Forty years ago, I was working for Bob Crandall as an RA at Brookings, on how much the voluntary export restraints (VERs) added to the costs of a typical Japanese imported car. He found that number to be about $820 (a Datsun Stanza was about $6700 in 1981), and a comparable domestically produced car by about $370 (since the VER puts up a wall that allows domestic producers to raise prices). Today, according to Wells Fargo, the 25% tariffs would result in a vehicle assembled in Mexico or Canada to go up  in price by $8000-$10000, while the average over all cars using imported parts will go up about $2100 (average car price in March 2024 is about $47000; a Ford F150 STX is about $42000).

Now, Trump is talking about tariffs. But an effective VER is like a quota (although the rent is transferred to the Japanese rather than US importers), and a quota (in a certainty world) is like a tariff. So no wonder this would be a terribly anti-competitive, anti-consumer policy.

As a policy analyst, this is a horrible, counter-productive, policy. As a social scientist, I am curious as to how this plays out, in terms of price impacts, automobile purchases, and unemployment effects (the article cites $5-$9 bn risk to US headquartered auto companies).

I am also interested in the distributional effects. To the extent light trucks will be particularly affected, and those vehicles are more heavily used in rural areas, expect the cost impacts to be particularly pronounced in those areas.

For more on the VERs and hedonic adjustments, see Feenstra (1984).