This Probably Isn’t Going to Reduce Inflation
The president announces that an additional 25-percent tariff on cars and car parts will take effect next week, adding as much as $6,000 to the price of a car.
Good Morning!
Here are today’s highlights:
A response to Gene Marks: Why abolishing the SBA would be a mistake.
The increase in the price of eggs has been especially tough on small businesses that are reluctant to raise their own prices.
It’s probably going to keep getting harder to buy a house.
The more successful you are in your career, the more challenging retirement can be.
INTERNATIONAL TRADE
Trump announces a 25-percent tariff on cars and car parts: “The U.S. will start collecting the auto tariffs on April 3, Trump said, the day after he is set to announce a broader slate of trade actions. Trump’s so-called reciprocal tariffs, slated for that day, were originally planned to equalize U.S. tariffs with those charged by foreign nations, but Trump said Wednesday that the tariffs he plans to implement would likely be lower than that. The tariffs will cover finished automobiles and automotive parts, a senior administration official said.”
“The 25-percent tariff will be added on top of existing duties, including a 2.5-percent tariff currently imposed by the U.S., as well as existing 25-percent tariffs on light trucks, known as ‘the chicken tax,’ the senior administration official said. They would be added on top of 25-percent tariffs on goods from Canada and Mexico that Trump imposed because he said those countries weren’t doing enough to disrupt the illicit fentanyl trade. Negotiations on those duties are continuing.”
“Canadian Prime Minister Mark Carney called the tariffs a direct attack on Canadian workers. He said Canadian officials would decide what actions to take, including possible retaliatory tariffs, after seeing the language of Trump’s executive order. ‘It’s clear that this is a violation and he has betrayed our trade agreement,’ said Carney.”
“In a post on Truth Social early Thursday, Trump threatened to impose ‘large-scale tariffs, far larger than currently planned’ on Canada and the European Union if they worked together to ‘do economic harm’ to the U.S.” READ MORE
The tariffs on cars and car parts are likely to increase prices and reduce production in the U.S.: “Cox Automotive, a research firm, estimates that tariffs would add $6,000 to the price of a car made in Mexico or Canada, two of the top exporters of vehicles to the United States. Affected models include the Toyota Tacoma pickup, gasoline and electric versions of the Chevrolet Equinox, and several models of Ram pickups. Ram is owned by Stellantis, which also produces Dodge, Chrysler, and Fiat vehicles.”
“Higher prices will deter buyers and force automakers to curtail production, said Jonathan Smoke, chief economist at Cox Automotive. He forecast that U.S. factories would produce 20,000 fewer cars per week, about 30 percent less than usual.”
“‘By mid-April we expect disruption to virtually all North American vehicle production,’ Mr. Smoke said on Wednesday during a conference call with clients and reporters. ‘Bottom line: Lower production, tighter supply, and higher prices are around the corner.’”
“About one million people in the United States are employed in auto and parts manufacturing, according to the Bureau of Labor Statistics. Two million more work at dealerships that sell cars or parts. If automakers are forced to significantly reduce production, they are likely to furlough workers at factories, and dealers would have to cut jobs if higher prices hurt sales.” READ MORE
