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News Link • Tariffs

The Tariff Cudgell

• https://www.ericpetersautos.com, By eric

Specifically, in Mexico.

GM, Ford and Ram trucks are made there and then truck-shipped here, which is a variation of driving around the block to cross the street done to get around the high cost of manufacturing vehicles in this country. Trump has been using the threat of heavy taxes – those tariffs being just exactly that, just as your "contributions" to Social Security are exactly that, too – to pressure GM, Ford and Ram (and not just them) to ship their manufacturing operations back across the border in order to "make America great again."

But it won't. All it will do is make things more expensive for Americans – again – unless the factor that's made manufacturing vehicles in this country so expensive is dealt with. That being – chiefly – the cost of complying with a Kafkaesque array of regulations applied to the manufacturing of vehicles and to the vehicles themselves.

This latter is italicized to bring up a point that is rarely brought up – and to bring up  related point.

The first point is that regulations pertaining to what is styled "safety" and also "fuel economy" have imposed thousands of dollars in add-on costs to new vehicles. One can argue the merits of a car that has six air bags in terms of the hypothetical benefit to the people within in the event of a severe crash. It is beside the point if people cannot afford to buy a car with all those air bags – and everything else that is mandated in the name of "safety." It is like arguing that a home solar system that costs tens of thousands to install will "save money" on utility bills.

This brings up the "fuel economy" thing. What good is a 50-plus MPG hybrid car if people can't afford to buy one? Federal regs now demand exactly that – i.e., that cars average 50 MPG – and if they do not, then the federal government hits the manufacturer with taxes that are styled "CAFE fines." The taxes are of course folded into the cost of vehicles.

How many Americans would prefer to be able to buy a $15,000 new car that gets 30 MPG rather than a $30,000 hybrid car that gets 50 MPG? Of course, they're not aware that the $15,000 car has been out-regulated (effectively the same thing as outlawing something) by federal "safety" regs that have made it impossible to sell a $15,000 car in this country.