Why Americans Are Buying More Imported Cars Than Ever Before

Photo by Carl Court/Getty Images
Carl Court/Getty Images

Since 2013 or so, auto sales have been plugging away and are now approaching or exceeding pre-recession levels in terms of volume. In a sign that the underlying economy is still strengthening, transaction prices for vehicles have continued to swell also, lending a greater boon to automakers’ bottom lines. Unfortunately for us, number of cars being sold here but not made domestically is at an all-time high.

The auto market is a sort of bellwether for the import-export health overall. Per the Detroit News, autos — including vehicles, parts, and engines — accounted for more than one-third of the trade deficit. The import-export deficit is defined by the difference between the dollar amount that the country imports, versus what it exports; import more than you export, you have a trade deficit; export more than you import, and you have a trade surplus. Sadly, we’re facing a trade deficit that rose 7.1% (after being adjusted for seasonal fluctuations) to $43.8 billion in June.

In the car industry, this is largely due to the surge in labor in low-wage countries — Mexico, specifically. But before all the blame is pinned on the labor-export practices of a few blue-chip automakers, the problem is made substantially worse by the strongest dollar in years, which makes American goods less palatable for international markets.

U.S. auto imports rose to $29.8 billion, according to the U.S. Census Bureau. U.S. exports of autos, meanwhile, are down by $3 billion in the first half of the year, to $74.8 billion; auto exports hugged the flatline in June at $12.6 billion, up just $62 million according to the Bureau (via Detroit News). Imports handily outpaced the rate of exports — $10.8 billion to $171.5 billion through June, for autos alone.

Source: Tesla

The import-export issue is a hot topic moving into the 2016 presidential elections. Mounting pressure to grow the U.S.’s workforce are demanding proposals from a number of candidates, most prominently Bernie Sanders and Donald Trump.

“Americans bought $254 billion in imported automobiles in 2011, $298 billion in 2012, $309 billion in 2013 and $328 billion last year,” the Detroit News said. “The auto trade deficit is also rising — it was $156 billion in 2013 and $169 billion last year.”

Though companies have been investing more in their local facilities, this is a trend that’s likely to continue. Japan’s campaign to weaken the yen has allowed Japanese manufacturers more flexibility to compete on pricing, while the surging dollar has been hampering exports. On the bright side, most of the best-selling models in the U.S. from Japanese companies — the Toyota Camry, the Honda CR-V, etc. — are primarily built here in the States, with the majority of their parts also sourced domestically.

Strategically, the U.S. government could make moves to devalue the dollar in an effort to boost exports and narrow the trade deficit. This is highly unlikely to happen, however, given that America is largely an import economy that relies considerably on international labor and products.

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