The Trump Tax on cars

NAFTA was a bad deal, the worst deal ever, sending jobs to Mexico. Our imports exceed exports, a bad thing. Trump’s tough talk of tariffs against Mexico made them give us a better deal. A big win. So much winning!

That’s the Trump story. Every word is a lie, including “the” and “to.”

NAFTA reduced trade barriers among Canada, Mexico, and America. This enabled Mexico and Canada to produce and export more — thereby becoming richer, and hence a bigger market for stuff we produce. (After NAFTA we export more to Canada and Mexico than we import from them.) Low production costs in Mexico enable Americans to buy stuff cheaper, and thus to buy more. Which creates more jobs — more than the ones lost to Mexico. That’s how free trade makes everybody better off.

That’s Economics 101. Which Trump flunked. (He got rich as a con artist.)

But isn’t Trump’s new deal with Mexico better for America? No, it’s worse — and worse for Mexico as well. Mexico agreed to it because the Trumpian alternative of full punitive tariffs was worse still (and Mexico’s incoming and outgoing presidents both wanted this issue resolved before the handover).

Cars are the main target. Trump’s deal will make Mexican car production costlier, so more production will occur in America. Good, no? No, because North American car makers don’t compete just against each other, but against the whole rest of the world. Making North American car production more expensive makes it less competitive against cars from all those other countries. And Trump’s idiotic trade policy raises the costs of not only Mexico’s car production, but our own. Cars use a lot of metal, and tariffs on metal, like aluminum, raise prices for it. Surely a plan for killing both U.S. and Mexican jobs and making us all poorer.

We don’t know yet how things will wind up with Canada. But meantime it’s estimated that Trump’s “great deal” with Mexico will add over $2000 to the cost of your next car purchase. Call it the Trump MAGA tax. (But don’t forget the big tax cut he gave millionaires.)

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One Response to “The Trump Tax on cars”

  1. Mark Watson Says:

    How I can make America great again in 2019.

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