The only possible way a tariff could reduce unemployment is if it was used to cut real wages. This was actually proposed during the 1920s by English economists, mainly from Cambridge. They argued that if a flat tariff of 10 per cent to 15 per cent was levied on all imports this would lower unemployment by raising the price level which would have the effect of cutting real wages while leaving nominal wages intact. What needs to be noted about this policy, without going into its pros and cons, is its recognition that tariffs cut purchasing power, the very opposite of what the car industry claims, and the role of excessive wage rates in causing permanent unemployment. As for McKenzie's implication that the tariff will expand the country's exports, we have already seen how absurd that is.
Tariffs always restrict the total flow of exports.
There is only one way that a tariff in itself could expand the foreign demand for Australian car components and that is if demand from our protected industry was sufficiently high that when combined with foreign demand it allowed component manufacturers to reduce their costs of production. But this is just another version of the external-economies argument. Simply put, this means that an increase in demand for the product lowers the cost of production for individual firms even though their numbers might increase. In fact, an increase in numbers would reinforce the fall in production costs What is overlooked is that even here the reduction in costs was only brought about by increasing costs elsewhere. That is, the components sector received an indirect subsidy from the protected industry.