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Vehicular Assault: Proposed Auto Tariffs Will Hit American Car Buyers’ Wallets

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Listed:
  • Mary E. Lovely

    (Peterson Institute for International Economics)

  • Jeremie Cohen-Setton

    (Peterson Institute for International Economics)

  • Euijin Jung

    (Peterson Institute for International Economics)

Abstract

President Donald Trump’s proposal in May to impose 25 percent tariffs on imported automobiles, SUVs, vans, trucks—as well as all auto parts—will raise car prices significantly, suppressing sales and pushing some buyers with modest incomes out of the new car market entirely. Using industry data, consumer information, and the record of previous tariff hikes, the authors estimate that the average price of an entry-level compact car will increase between $1,408 and $2,057. Similarly, the price of a new compact SUV/crossover, the most popular vehicle in America, will rise by $2,093 to $3,066. More upscale versions of the compact SUV/crossover will rise by significantly more, $4,708 to $6,972.

Suggested Citation

  • Mary E. Lovely & Jeremie Cohen-Setton & Euijin Jung, 2018. "Vehicular Assault: Proposed Auto Tariffs Will Hit American Car Buyers’ Wallets," Policy Briefs PB18-16, Peterson Institute for International Economics.
    • Handle: RePEc:iie:pbrief:pb18-16
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    File URL: https://www.piie.com/publications/policy-briefs/vehicular-assault-proposed-auto-tariffs-will-hit-american-car-buyers
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    Cited by:

    1. Sébastien Jean & Gianluca Santoni, 2018. "How Far Will Trump Protectionism Push Up Inflation?," CEPII Policy Brief 2018-23, CEPII research center.
    2. Karyne B. Charbonneau & Anthony Landry, 2018. "The Trade War in Numbers," Staff Working Papers 18-57, Bank of Canada.

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