The Automotive Industry Tariff Thread

[mikeavelli]

Well sadly let’s talk about how tariffs are effecting the auto industry from cars to parts to strategy and pricing changes and everything in between.

I don’t think I have seen any positive reporting. They are now in effect.

https://www.wsj.com/personal-finance/trump-auto-tariffs-car-prices-0b7ca5f2

I noticed on autotrader discounts are gone and prices for certain cars have skyrocketed. My 911 dreams are now cooked lol

 

[mikeavelli]

Stellanis laying off

Stellantis lays off hundreds of workers in US over Trump tariffs: reports

The maker of Ram trucks and Jeeps has also halted production at plants in Mexico and Canada, according to reports.

www.newsweek.com

 

[Tragic Bronson]

Ford Motor Company will offer employee pricing to all US shoppers: 'Handshake deal with every American'

Ford Motor Company has launched a From America, For America campaign, offering U.S. customers access to the company's employee pricing.

www.foxbusiness.com

 

[mediumhot]

Oh God! Hopefully this nonsense will not last for too long.

 

[ssun30]

Tariff destroys variety. Now car manufacturers will only produce and sell cookie cutter models with the largest volume. Any low volume, imported niche product will disappear. And usually in countries with high tariffs you can at least get grey imports (non-catalogue, privately imported) but I don't think that's legal in US.

The car industry and car market is hopeless in US unless inflation stays flat for a decade, or go into deflation for 3-4 years to undo the damage of rampant inflation during COVID. One of the biggest lies in economy is that you need "moderate inflation" to keep growing. There is no reason prices of industrial goods must keep rising when innovations in manufacturing keep reducing cost. Better productivity = lower prices.

In reality what happens is politicians manipulate the data to make inflation look "moderate" while citizen's purchasing power keep shrinking. Economists keep telling the lie that 30 years of deflation in Japan was only a bad thing, but the living standards of Japanese citizens have not become worse. The real reason for Japan's stagnation is population collapse.

 

[Och]

There is a much more complex problem that wont be solved with simple tariffs. If anything, they are treating the symptoms, not root causes.

 

[F1 Silver Arrows]

Tariff destroys variety. Now car manufacturers will only produce and sell cookie cutter models with the largest volume. Any low volume, imported niche product will disappear. And usually in countries with high tariffs you can at least get grey imports (non-catalogue, privately imported) but I don't think that's legal in US.

The car industry and car market is hopeless in US unless inflation stays flat for a decade, or go into deflation for 3-4 years to undo the damage of rampant inflation during COVID. One of the biggest lies in economy is that you need "moderate inflation" to keep growing. There is no reason prices of industrial goods must keep rising when innovations in manufacturing keep reducing cost. Better productivity = lower prices.

In reality what happens is politicians manipulate the data to make inflation look "moderate" while citizen's purchasing power keep shrinking. Economists keep telling the lie that 30 years of deflation in Japan was only a bad thing, but the living standards of Japanese citizens have not become worse. The real reason for Japan's stagnation is population collapse.

There is a much more complex problem that wont be solved with simple tariffs. If anything, they are treating the symptoms, not root causes.

Both of you guys added some very important nuance and genuine facts to the discussion. Well said, the both of you.

 

[Sulu]

Here are my concerns as a Canadian. I want to see how this settles out.

Canada just announced counter tariffs on vehicles imported from the USA that do not meet USMCA compliance rules. I assume this means vehicles assembled in the USA, but still with raw materials and parts that may crossed the Canadian and Mexican borders several times. I have also read that these non-compliances may be resolved simply with updated paperwork, meaning, I assume, it is merely a matter of having an inspector check that everything is in order. But what vehicles are affected -- any Toyota or Honda vehicles?

If all North American-produced Toyota and Lexus models are affected somehow by tariffs, would it -- could it -- mean that a Japanese-built Toyota or Lexus is a better buy as a Canadian? Will the Crown (Signia) or new ES be a better buy here in Canada (than a Camry with tariffs)?

Or would Toyota stop importing the Crown because it would get even more expensive with a tariff on top? If Toyota stops importing models from Japan to the USA, they will stop sale here in Canada also because our market is too small to sustain a low-volume model.

 

[Och]

It's not just cars, just look at what happened to the prices of raw materials after the scamdemic. They blamed supply chains and chip shortage, and prices of everything pretty much doubled and never came down. All the metals are double their pre pandemic prices, yet look what is happening in the West - Germany is closing factories and moving manufacturing to China, and just last week UK shut down their last two remaining blast furnaces, ending steel production in the UK completely. And these idiots are talking about building up weapons for a potential war with Russia, lol.

Britain becomes only G7 country unable to make new steel

British Steel blames Donald Trump as it announces plans to shuts Scunthorpe blast furnaces

www.telegraph.co.uk

In the US nothing has changed since the pandemic, if anything the manufacturing of domestic materials has slowed down even more due to labor shortages, surging energy prices, and insane regulations.

While the tariffs are a part of the solution, they should be way higher and way further down on the list.

 

[Sulu]

Honda Might Build Nearly Every US-Sold Car Right Here in America | Carscoops

The Japanese automaker could move production from Canada and Mexico into the USA

www.carscoops.com

To do so, it could shift up to 90 percent of production for US-destined cars to the USA within the next few years, according to Nikkei Asia. The journal believes it’ll move production of the Civic sedan and CR-V from Canada to the USA. The HR-V will end production in Mexico and move to the US as well. Honda will also go from a two-shift system to a three-shift system and hire more workers to increase production.

During this morning's news, it was reported that Honda would be moving production of the CR-V and Civic from Alliston, Ontario to the USA, even though the newscaster said that it was unconfirmed. (I live about an hour away from the Honda plant in Alliston, Ontario.)

During the day, provincial and federal politicians (taking a break from the federal election campaign) were lining up to speak with Honda. By this evening's news, it was said that the announcement did not come from Honda, and that the Alliston plant will continue working as usual.

I wonder how Honda Canada's workers and the many suppliers to Honda thought about this news this morning.

Honda's plant in Alliston has received government money to expand to build EVs, which explains the near-panic here.

Update: Honda Canada issued a statement in response to the report, and while it did not comment on the increase in US production, it clarified that its manufacturing facility in Alliston, Ontario will continue to operate at full capacity for the foreseeable future.

This statement from Honda Canada came out during the day.

This was not an announcement by Honda and we cannot comment on the specifics of this morning's headlines. However, we can confirm that our Canadian manufacturing facility in Alliston, Ontario, will operate at full capacity.

 

[ssun30]

Honestly the world we are living in is too stupid to be real. It's like watching two heavyweight boxers fighting. Player A punched himself in the face. Just when you think "surely the other one can just wait for him to fall down and automatically win", player B just jumped out of the ring and announced retirement.

 

[mikeavelli]

Subaru importing more from Japan to Canada since they have no tariffs

Subaru Canada to source more vehicles from Japan, not U.S.

Switches in production locations could potentially reduce U.S. imports from 26% to 10%

driving.ca

 

[Och]

Honestly the world we are living in is too stupid to be real. It's like watching two heavyweight boxers fighting. Player A punched himself in the face. Just when you think "surely the other one can just wait for him to fall down and automatically win", player B just jumped out of the ring and announced retirement.

It usually happens when boxer B is getting paid enough to this - its not stupidity, its by design. Kind of always been like this.

 

[mediumhot]

The only trade deal signed so far is 10% tax on imports from UK.

 

[Sulu]

Although it is nice to see an agreement for a trade deal between the USA and the UK, that is all there is right now, an agreement -- a framework or a plan -- for a formal trade contract. There is nothing formal yet.

Who knows, given Mr. Trump's mercurial moods, if the formal written contract will be (largely) the same as the framework. And then that written contract has to be ratified by Congress.

 

[CRSKTN]

Dedollarization is slowly rearing its head across markets, commodities.

This is bigger than just car prices.

Where does USD land without reserve currency status?
Without unlimited global borrowing power?

I genuinely dont know what the US looks like as a continental power and not a global one.

Theres gonna be a reckoning with their budget and military.
I'd expect desperate actions.

 

[mediumhot]

One thing is for sure, once msrp goes up it will never go back even if import tax is canceled the next day. One way to remedy this, and its a slow way, is to wait for median income to go over current threshold over some period of time while prices across the board stagnate. Very unlikely anytime soon.

 

[mikeavelli]

Cliffs- China retaliated with rare earth tarriff and they control 90% of it. Now a license has to be approved to buy. Automakers assembly lines might halt soon without more materials.

China’s rare earth restrictions halt first auto industry production lines — The Verge

The auto industries in both the US and Europe could come to a standstill within weeks thanks to China’s ongoing restrictions on exports of rare earth minerals and magnets.

apple.news

m

More

Even after Trump-Xi call, China’s rare earth controls aren’t going away — The Washington Post

China views its rare earths as a national security issue, not a trade one, and that’s why Beijing is unlikely to loosen controls any time soon, experts say.

apple.news