Vehicular Assault: Proposed Auto Tariffs Will Hit American Car Buyers’ Wallets

Mary Lovely, Jérémie Cohen-Setton () and Euijin Jung ()
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Euijin Jung: Peterson Institute for International Economics

No PB18-16, Policy Briefs from Peterson Institute for International Economics

Abstract: President Donald Trump’s proposal in May to impose 25 percent tariffs on imported automobiles, SUVs, vans, trucks—as well as all auto parts—will raise car prices significantly, suppressing sales and pushing some buyers with modest incomes out of the new car market entirely. Using industry data, consumer information, and the record of previous tariff hikes, the authors estimate that the average price of an entry-level compact car will increase between $1,408 and $2,057. Similarly, the price of a new compact SUV/crossover, the most popular vehicle in America, will rise by $2,093 to $3,066. More upscale versions of the compact SUV/crossover will rise by significantly more, $4,708 to $6,972.

Date: 2018-06
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