China along with Mexico is our largest trading partner. Is there some reason I can buy a host of Chinese goods but not EV cars?
Americans buy tons of Japanese and South Korean automobiles. Apparently that's ok. Some of course are dumb enough to buy Ford, GM or Chrysler.
Why can't I buy a BYD EV car? They're the largest EV auto manuf in the world. Their cars are great and cost approximately half the price of a Tesla. I'm pissed!
Donald Trump Calls for Making Car-Loan Interest Tax Deductible
Former president also threatens new tariffs on Chinese companies to help auto industry in Detroit
By Joshua Jamerson and Richard Rubin, WSJ
Updated Oct. 10, 2024 9:58 pm ET
DETROIT—Donald Trump said he wants to make car-loan interest payments tax deductible and took a warning shot at Chinese car companies looking to send Mexican-built vehicles to the U.S., in proposals aimed at strengthening the American auto industry.
Trump outlined his plans, which also include renegotiating the U.S.-Mexico-Canada Agreement to address his concerns about Chinese cars being made in Mexico, at an event Thursday before the Detroit Economic Club. He said he would impose a 100% tariff or more on any such vehicles exported to the U.S.
Chinese car companies don’t currently sell vehicles in the U.S., nor do they have immediate plans to export them from Mexico to the U.S. But fear is mounting in Detroit that they could eventually target American buyers with cheap electric cars that have gained popularity in Europe and other parts of the world.
Mexico is an attractive manufacturing base for many car companies, and for those in China, it would be one way to get around an existing tariff imposed on imported cars built in their home country.
Trump is locked in a tight race with Vice President Kamala Harris in Michigan, home to the nation’s automakers and a state where the economy is historically intertwined with car manufacturing. The GOP presidential nominee’s car-loan deduction adds to his continually growing list of tax breaks aimed at key constituencies.
“My goal is to see U.S. auto manufacturing even greater than it was in its prime, and for Detroit and Michigan to be at the center of the action,” Trump said.
On X, the Harris campaign shared a moment from the speech in which Trump said he would consider 1,000% tariffs on imported goods. A Trump campaign aide said the former president was being hyperbolic.
In remarks intended to tout his plans for the auto industry, Trump spoke for over an hour and a half, often meandering from the subject he sought to shine a light on. He repeated his exaggerated claim that the price of bacon has gone up several times over; he called Shawn Fain, the president of the United Auto Workers union, a “stupid, stupid guy”; once again called Harris dumb; and cast Detroit in a negative light.
“Our whole country will end up being like Detroit if she’s your president,” Trump said of the Democratic nominee. “You’re going to have a mess on your hands,” he said. On X, the Trump campaign said Trump “was talking about the economic disaster Kamala has been for Detroit and the country.”
Later, Trump said: “I’m telling you right now, standing here in the center of this once great city, that by the end of my term, the entire world will be talking about ‘the Michigan miracle’ and the stunning rebirth of Detroit.”
The UAW has been among Trump’s harshest critics, accusing him of being a “scab” who merely pretends to help working people and the domestic auto industry.
“He’s all talk…but he’s no action,” Fain said ahead of Trump’s speech. A representative for the UAW didn’t immediately respond to Trump calling Fain stupid.
You may also like
Chinese car makers are ramping up electric-vehicle production, posing a challenge to U.S. automakers. WSJ’s Yoko Kubota traveled to the city of Hangzhou to see the impact of China’s EV boom. Photo: The Wall Street Journal
Detroit, once beset by urban decay, is already in the middle of a rebirth of sorts. Its downtown streets now often feel bustling and several once-dormant historic skyscrapers have been renovated to contain offices, luxury apartments and hotels. According to the city, its population has started to grow for the first time in decades.
“Detroit is the epitome of ‘grit,’ ” Michigan Democratic Gov. Gretchen Whitmer posted in response to Trump. “So keep Detroit out of your mouth. And you better believe Detroiters won’t forget this in November.”
Amid high car prices and interest rates, Trump said that making car-loan interest deductible would make cars more affordable and boost auto production. But the proposal may have limited reach, and it would be counteracted by any tariffs that raise auto prices, either the universal tariffs Trump has proposed or the larger ones he has threatened on some Mexican auto production.
Trump said it would be like the deduction for mortgage interest, which taxpayers claim as an itemized deduction.
There were some $1.6 trillion in outstanding auto loans in the second quarter, according to the Federal Reserve Bank of New York. Auto loan balances grew in particular when car prices surged a few years ago, pushing people to take out bigger loans. More recently, borrowers have been struggling to stay current.
But because of Trump’s own 2017 tax law that increased the standard deduction, far fewer Americans itemize their deductions and can claim specific benefits for mortgage interest and charitable contributions. Fewer than 10% of households itemize deductions now, down from about 30% before the 2017 law.
The change would require approval from Congress. And if it happened, Trump would be restoring a tax break that existed until the 1986 overhaul of the tax code, when Congress eliminated deductibility for credit-card and auto-loan interest in an attempt to simplify the system and lower tax rates. Business owners can, within limits, deduct interest on vehicle purchases.
“Another day, another way that former President Trump wants to create holes in the income tax,” said Daniel Bunn, president of the Tax Foundation, which favors a tax system with fewer deductions. The people who benefit are likely to be higher earners who buy more expensive cars, he said.
“Yes, car prices are high, and auto loan interest rates are high, but that does not mean that a tax deduction is the answer,” Bunn said.
The car-loan interest break is Trump’s latest in a series of tax-cut proposals that go beyond extension of the 2017 tax cuts, which largely expire at the end of 2025. He has also called for eliminating taxes on tips, overtime pay and Social Security benefits and for restoring the state and local tax deduction capped by his 2017 law. Just Wednesday, he said he wanted to lower taxes on U.S. citizens who live abroad.
Those proposals add up, and his spending and tax policies would increase budget deficits by $7.5 trillion over the next decade, according to an estimate from the Committee for a Responsible Federal Budget.
In the speech, Trump also reiterated several of his prior proposals—lowering the corporate tax rate to 15% for certain domestic manufacturers and providing faster business deductions for equipment purchases.
Christina Rogers and Christopher Otts contributed to this article.
Write to Joshua Jamerson at joshua.jamerson@wsj.co
Comments