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If President Trump applies the tariffs, he pushes on imported cars, trucks and parts automobiles. a massive escalation of a trade war whose economic consequences are already hitting the house.
Trump's advisers believe that he wants to impose a 25% tariff on foreign automobiles, hoping to increase the cost of foreign competition and convince US consumers to buy American products. cars. But critics – who include many of his Republican colleagues and even some of his own advisers – warn that this could increase costs for consumers and be a disaster for jobs.
These critics also (unsuccessfully) urged Trump not to put tariffs on aluminum imports, but this time the stakes are much higher.
Up to now, the president has tariffs on foreign washing machines, solar panels, steel, aluminum and some products made in China. In total, tariffs cover about $ 85 billion of products. That sounds like a lot, but it's less than 4% of the US's total imports last year ($ 2.4 trillion), according to the Washington Post's Trump Taper Tracker.
If Trump goes ahead with tariffs on all vehicles In 1965, the United States imported $ 360 billion worth of cars, trucks and parts from abroad . and exported $ 161 billion worth of automobiles and auto parts, resulting in a trade deficit of the order of $ 200 billion.
That's why so many senators, business leaders, and think tanks are banning Trump's auto rates. The goal of Trump is to save jobs and bring business back to the US, but these leaders predict the opposite will be the case: US jobs will be lost and companies will relocate overseas, which will hurt the US manufacturing sector. growth for years, if not decades, to come.
The Peterson Institute for the International Economy predicts 195,000 job cuts from auto rates – and this, if other countries do not fight back. The European Union is already drawing up a list of ways to respond, Trump is going ahead with auto rates. If other countries fight back, the Peterson Institute predicts more than 600,000 job losses, which would do more than suppress gains in manufacturing jobs since Trump 's arrival.
Consumers across the country would feel it. According to the Center for Automotive Research, the cost of a car would increase from $ 455 to $ 6,875 (depending on the fare and the type of car). The Tax Foundation, which normally leans to the right, predicts that if Trump does both auto tariffs and additional tariffs on China, she will wipe out all the benefits cuts in 39; taxes. The growth and wages are already down because of the rates in effect, warn analysts of the Tax Foundation, and it will be worse if Trump stacks more tariffs.
Trump and many unionists claim that the United States has already lost jobs because foreign countries are seizing more and more of the auto manufacturing space. In 2000, the United States had 1.3 million workers in Ford, GM, and other factories that manufacture cars and auto parts, according to the Labor Department. Today, there are 966,000, a decline of about a quarter.
Many say that technology has replaced workers, but the United Auto Workers union reports that the United States also makes fewer cars today than in 2000.
There are three things that complicate Trump's quest to put tariffs on cars and parts.
Supply chains for automobiles and trucks are global. Every car in the United States is essentially a "foreign car" because some of its components were manufactured overseas, said Peter Welch, president of the National Automotive Dealers Association last week when 39, a public hearing on potential car rates. 19659018] All major automakers and equipment manufacturers have warned Trump and his team that setting up fares would make it difficult, if not impossible, to get some parts needed to make a car in the United States. This could push them to move factories abroad because it would be easier to do that than pay the import tax or wait – maybe for some time – for an American company to start doing what is needed
. The US auto sector has flourished since the Great Recession. He has added jobs (more than 300,000 since 2010) and has had years of record sales of cars and trucks, making it a bizarre moment to claim that the industry needs Extra protection. The Trump administration is trying to use the so-called process 232 to argue that there is a risk of "national security" here, which many commercial law experts say does not not to do for cars and trucks.
Many of the closest allies of the United States – Canada, Germany, and South Korea – are key players in American auto trade. These countries already feel trapped by much lower prices for steel and aluminum. The imposition of tariffs on cars and spare parts in these countries may "further damage the reputation of the United States," warned the European Union in a letter
Here are the five main countries imported by the United States in 2017 (in billions of dollars)): 1. Canada ($ 43 billion) 2. Japan ($ 40 billion) 3. Mexico ($ 30 billion) 4. Germany (21 billion dollars) billions of dollars) 5. South Korea ($ 16 billion)
Here are the top 5 US auto parts imported from 2017 (in billions of dollars): 1. Mexico ($ 56 billion), 2. China ($ 17 billion), 3. Canada ($ 16 billion), 4. Japan ($ 15 billion), 5. Germany (10
Although Canada is at the top of the list, the United States export almost the same amount to Canada as they imported from the neighboring country to the north, so even among union members Who would like to see a Trump action, do not want to see Canada hit with tariffs because they do not think Canada is the problem.
Trump tweeted on Wednesday that Republican lawmakers and his supporters should "be cool" and wait until he concludes a deal. It often points out that US tariffs on cars are 2.5% while the EU has a tariff of 10 on car imports. But he leaves out that the US has a 25% duty on foreign trucks (while the EU has a 10% tariff.)
Trump considers auto tariffs as a way to put pressure on 39, Europe and Canada. But many warn that it is demolishing the very foundations of the US auto industry that have helped the industry to flourish – and add hundreds of thousands of jobs – in recent years.
Related:
Trump's voters are being hit hard at him – for the moment
Trump pushes the 25 percent automatic rate while top advisers struggle to stop him
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