With the U.S. election barely seven weeks away, both major party candidates have stepped up the in-person campaigning, putting a focus on Michigan, a swing state that helped President Donald Trump win the 2016 election — and which may be key to Joe Biden’s chances in 2020.
As the heart of the U.S. auto industry, both candidates used visits last week to promote their records and lay out their positions on automotive policies, with an emphasis on boosting production and increasing jobs. But beyond those basics, the Republican president and his Democratic challenger differ in how they want to get there — and on plenty of other issues impacting the auto industry, including trade and the environment.
“You better vote for me. I got you so many damn car plants,” Trump told an audience during a rally at MBS International Airport near Saginaw, Michigan on Sept. 10. “And we’re going to bring you a lot more,” Trump added, while declaring that his administration had “saved” the auto industry during his first term.
For his part, Biden has laid out a similar claim during trips to Michigan, reminding voters that the Obama administration enacted a massive bailout that kept General Motors and what was then Chrysler alive during the Great Recession. During last week’s campaign stop, Biden outlined his own jobs plan while warning that a “defeatist view” of the Trump administration threatens “good-paying U.S. jobs here in America.”
Critics took aim at some of the claims made by both candidates during their recent trip. Trump, for one, has actually seen few new auto plants open in the U.S. since taking office. Some plants, such as the big GM assembly plant in Lordstown, Ohio, have closed. Questions were raised about Biden’s jobs plan, meanwhile, notably the new corporate taxes and an “offshoring penalty surtax” designed to bring manufacturing and jobs back from abroad.
Here’s a look at how the two candidates stand on various issues important to the auto industry.
There are few areas impacting the auto industry where Trump and Biden have more differing positions. While vice president, Joe Biden served in an administration that aimed to expand global trade. Among other things, the Obama administration negotiated the Trans-Pacific Partnership, a massive deal with Asian markets.
One of the first acts of the Trump administration was to kill the TPP while also pressing the country’s nearest neighbors, Canada and Mexico, to renegotiate the North American Free Trade Agreement that the United Auto Workers Union has long railed against. The replacement, the USMCA, is generally seen as a modest update, however, not a wholesale replacement of NAFTA, and there have been few signs that it is bringing manufacturing and jobs back from either of those trade partners.
The case is the same with the various trade wars Trump has triggered, especially with China. If anything, the cost of imports such as steel and aluminum, as well as Chinese-made auto parts, have risen, contributing to the run-up in new vehicle prices over the last few years.
Meanwhile, U.S. exports have been hit, notably to China, due to tit-for-tar tariffs. Under President Barack Obama, American auto plants shipped 314,580 vehicles to the Chinese market in 2014. Last year, that dropped to 192,210 — and production of some models bound for China, such as the BMW X5, has been moved abroad.
Biden is expected to reduce the threat of new trade wars that could impact the auto industry, especially with Europe, but if and how he might try to wind down the current confrontations with China is less clear.
What Biden has laid out is a plan that would raise corporate taxes from 28 percent from the current 21 percent, reversing some of the cuts enacted by the Trump administration. It’s here that the Democrat believes he can keep U.S. jobs — including those in the auto industry — from fleeing the country with a 10 percent “offshoring penalty surtax” on profits made by American companies on goods produced abroad but sold in the U.S.
Biden also has promised to take steps to help middle-income wage earners, something that could provide more cash in pocket that could be used to buy new vehicles.
Trump enacted significant tax cuts during his first administration and has talked about further reductions. But critics contend his trade wars have resulted in de facto taxes in the form of tariff-led price increases. He continues to raise the prospect of enacting new duties on European imports, autos in particular.
Until the pandemic struck, Trump was able to boast about record levels of employment. He is now asking for a chance, during a second administration, to bring back those jobs lost. By boosting the economy and U.S. sales and by using trade deals to bring back U.S. production, he contends, more American car plants will open creating more industry employment.
For his part, Biden’s proposal to “Build Back Better” puts an emphasis on the auto sector. “This will mean 1 million new, well-paying jobs in the American automobile industry,” he said during a July speech. His plan is heavily dependent on increases in government spending.
Energy and the environment
During his original run for the White House, then-candidate Donald Trump emphasized traditional fossil fuels, including coal, oil and natural gas. While coal has continued declining, production of domestic oil and gas has hit record levels.
Since taking office, meanwhile, the president has ordered the rollback of the aggressive Corporate Average Fuel Economy, or CAFE, mandates enacted during the Obama administration. It also has eliminated rules that let California set emissions standards tougher than those enacted by the Environmental Protection Agency. Both of these moves are facing court challenges and could be scrapped under a President Biden.
Since 2016, the auto industry has begun a potentially historic shift away from the internal combustion engine to battery-electric propulsion. The rollback of CAFE, if allowed to stand, could reduce demand for clean vehicles, according to reports by IHS Markit, Alix Partners and other analysts.
While Biden has expressed clear support for tougher fuel economy mandates, he also has backed electric and hydrogen-powered vehicles under the “Clean Cars for America” proposal. Among other things, the new administration would shift 3 million government vehicles from gas to electric power. To make retail car buyers more comfortable with EVs, the plan also calls for creation of 500,000 electric vehicle charging stations.
The Trump administration, meanwhile, has shown little support for EV incentives of up to $7,500 per vehicle — tax credits that have been phased out for several manufacturers, including Tesla and GM, after having hit sales targets set by Congress. Biden has expressed support for expanded financial incentives and there has been talk of a possible EV-based version of the “Cash for Clunkers” program run during the Obama administration.
The two men also take starkly opposing views on environmental regulations, including automotive emissions, with Trump continuing to press deregulation while Biden wants to enact measures to cut air, as well as water, pollution.
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