Oh boy.
Shawn Fain, president of the United Automobile Workers, is doing that thing that burns every single person who tries it: praising President Donald Trump.
“We applaud the Trump administration for stepping up to end the free trade disaster that has devastated working-class communities for decades. Ending the race to the bottom in the auto industry starts with fixing our broken trade deals, and the Trump administration has made history with today’s actions,” he said in a statement.
Yeah, that’s not how it works.
According to Detroit’s WXYZ-TVUAW leaders have expressed that they feel blindsided by the announcement of layoffs at Cleveland-Cliffs Dearborn Works, a plant that supplies steel for the auto industry. Once the layoffs begin on July 15, UAW leaders will be scrambling to find work for their members.
Cleveland-Cliffs Dearborn Works is the auto industry’s largest steel supplier, and it employs 1,000 hourly workers. Now the company plans to lay off 500 hourly workers—as in half of this workforce—and 100 salaried workers.
If a key auto industry supplier has been hit this hard, it’s only a matter of time before the automakers themselves start shedding jobs.
Ford CEO Jim Farley has been sounding the alarm for months.
“Let’s be real honest: Long term, a 25% tariff across the Mexico and Canada borders would blow a hole in the U.S. industry that we’ve never seen,” he said in February.
And of course they will! There’s a complex supply web that connects the United States, Canada, and Mexico—all now subject to tariffs. And steel and aluminum tariffs are, on their own, raising the cost of materials.
With the average cost of a new car now just under $50,000the 25% increase in tariffs will only fuel inflation, layoffs, economic uncertainty, and consumer anxiety. Adding $10,000 to the cost of a new car won’t do the industry any favors. It’s a vicious cycle that will feed on itself, leading to more autoworker layoffs.
The Federal Reserve Board is already forecasting lower economic growth and rising unemployment. The Atlanta Fed’s objective data-based growth index now forecasts a nearly three-point drop in the nation’s GDP. And Trump continues to threaten allies with additional tariffs.
Trump and Fain are under the delusion that tariffs will force domestic automakers to onshore their entire massive supply chain—an undertaking that, under the best of circumstances, would take years and billions of dollars.
Even pro-tariff, pro-protectionist Sen. Bernie Sanders of Vermont recognizes that Trump’s bull-in-a-China-shop approach is an economic disaster.
“Donald Trump’s haphazard and reckless plan to impose tariffs on Canada and the European Union is an absolute disaster that will cause unnecessary economic pain to farmers, manufacturers and consumers in Vermont and throughout the country,” he said.
There is certainly a case that many of our trade deals are unfair to U.S. workers, but what Trump is doing is not fixing those problems. Remember, the North American Free Trade Agreement that Trump is now railing against was his trade deal. He signed it.
The reality is that it makes more sense for big industrial players to simply ride out the next four years and hope for a more rational administration on the other side—laying off workers, idling factories, and preserving as much cash as possible in the meantime.
“It’s three years at best for brand new automotive capacity that could potentially span into a new administration, where the rules could change. So just by the time that capacity was coming online, you might find that was no longer your optimal footprint,” one auto executive told CNN.
According to CNN, a shuttered Stelantis plant in Illinois reopened in 2023 but won’t come online until 2027—and that’s an existing auto plant. Completely new infrastructure would take even longer.
Additionally, given tariff-fueled inflation, construction materials are now significantly more expensive.
A KeyBanc report found that U.S. steel prices are already up 30% in the last two months alone, while aluminum is up 15%. And since tariffs are also increasing food prices, the cost of labor must increase to account for a higher cost of living.
Trump wants more domestic industrial production, yet his own policies are making that prohibitively expensive.
But, of course, Trump is living in la la land.
“We’re already setting records for new plants. The tally, just within a period of a few weeks is very large. I think our automobile business will flourish like it’s never done before,” he said.
The actual number of new post-tariffs plants is zero. There is a handful of existing construction, which is being subsidized by former President Joe Biden’s Infrastructure Reduction Act for electric vehicles and battery plants. But Trump has already said that he will zero that out, too.
We expect Trump to be a fool. But what’s Fain’s excuse?
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