I understand the argument, but one thing that seems clear is that everyone underestimated how far Trump was going to go with these tariff threats. Even with the ones put in place before yesterday (removing extensions), the effective rate had already gone up about 4%, from 4% to 7%.
And what Bessent, Trump, and some around him have said about them being somewhat comfortable with short-term pain for long-term gains, makes me think they are still willing to go as far as they can without causing major issues.
Car and auto parts may seem like a significant % of imports, but at the end of the day is only like ~1.6% of GDP (because imports are only like 11% of GDP) So, I think currently there could be negotiations, probably to companies with clear plans to invest on the US, but don’t think he will back away until he sees real ugly damage on the economy or auto industry.
Because while direct impact is low, probably the secondary effects and uncertainty here is what will matter.
I will investigate this more, and share my thoughts on another topic when done.