Free Trade

Trump Still Determined to Slap New Tariffs on Auto Imports

White House advisors are worried that "he could get impatient one day and force their hand like he did with the steel and aluminum tariffs."

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JONATHAN ERNST/REUTERS/Newscom

President Donald Trump is reportedly chomping at the bit to impose tariffs on foreign-made cars despite warnings from the auto industry, from economists, and from his own advisers that the move could cost American jobs, hike car prices, and increase friction between the U.S. and Europe.

There is no sense that the tariffs are imminent, but Trump remains "jazzed" about the idea of import taxes on foreign cars; White House advisers are worried that "he could get impatient one day and force their hand like he did with the steel and aluminum tariffs," reports Axios' Jonathan Swan.

Trump has been talking about putting tariffs on cars since well before he became president, but the threat of auto tariffs ramped up during the spring and summer. The Commerce Department held hearings on the proposed tariffs in July, around the same time that the White House instructed Commerce Secretary Wilbur Ross to find a "national security" justification for tariffs on imported cars—something that is necessary for the president to impose tariffs unilaterally, under the terms of the Trade Expansion Act of 1962. That's the same process used to impose the tariffs on steel and aluminum, which Trump ordered in March after months of investigations and hearings. The deadline for Ross to complete his report is early next year.

In a speech given in Berlin on Monday, European Commission President Jean-Claude Juncker sounded a pessimistic note about trade relations with the U.S., according to Bloomberg. Juncker and Trump had reached a temporary truce in July that prevented further escalations of the trade war between the U.S. and the E.U., but Juncker now says he expects that truce to expire shortly after the new year.

Trump's justification for auto tariffs seems to rest—much the justification for the steel and aluminum tariffs—on two very different arguments. Politically, he seems to believe the auto tariffs are powerful leverage that can be used to squeeze other concessions out of Europe and other trading partners. At a political rally in West Virginia during August, Trump bragged about telling Juncker how America would soon "put a 25 percent tax on every car that comes into the United States from the European Union."

That tax, of course, will be paid by Americans buying those cars. Still, the threat of tariffs has worried European officials, because they could disrupt international supply chains and harm American sales of European-made cars. If sales drop, American automakers could have to cut jobs too.

An analysis from the Center for Automotive Research, an industry-backed group, says a 25 percent tariff on automotive parts imports will result in up to 2 million fewer vehicle sales in the U.S., triggering more than 714,000 job losses in the industry and reducing U.S. economic output by $59 billion.

Trump's second argument for the tariffs is even more nonsensical. Under the terms of Section 232, there has to be a national security justification for the auto tariffs. There is no way that imported cars are a national security threat. At the July hearing hosted by the Commerce Department—a hearing held with the goal of finding such a justification—more than 40 people representing automakers, dealerships, and specialty equipment manufacturers repeatedly told the department that tariffs will increase costs for raw materials, which will hike prices for consumers, which will reduce car sales, which will cost manufacturing jobs, all without any benefit to national security.

Even if Trump listens to his advisers and holds off on the tariffs, the auto industry and consumers are likely to start feeling the pain from other aspects of Trump's trade policy. Tariffs on Chinese imports will hit many of the roughly 30,000 parts used to assemble vehicles at American automaking facilities, and higher component prices will increase the final sticker price on American-made cars.

With direct tariffs on cars and car parts, the effect will be more pronounced. A July analysis from the European Commission estimates that a 25 percent import tax on foreign cars would increase sale prices to American consumers by between $1,400 and $6,900, depending on the value of the vehicle. Similarly, the Center for Automotive Research says the average car sold in the U.S. would cost $4,400 more after tariffs, while the tariffs would also increase the price for American-made cars by about $1,200.

For much of the year, it was at least possible to give Trump the benefit of the doubt about the threatened auto tariffs. It was conceivable, after all, that he was just using them as a NAFTA renegotiating ploy. But if Swan is correct that Trump's "zest for car tariffs" has kept swelling even after the NAFTA negotiations are done…well, you might want to buy that new car sooner rather than later.

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  1. But Boehm, has the economy collapsed?

    I was assured that the USA economy would collapse because of using tariffs to negotiate lowering trade restrictions with our trading partners.

    1. Trump will only get credit for this growing US economy when it has an inevitable market correction.

      You propagandists are not fooling anyone.

      1. Don’t you have some homework to do? Or detention? Or glee club? Or whatever you juveniles do after school these days?

        1. ^This sock forgot to log into its other semen covered sock.

          1. [citation needed]

            1. I would not touch your semen covered comment with a ten foot pole.

              Ask Tony, he likes semen in his mouth.

      2. If its an inevitable market correction then he wouldn’t deserve the credit he’ll be getting, no?

        1. Presidents get more credit and blame for the economy than they deserve. Democrat Presidents definitely get the media to cover for them to mitigate from massive government restrictions on the economy and the economy stays bad.

          Trump tariffs have not caused the economy to correct and the economy has grown beyond expectations. It will correct but is that because of the tariffs, all the trade restrictions in place pre-Trump finally taking their toll, or that the market needs to correct because that is what markets do.

          1. The economy doesn’t “correct” – prices do. The stock market is in correction territory right now. The Dow is down another 500 points today.

            Stock prices are “correcting” for lower future earnings as we read this.

          2. This is amazing self-unawareness.

            Presidents get more credit and blame for the economy than they deserve.

            Very next paragraph:

            Trump tariffs have not caused the economy to correct and the economy has grown beyond expectations.

            Pull the other one.

          3. Got these Lefty commenters are stupid.

            1. Unlike lc1789, who can’t even figure out which Reply button to click.

            2. Really stupid.

    2. You assured us the GOP would increase its House membership.

      Why should anyone rely on you?

      Any liar (like you) who says that raising prices by government fiat is good, or who doesn’t understand comparative advantage, simply reinforces the perception of his idiocy.

      Claptrap about a negotiating ploy is rendered useless by the result of his great NAFTA negotiating, which created the less-free-trade successor. If that’s how good a negotiator he is, you should ask for your money back.

    3. Poor Lefties hate that I was right on everything else that I said but the GOP would gain seats.

      Lefties are really gonna shit themselves when trump replaces RBG, Thomas, and Breyer.

      That and when the state convene an Article V Constitutional Convention to amend the Constitution, that the House cannot do shit to stop.

      1. Right on everything you said – except the things you weren’t right on.

        Right. You’re a regular Sylvia Browne.

        1. I was wrong about the House. Unlike the psycho you mentioned, I could back up what I said with things that you could also look up.

          I underestimated how many RINOs would get ousted from Congressional districts that I was surprised they were Congressmen in. After all that is said and done, Democrats will not even have the majority in the House that Republicans had and lost seats in the Senate.

          Its a win against Lefties overall. RBG will be replaced by Trump which makes a loss in the House worth it.

          1. What will it take for you to admit you don’t understand basic economics? What conditions would suffice for that?

            Considering Trump’s great negotiating skills replaced NAFTA with the less-free USMCA, what will it take for you to admit that Trump’s negotiating skills are less than advertised?

          2. Lefties sure spend a bunch of time trying to spread propaganda that nobody believes anymore.

            1. [citation needed]
              -or-
              self-referential

              Take your pick.

            2. I have troll bots following me around now. How cute.

              Sit boo-boo, sit.

    4. So you’ll be happy to pay for my increase in steel. Awesome where do I send the bill? It will be well over $500,000.00 but I am sure a man of your stature has that kind of dough lying around. Hey then I can buy that new coil line I was going to purchase but couldn’t because of tariffs! Thanks lovecon, I appreciate it.

  2. An analysis from the Center for Automotive Research, an industry-backed group, says a 25 percent tariff on automotive parts imports will result in up to 2 million fewer vehicle sales in the U.S., triggering more than 714,000 job losses in the industry and reducing U.S. economic output by $59 billion.

    Yet the MAGA! dumb-asses still pollute this site.

    1. Make mine Marvel.

  3. What about prices for replacement parts for repairs? Haven’t seen that mentioned anywhere.

  4. Good ol’ Trump gonna tax us all into prosperity!

    1. That’s about it. $200B tariffs are a $200B tax, yet they just laugh it off as having no effect on the economy. A negotiating tactic, if pressed, but really, no effect on the economy. They sometimes brag about the jobs it will create, neglecting to consider all the other more efficient jobs those people were doing, or what the public can’t buy because it has less money left over after buying the more expensive goods, and all those jobs which disappeared because people stopped buying what they made.

      MAGA my ass. I understand proggies being economically illiterate, their whole life is planned around using other people’s money to enrich themselves. But alleged libertarians? God save us!

      1. When SPB is more economically literate than the majority of the posters here, you know the comments have gone down the shitter.

        1. That “majority of the posters” should probably be “majority of the posts”, since John and lc1789 seem to think that “quantity has a quality all its own”.

          1. Which one of you is peanut butter and which one is jealous?

            1. We know whose legs are shaking like jelly and is in a jam because his predictions fell apart and he can’t back up his mercantilist non-economics or slavish devotion to thtat non-negotiator Trump.

            2. Look how pathetic this goober in a jar is.

              1. Look where? You can’t even find the right Reply button.

            3. Look at this dipshit who does not understand when someone talks around them instead of replying to trolls.

              1. Then there’s your dipshittery that thinks pretending to talk around someone is somehow distinguishable from not having an actual answer.

            4. Look at the trolls not adding anything and demanding replies.

  5. New trade restrictions same as the old trade restrictions.

    1. Just more of them. And that’s somehow better.

      1. Getting socialist nations to cave to America trade demands for lower trade restrictions is better.

        MAGA!

        1. Yes, his great negotiating skills replaced NAFTA with the more restrictive USMCA. Great job, Trumpie!

          MAWA!

          and [citation needed]

        2. Funny how Trump offered free trade and that was rejected.

          We are back managed trade again, just like the non-Libertarians on Reason like it.

          1. Funny how Trump had free trade and threw it out in favor of more restrictions.

          2. Trump: Free trade?

            US Trading Partners: Fuck no!

            Trump: Tariffs to get access to best market in the World.

            US trading partners: Okay, you win. But can I save face and get the media and useful idiots to cover for us?

            1. NAFTA: 97% free trade.
              USMCA: Less and with more unrelated restrictions that favor Democratic talking points.
              lc1789: MAGA Trump is my Lord.
              Everybody else: HA HA HA HA HA

          3. Trolls adding made up numbers with no citations and still knowing that nobody believes the trolls.

        3. Uhm, so – when does that start happening?

          1. How long do I have to be beat before the Chinese stop beating their citizens?

    2. No. The USMCA is more restrictive than NAFTA.

      Wrong again.

      1. Your citation fell off.

        You’re getting all your sock puppets confused.

        1. He is correct. The new NAFTA just slapped more country-or-origin and work-pay regulations on the old NAFTA. Reason wrote about it extensively.

          If you read stuff instead of just polluting the comments you might learn something one day.

        2. What citations have you shown?

          NAFTA was something like 97% ZERO tariffs. Is that not good enough for you? USMCA raised the content level and add new restrictions for minimum wage (which proggies love) and environmental qualifications (which proggies love). Is that what MAGA? Why not just vote Democratic and get it over with?

          1. NAFTA was something like 97% ZERO tariffs.

            According to lc, any tariff at all equals a trade war. 97% zero means 3% non-zero, which equals a trade war. It’s no different than a 25% tariff on everything. It’s non-zero. Anything non-zero is war.

        3. Poor Lefties cannot provide citations, so they babble even more.

          1. [citation needed]

          2. Proof positive.

            1. Of clicking the wrong Reply button?

            2. definitely proof positive.

        4. Look at the goober trolls fall all over themselves to explain away pre-Trump trade restrictions, tariffs not destroying the US economy, and US trading partners have caved to Trump’s negotiating tactics.

          1. If we’re the goober trolls, that makes you the goober. Keep on pretending.

          2. Poor trolls. so upset.

  6. apathetic.

  7. I am against tariffs and I do not approve of this proposed action.

    (Don’t let the resident idiots see this comment. They might get the idea that it is possible to attempt to be objective in one’s criticism instead of being reflexively “Orange man bad” about Trump because of severe cases of TDS.)

    1. The Libertarians can tell the difference and get your position.

      I am okay with negotiation tactics but by June 2019, I think trump should roll back tariffs and try something else to get the Commies and Socialists to lower trade restrictions.

      If low tariffs paid for most of our tiny federal government, I would probably be okay with that too. Trade will likely be taxed no matter what we do, the taxes are just called different terms.

      1. Uly 2019 will be interesting to see how you bitbucket your promise.

        And it’s great, fantastic, hugely so, that you are okay with abridging my liberty until July 2019.

        Fuck off, slaver-who-can’t-click-the-right-Reply-button.

      2. Looks at the trolls who get so upset that I am talking around them.

  8. American journalists have a naive view of tariffs. There is no justification for the Chicken Little panic that the sky is falling. For a century and a half the USA was the most tariff protected nation on earth. We prospered. For a more realistic view of the real impact I suggest Douglas Irwin “Clashing Over Commerce,” F. W. Taussig “The Tariff History of the United States,” and my favorite Dr. Ravi Batra “The Myth of Free Trade-the Pooring of America.”

    Most of what is written about tariffs is a combination of myth and NeverTrump propaganda. Irwin, for example, devotes a full chapter to the real impact of the Smoot-Hawley tariffs. Consider the following quotes

    “An imported good that cost $1 would sell for $1.40 before and $1.46 after the new tariff (Smoot-Hawley), an increase of about 4 percent in the price paid by the consumers.”

    “Out of the 3,295 dutiable items in the tariff code, the final bill (Smoot-Hawley) made 890 increases, 235 decreases, and left 2,170 duities unchanged from the existing schedule.”

    That is in sharp contrast to what is usually said about Smoot-Hawley. Virtually nothing journalist say about Smoot-Hawley or other tariffs is true.

    1. Virtually nothing of what you say about tariffs is supported by basic economics, only by control freaks who love abridging my liberty.

      I notice all you spout is excuses for tariffs as revenue. Absolutely nothing about tariffs as abridging liberty.

      Fuck off, slaver.

    2. +1000

      The trolls are butthurt about the truth so they do what trolls do.

      They dont want free trade or anything good for the USA, so there’s that.

      1. Apparently neither does Trump – which is why he’s tanked NAFTA and is all keen on shooting people if they don’t buy things from his politically favored groups.

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