White House trade counselor Peter Navarro said Sunday that President Trump’s tariffs on imported automobiles and car parts will be “great for America” amid rising concerns that they will force American consumers to pay more at car dealerships.
Mr. Navarro said the 25% tariffs on auto imports that are set to take effect this week will help restore the nation’s manufacturing base, “protect American consumers” and create more than a million new jobs.
“The message is tariffs are tax cuts, tariffs are jobs, tariffs are national security, tariffs are great for America, tariffs will make America great again,” Mr. Navarro said on “Fox News Sunday.”
Mr. Trump announced that the United States will begin imposing the tariff on all foreign-made vehicles starting Wednesday, dubbing it “Liberation Day.”
The White House has estimated that the 25% tariffs on imported cars and car parts will raise $100 billion in revenue annually. Roughly half of the vehicles sold in the United States are imported.
Tariffs are a tax or duty paid by importers on the goods they bring in from foreign markets.
Economists and free trade advocates have warned that the move will put a financial squeeze on automakers, who will likely pass the tax hike onto consumers. The uncertainty surrounding the impact of the tariffs has rattled Wall Street. Surveys have shown a deterioration in consumer sentiment thanks to growing fears about inflation.
Canadian Prime Minister Mark Carney has said his country will impose retaliatory tariffs after Mr. Trump rolls out his tariff package this week.
Diane C. Swonk, chief economist for KPMG LLP, said consumer surveys have found “an increase in inflation expectations and deterioration in job expectations and job security.”
“That is a very worrisome combination. It has that flavor of stagflation to it,” Ms. Swonk said on ABC News’ “This Week,” where she questioned the Trump administration’s claim that tariffs will reduce the cost of cars. “The economics does not suggest that at all. It is the economic consensus that actually car prices will go up.”
Brian Moody, executive editor of the Kelley Blue Book, said on CNN that “most likely prices are going to go up by a few thousand dollars at least, but it would vary from brand to brand and even model to model.”
Mr. Trump downplayed the concerns over the weekend, telling NBC News that he doesn’t worry about whether automakers raise prices on foreign cars.
“I couldn’t care less,” the president said Saturday. “I hope they raise their prices, because if they do, people are going to buy American-made cars. We have plenty.”
On Sunday, Mr. Navarro also said concerns about the tariff fallout are overblown. He said the tariffs are part of a bigger economic plan that includes tax credits for people who purchase American-made cars and extending the 2017 Trump tax cuts for working families.
“The reason why we are not going to see inflation is because the foreigners are going to eat most of [the tariff] – they have to,” Mr. Navarro said. “We are the biggest market in the world. They have to be here … So they are going to cut their prices to absorb that. But the bigger picture here is restoring the American manufacturing base.”
