Bad policy, worse political strategy on auto tariffs

WASHINGTON — The Trump administration has gotten itself so far out on a ledge over auto tariffs, that it’s struggling to find a way to crawl back to political safety.

But we’ve seen this movie plot before, haven’t we?

Candidate relentlessly promises hard-core supporters that he will deliver immediate results by stopping foreigners from taking advantage of the U.S. As president, he spends next two years creating an alternative reality about the threat coming across our border and relentlessly hypes the danger to rev up his audience. He refuses to compromise even when most experts and most voters don’t agree with the diagnosis or the prescription. And so he must invoke emergency powers to get his way, play for TV ratings and hope that the courts will either bail him out or give him credit for trying.

The auto tariff fight isn’t so different from the border wall fight, except that it’s even more one-sided. There’s Trump (and adviser Peter Navarro) — and there’s everybody else. But here we are, on the brink of punishing tariffs, on national-security grounds, that could do upwards of $83 billion worth of damage to the economy by some estimates. All because the author of Trump: The Art of the Deal has backed himself into a corner again.

The Commerce Department on Sunday delivered to the White House its report on whether imports of auto products are weakening the economy and pose a national security threat. The president has 90 days to decide how to respond. But having demonized auto imports, especially from Europe, as an imminent threat, how can he back down?

It won’t be just the Europeans who pay. Vehicles assembled in the U.S., by domestic and foreign manufacturers, still depend on overseas parts. A vehicle selling for $35,000 contains about $26,000 in value from materials and components. At 80 percent U.S. content for these inputs, a 25 percent tariff applied to all imported auto parts would add $1,300 to the vehicle’s price, according to a new study by the Center for Automotive Research.

American consumers can pay that price, or stay on the sidelines, which would hurt sales and the jobs that depend on them. And those job losses will be felt in every congressional district around the country.

Maybe Trump will realize he has his hands full trying to negotiate out of a trade war with China and getting the U.S.-Mexico-Canada free trade deal through a skeptical Congress.

Most of his advisers, I would venture, now realize that last year’s steel and aluminum tariffs backfired, hurting many businesses across the economy, while aiding just a few steel mills that were able to raise prices. The fallout from auto tariffs would be much greater given the economic magnitude of the auto industry. But people such as Lawrence Kudlow, Trump’s top economic counselor, and Treasury Secretary Steve Mnuchin are either failing or not trying to convince a president who seems to genuinely relish the idea of tariffs.

If the administration officials really wanted to move ahead on auto tariffs, they could have done so last summer, before the midterm election. That they didn’t suggests they recognized the danger to the economy. And now the politics get even tougher. Stakeholders have had time to build coalitions and find congressional champions to push back against Trump.

For now, the White House will keep the Commerce Department report secret so it can use it to pressure Japan and the European Union for concessions in upcoming trade talks. Auto interests want full disclosure so they can prepare their political response.

The White House’s best move would be to bury the report, and never let it see the light of day.