42 million people were reported to have tuned in to Tuesday’s election results, hoping that the flood of political texts everyone has been receiving would soon come to an end.
With Donald Trump expected to return to the White House
, what does this mean for Detroit and the manufacturing sector as a whole? The market appears to have reacted positively to Trump's election.
This post will explore what we might expect for Detroit’s economy, automotive, and manufacturing industries.
Electric Vehicles and Automotive
All eyes will be on how policies will affect the Big 3 and their push toward electric vehicles (EVs). Over the past four years, government programs from the Department of Energy (DOE) and grants from Michigan's governor have encouraged OEMs to retool and pave the way for a cleaner future. In 2022, there was a significant surge in the EV market, but this momentum came to a dramatic halt in early 2024. Customer demand for EVs was much lower than expected, resulting in missed revenue goals, layoffs, decreased production, and even plant closures across metro Detroit, according to Taldeco.
Trump's most prominent supporter, Elon Musk, has a vested interest in ensuring a bright future for Tesla, and it will be interesting to see how related policies are rolled out. While the shift to an all-electric future is ultimately inevitable, it may not progress as quickly as previously anticipated.
We foresee a renewed emphasis on manufacturing combustion engines while also focusing on hybrids. Detroit’s Big 3 have many considerations to weigh now that initial customer demand for EVs has proven lower than expected.
Trade Policies and Tariffs
One of the main focuses of Trump’s first presidency was trade and tariffs aimed at bolstering U.S. manufacturing. Most of the world took a wait-and-see approach to the 2024 election, including China’s BYD, which delayed investing in a Mexican plant due to the potential tariff threats made by Trump.
The outcome of Trump's push for tariffs remains uncertain. One viewpoint is that this policy could encourage more foreign companies to establish domestic manufacturing, providing more jobs for U.S. workers. On the other hand, some argue that more tariffs would increase production costs, leading companies to raise their prices. It is likely that we will see a mix of both outcomes, which would play out over the course of a few years.
Labor and Employment
Trump has historically advocated for job creation within U.S. borders, which is what we expect in the next four years. His push for tariffs could lead companies to reconsider foreign manufacturing operations, potentially creating more domestic jobs.
We anticipate a boost in blue-collar employment despite the advancement of automation, particularly in skilled trades. It will be important to monitor how unemployment rates and consumer goods prices fluctuate. If Trump enacts tax cuts, we may see an uptick in consumer spending, similar to what occurred in 2020.
Comments