The auto tariff decision is simply incomprehensible otherwise. It is the severest setback for trade liberals in a generation: an incoherent, inconsistent, indefensible botch of what ought to have been a straightforward overhaul of trade policy in the auto sector. It is more than a costly slap in the face to consumers. It is a craven capitulation to the worst sort of muscle politics, without even the pretense of concern for the broader public interest.

Though it will decline to 6.1 per cent next year under the term of international trade agreements, the tariff still adds thousands of dollars to the price of many imported vehicles: a Honda CR-V, for example, costs about $2,000 more than it would without the tariff. All told, the Canadian Association of Japanese Automobile Dealers estimates Canadians will have paid more than $5-billion in tariffs between 1988 and 2000.

But of course it isn't only the imports that cost more: the tariff gives rival makers the competitive shelter they need to raise their own prices. So whereas the tariff applies directly to only about 10 per cent of cars sold in Canada, when this "umbrella" effect is factored in, the impact is felt in as much as a quarter of the market. Cars are expensive enough as it is: economists at the Royal Bank calculate it cost the average worker 42 weeks' wages to buy a new car in 1997, up from just 26 weeks in 1991. Yet it is the policy of the government of Canada to keep prices artificially high, by law.

If it were only a simple case of protectionism, the tariff would be idiotic enough. The extra costs imposed on consumers are not, as some would have it, the price of saving jobs in the auto sector: every dollar taken from consumers' wallets to prop up the auto industry is a dollar they cannot spend in other sectors of the economy. Protectionism doesn't save jobs: it just trades one job for another, protecting industries that can't compete at the direct expense of those that can.

But the ridiculous approaches the sublime when you delve into the particulars of the issue. The "domestic" industry the tariff is supposed to protect is, for starters, entirely foreign-owned: branch plants of the Detroit- based Big Three. What is more, most of the cars they make here, 90 per cent in fact, are exported. So even if the tariff were designed, as advertised, to protect Canadian auto workers from being undercut by low-wage Third World labour, that is not its effect, since few of the cars Canadian workers make are sold in the market where the tariff applies.

So which cars does the tariff protect? Mostly imports from the United States and Mexico - that is, cars the Big Three import duty-free from their factories in those countries. Indeed, the Big Three are allowed to import cars duty- free not only from anywhere in North America, but overseas as well, thanks to the 1965 Auto Pact. The Big Three will tell you they've earned this privilege by locating a specified amount of production here over the years.

What they don't tell you is a) they would have made that many cars here anyway, Auto Pact or no, and b) the offshore makers, though they have since raised local production to Auto Pact levels, still aren't allowed to join, under the terms of the North American Free Trade Agreement. In any event, you shouldn't have to make cars here to sell them here. The whole point of trade is to be able to buy things that can be made better and cheaper elsewhere.

So what we have here is one set of cars made in a foreign country by a foreign-owned manufacturer, being protected from competitition from another set of foreign-made, foreign-owned cars. It's not Canadian jobs that are the issue, but the already sizeable profits of the Detroit-based multinationals. But wait, it gets better. The Big Three now include among their number the German auto maker Daimler-Benz, thanks to its recently- announced merger with Chrysler.

So the point of the tariff, apparently, is to protect some offshore auto makers from some other offshore auto makers. The government's decision means the coercive power of the Canadian state will continue to be used to transfer billions of dollars out of the pockets of Canadian consumers into the treasuries of foreign-based manufacturers. What a travesty. What a betrayal.