Here’s a letter to a new correspondent.
Mr. B__:
You label as “drivel and nonsense” my (satirical) proposal that the U.S. government protect domestic automakers by punitively taxing automobiles kept for longer than five years. “No one reasonable,” you write, “thinks keeping cars longer threatens our auto makers like imported cars do.”
I agree that almost no one recognizes that extending the life of existing automobiles reduces the demand for newly produced automobiles every bit as much as does the importation of automobiles. But my point is that people should recognize this reality, for it helps expose the case for protective tariffs on automobile imports as, well, drivel and nonsense.
In 2024, Americans bought 16.1 million new automobiles. Thirty-nine percent of these vehicles – or 6.3 million – were imported. (So in 2024, sales of new American-made cars were roughly 10 million.) In that same year (according to Claude), Americans relinquished between 10 to 12 million vehicles in order to purchase newly produced automobiles. If each of these relinquished vehicles were instead kept for one year longer, that number would swamp that of imported vehicles.
It follows that if the threat posed to America’s economy by imported automobiles is so great that the government is justified in punitively taxing Americans’ purchases of imported vehicles, then the threat posed by extended-life automobiles is even greater, thus requiring even stronger government efforts to discourage Americans from extending the lives of their existing automobiles.
If you extend the life of your car in order to save money, would you be cool with the government penalizing you for this effort? If not, why are you cool with the government penalizing you for buying an imported car in order to save money?
Sincerely,
Donald J. Boudreaux
Professor of Economics
and
Martha and Nelson Getchell Chair for the Study of Free Market Capitalism at the Mercatus Center
George Mason University
Fairfax, VA 22030
