Car prices: BOHICA

Investment Analysis Clubs Macro Economic Trends and Risks
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Remember those soothing, reassuring, words the media has been laying on, about TIG telling the automakers to NOT take advantage of the protected market and inventory shortage to gouge the daylights out of people?

Enjoy the break from reality?

Watched the NBC news this evening. They had a reporter on, with a couple quotes from her interview with TIG, which is supposed to air in full tomorrow. She asked about the tariffs. TIG confirmed “permanent”. She asked if the chatter was true, that he was pressuring the automakers to hold prices. He denied it outright. I can’t remember the exact words, but the jist of it was automakers are free to do whatever they want with prices.

I may need to double my position in Ford. I have 1000, but it’s only a $10 stock. Farley’s comments, over recent years, indicate he is not interested in building better cars (Ford’s sky high warranty claims give evidence to that), and he isn’t interested in growing the company. Farley’s only interest is taking more money off of each person who buys from them. TIG just handed Farley the perfect environment to gouge the living daylights out of people.

Steve

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Film at 11:00

The clip from the NBC news is now available on line.

Asked what his recent message was to motor industry CEOs, and whether he had warned them against raising prices, Trump said, “The message is congratulations, if you make your car in the United States, you’re going to make a lot of money. If you don’t, you’re going to have to probably come to the United States, because if you make your car in the United States, there is no tariff.”

When pressed if he told CEOs not to raise prices, as reported in the The Wall Street Journal, Trump added, “No, I never said that. I couldn’t care less if they raise prices, because people are going to start buying American-made cars.”

Asked if he was concerned about car prices going up, Trump said, “No, I couldn’t care less, because if the prices on foreign cars go up, they’re going to buy American cars.”

Steve

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… money that would come out of consumers’ pockets. That‘s quite a shift from claiming foreigners would pay for his tariffs…

Any bets on „last minute developments“ prior to April 3?

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The width of the yellow streak down his back and tied to his tie ???

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Trump wants to generate enough revenue from tariffs to repeal the income tax. I have seen reports on the wire this morning quoting both Trump and Navarro that what people pay for tariffs will come back to them in tax cuts. I take that spin as accurate, because cutting income taxes benefits TIG, personally, and benefits the rich, in general, more than anyone else.

Steve

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“Trump wants to generate enough revenue from tariffs to repeal the income tax. I have seen reports on the wire this morning quoting both Trump and Navarro that what people pay for tariffs will come back to them in tax cuts”

Someone please explain to me how the Trump Tariff-Tax Increase is not going to raise prices ? ( rhetorical, lol ).

Is the Trump Admin going to cook the books in regards to factual inflation numbers ? Because that is the only way I can wrap my head around the Trump Tariff-Tax Increase, and lower prices.

Trump bankrupted 3 casinos. But he played a cutthroat businessman on The Apprentice. Apparently Americans put more stock in made up scripted TV than in Trump’s actual performance as a businessman.

For all of you Trump supporters, y’all better get a grip on him before he leads America into another BK. A whole lot of you have talked about how you like his “economic policies”. You might want to examine that position and let him and his Congressional supporters know about some possible concerns you might have. But more likely, let’s all go down with the ship.

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Also wanted to say that I agree with getting American Government spending under control. But DOGE “savings” are a mirage. Musk has zero credibility with me.

Anybody thinking that Trump Tariff-Tax Increase is going to result in a Lower budget deficit ??
Combine the Trump Tariff-Tax Increase with the Trump Tax Cuts he wants to extend, and the deficit will likely explode.
People are already cutting spending, before these tariffs are put in place.
So explain how Trump is being fiscally responsible with his “economic policies” that are said to be favored by his supporters.

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They are going after government employees and agency contracts.

The big 3 of government spending are: defense, Medicare, and Social Security. If you don’t attack those you are spitting in the ocean. If you do attack those you are politically dead. You’re not gonna make it turning out janitors and X-ray technicians at the VA.

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The closest I could find at the moment was this quote from Navarro:

Trump trade adviser Peter Navarro said on Fox News Sunday that the tariffs due to start this week would raise $100 billion, while the total tariffs packages would raise another $600 billion.

“It’s the biggest tax cut in American history for the middle class, for the blue-collar deplorables,”

Navarro goes on to explain that the foreigners will eat most of the tariffs (yeah, sure they are) The jist of what he is saying is the people they are concerned about will, after paying the tariffs, and receiving an income tax cut that was paid for with the tariff revenue, will net out better off. I understand that line of reasoning, but, of course, with our progressive tax system, and history of Shiny tax cuts, the biggest beneficiaries will, of course, be the highest income people.

Example, someone earning $150k, in the 24% tax bracket pays $50,000 for a new car. A “JC”, with a $30M income, at the 37% tax bracket, pays $150,000 for a new Range Rover. Who is better off after his income tax is zeroed out, in favor of paying 25% more for the car?

Steve

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I don’t buy cars, so not worried. But will tariffs also eliminate the corporate income tax? Key question. I hope it does–so my plan can be implemented when a REAL US govt is elected.

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I’m pretty sure elimination of the IRS would mean no corporate tax.

The Trump administration is preparing to launch the “External Revenue Service,” a new tariff-collecting agency which it hopes will contribute to the eventual elimination of the Internal Revenue Service (IRS).

Steve…flipping the calendar ahead to 1912

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B4CSM or AC (After Cataclysm)?

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" Trump trade adviser Peter Navarro said on Fox News Sunday that the tariffs due to start this week would raise $100 billion, while the total tariffs packages would raise another $600 billion."

I’m not from Missouri, but gonna have to invoke their motto:
Show Me, lol.

Who Pays Federal Income Taxes? Latest Federal Income Tax Data

" In 2021, taxpayers filed 153.6 million tax returns, reported earning more than $14.7 trillion in adjusted gross income (AGI), and paid nearly $2.2 trillion in individual income taxes"

So even if they have a goldilocks outcome, and people do not curtail spending, and they get all of the $600 Billion, they still have to come up with $1.6 Trillion, based on 2021 individual tax revenue, per the link.

I think DOGE is pulling #'s out of their keister. Where is the $1.6 Trillion deficit being made up ?
Why has Federal Spending gone UP since Trump took office ?
US government spending has not slowed under Trump so far, data shows | Reuters
“US government spent $710 billion in Trump’s first month, up from same period a year ago”

Hmm, expanding Federal Deficit, or gut SS and Medicare, which will it be, which will it be ??

I’m not buying any of it.

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Some $880B from Medicaid. iirc, there was another $250B-ish cut somewhere else, in the budget that is in Congress. Does $600B sound more attainable?

Steve

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The days of the “gilded age”, when the “JCs” enjoyed massive wealth, without “burden”, and the Proles lived in squalor?

Steve

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“Some $880B from Medicaid.”

Man, that is a whole lotta pain for some of his red hat constituents ( and other side as well ).
There is a non zero chance that such a cut would lead to at least some of the red hat congress people losing their cushy and lucrative jobs. I wonder if they’re prepared to just sit back and let that happen ? Will their own self interest finally nudge them toward defying the King ?

We will all be finding out soon enough, although it’ll feel like an eternity to me.

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Keep in mind, propagandists like Fox Noise, have been telling the base, for decades, that “others” are the ones on welfare. The base wants “others” to be disowned, disenfranchised, and tossed out. Even when some of their own friends and neighbors suffer, they will be OK with that, because, they will assume, most of the pain is suffered by “others”.

Steve

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One other tidbit. I had to do some field research today: From the article linked above:

NBC News reported earlier this week that foreign auto parts would also be taxed at 25% even if the vehicles they go into are assembled domestically. Companies that import vehicles under the United States-Mexico-Canada Agreement (USMCA) will get special consideration until the government establishes a process for levying the 25% duties, according to the White House..

Until that time, USMCA-compliant auto parts will remain tariff-free.

I did some sampling of compact SUVs.

USMCA compliance means 75% of content from within the USMCA zone, and 40%, for cars, and 45% for light trucks, of content made by labor earning at least $16/hr, meaning US/Canada, as Mexican rates are far below that.

Jeep Compass content statement:

Screenshot 2025-03-30 at 17-02-03 MONRONEY - jeep-9.pdf
Screenshot 2025-03-30 at 17-02-03 MONRONEY - jeep-9.pdf268×355 18.6 KB

82% USMCA zone content, but only 28% of content meets the wage requirement.

Chevy Equinox:

Screenshot 2025-03-30 at 16-59-47 GMLBL_PROD_0043 - window-sticker-3.pdf
Screenshot 2025-03-30 at 16-59-47 GMLBL_PROD_0043 - window-sticker-3.pdf372×386 29.6 KB

Only 64% USMCA zone content = not compliant. Only 15% possibly meets the wage requirement = not compliant.

The field research: nosing around at a Ford dealership, as Ford does not put the content information on the Monroney sticker.

Escape (US final assembled) 36% US/Canadian, 27% Mexican, Mexican engine, US transmission.

Bronco Sport (Mexican final assembly) 23% US/Canadian, 64% Mexican, Mexican engine, US transmission (USMCA content compliant, USMCA wage rate not compliant.

Maverick (Mexican final assembly) 27% US/Canadian. 60% Mexican, US engine, US transmission. (USMCA content compliant, USMCA wage rate not compliant.)

Seems that the previous 2.5% US tariff on imported cars was not enough to motivate compliance with USMCA, as seems nothing in this very popular segment is fully complaint.

And a tidbit about how to increase prices, without “increasing price”.

The Ford Escape is final assembled in Louisville, but the 1.5 engine installed in the lower trims is built in Mexico. The 2.0 engine installed in the higher trims is built in the US. So Ford will cry a river about the “burden” of importing the 1.5 from Mexico, so the cheapest Escape available will not be the $29,150 “Active” trim, or anything else with the 1.5. The cheapest Escape will be the one with the US built 2.0, the “ST-Line Select”, at $32,830, and there won’t be any cash incentives or cut rate financing, because, with all the Korean, Japanese and European CUVs tariffed out of contention, there will be a “shortage”.

Steve

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Gild the JCs–literally. Coat them 100% in fool’s gold.

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My guess, not even a hypothesis, is that any revenue from tariffs will be offset by a decrease in revenue from income taxes and corporate taxes, but due to a slowing economy and not because a change in the law.

The thing is, people feel tariffs and corporations feel reduced profits more so than the more passive income and corp taxes.

I don’t this going to as they expect it.