Will Donald Trump Help American Car Consumers in Any Way?
Many Americans have been disappointed by Donald Trump’s presidency. Naturally, most Democrats opposed everything Trump has done. However, many Independents joined them following the Muslim travel ban and the overall lack of improvement in the economy. Once Trump reportedly agreed to a DACA deal with Nancy Pelosi and Chuck Schumer, some conservative Republicans started heading for the exits, too.
After seeing so many politicians lie on the campaign trail should we be surprised? In fairness to voters, no U.S. president ever broke so many campaign promises during his first nine months in office. In that respect, we couldn’t prepare for Trump. However, the same struggling Americans who voted him into office still need to see their quality of life improve.
Trump said he’d make it happen with better health care and more jobs. Since those efforts remain stalled in Congress, some would settle for improvements in trade deals. Trump said changes to NAFTA and other pacts would benefit auto workers and the average American on their daily commute. As this administration tries to move forward, we look at Trump’s auto industry promises and whether American drivers will see any improvements.
The border tax effect on consumers
While the new administration floated the idea of taxing cars from Mexico between 20% and 35%, Carjojo did a study on what it would mean for U.S. dealerships. The car-buying site found 35% of vehicle sales below $20,000 came from cars assembled in Mexico. By taxing these cars, the poorest Americans (i.e., those who buy the Nissan Versa and Ford Fiesta) would hurt the most. Such a tax might sound good in theory, but in practice it would not change commuters’ lives for the better.
Lower mpg standards equal higher fuel costs
When you look at the cost of vehicle ownership, fuel represents a major part of the equation. In Trump’s assault on the EPA and fuel economy standards, he said “industry-killing regulations” hurt job production. This argument, which the administration hasn’t backed up with statistics, formed the basis for lowering fuel economy standards ahead of 2025. (The heads of several automakers, including ousted Ford CEO Mark Fields, lobbied Trump to drop mpg standards.)
In fact, the EPA mpg standards finalized in 2016 already forced automakers to improve economy in vehicles. To get there, they developed hybrid and electric vehicles that feature far better efficiency than SUVs and other gas guzzlers. While doing so, the industry broke the all-time sales record. By reducing standards, consumers won’t see more economical cars hit the market at low prices, and the average American’s fuel costs will rise.
Car prices could rise, too
It’s not just consumer groups saying lower mpg standards would be bad for commuters. In September 2017, auto parts suppliers told the EPA that dropping fuel economy standards would have a negative impact on their businesses, too. According to Automotive News, a senior official from the Motor & Equipment Manufacturers Association said suppliers already made long-term investments based on the 2017-2021 mpg standards.
If the EPA relaxed them, suppliers would be forced to charge higher prices due to lower sales volumes. Once big car companies got the bill, they would simply pass it on to consumers at dealerships.
Killing jobs in auto tech
The changes would affect jobs, too. About 288,000 Americans work on products that improve fuel economy, according to BlueGreen Alliance statistics. Motor & Equipment Manufacturers Association data showed a 23.3% increase in employment in the industry since 2012, when the regulations entered the books, according to Automotive News. So the laws that were supposed to hurt the economy actually created tens of thousands of jobs.
Delaying the inevitable
Here’s a look at the top seven countries for auto sales in 2016:
- England (U.K.)
Now, here’s a look the countries planning to ban gasoline and diesel vehicles in the coming decades.
- England (U.K.)
So the world’s biggest auto market and four others in the top seven plan to phase out fossil fuels. Where will that leave American manufacturers? If U.S. vehicles become a niche segment overseas, Detroit will see lower sales worldwide, and consumers would likely have to pay higher prices for economical foreign cars. By shaking up the auto industry in a shortsighted way, the Trump administration is setting up consumers for failure.
Auto sales slowing in 2017
If the Trump administration was supposed to be a boon for American consumers, we haven’t seen the benefits yet. Retail sales fell in August 2017, and industrial output hit its lowest mark since 2009, Reuters reported. While Hurricane Harvey had an effect on these numbers, auto sales are down 3.2% for the year, according to data from GoodCarBadCar. If the trend continues as expected, auto sales will decline in 2017 for the first time since 2009, when the recession hit America.
Progress on NAFTA?
The auto industry has the most to lose in renegotiation of NAFTA. For that reason, an alliance of automakers opposes the Trump administration’s ideas about changing the deal’s terms. The proposal to force an increase in U.S. content in every car could lead to production shifts or higher taxes. In both cases, operating costs for manufacturers would rise and — you guessed it — sticker prices would rise as a result.
Gas prices higher in 2017
According to AAA, gas prices in America stand at $2.64 as of September 2017, up 21% since September 2016. If that trend continues, midsize SUV owners would pay over $370 per year in extra fuel costs than they did during the Obama administration. Of course, many global factors dictate the price of gas at the pump. But taken with every other indicator, it looks like the average American has not been helped by Trump’s policies. Let’s hope what happens in the coming years makes things easier for consumers.