How are auto makers going to handle tariffs?

[StevenC56]

I truly apologize, but can we all agree to not use the name, "Mark Twain" in this thread?

I did a book report on Tom Sawyer back in the day and it did not go well. I forgot to read it.

I get triggered whenever I see that name.

Hopefully you understand.

I apologize for my insensitivity. I am truly sorry. I will reference Shania Twain quotes from now on.

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[Omen]

I get so "triggered" when I see the word "Elon" that I just can't respond in a rational way.

I guess you were correct all along.

Gosh dang it, you are much smarter than I thought. You knew what I was thinking before I thought it.

You win the battle of wits on this one but I will be more prepared next time.

Well I guess this thread has been settled. Omen was correct all along.

Next.

You and SteveC56 are the coolest guys I know, Hopefully the next 4 years don't take its toll on you....enjoy

 

[Mach1E]

So let us accept that we are going to tax (tariff) all of our vehicles going forward.

Ford takes your advice. They listen to the man that promised that Mexico would pay for a wall on the Southern border. Makes sense.

Ford, moves all of their tooling etc. from Mexico and elsewhere and builds more factories in the US.

Now granted, they have one month but that should be plenty of time to move and hire all of the people needed.

They now need to build into the price the added labor cost along with the land purchasing etc. that cost more here than there. (If you recall, the reason they moved down to Mexico with their plants is to stay competitive with non domestic companies) They now need to figure out how to obtain the electronics and all other products needed to finish the car from other countries (with the added tariff/tax) and cut back on domestic made products to compete with other companies. Are you keeping up with the additional costs in this scenario? It is adding up rather quickly.

Now let us say for example their competitor takes the chance that "Agent Orange" is fibbing and they keep their plants etc. abroad. Now, one month later Agent Orange says that he got off the phone with Mexico and they are paying for the wall........................I am just kidding...............He gets off the phone with Mexico and he says all is good. The illegal immigrants are going to stay put and this ole' tariff thing was a bargaining chip.

Ford now has to make the decision to :

A. continue with the move knowing that they will not compete with the company that decided not to move.

B. Stop the move and go back to the original set up.

Now fast forward 6 months and Agent Orange says that he got the first check from Mexico for the wall..............sorry, just kidding again..............rather the tariffs are BACK ON!!

Now (to my knowledge) Companies don't do well when they don't know the "end game". Chaos is not their friend and they are gambling with unknowns and it can make them bankrupt quicker than you can say the word "Tariff".

So while you may side with a man that has been known to lie, I would gamble on the fact that he is full of BS and just let him sweat in knowing that this scenario of a Tariff will not end well. In other words I am calling his bluff.

Can you imagine if you were playing poker with this man and he said, "All in" no wait "I fold" wait, "I AM ALL IN" and my neighbor to the south is paying for my gambling loss (just in case I don't have a good hand) wink, wink................

What? No….

This is not much different when the last regime was playing with the $7500 tax credits. They’re on, they’re off, they’re limited based on country of origin…. Etc

The planning for it is pretty much exactly the same. Adjust your prices. ?‍

 

[DennisD]

You and SteveC56 are the coolest guys I know, Hopefully the next 4 years don't take its toll on you....enjoy

Hopefully not but when even this man is concerned with the possibility of a Recession, I would guess it may take a toll on all of us if he is correct.

Interesting that you use the word "toll". Toll is a tax just like Tariffs. You seem to enjoy taxes?

In any event, we know the comedians have job security.

Take care,

 

[DennisD]

What? No….

This is not much different when the last regime was playing with the $7500 tax credits. They’re on, they’re off, they’re limited based on country of origin…. Etc

The planning for it is pretty much exactly the same. Adjust your prices. ?‍

Adjust prices aka raise prices. Sure, why not.

Yeah, it was/are the people on the right side of the aisle (along with Manchin's influence) that create/d uncertainty on that one too.

You would have thought the people would have learned by past mistakes but chaos seems to be in their DNA.

Btw, you do realize that the tariffs don't only influence all of the vehicles you purchase but pretty much most things that you purchase? I don't think any electronics are made in the States therefore, at least some parts will be subjected to Tariffs in one way or another?

Other than that little detail, you are spot on.

 

[Mach1E]

Adjust prices aka raise prices. Sure, why not.

Yeah, it was/are the people on the right side of the aisle (along with Manchin's influence) that create/d uncertainty on that one too.

You would have thought the people would have learned by past mistakes but chaos seems to be in their DNA.

Btw, you do realize that the tariffs don't only influence all of the vehicles you purchase but pretty much most things that you purchase? I don't think any electronics are made in the States therefore, at least some parts will be subjected to Tariffs in one way or another?

Other than that little detail, you are spot on.

You seem a bit misguided based on what I’m trying to convey.

I’m not defending the tariffs.

Was just answering your question on how companies can plan for them.

And the answer is the same way they plan for other cost increases, by adjusting their prices.

And it’s both sides of the aisle that kept changing the rules for the tax credits. Plenty of blame to go around on those.

My point about comparing the two? It’s just that this (from an automotive business standpoint) isn’t really new, nor is it a one sided blame argument.

If we want to start complaining about who did things that raised the price of stuff in this country…….. we will be here all night. ?

Once again, plenty of blame on both sides in recent history.

 

[DennisD]

You seem a bit misguided based on what I’m trying to convey.

I’m not defending the tariffs.

Was just answering your question on how companies can plan for them.

And the answer is the same way they plan for other cost increases, by adjusting their prices.

And it’s both sides of the aisle that kept changing the rules for the tax credits. Plenty of blame to go around on those.

My point about comparing the two? It’s just that this (from an automotive business standpoint) isn’t really new, nor is it a one sided blame argument.

If we want to start complaining about who did things that raised the price of stuff in this country…….. we will be here all night. ?

Once again, plenty of blame on both sides in recent history.

Yes, both sides are partially to blame with the tax credits. We can agree on that.

When you say, "adjust prices", I could see that if the tariffs were say static.

Because the Tariffs seem to be on shifting ground, the Companies are between a rock and hard place. Damned if they adjust and damned if they don't. There are no good outcomes that I can see from my vantage point.

I can easily see this sinking some Companies if they can't out guess a man that seems to change his position on a whim.

I own a Business and the last thing I would want is major decisions to swing back and forth on a daily basis due to an unstable man switching positions based on his mood of the day or even minute.

Well at least I hope you are correct. If not, this house of cards could come down crashing on all of us. You seem to think this has happened before but the rapid speed of a major policy decision shifting back and forth is something we have never experienced as a Country.

Oh, and it doesn't help that all of our allies are looking elsewhere to do business now. We (he) has pissed them all off. Not sure we can recover from that stain anytime soon?

Have a good evening,

 

[Mach1E]

Yes, both sides are partially to blame with the tax credits. We can agree on that.

When you say, "adjust prices", I could see that if the tariffs were say static.

Because the Tariffs seem to be on shifting ground, the Companies are between a rock and hard place. Damned if they adjust and damned if they don't. There are no good outcomes that I can see from my vantage point.

I can easily see this sinking some Companies if they can't out guess a man that seems to change his position on a whim.

I own a Business and the last thing I would want is major decisions to swing back and forth on a daily basis due to an unstable man switching positions based on his mood of the day or even minute.

Well at least I hope you are correct. If not, this house of cards could come down crashing on all of us. You seem to think this has happened before but the rapid speed of a major policy decision shifting back and forth is something we have never experienced as a Country.

Oh, and it doesn't help that all of our allies are looking elsewhere to do business now. We (he) has pissed them all off. Not sure we can recover from that stain anytime soon?

Have a good evening,

Oh it sucks for sure and definitely isn’t unique to cars.

Companies across the world are scrambling to do the same thing- adjust prices based on changing tariffs.

And adjustment is pretty simple- if the item ends up with a tariff on it, raise the price.

Tariff goes away? Lower it.

Tariffs and tariff wars have been going on for a long long time.

If you think a 25% tariff on cars sounds bad, how do you think China likes the 100% Tariff Biden imposed on them last year?
https://www.utilitydive.com/news/joe-biden-china-tariff-hikes-ev-battery-semiconductor-final/727014/

I’m guessing we’d have to go pretty far back in the history books to find a US President who didn’t have tariffs in place.

LOL….. google answered it for me. The first President to use tariffs? George Washington in 1789. There went that theory. ?

 

[DennisD]

Oh it sucks for sure and definitely isn’t unique to cars.

Companies across the world are scrambling to do the same thing- adjust prices based on changing tariffs.

And adjustment is pretty simple- if the item ends up with a tariff on it, raise the price.

Tariff goes away? Lower it.

Tariffs and tariff wars have been going on for a long long time.

If you think a 25% tariff on cars sounds bad, how do you think China likes the 100% Tariff Biden imposed on them last year?
https://www.utilitydive.com/news/joe-biden-china-tariff-hikes-ev-battery-semiconductor-final/727014/

I’m guessing we’d have to go pretty far back in the history books to find a US President who didn’t have tariffs in place.

LOL….. google answered it for me. The first President to use tariffs? George Washington in 1789. There went that theory. ?

Once again, you are correct about Tariffs being imposed as far back as Washington. I have never said/stated that Tariffs have not been used or even tweaked.

If you look closely to what I have been saying, you will note it is the back and forth at rapid speed that Companies are going to find nearly impossible to navigate.



And it is not me, it is Ford and others that suggest as such.

 

[Mach1E]

Once again, you are correct about Tariffs being imposed as far back as Washington. I have never said/stated that Tariffs have not been used or even tweaked.

If you look closely to what I have been saying, you will note it is the back and forth at rapid speed that Companies are going to find nearly impossible to navigate.



And it is not me, it is Ford and others that suggest as such.

Of course the people directly affected (Ford) are going to fight it.

But they shouldn’t act like they have no way to rapidly change prices.

They do it literally every month for the last few decades with drastically changing incentives.

Consumers will get whiplash, but there actually may be a short term positive effect for car dealers and car manufacturers.

They may get a small taste of Covid like sales while consumers scramble to buy the last few tariff free cars on the lot “before prices go up.”

 

[DennisD]

Of course the people directly affected (Ford) are going to fight it.

But they shouldn’t act like they have no way to rapidly change prices.

They do it literally every month for the last few decades with drastically changing incentives.

Consumers will get whiplash, but there actually may be a short term positive effect for car dealers and car manufacturers.

They may get a small taste of Covid like sales while consumers scramble to buy the last few tariff free cars on the lot “before prices go up.”

I just wish I had your "positive" outlook on the proposed Tariffs that keep going back and forth.

I really don't think you grasp the situation at hand and you seem to dismiss it as we have seen this movie before so to speak.

Almost every economist (both conservative and liberal) thinks this will be a total disaster. Not sure where your nonchalant attitude is coming from but I would like to get some of that.

I get that we have had tariffs before and the history is typically not too kind to Tariff Wars. Not only is this ill conceived but his approach may be the most idiotic I have seen. By introducing it and backing off just shows the other Countries that we are weak. Just like my example of playing poker, you just can't walk some things back without looking like a complete Moron.

Canada is doing, IMO the correct response. They are calling his bluff and raising the stakes. Most weak people typically fold at that point.

I guess we will see how this "Mexico will pay for the Wall" approach goes for future deals.

 

[Mach1E]

I just wish I had your "positive" outlook on the proposed Tariffs that keep going back and forth.

I really don't think you grasp the situation at hand and you seem to dismiss it as we have seen this movie before so to speak.

Almost every economist (both conservative and liberal) thinks this will be a total disaster. Not sure where your nonchalant attitude is coming from but I would like to get some of that.

I get that we have had tariffs before and the history is typically not too kind to Tariff Wars. Not only is this ill conceived but his approach may be the most idiotic I have seen. By introducing it and backing off just shows the other Countries that we are weak. Just like my example of playing poker, you just can't walk some things back without looking like a complete Moron.

Canada is doing, IMO the correct response. They are calling his bluff and raising the stakes. Most weak people typically fold at that point.

I guess we will see how this "Mexico will pay for the Wall" approach goes for future deals.

I don’t have a positive outlook on the tariffs.

But I’m also not in the “sky is falling, doom and gloom” place that many seem to be in.

Why?

Because I have a strong belief that it’ll work itself out. It always does.

It’s the same thing with any “lever” that the government pulls. If things go in the wrong direction, they pull the lever back.

Despite what the news tries to tell you about the “other side,” neither party is trying to destroy the economy. They both want to grow the economy, create jobs etc. They just disagree on which way to do it.

 

[DennisD]

I don’t have a positive outlook on the tariffs.

But I’m also not in the “sky is falling, doom and gloom” place that many seem to be in.

Why?

Because I have a strong belief that it’ll work itself out. It always does.

It’s the same thing with any “lever” that the government pulls. If things go in the wrong direction, they pull the lever back.

Despite what the news tries to tell you about the “other side,” neither party is trying to destroy the economy. They both want to grow the economy, create jobs etc. They just disagree on which way to do it.

You are actually incorrect in suggesting "It always does".

The Great Depression comes to mind. Because certain regulations were not in place, the house of cards came crumbling down.

Not certain if I can hold out on any hope when the man that suggested on Day 1 things would be great and then 6 weeks later he suggests we may be heading towards a Recession.

What a buffoon...............

Hopefully your optimism holds out. It is funny how you seem to have more confidence than the man in charge does.

 

[Mach1E]

You are actually incorrect in suggesting "It always does".

The Great Depression comes to mind. Because certain regulations were not in place, the house of cards came crumbling down.

Not certain if I can hold out on any hope when the man that suggested on Day 1 things would be great and then 6 weeks later he suggests we may be heading towards a Recession.

What a buffoon...............

Hopefully your optimism holds out. It is funny how you seem to have more confidence than the man in charge does.

And the fact that the Great Depression ended means, “it worked itself out.”

People are extremely resilient. And the US economy has shown this time and time again.

This too shall pass. Every time I hear people claiming “this is the end, this time is different,” we both are happy a short time later that they were wrong.

And a normal recession and the Great Depression are nothing alike. One is part of a normal market cycle, the other is a one off that we learned a lot from.

I don’t think I’m more confident than the man in charge. Not by a long shot. He believes everything is an extreme (the best or the worst), I live in the “it’s ok” camp.

Getting too excited or too scared never seemed to do anyone any good.

 

[devmach-e]

And the fact that the Great Depression ended means, “it worked itself out.”

People are extremely resilient. And the US economy has shown this time and time again.

This too shall pass. Every time I hear people claiming “this is the end, this time is different,” we both are happy a short time later that they were wrong.

And a normal recession and the Great Depression are nothing alike. One is part of a normal market cycle, the other is a one off that we learned a lot from.

I don’t think I’m more confident than the man in charge. Not by a long shot. He believes everything is an extreme (the best or the worst), I live in the “it’s ok” camp.

Getting too excited or too scared never seemed to do anyone any good.

The Great Depression didn't "work itself out". The government had to step-in in a big way. Lots and lots of people ended up suffering during the decade or so it took to recover. Sadly, a lot of the hard earned lessons of that time seem to have been forgotten and that's why people are have a gloomy outlook on things now.

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