Trump's threatened tariffs would increase car prices by thousands of dollars, economists say

• President Donald Trump has doubled down on threats to slap steep tariffs on the European auto sector.
• Frustrated with the trade surplus the 28-member bloc runs with the US, Trump argues that tariffs will pressure car manufacturers to move back home.
• Economists estimate the escalation would add thousands of dollars to the price of cars sold in the US.
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President Donald Trump has doubled down on threats to slap steep tariffs on the European auto sector, a move expected to add thousands of dollars to the price of cars sold in the US.

The president said Tuesday that while he hoped broader trade tensions with the European Union could be resolved, he would turn to a punitive 25% tariff on vehicles if a fair deal isn't reached. Frustrated with the trade surplus the 28-member bloc runs with the US, Trump argues that tariffs will pressure car manufacturers to move back home.

The president has separately wielded similar econnomic threats against other nations and reportedly in foreign policy negotiations. But economists say that such tariffs would be felt by American businesses and consumers, putting upward pressure on the costs of both imported and domestically produced automobiles and parts.

The proposed 25% tariff could add up to $6,875 to foreign vehicle prices, the Center for Automotive Research estimated in a July 2018 report. That would also push up prices in the overall market, the group said, by an average of about $4,400 per car.

Researchers at the Peterson Institute for International Economics have reached similar conclusions, saying in a recent study that tariffs "will raise car prices significantly, suppressing sales and pushing some buyers with modest incomes out of the new car market entirely."

The Washington-based group estimated that price increases would range between $1,400 and $7,000, citing a deeply intertwined global auto market.

"Often overlooked when auto tariffs are considered is that, because of border-crossing manufacturing supply chains, there are in fact no 100 percent 'made in the USA' cars," the economists wrote. "Many so-called 'foreign cars' are assembled in the United States-and some contain more domestic content than similar vehicles bearing American name badges."

Businesses and bipartisan lawmakers have expressed sharp opposition to the proposed escalation. The Trump administration has long maintained that imported vehicles pose a threat to national security, but shielded from public view a Section 232 report justifying that assertion.