How are auto makers going to handle tariffs?

[RickMachE]

If they have to, automakers will stop making the vehicles in those markets. They'll then sit and wait for the administration to hear the screaming of people that cannot buy those models anymore. Moving production takes too long and costs too much.

People who say "buy American made products" usually are clueless as to the cost increase they will have to bear if a product was American made. It's not simply labor, it's the pieces parts that would be made in the US with more expensive materials and more expensive labor.

Years ago the company I worked at made a product that was related to an American theme. We got letters "make it in America, not ____". In a focus group, we asked "would you rather buy it if it was made in America?" Then we said "the price would go from $37.50 to well over $100. " Every answer was "no thanks".

While the concept of every job in the country paying a wage to support a family of 4, the reality is that's a ridiculous concept. Some states see much higher costs for things primary due to higher labor costs. Reality is that as price goes up, demand goes down. People yap until it's time to open the wallet.

The funniest part of all this is that products sold by the leader of the orange clan are made outside the US, yet the lemmings buy these products. When it's pointed out to them by people like Jordan Klepper, they seem to develop a stammer.

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[Dear_OP]

I hope Canada would just open its EV market to Chinese brands and be done with it. Affordable EVs and a middle finger to Washington's Oompa Loompa. Sorry, love you Americans. Really nice people in person. But your elected leader is terrible. You can do better.

 

[MonkeyNutz]

It really shouldn't be, but yeah, EVs are somehow a political thing.

I would argue that EVs are a much bigger political issue for those who oppose them. But opposing EVs, clean/renewable energy, or just most new energy tech is completely baffling to me. It’s because there’s no logic to it.. It becomes a political cause, or an issue on which to grandstand a platform.

People who say "buy American made products" usually are clueless as to the cost increase they will have to bear if a product was American made. It's not simply labor, it's the pieces parts that would be made in the US with more expensive materials and more expensive labor.

Anecdotally, everyone I know that loves to blurt out “buy American!” are the same folks who shop at WalMart and don’t really have a clue where anything is made or why.

As for these tariffs, it’s hard to say just how soon or how intense the pricing shifts will be for the auto industry. I know that GM and Toyota intend to sue as soon as the tariffs are imposed, I con only hope Ford joins in on that. One of the higher-ups at Ford that I know, says he has no idea how it will play out. That’s not his department, but some of the murmuring indicates that initially they may try to spread tariff costs across all their offerings as opposed to raising the price on specific vehicles to a point where almost no one will buy. But they’re just guessing. I know GM’s take was a bit different. It seems Mary wants to line-item the tariff as “Trump Administration Tariff” right on the window sticker next to the D&H fee. Let customers see exactly what they’re paying. …I’m with Mary on this one.

I still wonder what this means for Ford’s Ontario plant that was being re-tooled to build Super Duties starting next year? …After already changing their plans away from building their larger EV platforms there. Stellanais Just halted their Canadian factory retooling operations last week. They were going to build the new Jeep Compass and Liberty….

 

[NH_Pony_Boy]

What do we think Ford will do with Mach-E factory orders not yet fulfilled?
Can they just not deliver the car?

 

[RickMachE]

What do we think Ford will do with Mach-E factory orders not yet fulfilled?
Can they just not deliver the car?

The car was ordered by a dealership. The buyer has no legally binding contract with Ford, or likely with anyone.

Ford could hold the vehicles in Mexico. They could turn off production. They could ship the car with a revised sticker, and the buyer can choose to walk away.

 

[NH_Pony_Boy]

Once they pay that tariff there is no getting it back in the event the tariffs be cancelled after the tax was paid.

 

[Sikkun]

Things cost people who sell things more money makes things that people buy cost more money.

 

[RickMachE]

Things cost people who sell things more money makes things that people buy cost more money.

I don't think that's correct, at least that's why the orange overload has said...

 

[Sikkun]

I don't think that's correct, at least that's why the orange overload has said...

If orange man say thing, thing is probably not true.

 

[RickMachE]

You have to listen carefully, because he says it's true, or maybe it's not true, or maybe it's partly true, we'll just have to see. Bing, bing, bong, bong.

 

[Herbknowsit]

Even without the the tariff BS we "gots trouble a comin" as jobs across the USA are being butchered by this new administration team. As we saw in 2008, when a person here loses their job during uncertain times, it isn't easy to get employment and start spreading the greenback love around again. I believe prices on everything under the sun are going to rise under Trump and sales will nosedive on many goods. Causing....wait for it....more job losses which in turn means we have lower sales of vehicles. Back to the tariff debacle....it was foolish of Trump to push smaller government via massive job cuts at the same time as penalizing our North American neighbors. He could have waited one year between the two initiatives. The park ranger who lost their job this week sure as hell won't be buying a new vehicle any time soon.

 

[ChehRob]

Canada and Mexico will be forced, more or less, to find other trade partners. China will be ready and willing.

 

[MBCook]

What can you do?

You can raise prices to cover them, you can eat into your profit, or you can cut the true cost of the car by gutting features and luxury to get the price to where real price + tariff is similar to old price.

#1 turns people off. #2 makes it harder to survive even if you can afford it. And #3 won’t work well when that number is big for normal cars and people won’t like purposefully cruddy cars.

You’re competing against the fully featured used cars that already exist, for example.

I see no way prices don’t go up a lot, and thus sales down a lot.

It’s not like there a lot of $15,000 sedans out there. People already mostly buy relatively expensive cars (compared to 15k) many can barely afford with 72 month leases.

The auto industry is going to hurt, as is anyone who needs a vehicle. Just like the supply stuff in the pandemic, this will cause used process to shoot up.

Unless you’re looking to sell a spare car everyone in the market is in for it.

 

[1st_EV_2011]

I am glad that I bought my Mach-E GT when I did. The 2023 model year is great, and I received the $7,500 tax credit.

My education informs me that interventions in markets usually produce unintended consequences. It will be interesting to see how this plays out.

 

[MellowJohnny]

The whole premise is flawed. Even if Canadian plants shut down and move production to the US, those models will ostensible be more expensive to build in the US as labour is more expensive vs. Canada. Doubly so for Mexican cars. Oh, and how much is building a new plant these days? Right.

And even if final assembly is done in the US, trannys and engines and all sorts of other high-value parts will still be coming from outside the US.

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