Should the Administration of President Donald Trump to impose a 25% tariff on imported cars for reasons of national security, it would cause a loss of 157,000 net jobs in the United States, according to a study by The Trade Partnership (PDF).
"We find that the tariffs would have a very small positive impact on high-skilled workers in the motor vehicle and parts sectors, but very large negative impacts on workers — both high- and lower-skilled — in other sectors of the economy," says the study by the trade policy consulting group.
A 25% a tariff -as the one that President Trump seeks- would add 92,000 jobs in the automotive industry, but it then would cause the loss of 250,000 jobs in the rest of the economy. About three jobs would be lost for every job gained in the automotive and parts sector.
The price of foreign vehicles would rise from US$ 30,000 to US$ 36,400, a 21% increase. All in all, the economy would lose 0.1 percent of its value. Such effects don't take into account any potential retaliation by American trade partners.
The main job losses would occur in the service sector: 120,000 positions in the construction segment and 68,000 jobs in the business and professional services sector.
"If supporting jobs and strengthening the economy are the motivations for invoking national security reasons for imposing protection, such tariffs would have the opposite impact from that intended," concludes the study based on official data.
The study does not provide data on the impact on the industries of Mexico and Canada, main sources cars imports to the US, but it insists that the increase in price would be for both locally-produced and imported.
On May 23, the Department of Commerce announced the beginning of a probe to determine the impact on national security of imports of automobiles, auto parts, SUVs and light trucks under Section 232 of the US Trade Expansion Act. 1962
The US Department of Commerce announced two days of public hearings on July 19 and 20 for the public to present their argument as well as to announce a comment period before June 22.