President Donald Trump promised that if he was elected, he would impose high tariffs and thereby help America’s beloved and lucrative automobile industry. Instead, expert economists revealed on Monday that the tariffs have actually done “the opposite of what Trump promised.”
Describing a “tariff shock” caused by Trump’s policies, the car magazine WardsAuto reported that “the financial toll has been swift and steep. General Motors projects a tariff hit of $3.5 to $4.5 billion in 2025. Ford absorbed an $800 million second-quarter blow. Volkswagen is bracing for a €5 billion impact. Cox Automotive estimates the industry has collectively accumulated more than $25 billion in tariff obligations through just the first seven months of the year — roughly $5,200 per imported vehicle. For vehicles built in Mexico, a critical manufacturing hub, the added cost runs to approximately $4,800 per unit, effectively turning the build-in-Mexico business model upside down.”
To analyze the problems which have arisen from Trump’s tariffs and come up with proactive solutions, the US software company ServiceNow and the UK multinational professional services network KPMG issued a joint white paper called "When Tariffs Hit an Industry in Transition.” KPMG managing director Len Prokopets, an expert on supply chains, explained to WardsAuto that the tariffs “have created a three-dimensional crisis: direct cost increases on materials and parts, deteriorating supplier financial health, and a massive internal administrative burden as OEMs must analyze, validate, and renegotiate thousands of individual supplier claims.”
Karl Widerquist, an economist and philosopher at Georgetown University-Qatar, told AlterNet that he shares the concerns expressed in the WardsAuto article. He described the tariffs as being “very much the opposite of what Trump promised,” having had “a highly negative effect on many U.S. manufacturers. Today, most big market products are built with international supply chains, meaning that parts come from factories all over the world.” For more than half a century, the car industry built supply chains all over the world based on the fact that America had been a free trade country since the 1930s.
“Suddenly Trump reversed course with tariffs sometimes upwards of 100%,” Widerquist explained. “That kind of reversal will disrupt any industry that relies on foreign resources or parts--and that is most industries.”
Writing for MS NOW, lawyer Ray Brescia cited the Court of International Trade Judge Richard Eaton — who is presiding over the case to determine how the Trump administration reimburses the tariffs he illegally collected — to illustrate the magnitude of the tariffs’ impact on ordinary Americans.
“The $165 billion in collected duties is currently accruing approximately $650 million in interest every single month,” Brescia wrote citing Eaton. “If the entries are not liquidated by the end of the year, he explained, American taxpayers will be on the hook for an estimated $10 billion in interest alone.”
Widerquest further broke down the “legal morass” that has resulted from Trump levying illegal tariffs.
“The question of who gets compensated for a tariff is a legal morass that relies on unknowable questions,” Widerquist told AlterNet. “The question of how to pay a tariff usually involves at least three parties: foreign manufacturers, U.S. retailers, and U.S. customers. With the complex contemporary supply chains, it can be many more. To decide who gets the refund, one has to imagine what the price would have been without it.”
As an example, Widerquist posited a consumer paying $200 for a “widget,” with $100 going to the domestic retailer and the other half going to the foreign manufacturer.
“To say who should get the refund, we have to imagine what the price would have been had there been no tariff,” Widerquist pointed out. “If the retail price would have been $100, then the consumer should get a $100 refund. If the price would have been $200, while the import price was $100, the local retailer should get the entire refund. If both the retail and the import prices would have been $200, the foreign manufacturer should get the entire refund. But the two relevant prices could have been anything in between, justifying a three-way split of the refund in any conceivable set of portions. We have no way to know which is the ‘right’ one.”
He concluded, “Our legal system will probably give the refund to the part that spends the most on lawyers instead of the one with the best evidence.”
Americans appear to be aware that the tariffs have hurt their pocketbooks. Conservative commentator Mona Charen wrote for The Bulwark in February that the tariffs could even cost Trump in the 2026 midterm elections.
“Voters are rarely able to connect policy to outcomes, but they have done so in the case of tariffs,” Charen wrote. “Back in 2024, Americans were about equally divided on the question of trade, with some favoring higher tariffs and roughly similar numbers opting for lower tariffs. Experience has changed their views.”
