Trump’s tariffs on cars will create good jobs and increase wages in America | Opinion

Brave American soldiers helped win World War II. But they could not have succeeded without a rock-solid auto industry that mass-produced tanks, trucks and jeeps by the millions.

Today, this key pillar of America’s once-vaunted “Arsenal of Democracy” has been hollowed out by decades of unfair trade. No longer does America fully manufacture its own automobiles. We largely assemble high-value parts made overseas.

To restore our auto industry to strategic dominance, President Donald Trump has imposed 25% tariffs not just on foreign-built autos but also on imported auto parts. These new Trump tariffs will provide powerful incentives for automakers to bring engine, transmission and drivetrain production back to American soil.

Opinion: Trump tariffs will save American jobs and level the playing field

About half of autos sold in US are imports

Of the 16 million passenger vehicles, SUVs and light trucks Americans buy annually, about 8 million are imported, primarily from Germany, Japan, Mexico and South Korea. Of the other 8 million vehicles assembled in America, about 50% of their content is made in America.

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This means that just 25% of the dollar value of the vehicles Americans buy each year actually supports American manufacturing. The rest of our hard-earned money goes to pay for foreign-made parts and labor.

What caused this decline in America’s once-mighty auto sector?

It’s the same story we’ve seen across industries: Other nations use unfair trade practices and predatory industrial policies to flood our market with subsidized vehicles and parts while blocking U.S. exports from reaching their own consumers.

Opinion: Give President Trump credit. Americans believe the nation is headed in the right direction.

Take Germany: It imposes a 10% auto import tariff, four times higher than the previous U.S. rate of 2.5%. It further stacks the deck by heavily subsidizing exports, offering VAT tax rebates and erecting technical barriers to trade − bogus safety standards that disqualify U.S. vehicles. The result? Germany exports six times more vehicles to America than we export to Germany.

Japan’s official auto tariff is low, but that’s not the point. Its domestic market is locked down by deeply entrenched distribution networks and technical regulations. For example, U.S. cars must pass a hood impact test − a pedestrian safety standard requiring the hood to deform when struck by a falling object, simulating a human head impact. Vehicles that fail can’t be sold in Japan. Not surprisingly, over 95% of vehicles sold in Japan are made in Japan.

Americans are losing out on high-paying jobs

The real threat from Germany and Japan isn’t just about finished vehicles. It’s their strategic dominationof powertrain manufacturing − the engine, transmission and drivetrain components that are the heart and brain of a vehicle. These components not only offer the highest profit margins, they also support the highest-paying manufacturing jobs.

Powertrain assembly demands deep experience and skilled labor, which is why wages inpowertrain facilities are 10-20% higher than those in final assembly plants.

And here’s the gut punch: America produces fewer than 20% of the engines for the vehicles it sells. Germany and Japan together produce a much greater shareof the engines and transmissions powering vehicles sold on American roads.

At BMW’s massive plant in Spartanburg, South Carolina, building SUVs for global export, nearly all engines and transmissions are imported from Germany and Austria. 

Mercedes-Benz follows the same model in Alabama. These are not “American-made” vehicles. They are German-engineered machines assembled by lower-wage American labor.

In Indiana, Subaru assembles the Outback and Ascent, but the engines are imported from Japan

Toyota and Honda use more U.S.-made components, but they still rely heavily on Japanese powertrains.

Even the major Detroit automakers have offshored the heart of their vehicles. More than half of Ford’s U.S.-assembled vehicles use Mexican engines. Stellantis (formerly Chrysler) sources many of its engines from Italy and Mexico, while relying on transmissions built by German-based ZF Friedrichshafen AG. General Motors, while somewhat more balanced, still depends on imports from Mexico, Austria and South Korea.

The United States-Mexico-Canada Agreement (USMCA) was supposed to change this. Instead, under the Biden administration’s lax enforcement, Mexico became the new Michigan. A string of Mexican cities now forms a “Motor City diaspora” − Volkswagen and Audi in Puebla, GM and Stellantis in Ramos Arizpe, Ford in Hermosillo, Nissan and Mercedes-Benz in Aguascalientes.

By extending tariffs to both autos and auto parts, President Trump is confronting this threat to America’s economic and national security. He understands that powertrain design and production are not just technical challenges − they are strategic capabilities. Lose them, and we don’t just lose good jobs − we lose the industrial strength needed for national defense.

This isn’t protectionism. It’s restoration. Restoration of full-spectrum manufacturing, from bolt to body. Restoration of high-wage, high-skill jobs. And restoration of America’s arsenal of democracy.

Let the restoration begin.

Peter Navarro is White House senior counselor for manufacturing and trade.

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