How Trump's Tariffs Will Harm National Security
Imports improve the economy and benefit the country.
American motorists have never had it so good. Cars and trucks are better than ever, and their prices have barely risen in this century. A host of automakers here and abroad compete fiercely to satisfy every whim a driver could have.
And I do mean every whim. The Subaru Ascent SUV offers eight seats but 19 cup holders. Last year, The Wall Street Journal reports, Ford filed a patent application for "a gyroscopic cup holder to keep a drink upright while accelerating, braking or 'while the vehicle travels upward at an incline.'"
These developments are more remarkable when you consider that the first car with built-in cup holders didn't arrive until 1983. Until then, vehicles were only slightly less austere than a stagecoach.
Today's cars also feature other innovations that even the Jetsons could not have imagined—backup cameras, navigation devices, air bags, collision avoidance systems, TVs, and much more. Anything people desire, it's safe to say, automakers are either providing or figuring out how to provide.
But it appears drivers are about to be banished from this asphalt Eden. The Trump administration has begun an investigation to determine whether imported passenger vehicles undermine national security. It argues that when Toyota or Volkswagen sells you a car that was built abroad, it puts Americans at risk.
Wrong. In the first place, we don't require a domestic supply of RAV4s to fight the next wars. In the second, we don't go begging our enemies for shipments of passenger sedans and crossovers. We buy them from our allies, who have a stake in our well-being.
The only way Commerce Secretary Wilbur Ross can treat auto imports as a national security matter is to claim that they damage our economy. "Without a strong economy," he claims, "you can't have a strong national security."
Oh? The Soviet Union was a superpower even though it was notorious for making shoddy consumer goods—and never enough of them. North Korea, which suffers chronic food shortages and a miserably low standard of living, presents a serious military threat to South Korea, Japan, and even the U.S., which are economic giants by comparison.
But the bigger flaw in Ross' argument is the assumption that imports harm the economy. In fact, they enlarge it and invigorate it while improving the welfare of consumers and businesses. A nation that produced everything for itself would be a materially poor one.
International trade lets us acquire more goods and services at lower costs. It makes the nation wealthier, which makes it possible to invest more in the military, intelligence agencies, and other institutions that protect us from enemies foreign and domestic.
Slapping foreign-made autos with a 25 percent tariff, which is what the administration has in mind, would only impoverish us. It would raise the price of cars and trucks—not just imports but also domestic ones. If the price of a German car were to jump, makers of comparable American models would be free to raise their own prices without fear.
Trump's tariffs would undoubtedly be passed on to consumers. A new RAV4, which currently goes for about $25,000, would probably go for about $31,000. Luxury cars would get an even bigger increase. An Audi A6 sedan's price, now around $50,000, would jump by about $12,000.
It's not just new cars that would get more expensive. Used cars would suddenly be in greater demand, pushing their prices up too.
That's not counting the effects of the duties the administration has imposed on imported steel and aluminum, which will raise the cost of passenger vehicles made in this country. It's no tonic for the economy to punish consumers in this way.
Motorists who need to replace their wheels would feel the pain, and so would companies that buy or lease vehicles. But the suffering would not be confined to them.
If consumers spend more on cars, they will have less to spend on other needs. What Ford and General Motors hope to gain, Target and McDonald's stand to lose. Any jobs added in the auto industry will be matched by layoffs in other sectors.
It makes no sense to dole out such pain to our trade partners and military allies. The national security pretext is based on a gross misunderstanding of economics and a myopic disdain for geopolitics.
The administration makes international trade policy as if we don't have friends. At the rate it's going, we won't.
