After the Ford Motor Company announced it was exporting thousands of US jobs to Mexico, where it will manufacture all of its small cars, Presidential candidate Donald Trump has forcefully argued that, if elected president, he would slap a 35 percent tax on Ford’s small cars coming into the United States from Mexico. That tax is called a tariff and critics are in an uproar over such a proposal.
According to CNN, “It would immediately make Ford cars more expensive for Americans.” This was dead wrong and intended to distract you from other answers.
Let’s get one thing straight. If the US imposed a 35 percent tariff on Ford’s Mexican made vehicles it wouldn’t make their vehicles more expensive.
Instead, it would force Ford to keep those jobs in the United States and pay middle class wages. That tariff would also do another thing the corporate propaganda machine doesn’t want you to know about.
Ford CEO Mark Fields told investors, “Over the next two to three years, we will have migrated all of our small car production to Mexico and out of the United States.” Notice Fields told investors what they should expect.
Moving small car production to Mexico was a sales pitch to entice investors into purchasing Ford shares in sufficient numbers to prop up the sliding share price. The announcement failed in its objective to appease large institutional investors such as JP Morgan/Chase and a variety of hedge funds.
So moving small car production to Mexico is pointless since it failed to achieve its goal before the first US job was ever exported.
A tariff on these Mexican made Ford vehicles would keep the jobs in the United States and have no impact on Ford’s share price. In addition, this tariff would help in some small way in the battle against income and wealth inequality that has taken place since tens of millions of US jobs have been exported.
The difference between the old higher US wages and the new lower Mexican wages would go straight into the pockets of rich shareholders via rising Ford profits and higher dividends. In this case, it is a unlikely Ford’s exporting jobs south will impact its already crummy share price. Ford is simply a bad investment.
The tariff is the way to go.
Besides, what’s an economy for? Is it for having shared prosperity for everybody, or for just making super rich people wealthier while impoverishing everybody else?