Name: ‘Buckle in’: Top economist says Trump’s tariffs may backfire
Uploaded: 2025-03-27T15:36:12.417Z
Duration: 2 min 32 s
Description: President Donald Trump announced a 25% tariff on all imported U.S. cars that will go into effect April 3. Trump believes these tariffs will boost U.S. manufacturing, but economist Mark Zandi disagrees.

President Donald Trump announced a 25% tariff on all imported U.S. cars that will go into effect April 3. Trump believes these tariffs will boost U.S. manufacturing, but economist Mark Zandi disagrees.

Washington

Donald Trump has signed an order to impose tariffs imports into the U.S. from countries including China, Mexico and Canada.

Global Tariffs

President Donald Trump has announced a 25% tariff on all imported cars and car parts into the United States. The tariffs are expected to be put in place to bolster U.S. manufacturing. The announcement has drawn varied responses from different stakeholders. The United Auto Workers (UAW) president, Sean Fain, supports the decision, viewing it as a positive step to address free trade issues.

However, not all experts agree with the predicted beneficial outcomes. Economist Mark Zandi has voiced concerns regarding the potential negative implications of such tariffs. Zandi suggests that if the tariffs are fully implemented, the consequence will likely be higher vehicle costs, estimating an increase in the price of a typical car by $5,000 to $10,000 more than current levels. This means the average car price could rise from about $50,000 to $55,000 or $60,000.

Additionally, Zandi anticipates retaliatory actions from other countries, which could hinder U.S. manufacturers from exporting goods internationally. This might result in job losses within the manufacturing sector. Drawing from history, Zandi referenced similar adverse effects from tariffs during Trump's first term, indicating the potential for repeated economic harm. The economist also pointed out the uncertainty of the situation, as such tariffs are instituted through executive orders and can be altered swiftly, posing a risky environment for potential investors in U.S. manufacturing.



‘Buckle in’: Top economist says Trump’s tariffs may backfire

25% tariffs coming for cars and basically all cars, since it also applies to car parts. What is this going to mean? What's your analysis on what people need to be preparing for? Well, Kate, it means higher prices and it means fewer jobs. I mean, on the higher price side, you know, a lot of moving parts here, a lot of uncertainty, but I think if the tariffs are imposed as articulated and stay in place, by this time next year, the typical car price will be somewhere between $5,000 and $10,000 more. So, you know, right now the average car price is 50K. So that means you're going to be paying 55K to 60K as a result of the tariffs. And then I do expect that it's going to cost jobs. You'll see retaliation. Just heard the Canadians talk about this. Other countries will respond, no doubt. And that means U.S. manufacturers are going to have trouble selling what they produce to those countries. And it'll cost jobs. And you don't really need to go too far back to see this. If you go back to President Trump's first term and look at what happened with manufacturing activity, jobs and prices, the tariffs resulted in the kind of damage that I'm talking about. So, and here we're talking about much higher tariffs. So I buckle in. I think this means higher prices and fewer jobs. Donald Trump, the president says that this is being done to protect American manufacturers, to save American workers. The UAW president, Sean Fain, applauded the decision saying it's a step in the direction to end the free trade disaster is how he put it. What are the chances this does not negatively affect American consumers? I just don't see it. I really don't. You know, take a, just put yourself in the position of a CEO of a major global manufacturer. And you're looking at this and you're thinking, should I build a vehicle factory in the United States? And by the way, Kate, to build a factory takes years. You know, you can't build it for next month, next quarter. This is something that takes two, three, four years. And then you're building it to last for years after that, maybe even decades. And what's the tariff going to be tomorrow? What's the tariff going to be six months from now? What's the tariff going to be a year from now? What's the tariff going to be five years from now? Because all of this is done under executive order. It's not in the legislation. It can be changed in the stroke of a pen. So that CEO is going to say, I'm not going to invest. I'm just going to sit on my hand. So I just don't see it. I'm confused by it.

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Global Tariffs