How are auto makers going to handle tariffs?

[Sikkun]

People have entire accounts with only 20 messages and all of them are complaining….oh wait…I guess that is different when they do it in other threads!

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[Mach1E]

Please enlighten me on how one would handle something that's on one day off another day and then on another day and then off?

By making contingency plans.

This seems to be a binary situation. Either we have tariffs or we don’t. Shouldn’t be hard to plan for either of these what if scenarios, especially since one of the options requires zero action for the status quo.

So all they have to plan for is “what if the tariffs go into effect.”

 

[devmach-e]

Much like the ironically-named "Inflation Reduction Act". It jacked around the $7500 tax credits so much that Ford went from +$7500 on the Mach-E vs the Model Y (it's main competition at the time) to -$7500 almost overnight. Totally changed Ford's economics on it that they launched the car under.

Yes, government sucks.

Under the old tax credit scheme, Ford had hit the 200K phaseout trigger in the 3rd quarter of 2022. Which meant that on January 1st, 2023, the tax credit was going to be cut to $3750, and then cut in half again to $1875 on July 1st, 2023, and gone by January 1st, 2024. So no matter what, the tax credit was going away for Ford within a year.

The IRA actually extended the full tax credit available by 3.5 months before the minerals sourcing requirement cut the credit to $3750. And kept the $3750 amount all the way to December 31st, 2023.

 

[DennisD]

By making contingency plans.

This seems to be a binary situation. Either we have tariffs or we don’t. Shouldn’t be hard to plan for either of these what if scenarios, especially since one of the options requires zero action for the status quo.

So all they have to plan for is “what if the tariffs go into effect.”

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................

 

[StevenC56]

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................

This! 100%!!!

 

[Omen]

Well there you go. I'm not triggered by anyone but rather entertained about those that complain about people that complain?

Now back to my original question. How would a company handle a tariff that is on one day off another and then on and then off?

Likely there will be no tariffs, it’s all a game for negotiation. If there is tariffs the manufacturers will place that on to the vehicle. You can choose to pay it or you can find a vehicle that possesses more American parts and labor. The manufacturer can also modify some of their plants to produce those cars in the US (some plants don’t operate at full capacity and have room) Those that say it not possible because of labor wages, well how does Toyota , Honda, Tesla, bmw , Chevy , ford , etc do it will other models built in the US. Also the price really doesn’t have to change at all, they could just do a way with rebates or even less discount. I was able to get almost 10k off my Mach e GT purchase with rebates and dealer discount, there was no ev credit. So if there is so much play in the msrp price they likely don’t have to raise anything you just deal with less rebates/discounts. Once again you all are just triggered by Trump and Elon.

 

[E90alex]

Those that say it not possible because of labor wages, well how does Toyota , Honda, Tesla, bmw , Chevy , ford , etc do it will other models built in the US.

All of those companies have cars and parts made in Mexico. Especially the ones where price is important. Toyota makes the Tacoma in Mexico. They also have the Yaris made for them by Mazda in Mexico. Honda makes the HR-V in Mexico. The Prologue is built for them by GM in Mexico. Tesla has a lot of parts made in Mexico and China. BMW makes the 2 and 3 series in Mexico. GM makes a ton of models in Mexico. Ford makes the less expensive models like Maverick and Bronco Sport in Mexico. And of course Mach E so they can sell it at a more competitive price.

If you look at Blazer EV and Prologue made in Mexico vs Lyriq and ZDX made in the US, the US made versions are $10-15-20k more. Yes of course some of that is due to more luxurious trims and equipment but there’s a reason they chose to make the less expensive versions in Mexico.

 

[DennisD]

Likely there will be no tariffs, it’s all a game for negotiation. If there is tariffs the manufacturers will place that on to the vehicle. You can choose to pay it or you can find a vehicle that possesses more American parts and labor. The manufacturer can also modify some of their plants to produce those cars in the US (some plants don’t operate at full capacity and have room) Those that say it not possible because of labor wages, well how does Toyota , Honda, Tesla, bmw , Chevy , ford , etc do it will other models built in the US. Also the price really doesn’t have to change at all, they could just do a way with rebates or even less discount. I was able to get almost 10k off my Mach e GT purchase with rebates and dealer discount, there was no ev credit. So if there is so much play in the msrp price they likely don’t have to raise anything you just deal with less rebates/discounts. Once again you all are just triggered by Trump and Elon.

Once again?

Please enlighten me on when I mentioned, implied or used Elon's name? I think we have been down this path before just to have you reply that I didn't. Btw, don't you just get annoyed by people that get triggered easily (small crowds etc.)

Also, the price that you paid (10k off) is not sustainable for Ford. Ford is absorbing some cars at a loss to move inventory. Companies do this all of the time. After Christmas, many products are 50% off their Christmas inventory. By you suggesting they could do it all of the time because you purchased 50% off, simply does not work in the long run.

It is not so much that companies can't handle tariffs aka taxes on the people buying them, but rather the way it is being played out. Once again, companies need to know what they are up against to adjust with competing companies. If company A adjusts and company B doesn't and scenario B gets lucky because the tariffs were all BS, company A files for bankruptcy.

Just ask any business if this tactic works well.

In the long run, it will be the consumer that pays no matter what. Those that adjust to tariffs and moving their companies to the States will need to charge more because labor etc. is costing them more (pass it on to the consumer). Those that don't adjust will pass the tariff on to the consumer.

This is all a game (Mexico will pay for the wall) and Companies and peoples jobs are in the balance.

What could go wrong?

 

[Omen]

All of those companies have cars and parts made in Mexico. Especially the ones where price is important. Toyota makes the Tacoma in Mexico. They also have the Yaris made for them by Mazda in Mexico. Honda makes the HR-V in Mexico. The Prologue is built for them by GM in Mexico. Tesla has a lot of parts made in Mexico and China. BMW makes the 2 and 3 series in Mexico. GM makes a ton of models in Mexico. Ford makes the less expensive models like Maverick and Bronco Sport in Mexico. And of course Mach E so they can sell it at a more competitive price.

If you look at Blazer EV and Prologue made in Mexico vs Lyriq and ZDX made in the US, the US made versions are $10-15-20k more. Yes of course some of that is due to more luxurious trims and equipment but there’s a reason they chose to make the less expensive versions in Mexico.

Well the the lyriq and ZDX are from luxury brands , that’s a horrible comparison. They may be same underpinnings but vastly different in terms of features, materials, and design. So that a horrible comparison for your price difference from USA and Mexico

 

[Omen]

https://www.kbb.com/car-news/report-tesla-makes-the-most-american-cars/

Here you guys, a list of the most domestic cars that will help limit the amount you pay when the tariffs go into play and the world ends. You can help support Elon.

 

[DennisD]

https://www.kbb.com/car-news/report-tesla-makes-the-most-american-cars/

Here you guys, a list of the most domestic cars that will help limit the amount you pay when the tariffs go into play and the world ends. You can help support Elon.

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.

 

[StevenC56]

What's that Mark Twain quote?

 

[Kamuelaflyer]

What's that Mark Twain quote?

“The coldest winter I ever spent was a summer in San Francisco”?

 

[DennisD]

What's that Mark Twain quote?

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.

 

[Sikkun]

Maybe companies would rely less on foreign chips if we passed a bill allocating a bunch of funds to rebuild American chip manufacturing and stay competitive.

But that might make the wrong people look good, so scrap all that. Fire enough tariff!!!

50d chess.

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