So about these possible Tariffs on Automakers...

[mikeavelli]

I hope we don't get too political in this thread. The fact of the matter is the current administration is threatening tariffs on Euro imports and the EU has already said they will respond in kind and tax more of our products. It sounds like 25%..

Harley already said it has to move production to the EU to avoid tariffs and be sustainable..

http://fortune.com/2018/06/26/harley-davidson-moving-production-overseas/

Note Automakers here are not asking for tariffs on the competition and think its a lose/lose..

https://www.politico.com/story/2018/06/26/us-automakers-trump-administration-car-tariffs-653654

 

[RAL]

All I know is ... I am planning on a 7ES at the end of this year. I hope the elephant in the room doesn't do something to jeopardize it! Anyone with any economic sense knows tariffs will be a lose/lose! Unfortunately for Harley, that point has been made!

 

[Joaquin Ruhi]

Toyota's official reaction:

Toyota Statement on Proposed Tariff on Vehicle Imports
June 27, 2018
Background

On May 23, President Trump directed the US Commerce Department to conduct an investigation, under section 232 of the Trade Expansion Act, to determine whether imports of vehicles, including cars, SUVs, vans and light trucks and automotive parts, are a threat to national security.

President Trump announced he will impose a 25 percent tariff on vehicle imports if the government concludes that they are a security threat. Commerce Secretary Wilbur Ross announced plans to complete the probe by late July or August after holding hearings next month.

The Commerce department has set Friday, June 29th as a deadline to file comments on its proposed tariff. Industry trade associations, automakers, including Toyota, and other groups plan to submit comments.

Below is Toyota’s statement in advance of its formal submission:

Toyota Media Statement on 232 Submission:

“A hundred and thirty-seven thousand Americans support their families working for Toyota, and Toyota and Lexus dealerships. They are not a national security threat. Indeed, Toyota operates 10 manufacturing plants in the U.S. We are an exemplar of the manufacturing might of America. A 25% tariff on automotive imports, which is just a tax on consumers, would increase the cost of every vehicle sold in the country. Even the Toyota Camry, the best-selling car in America, made in Georgetown, Kentucky, would face $1,800 in increased costs. We believe the only plausible outcome of this investigation is to reject the notion that automotive imports threaten national security.”

http://pressroom.lexus.com/releases/toyota+statement+on+proposed+tariff+on+vehicle+imports.htm

 

[mmcartalk]

Harley already said it has to move production to the EU to avoid tariffs and be sustainable..

IMO if they do that, they will shoot themselves in the foot, and lose too many customers. Most typical Harley buyers demand an American-made bike....baseball, hot dogs, apple pie, and Harleys.

As I see it, American companies aren't going to like it, but, in the end, the upcoming tariffs are simply going to force them to bring more production back home (or prevent it from leaving) without substantially raising their prices. They won't want to do it, but it will become a necessity...they won't have a realistic choice. With the tariffs, building their vehicles overseas will simply make them too expensive, which was the objective of the tariffs to start with....bring the jobs back home.

 

[Joaquin Ruhi]

South Korea makes some compelling arguments as to why they should be exempt from President Trump's proposed 25% tariffs on imported cars. Here's a summary of a Reuters report by Heekyong Yang:

A South Korean trade group on Thursday asked the United States for exemption from a tariff on automobile imports for the Asian country, citing a security alliance and a bilateral trade deal...

...KITA (Korea International Trade Association) noted that South Korea and the United States in March had already agreed in principle to revise their bilateral trade deal, with Seoul saying it would improve local market access for U.S. automobiles and accept an extension on import tariffs for Korean pickup trucks for another 20 years.

“Unlike other automobile exporting countries or other foreign manufactures, Korea and Korean automakers have already addressed the concern of the U.S. counterparts,” it said.

KITA said the trade deal revision works to “ensure and maintain U.S. security interest in the region”...

https://www.reuters.com/article/us-...exemption-from-u-s-auto-tariffs-idUSKBN1JO0ZL

 

[mmcartalk]

South Korea makes some compelling arguments as to why they should be exempt from President Trump's proposed 25% tariffs on imported cars. Here's a summary of a Reuters report by Heekyong Yang:



https://www.reuters.com/article/us-...exemption-from-u-s-auto-tariffs-idUSKBN1JO0ZL

Perhaps...but that is simply part of the nature of dealing with other countries. They all want (or will want) exemptions for some reason or another....yet they still find reasons to keep tariffs and other economic impediments in effect against the U.S. Mike doesn't want this thread to get too political (and I'll abide by that request)....but, as far as I'm concerned, either we, as a country, start looking out for our own jobs and industries, or we don't.

 

[Rhambler]

People seem to forget or gloss over how much we protect our markets as well.

We carry a 25% duty on trucks and this is to protect the largest truck market in the world, us. In reality, percentage-wise, our 2.5% on cars and 25% on trucks outweighs what the euro's do all around at what, 10%? There's a lot more at stake with our lucrative truck market versus cars in Europe in my opinion.

I'm not sure how Ford or Chevy would feel if that duty fell to the wayside.

So, there's some hypocrisy going around.

 

[mmcartalk]

People seem to forget or gloss over how much we protect our markets as well.

We carry a 25% duty on trucks and this is to protect the largest truck market in the world, us.

Most buyers, though, choose American-designed trucks over the Toyotas and Nissans simply because, overall, they are designed better for American work-needs. It's not necessarily a matter of tariffs or economic (dis)-incentives. Toyota trucks, for example, have been noted for frame-rust problems, and the 2Gen Tundra had sub-standard sheet metal and hardware that allowed tailgates to buckle and warp under load.

 

[Rhambler]

Well, why are our tariffs even necessary then? Isn't this a perfect example of the pot calling the kettle black?

Why is Trump making a big stink over tariffs to begin with then?

 

[Ian Schmidt]

Why is Trump making a big stink over tariffs to begin with then?

Because under various alleged "free trade" deals up until now (NAFTA, TPP, and many more), it's mostly only free one way, for the US buying foreign goods. Almost every country on the planet charges tariffs on imports from the US (which I actually didn't know until this became a thing). This was explicitly allowed immediately after WW2 to help Europe get back on their feet, but someone forgot to cancel it circa 1965 when it was clearly no longer necessary.

I expect most countries to fold relatively quickly, as China has on their auto import tariffs (which is expected to help Toyota/Lexus a lot there).

 

[mikeavelli]

Tariff's IMO will only raise the prices of goods and products here. There won't be some mass exodus of people not buying German cars going to buy Lincolns etc.

As a car enthusiast, I think Benz has already stated if this happens, you can kiss goodbye to low volume cars.

You know what I would rather see, maybe Trump challenge ourselves (Ford, GM, etc) to make the best damn vehicles on the planet, thus creating its own demand.

 

[Ian Schmidt]

I don't think anyone expects a mass exodus, they just expect simple fairness. Let everything compete on its actual merits rather than government price-cheating. That upcoming super-Caddy has the specs to go toe-to-toe in Germany if they don't GM the interior, so let it do it.

 

[mikeavelli]

I don't think anyone expects a mass exodus, they just expect simple fairness. Let everything compete on its actual merits rather than government price-cheating. That upcoming super-Caddy has the specs to go toe-to-toe in Germany if they don't GM the interior, so let it do it.

The thing is German cars cost more than American cars, more than Japanese etc. American cars don't sell much in Europe as they ignore for the most part what is needed to succeed there. Note Lexus is still a small player but has figured out its hybrid strategy works.

I agree the CT-6 V-Sport is a great step in the right direction on paper. Hopefully it drives well and is built well. The new Navigator also is doing very well.

 

[mmcartalk]

Almost every country on the planet charges tariffs on imports from the US (which I actually didn't know until this became a thing). This was explicitly allowed immediately after WW2 to help Europe get back on their feet, but someone forgot to cancel it circa 1965 when it was clearly no longer necessary.

Though I'm not completely disagreeing with you, I think a good argument can also be made that it was still needed at least somewhat in 1965. I don't know if you are old enough to remember that year (I am...though I was still in school). Outside of the ubiquitous air-cooled VW Beetle and Microbus (the famous pot-vehicle for hippies), at that time, imports in the U.S. market were few and far between. The small British roadsters had some popularity, but their unreliable engine-seals, poor weather-protection, and Lucas electrical systems were a PITA for owners, and clearly damped sales. The Korean brands were unheard of here, and Toyota and Datsun (Nissan) had only a tiny presence at best. Not until the gas crunches of the 1970s did the American market seriously turn to imports as an alternative....which was not surprising, given the junk small cars (Pinto, Vega, Gremlin) that Detroit was then offering.

 

[Tragic Bronson]

Tariffs don't go well...I remember 1995 still, would've really hurt the Lexus brand. I think the Lexus Story or one of the other books written mentioned this and executives even to consider rebadging Avalons as Lexuses or something to that extent if the sanction was enacted :skull:

https://www.nytimes.com/1995/05/17/...-tariffs-set-13-top-models-japanese-cars.html

 

[Joaquin Ruhi]

Tariffs don't go well...I remember 1995 still, would've really hurt the Lexus brand. I think the Lexus Story or one of the other books written mentioned this and executives even to consider rebadging Avalons as Lexuses or something to that extent if the sanction was enacted :skull:

https://www.nytimes.com/1995/05/17/...-tariffs-set-13-top-models-japanese-cars.html

I also recall reading at the time about a contingency plan to rush Lexus ES production into the Georgetown, Kentucky plant a couple of decades before they finally pulled the trigger.

 

[Rhambler]

I agree that tariffs always backfire; it’s not a zero sum game.

People don’t realize that tariffs actually hurt the very industries it is meant to protect over the long run.

These industries operate under an artificial umbrella. When the time comes to compete—to truly compete—they are at a big disadvantage because of that fake “crutch.”

Conversely, industries that have to operate in countries that have tariffs become extremely efficient. It’s Darwin for the business world and it’s brutal, but the cream always rises to the top. These companies have been competing handicapped so to speak and surviving, which means they are way ahead of any counterparts in countries protected by artificial barriers.

 

[mmcartalk]

I agree that tariffs always backfire; it’s not a zero sum game.

People don’t realize that tariffs actually hurt the very industries it is meant to protect over the long run.

These industries operate under an artificial umbrella. When the time comes to compete—to truly compete—they are at a big disadvantage because of that fake “crutch.”

Conversely, industries that have to operate in countries that have tariffs become extremely efficient. It’s Darwin for the business world and it’s brutal, but the cream always rises to the top. These companies have been competing handicapped so to speak and surviving, which means they are way ahead of any counterparts in countries protected by artificial barriers.

Yes, the business world is no piece of cake...no one is arguing that. But there should at least be a level playing field...otherwise you don't have fair competition, the best choices for consumers, and the best job opportunities for workers/employees.

 

[Rhambler]

Oh the contrary, I say let them for the precise reasons I mentioned. We get leaner and meaner while companies elsewhere don’t.

Those companies, buffered by protectionism, will have a tough time competing on the world stage. To even compete they have to have government help. But that is not sustainable. And when the bottle comes off, well...

It’s like gas subsidies: it just doesn’t work over the long run and backfires because the true market signals never comes in. It never lasts.

 

[Ian Schmidt]

Though I'm not completely disagreeing with you, I think a good argument can also be made that it was still needed at least somewhat in 1965.

I was spitballing that date . In hindsight I think it's workable for Japanese imports (although 1970 might work better there), but Euro didn't really take off until the early 80s.