Tuesday, July 3, 2018

Trump Trade War tariffs could add $5000 to price of new cars

by Rod Williams - Prices of new cars and trucks could increase by as much as $5000 if President Trump follows through on his threat to raise tariffs on imports.  Even vehicles made in America would likely increase in price as automakers would likely spread the cost of tariffs among many different vehicles to avoid putting at a disadvantage those vehicles made in foreign markets.  The President has threatened to impose tariffs of up to 25% on foreign auto imports.

The tariffs on the import of foreign vehicles is not likely to increase car manufacturing in America but depress sales.  Instead of more manufacturing of cars in America, the tariffs could lead to decreased production as sales fall.  Not only would those involved in auto manufacturing be at risk of job loss but those involved in sales or financing of vehicles could see job losses.

Not only would those buying new cars feel the impact of the higher prices but used cars would likely increase in price also.  When fewer new cars are sold and those that are sold sell at a higher price then the price of used cars tends to rise. Increases tariffs are in effect a tax on the American people.  I hope that Trump will listen to reason and retreat from his threatened trade war with out allies.  The real culprit in international trade is China with its policy of currency manipulation and theft of intellectual property.

Congress should exert its authority and block Trumps tariffs. Unlike immigration policy or health care policy, this is not that complicated. There should be a bipartisan majority that would vote to require that all tariffs be approved by Congress before they are implemented. Republicans should stand with the president when he is right but he is wrong on this issue.  Not only is his policy likely to lead to an economic downturn but it has the potential to spiral out of control and lead to a world-wide economic crisis. Even a less than catastrophic impact could have severe political impact on the Republican party. The recent wave of economic good news resulting from tax cuts and deregulation could quickly be erased as prices rise and unemployment increases as a result of a trade war.  If Trumps Trade War leads to an economic downturn, Republicans will get the blame and rightly so.

For more on this issue see, Trump tariffs could add $5,000 to price of new vehicle in U.S.

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