The Very Stable Genius's protectionism is backfiring

One of the few themes of the VSG's candidacy and subsequent presidency that has had any coherence was this business about putting America first and bringing back manufacturing jobs.

It seems something he insufficiently considered was what an expensive hassle it os to uproot a manufacturing facility and relocate it:

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The new North American free trade agreement that came into effect on July 1 was touted by US president Donald Trump as an engine of American job creation. But Japan’s automakers are largely opting instead to keep their Mexican operations in place and pay their workers more or even just pay tariffs.

The US-Mexico-Canada agreement requires 40 per cent or more of parts for each passenger vehicle to be manufactured by workers who are paid at least $16 an hour as a condition to make them tariff-free in the region. Mr Trump hailed that feature as a way to boost production in the US, which has a higher hourly rate than Mexico.

However, this looks to be wishful thinking. The ratio of US-Canada parts among Mexican-assembled vehicles sold in the US was 13.5 per cent in 2018, according to the US Department of Transportation’s National Highway Traffic Safety Administration. Mr Trump’s theory was that US production would inevitably increase to meet the 40 per cent requirement, but Japanese automakers — which had already positioned their production bases according to the old Nafta regime — are not willing to up sticks and redeploy.

One reason is the cost of moving production. Honda-affiliated parts maker Keihin will raise the hourly wage of employees at a factory in Mexico to $16 by next month — triple the average rate of a parts factory in Mexico but still cheaper than making a move. Because the pandemic has hurt earnings, the cost of moving production will probably be too burdensome over the foreseeable future. Auto component maker Piolax will raise the hourly wage at its Mexican plant to $16 within the year, and is also installing robots to mitigate rising labour costs, said Yukihiko Shimazu, company president.

Toyota, which built a new plant in Mexico in 2015, is not finding it easy to change plans either. The new plant started full-scale production of pick-up trucks in February. The trucks are popular in the US and will be subject to a 25 per cent tariff if they do not meet the content requirements of the USMCA. But if Toyota does not operate the factory, it cannot recover its investment.

“We don’t want to be whipped around by a policy that we don’t know how long it will last,” said an executive at a Japanese carmaker. 

Republican Senators have no clear notion of what Trump's agenda would be for a second term.  When given the floor to articulate a vision by the ultimate bootlicker, Sean Hannity, he came up really short. 

Yo, chief. Wanna look like a winner? Try an actual free-market approach to the economy.