Honda CEO Takanobu Ito, (center right) during groundbreaking ceremonies for the maker's plant in Mexico. Honda recently began building the Fit there.
Despite the rapid expansion of “transplant” assembly lines operated by a wide range of foreign-owned manufacturers, U.S. auto imports hit an all-time record during the first half of 2015, with no sign of slowing down.
If anything, the rapid expansion of Mexico’s production base could spell even bigger automotive trade deficits in the years ahead, experts warn. Autos and automotive parts accounted for about a third of the overall U.S. trade deficit in June, meanwhile.
Automotive imports rose by $10.8 billion, to $171.5 billion during the first half of 2015, according to a newly issued report from the U.S. Census Bureau. During the same period, auto exports dipped by $3 billion, to just $74.8 billon.
Mexico was a major factor in that deficit, accounting for $35 billion during the first half of 2015. While the U.S. exported $1.4 billion in cars, light trucks and crossovers to its southern neighbor, it imported $11.3 billion in those vehicles. Export of larger trucks to Mexico totaled just $630 million, with imports coming to $14.5 billion. Auto parts made up the rest of the deficit.
Daimler and Renault-Nissan are pairing to build a new plant in Mexico to build luxury cars.
Mexico is now among the top five global producers of automobiles, and its manufacturing base is rapidly expanding. Nissan just began work on a new plant in Aguascalientes that will produce luxury vehicles for both its Infiniti brand and alliance partner Mercedes-Benz. Audi is close to completing its first plant in the country, while Kia is preparing to build its own factory there.
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The Mexican car market is a fraction the size of the American one, creating relatively little demand for U.S. automotive exports. And Mexico has significant advantages, especially when it comes to labor costs. That has encouraged the shift in production of small cars offering low profit margins. While Ford has not confirmed specific details, it is expected to move assembly of its compact Focus and C-Max models to Mexico from a plant in suburban Detroit next year.
The threat of losing automotive jobs to Mexico has already become an issue in the early days of the 2016 presidential election, GOP candidate Donald Trump recently declaring his intent to heavily tax Ford Motor Co. if it adds production there.
Legal experts say there is little chance that such a threat could be carried out in light of current trade agreements between the U.S. and Mexico. If anything, observers expect the trade imbalance could become even more lopsided.
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But Mexico isn’t the only country running an automotive trade surplus against the U.S. During the first half of the year, Japan shipped $25 billion in autos, trucks and auto parts to the U.S. while importing just $1 billion in similar goods.
The auto trade deficit has been growing, along with the overall U.S. auto industry, since the country began emerging from the devastating Great Recession – which saw the sharpest downturn in American auto sales in decades.
Americans spent $254 billion on imported automobiles and parts in 2011, a figure that jumped to $328 billion last year. For the first half of 2015 the import total reached $171.5 billion, putting it on pace to set a new record for the full year.
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The auto trade deficit has similarly been on the rise, from $156 billion in 2013, to $169 billion last year.
What this article is documenting is the lost jobs created by our “give away” trade agreements. We are giving our jobs and sovereignty up with these agreements.
If we did not have these “Anti-American” agreements, all those jobs and new auto plants would be built in the USA.
The $35 billion EXPORTED by Mexico to USA – would be coming FROM the USA, not IMPORTED into the USA.
Then, one wonders why America is NOT great, now. Trump has hit a nerve about the economy, jobs, immigration and other problems in this country.
All we have today are Rubber Stamped politicians, no one has any concerns or nerve to discuss the real issues in America.
We need to stop all these “cookie cutter” politicians and find one that PUTS this Nation, first. Not the lobbyist and Big Money.
BTL, consider how many foreign assembly plants have opened in the US during the last two decades despite — or because of — such trade agreements. There was a time when the vast majority of Japanese, and then Korean, vehicles were imported. The vast majority of the major Japanese brands now are built in North America and the Koreans are increasing production here. Sloganeering about trade is one thing, understanding the subtleties of the issue entirely another.
Paul E.