I saw a replay of an interview with Trump’s eccentric economic advisor, Peter Navarro, this morning. In it, he was explaining that Ford, founded by an American, still owned by an American family and developer of the idea that there should be a mass market for autos, is not an American company. In contrast, Toyota, a highly traditional (meaning anti-woman, anti-foreigner) member of the samurai-created zaibatsu that fomented WWII, is. Honda, too.

The only sense I can make out of this is that although Ford assembles most of its autos in the US, its engines come from Canada. Toyota and Honda, in contrast, both make engines in the US.

As far as I can tell, Navarro, whose area of academic expertise the internet says is electric utility regulation, maintains that raising tariffs high enough will force car manufacturers to move engine manufacturing plants from abroad to the US and that this will create a wealth of high-paying domestic jobs.

Three issues:

–the only car manufacturer with wholly domestic production is Tesla. So it’s hard not to see dots connecting the administration’s proposal to Elon Musk’s company. This would also certainly upend BYD’s plans to deliver its moderately priced offerings to US customers from Mexican plants

–plants moved from abroad to the US would likely be highly automated, therefore producing (my guess) surprisingly small number of new jobs

–let’s suppose the effect of tariffs is to raise the average retail price of a new car in the US by $5000, or about 10%. If anything, my hunch is that the actual price increase would be higher. Given that 16 million cars and light trucks are sold in the US each year, on this assumption, tariffs would raise $80 billion yearly. The actual total number could be lower, since the higher price would likely reduce total demand.

Toyota produces a million engines a year in its Alabama plant (one I selected kind of at random, figuring it would be very efficient) with 2000 workers. Manufacturing another 5 million engines in the US to replace imports would create 10,000 new jobs here. If these were the only new jobs created, the cost in tariff payments to Washington for each job created would be around $8 million. Suppose (I’m just making up numbers in all of this) we’d need, say, 10,000 new assembly workers, too. That drops the cost/job to $4 million. Still seems like an awful lot. If new job creation is 10x what I’ve been assuming, i.e., 200,000–which would be about a 20% increase in total US auto making employment, the cost per job is still $400,000, or 5x what the industry average wage is.

In other words, it’s hard to make up numbers where, taken by themselves, the tariffs don’t end up reducing economic growth. Presumably, the administration’s plan is to use the tariff income to fund tax cuts for the ultra-wealthy. Given that this group is the most likely to save and the least likely to consume, the net result still seems to me to be contractionary.