By Mark Gimein
August 12, 2016
Hillary Clinton gives speech at Michigan aerospace plant on Thursday about economics and trade.
Benjamin Beytekin—picture-alliance/dpa/AP Images

Democratic presidential candidate Hillary Clinton on Thursday gave a virtual mirror image of the speech that Donald Trump gave earlier this week. Trump went to Detroit to tell a story of the decline of U.S. manufacturing. Clinton went to a high-tech factory in the suburbs to talk about its rebirth.

There’s one area, though, where Clinton and Trump have some points of agreement: trade. The Hillary Clinton of a few years ago was an advocate of free trade. The campaign has pushed her toward protectionism. The implicit message of Clinton’s speech was that we could make great things in the U.S. and ship them abroad.

And we can! But that’s the funny thing about trade discussion these days: They all take place on Trump’s terms, and the discussion is largely about how the U.S. can make more stuff at home and buy less from abroad. And if every country acted that way — well, you can guess the result.

The protectionist bandwagon is getting pretty full now. There will still be plenty of time to climb on it if you want. But before you do, some questions that may help you gauge if that wagon is really headed in the direction you want to go:

Clinton visited an advanced auto parts factory, right? No, not exactly. She spoke at the plant of a company called Futuramic Tool & Engineering. Futuramic once made parts for the auto industry, but that’s no longer its focus. It’s now, Clinton said in her speech, an aerospace company, making parts for the F-35 fighter plane and the tools that will be used to assemble the next generation Space Launch System Rocket (NASA’s replacement for the space shuttle).

The F-35, that’s a military program, isn’t it? What does that have to do with trade? Yes, the F-35 is indeed a military program. The fighter airplane is also likely to become one of the biggest U.S. exports. A number of partner countries, including Australia, the United Kingdom, and several other NATO members are also supplying parts for the plane. They are now testing it, and will be future buyers when it hits final production. Another buyer? Japan. Japan has already ordered parts from the U.S. that will be used to assemble F-35s in a factory overseas.

Got that? We are buying parts from Europe for F-35s to build here, some of which will be exported back. We are also sending parts to Japan for F-35s that will be built there. Trade gets complicated that way. Every country plays the “make it here if you want to sell it here” game to some degree. That’s part of the reason large-scale projects like the F-35 source components from around the world. The idea, hopefully, is that in the end the best companies in each place get a piece of the business, not that one country will “win” by building everything.

What about private aerospace? The U.S. does have a big private aerospace industry. Most of it, however, is headquartered on the West Coast. In fact, Futuramic recently opened an office there, to be close to Boeing and other companies like Blue Origin, Jeff Bezos’s rocket company. Going to California or Michigan wouldn’t present the same contrast with Donald Trump’s speech, which portrayed Detroit as a desert of failure and decline. Ironically, Michigan has actually been a quiet success story. It’s unemployment rate is now 4.6% —lower than the national average, and lower than those of California or Washington.

Hey, what about cars? Don’t they still make them in the United States? Why didn’t Clinton go to that kind of plant? Yes, there are definitely cars still made in the U.S. Like the Toyota Camry. Cars.com, which compiles an “American Made” index each year, found eight cars in 2016 that were composed of at least 75% U.S.-made parts. Five of those were made by Toyota or Honda. (Did we mention that trade was complicated?) In 2015, it was just seven. A decade ago, it was more than 20. So, basically: Fewer cars are made primarily in the United States. Most of the ones that are are what many folks still think of a “Japanese cars.”

Didn’t Clinton say Trump could make his suits and shirts here? She did, and he could. On her campaign website, Clinton provided a list of U.S. makers for all the stuff sold under the Trump name. (Incidentally, Trump doesn’t really make it all; he just licenses his brand.) There are a lot of great manufacturers on that list, some venerable names you might have heard of.

It’s a clever conceit, but here’s the big caveat: A lot of the U.S.-manufactured apparel is pretty high-end items. Trump collection suits run from $144 to $280 at Amazon.com; a typical Hickey Freeman suit is about $547. Many of the shirts made in the U.S. are finely tailored, intriguingly designed — and much, much more expensive than you are probably used to paying. Dress shirts from Mizzen+Main in Dallas, are priced at $125; ones from O’Connell’s in Buffalo, N.Y. will generally set you back about $125 to $165.

Nothing wrong with that. There are good reasons to make shirts domestically. For instance, you can maintain an extensive catalog of styles, then quickly make and deliver a new batch of the most popular one. If you can afford these shirts, great. But most Americans don’t spend that much (and even most of those who do probably get some cheaper ones, as well). What’s left of the U.S. apparel industry specializes in a fairly high-end product. If you think it’s better that all our apparel should be made in the U.S., be prepared for much higher prices.

You may wonder, by the way, about those countries that do make cheaper apparel, like Bangladesh. Do they buy anything from the United States? Oh, yes, they do. And at this point you might even guess what: Biman Bangladesh Airlines is waiting for a delivery of new Boeing 787 Dreamliners.

But all that only works if other countries don’t put up barriers to U.S. products, right? And do things like protect our intellectual property? Sigh. Yes, that’s right. Actually, the Trans-Pacific Partnership was about taking down those barriers. It would facilitate the kind of trade in which a U.S. maker buys some parts from Asia, others from the United States, and ships the finished, high-tech product around the world — just like that F-35. In Michigan, Clinton unequivocally promised to kill it: “I oppose it now, I’ll oppose it after the election, and I’ll oppose it as president.”
It would be hard for her to step back from that in the Oval Office. It’s really a read-my-lips-no-trade-deal moment. Does that mean the infamous TPP is dead in a Clinton presidency? Well, maybe. But in the business world there’s a huge amount of backing for something like the Trans-Pacific Partnership. Sure, it might get chopped up, renamed, and partially “renegotiated,” but there’s a good chance we’ll have a trade deal of some sort, just called something else.

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