Trump views all the unpredictability as a strategic advantage, but "consistent unpredictability does nothing more than erode the trust of your negotiating partners," said Kellie Meiman, managing partner at McLarty Associates, a global trade consultancy.
Meanwhile, Trump is enraged that Canada has not embraced his NAFTA ideas for bilateral, rather than three-party, talks, a five-year sunset provision and stricter auto rules of origin, and he seems prepared to use auto tariffs as a way to punish Canada, said Eric Miller, a well-connected trade and government relations consultant who heads Rideau Potomac Strategy Group.
"If you have a national security tariff on autos, that's Armageddon," he said. "That's the firewall for the global trading system."
Industry officials and trade experts say the proposed auto tariffs — pending an investigation by the Commerce Department under rarely used authority governing national security emergencies — would damage the very sector they are supposed to help.
They would cover $208 billion in vehicle imports and $100 billion in parts, surpassing the combined value of all other tariffs implemented or proposed so far.
Initial economic effects would be modest, but the damage increases if trade partners retaliate, according to an analysis by the Peterson Institute for International Economics. It predicts automakers would suffer a 1.5 percent loss in productivity, resulting in a 2 percent drop (20,000 jobs) in employment, as auto prices for consumers rise and demand dips. The ripple effects of decreasing sales and shipping activity would cost 195,000 jobs in the overall economy.
Countertariffs on U.S. auto exports would reduce domestic auto production by 4 percent, costing 50,000 industry jobs and 624,000 total jobs.
"It's not to say this action throws the U.S. economy into a tailspin, but why are you taking it when it makes things worse for U.S. firms and workers?" Jeffrey Schott, co-author of the institute's analysis, told Automotive News.
Autos produced in the U.S. wouldn't escape higher costs because the tariffs also target parts used for assembly. And MEMA's Wilson said consumers who maintain their vehicles will feel higher prices because many aftermarket parts are made overseas.