The power of tweets
Yesterday in his farewell speech, President Obama listed some of the things that he considered a success that happened on his watch. Among them was rebooting the US auto-industry. Certainly some of the struggling US car companies did manage to survive the crash of 2008 so the claim has some validity. However, it could be argued that the $3bn of government money spent in 2009 under the cash for clunkers scheme was not all for the benefit of the US vehicle makers. Much of the money was absorbed by the wages of the army of civil servants taken on to run it and a huge chunk of it went to foreign car makers especially those from Japan and Korea. Since 2009, US car companies have spent a lot of money on building new plants outside of the US, notably in nearby Mexico. That is something that incoming president Trump has vowed to change and he has made a very successful start even before taking office. In less than a week, Ford has cancelled construction of a new factory in Mexico and promised to shift production of the small cars that would have been built there to its Michigan factory, creating new jobs and spending $700m on US production of an all-electric version of the small car. Fiat-Chrysler has announced it would invest $1Bn and create 2,000 jobs at two US plants that make sport utility vehicles and trucks and Toyota has said it would spend $10bn on new investments in the US over the next five years. Germany’s BMW is the only car maker to buck the trend saying it will continue with plans for a new plant in Mexico. Trump has achieved all this by the mere suggestion on public media that cars intended for the US market not made in the US will be subject to big import taxes. Significantly no US government money is involved. Trump’s promise to impose import duties signifies an end to NAFTA and builds on his promise to reverse the export of US jobs to cheap labour areas. There are losers of course, the Mexicans who will not now be employed and likely more in other countries, but it is a sign of the times that politicians need to listen more to their electorates than to the idealists of the world. For the shipping industry, these signals will likely lead to a short period of less demand for their services but in the long run, when the spending power of US workers grows demand for imported goods will likely rise as well.