Opponents of President Donald Trump’s tariff proposals were hoping that he would back down from imposing 25 percent tariffs on all goods imported into the United States from Mexico and Canada. Trump postponed those tariffs by 30 days, but he appears to be determined to go through them after that.
In an editorial published on February 25, the Wall Street Journal’s conservative editorial board warns that the tariffs will significantly harm the auto industry if Trump follows through with them.
“Businesses breathed a sigh of relief after President Trump gave Mexico and Canada a 30-day reprieve from his threatened 25 percent tariffs,” the WSJ editorial board explains. “But on Monday, he said he is ‘going forward’ with the tariffs next week. If the goal is to harm U.S. auto workers and Republican prospects in Michigan, then by all means, go ahead, Mr. President.”
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The WSJ editorial board cites recent analysis by the Anderson Economic Group, which detailed the problems Trump’s tariffs will cause.
“Start with auto prices,” the WSJ conservatives warn. “The study estimates that a 25 percent tariff on the U.S. neighbors would increase the cost of a full-size SUV assembled in North America by $9000 and a pickup truck by $8000. The cost of an electric-vehicle cross-over would increase by $12,200. Canada is the biggest supplier to the U.S. of nickel, a key critical mineral in lithium-ion batteries. Such higher prices owe partly to the compounding effects of tariffs on auto parts that sometimes cross the border multiple times.”
The WSJ board is skeptical about Trump’s claim that tariffs will force automakers to manufacture more vehicles in the U.S.
“Domestic demand for some vehicle models — especially sedans — isn’t sufficient to justify the cost of building new U.S. factories,” the board notes. “Auto makers will have to absorb the tariff, increase prices on cars, or stop selling some models because they are too expensive. U.S. auto workers will pay, too, if auto sales drop as a result of higher prices. Note that new U.S. vehicle sales last year were about 1.2 million lower than in 2019, largely because inflation and higher interest rates have made cars less affordable. One result is that U.S. plants produced 340,000 fewer cars last year than in 2019…. The president may think tariffs will yield a new economic golden age, but workers, businesses and financial markets may not enjoy the long march to this promised land.”
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Read the Wall Street Journal’s full editorial at this link (subscription required).
