Auto Tariffs and Revenues
TV Hit, 3/29/25
I’m on NewsMax later on this evening, specifically on their show, The Count. I don’t think I’ve ever done this show, so this will be a new experience for me. We’ll be talking about this article, conveniently published by NewsMax.
There are a lot of claims that are made in the article and, unfortunately, very few sources. Anyway, here are the talking points that I’m going to try to make:
Talking Points
I think it’s fair to say that Trump is trying to do a lot of good things.
Helping promote the middle class by promoting manufacturing jobs
Increasing our access to foreign markets
Honoring the Tenth Amendment, which has been all but obliterated over the past 50 years
Paying down the national debt
Cutting regulations and taxes…
The list of good things that Trump is trying to get done is long.
But when it comes to tariffs, he’s just completely off base.
They are absolutely going to raise prices on car parts.
Making it more expensive to build cars is the opposite of “spurring growth.”
They are pretty horrid at raising revenues.
If Trump succeeds at bringing car manufacturing all back to the US, there will be zero revenue raised from the tariff.
And with this announcement that he’ll be allowing us to deduct car interest payments on our taxes, they’ll actually be a negative for tax revenue.
Even if it does raise $100 billion annually, which is incredibly unlikely, it’s worth pointing out that Congress currently spends $7 trillion each year.
In other words, Congress spends $100 billion every five days.
Forgive me for not being impressed by the amount of revenue that the White House is claiming will be raised annually by this.
Maybe he’s trying to negotiate better deals with other countries.
That seems strange, though. Why not get them to the table and talk to them about finding bilateral reductions in trade restrictions? Why threaten them?
Which countries’ leaders have refused a meeting with Trump? Which leaders did not answer the phone when he called them?
Is he having a hard time getting other countries “to the table” by reaching out to them? Seems unlikely…
But even then, this isn’t likely to work in the long run, as I’ve written here, here, here, and here.
It’s also interesting to note that Trump is touting all of the foreign investment that’s occurring because of the tariffs (at least supposedly, I have my doubts but I’ll have to dig more into this).
Last time I checked, Trump has sold himself as “America first.”
So why is he so proud of inviting foreign auto firms and foreign steel firms into the US, which will take profits and revenues away from the American companies?
The truth of the matter is that specialization and trade, not protectionism, are the ways to prosperity.
The idea of “doing things yourself to save money” reminds me of this old meme:
So What Happened?
I was joined by Nathan Stemple, the President of Drake Enterprises, to discuss the impact of the tariffs on the auto industry. From Mr. Stemple’s perspective, these tariffs are great! His family business has been getting called for quotes like crazy.
It’s important to note that he’s getting called for quotes. Quotes are an important step to getting a contract, but they are not in and of themselves contracts. I’ll be very curious to find out if he gets actual contracts from this. My guess is that he’ll get a few in the short run, but probably not too many in the long run once the cost of aluminum and steel catches up to his outfit, but that’s a separate matter.
In my remarks, I was very careful to point out that I was happy that he’s getting so many orders and that I wished him nothing but success. I should have said “calls for quotes” but I was feeling generous. It was very clear that he didn’t prepare a whole lot for this segment and I didn’t want to be mean. I did point out that I was happy to hear that one firm out of the hundreds in the greater Detroit area (something I’m very familiar with given my dad’s work history) was seeing some improvements, which I thought was a gentle way to basically dismiss everything that he had said and was going to say.