Economy

Study: Trump’s Proposed Tariffs On Cars Would Kill 250,000 Jobs

JM Ashby
Written by JM Ashby

Trump recently ordered the Commerce Department to determine if they can impose tariffs on imports cars and car parts under Section 232 of the Trade Expansion Act of 1962.

If they go through with it, Trump's tariffs will kill at least 250,000 jobs down stream from automakers according to a study from the non-partisan Trade Partnership.

And there is reason to believe that is a conservative, low-ball figure, they say, because it doesn't account for retaliation.

We find that the tariffs would have a very small positive impact on high-skilled workers in the motor vehicle and parts sectors, but very large negative impacts on workers — both high- and lower-skilled — in other sectors of the economy," the study says.

In all, the tariff policy would boost jobs in the auto sector by 92,000, but then destroy 250,000 jobs in the rest of the economy, according to the study. The price of foreign vehicles would rise from $30,000 to $36,400, a 21 percent increase. All in all, the economy would lose 0.1 percent of its value.

Those effects don't take into account any potential retaliation by American trade partners for the tariffs.

There's also good reason to believe these tariffs would not actually boost employment in the auto sector by 92,000.

For example, this study was conducted before today's report that Trump is also considering a total ban on German luxury carmakers. Such a ban could easily wipe out the minimal gains of tariffs on all imported cars and car parts. We also have recent examples from the metal industry where Trump's initial round of tariffs on steel and aluminum had little to no effect on employment in the metal industry and even saw employment dip in several cities.

Moreover, who can say other countries won't respond by imposing tariffs on American cars and car parts?

When you consider all of the possibilities, it's very easy to see how protectionist policies can get out of hand very quickly.

  • muselet

    Why, it’s almost as if nobody in the administration knows how national economies and international trade work.

    Once more, with feeling: it will take at least a generation before any country trusts us again.

    –alopecia

    • Draxiar

      I’m hoping that that other countries look at this era as a parent looks at their teen going through a phase. After it’s over things return to normal and we all go about our business as it was before.