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[quote=Anonymous]Trump's tariff deal with Japan has made US car manufacturers worse off.  FAFO.
 
#The Art of the Really Stupid Deal
What the heck were the Trumpists thinking?
Paul Krugman
Jul 25

So far, these costs haven’t been fully passed on to consumers, probably in part because businesses have been expecting tariffs to come down. But once businesses see how high tariffs on Japan and Europe are after they’ve made deals, their willingness to absorb the tariffs rather than passing them on to consumers will evaporate.

So U.S. consumers will soon be suffering. But why are U.S. manufacturers so upset with the Japan deal? Because in combination with Trump’s other tariffs this deal actually leaves many U.S. manufacturers worse off than they were before Trump began his trade war.

This is clearest in the case of automobiles and automotive products. Trump has imposed a 25 percent tariff on all automotive imports, supposedly on national security grounds. This includes imports from Canada and Mexico. And here’s the thing: Canadian and Mexican auto products generally have substantial U.S. “content” — that is, they contain parts made in America. Japanese cars generally don’t.

But now cars from Japan will pay only a 15 percent tariff, that is, less than cars from Canada and Mexico.

OK, it’s not quite that straightforward, because imports from Canada and Mexico receive a partial exemption based on the share of their value that comes from the United States. Yes, it’s getting complicated. But we may nonetheless now be in a situation where cars whose production doesn’t create U.S. manufacturing jobs will pay a lower tariff rate than cars whose production does.

Wait, there’s more. Trump has also imposed 50 percent tariffs on steel and aluminum, which are of course important parts of the cost of a car. Japanese manufacturers don’t pay those tariffs.

Overall, the interaction between this Japan deal and Trump’s other tariffs probably tilts the playing field between U.S. and Japanese producers of cars, and perhaps other products, in Japan’s favor.

If this sounds incredibly stupid, that’s because it is. [/quote]

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