In a recent analysis, renowned economist Arthur Laffer cautions that President Trump’s proposed 25% tariffs on auto imports could inflate vehicle costs by approximately $4,711 and hamper U.S. automakers’ competitiveness against foreign brands. Laffer, awarded the Presidential Medal of Freedom in 2019, suggests that retaining the supply chain rules from the 2019 USMCA trade deal would better serve the auto industry.
The White House has temporarily exempted auto and parts imports under the USMCA from these tariffs, initiating a process to tax non-U.S. content. Laffer warns that without such exemptions, the tariffs could inflict ‘irreparable damage’ to the industry, undermining the administration’s aim of bolstering U.S. manufacturing.
Despite the administration’s confidence in tariff plans, stock market unease prevails, and Laffer’s assessment shows a lack of conviction from skilled economists regarding the expected outcomes of these tariffs. The analysis lauds the USMCA as a pivotal achievement that supports economic growth and stabilises supply chains, projecting reduced vehicle costs from $4,711 without exemptions to $2,765 if they are upheld.
Noted economist Arthur Laffer has warned that Trump’s 25% tariffs could raise vehicle costs by $4,711 and weaken U.S. automakers’ competitiveness. He suggests that preserving the exemptions under the USMCA trade agreement is crucial to prevent irreparable damage. While Trump asserts that these tariffs will encourage domestic production, Laffer’s analysis raises doubts over the expected benefits.
Arthur Laffer’s warnings about the implications of Trump’s 25% tariffs on the auto industry emphasise the potential financial burdens on consumers and the competitive challenges for American manufacturers. He highlights the importance of the USMCA in maintaining a stable supply chain and fostering economic growth, urging the administration to reconsider its tariff strategy to avoid damaging the industry further.
Original Source: www.usnews.com
