We don’t regard Chrysler, Ford and General Motors as the Big 3 anymore, and for good reason. Detroit’s near-total dominance of the American car market and the U.S. policies that shape it is a fading memory.
They operate in a global industry now. The protectionist rules put in place to guard countries’ native automakers — such as America’s “chicken tax,” the costly legacy of a 1960s trade dispute with Germany — are passe in an era of free trade.
But if the United States finishes the European and Asian trade alliances that are at the core of President Obama’s diplomatic strategy, we could see a new, global Big Three or Gang of Four, in which the members are nations, not companies, and the dominant strategy is lowering trade barriers, not raising them.
The members of the free-trade club would be the auto industry’s old powerhouses: the United States, Europe and Japan, with the possible addition of South Korea. The club’s mission would be to make those markets much less hospitable for China and other countries that won’t do business by the club’s rules.
The events of May gave us a clear view of the potential perks of membership in the new automotive Big Three or Gang of Four and the pitfalls of being left out.
China felt the sting on May 23, when the Geneva-based World Trade Organization sided with a U.S. complaint about Chinese duties on cars and trucks. The duties, set from 2 percent to 21.5 percent, touched about $5 billion worth of U.S. exports in 2013, affecting large-engine models such as the Jeep Grand Cherokee and Cadillac Escalade.
In its ruling, the WTO found that China hadn’t shown that U.S. exports were hurting Chinese businesses before retaliating. It underscored a bigger point: The Obama administration is willing to go after China for the sort of tactics that were once commonplace in the United States but are being phased out by the new gang.
