Thanks to protection from this “chicken tax,” Ford, Chevrolet and Dodge have come to dominate the American pickup market, which is a good thing for them, because in 2017, passenger car sales fell 10.9 percent but light truck sales rose 4.3 percent, and because pickup sales are far more profitable than smaller-
vehicle sales. In 2012, Morgan Stanley estimated that 90 percent of Ford’s global profits came from sales of F-series trucks alone.
We rehearse these obscure facts to place President Trump’s latest idea for trade policy in its proper context. By asking the Commerce Department to investigate the possibilities for imposing a 25 percent tariff on all automobile imports on national security grounds, Mr. Trump is essentially contemplating a chicken tax for the entire U.S.-based industry. Even by the standards of Mr. Trump’s previous tariff proposals, this is a bad idea.
Mr. Trump’s notion is a cure in search of a disease: Making money hand over fist from light trucks and SUVs, U.S. automakers are not clamoring for protection from car imports from the few countries that would be affected — such as Germany, Japan, China and South Korea, which accounted for about 3.3 million of the 17.5 million
new light vehicles
sold in the United States in 2015. (Canada and Mexico, sources of about 4 million vehicle imports combined in 2015, would be exempt from tariffs under the North American Free Trade Agreement, though that could change if Mr. Trump scraps that deal, too.)
No doubt U.S. manufacturers, both U.S.- headquartered and Asian and German “transplants,” and their workers would reap a windfall. The United Auto Workers’ president has voiced sympathy for Mr. Trump’s proposal. However, it would come at the expense of the vast majority of Americans who do not make cars and who would find themselves paying higher prices for a more limited range of vehicle choices. Quality, too, would fall off if U.S. producers faced less healthy competition. Not to mention possible disruptions to global supply chains.
Under long-standing rules of international commerce, “national security” is meant to be a rare exception to the free-trade norm, for the very good reason that this rationale is susceptible to self- interested manipulation. By following steel and aluminum import levies previously, and dubiously, chalked up to national security with possible tariffs against consumer products from U.S. treaty allies, Mr. Trump demonstrates just how susceptible.
Japanese and European protection of their relatively small domestic auto markets is a legitimate concern that could, and should, be addressed aggressively, in the context of negotiations, such as those over the proposed trans-Atlantic and trans-Pacific trade deals Mr. Trump has spurned. What he is embarking upon now could turn into a game of protectionist chicken that U.S. consumers will lose.