President Obama recently said that opponents of the Trans Pacific Partnership (TPP) trade treaty do not understand it will benefit US automakers. The president cited as anecdotal evidence the fact that anyone inside the Washington Beltway can attest that Japanese cars are ubiquitous. By contrast, the president pointed out that in Tokyo, very few American cars will be seen. As people at Boraie Development understand it, by adopting the TPP trade deal, Japanese markets will open up to US automakers and translate into a boom in new sales. Given this fact, it would appear as a given that the big three automakers, Ford, Chrysler, and GM, would be vigorously behind the TPP agreement and by extension the United Auto Workers (UAW) union.
It isn’t true. This is because Japan does not impose any tariffs on American made cars. By contrast, the United States has tariffs on Japanese cars to limit their sales. The TPP agreement will force the United States to drop those tariffs and further hasten Japanese auto sales in the United States at the expense of domestic cars. In addition, the big three do not support TPP because it fails to address the main reason why American cars do not sell briskly in Japan: currency manipulation. This allows Japan to make their cars cheaper to Americans while making the US cars more expensive to Japanese consumers. In fact, this is the very reason why real estate mogul Donald Trump is against TPP.