The Auto Industry: Mexico & Fuel Economy Standards
The Journal editorial board points out that there are policy moves that can be made to reduce the incentive to produce small cars in Mexico – namely corporate average fuel economy standards and trade deals that help American exports.
It’s true that auto makers have shifted production of small cars to Mexico, where wages are about 85% lower than in the U.S. But small cars aren’t profitable to make in the U.S., though they are necessary to meet the Obama Administration’s increasingly onerous fuel-economy mandates.
Some brave soul should also tell Mr. Trump that auto makers have moved production in Mexico because of its free-trade deals that provide better access to global markets. Mexico has 10 trade deals with 45 countries including the European Union and Brazil, which make up half of the global car market. The U.S. has 14 agreements with a mere 20 countries.
.. The bailout did work, for everyone except the taxpayers, who lost $10.5 billion.