One of those facts that “everyone knows” is that the US auto industry has been crushed by foreign competition. As Adam Ozimek points out in “Myths and Lessons from a Century of American Automaking” (Economic Innovation Institute, August 1, 2025), while the US car industry certainly no longer features large manufacturing plants in the city of Detroit, there are a number of ways in which the US-based industry is doing just fine. Consider some figures:
Here is a figure showing total motor vehicles assembled in the US each year. The current level is a little lower than the 1980s, but the total has not fallen off a cliff.
A more sophisticated measure of auto industry output looks as “motor vehicles and parts.” Also, it looks at “value added”–that is, the value that is created in US production plants not counting imported products–and the industrial production index, which basically looks at physical output as distinct from prices. By these measures, the US motor vehicles and parts industry has had fairly strong growth since about 1990–albeit with a plunge during the Great Recession in 2008-09.
Is this a case where greater output has been accompanied by a dramaticallly rused number of jobs in the industry. Not really. The number of jobs in the motor vehicles and parts industry is down from levels in the 1980s and 1990s, but it still at about one million.
But as you might guess behind these overall numbers are some substantial shifts. For example:
Total motor vehicle and parts employment in the city of Detroit actually fell from 220,000 in 1950 to 100,000 in 1970. But during this time, motor vehicle and parts employment in Michigan, but outside of Detroit, was increasing by even more. In this sense, what many people view as the “glory days” of the US auto industry are actually the same time period when the industry was moving away from its Detroit-based roots.
But a bigger shift was that total US employment in motor vehicles and parts was shifting out of Michigan as well. Again, the “glory days” of the US auto industry in the 1960 and 1970s were a time before the gale-force winds of rising globalization, and also a time when the big US auto manufacturers were relocating to the rest of the US–often to escape what they perceived as a militant Detroit-based and Michigan-based anti-business climate, including conflict-seeking labor unions.
Of course, there’s more to the story. The number of imported cars does rise in the 1980s. But in addition, carmakers from around the world started following the example set by the big US car companies from the 1950s to the 1970s and making cars in non-Michigan, non-Detroit parts of the United States. The result has been substantial disruption for Ford, GM, and what used to be Chrysler but is now Stellantis. But we have come a long way from the claim that “what is good for General Motor is good for the economy.” The competition from imported cars forced the US carmakers to up their game, and both US consumers and the US workers at these foreign-owned but US-based auto plants benefited. It’s worth remembering that the anti-import Trump administration keeps trumpeting plans by foreign investors to build plants here, so it would be odd for devotees of that agenda to see the foreign-owned but US-based car manufacturer as a mistake.
But along the way, the most profitable part of the US auto industry has been light trucks, in part because they have hidden behind tariffs for six decades now. As Ozimek points out:
Originally intended as a temporary policy, a retaliation against Europe for their tariffs on American chicken imports, the United States has upheld a 25 percent tariff on imported light trucks since 1964. The result has been less competition, fewer choices, and higher prices for American buyers of these vehicles. … The light truck tariff reveals the danger of implementing a policy that initially is not meant to be permanent but turns out that way nonetheless. A new protectionist policy can be sticky, leading to political apathy and status quo bias as policymakers accustom themselves to it, fearing the backlash from the protected industry if they try to undo it. In the case of the truck tariff, a policy response in an unrelated trade war ended up remaining in place for more than six decades — and counting.
