Myths and Lessons from a Century of American Automaking
Protectionists love talking about the auto industry. Believing it offers a potent example of the harms of globalization, their arguments have long been politically attractive to politicians on both left and right. Most recently they have justified the Trump administration’s 25 percent tariffs on auto imports by emphasizing the long-term decline of the industry.
The protectionist argument for insulating the American auto industry from foreign competition not only draws the wrong lessons from history, it gets the history itself wrong. It rests on four myths, all of which I debunk in this analysis:
Once these myths are set aside in favor of a clear, accurate understanding of the auto sector and its history, there is no reason to be optimistic that the Trump administration’s protectionist approach to the sector will work as intended. Indeed the case for it falls apart entirely.
The backdrop for President Trump’s tariffs is the idea that the auto industry has been decimated by globalization. “No one anymore, on the left or the right, denies that globalization has fractured the U.S., both economically and socially,” writes Joe Nocera at the Free Press. “It has hollowed out once-prosperous regions like the furniture-making areas of North Carolina and the auto manufacturing towns of the Midwest.”
