Featured 25% tariffs on all foreign vehicles coming in April

This is a great misreading of history. The US was in really bad shape in the 1930s because tarrifs caused a trade war. The tarrifs made the depression world wide and much longer than it needed to be. How many people did it take to build a airplane in 1940. There was no highway system. It took much longer to do most everything. Lives were much shorter, men on average live 17 years longer than in 1940. People did with less to industrialize america. Why try to create a new recession. Do you think having the option of using canadian steel and electricity and lumber makes america weak? Supply chain disruptions during covid will look mild if these tarrifs stay in effect. I expect shortages and recession, but yes we can easily make all the stuff we import except raw materials, it just will cost more and be less stable. We are not going back to the low productivity of the 1940s. Its not going to give that many more people manufacturing jobs.

Many of the supply chains were strengthened because trump passed the USMCA. He did a losy job, but those auto companies will take 5 years to build the chains in the us as efficiently. During those 5 years I expect ford and gm both to need bail outs. Farmers will need them too as retaliation will mean farmers can't export their products.

Today trump looked at the stock market killing retirement savings and reversed for 1 more month. The uncertainty will reduce investment in domestic manufacturing.

 

Today's manufacturing is not as simple as making horse harnesses, belts, buggy whips or wooden barrels as it was in the early 18th Century or even making simple cars like the Model T.

It took nearly 10 years for Honda to build the plant in Marysville, Ohio decades ago. Cars are twice or three times more complicated and with many more parts available only from some exclusive and patented overseas sources not available in the US.

Tha would mean establishing a specialty plant more a specific plant making one part under license.

And it would take years before that one part would be made in the USA.

Not impossible but expensively costly and time consuming with possibility a decade of lead time. Why that time, the product may have become obsolete.

 

We can't even agree on our past. How can we know what will happen in the future?

I'm of lower wages. I'm struggling to be able to save enough for retirement. We have no house, so I can only hope I can safe enough to rent somewhere for the rest of our lives. The way I see it, if things get more expensive we'll just have to keep tightening our budget. The thing is that we have no subscriptions, don't eat out, don't go on costly vacations, don't have a car payment, etc. so tightening our budget may mean things like moving to a different state where rent is cheaper, cutting internet, cutting cellphone plans to just one, maybe even cutting the car out entirely and just biking and walking.

 

This is true. But across and back and across again would normally only count as 2 times, not 3 unless for some strange reason both countries had an import tariff on the same thing. And if a part was an expensive enough part and easily installed at other stages of assembly it could be left out.
For example a bunch of computer chips, big and small are sent across a border, and assembled into circuit boards, sent back and install into computer cases. You could leave out the bigger and more expensive computer chips (CPUs & GPUs) and just install them when the boards are installed in the cases. Yes, if would take additional factory space and minimal expertise to do this. But this is what the tariffs are meant to do, sort of. This example may not be realistic, and may be more difficult to apply to car parts well.

Mike

 

Easy to say that now, based on our current definition of what we consider efficient. Back then most people probably agreed that efficient, to them, meant a car a few feet from their front door and no need to put up with the crowds on a bus or train.

Mike

 

Our shameful consideration of efficiency might be compared to Japan's 200 mph bullet train.
Japan’s Shinkansen: How Does It Stack Up Worldwide? | Nippon.com.


So instead of way over a million miles of state & Interstate highways, if we had the Lions share as rail, the amount of resources saved/expended would be astounding, & we would have tons & tons of places to land airplanes in emergencies anyways.
Never mind how much way cheaper it would be taking all of that Interstate Trucking & putting much of it on those rails to speed things along.
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That NC Toyota battery plant involved years of investment in creating a workforce trained in the disciplines needed for operating the factory. Such people aren't just laying around in the location you like because of incentives and taxes. And will come on line slowly mixing its output with those from existing plants in other countries to create the batteries Toyota will need for its next generation of EVs and Hybrids. Rome wasn't built in a day and neither can a production line. It ain't like WW II era production.

Take as an example the modern center of dash display. The one your maps display on. Think that comes from the US? Think not just of the physical part but the software, firmware, apps. And then lets talk patents. All that complexity and cross licensing and patents comes from many sources. Without that simple taken for granted part, the entire auto industry will shut down and with it people's jobs and lives. And lives will be lost in despair.

Or take the sensors and computers in a modern car. Be it EV or hybrid or ICE. Think they all can come from any single country and it happen overnight?

I'm waiting for my center screen to be replaced in a 5 year old hybrid. Because the dealer bricked my original trying to do a requested map data update (yea I know in today's world it could be done OTA but mine still requires a physical part to be ordered and used in the process). So the dealer ordered the entire unit. Took 10 days to get here (Yea, Amazon could have it here in a day). And then today the dealer installed the entire physical display and bricked the replacement. So I am sensitive to the complexity of these trivial things without which cars won't be shipped and jobs will be lost.

And I see Canada is firing back.

 

That's why they call it a trade WAR, instead of a trade peacekeeping mission.

We'll see.
I personally think that the POTUS is wring about tariffs, but I'm content to see what actually happens over the next few months, especially since he's never listened to me.

 

Not an exact comparison but I had a flashback. Kind of reminds me of the folks be moaning we are all doomed back during Y2K. Next thing you know all the computers were up to speed.
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Who's going to make any long term investment here when there is no certainly from one day to the next on taxes and tariffs?

 

Thank you Eeyore

 

Aren't Canada and Mexico imposing tit for tat tariffs?

So if steel or other metal is imported from Canada to the USA for rough fabrication of a part, then sent back to Canada to be machined, then back in the USA to be assembled into the engine or transmission, which engine or transmission is then sent to Mexico to be put on the vehicle, which is then imported, once again, into the USA, now that original metal was tariffed 6 times.

 

I remembered that we had a team running throughout our facility, for about 18 months, making sure everything from A-Z would operate on the rollover. Those that wouldn't was rolled back a few years and put on a replacement list. That's the reason it was no big deal....

 

My timeline is a little shorter so I've put it on my calendar:


Not because of the sociopath in Chief but a distracted Elon:

• Since Twitter/X purchase, TSLA is no longer a top priority. He has more interest in his private companies that are not pubic traded.
• "Denholm, Tesla's board chair, sold 112,390 securities" - closer to Elon, I suspect she sees the same problem.
• Pissed off everyone who hates National Socialist - lost retail customers.
• New Tesla products that are not appealing to this former investor: (1) Optimus robot; (2) Cybertruck pickup; (3) Robo Taxi, and; (4) Class 8 EV truck.
• Fired and partially rehired the SuperCharger group.
• Tesla solar roof - too expensive, too limited, and no follow-up, so I went with Solar Alternatives.
• Had some spare change to "Short Sell" 10 shares of TSLA stock.
• Unemployed Federal workers can not buy a Tesla but may have to sell their's. Other Federal employees have taken note.
• MAGA followers were and remain adverse to Tesla cars and pickup.
• No farm equipment Tesla products.

Bob Wilson

 

That is why many Automotive manufactures like Toyota do not have - just one manufacturer identified for a part - they used to require 3 manufacturers for each part - just in case of a primary supplier interruption - due to - labor strife, natural disasters, political issues, tariffs, facility destruction etc. they also required their Parts Manufacturers to have plans in place to deal with potential interruptions.
Companies like Toyota also tried to foster/enable local part Manufacturers to grow their businesses and step into Toyotas supply chain.

Interestingly enough its is the domestic Automakers - Ford, General Motors and Chrysler who petitioned the Government to hold off the Tariffs for at least a month as they scramble to move their Mexican Supply Chain Network to US Sourced Networks.
Trump will delay some auto tariffs after Detroit Three push | Reuters

Tariffs certainly complicate the field somewhat - but the game will still be played just with different rules - in the Auto Manufacturing Sector Domestic Manufactures are the least prepared to be nimble and change with the times due to their ties with the UAW and constraints placed on them by these restrictive Labor Agreements.

 

Absolutely this has been what countries do.

Economist estimate a vehicle with a typical north American supply chain would go up in price $3000-$7000 per new vehicle. If you import the vehicle whole like from japan or germany the tarrif impact would be less. Auto parts cross the border multiple times and even if canada and mexico didn't impose their own reciprical tarrifs, they likely would start buying vehicles made in mexico or canada and US manufactured auto plants would export less and likely reduce head count.

The chinese would stop buying most food from american farmers, and prices for food not grown in the us would go up and price. Do you want the government dictating how many avocados you can afford. Then you need massive farm subsidies, because most family farms would go under, and the big corporate ones would have more weight to manipulate the government.

Looking at historical data it is clear that these unfocused tarrifs would reduce employment and gdp and increase inflation or cause a massive recession. Peter Navarro the convicted fellon economist that pushes this stuff, said in an interview that he doesn't trust the numbers he has a belief that the us is being taken advantage of. Trade wars hurt all parties, and I expect the administration will simply cook the books to pretend that the tarrifs did not do what they did. They put out false numbers the last time, but this time will be worse.

 

Is it interesting or was it inevitable that the tarrifs would hurt the companies the most with supply chains built up. You can't simply waive a wand and create a new one. Exports would also end. So yes the big 3 (or 2 plus stalantis) would likely have to fire workers when their prices rose from the supply chain disruptions. They would not be able to invest in the US. They relied on the trade treaty negotiated in 2019. Don't blame them blame the idiots that negotiated it and now say it was terrable and we need to break it.

This is not the problem. The problem is you can not build supply chains over night and building them costs money when you have to strand your assets that were working. A tarrif in 5 years might do this, but doing it on a whim simply is stupid and corrupt. The auto manufacturers had to pretend and praise the president, and they get a one month reprieve. They will have to do it again. Maybe they need to buy trump coin, or stay in his hotels or bribe him anouther way.

 

You are simplifying a very complex situation to advance strongly held political biases - as proof - look at who gave your post likes!

UAW Labor Negotiations and Contracts specify who you will deal with, supplier and supply chains.

We witnessed this first hand recently in our area:
Ford built/is building a beautiful new Battery Manufacturing Facility in our state - one of the primary incentives for building here is - it is a right to work state. Ford was adamant this was going to be a Union Free Plant to be competitive and hold cost down. The UAW in the most recent contract negotiations insisted this Plant be Unionized and this turned into a key item as to if they would sign a contract with the Big 3.
So... Ford agreed signed the Labor Agreement with the Big 3 and then immediately canceled all plans to complete the Battery Plant and stopped work on it. Fast Forward - Ford read the writing on the wall - Political climates changed and the New Ford Battery Plant is now back under construction. Unfortunately it will be operating under a UAW Labor Agreement and will be competing at a severe disadvantage with other Non-Unionized Battery Plants. The Price of their Product will make it not competitive. Just the additional labor cost involved will guarantee that.

UAW contracts often will insist that the companies uses Unionized Auto Parts Suppliers, Unionized Trucking Companies etc. putting the Companies under these restrictive UAW contracts at a severe competitive disadvantage.

That is just one of the many reasons the Big 3 farms out as much work as possible far away from the UAW reaches (Mexico, China etc.) - forcing the Big 3 to do business closer to home within the UAW reach will decimate these companies unless something changes.

The UAW has been targeting Parts Suppliers since the early 2000's
Suppliers are the target: UAW drive to focus on outside parts workers

People need cars - people who make cars will find a way to make and sell them at a profit - the game is constantly changing- the companies best positioned to nimbly respond to the changing environment will be best positioned for success.

 

People need a living wage. Cars are a strong convenience today.

When it works right, labor groups can help each other. Literally, the people are helping themselves to lift each other up and enjoy greater community success.

It doesn't always work right. Corruption always sucks- see police unions for a sharper example.

But when you don't even want to try, it makes you look like you're ready to shank your neighbor just to save a nickel.

 

Agree with you - I saw this first hand in Japan where the Union and Toyota worked together to provide a safe, social and economically beneficial environment for the Workers and the Company's success.