Here’s a note to the Highland County Press.
Editor:
Commerce secretary Howard Lutnick asserts that NAFTA allowed U.S. automobile producers to “screw” American auto workers by shifting auto-industry production to Mexico and Canada (“Trump Cabinet members: Tariff plans are working; tariffs could eliminate federal income tax for those earning less than $150,000,” March 20). Mr. Lutnick’s assertion is difficult to square with the facts.
While employment in the U.S. auto industry has fallen since NAFTA took effect on January 1, 1994, production has risen. Today (February 2025), we Americans produce 71 percent more motor vehicles and parts than we produced in December 1993. This auto-industry employment decline is caused, therefore, not by production shifting abroad, but by improved worker productivity. This improved productivity, in turn, results from advances in technology as well as from the greater specialization encouraged by the NAFTA-enabled integration of the U.S economy with those of Canada and Mexico.
And according to economist Gordon Hanson, the improved efficiencies and lower production costs made possible by NAFTA help U.S. auto producers better compete globally, including against Chinese automakers.
It’s discouraging that Secretary Lutnick and other top policymakers are so very ignorant of basic economic realities.
Sincerely,
Donald J. Boudreaux
Professor of Economics
and
Martha and Nelson Getchell Chair for the Study of Free Market Capitalism at the Mercatus Center
George Mason University
Fairfax, VA 22030
