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Letter: President not blameless in tariff spat
02012018 LETTER
I subscribe to several online newspapers and find posted comments interesting. The comments concerning the announced closures of several GM plants demonstrated several misunderstandings about our economy.

Most of the posts blamed President Trump for the entire situation. I believe this is a simplification of the situation.

At least some of these closures were going to happen with or without Trump. Ford and Fiat Chrysler have already cut sedan models from future offerings. Americans are not buying as many sedans. Before Monday’s announcement, the Lordstown, Ohio, plant had already eliminated two shifts and 3,000 jobs. It was only a matter of time before the plant was shut.

Though the macroeconomic trends are not favorable for segments of the American auto industry, some of the blame for the rapidity of these changes can be attributed to President Trump’s policies. He is not blameless.

Protective tariffs for U.S. steel and aluminum have raised the cost of building vehicles here. U.S. steel is now the most expensive steel in the world. Protective tariffs make foreign steel more expensive and the intention of those tariffs is to encourage American industries to purchase American steel and aluminum.

American producers raised their prices because those tariffs made imported steel expensive. There was no benefit to the consumer or the auto industry. In addition, China has retaliated with 25 percent protective tariffs on U.S.-built vehicles.

The result of those tariffs meant that building vehicles in the United States became more expensive and it also meant that these expensive vehicles would be taxed 25 percent when exported to China, which is the largest vehicle market in the world.

In 2017, China produced 25 million passenger cars. By comparison the United States produced 3,033,216 passenger cars.

In short, American auto companies have to shift production to China. The market is larger than ours and that is where the profits are.

The economic forces at play are complicated and cannot be totally explained in a short letter. My hope is that this letter encourages others to research this topic. We need informed citizens and we need our government to make better decisions.

Lesson one is that trade wars are not easy to win.

Jimmy O’Neill


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