By Howie Katz
Auto parts on American cars that are imported mostly from China
Trump's 25% tariff on imported cars and auto parts is designed to get Americans to purchase American-made cars instead of foreign imports and to boost jobs in the auto industry. But it ain't a gonna do that.
That tariff is going to cost Americans more, not just for foreign imports, but for American cars as well. That's because most of the auto parts on American cars are imported, mostly from China.
The tariff on auto parts is not going to impact what there is of the auto parts industry in this country. With the high cost of labor, it is far cheaper to import car parts from China than it is to manufacture them here, the cost of shipping and the 25% tariff notwithstanding.
For example, take the container cranes in our ports. It costs a small fortune to ship these huge cranes to the United States from China.
Yet it costs far less to manufacture these cranes in China and ship them to the United States than it would cost to make them in this country. And the 25% tariff won't change that.
It's the high cost of labor in this country that has led to auto parts being made in China and for some American-brand cars and trucks to be made in Mexico.
With an expected price increase of $6,000 for a Japanese or Korean import, President Trump says that Americans will switch to buying American-made cars. That may be wishful thinking.
Brand-loyalty will probably keep Honda, Toyota, Hyundai and Volkswagen drivers from switching to American brands. They'll just wait longer before buying a new car.
It
should also be noted that foreign carmakers have plants in the United
States while American carmakers have plants in Mexico and China.
So, all that Trump's 25% tariff on imported cars and auto parts will do, as well as the other tariffs he's imposed, is to raise the prices for what Americans purchase.
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