In today’s broadcast of This Week with George Stephanopoulos, UAW President Sean Fain came out in support of President Trump’s tariffs. Why would a labor president of the sixth largest union in America, one that typically favors Democrats over Republicans, come out on a major network in support of the president’s policies? Here’s why.
Fain’s Comments on Trump’s Tariffs and Trade
Fain was asked why he supports Trump’s tariffs. Here’s what he said. “We’re in a crisis mode in this country. There is no single issue in this country that has affected our economy and working class people and their jobs than NAFTA, the USMCA, and our trade laws, our broken trade system…..” He went on to say, “We’re in a triage situation. Tariffs are an attempt to stop the bleeding from the hemorrhaging of jobs in America for the last 33 years.”
Yes, it’s a bit surprising to find a union president wandering off the Democrat reservation to support a Republican’s policy. Fain’s logic was sound and his comments clear, the U.S. needs to address the unfair trade agreements with our trading partners.
Back in 1993, on Larry King Live, Al Gore and Ross Perot had a debate over the North American Free Trade Agreement or NAFTA. Perot’s famous comment about a “giant sucking sound” referring to the exodus of American jobs moving overseas became a mantra among free-trade advocates. When asked about the debate in 1993, Fain had this to say, “Gore referred to four living presidents, Nobel-laurate economists, and everyone said this was gonna create 400,000 jobs in the first year of NAFTA’s inception, and you know what happened? We’ve lost millions of jobs since then. We’ve lost 90,000 manufacturing facilities in the United States since the inception of NAFTA. That’s 1,800 manufacturing plants, per state.”
Fain didn’t mince words. He was clear and direct in support of Trump’s tariffs. Let’s examine why he supports this part of the president’s agenda.
Trump’s Tariffs: How Will it Help U.S. Jobs
Let’s consider a hypothetical. Assume Country A (a foreign trading partner with the U.S.) places a 20% tariff on imports of U.S. autos. Further assume that the U.S. places a 5% tariff on auto imports from Country A. Because of the disproportionately higher tariff rate imposed by Country A, U.S. automakers will sell less product to this trading partner. If the tariff rates were the same, the two countries would be on equal footing and the market would determine which country’s autos sold the most. In short, the U.S. has many trading partners that impose a higher rate on U.S. exports than the U.S. charges on imports from those countries. Fain also challenged the host to name any president in the past 25 years that has addressed the trading disparity.
If U.S. companies sell more product to our trading partners, it will translate to additional jobs for Americans. It will also place an upward pressure on wages. Thus, there would be more jobs and better wages, an issue on which everyone should agree.
The president’s tariff strategy will also cause companies to move manufacturing back to the U.S. to avoid tariffs. This has already begun as I mentioned in a previous Forbes article, “Trump’s Tariffs AND Trade: Uncertainty, Chaos, or Brilliance?” Taiwan Semiconductor, the largest semiconductor manufacturer in the world, drug maker Eli Lily, Apple are all planning major investments in the U.S. and there will most certainly be more to come. As these companies move production facilities to the U.S., it will create more good paying jobs for Americans.
Trump’s Tariffs: The Downside
There is a short-term downside to the president’s tariff policy as articulated by Democrats. Democrats, when asked about Trump’s tariffs, point to the confusion and chaos from the president’s on-again, off-again tariff approach. That is true. Uncertainty on such an important issue causes corporations to delay hiring and expansion plans. If this type of wavering were to continue, companies may feel pressure to cut expenses, and labor costs are the major expense for many companies.
In the short-term, Trump’s tariffs will likely cause some measure of pain. In the intermediate- and long-term, however, it should make America much stronger financially, increase the number of available jobs, and create better pay for American workers. If you find yourself out of work due to cuts in staffing in the federal government, you will probably not like or appreciate what has transpired thus far. I understand that. And yes, the process could be improved. However, if things unfold as expected, many displaced federal workers could find ample opportunity in the new jobs that are coming. Unfortunately, those new jobs may take a while to materialize.
Will Sean Fain’s comments resonate with the UAW membership? There are many Democrat members of the union, but if Trump’s tariffs do help American auto workers, it may be the catalyst that changes the makeup of the UAW. Could the UAW become aligned with the Republican party? That may be a stretch, but it is an interesting notion. In one of Sean Fain’s concluding remarks, he said, “…..NAFTA sucks,” a sentiment share by those familiar with trade policy.
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