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President Donald Trump has long blamed harmful trade agreements for the decline of American factory jobs, particularly in the auto sector. In a recent announcement on April 2, Trump proposed a 25% tariff on imported cars, arguing it would boost domestic production and bring back jobs. However, experts argue that the loss of auto industry jobs is largely due to automation and market shifts, not just trade policies. A closer look at the industry’s history suggests tariffs may not have the desired effect.

Tariffs May Not Solve Auto Industry Job Loss

Trump’s tariffs are intended to reignite U.S. auto manufacturing by taxing imported cars, but they ignore key factors contributing to job losses. The decline in U.S. auto jobs started long before trade agreements like NAFTA came into effect. While Trump claims that foreign nations have dismantled American factories, the real causes include automation, market preferences, and poor product quality by U.S. automakers.

Automation’s Role in Auto Sector Job Loss

Jason Miller, a business professor at Michigan State University, points out that automation has played a major role in reducing jobs within the auto industry. As automation technology has advanced, the number of labor hours needed to build a car has significantly decreased. Automation surged during the same time trade liberalization gained momentum, leading many to wrongly attribute job losses to international trade agreements like NAFTA.

According to the U.S. Department of Labor, more people currently work in U.S. auto factories than in 1994, when NAFTA was signed. Data from S&P Global Mobility further confirms that last year, U.S. plants produced nearly twice as many vehicles as those in Mexico and Canada combined. This suggests that automation, rather than foreign competition, has been the dominant force reshaping the industry.

Market Shifts and Poor Quality Contribute to Job Loss

In addition to automation, market preferences have also played a critical role in the decline of U.S. auto jobs. For decades, American consumers increasingly turned to foreign automakers for their superior quality and design. In the 1970s, U.S. automakers dominated the domestic market, selling over 80% of all vehicles. By 2007, that share had dropped below 50%, and in 2024, U.S. automakers held just 38% of the market, according to Wards Automotive.

Patrick Anderson, president of the Anderson Economic Group, argues that the shift away from U.S. automakers was not solely due to foreign competition but was also influenced by domestic issues, including poor design, weak product quality, and labor disputes. Although U.S. automakers have made strides in improving product quality, they have struggled to fully recapture market share.

Foreign Car Manufacturers Shift Operations to the U.S.

As foreign brands gained traction in the U.S. market, many of them set up production plants in Southern states, where labor costs are lower and union influence is weaker. For example, a Volkswagen plant in Chattanooga, Tennessee, became unionized in 2024. Despite these shifts, foreign manufacturers have not drastically reduced employment in the U.S. auto sector.

According to S&P Global Mobility, Asian and European manufacturers produced 4.9 million vehicles in the U.S. last year, surpassing U.S. automakers like Ford, GM, and Stellantis. Tesla, a U.S.-based manufacturer, added another 648,000 vehicles to this total. While foreign competition remains significant, the number of auto assembly jobs in the U.S. has not fallen as much as expected.

The Shift of Auto Parts Jobs

While overall assembly jobs have remained steady or even increased, jobs in the auto parts sector have significantly declined. The rise of automation and outsourcing to countries like Mexico has shifted many of these jobs overseas. S&P Global Mobility data shows that while U.S. plants continue to dominate regional production, Michigan has lost half of its 220,000 auto parts jobs since the 1990s.

The current structure of the auto industry shows that parts plants, rather than full-scale assembly operations, are more likely to relocate back to the U.S. However, experts caution that this shift will not result in a massive employment boom. According to Laurie Harbour, a partner at the consulting firm Wipfli, bringing back parts plants from Mexico will take time, and the job growth will likely be more modest than anticipated.

The Impact of Automation on Future Employment

Even if Trump’s tariffs do succeed in encouraging more auto manufacturing in the U.S., the role of robotics and automation in modern production means that the number of jobs created will be limited. Professor Jason Miller notes that new auto plants will rely heavily on robotics, reducing the need for human labor. Commerce Secretary Howard Lutnick has acknowledged that future factory jobs will focus on operating and repairing robots, a role that requires specialized skills but is still accessible to workers with a high school education.

The proposed tariffs on imported cars may not bring the revival of U.S. auto manufacturing that President Trump envisions. Automation and outsourcing have already reshaped the industry, and the trend is unlikely to reverse. While some job growth may occur, experts warn that the employment impact will not match public expectations. The future of U.S. auto jobs will depend on how the industry adapts to ongoing technological advancements, including automation and robotics.