The Department of Commerce initiated a national security investigation on auto and parts products on May 23. Findings and recommendations are due by mid-February 2019 but could be issued much sooner.

PIIE, the Peterson Institute International Economics says Trump's Proposed Auto Tariffs Would Throw US Automakers and Workers Under the Bus.

President Trump is reportedly considering raising US duties to 25 percent on all imports of automobiles—including SUVs, vans, and trucks—and auto parts, invoking the same national security law recently used to impose tariffs on steel and aluminum. A new PIIE analysis shows that if he did this, production in these industries would fall 1.5 percent and cause 195,000 US workers to lose their jobs over a 1- to 3-year period or possibly longer. The US auto and parts industries would shed 1.9 percent of their labor force. The analysis assumes there would be no exemptions for any country (or even for North American Free Trade Agreement [NAFTA] partners, as in the steel and aluminum cases). The potential trade action would affect more than $200 billion in US imports.

If other countries retaliate in-kind with tariffs on the same products, production would fall 4 percent, 624,000 US jobs would be lost, and 5 percent of the workforce in the auto and parts industries would be displaced (table 1). This second scenario would also hurt US exports of these products more than imports. The aggregate effects on the US economy in either scenario would be small.

Jobs Lost

Image placeholder title

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. Tariffs would raise the cost of these parts and domestic production, which makes products more expensive to consumers and lowers demand for them in the United States and abroad. Consumers could expect to see prices rise for both imported and domestically produced vehicles.

US Auto Exports

Image placeholder title

US auto exports total $51.1 billion.

Truck exports are another $15.1 billion, nearly all of it to Canada.

Tweet to Think About


How Stupid is This?

Damn stupid.

The knock-on impacts, which the PIIE did not estimate, are likely to be as important, if not more important

Instead, let's portray it as "Winning".

Why Do This?

As a matter of national security, we allegedly need to harm the US auto sector.

Related Articles

  1. Trump Considers 25% Tariffs on All Auto Imports as Matter of "National Security"
  2. Trump Started a Global Trade War Today: Canada, Mexico Responded, So Will Europe

Mike "Mish" Shedlock

Trump Considers 25% Tariffs on All Auto Imports as Matter of "National Security"

Trump has gone apeshit batty with his latest "national security" tariff proposal.

Fed Study: "Tariffs Kill High-Paying American Manufacturing Jobs and Businesses"

Fed economists admits the obvious "Tariffs likely to kill jobs".

Foolish Nature of Picking Winners: Trump's Tariffs Cost Ford $1 Billion

The CEO of Ford says Trump's tariffs on metals cost the company $1 billion. Who won?

Commerce Study Deems "European Cars a Threat to US National Security"

With 2 hours to spare, the Commerce Dept delivered its tariff report to Trump. Allegedly, it declared EU cars a threat.

More Tariff Madness: Trump Targets Steel, Aluminum

Trump administration ponders a global tariff of at least 24% in a mad effort reduce the trade deficit and save jobs.

Tariff Scorecard: 57 Companies Bitch About Trump's Tariffs, 7 Give Positive View

89% of companies taking a stand on Trump's tariffs are complaining. Consumers are taking it on the chin as well.

Germany Seethes and Juncker Warns Trump About Tariffs: Can Trump Win?

In a hot air speech to the EU parliament, Juncker demanded permanent tariff exemptions from Trump. I ask "or what?"

War With the World: Trump Puts Tariffs on India, Considers Australia

Add India to the list of countries the US is n a trade war with. For now, Australia barely avoided Trump's wrath.

Trump's Steel Tariffs Start Cascade of Downstream Pain

On Jan 24, Trump issued a proclamation on further steel and aluminum tariffs because the initial tariffs backfired.