Tariffs and the Auto Industry

is Dean of the College of Law at ���ϲ����� and began his career in the Office of the General Counsel at Ford Motor Company in the International Trade and Transactions practice group. His practice focused on ��U.S. law for foreign affiliates and subsidiaries, among other topics. Later he served as Ford’s Director for the Association of Southeast Asian Nations Government Affairs.

• “The global automotive industry works best in free markets, free of market distortions such as tariff and non-tariff barriers. Free markets have led to greater consumer choice and lower prices. The industry requires long lead times to adjust to changes in tariff policy. An immediate 25% tariff on automotive parts and finished vehicles from Canada and Mexico will introduce a great deal of uncertainty into the supply chain, and ultimately will lead to higher vehicle prices until the market can adjust,” said Lau.

History of Tariffs

, professor of history in the Maxwell School at ���ϲ�����, is the author of��. The book gives a history lesson of the tariffs used by American governments from the 18^th century until early 20^th century. Early in American history, Congress instituted high tariffs on most imports due to distrust of foreign goods.��But due to demand for things like silk, tobacco, and sugar, a brisk illicit traffic developed to maneuver around those laws. Cohen said:��

• “The US has long used tariffs to collect revenue, aid manufacturing, and exert power.�� But I can’t think of a trade war initiated so randomly in a time of peace and prosperity” said Cohen.
• “Early 20^th Americans replaced tariffs with income taxes because the former generated insufficient revenue to pay for a modern military,” said Cohen. “Reformers also viewed the tariff as a source of corruption, as businesses bribed Congressmen to support taxes giving them monopolies.��Tariffs led to widespread smuggling, which even an extensive network of customhouses could not staunch. Writing a tariff bill became so complicated that Congress gave the president wide discretion to negotiate rates.�� Now, we’re seeing the consequences, as one man can start a trade war.”

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Economic Impact and Tariffs

, assistant professor at ���ϲ�����’s Maxwell School of Citizenship and Public Affairs, is an expert in international trade, tariffs, and supply chains. He’s been interviewed by several news outlets about tariffs including a recent interview with Newsweek, “.”

From the article:

• “Ryan Monarch, a professor of economics at ���ϲ�����, told��Newsweek��prices will be driven up not only by the tariffs themselves, but also the increased costs with complying with customs rules.
• There will be added costs both from sellers, who will need to prepare paperwork and calculate the value of each package as well as U.S. customs workers who will be tasked with enforcing the new policy, he said.
• ‘Part of the reason the exemption exists in the first place is that it didn’t seem worth it to try to do all of the work to examine all of these packages and imported things that are of such low value,’ he said.
• In total, a 25 to 30 percent price increase would not be ‘outlandlish,’ Monarch said. It’s difficult to predict the full impact, but companies are unlikely to eat the costs of these fees, he added.
• ‘We should expect that those prices are going to go directly onto American buyers. Research has shown that Chinese suppliers pass on those prices completely.’”