Trump's Thursday visit to Warren will tout trade-agreement victory
Don't expect President Donald Trump to waste any time telling Michigan autoworkers just how much the U.S.-Mexico-Canada Agreement, signed into law Wednesday, will positively impact them.
The president is likely to tout the trade deal in remarks Thursday at Dana Inc., an auto parts supplier of axle and driveline components whose plant sits in the industrial heart of Macomb County — an electoral bellwether that played a key role in Trump winning Michigan in 2016 and likely could again.
A Dana official said the company will cancel two shifts at its Warren plant to allow employees to attend the president's remarks, delivered amid his continuing impeachment trial in the Senate. Experts say Trump likely will focus heavily on the passage of the replacement for the North American Free Trade Agreement — a campaign promise turned-political-win that industry analysts predict will be a boon for the U.S. auto industry, for Michigan and for Detroit.
"I expect the president to boast about his accomplishment in getting NAFTA replaced with the new USMCA agreement," said Patrick Anderson, CEO of the East Lansing-based Anderson Economic Group. He'll "take credit for a very important trade agreement that will have strong effects on states like Michigan. The signing of the USMCA together with the tax cut are probably the two biggest economic decisions that the Trump administration has made in terms of affecting workers in the Midwest."
Under the USMCA, automakers will have to produce vehicles with 75% of parts originating from the United States, Canada or Mexico to qualify for duty-free treatment. The requirement, referred to as “rules of origin,” is an increase from 62.5% under current NAFTA rules. In addition, 40-to-45% of a vehicle's content must be made by workers earning at least $16 an hour. Vehicles not meeting the requirements will be subject to a 2.5% duty.
The Trump administration has expressed optimism that the USMCA and the recent "Phase One" trade deal with China will spur economic growth as the president heads into a re-election battle. With Michigan expected to again be a central battleground in the 2020 campaign, Trump is making his first post-signing visit to Warren.
The labor provisions are an attempt to boost U.S. jobs. But it remains to be seen if automakers that have gravitated to lower wages in Mexico will conclude they can profitably return more production stateside, fulfilling one of Trump's central goals in rewriting the trade pact.
Mexico says that about 30% of its current auto production would not conform to the new rules, but the country has not specified which rules would not be met. Industry observers expect some models that have low domestic sales volume or are too costly to bring into compliance would be withdrawn from the U.S. market.
The vast majority of U.S. and Canadian production is expected to conform to the rules within a three- to five-year transition period, the Ann Arbor-based Center for Automotive Research forecasts.
Automakers and groups that lobby for the industry in Washington have hailed passage of the USMCA, saying free trade with Canada and Mexico are vital to Detroit manufacturers' ability to compete in the international market.
Jared Bryan, spokesman for northwest Ohio-based Dana, said the company has been supportive of the passage of the USMCA. Most U.S. auto companies, as well as many of their suppliers, have said at least that NAFTA needed to be reformed.
The 800,000-square-foot Dana facility in Warren employs roughly 800 people. The plant runs three shifts manufacturing axle and driveline components for General Motors Co., Ford Motor Co. and Fiat Chrysler Automobiles NV vehicles, among others.
The Warren facility hasn't hosted a sitting American president since September 1942, Bryan said, when president Franklin D. Roosevelt and his wife, Eleanor, visited what was then the Detroit Arsenal Tank Plant. Dana is one of the top-five U.S.-based automotive suppliers.
Experts and politicians said that while the process of getting a new trade deal signed was arduous, it's a win for Trump. It also fulfills one of his most prominent campaign promises: to bury the 26-year-old NAFTA deal that the president, labor leaders and many Democrats blame for killing jobs and hollowing out industrial sites.
In a statement, the United Auto Workers said: "USMCA will not bring back the hundreds of thousands of good U.S. manufacturing jobs that have already been shipped to Mexico. Even under the rosiest of scenarios, it would only stem the tide. We need to invest in workers and fix our bad tax and labor laws to compete on a level field abroad and restore the good manufacturing jobs that built our middle class."
Added U.S. Sen. Gary Peters, a Bloomfield Township Democrat: "Although the USMCA is not perfect, it is an improvement from the initial deal announced by the administration and includes strict labor standards and stronger enforcement mechanisms that I pushed for. That’s why I believe the USMCA will make some progress for Michigan, and why I supported the USMCA when it came before the Senate for a vote."
That progress for Michigan's auto industry could prove meaningful in the 2020 election, because the state that put America on wheels is shaping up to be a major battleground in Trump's bid for a second term.
"The fact that the president spoke in December in Battle Creek and January in Macomb County speaks volumes about the importance of Michigan in the 2020 election," said Anderson. "Ohio, Michigan and Wisconsin are must-stop destinations now for national politicians — and it’s about time."