Study: Trump's Proposed Automobile Tariffs Will Destroy 195,000 American Jobs

And if other countries respond with similar tariffs, the U.S. could lose more than 600,000 manufacturing jobs.


Imagine China/Newscom

A new study says the American automobile industry will lose 195,000 jobs over the next three years if President Donald Trump presses forward with a plan to impose 25 percent tariffs on imported cars and auto parts. That's on top of the existing tariffs on steel and aluminum, which are already forecast to whack automakers and other manufacturing jobs.

According to the study, which was released by the D.C.-based Peterson Institute for International Economics (PIIE), a 25 percent tariff on automobiles and auto parts would cause production in those industries to fall by about 1.5 percent and would force the industry to shed around 1.9 percent of its American workforce. The resulting slowdown would affect more than $200 billion in U.S. exports, PIIE projects.

Last week, Trump ordered Commerce Secretary Wilbur Ross to investigate whether the U.S. should slap new tariffs on imported vehicles and auto parts under Section 232 of the Trade Expansion Act of 1962, which allows the president to impose tariffs unilaterally for "national security" reasons. It's the same process the White House used to craft the tariffs on steel and aluminum imports that Trump announced in early March.

It's absurd, of course, to argue that imported cars are a threat to national security.

The auto tariffs "would deal a staggering blow to the very industry it purports to protect and would threaten to ignite a global trade war," Thomas J. Donohue, president of the U.S. Chamber of Commerce, said in a statement.

The American automobile industry employs 50 percent more people than it did in 2011, Donohue noted, and domestic production has doubled in the last decade. According to PIIE, the United States imported $183.8 billion of passenger cars, SUVs, and minivans in 2017, mostly from the European Union ($46.6 billion), Canada ($43.3 billion), and Japan ($43 billion). The U.S. currently imposes a 2.5 percent tariff on cars and a 25 percent tariff on trucks—a hangover from a 1960s trade war with France and Germany.

If other countries respond to American tariffs on automobiles and auto parts with similar tariffs, PIIE projects, the consequences could be even more disasterous. In that scenario, American production would fall 4 percent and 624,000 American jobs would be lost.

"Both scenarios demonstrate how reliant the domestic industries are on imported parts, or intermediate inputs, that are not produced in the United States or that have no easy US-made substitute," PIIE's analysts write. "Consumers could expect to see prices rise for both imported and domestically produced vehicles."

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  1. Well duh. But he isn’t Obama or Hillary so we’ll give him a free pass.

  2. Are these a different set of tariffs that are going to be placed on top of the currently existing tariffs?

    Asking for a friend from the 1970s.

    1. Everyone knows that Reagan’s automotive tariffs in the 1980s destroyed the American auto industry and the entire economy with it. Right ?

      Isn’t Nick always saying that there is no future in manufacturing and the future is Uber and the sharing economy? So why are these jobs there to lose?

  3. I’ve never understood who’s buying all these new vehicles, and what’s happening to all the old ones. We should be buried in automobiles.

    1. Many used cars are bought, exported and sold in the third world.

      1. Also, many used cars are boughtstolen, exported and sold in the third world (as well as eastern Europe and the former Soviet Union

    2. Most cars eventually end up in a recycling center (formerly known as junkyards). They’re stripped of any useful components, and whatever is left gets melted down and made into new steel. It’s the circle of life, automotive style.

  4. I actually think it’s safe to say that Hillary would have been more free-market friendly. For real.


    2. Tony|6.1.18 @ 6:06PM|#
      “I actually think it’s safe to say that Hillary would have been more free-market friendly.”

      Do you post here to prove you’re an ignoramus, or is that just a side benefit?

      1. I don’t say this very often, but I think Tony might actually have a point here. While I cherish no illusions about Clinton’s dedication to free trade, I can’t see her possibly being worse. Trump’s actions seem to be the very dumbest and least likely ways to achieve his stated goals.

    3. It depends. If you mean supporting NAFTA and TPWhatchacallit, perhaps. But I don’t consider those agreements free trade.

      1. Compared to what?

        1. Actual free markets.

          1. I’d really like to see free trade agreements with a lot more “free” and less “agreement”. But there’s no way I can believe any changes Trump seeks to make will go in that direction.

  5. According to the study, which was released by the D.C.-based Peterson Institute for International Economics (PIIE)

    I wonder what former board member George Soros thinks?

  6. try a weekend of not bowing to new studies

    1. Yea, screw studies. Just do whatever you think will work, because hey, common sense and all, right? Actually, we should ask car mechanics to decide on whether auto tariffs will be implemented, because hey, they’re the ones who know about cars, right?

  7. Here’s hoping the job losses are concentrated among Trump supporters. Accountability is always just.

  8. Trump: “I’m going to punish Americans for buying goods from your country!”
    Other countries: “Oh yeah? Well we’re going to punish our citizens for buying goods from America!”

    1. Yeah, it’s basically a race to see who can punch themselves in the nuts hardest.

  9. It’s absurd, of course, to argue that imported cars are a threat to national security.

    “Who could *possibly* have foreseen this takeover of the American transportation infrastructure by artificially-intelligent swarms of imported cars?!”

  10. “The American automobile industry employs 50 more people than it did on 2011….”

    Lol, you mean the year the industry bottomed out from the Great Recession? THAT’S your baseline number? Well, of course it has increased since then. That’s not cherry-picking data; nope, not at all.

    But if you want a more accurate assessment of what has happened to the US automotive industry — and not-so-coincidentally, why Trump is president today — compare the number of jobs today with the number back in 1991, before NAFTA took effect.

    1. *50 percent

  11. Fake news! That picture is from China.

    Why do you want to save China from taxes on Americans?

  12. “Study: Trump’s Proposed Automobile Tariffs Will Destroy 195,000 American Jobs”

    I’m sure Reason will be watching employment statistics to show us whether or not this was an accurate prediction.

    You’ll keep us informed, won’t you, Eric?

  13. “Study: Trump’s Proposed Automobile Tariffs Will Destroy 195,000 American Jobs”

    LOL, The US auto industry only directly employees about 200,000 people. So, I’m calling bullshit on this number.

    1. I’ll amend that, if you include the entire industry, direct suppliers and everyone it’s closer to 600K. Still there’s no frigging way that a 25% tariff would destroy 1/3rd of the jobs in the industry.

      And spouting figures like this just destroys your credibility.

  14. Simply because tariffs are everywhere and always a bad idea, I don’t doubt there will be negative effects from this, but it would have been helpful to link the study, not the home-page of the think-tank involved. Look around there, and there is no mention of auto-related tariffs.
    Again, Trump’s way better than I hoped, but he’s a long ways from anything you could call libertarian. Or even tending toward free-market econ policy.

  15. I saw Trump earlier today whining and crying about how Mexico has taken so many of our factories and how stupid we are for letting it happen, with no hint that he understood those aren’t “our” factories and Mexico didn’t “take” them. His answer to the problem seems to be to threaten that if these companies don’t get their ass back here where they belong he’s going to beat the shit out of them, instead of recognizing that the problem is that Mexico offered them a better deal to locate their factories there. As I understand it, the deal is that a factory in the US importing Chinese materials has to pay a tariff whereas the same factory in Mexico doesn’t, and under NAFTA once the Chinese materials are assembled into a finished product they can be shipped to the US tariff-free. The factories are just looking out for their own self-interest in avoiding the tariffs. And Trump’s response to this is to double down on these tariffs rather than get rid of them in an attempt to get the factories to come back to the US? Sounds about right, because Trump’s no master negotiator, he’s an asshole whose idea of a carrot-and-stick approach is that the carrot is you don’t get the stick and you should be grateful for that. The only way he knows how to deal with people is finding some way to fuck them and then withholding the fucking as long as they stay compliant.

    1. ^^^ 1000%

  16. “A new study says the American automobile industry will lose 195,000 jobs over the next three years if President Donald Trump presses forward with a plan to impose 25 percent tariffs on imported cars and auto parts”

    Trump is negotiating trade deals
    Threats to increase your tariffs are how you get other countries to lower theirs

    1. Very few people have figured this out yet. I realized something a while back: Trump’s greatest advantage is a hostile press. If they were constantly pointing obvious stuff like this out instead of painting him as an unstable madman who acts randomly, his negotiating position would be much worse. So please MSM, keep writing articles about how Kim outsmarted Trump and how Europe and Mexico are in the catbird seat.

    2. Why would we care if they lowered theirs? It’s to their advantage to lower theirs.

  17. Had no one at Reason recognized this is a negotiating tactic?

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  19. Yes, and if my roof leaks I’ll just have to accept that all my possessions will be ruined. Oh, wait! I can repair the roof! There are always options. If a car manufacturer finds that tariffs are raising his costs, he can find another way to source parts. For instance, he can source parts from within the USA, which is the point of the tariffs in the first place. I was in business for over three decades, and all the parts are moving all the time. Anyone who is running their business the same today as they did five years ago, is probably not going to still be in business five years from now.

    We all get that a person, business, or state needs to produce at least as much income as it spends. Or else. Examples of “or else” would be Greece, Venezuela, Cuba, etc. What makes anyone think the USA is different? We have built a lot of wealth over a couple of centuries, but we can’t keep living off our ancestors productivity. If tariffs aren’t the answer, what is? I haven’t seen Nick offer any solutions whatsoever.

  20. How about the Europeans drop their tariffs and we drop our? Same for every other country? How about the Chinese stop stealing intellectual property, and we do likewise?

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