The news reports say Trump’s tariffs have cost the car industry “at least” $35 billion so far. But that’s not quite right.
They have cost us that sum – and then some.
What is a “tariff” but a tax by another name? Functionally, it amounts to a sales or “value added” tax in that it raises the price you pay for an item. The only difference is that you are paying a private business to offset the costs they had to pay the government. Does that make any difference to you?
Some support tariffs as a way to protect domestic industry from what is often styled “unfair” foreign competition and to “protect jobs” here by discouraging their offshoring to there (i.e., other countries where labor costs are lower). But what happens when the jobs – the industries – are already gone, not so much because of lower-cost foreign made-products but rather because of the cost of manufacturing products here?
This is in fact the situation.
Yes, of course, things can be made so cheaply in China and other such places that even when you take into account the cost of shipping them across the ocean they can still be sold here at a profit for less than a similar product that was made here. But how does making those foreign-made items just as expensive – by imposing tariffs on them – make the similar items made here less expensive?
This is a question not often raised – or answered in the debate over Trump’s tariffs.
They can seen as something like the driveshaft in an car with one end disconnected. The tariffs may take away the competitive advantage a foreign-made product has over its domestically made equivalent – but it does not address the disadvantage of attempting to make things in a country (ours) with exorbitantly high regulatory compliance costs.
It merely equalizes the costs. More finely, it raises the costs of everything. Here’s an example to make the point:
As things were, Toyota – which has had to absorb $9.1 billion in tariff costs – and other Japanese/Korean car companies could offer vehicles that cost less than rival brand vehicles. This put pressure on rival brands to try to keep their prices in line with theirs. The tariff costs applied to Toyota, et al cost money; more finely, they effectively force Toyota, et al to increase the prices of their vehicles – in order to not lose money. This, in turn, eases the pressure on rival brands that had been at a competitive disadvantage vis-a-vis Toyota, et al.
They all cost more now. Or will.
It is naive bordering on stupid to expect that vehicle manufacturers less affected by tariffs will reduce the prices they charge for their vehicles. It is true that tariffs will have an equalizing effect but that is not the same thing as a lowering effect. The fact is that the less expensive foreign-made competition did have that effect, but instead of addressing the fundamental source of the problem – regulatory compliance costs – Trump applies tariffs to those products and companies that have avoided paying them. It amounts to something like going after expats who left the country to avoid income taxes. It does not lessen the tax burden on Americans stuck in America who have to pay the income tax; it just assures more people pay it.
There is a vindictive element to that – in both cases.
Trump’s secondary argument in defense of his tariffs is that they will end up causing more manufacturing to be home-sourced rather than out-sourced and that will create the “good jobs” that will enable the workers to buy the things manufactured. But – again – all it will do (if it even happens) is push the cost of labor higher as well as the cost of the things made by labor. This does not serve to make things cheaper.
The long and short of it being that the cost of everything increases. What is styled inflation works similarly. Twenty years ago, a $100 bill in your wallet bought a shopping cart-load full of groceries, enough for a family for a week. Today, it buys two plastic bags – enough for one person for today and tomorrow, maybe. In other words, everyone having $100 in their pocket has not made them wealthier.
So, about how much is all of this costing us? According to Cox Automotive, around $2,500 per new vehicle, on average.
“Based on volumes and average listing prices of imported vehicles through the first seven months of 2025, automakers have theoretically racked up more than $25 billion in tariff obligations so far . . . This is equal to the average imported vehicle being charged roughly $5,200 at the U.S. border. Land Rovers are obviously paying more; Chevrolets from South Korea are paying less. But in this scenario, Toyota, General Motors and Hyundai Motor Group would have paid the most so far in 2025. When spread across all vehicles sold year to date, that $25 billion is roughly equal to an additional $2,500 per vehicle in added cost for the industry.”
Three months into 2026 and the tab is up to $35.4 billion – and someone’s going to have to pay for all of that.
If you have been new car shopping recently, you already know who that will be.
The tragedy is that were it not for these compliance costs, tariffs would be unnecessary because things would be inexpensive to make here again. There is no natural reason why they cannot be made here, inexpensively. American manufacturers did so for most of the country’s history, through the ’90s – which was when the Chinese and other foreign countries began to be seen as greener pastures for manufacturing – because they were.
Instead of dealing with that by making the grass greener here, it was made browner by even higher regulatory compliance costs. Manufacturing left for greener pastures. So did the jobs.
Trump’s solution is to brown the grass everywhere. It’s not helpful.
It’s certainly not going to make America Great (or vehicles inexpensive) again.
. . .
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Pentagon seeks more than $200 billion in budget request for Iran war, Washington Post reports
https://www.reuters.com/world/us/pentagon-seeks-more-than-200-billion-budget-request-iran-war-washington-post-2026-03-18/
ALSO announced today “US national debt surges past $39 trillion just weeks into war in Iran”
ZIONISTFIRSTFOXWARCHANNEL: “US national debt breaches $39 trillion milestone for first time amid spending surge”
https://iran-cost-ticker.com/
Found link above at: h/t Sonar21 Joe Kent Hero… Tulsi Gabbard, a Contemptible, Craven Zero
BruceOHara -50 minutes ago
That damned internet is undermining all their pro-war propaganda!
https://bruceohara.substack.com/p/outfoxed
(has some kicking video criticizing trump including a brit and an Indian woman who has a very annoying voice if you have a headache but spot on)
The US car industry does not want to lobby on behalf of us, they’re perfectly contempt selling us slop. You know this, you ketchup packet conspiracy theroist!
H Steve,
Yes, I do – unfortunately.
In re the Ketchup Packet: It took me a long time to think it might be so, but I now heavily lean in that direction. Why? Well, because it makes the most sense – per Sherlock Holmes. Per Occam’s Razor. Lets just consider it mathematically. What are the odds that Trump would turn his head at literally the exactly right moment to avoid a head shot that probably would have killed him? Does it not border on the miraculous? I do not believe in miracles. Do you? Next we have the extremely strange behavior of the Secret Service, which not only did not completely shield him from further attack – which they had no way of knowing wasn’t coming – but allowed him to stand up and expose himself and first-pump, as if for a photo op.
Now, I ask you: Which is the likelier scenario given these facts – and who benefitted from this performance?
Does it not seem likelier that it was staged (with real shots that killed real people, to make it seem very real)? Trump not only survives in a miraculous way – suggesting divine intervention, super appealing to the Scofield Believers who form the core of his support and who see him as a Biblical figure – and also generated widespread sympathy for him that boosted his political support. Bear in mind who Trump is. That he is a practiced showman, a friend of the McMahons who ran professional wrestling.
I am just asking that you consider this. I understand it seems out there at first blush. But – as Mr. Spock once said – reason it out.
All of it, theatrics, you can count on it. D.C. is the new Hollywood, except with more pedos.
Japan out of gasoline (nearly)
King Fahd Causeway severed (Saudi to Bahrain)
Tit for Tat:
Israel, with US support, attacked Iran’s largest gas field.
The world’s largest LNG hub in Qatar is engulfed in flames after a missile attack.
https://avia-pro.net/news/krupneyshiy-v-mire-centr-spg-v-katare-ohvachen-ognem-posle-raketnoy-ataki
stonks made new lows
Orange Douchebag “we are winning”
Clowngress – does nothing to stop Orange Caligula from destroying world economy
No one talks about world record debt:
“Government spending lifts global debt to a record $348 trillion in 2025”
and a world wide economic depression, how that will cause a severe debt liquidity crisis
watch the CDS swaps on corporate and sovereign debt
just before Lehman Bros. went under, CDS spiked
https://www.worldgovernmentbonds.com/sovereign-cds/
note the location of USA – lol worse than italy
What rarely gets mentioned in the costs of manufacturing in the US is the utterly idiotic practice of employer sponsored “health insurance”. Not only is the “health care” in the US exorbitant and destructive, but the whole system is the WORST OF ALL POSSIBLE OPTIONS, including “single payer”. Until this issue is addressed in a realistic manner – which is not possible in the oligarch owned Orange Douchebag administration – the whole idea of the return of manufacturing is a non starter.
Not to mention that the US government is treasonous and not worthy of the slightest trust.
Hello, MQ and how very true. Include the mandatory, minimum wage laws (whether good or bad, anther debate entirely), and the mandatory paying out to Medicare, Medicaid and Social Security, and is it any wonder companies do not want to do business in the States? Never mind dealing with our demonic leaders. And even if Orange Man was trustworthy (ha ha), why would any company want to start up any company in the States, knowing that in four years, we will have another “leader” who may upend all their hard work? In the end, it is just not worth it for them.
Minimum wage isn’t the problem, no one (much) makes minimum anymore, it’s all the other crap
“Instead of dealing with that by making the grass greener here, it was made browner by even higher regulatory compliance costs. Manufacturing left for greener pastures. So did the jobs”
Cost of labor in the USSofA is not competitive with the rest of the world. Itz gonna get worse real soon. Our soon to be Illinois Senator Stratton is proposing a Federal minimum wage of $25. That Burger King Whopper that costs about $6 will soon be $10. That carrot stick just keeps moving and we have no choice but to follow except of course if you can grow your own food or live like the “Ethiopians”.
What a cheapskate!
The minimum wage should be $500/hr
Autos have stringent emission regulations. But the government goes to wars based on lies, ruins the environment with bombs, blows the shit out of people’s homes, pollutes the air on a massive scale by attacks on oil storage facilities.
the US government is causing massive harm to the environment, and now they want to use nukes
the government is completely insane
Excellent point Jack,
The enormity of all the fires burning right now is probably beyond ten years worth of “emissions” of every IC vehicle in the USSA combined.
Tariffs Vs Regulations, Free Immigration Vs the Welfare State.
In both cases, in the abstract of a perfect Milton Freedman libertarian free market economy, if you had a no regulation manufacturing base, you would not have the *tax* via tariffs other foreign products. In this perfect libertarian world, each product would stand on its own merits and consumers could decide without government interference what is best for themselves. In the same perfect libertarian world, we would not need boarders. Anyone could immigrate here but they would be on their own without government assistance and would have to sell their labor in an open market for what the market would bear, side by side with those who live here.
However, we do not live in a perfect world. Not saying that we should not adhere to and make better our freedom and expand our choices through freedom and libertarian ideals. In the immigration case, Americans, especially conservative-libertarians are forced to defend the welfare state and socialism. You can’t have free immigration and provide free services transferred from the fruit of the human efforts (work products of productive citizens taken extorted via taxes) to those who come here. Also, when we are one of the few places in the world where freedom is experimented with, we can’t have a constant flow of labor driving down the price in the market for it. It forces free Americans to become defenders of socialism.
Same with tariffs as a tax. Much of our higher costs are caused by government interference in the marketplace via regulations which don’t *make regular* trade amongst the states but drive-up costs and drive down innovation and choice. This makes our products less price worthy both here and abroad. But there is another problem, we can’t *make regular* our products in foreign markets when many of these other countries tax our products through tariffs and at the same time have ample labor (some of which is either starving intentionally) or is slave labor via gulag factories. It forces free Americans to become defenders of government tax (via tariffs) to make our products price viable at home.
What Trump has done is used tariffs as negotiating leverage. What Trump has not done is reduce the burden of regulations significantly enough to *make regular* trade within the USA and our products more price worthy. Trump should be waging war against states such as California which are the exact opposite of what our founders intended in regard to *make regular* trade amongst the states. Their special gas-fuel blends, legislation on vehicles are the fruits of a failed former free market state, into the throes of transitioning to communism. As for waging war on country the other side of the globe, that is for another discussion.
The Supreme Court delivered its decision in Learning Resources, Inc. v. Trump on February 20, 2026. The Court ruled 6-3 that the President lacked authority under the International Emergency Economic Powers Act (IEEPA) to impose tariffs.
Is it mere coincidence that Orange BLOTUS started a war on Iran just eight days later?
Could be. But the Orange Flake was clearly berserked by his tariff setback. Being eight years old in emotional maturity, little Donnie began flinging feces at the Court with his usual schoolboy taunts and insults.
Now Donnie’s got a right royal mess on his hands, as U.S. Customs struggles to implement an online refund claim system by mid-April. It supplements the “war situation” mess which Donnie ordered on Feb 28, 2026. And one can anticipate a whole new “Papiere, bitte” mess if the R-party’s misconceived SAVE Act passes after weeks of turmoil in the Senate.
Making messes — it’s what troubled little boys do, to act out their rage. But no sane nation would allow such a delinquent child to rule over it. That’s wacko. 🙁
The world is the Truman Show. Maybe Trump’s been allowed to be POTUS just to cause chaos.
Great article, Eric. I think you bested Murray Rothbard on this topic, with fewer words!
If FedGov returned to its strictly constitutional functions — including no wars without a Congressional declaration, and Constitutional money — its budget would be tiny. There’d be no need for a Federal Reserve, Federal income taxes, corporate taxes, excise taxes. A tiny tarriff on imports would easily cover expenses.
Without that gigantic parasite eating a third of our national output, how could we not be a prosperous country once again?
Thanks, Mr. Bill!
I’m on Wheels Up in about five minutes….
I would only (thinly) support tariffs as a means to fund legitimate government programs, if income and sales taxes were eliminated. This is not that. This is just another got-damned government get rich scheme.
If you drive a car, I’ll tax the street
If you try to sit, I’ll tax your seat
If you get too cold I’ll tax the heat
If you take a walk, I’ll tax your feet
-Taxman by the Beatles
If you like blues, here is Stevie Ray Vaughn’s version of that song. https://www.youtube.com/watch?v=dNDYArDUgSg&list=RDdNDYArDUgSg&start_radio=1
I have no problem with tariffs designed to renew the manufacturing base here at home. The fact they are directly mentioned in the constitution is instructive. Unfortunately we have a president who has no concept of using the office as a bully pulpit or a leadership platform. Instead we get stupid tweets masquerading as a vital president. (nevermind, the wars, etc)
This president has misapplied tariffs against all countries, pushing up living costs. Unfortunately, like his EEEEEVEEEE directives, they will probably be quickly undone by the next president. With a 15 percent global tariff, say, enacted into law, some manufacturing would likely return. Or US goods would be competitive. Unfortunately, companies would rather pay the tax than to build manufacturing plants here which would then be torn down the minute the next president undoes the tariffs, as is extremely likely, since none of these has the force of law.
I find it astounding that tariffs have added $5500 to the cost of the average vehicle. I am further astounded that the vehicle market manages to be 15.5 million per year despite the exhorbitant costs of new cars, even before all of this madness began in 2020. With almost zero exceptions, I would never purchase a new automobile for all of the reasons that Eric mentions in his articles.
I need a drink
Environmentalist have been a major factor in ruining the manufacturing base in this country. However, what seems to be missing in many conversations is what Labor Unions have contributed to the problem.
Growing up in the Rust Belt the auto, steel and rubber unions would strike for and get higher wages. It dawned on me back then that it would collapse because you can’t pay someone $30k (in 1971 dollars = $240k 2026) for a non-skilled job and expect it to be a long term strategy.
Actually you can. If you destroy all the world’s industry save one country. Then you can pay whatever you need to for labor, since you have a monopoly position for your factories.
Trouble starts when all those industrialized nations retooled with the latest and greatest factory tech, while you’re still working with the last generation stuff. Now instead of just passing along labor cost you have to panic – usually in the form of layoffs and big “swing for the fences” projects that never really get integrated into the core.
Yes but that has mostly worked its way through the economy.
The labor market is completely out of whack at this point, some stuff that you need to go to school (maybe even grad school) for doesn’t pay jack crap anymore while other stuff that is skilled (but requires FAR less time & expense to obtain the skills) pays quite well, software is just beginning to realize it’s been WAY overvalued for quite some time but hasn’t adjusted yet, most things don’t pay enough to cover rent + groceries, companies still are able to get by with firing a percentage of their workforce and then hiring back for $20k less than before, and everything is in a state of flux. Add on ruinous taxes, inflation, a shrinking population/workforce, shrinking demand, massive consumer debt, etc. and you have yourself a gigantic bomb waiting to go off.
Everything is off equilibrium, and giving off wacky signals, and the government is making it worse, and people are still assuming Moore’s Law applies to everything when it most certainly doesn’t, which makes equilibrium extremely difficult to find.
AI gets blamed for a lot but really it’s the least of anyone’s problems (and it’s not nearly as useful or helpful or cost-effective as advertised)
I’ve found AI to be a great tool for art work, and I can certainly see it being able to easily do bureaucratic form filling and paper shuffling. Otherwise, it’s a menace. But bureaucracy shouldn’t be streamlined, it should be trashed, and humans still do better art work. I’ve tried using AI dozens of times to create art based on my vision and it always misses the mark, though sometimes in interesting directions.
You don’t want or need AI for that kind of stuff. A traditional algorithm is more accurate, controllable, and reliable.
Think TurboTax…
You tell it what the rules are & then have it calculate for you. Simple. Deterministic. You control the key decisions/branch points.
Now have AI do it for you. It’s only going to give you the exact same output every time if you save the random number seeds and re-input them, which it is designed not to do; it makes the decisions for you but it isn’t clear when where or why that is happening, it just gives you a result. It reduces everything down to a rule that it has somehow determined by analyzing for the strongest correlation, without actually understanding the system, and discards all of the exceptions to the rule (which is a key reason why these models eventually choke on their own output and break down).
“What is a “tariff” but a tax by another name? Functionally, it amounts to a sales or “value added” tax in that it raises the price you pay for an item. The only difference is that you are paying a private business to offset the costs they had to pay the government. Does that make any difference to you?”
And therein lay the root cause of the War for Southern Independence aka the “civil war”.
All history is prologue…
Hi MH.
Tariffs are designed to encourage manufacturing at home. The problem becomes one of what happens when the home country does everything it can to insure nothing is manufactured at home?
Part of the problem is that from a national security perspective we need manufacturing done at home. Not Mexico, China, India or some other place but here. Until common sense returns there won’t be many companies building here. The reason China uses coal for energy is that cheap power was always the cornerstone of success in manufacturing and we no longer have that.
Sadly even if factories get built here they’ll be so automated that there won’t be lots of jobs either. I look at those videos of the new humanoid robots and can see them doing a lot of those repetitive tasks that you see in factories. Robot# U^$974ty isn’t going to be thinking about the weekend when it’s installing an alternator it will only be concerned with installing an alternator. Based on how much UAW members make I can see those that leave or retire will be replaced by robots.
The problem becomes once the “good” jobs are gone who will be buying anything but necessities? Heck even the military is going robotic so employment there might not be an option there either.
Screwed? Yep.
A couple of points about the Communist dystopia the U.S. is headed into: 1.) Since Communism isn’t economically self-sustaining, it requires a heavy capital base to parasitize for its survival. Farms and factories provide this, which is why the history of Communism is largely about forcing citizens to slave for the State in those two capacities so that the owners (the Party) can sell the products on the export market for profits. 2.) This means that the end goal of Communism is, ironically, a type of primitive Capitalism (but perversely, the profits the State accrues are used mainly to buy weapons to wage war and spread Communism).
With Trump serving as the chief Party organizer in setting up factories in the U.S. once again, it begs the question: will citizens be forced to labor for the State once these manufacturing plants are set up? Is this how the banks plan to force indebted Americans to pay back their debt, by forcing them into factor employment? This would partly explain Trump’s obsession with using tariffs as a weapon to reshore industry and build new factories at home.