Washington’s dysfunction is weighing on the auto industry. The Trump administration was supposed to be Detroit’s best friend in a couple of generations. The president was supposed to understand the industrial Midwest, if only because its voters delivered him to the White House and his team would enact policies the industry purportedly would like.
It’s not working out that way.
Listen closely to executives gathered at last week’s Detroit auto show and you could detect a common complaint: Washington is broken.
That could become a real problem, nearly a decade after two of this town’s automakers emerged from bankruptcy and drove a long road back to respectability. Uncertainty looms, confirming the honeymoon between Detroit and the White House is over.
The longest shutdown of the federal government in American history doesn’t help – especially if it runs the whole first quarter and pushes economic growth to zero, as a Trump economist warns.
Add that to the long list of automotive woes: A ranking Ford executive says Trump tariffs on steel and aluminum are making U.S. metal the most expensive in the world.
Trade tensions with Canada, Mexico, China and the European Union, are raising costs and complicating decision-making. Rising interest rates are increasing borrowing costs for consumers and business.
The net effect? The stability craved by business is being undermined by D.C. Political squabbles over who’s to blame for the shutdown and whether the president will or will not deliver his State of the Union speech amid the mess resemble a junior-high debate class, and a bad one at that.
How’s a woman like General Motors CEO Mary Barra supposed to make billion-dollar bets on plants, products and people? How are investors in Ford Motor supposed to know just how much all this policy over-reach and this economic turmoil for the sake of turmoil will cost the Blue Oval and them?
Good questions.
The International Monetary Fund warned that the global economic expansion is losing steam. Polling shows blame for the continuing shutdown accruing more to Trump than the newly empowered Democrats. The University of Michigan's most recent consumer sentiment index reported its largest drop since Trump became president.
At the World Economic Forum in Davos, a big worry focused on the lack of international leadership coming from Washington, London, and Berlin – and what it all means for economic prosperity and stability.
Disincentives are mounting. Trade fights are slowing the world's largest economies. China is officially pegging its growth rate at 6.4 percent in the final three months of last year. That’s the slowest since the global financial meltdown a decade ago.
Tariffs and threats of more are affecting Chinese investment in the United States, too. Guangzhou-based GAC Motor used the Detroit auto show to confirm it’s delaying its plans by roughly a year to enter the rich U.S. market.
Ford’s executive chairman, Bill Ford, laments the lack of civility coming from Washington. He says, “There's very little getting accomplished. That makes it hard for business to operate.”
He’s got that right.
Daniel Howes is a columnist at The Detroit News. Views expressed in his essays are his own and do not necessarily reflect those of Michigan Radio, its management or the station licensee, The University of Michigan.
