Trump says free trade killed American auto jobs. That’s not the whole story
By Chris Isidore, CNN
(CNN) — Much of President Donald Trump’s tariff rhetoric has been about restoring factory jobs — particularly auto jobs — that he says had been destroyed by bad trade deals such as the North American Free Trade Agreement.
“American steelworkers, auto workers, farmers and skilled craftsmen … they really suffered gravely,” Trump said during his April 2 rollout of new tariffs. “Foreign cheaters have ransacked our factories, and foreign scavengers have torn apart our once beautiful American dream.”
Trump promises that his 25% tariffs on all imported cars will raise costs enough to bring a flood of new auto plant construction, and thus auto jobs, back to US shores. But the loss of auto jobs in the US, especially across the upper Midwest, is a complex story beyond trade deals and shifting production to low-wage countries. There was also the fact that American car buyers abandoned the three Detroit automakers for foreign competitors following years of questionable quality and value. And most importantly, the introduction of automation, which drastically reduced the hours needed to assemble a car.
“What you see is that the real story in the auto sector is automation,” said Jason Miller, a business professor at Michigan State University and an auto industry expert.
One of the reasons the production shift to Mexico gets so much attention from those angry about assembly plants and auto parts factories closing, Miller says, is due to timing. The introduction of more robots, and the resulting job loss, “was especially severe during the exact time period that trade liberalization took place.”
And the situation is not nearly as dire as Trump makes it out to be. In fact, there are more workers building cars in US assembly plants today than when NAFTA took effect in 1994, according to the US Labor Department data. They also built roughly twice as many cars as Mexico and Canada combined last year, according to S&P Global Mobility.
Experts widely agree that the trade deals are a distant third cause of auto factory closings, behind automation and market share losses.
Tariffs are not going to reverse those factors.
Big Three lose market share
Automation revolutionized car manufacturing. It cut the time it took to build a car from about 50 hours of labor in 1988 down to about 18-20 hours by 2005, said Laurie Harbour, partner at auto industry consultant Wipfli, which studies auto plant efficiency.
“At the same time, (the Detroit automakers) were dramatically losing market share,” Harbour said. “So those two things combined – I’m not making as many vehicles, and I’m making them in like half the time – is what led to the plant closings.”
Up through the early 1970s, more than 80% of US car sales went to the traditional Big Three American carmakers — General Motors, Ford and Chrysler, which is today owned by Stellantis, according to Wards Automotive, which reports on the auto industry. That market dominance started to decline in the face of Japanese imports. By 2007, the Big Three lost a majority of US sales for the first time, and in 2024, they made up only 38% of the US market combined.
That loss of market share was greatly self-inflicted, said Patrick Anderson, president of Anderson Economic Group, a Michigan think tank.
“There’s no question that deficient quality, uninspired design and bad labor relations of 20 to 30 years ago caused lasting wounds,” he said. “The US automakers have recovered from much of that. But before it got there, it did end up bankrupting GM and Chrysler.”
And despite building better quality cars in recent years, those American brands haven’t been able to win back many of the buyers it lost to import brands, he said.
Foreign brands make many cars here
While foreign automakers were winning market share, they were also building their own US plants. But not all auto jobs are made equal.
Most of those new plants were nonunion factories built in lower-wage “right-to-work” states in the South. Currently, the only exception is a Chattanooga, Tennessee, Volkswagen plant that voted to join the United Auto Workers union just a year ago.
Last year, Asian and European brands built 4.9 million vehicles at US plants, edging out the 4.6 million built by Ford, GM and Stellantis, according to data from S&P Global Mobility. Tesla built an additional 648,000 at its two US plants. That is why even with automation and market share losses, there are more US auto plant assembly jobs today as there were 30 years ago.
While assembly jobs are slightly above their 1994 levels there has been a decline in auto parts jobs. That’s significant — nearly twice as many auto workers build parts as perform the final assembly.
Many of those parts jobs disappeared due to production shifts to Mexico or automation in American plants. And new US auto parts jobs followed the new assembly plants to nonunion states in the South: Michigan has lost half of its 220,000 auto parts jobs since the 1990s, while auto parts jobs in Alabama have more than doubled, according to Miller, the business professor at Michigan State University.
Even so, there is no doubt that NAFTA led to a boom in assembly plants and auto parts factories in Mexico. Today, virtually every major global automaker has a plant in Mexico to serve the US market. Last year, Mexican plants built 4 million vehicles and shipped 2.5 million of them to American customers, according to S&P Global Mobility.
Under NAFTA, and the United States-Mexico-Canada Agreement (USMCA) that Trump negotiated in his first term to take NAFTA’s place, automakers operated as if the three countries were a single market. They built cars and trucks by moving parts and vehicles freely across the borders.
But more cars have also been imported from Asia and Europe. Today, South Korea is the second-largest source of car imports behind Mexico, sending 1.4 million cars to US dealers. Japan is right behind with 1.3 million followed by Canada with 1 million and Germany a distant fifth with 430,000 exports, according to S&P Global Mobility.
US auto industry still strong
Despite its problems, US auto plants still dominate the North American market and are major players globally, unlike other sectors such as textiles and semiconductors.
Last year, 10.2 millions cars — or two-thirds of the North American output — were assembled at US plants, according to S&P Global Mobility. That’s enough to account for 55% of the cars purchased in the United States, with 1 million exported to other countries, including Canada and Mexico.
US car production is currently down only 14% since NAFTA went into effect in 1994, according to Wards Automotive. That’s even as car production in Mexico has soared 272% since then.
Despite the arguments made by the Trump administration, tariffs won’t relocate auto plants in foreign countries to America anytime soon.
“It’s a minimum of a two-year exercise to pull a plant out of Mexico and move it here,” said Harbour.
US assembly plants with excess capacity can’t necessarily start producing the additional models now being built elsewhere. And reopening a plant that has been closed can take years. Even if new auto plants are built, they would need to be highly automated to compete with lower-wage Mexican plants.
“You will not see US manufacturing employment numbers go back to the 1990 level due to automation,” said Miller.
Even members of the Trump administration are talking about automation in new plants, which would mean fewer jobs in any returning plants than the factories of the past.
“Here’s the key. Factories now can use robotics,” said Commerce Secretary Howard Lutnick in a recent interview on CNBC. “So American workers can be much more efficient with robotics. You’re going to see the greatest surge in … teaching people how to be robotics mechanics … it’s a great paying job and it requires a high school education.”
It’s more likely that parts plants will shift back to America than assembly plants, said Harbour. But that doesn’t mean there will be significantly more jobs at those factories.
“I think you’ll see some job growth. I don’t think you’ll see a jobs boom,” said Harbour. “It’s being portrayed to be much larger than I think it will be.”
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