Category Archives: Trade Policy

All That Is Old Is New Again: Protection for Automobiles and Light Trucks

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).

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Trade War and Recession?

Former Senator Toomey (Politico):

“We have a recession coming. That’s what the response would be from a full-blown trade war that [Trump] would precipitate,” Toomey said, referring to the president-elect’s trade proposals. Those include tariffs of up to 20 percent on all imports, tariffs of at least 60 percent on China and more radical positions such as swapping the income tax with tariffs.

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