Trump auto tariffs all pain, no gain for consumers

President Trump said today that starting April 2, he plans to impose a 25 percent tariffs on cars and trucks shipped into the United States. CEI trade policy expert Ryan Young explains that American consumers are the ones who will pay those tariffs – or else settle for less appealing options.

Statement by Ryan Young, CEI senior economist:

President Trump’s 25 percent tariff on cars is an example of government creating winners and losers on two different levels.

The auto industry will lose because it is getting special punishment compared to other industries.

Consumers will likely pay thousands more for a new car due to tariffs, which will also dent some of those sales. Many families with aging cars will hope their cars can last a little longer or look to the used market – which is about to have its own price hikes as demand rises for used cars.

A second level of loss is within the car industry itself. Some domestically assembled carmakers, like Honda and Hyundai, will be less harmed by the tariffs than other carmakers, like Ford and GM. Trump’s tariffs will give Honda and Hyundai a competitive boost that has nothing to do with the quality of their cars.

One of the few winners will be DC’s restaurant industry, which is about to benefit from a hike in expense-account dinners paid for by lobbyists seeking tariff exemptions for their clients.

The fact that Trump waited until after markets closed on Wednesday to make the announcement shows that even he knows his tariffs will create more losers than winners. Consumers’ and automakers’ best hope now is that Trump will walk back the tariffs before they take effect on April 2.