Ijaw Dictionary Online

How Automobiles Work


This is a 1993 Chevy Suburban. And this is a 2018 Chevy Suburban. The 1993 one cost $21,000 brand new and 2018
one costs $47,000. But if we adjust the price for inflation,
the 1993 Suburban would cost $42,000 today. Even though the 2018 model comes with modern
features like a back up camera, remote engine start, and ya know – airbags – the cost hasn’t
changed much in 25 years. It’s not just the Suburban — the average
price of new cars has risen only 7% since the early ’90s. While the price for almost all other goods
has increased by 86%. And that, is thanks to NAFTA. “The nations of North America are ready.” “Strengthened by the explosion of growth
and trade” “To recognize that there is no turning back
from the world of today and tomorrow.” When the North American Free Trade Agreement
took effect in 1994, it was the first major trade deal of its kind. The US, Canada and Mexico agreed to eliminate
tariffs, which are taxes on most imported and exported goods. The countries hoped it would increase investments
and that by strengthening Mexico’s economy, it would slow illegal immigration. The trade agreement benefited the
auto industry in particular. It allowed automakers to keep costs down, because cars and auto parts could be traded for free. Well, for the most part. If at least 62.5% of a car’s parts were
sourced from North America, it would be tariff-free. Cars that didn’t meet the requirement, or
were made overseas, would be slapped with a 2.5% tariff. NAFTA also gave automakers the ability to
source cars where costs were lowest. By comparison, a car made in Mexico costs
$1,200 less than one built in the US because labor and the parts are cheaper. “As an industry, we’ve kind of performed some economic
miracles when it comes to keeping cars affordable by being able to source some of those 30,000 parts
from, you know, the least expensive places.” Let’s take this model of a 2014 Ford Mustang
for example. It’s engine was built in the U.S., but it’s
manual transmission came from Mexico. It’s impossible for a consumer to easily
find out where each individual part came from, but it’s likely the doors were molded
in Canada. The speedometer came from Germany or China, which was assembled in the US, but then sent to Canada to be installed into the dashboard. The seatbelts did come from a company in Japan. But the seats were probably made in Mexico. The tires most likely came from South
Korea. In the end, the 2014 Mustang was built in
Detroit, but with only 65% of its total parts sourced from North America. It made the tariff cut. And Ford is in no way the only company who
does this. About three-quarters of the cars sold in the
US meet the standards to avoid tariffs, including most cars produced by the top four auto brands. The US is actually producing more cars now
than before NAFTA. Same for Mexico and Canada. But you wouldn’t know that if you listened
to politicians. “NAFTA was a mistake.” “The single worst trade deal ever made,
by any country, anywhere in the world.” “Instead of creating jobs, NAFTA cost us
jobs.” In the auto industry alone, a third of US
auto manufacturing jobs have disappeared since NAFTA was signed. As the same types of jobs have grown in Mexico. But in reality, that may have less to do with
NAFTA, and more to do with automation. Researchers have found that fewer than 5%
of US jobs lost from sizable layoffs can be blamed on trade with Mexico. But the timing of these manufacturing layoffs,
in lots of different industries, made it easy to point the finger at NAFTA. So while most Americans think the trade deal
was good for the US, those that feel they were directly affected are passionately against
it. And this opposition is why President Trump
is following through on a campaign promise. “A brand new deal to terminate and replace
NAFTA called USMCA. It sort of, just works. MCA.” But this isn’t a much of a new deal. While it’s essentially a re-branding of
NAFTA, it does make one major change to the auto industry. Because it would require cars be made with
75% North American sourced parts. And that 40-45% of those parts must be made
by workers who earn at least $16 an hour. At least 46 and as many as 125 cars sold today, that aren’t taxed under NAFTA, wouldn’t qualify under the proposed USMCA regulations. Our 2014 Mustang likely wouldn’t meet the
new requirements. So if it is implemented, auto manufacturers
will have to decide to just pay the 2.5% tariff or change how they manufacture their cars
sold in North America, even if it increases production costs. “What looks small on paper, when you think about the complexity and how many parts are on every car, it starts
getting out of hand fast.” Prices of those cars could go up anywhere
from $470 to $2,200 dollars in the US. And at these higher prices, roughly 60,000
to 150,000 fewers cars would be sold in the US each year. That would mean job losses. “I don’t want to see our companies leave
and fire our workers. Those days are over.” But the USMCA could actually incentivize car
companies to leave North America. NAFTA made US car companies more competitive
with the global market, and even attracted foreign car companies to build in North America. And if those cars are going to face higher
costs of manufacturing and tariffs – their production might get moved to China or other
countries. Building a car with thousands of parts is
an incredibly complicated process. So while NAFTA has kept cars pretty cheap
to produce, the USMCA could change that. And consumers will likely be the ones to pay
the price.

100 thoughts on “USMCA vs NAFTA, explained with a toy car

  1. Renegotiating NAFTA is the latest in the Trump administration's escalating rhetoric and action around international trade.
    Watch our video on trade wars, which outlines what's at stake: http://bit.ly/2qjliwj

  2. Whoever made this video in October of 2018 needs to go back and find out where all of their mistakes were made, because they made a lot.

  3. This was very good, but I wonder if you have ever worked in a manufacturing environment affected by NAFTA. I worked in a rural area where textile mills closed down. Maybe that's just what happens. Maybe it's the same as when the textile mills in England were automated in the early 19th century. That said, you kind of lost me when you said the inflation doubled the price of that Chevy Suburban, car for car, in 25 years. The real theft is the inflation.

  4. On minute 1:50 that is total bulshit. New Cars cost more in Mexico and have cost more for the last 10 years in comparison to the cars of the same
    Model year and features in the u.s.

  5. Do you really want to trust your life, and the lives of your family, in an automobile put together by the lowest bidder?

  6. Rutt ro. I spread the word as far as I could,but folks just did not listen. Wait until folks realize USMCA workers will be NON-NATION AKA NON NATIONAL WORKERS. COMPANIES CAN BRING IN AS MANY WORKERS AS THEY NEED. ILLEGAL IMMIGRANTS BY MY STANDARD OF READING THE USMCA LITERATURE. COMPANIES CAN ALSO SUE THE GOV. IF THEY WANT MORE NON NATION WORKERS.
    NOW POWER GRID IS A DISASTER,BASICALLY GIVING CANADA AND MEXICO CONTROL OVER U.S.
    POWER TO CONGRESS OVER FEDERAL/STATE/LOCAL LAWS IS ANOTHER ISSUE I SEE WITH USMCA.
    WE MIGHT BE IN TROUBLE HERE. THE BEST PART IS LESS DEPENDANT ON CHINA,HOWEVER UNLESS OUR PARTNERS IN USMCA CONCIDER ALL COUNTRIES EQUALLY AS A CONTINENT LESS THE SEPERATION OF COUNTRY IT MIGHT BE OKAY AND WORK OUT. I D K. TIME WILL TELL. LOCKED IN FOR 10 YEARS. 2400 PAGES OF IFS,MAYBES,BUTS.
    AMERICA MAY BE SACRIFICING OUR OWN SOVERIGNTY HERE.

  7. To be honest I don’t care if the price of a car go up, IF it creates more jobs. So we will see how it plays out, before I make a decision on wether it helps or hurts American workers. A car is expensive ether way you look at it so a bank loan is a bank loan, I know that sounds a little careless about costs. And yes I am a little but like I said. I care more about jobs then how many thousands I pay for a ride 47k is expensive and so is 57k so let’s see

  8. NAFTA sets the example for other industries who will follow suit just like the "downsizing" trend of the 80's. They cleverly use the term "sourcing" not outsourcing which is what it really is which means American workers lose their jobs. I had a good paying job until my job got outsourced to cheap unregulated labor. I could no longer support the American economy and it almost ruined my marriage and my family life. But Democrats and liberal media outlets like Vox couldn't care less because other workers from foreign countries need those jobs more than American workers do!

  9. TL;DR – USMCA will create jobs in the US. NAFTA was a mistake. No one will leave North America, because this is where the economy is booming. Your logic is flawed.

  10. Andrew Yang is the only presidential candidate talking about how automation is taking jobs and we're getting none of the gains of it

  11. VOX has no clue what they are babbling about. Everyone buys cars on a payment plan. Spread 470 bucks over 3 to 5 years, and I defy you to be able to measure the impact. Marketing focuses on the cost of monthly payments, not the cost of the car. $2200 sound like a lot, but in reality, that is a pickup truck that costs $80,000. That is not going to stop someone from buying their new pickup.

    Automation does not really reduce labor. It just improves accuracy of assembly. New cars have very low warranty costs as a result.

  12. Lol remember when every other thing Trump did was also going to be the death of our economy? Yeah I'm not worried about this

  13. Having auto costs rise only 15 percent, inflation adjusted, is a good thing, but hardly a miracle. This is especially true when the difference is from electronic components that collect information on car owners and hastens product obsolescence.

  14. It's meant to save job, but I think it'll make American lose jobs.

    Since it's cheaper to just build them completely in Mexico, they started doing just that and they save enough to compensate for the tariff raise on imports.

  15. I was in d.c. in 93 when that scam on the American taxpayers was passed by this sold off government of ours. Only one thing can bring this country back to its original intention by our founding fathers. THATS A REVOLUTIONARY WAR.

  16. its simple supply and demand really, tarifs are taxes, taxes raise the price point on the balance and that slows down ciclical consumption which is the basis of the economy so yea its bad to tax stuff

  17. A lie repeated a thousand time ends up by becoming a truth. We consumers should keep a watchful eye on our politicians so that we do not let ourselves be carried away by populist demagogues.

  18. So you’re saying you didn’t do your research and are claiming that the Mustang wouldn’t pass new regulations. Pretty ignorant and bold statement.

  19. Things like NAFTA/Globalization are simply big business think tank schemes to skirt labor and wage costs while maximising global profits with the added ability for firms to move money around to avoid taxes.
    EVERYBODY loses except the business, finance, and banking execs.

  20. THEY ARE ALL IN IT TOGETHER. REMEMBER PEOPLE, TRUMP MAY HAVE INTRODUCED THIS BILL BUT YOUR DEMOCRATS, YEST THE SAME DEMOCRATS THAT WERE TRYING TO IMPEACH HIM, DID NOT VETO THIS BILL BUT PASSED IT AND THIS IS SUPPOSED TO BE TRUMP'S PRESIDENTIAL LEGACY. THIS TELLS ME, THIS WHOLE IMPEACHMENT AND THE CORONAVIRUS WAS ALL A PSY OPS, A DOG AND PONY SHOW, WHILE WE WERE DISTRACTED, THEY QUIETLY PASSED THIS BILL. THIS IS BASICALLY OPENING DOORS TO FEDERAL CONTROL, AGENDA 30….WE WILL SOON BE SEEING THE ONE WORLD GOVT, THE NEW WORLD ORDER. SAY GOOD BYE TO THE SOVEREIGN NATION OF THE USA.

  21. The dirt bags in Congress can be thrown out. If you vote. Never vote for the same person term after term. Seniority is corrupt. Throw them out!

  22. I feel like being anti-Trump is alright but when it comes to the point of supporting NAFTA unequivocally, you're in trouble.

  23. Apple doesn't ship iPhone parts around the world 15 times before building the phone. If we centralized manufacturing we could improve productivity and reduce cost. Shipping ain't free folks! You could also train people to do different things so they don't become such expendable one-trick ponies.

  24. One way to archive an economic miracle is to avoid paying $16 dollars an hour to a guy in the USA instead pay a guy in Mexico $8 dollars an hour. And don’t forget to include your nafta version the ban workers from forming unions and make the guy in USA to hate the guy in Mexico.

  25. Who cares if the 2014 mustang doesn't meet the standards. What matters is if the 2022 model meets the standards, and what good car companies (or just good companies) do is adapt and adjust.

  26. Meanwhile in India… If you want to import a Tesla in India get ready to pay upwards of 100% to 300% on each car

  27. 1:11 "The countries hoped [NAFTA] would increase investment and by strengthening Mexico's economy, it would slow illegal immigration."
    3:35 "In the auto industry alone, a third of US auto manufacturing jobs have disappeared since NAFTA was signed, as the same types of jobs have grown in Mexico."
    Economists: "Y'all need to at least be consistent in your priority setting. You said you wanted people doing low skilled jobs to be able to afford cars AND to reduce illegal immigration? Just know that by reducing illegal immigration, there are more low skilled jobs available in the US. But you can't impoverish Mexicans and expect them to stay home. 'Cause and effect'…first year economics…"

  28. So a $30000 car will now cost $30750 and add $12.50 a month to my 5 year loan provided it’s not made with 75% North American, although not necessarily US made parts. So it can have all 75% of parts made in Canada and Mexico

  29. Is it really thaaat bad to reduce the number of cars sold?? Wouldn’t that be muuuch better for the environment?

Leave a Reply

Your email address will not be published. Required fields are marked *