How are auto makers going to handle tariffs?

[Teslaeata]

History might repeat itself.

In the 80's Japanese companies showed the world that cars could be made reliable and cheap, US domestic couldn't compete so tariff's were introduced. That put the import way higher than domestic. Same thing would happen again.

The solution at the time? Build factories in the US.

So how will manufacturers handle it? Prices WILL go up. If the manufacturer is no longer competitive then maybe they will look at domestic manufacturing again but the executive branch can drop those Tariffs at any time unlike the 80's when it felt like the whole of Congress was onboard. So it might just be painful for a short while.

I’m sure you’re right, problem with US & UK building factories is something we can’t do cheaply enough and then staff them economically to compete with Nations who don’t have our commitments to labour, unions etc etc

Sponsored

 

[CarlSagan82]

They believed him when he said Mexico will pay for the wall. He doubled down again yesterday with the UK prime minister visit and said the “other” countries will pay for the tariffs which he has said the past month. They will believe him again and blame Biden and immigrants when it doesn’t work out. So I don’t see him changing course as others have optimistically suggested.

 

[Donna216]

I think it's a bluff.

 

[NH_Pony_Boy]

History might repeat itself.

In the 80's Japanese companies showed the world that cars could be made reliable and cheap, US domestic couldn't compete so tariff's were introduced. That put the import way higher than domestic. Same thing would happen again.

The solution at the time? Build factories in the US.

So how will manufacturers handle it? Prices WILL go up. If the manufacturer is no longer competitive then maybe they will look at domestic manufacturing again but the executive branch can drop those Tariffs at any time unlike the 80's when it felt like the whole of Congress was onboard. So it might just be painful for a short while.

I’m sure you’re right, problem with US & UK building factories is something we can’t do cheaply enough and then staff them economically to compete with Nations who don’t have our commitments to labour, unions etc etc

From a 1948 NY Times ad. A simple, two-speed blender, undoubtedly built in the US, for $22. That is $286 in 2025 dollars. Access to cheap, foreign made products, has markedly improved the living standard in the US. It is true, you cannot put a kid through college building blenders on the assembly line.

 

[jorgedmz]

Let us try and do a thought exercise without involving politics.
Just an addressing of the facts.
The 25% tariffs on Mexico and Canada are going in effect on March 4th.
The Mach-E is built in Mexico so I assume that makes the whole vehicle subject to a 25% price increase.
Even cars built in the US have parts from both countries which would increase the price considerably.
If you have a car ordered from the factory, and it hasn't crossed the border yet, I think it is possible that Ford will not deliver that car as they cannot swallow the 25% price increase.
Is it possible the car makers will just not build new cars until the tariffs are rescinded?
That seems unlikely but it might be cheaper to shut down factories rather than build cars that you cannot sell because they are 25% more expensive than a Toyota.
What happens to the economy if the American automakers stop production and layoff tens of thousands of workers?
Seems like there is no good outlook on this.
On the upside this will increase the value of our used cars (but replacing it will be more expensive unless you buyJapanese).

My two pennies.... oh wait we dont have those anymore . Tariffs are negotiation tactics "I push for this to have a better leverage during the upcoming USMCA negotiations in 2026". if we look at the window sticker there is the local content being; local, regional, others. If we only assume final product meaning assembled cars it could be simpler but in reality and in my humble opinion to track autoparts coming from multiple countries it should be the only fair way a tariff could work and to do that the 25% will be diluted among several parts produced in Canada and Mexico and also from China, there as someone pointed out a good amount of components produced in USA that should not be subject to this tariff; thus the 25% increase on piece price does not make sense. Also moving production from one place to the other is not an easy feat, first is the economic burden of companies, cancelation of grants by the countries, states, cities. cost of firing people, and lastly the validation process that each automaker must do to guarantee a good quality on the product it may take years.

 

[DennisD]

My two pennies.... oh wait we dont have those anymore . Tariffs are negotiation tactics "I push for this to have a better leverage during the upcoming USMCA negotiations in 2026". if we look at the window sticker there is the local content being; local, regional, others. If we only assume final product meaning assembled cars it could be simpler but in reality and in my humble opinion to track autoparts coming from multiple countries it should be the only fair way a tariff could work and to do that the 25% will be diluted among several parts produced in Canada and Mexico and also from China, there as someone pointed out a good amount of components produced in USA that should not be subject to this tariff; thus the 25% increase on piece price does not make sense. Also moving production from one place to the other is not an easy feat, first is the economic burden of companies, cancelation of grants by the countries, states, cities. cost of firing people, and lastly the validation process that each automaker must do to guarantee a good quality on the product it may take years.

I actually think it is a "clever" way of shifting the tax burden to the poor. A tariff is more of a regressive tax than anything else. The products that are being purchased will go up and everyone (poor and wealthy) will pay the same amount.

I think that is what "they" want at the end of the day IMO.

I don't think this will go well in the long run but hey, I will sit back and watch those that voted for their "burden" to eat crow.

 

[music_cities]

The solution at the time? Build factories in the US.

I'm not an expert, but I think the real answer at the time was to build an efficient North American integrated supply chain so that Canada and the USA could work together to build domestic autos taking advantage of what we had in terms of efficiency by working together. That's how we competed with the Japanese.

 

[NH_Pony_Boy]

I'm not an expert, but I think the real answer at the time was to build an efficient North American integrated supply chain so that Canada and the USA could work together to build domestic autos taking advantage of what we had in terms of efficiency by working together. That's how we competed with the Japanese.

We have had a well integrated North American supply chain since Clinton signed NAFTA.

 

[Blue highway]

I'm not an expert, but I think the real answer at the time was to build an efficient North American integrated supply chain so that Canada and the USA could work together to build domestic autos taking advantage of what we had in terms of efficiency by working together. That's how we competed with the Japanese.

The response to the Japanese also included the big moves to Mexico

 

[Keytone]

That is what most people don't understand. The world has changed. So many industries are truly interconnected with suppliers and materials from all around the world.

Though, this issue is not of the world.

It is of the USA tearing up the Trump negotiated free deal with the Canada and Mexico.

 

[SonicBlue]

His favorite talking point in term one was the record stock market. And in fairness it was at then record highs. The DJI is now almost a thousand points lower than it was on Inauguration Day.
The gift he has is to claim a victory and convince his base he won and then reverse the decision. I think that will surely happen when the market starts to face up to the fact that tariffs will indeed happen and the economy will suffer.

Given that the stock market is massively over-valued, due in part to inflationary spending, I don’t think that’s a great metric. We are overdue for a market correction regardless of tariffs.

Look, if you want to be worried about this, or anything else Trump does, have at it. I don’t have the bandwidth for the constant freakouts. I’m just gonna live my life, and keep my fingers crossed for a wind down to international conflicts, appointment of good judges, an energy policy of abundance, a simpler and less burdensome tax code, less woke ideology rammed down from on high, and a reduction in the size and cost or government. I think overall things will shake out pretty well (for me).

The tariff stuff just doesn’t scare me. You can have the last word, or last 500. Peace be with you.

 

[Oxford]

Let us try and do a thought exercise without involving politics.
Just an addressing of the facts.
The 25% tariffs on Mexico and Canada are going in effect on March 4th.
The Mach-E is built in Mexico so I assume that makes the whole vehicle subject to a 25% price increase.
Even cars built in the US have parts from both countries which would increase the price considerably.
If you have a car ordered from the factory, and it hasn't crossed the border yet, I think it is possible that Ford will not deliver that car as they cannot swallow the 25% price increase.
Is it possible the car makers will just not build new cars until the tariffs are rescinded?
That seems unlikely but it might be cheaper to shut down factories rather than build cars that you cannot sell because they are 25% more expensive than a Toyota.
What happens to the economy if the American automakers stop production and layoff tens of thousands of workers?
Seems like there is no good outlook on this.
On the upside this will increase the value of our used cars (but replacing it will be more expensive unless you buyJapanese).

From a Canadian perspective, this could be a game changer. To start, the plants that shut down would be repurposed for our great big beautiful new military production of drones designed by the Ukrainians. The "beautiful military" build will happen in Canada and not the US. Saving lots of money. All the materials will be done in Canada so no need to deal with hostile trade partners.
Canada would then invite the Chinese EV makers to come in and manufacture and sell the better EV's they offer, cutting our cost down in a "huge beautiful way". No longer would Canada need to deal with tariff threats, unhinged comments. We would sell our oil to friendly nations that will pay market price and not demand a discount only to turn around and say they subsidize us. Mexico, Europe and Latin America will become a trade block and the "beautiful word Tariffs" will never be spoken again or heard since it will not be a factor. All that steal and Alluminum we produce can be used for a beautiful wall on Canada's southern boarder, so all the guns and drugs that come in will stop.
This is what it has come to USA, hostile words from your leaders towards your friendly neighbours who sell our resources to you for less than others so you can make more money but that makes us bad in your leaders eyes. So good bye to cheap resources.

 

[NH_Pony_Boy]

Given that the stock market is massively over-valued, due in part to inflationary spending, I don’t think that’s a great metric. We are overdue for a market correction regardless of tariffs.

If he hears people on Fox Business say tariffs are adversely impacting the markets that is all it will take.

 

[Sikkun]

If he hears people on Fox Business say tariffs are adversely impacting the markets that is all it will take.

Only if you think crashing the market isn’t part of the plan.

Every decision is being made to benefit billionaires, of which I assume no one here is.

 

[Eagertrader]

In addition to paying more for cars and car parts, expect to pay 25% more for avocados, tomatoes, raspberries, strawberries, peppers, limes, blueberries, blackberries, broccoli, mangoes, beer and tequila.

Sponsored