[[link removed]]

A WORLD BEYOND TARIFFS  
[[link removed]]


 

Luis Feliz Leon
April 17, 2025
The American Prospect
[[link removed]]


*
[[link removed]]
*
[[link removed]]
*
*
[[link removed]]

_ The United Auto Workers weren’t always in favor of tariffs; they
earlier supported cross-border coordination to support better jobs and
a peaceful future. _

,

 

In 1966, at the height of the labor movement’s postwar power, Walter
Reuther, then president of the United Auto Workers, helped establish
the first four “World Auto Councils.” Workers at General Motors,
Volkswagen-Daimler-Benz, Fiat, and Chrysler (now Stellantis) could now
meet across borders and, it was hoped, establish common international
contract expiration dates.

The plan fell short of an international bargaining agreement, but the
unions hoped it would “strengthen the hand of each union in the
contract negotiations of its own country,” said World Auto Councils
coordinator Burton Bendiner in 1978.

In 1971, French GM workers who supplied gearboxes and transmissions
for the company’s European operations went on strike. They
coordinated with their counterparts in Germany’s IG Metall and the
UAW to pressure GM management. They refused work that management had
diverted from a struck plant and created a common strike fund. The
French union, said Bendiner, was able to draw strength from the more
powerful UAW.

imilarly, when Ford workers in Britain went on strike in 1971, their
counterparts in West Germany refused to pick up the slack with
overtime. This increased striking workers’ leverage at the table
while avoiding the legal challenges a sympathy strike would have
provoked.

Instead of letting companies pit plants and workers against each
other, unions in France, Belgium, Austria, Italy, and Germany
negotiated a “multinational-union agreement” that forced their
common employer—a Belgian and French glass company—to distribute
work among subsidiaries in different countries. This pointed to an
international vision of economic development and job creation.

The UAW was championing solidarity, not competition for scarce jobs.
The common target was the multinational corporation.

AN OUTSIZE ROLE FOR TARIFFS

The UAW’s 1970s drive for global coordination to take on
multinationals is a far cry from its current posture, which gives
tariffs an outsize role.

“We have a long history of supporting the use of auto tariffs well
before Trump ever stepped foot in the White House,” wrote
[[link removed]]
union president Shawn Fain in an op-ed in _The Detroit News_,
maintaining that the tariffs may bring some auto jobs back to the U.S.
“Thankfully, with new tariffs, the new Stellantis corporate
leadership has an opportunity to invest in American manufacturing and
get UAW members back to work.”

We’ve seen some signs of this in action. The Japanese auto company
Nissan has considered
[[link removed]]
shifting production to the U.S. in response to Trump’s tariffs.
It’s been in Mexico since 1961, employing 15,000 workers. However,
Stellantis actually temporarily laid off 900 autoworkers
[[link removed]]
at U.S. facilities after Trump announced his April 2 tariffs,
including layoffs in Indiana and Illinois, while giving Wall Street a
lucrative multibillion-dollar dividend
[[link removed]].

The UAW is arguing for destroying the neoliberal free-trade regime—a
worthy goal. But if the primary tool for doing that is tariffs, the
vision is a narrow one, and success is unlikely
[[link removed]]
in an unpredictable economic climate.

The shift in the UAW’s focus from multinational bargaining to
tariffs dates back to the 1970s, when an employer counteroffensive got
its bearings, culminating
[[link removed]]
in 1981 with the destruction of the Professional Air Traffic
Controllers Organization under President Reagan. As inexpensive
imports flooded the U.S., the UAW was the last holdout opposing
tariffs among unions in labor-intensive industries, preferring a
combination of support for unions in developing countries and
industrial policy to maintain sufficient levels of investment to avoid
job losses.

Tariffs and trade enforcement are tools to protect domestic jobs and
industries, but there are other methods to do so. Since the 1970s, the
U.S. has allowed multinational corporations to abandon domestic
investments. We can learn from the UAW’s own labor history.

And we can also learn from China, while rejecting its authoritarian
state-led growth economic model and centralized political party. When
a company threatens to leave China, it must apply for a permit, which
is typically slow-walked, and it must pay out
[[link removed]]
workers’ wages for one or two years. The company also risks losing
the factory, including molds and other intellectual property. While
China is experiencing a “China shock
[[link removed]]”
of its own, particularly among textiles and other labor-intensive
jobs, the shift is more gradual and less disruptive.

In the U.S., by contrast, no penalty would ever be big enough when a
company wants to increase its stock price by offshoring. So the only
credible countermeasure is a stronger labor movement committed to
practical cross-border solidarity, fair enforcement mechanisms in
trade agreements, and government support for rebuilding the industrial
base to transition to a climate-friendly future.

Expand
[Feliz Leon-Autoworkers 041725 2.jpg]
Jose Juarez/AP Photo

United Auto Workers President Shawn Fain acknowledges the crowd at a
Bernie Sanders rally in Warren, Michigan, March 8, 2025.

A ZERO-SUM CALCULUS

Since the 1980s, the auto industry has been integrated along
international supply chain networks, especially for parts. In 2023,
Mexico employed
[[link removed]] 847,140
auto industry workers, representing 17 percent of all manufacturing
employment in Mexico. Parts account for 84 percent of these jobs,
while auto assembly constitutes 13 percent. That same year, U.S. auto
manufacturing, including vehicles and parts, peaked
[[link removed]]
at one million jobs, but most of the growth over the past 16 years
went to the non-union sector, which produced
[[link removed]]
4.9 million vehicles to 4.6 million by the Big Three. Employers
haven’t drastically cut union jobs in the U.S. as much as they have
added more non-union ones.

The 2018 U.S.-Mexico-Canada Agreement (USMCA) attempted to protect
[[link removed]]
the continental integration of North America from China. It also
attempted to equalize wages between Mexican, Canadian, and U.S.
autoworkers.

Auto companies, which have more plants than they need
[[link removed]],
have a bargaining advantage because they can easily add and subtract
shifts and lines at each plant, undermining workers’ bargaining
power across borders. The UAW wants to restrain capital mobility and
increase its bargaining power when auto bosses threaten to offshore
jobs and establish runaway shops abroad. But it is trying to do this
not by coordinating with other unions abroad, but by erecting trade
barriers to compel the companies to reshore jobs in the U.S.

The UAW argues that tariffs could force the U.S. auto industry to
bring back jobs from Mexico and Canada, though the union isn’t
explicit about job losses to Canada’s unionized autoworkers. But if
Mexican workers make on average $3 an hour, would a 25 percent tariff
be enough incentive for auto companies to stop producing in Mexico?
What about the savings they get from manufacturing in Canada, with its
weaker currency and comprehensive national health insurance? Then
there’s question of how deeply integrated auto industry is globally.
About 46 percent of GM’s U.S. sales come from imports, according
[[link removed]]
to Bloomberg. Of its 1.23 million imports last year, 400,000 came from
South Korea, including the budget-friendly Chevy Trax and Trailblazer,
which are made there.

When Fain says, “If the Big Three alone just got their currently
active plants up to 100 percent capacity, they could add 50,000
jobs,” the conversation has shifted to a zero-sum calculus. Without
an increase in car sales—a dim prospect with the world economy
tipping into recession—Fain’s statement is tantamount to “take
their jobs and give them to us.”

A more internationalist perspective would argue for a new industrial
policy focusing on climate change: What new industries are emerging?
How can unions shape them, organize, and grow these new sectors? The
Biden administration started to do this with the Inflation Reduction
Act, the CHIPS Act, and the bipartisan infrastructure law
[[link removed]],
but now all of that is either on hold or in a precarious state
[[link removed]].

The well-being of U.S. autoworkers cannot come at the expense of
workers in Canada and Mexico, as well as those in Asia or anywhere
else.

EQUALIZING LABOR COSTS

The UAW is rightly seeking to equalize labor costs across the
unionized auto industry—especially in the South, where the companies
flocked
[[link removed]]
for discounts in labor costs and subsidies. But when companies seek to
offshore plants in search of lower production costs and higher
profits, they can still go further south to Mexico.

Take Volkswagen, where the UAW won a union election a year ago and is
bargaining a first contract in Tennessee. Volkswagen has scaled back
production by eliminating one shift out of three, moving production of
the ID.4 electric SUV to Mexico, and offering a buyout package during
bargaining without consulting the union. The company is also denying
workers company-paid health care and Veterans Day off. “Volkswagen
is now outright refusing to honor those who fought for this country,
including the memory of those brave Americans who died 80 years ago
liberating Volkswagen’s Wolfsburg factory from the Nazis,” said
[[link removed]] Fain.

After the UAW won record-setting contracts at the Big Three automakers
in 2023, Stellantis began shifting production from the Warren,
Michigan, truck assembly plant to Mexico. A thousand UAW members were
laid off there six months ago
[[link removed]].

As difficult as it is to equalize labor costs within the U.S.,
that’s the very challenge the UAW must meet across borders if it is
to stem the flow of runaway shops to Mexico. The UAW has signaled a
willingness to take some initial steps in that direction. “A new
trade deal for North America should have a manufacturing minimum
wage,” said Fain on the April 10 Facebook livestream. “Workers on
two sides of a border should not be competing with one another in a
race to the bottom.”

Since the signing of the North American Free Trade Agreement in 1992,
wages in Mexico and the U.S. have plummeted as bosses threatened to
close plants. The USMCA makes a nod toward raising Mexican wages. It
requires that vehicles and parts manufactured anywhere in North
America must contain 40 to 45 percent labor content produced by
workers earning at least $16 an hour.

This rule was supposed to be phased in over five years. But there’s
a loophole: The minimum applies on a per-company basis. As long as a
company has some production in a high-wage country, the U.S. and
Canada side of the supply chain can fulfill
[[link removed]]
that requirement.

The UAW wants to tighten the loophole and make rules of origin
enforceable in the renegotiation of the USMCA. About 8 percent of
vehicles and 20 percent of auto parts exported from Mexico to the U.S.
violate
[[link removed]]
the USMCA. Another calculation
[[link removed]]
finds that 93 percent of autos are compliant, while only 63 percent of
parts are. So when Fain says stronger enforcement is necessary when
the USMCA is negotiated in 2026, he’s correct.

Unionized Volkswagen and GM plants in Mexico pay workers $7 an hour.
“Wages could grow even faster if the UAW would assist [Mexican
autoworkers union] SINTTIA and other independent unions at Nissan,
Audi, Volkswagen in organizing and collective bargaining, including
using their strike fund,” said Jeffery Hermanson, director of the
International Union Educational League, a nonprofit organization
supporting unions in Mexico and the Global South.

Expand
[Meyerson-UAW VW 042224.jpg]
George Walker IV/AP Photo

Volkswagen automobile plant employees celebrate as they watch the
results of a UAW union vote, April 19, 2024, in Chattanooga,
Tennessee.

INTERNATIONAL AUTOMAKING

Ford and GM have been assembling vehicles in Mexico since the
mid-1930s. Decades before NAFTA wreaked devastation on both sides of
the border, the UAW was aware that greater international coordination
was the key to equalizing working conditions and standardizing labor
costs.

By the 1970s, Volkswagen, Renault, Peugeot, and the Big Three had
large operations in Brazil, Mexico, and Venezuela. Chrysler had
subsidiaries in Peru, Venezuela, and Iran. The UAW responded to that
global spread through hosting educational events to discuss bargaining
priorities, as well as plant visits in Argentina, Brazil, and Mexico,
among others. Through these exchanges, Bendiner said, European and
North American unions assisted counterparts in these developing
countries in framing collective-bargaining demands.

But automakers responded by starting to cluster
[[link removed]]
non-union plants around highways I-65 and I-75 corridors in the 1980s,
increasing from less than one-third in 1979 to more than one-half in
the 1990s, according to James Rubenstein
[[link removed]]’s _The
Changing US Auto Industry_. Even before NAFTA, the Big Three reduced
their capacity to produce autos by more than one-third during the
1980s and early 1990s, “with more plant closures than even during
the Great Depression,” as Rubenstein puts it. The only workforce
growth
[[link removed]]
would come from non-union international automakers clustered in the
South.

In the 1980s, Mexico imposed
[[link removed]]
a domestic content policy requiring that 50 percent of cars built in
the country have domestically produced engines, building an
export-driven auto sector, especially in parts and components. That
was part of the import-substitution strategy of Latin American
countries between 1950 and 1980. By 2008, Mexico had overtaken
[[link removed]]
Canada to become North America’s second-largest producer of light
vehicles, trailing only the United States, and the Great Recession
added even more restructuring, with greater importance allotted to
Canada and Mexico in auto assembly. Manufacturing has historically
been the path out of poverty, and Mexico has followed that development
playbook to grow its economy.

Today, there is no such thing
[[link removed]] as a 100 percent
made-in-America vehicle, with the share of foreign content between 50
to 60 percent. The answer to that reality isn’t to entertain
fantasies of undoing integration, but working across borders to lift
standards and democratize investment, so auto companies can discipline
neither Mexican nor U.S. autoworkers with offshoring.

GOING BEYOND TARIFFS

Between 1979 and 2025, UAW membership dwindled from 1.5 million in
1979 to about 380,000 (though there are still 1.5 million assembly and
auto parts workers in total). In that period, the state became an
instrument of the neoliberal capitalist regime, breaking strikes,
disciplining labor, and handing off corporate subsidies.

In 2023, the UAW set out to organize ten foreign-owned transplants,
including Toyota, Hyundai, and Mercedes, as well as in the
electric-vehicle sector at Tesla, Rivian, and Lucid. The goal was to
organize 150,000 workers, roughly the same number of workers covered
under the Big Three contracts, across 13 automakers and their
joint-venture battery plants. Only the Volkswagen union drive has been
successful to this point.

Sam Gindin, the former research director of the Canadian Auto Workers,
argues that tariffs are a diversion from the fight for everything from
“universal health care and inadequate access to higher education and
affordable housing to the refusal to make unionization a substantive
democratic right.” Gindin writes
[[link removed]],
“Trade matters, but the antagonistic and substantively undemocratic
_domestic_ impact of corporate and government decisions matters
more.”

At the forefront of this is the climate challenge. Historian Nelson
Lichtenstein said that Fain has emphasized Biden’s infrastructure
investments in support of a green transition to support battery and
electric-vehicle plants, while demanding that the rules support good
jobs in these emerging industries. But, as Lichtenstein stressed, Fain
“did not really emphasize that such domestic incentives have to be
there to make any tariff really work. Otherwise, producers, foreign
and domestic, will try to game the system through third countries to
get around the tariffs.”

Even with punitive tariffs in place to shut it out of the U.S. market,
China, the world’s largest car exporter, reached a milestone of $117
billion in total car exports last year, an increase of 600 percent
over five years, according
[[link removed]]
to Bloomberg. BYD, the world’s largest electric-vehicle maker,
topped $100 billion in sales last year, surpassing Tesla. China has
now established electric-vehicle beachheads in European and Australian
markets, as well as Singapore and Thailand. BYD launched the Shark, a
midsize hybrid-electric pickup truck, in Mexico last year. One out of
ten cars sold in Mexico in 2024 was from a Chinese automaker.

“In the fifties, the US was producing about three quarters of all
gas-powered vehicles in the world,” wrote
[[link removed]]
Gindin. “Today China, for reasons that go far beyond trade issues,
makes about the same proportion of the world’s electric vehicles.
The reasons, and so the solutions, go far beyond tariffs.”

TRANSITION WITH OR WITHOUT THE U.S.

Industrial policy to spur the EV transition may be on pause for now in
the U.S. But the transition will happen globally, with or without the
U.S.’s public investment in infrastructure, research and
development, and factory construction. EV expansion in the U.S. is
likely to arrive chaotically and without state planning, perhaps with
tariffs to shield the industry. It is poised to cause extreme
dislocations, especially coupled with the increased automation brought
on by artificial intelligence, which will reduce labor content.

“The biggest lever is going to be the way we design the vehicle for
radical simplification of the labor content,” Ford Motor Company
President and CEO Jim Farley said
[[link removed]]
in a June 2022 fireside chat. “Half the fixtures, half the
workstations, half the welds, 20% less fasteners. We design it because
it’s such a simple product, to radically change the
manufacturability, take the content out and labor, and optimize the
engineering.” Volkswagen is moving in a similar direction, investing
$5 billion into Rivian last year to incorporate technological
advancements into its auto manufacturing.

Fain is correct to say it’s a mistake “to just defend the status
quo,” asking where the pearl-clutching from Wall Street and the
pundits was when 90,000 plants closed in the wake of NAFTA or when
four million jobs were lost in less than a decade in the 2000s.

But Fain is also distorting an uncomfortable truth about auto
manufacturing. In his magisterial biography, _Walter Reuther: The Most
Dangerous Man in Detroit_, Lichtenstein writes that even in the
postwar boom years, a period that saw the real wages for autoworkers
double between 1947 and 1960, “big layoffs and plant closings were a
regular feature of automobile employment. During the recession of
1957-58, it took almost seventeen years’ seniority to retain a
production job in Detroit.”

The answer to high pay and employment instability was bargaining for
better retirement, unemployment benefits, greater protections against
layoffs, and a shorter workweek. That can also be the answer today,
rooted in demanding more from the state for social well-being of all.

History offers some ideas for how we might handle the looming economic
restructuring. When Amtrak was created by Congress in the 1970s,
railway workers who lost their jobs or whose seniority was downgraded
were guaranteed their full wages and benefits for a period equal to
their employment, up to six years. At the time, the UAW wanted to
model the government’s trade adjustment assistance program on
Amtrak. Workers who lost their jobs due to increased imports would
receive similar guarantees, coupled with retraining. The answer to
protectionism was to supplant its allure with the guarantee of full
employment. (In retirement, the UAW’s longtime chief economist, Nat
Weinberg, devised a similar six-to-eleven-year federal provision of
equivalent wages and benefits to loggers who’d lost their jobs due
to the expansion of redwood national forests, similar to the program
devised for railway workers.)

U.S. auto manufacturing in the current era is unlikely to employ tens
of thousands of union workers at the Big Three or elsewhere for very
long. Less than 10 percent [[link removed]]
of U.S. workers, or 8.9 million nonsupervisory and production workers,
are employed in manufacturing in 2025. But manufacturing output
[[link removed]] in the
U.S. today is $2.9 trillion. In 2023, the share of global
manufacturing
[[link removed]]
in overall GDP was 15 percent. This gives manufacturing workers
incredible structural power in the global economy.

As the EV transition creates disruptions and conflicts ripple across
the global auto supply chain network, greater cooperation for growth
in a state-planned green transition would be preferable to a zero-sum
competition for scarce jobs, especially if global economic stagnation
is likely to fuel inflationary pressure and stagflation.

A PEACEFUL TRANSITION

Already, countries across the Global South are experiencing
“premature deindustrialization
[[link removed]],”
argues historian
[[link removed]] Tim
Barker. Industrial employment has peaked, due in part to increased
automation, bringing on a decline even before national income rises as
it did in countries that industrialized earlier.

But instead of tackling these larger problems of slow growth and low
investment in ways that promote workers’ well-being, the Trump
regime seems set on rebuilding the U.S. war machine to fight China,
with tariffs escalating the conflict.

UAW president Fain has linked manufacturing capacity with military
preparedness. “I do believe, when we eliminate our manufacturing
base in this country, we’re going to be in big trouble if we have to
defend ourselves,” said
[[link removed]] Fain.
“Because when you can’t produce anything, you’re opening
yourself up for attack from anyone. I go back to the arsenal of
democracy in World War II: the way that World War II was won when the
United States got involved was, we utilized the excess capacity at our
auto plants in this country to build bombers, to build tanks, to build
jeeps.”

Germany is already retooling
[[link removed]]
auto factories to make components for military vehicles.

But the green transition and the jobs it can create offer another
horizon: government planning to promote global growth and well-being,
environmental justice, and peaceful coexistence, funded through
national investments.

Neoliberal development has created the current impasse. The only way
out is through emerging possibilities from below. The first step is
class unity to reimagine a different state that meets the needs and
wants of its people through an industrial policy oriented toward the
future.

===

Luis Feliz Leon is an organizer, journalist, and independent scholar
in social-movement history making good trouble in New York City.

* Labor; Cross Border Unions; Tariffs; United Autoworkers; NAFTA;
[[link removed]]

*
[[link removed]]
*
[[link removed]]
*
*
[[link removed]]

 

 

 

INTERPRET THE WORLD AND CHANGE IT

 

 

Submit via web
[[link removed]]

Submit via email
Frequently asked questions
[[link removed]]
Manage subscription
[[link removed]]
Visit xxxxxx.org
[[link removed]]

Twitter [[link removed]]

Facebook [[link removed]]

 




[link removed]

To unsubscribe, click the following link:
[link removed]