THEIR VIEW: Car tariffs would hurt U.S.

Published on Tuesday, 29 May 2018 18:44
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How different history might have been if the Europeans had not jacked up their tariffs on American frozen chicken imports in 1962. That attempt to protect French, German and Dutch poultry farms triggered U.S. retaliation, in the form of a 25 percent tariff on light trucks, which applied worldwide - and has remained in force ever since, even with respect to one key auto producer, South Korea, with which the United States has subsequently made a free-trade agreement.

Thanks to protection from this “chicken tax,” Ford, Chevrolet and Dodge have come to dominate the American pickup market, which is a good thing for them, because in 2017, passenger car sales fell 10.9 percent but light truck sales rose 4.3 percent, and because pickup sales are far more profitable than smaller-vehicle sales. In 2012, Morgan Stanley estimated that 90 percent of Ford’s global profits came from sales of F-series trucks alone.

We rehearse these obscure facts to place President Donald Trump’s latest idea for trade policy in its proper context.

By asking the Commerce Department to investigate the possibilities for imposing a 25 percent tariff on all automobile imports on national security grounds, Trump is essentially contemplating a chicken tax for the entire U.S.-based industry.

Trump’s notion is a cure in search of a disease: Making money hand over fist from light trucks and SUVs, U.S. automakers are not clamoring for protection from car imports from the few countries that would be affected - such as Germany, Japan, China and South Korea.

No doubt U.S. manufacturers, both U.S.- headquartered and Asian and German “transplants,” and their workers would reap a windfall.

Japanese and European protection of their relatively small domestic auto markets is a legitimate concern that could, and should, be addressed aggressively, in the context of negotiations, such as those over the proposed trans-Atlantic and trans-Pacific trade deals Trump has spurned. What he is embarking upon now could turn into a game of protectionist chicken that U.S. consumers will lose.

-The Washington Post

Posted in New Britain Herald, Editorials on Tuesday, 29 May 2018 18:44. Updated: Tuesday, 29 May 2018 18:47.