What Trump Got Wrong in Detroit
President Trump went to an auto facility outside of Detroit, Michigan last week to start the process of rolling back successful clean car and fuel efficiency standards that are working to lower American drivers’ fuel bills, reduce our dependence on oil, and cut pollution. Not surprisingly, his remarks contained typical untruths and distortions—including his false allegation of “industry-killing regulations.”
For example, his claim that past presidents did not invite American auto companies to the Oval Office is misleading at best. In fact, Presidents Obama, Bush, and Clinton all hosted meetings with auto executives at the White House.
But more significantly, his claim of “industry-killing regulations” doesn’t pass muster. Strong fuel-efficiency standards have worked to strengthen the auto industry and protect its workers. If strong standards are so bad, then what explains why over the last eight years, the auto industry has added nearly 700,000 more jobs and hit all-time high for sales while also achieving record high fuel efficiency?
The answer is that strong fuel efficiency standards drive innovation, investments, and jobs in designing and building advanced technologies that are needed to ensure the U.S. auto industry is competitive. In Michigan alone, there are more than 200 facilities and nearly 70,000 workers building clean vehicle components.
Twice in the past 40 years, Detroit automakers have been caught flat-footed during oil shocks and needed taxpayer bailouts. Just over six years ago, American taxpayers bailed out GM and Chrysler, eventually providing a total of $80 billion in loans. And now these companies are turning their backs to U.S. taxpayers and consumers who would benefit from lower fuel bills?
In his remarks, the president pointed to job losses in the Michigan auto industry over the past two decades. But what he failed to acknowledge is that the U.S. automakers lost ground to foreign competitors during major oil shocks because Detroit was overly dependent on gas-guzzlers. Consumers flocked to fuel-efficient foreign products and many never went back to buying American. And these foreign cars are now increasingly built in states outside of Michigan and the Midwest.
Automakers are now using low oil prices as an excuse to roll back standards.
As I pointed out in my blog a year ago, strong standards are more important now than ever. With the industry thriving and making billions of dollars in profits, now is the time for automakers to double down on fuel efficiency and the clean car technologies of the future.
Furthermore, as demonstrated by a recent analysis by the investor advisory group Ceres, the Detroit Three automakers, GM, Ford and FiatChrysler, will make billions of dollars in profits while complying with current clean car standards, even when oil prices low. While demand is higher for less fuel-efficient light trucks (including SUVs, CUVs, and pickups) when gasoline prices are low, profits on these vehicles are higher, more than making up for any reduced consumer willingness to pay for the additional cost of the fuel-efficiency technologies.
Attacking these commonsense clean car standards will throw the industry into chaos, with years of litigation and regulatory battles, putting jobs at risk, raising fuel bills, and making America more dependent on dirty oil and more vulnerable to oil shocks. Weakening standards would encourage the automakers to once again engage in short-term, risky behavior. As the president of NRDC, Rhea Suh, asked in a recent op-ed in the Detroit Free Press:
Trump always boasts about how he wants to “Make America Great Again”—but how is having more pollution, higher fuel costs, and greater dependence on dirty oil “great” for Americans?