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Why so few cars qualify as "American-made"

Donald Trump last week launched a trifecta of attacks on major automakers. Having bashed Ford (F) and General Motors (GM) for plans to open new factories in Mexico, the president-elect added Toyota to the list. He said if the Japanese automaker (TM) opened a planned Mexican plant to build Corollas, it would face a “big border tax” of 35 percent on any of those cars sold in the U.S.

Never mind that many Republican congressional leaders are anti-protectionism and would likely be reluctant to pass such a tax. The bigger problem is that the notion ignores the modern realities of the auto industry, in which the flow of cars and auto parts across national borders is built into a system that makes it hard to identify “American” cars.  

This reality is reflected in the annual American-Made Index published by automotive web site Cars.com. In the most recent version, published last June, only eight cars qualified as “American,” compared with nearly 30 vehicles just five years earlier. And of those eight, five are from Toyota or Honda (HMC). Three GM SUVs complete the list.

To make the list, a vehicle must be assembled in the U.S. using at least 75 percent of parts made here as well. (Although under a labeling law, parts from Canada can be included). Once that group  of vehicles is assembled, rankings are determined by sales of individual cars.

The shrinking list reflects the fact that fewer vehicles can meet the hurdle of 75 percent U.S. parts. “It’s the result of globalization,” said Patrick Olsen, editor in chief of Cars.com. “Automakers build cars around the world, and they want to be sure they make parts in enough places that they don’t run out of supply.”

In the case of Toyota and Honda, expanding the range of parts makers has meant adding American jobs. The Georgetown, Kentucky, Toyota Camry plant is adjacent to parts makers, as is the Honda Accord facility in Marysville, Ohio. The Camry and Accord are the top two in Cars.com’s latest American-Made Index.

The rest of the ranking includes the Toyota Sienna, assembled in Princeton, Indiana, and the Honda Odyssey and Honda Pilot, both built in Lincoln, Alabama. The final three GM SUVs, the Chevrolet Traverse, GMC Acadia and Buick Enclave, are all built in Lansing, Michigan.

Following President-elect Trump’s anti-Toyota tweet, the company riposted that “Production volume or employment in the U.S. will not decrease due to our new (Mexican) plant.” The company noted that it has invested nearly $22 billion in the U.S. and has 136,000 American employees throughout 10 production plants and 1,500 dealerships.   

Even in this time of protectionist political rhetoric, U.S. auto shoppers may have moved past strictly nationalist criteria. The Camry and Accord are perennially the country’s best-selling sedans. And in a consumer survey conducted recently by Cars.com, a remarkably low 13 percent of respondents said they based their purchase decision on whether a vehicle is from an American manufacturer.

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    Jerry Edgerton, author of Car Shopping Made Easy, has been covering the car beat since Detroit companies dominated the U.S. market. The former car columnist for Money magazine and Washington correspondent for Business Week, Edgerton specializes in finding the best deals on wheels and offering advice on making your car last.