An Introduction
MishTalk reports that a new analysis by the Anderson Economic Group estimates that a 25% tariff on America’s neighbors would increase the cost of a full-size SUV assembled in North America by $9,000 and a pickup truck by $8,000. and the cost of an electric-vehicle cross-over would increase by $12,200.
Why So?
Such higher prices owe partly to the compounding effects of tariffs on auto parts that sometimes cross the border multiple times…and Canada is the biggest supplier to the U.S. of nickel, a key critical mineral in lithium-ion batteries.
Why Not?
Mr. Trump says tariffs will force auto makers to make more cars in the U.S. but that is not likely, and it would take time in any case.
- Domestic demand for some vehicle models—especially sedans—isn’t sufficient to justify the cost of building new U.S. factories,
- auto makers will have to absorb the tariff, increase prices on cars, and stop selling some models because they are too expensive and
- U.S. auto workers will pay, too, if auto sales drop as a result of higher prices…
Conclusion
The U.S. is already decelerating rapidly and consumer confidence is weakening so, if Trump wants a recession, tariffs will help.
