Trump’s New Car Tariffs Are a $100 Billion Tax Increase No One Wants
If there’s one positive thing to be said about President Donald Trump’s latest tariff announcement, perhaps it is this: Few trade policy moves are more abundantly counterproductive and costly than tariffs on cars and car parts.
That’s a lesson the Trump administration is apparently determined to learn the hard way. On Wednesday, Trump announced a new set of 25 percent tariffs that will apply to imported cars and the components that go into cars built in the United States. Trump says those moves will promote domestic auto manufacturing, but that seems unlikely. Instead, the tariffs will make cars and light trucks more expensive, and will likely reduce the number of cars made and sold in America. They are bad news for auto workers, auto dealers, and consumers.
The only winner is likely to be the federal government’s tax coffers. The White House projects that the tariffs will generate $100 billion in new revenue for the government—money that Americans will pay for the privilege of buying a car the government dislikes for arbitrary reasons. Americans imported nearly 8 million cars in 2024, and the biggest sources of imported cars were Mexico, Japan, and South Korea.
At Wednesday’s press conference announcing the tariffs, Trump immediately disputed his own staff’s estimates on the tariffs and predicted a much higher tax increase on Americans: “I think ultimately, we could probably [get] anywhere from $600 billion to $1 trillion,” Trump said. “I think we’ll go from $600 [billion] to a trillion in two years.”
That’s probably just Trumpian bluster—as always, Trump thinks bigger numbers are better, even when those numbers are the result of a tax increase he’s imposed on Americans. And, as economist Erika York pointed out, if the goal of the tariffs is to draw more manufacturing into the United States, then the tariff revenue would decline over time
Article from Reason.com
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