US President Donald Trump has continued to deny established facts – economic, political and almost everything else in general – by insisting that his country has a trade deficit with most nations, and therefore he must levy trade tariffs on goods being imported to the US from there.
He had claimed this protectionist stance was his way of ensuring more American jobs, for which he was already tightened the H-1B visa norms, and even batted for more coal jobs in the face of data showing clean energy was the way ahead, both economically and environmentally.
However, the very jobs Trump promised to bring back to the US seem to be leaving the country. The most recent of these are from General Motors (GM), which has in a regulatory filing said the trade tariffs imposed by Trump might lead to "a smaller GM."
Interestingly, other American companies like Harley Davidson are also planning to shift some jobs out of the US, which is the exact opposite of what Trump had promised the country.
'Iconic American company' speaks up
GM, in a regulatory filing dated Friday, June 29, explained that the "232 steel and aluminium tariffs and the Section 301 tariffs against Chinese imports" would be detrimental to the company's growth and prospects of investing more as well as creating more jobs in the US.
It said in the filing: "GM operates 47 manufacturing facilities and 25 service part facilities across the United States, employs approximately 110,000 people in the United States, buys tens of billions of dollars worth of parts from US suppliers every year, and, since 2009, has invested over $22 billion in US manufacturing operations."
According to a Reuters report, the Michigan-based Center for Automotive Research says about a third of all vehicles GM sold in 2017 in the US were made abroad, and more than five out of six of these vehicles were made in either Canada or Mexico.
GM, in its filing, explained that if the rise in the cost of these vehicles due to Trump's tariffs were to be passed on to customers, there could be a demand shortage because the customers of many of these vehicles may not be able to afford them any more. On the other hand, if GM itself were to absorb these overheads, it could lead to a reduced operation.
Either way, the company would be looking at fewer jobs. And these would all be jobs within the US.
GM not alone
The aforementioned Reuters report also said two other iconic Detroit-based companies – Ford Motor Co and Fiat-Chrysler Automobiles NV – also import many of the cars they sell in the US. It is obvious that these companies, which once made Detroit the automotive capital of the world, would be hit by the import tariffs as well.
Meanwhile, another iconic American company, Harley Davidson, announced earlier this week that it was shifting some of its jobs outside the US and to Europe, where it was opening a new manufacturing plant.
The move enraged Trump no end, as he tweeted about the "beginning of the end" for the two-wheeler-maker.
A Harley-Davidson should never be built in another country-never! Their employees and customers are already very angry at them. If they move, watch, it will be the beginning of the end - they surrendered, they quit! The Aura will be gone and they will be taxed like never before!— Donald J. Trump (@realDonaldTrump) June 26, 2018
Meanwhile, an Economist report speculated that the trade tariffs – which many believe are Trump's way of getting Canada and Mexico to renegotiate the North American Free-Trade Agreement (NAFTA) – may backfire on him.
The report says because Mexico is the lowest-cost location within the current NAFTA, and has many car-manufacturing plants that US carmakers may eye in order to avoid the import tariffs. This would move more American jobs outside the country, further exposing the short-sighted policies Trump seems to be enacting every day.
The real fear here is that if the US – the world's leading economy – experiences successive stumbles, it won't be good news for the rest of the world.
[The author teaches reporting and editing at St Joseph's College (Autonomous), Bengaluru. The views expressed are his own.]