The misery of auto tariffs is hitting families and factories
Trump's style of threatening and coercing U.S. trading partners with high tariffs has increased the toxicity of trade policy. This has all made for a rough start, with initial tariff announcements roiling the stock and bond markets and stoking consumer fear and uncertainty.
But now, two things have become clear. First, the Trump approach to tariffs has confused companies and the financial markets. Since March, employment has plummeted in industries with increased exposure to higher tariff-related costs. Second, and more important, the price of the chaos has come due, and it's being paid largely by working Americans.
The trade wars reveal just how much Trump has sold a bill of goods to his political base. Tariffs drive up prices to U.S. consumers, both directly and indirectly. Tariffs on imported finished goods, and components that are used in domestic manufacturing, are passed on to consumers directly through higher prices, as we've seen with coffee. Tariffs also stifle competition from abroad by making imports more expensive. This loss of competition can spur domestic price increases, as we've seen with tariffs on imported solar panels.
Let's take the high-profile case of automobiles. Automakers produce some models in the U.S. for sale here, make others for export and import other models. With tariffs on auto parts jumping from 2.5 percent to 25 percent, on steel from an original 0 percent to 50 percent and finished cars from 2.5 percent to 25 percent, costs are rising in all three areas.
Jeep maker, Stellantis, reported an expected $2.7 billion loss in the first half of 2025, partially due to tariffs. General Motors reported a $1.1 billion hit from tariffs on imported cars and parts in the second quarter of 2025. And Ford Motors estimates that tariffs will cost the company $1.5 billion in 2025.
We will see working Americans absorb the full force of these tariff-related cost increases, tariffs on imported vehicles from Asia and Europe and, to some (still uncertain) extent from Canada and Mexico, in higher automobile prices.
Because automobiles represent a sizable chunk of the average U.S. consumer's budget, higher prices will be an enormous hit to paychecks and pocketbooks.
The Bureau of Labor Statistics estimates that consumer spending on transportation between 2020-2023 accounts for about 17 percent of the average American's budget and new vehicles account for over 60 percent of that outlay.
Transportation ranks second among the five largest necessities that account for 75 percent of total consumer spending, preceded by housing (first) and followed by food (third).
Moreover, multiple cohorts depend heavily on cars for transportation. Over 90 percent of adults rely on personal vehicles for their commute to work. And in rural areas, for swing- and night-shift workers, and for families, car ownership is essential.
Simply put, working Americans spend a lot on automobiles because they have to. And for many Americans, a car is an absolute necessity.
Tariff-induced higher prices for automobiles carry a significant opportunity cost for consumers. Tariffs are expected to increase the price of a new automobile by between 6 percent and 22 percent. That's an additional $3,000 to $10,500 per new car purchase, piled onto the average automobile price of $48,000.
By way of comparison, this incremental cost is the equivalent of about five weeks of the average U.S. family food budget or 14 weeks of rental housing or mortgage payments.
Budget-constrained consumers make careful choices about how to spend their paychecks. For necessities like automobiles, higher tariff-induced prices will force them to cut back on spending in other important areas. The sheer size of this forced rebalancing stands, on balance, to further tighten budgets and lower working Americans' quality of life.
The Trump administration's willful ignorance of how tariffs hit working Americans and is coming home to roost.
In March, Trump stated that the administration did not care about whether automobile tariffs drive up consumer prices. And faced by complaints from Wal-Mart, Amazon and Mattel in May, Trump told U.S. companies to 'eat the tariffs' instead of passing them on to consumers through higher prices.
The ultimate tariff hit to paychecks and pocketbooks will be painful. Moreover, even if Trump's draconian policy was remotely successful in spurring the onshoring of U.S. manufacturing, it would take far longer than the three and a half years left in Trump's final and devastating presidential term.
So far, there's no sign that will happen. To the contrary, manufacturing has been shedding jobs and pulling back on investment this year.
Democrats should be looking now to find ways to advertise that Trump's tariff policy puts working Americans in the cross-hairs, and to campaign on reversing the policy and mitigating the harm.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
San Francisco Chronicle
24 minutes ago
- San Francisco Chronicle
Illegal immigration hit a record-high of 14 million in the US in 2023, Pew report finds
The number of people in the United States illegally surged to an all-time high of 14 million in 2023, a research group said Thursday, a major increase that still falls well short of estimates from President Donald Trump and some critics of immigration. The Pew Research Center's closely watched gauge rose from 11.8 million a year earlier and surpassed the previous high of 12.2 million in 2007. The increase was driven by some 6 million who were in the country with some form of legal protection. Trump has stripped many of those protections since taking office in January. Pew, whose estimates date back to 1990, said that, while 2023 is its latest full analysis, preliminary findings show the number rose in 2024, though at a slower rate after then-President Joe Biden severely restricted asylum at the border in June of that year. The number dropped this year under Trump, but is still likely above 14 million. The overall U.S. immigrant population, regardless of legal status, reached an all-time high of more than 53 million in January 2025, accounting for a record 15.8% of the U.S. population. The number has since dropped, which Pew said would be the first time it has shrunk since the 1960s. While the findings are unlikely to settle debate, Pew's report is one of the most complete attempts to measure illegal immigration. Nearly all the increase came from countries other than Mexico. Guatemala, El Salvador, Honduras and India accounted for the largest numbers after Mexico. Totals from Venezuela, Cuba, Colombia, Nicaragua, Ecuador, Ukraine and Peru each more than doubled in two years. Trump said in an address to Congress in March that 21 million people 'poured into the United States' during the previous four years, far exceeding estimates from Pew and what figures on border arrests suggest. The Federation for American Immigration Reform, a group largely aligned with his policies, estimated 18.6 million in March. The Center for Immigration Studies, a group that favors immigration restrictions, reported that there were 14.2 million people in the U.S. illegally last month, down from a peak of 15.8 million in January. Homeland Security Secretary Kristi Noem touted the reported drop of 1.6 million in six months. 'This is massive,' she said in a press release last week. Noem's own department, through its Office of Homeland Security Statistics, estimates there were 11 million people in the U.S. illegally in 2022, its most recent count. The Center for Migration Studies, author of another closely watched survey, most recently pegged the number at 12.2 million in 2022, topping its previous high of 12 million in 2008. Pew's findings, based on data from the U.S. Census Bureau survey and Department of Homeland Security, reflect an increase in people crossing the border illegally to exercise rights to seek asylum and Biden-era policies to grant temporary legal status. Those policies included a border appointment system called CBP One and permits for Cubans, Haitians, Nicaraguans and Venezuelans. Trump has ended those policies and also sought to reverse Biden's expansion of Temporary Protected Status for people already in the United States whose countries are deemed unsafe to return to. Mexicans were the largest nationality among people in the country illegally, a number that grew slightly to 4.3 million in 2023. The increase came almost entirely from other countries, totaling 9.7 million, up from 6.4 million two years earlier. States with the largest numbers of people in the country illegally were, in order, California, Texas, Florida, New York, New Jersey and Illinois, though Texas sharply narrowed its gap with California. Even with the increases in recent years, six states had smaller numbers in 2023 than in the previous peak in 2007: Arizona, California, Nevada, New Mexico, New York and Oregon. Pew estimated that a record 9.7 million people without legal status were in the workforce, or about 5.6% of the U.S. labor force in 2023, with Nevada, Florida, New Jersey and Texas having the largest shares. ___
Los Angeles Times
24 minutes ago
- Los Angeles Times
Christmas decorations come with a higher price tag this holiday season, thanks to tariffs.
The Christmas decorations industry is hoping Donald Trump's tariffs don't ruin the holidays. The vast majority of artificial Christmas trees, lights and other decor are imported — mostly from China. Because seasonal items typically need to be shipped months ahead of time, stiffer levies have already added millions of dollars in unexpected costs. Jared Hendricks, founder and chief executive officer of Village Lighting Company in West Valley City, Utah, had to take a line of credit leveraged by his house and office to help cover the $1.5 million in extra tariff costs. 'This is the most stressful year I've ever had,' said Hendricks, whose business sells lights, garlands and wreaths to professional installers and consumers. 'Over the last 20-some-odd years we've been through a lot, and I'm just kind of operating on faith that we'll find a way.' As Trump's ever-changing announcements on tariffs rolled in during the crucial shipping period for the industry, managers from across the country said they had to cancel shipments, cut down on orders and lay off workers to be able to pay the duties. Some expressed concerns about staying in business. For shoppers this holiday season, the shipping disruptions will mean less choice of products in the stores and prices that could be 10% to 20% higher than last year as a result of tariffs, said Jami Warner, executive director of the American Christmas Tree Association. An artificial tree that cost $299 in 2024, say, could fetch as much as $359 this year. 'This is a happy industry, and this is a pretty unhappy time to be in it,' Warner said. By the end of August, much of the year's imported Christmas trees and other decorations have been shipped, and retailers are busy preparing for the holiday season when they make the bulk of their sales. Another question this year is whether uncertainty about the direction of the economy will weigh on holiday spending.'It's going to be a challenging holiday season for lots of retailers,' said Natalie Kotlyar, a retail analyst at advisory firm BDO. U.S. companies imported $3.4 billion in artificial Christmas trees, ornaments, and other holiday decorations last year, and 87% came from China, according to the U.S. Census Bureau trade data. In addition, roughly $420 million in light strings came from abroad, a majority from Cambodia, a country that also faces a high tariff rate. Trump often says that companies can avoid import levies by making their products in the U.S. The administration's America First policies, including tariffs, are focused on unleashing real prosperity for American workers with good-paying jobs — 'not cheap imports,' White House spokesman Kush Desai said in an emailed statement. Craig Batten, president of S4 Lights in Toano, Virginia, said he has explored making Christmas lights in the U.S. but 'found that that was about impossible.' The only place to get many raw materials is in China and Southeast Asia, and finding enough workers here is a problem, he said. Batten added a line item to his invoices called 'tariff impact,' but he can't pass along the entire cost of the duties because that would raise prices too high. 'We're taking a hit, hoping that our existing inventory that we got pre-tariff helps offset the sticker shock,' he said. When tariffs on goods imported from China temporarily reached 145% in April, American Christmas LLC, stopped shipments and canceled 10% of orders, said CEO Dan Casterella. The Mount Vernon, New York-based company, which installs holiday displays in places such as retail stores, corporate headquarters and Christmas sites like the Rockefeller Center, resumed shipping when the duties were temporarily reduced to 30% in May as part of a trade-war truce with China. After another 90-day extension earlier this month, the new deadline for a trade deal is Nov. 10. The rate could go up or down, depending on negotiations between the US and China. Casterella says it's impossible to plan for next year without knowing what the tariff rates will be. He usually starts ordering in October or November for the following Christmas. 'I don't necessarily disagree with the mindset of having tariffs,' Casterella said. 'It's just the uncertainty right now of that around them is making it difficult to run a business.' Three Kings Gifts in Cockeysville, Maryland, specializes in nativity sets and small chests of gold, frankincense, and myrrh — the three gifts given to baby Jesus in the Bible. Rich Terlep says he's used contractors in China since starting the company in 2005. For instance, workers use a tiny tip of a peacock feather to put the pupils in the eyes of figurines. It's a low-wage job that wouldn't be filled in the U.S., he said. Terlep scurried to get 11 containers carrying about 700 sets each shipped so they would land in the U.S. before the initial Aug. 12 deadline. He's decided to eat the tens of thousands of dollars in additional costs from tariffs. 'Everyone is hoping against hope that somehow or another sanity is going to emerge out of this because it is unsustainable,' Terlep said. At Balsam Hill, one of the leading companies in the holiday-decorations business, the tariffs bill is expected to come to about $15 million this year — up from $1 million last year, according to Mac Harman, founder and CEO of parent company Balsam Brands. To preserve cash to pay tariffs, the California-based firm scaled back orders, cut 10% of its global workforce of 350 employees, and froze raises and travel. But none of those actions come close to covering the cost of the tariffs, Harman said. The Christmas Trade Group, which represents small and medium-sized decoration firms, has requested a tariff exemption from the Trump administration. The group argues that domestic production is impossible, decorations are critical to holiday retail sales and that tariffs effectively force businesses to choose between operating at a loss and closing. Jonathan Gold, vice president of supply chain and customs policy at the National Retail Federation, said he's heard from a number of owners who are concerned about the viability of their business. The Christmas Trade Group has been encouraged by conversations it's had both with members of Congress and the administration, said Josh Fendrick, a principal with Williams & Jensen representing the coalition. The White House didn't say whether the exclusion request would be considered. There's a precedent for relief. In his first term, Trump delayed some tariffs on Chinese imports, saying at the time 'so it won't be relevant to the Christmas shopping season.' 'We sell joy, we sell memories,' said Chris Butler of National Tree Company in New Jersey. 'If any industry had a shot at getting some kind of exemption from the administration, it would be us.' Niquette writes for Bloomberg.
Los Angeles Times
24 minutes ago
- Los Angeles Times
Appeals court throws out massive civil fraud penalty against President Trump
NEW YORK — An appeals court has thrown out the massive civil fraud penalty against President Donald Trump, ruling Thursday in New York state's lawsuit accusing him of exaggerating his wealth. The decision came seven months after the Republican returned to the White House. A panel of five judges in New York's mid-level Appellate Division said the verdict, which stood to cost Trump more than $515 million and rock his real estate empire, was 'excessive.' After finding that Trump engaged in fraud by flagrantly padding financial statements that went to lenders and insurers, Judge Arthur Engoron ordered him last year to pay $355 million in penalties. With interest, the sum has topped $515 million. The total — combined with penalties levied on some other Trump Organization executives, including Trump's sons Eric and Donald Jr. — now exceeds $527 million, with interest. 'While the injunctive relief ordered by the court is well crafted to curb defendants' business culture, the court's disgorgement order, which directs that defendants pay nearly half a billion dollars to the State of New York, is an excessive fine that violates the Eighth Amendment of the United States Constitution,' Judges Dianne T. Renwick and Peter H. Moulton wrote in one of several opinions shaping the appeals court's ruling. Engoron also imposed other punishments, such as banning Trump and his two eldest sons from serving in corporate leadership for a few years. Those provisions have been on pause during Trump's appeal, and he was able to hold off collection of the money by posting a $175 million bond. The court, which was split on the merits of the lawsuit and the lower court's fraud finding, dismissed the penalty Engoron imposed in its entirety while also leaving a pathway for further appeals to the state's highest court, the Court of Appeals. The appeals court, the Appellate Division of the state's trial court, took an unusually long time to rule, weighing Trump's appeal for nearly 11 months after oral arguments last fall. Normally, appeals are decided in a matter of weeks or a few months. New York Attorney General Letitia James, who brought the suit on the state's behalf, has said the businessman-turned-politician engaged in 'lying, cheating, and staggering fraud.' Her office had no immediate comment after Thursday's decision. Trump and his co-defendants denied wrongdoing. In a six-minute summation of sorts after a monthslong trial, Trump proclaimed in January 2024 that he was 'an innocent man' and the case was a 'fraud on me.' He has repeatedly maintained that the case and verdict were political moves by James and Engoron, who are both Democrats. Trump's Justice Department has subpoenaed James for records related to the lawsuit, among other documents, as part of an investigation into whether she violated the president's civil rights. James' personal attorney, Abbe D. Lowell, has said that investigating the fraud case is 'the most blatant and desperate example of this administration carrying out the president's political retribution campaign.' Trump and his lawyers said his financial statements weren't deceptive, since they came with disclaimers noting they weren't audited. The defense also noted that bankers and insurers independently evaluated the numbers, and the loans were repaid. Despite such discrepancies as tripling the size of his Trump Tower penthouse, he said the financial statements were, if anything, lowball estimates of his fortune. During an appellate court hearing in September, Trump's lawyers argued that many of the case's allegations were too old, an assertion they made unsuccessfully before trial. The defense also contends that James misused a consumer-protection law to sue Trump and improperly policed private business transactions that were satisfactory to those involved. State attorneys said the law in question applies to fraudulent or illegal business conduct, whether it targets everyday consumers or big corporations. Though Trump insists no one was harmed by the financial statements, the state contends that the numbers led lenders to make riskier loans than they knew, and that honest borrowers lose out when others game their net-worth numbers. The state has argued that the verdict rests on ample evidence and that the scale of the penalty comports with Trump's gains, including his profits on properties financed with the loans and the interest he saved by getting favorable terms offered to wealthy borrowers. The civil fraud case was just one of several legal obstacles for Trump as he campaigned, won and segued to a second term as president. On Jan. 10, he was sentenced in his criminal hush money case to what's known as an unconditional discharge, leaving his conviction on the books but sparing him jail, probation, a fine or other punishment. He is appealing the conviction. And in December, a federal appeals court upheld a jury's finding that Trump sexually abused writer E. Jean Carroll in the mid-1990s and later defamed her, affirming a $5 million judgment against him. The appeals court declined in June to reconsider; he still can try to get the Supreme Court to hear his appeal. He's also appealing a subsequent verdict that requires him to pay Carroll $83.3 million for additional defamation claims. Peltz and Sisak write for the Associated Press.
