Sign In or Create an Account.

By continuing, you agree to the Terms of Service and acknowledge our Privacy Policy

Podcast

The U.S. Auto Industry Wasn’t Built for Tariffs

Rob and Jesse talk with former Ford economist Ellen Hughes-Cromwick.

The Ambassador Bridge.
Heatmap Illustration/Getty Images

Over the past 30 years, the U.S. automaking industry has transformed how it builds cars and trucks, constructing a continent-sized network of factories, machine shops, and warehouses that some call “Factory North America.” President Trump’s threatened tariffs on Canadian and Mexican imports will disrupt and transform those supply chains. What will that mean for the automaking industry and the transition to EVs?

Ellen Hughes-Cromwick is the former chief economist at Ford Motor Company, where she worked from 1996 to 2014, as well as the former chief economist at the U.S. Department of Commerce. She is now a senior visiting fellow at Third Way and a senior advisor at MacroPolicy Perspective LLC.

On this week’s episode of Shift Key, Rob and Jesse chat with Ellen about how automakers build cars today, why this system isn’t built for trade barriers, and whether Trump’s tariffs could counterintuitively help electric vehicles. Shift Key is hosted by Jesse Jenkins, a professor of energy systems engineering at Princeton University, and Robinson Meyer, Heatmap’s executive editor.

Subscribe to “Shift Key” and find this episode on Apple Podcasts, Spotify, Amazon, or wherever you get your podcasts.

You can also add the show’s RSS feed to your podcast app to follow us directly.

Here is an excerpt from our conversation:

Jesse Jenkins: I hear often that we’re also sending parts back and forth as well — that particularly near the border with Canada, we have manufacturing parts suppliers on both sides of the border. So it’s not just the final car, it’s also pieces of the car going back and forth. How does stuff move around in this sort of complicated trade network between, Canada, the U.S., and Mexico?

Ellen Hughes-Cromwick: There is a lot of back and forth, and as you mentioned, a lot of the automotive analysts track the travel of not just the vehicles, but the parts. And the latest estimates show that in some cases, we’re going back and forth across the Ambassador Bridge here in Detroit, you know, six, eight times.

So when you say all of a sudden, as of tomorrow, I’m going to put a 25% tariff on that — I mean, that basically shutters businesses. You can’t absorb a 25% hit, especially if it’s a part or an assembled vehicle. Part of that 25% you could probably absorb, but for the thin margins that parts suppliers work for day in and day out, I mean, there’s just no way. You’re better off shuttering your business. I hate to say that, but you know, you just can’t make the equation work, with a 25% hit.

Jenkins: So this is hypothetical structure, I don’t know if this is exactly right, but so you might have engine parts manufactured in Michigan being sent to Windsor, Ontario to assemble an internal combustion engine. And then it goes back to a plant somewhere else in the U.S. to be assembled into a vehicle. Maybe you get the glass from somewhere for the windows, you know, these are all moving back and forth on a regular basis after so many years of free trade agreements between the two countries, or the three.

Hughes-Cromwick: That’s right. That’s right. And again, coming back to Michigan, because we’re so close to the suppliers in Canada, and we have the lion’s share of automotive suppliers, especially small and mid-size suppliers — so the tier two, tier three. They’re supplying to a tier one big supplier like Magna or Borg.

So you’ve got a lot of these tier two, tier three suppliers in Michigan. Well, why? Because they’re getting a part from a Canadian supplier, putting it into theirs. And maybe that’s a component that goes into an internal combustion engine that’s being produced.

This episode of Shift Key is sponsored by …

Download Heatmap Labs and Hydrostor’s free report to discover the crucial role of long duration energy storage in ensuring a reliable, clean future and stable grid. Learn more about Hydrostor here.

Music for Shift Key is by Adam Kromelow.

Green

You’re out of free articles.

Subscribe today to experience Heatmap’s expert analysis 
of climate change, clean energy, and sustainability.
To continue reading
Create a free account or sign in to unlock more free articles.
or
Please enter an email address
By continuing, you agree to the Terms of Service and acknowledge our Privacy Policy
Climate 101

Welcome to Climate 101

Your guide to the key technologies of the energy transition.

Welcome to Climate 101
Heatmap illustration/Getty images

Here at Heatmap, we write a lot about decarbonization — that is, the process of transitioning the global economy away from fossil fuels and toward long-term sustainable technologies for generating energy. What we don’t usually write about is what those technologies actually do. Sure, solar panels convert energy from the sun into electricity — but how, exactly? Why do wind turbines have to be that tall? What’s the difference between carbon capture, carbon offsets, and carbon removal, and why does it matter?

So today, we’re bringing you Climate 101, a primer on some of the key technologies of the energy transition. In this series, we’ll cover everything from what makes silicon a perfect material for solar panels (and computer chips), to what’s going on inside a lithium-ion battery, to the difference between advanced and enhanced geothermal.

There’s something here for everyone, whether you’re already an industry expert or merely climate curious. For instance, did you know that contemporary 17th century readers might have understood Don Quixote’s famous “tilting at windmills” to be an expression of NIMYBism? I sure didn’t! But I do now that I’ve read Jeva Lange’s 101 guide to wind energy.

That said, I’d like to extend an especial welcome to those who’ve come here feeling lost in the climate conversation and looking for a way to make sense of it. All of us at Heatmap have been there at some point or another, and we know how confusing — even scary — it can be. The constant drumbeat of news about heatwaves and floods and net-zero this and parts per million that is a lot to take in. We hope this information will help you start to see the bigger picture — because the sooner you do, the sooner you can join the transition, yourself.

Keep reading...Show less
Green
Climate 101

What Goes on Inside a Solar Panel?

The basics on the world’s fastest-growing source of renewable energy.

What Goes on Inside a Solar Panel?
Heatmap illustration/Getty Images

Solar power is already the backbone of the energy transition. But while the basic technology has been around for decades, in more recent years, installations have proceeded at a record pace. In the United States, solar capacity has grown at an average annual rate of 28% over the past decade. Over a longer timeline, the growth is even more extraordinary — from an stalled capacity base of under 1 gigawatt with virtually no utility-scale solar in 2010, to over 60 gigawatts of utility-scale solar in 2020, and almost 175 gigawatts today. Solar is the fastest-growing source of renewable energy in both the U.S. and the world.

Keep reading...Show less
Yellow
Climate 101

The Ins and Outs of Wind Energy

The country’s largest source of renewable energy has a long history.

The Ins and Outs of Wind Energy
Heatmap illustration/Getty Images

Was Don Quixote a NIMBY?

Keep reading...Show less
Green