Mexico will be a big winner in the next decade. There's political will to reverse offshoring, but that's expensive, so Mexico is attractive because it doesn't have the China drama and USMCA makes trade cheap.
In the 1980’s they demanded and got import quotas on Japanese automobiles which were outcompeting Detroit.
Supply constraints allowed US automakers to better compete on price without improving their product design, quality, or cost structure, so much of the same effect as a tariff.
Because there are already numerous trade barriers in place. The Chicken tax prevents normal size pickups from being imported. The Smart car was discontinued in the United States due to the need to modify to meed US standards that are differnt.
If people don’t buy foreign cars because they are too expensive, then no one. For the union there’s no intrinsic downside to such a protectionist action.
Why would American consumers purchase a car made in Europe without the tariff?
It is never possible that the producers and their labor will benefit more than the aggregate harm imposed on consumers by a tariff.
The cost of a tariff on the economy will always be more expensive than the benefit it gifts to a select few. However, the political reality of the cost spread out to many people compared to the larger per person benefit enjoyed by a smaller number of cronies means that tariffs will almost always be popular.
That's only true in a perfect globalized market economy. To head you off, I understand the the downward shift of the demand curve when the price level rises, that makes complete sense. However,
if the net result of not having protectionist trade policy is a loss of on-shore production and at a later date their is global instability, whether from a pandemic virus or war, such that a global market no longer functions freely, then wouldnt the "expense" be an investment? Demand for cars is fairly elastic I would imagine, so wouldn't domestic suppliers increase production?
Looking at vehicle production through the single dimension of economics without considering geopolitics seems naive.
Higher tariffs leads to less overall supply in the domestic market which leads to higher prices for consumers. Higher prices for consumers leads to grumpy consumers at the people who supported the tariff in the first place.
Moreover, longer term tariffs leads to domestic suppliers not being as efficient and hence fall behind international competition. Thus, domestic consumers get garbage cars and become grumpy at the people who supported the tariff in the first place.
Those European cars were made by workers with similar protections to American workers (though this will vary across Europe and across the US), so there isn't a labor rights angle here; it's just economic protectionism. Chinese manufacturing is different.
