Ford CEO Jim Farley said on his earnings call this week tariffs would hammer profits.
Farley didnât get the memo. Tariffs will somehow be paid by currently free-riding foreigners and will fund wonderful, best-ever tax cuts.
The memo is simple ⌠only cars built outside the US will be tariffed. All he has to do is crank up some of his US factories instead of his foreign ones.
And if he complains that building in the USA will STILL be more expensive than building outside the USA ⌠well, in that case, the tariff is probably a bit too low.
Of course, once every country âtariffs awayâ every trade imbalance in each and every product category until that imbalance disappears, all the benefits gained from globalization, specialization, and economy of scale effects will have been reversed⌠where would that leave corporate profits and stock prices?
From the article linked to above:
âBut by and large, this is a group beginning to get really frustrated by the new administrationâs ramping levels of policy chaos. They were promised tax cuts, regulatory rollbacks, and everything else under the sun that could jack up stock prices and profits (and bonuses).â
Promises? LOL.
I bet a lot of waiters voted for a politician because they were promised tips wouldnât be taxed, too.
I consider voting to be an IQ test, or at least a test about how well you can judge someoneâs character.
C-Suite (and about half of Americans) failed on both accounts.
Nowadays itâs also a test on your character.
As noted before, Farley is a buffoon. He claims that all Fordâs US plants are already running at capacity. Bull. Simple math says Louisville Assembly is running at half of capacity, or less. But Louisville builds the Escape compact SUV. Farley has said he doesnât want to sell compact SUVs, only huge, three row SUVs, because he makes more profit on them. Itâs pretty easy to surmise that Wayne Assembly is also running below capacity, because the local Detroit news has been reporting on people being reassigned out of Wayne, due to low demandâŚbut then, Wayne also builds smaller models. What would hurt Farley is that many Fords contain about 50% imported parts.
So Farley wants Japanese and Korean cars tariffed, instead of the Mexican and Chinese parts in the cars he sells.
Thing is, as TI showed last week, he is using the tariff threat to push Japan to shift itâs oil and gas purchases to the US. TI probably intends to do the same to South Korea, but SK has been having a major political crisis, so is probably unsure who to send to negotiate that âartyâ seal.
Reality check: Ford was the first automaker to âdonateâ $1M. But there is that long rumored âdonationâ by the oil industry of $1B. TI was a salesman for US oil and gas on the last go around too. I remember him telling European countries to NOT buy nat gas via the Nord Stream II pipe, but buy US LNG instead.
Steve
Each country will have to decide which categories are important enough and which are not. Iâd day that chipmaking is one of the most important categories, mainly because right now it is centralized in a place where China wants to control. The US is also always focused on automaking, yet oddly enough most US automakers have done a pi$$ poor job keeping up with technology (both of the components of the vehicles themselves AND with the production tech) over the last 5+ decades.
But there are tons of small-scale stuff that you need to keep a modern economy humming along. China has done it, they have small to medium size companies, thousands of them, maybe tens of thousands, all around every manufacturing center to support that manufacturing. If you have an element of your production line, and something breaks, and you need a specialized part to fix it, you can have someone spec it out, have if fabricated, and someone can drive 30-90 minutes away and often pick it up same day or at worst next morning. Then the production line can be back on line quickly. Meanwhile, in the USA, we hardly have such a thing anywhere. They have to spec the part, get approval to order the part, order it, then wait for it to be fabricated (maybe even somewhere over in Asia), then wait for it to be shipped, arrange customs forms for it, ship it, receive it, do all the receiving paperwork, and then finally send it to the factory to be installed. Production line could easily be down for a week or three. Or you could choose to locally store all spare parts ⌠and that makes your costs higher than anyone else who has local manufacturing support infrastructure (those thousands or tens of thousands of small companies that can make stuff for you right away). Machined parts is a perfect example of something that the USA allowed to get super concentrated overseas at the expense of quick service in the USA. And there are hundreds of other examples (custom textiles, plastic fabrication, anything metal, custom fasteners, custom wire harnesses, etc).
My guess is they actually implement this. Tax cuts for minimum wage waiters is window dressing. Last summer the Supreme Court ruled politicians can take bribes as long as theyâre paid after they pass the law or take some other official action. Then, itâs not a bribe at all, itâs a tip and perfectly legal. Iâm sure theyâre salivating over the windfall of legal tax-free bribes/tips.
The Supreme Court on Wednesday ruled that a federal anti-bribery law does not make it a crime for state and local officials to accept a gratuity for acts that they have already taken
That isnât correct. It is also on parts, not just cars.
Tariffs would, of course, sharply raise costs on vehicles imported from Mexico, like the Toyota Tacoma, or Canada, like the Chrysler Pacifica. But it would also raise prices for vehicles that are assembled in the U.S., because many of their parts are sourced from companies in Canada or Mexico. Some parts cross borders multiple times â like, say, a wire that is manufactured in the U.S., sent to Mexico to be bundled into a group of wires, and then back to the U.S. for installation into a bigger piece of a car, like a seat.
Yes, need to also crank up the parts manufacturing in the USA. For decades the automakers outsourced more and more and more to save a few bucks each time. Now it looks like that penny-wise pound-foolish behavior is going to bite them in the hiney. The right thing to do would have been to maintain some sort of balance, import some percentage of the parts to save a few bucks, and at the same time still manufacture some here in the USA and eat the extra cost. Just to maintain our capability in case of emergency. Well, maybe the emergency is now here.
I donât think they will. It will start a whole thing about if waiters donât have to report income, then why do I? Except, of course, for billionaires. For billionaires, paying taxes only applies to the little people.
Politics can only serve its function well if the public enters into it seeking more than solely personal/familial benefits. Community needs to be more than a geographic designation and instead its crux meaning of âwhat is held in commonâ, with citizens mutually respectfully chewing through issues.
The transformation from rural/urban to primarily suburban living arrangements clobbered much of the experience of neighbors and commonality. Technological shifts in communications clobbered the availability of reasonably reliable information. Political discussion is now closer to whining and fighting over fantasies than our ancestral town halls and cracker barrel discussions.
And yes, from Plato and Aristotle on we have known that good politics requires comprehension of demagoguery, and a resolute commitment to stop oligarchic greed trumping public good. IQ and judgment of public character are crucial and intentionally now being distorted and destroyed.
Yep! Theyâll cancel carried interest, and then suddenly the hedge fundies and PE-ites will call the 20% a âtipâ (the 20% of their â2 and 20â comp structure). LOL.
No, it was smart behavior in a free trade environment - something the Rep party used to champion.
Who the heck wants to pay $40 for a t-shirt made in the US when we can pay $12 for the same one made someplace else? Let some other country focus on low skill labor and letâs have our citizens work in higher skill jobs - and create products that we then export to the rest of the world.
The lack of education in America is killing us.
Tariffs do not accomplish that.
Higher corporate taxes do. Taxes can have expenses applied. Making building factories in the US more attractive. The higher the tax the more factories built here.
The sales are here. If taxes are low profits are high but building factories at a lower cost or with less expensive labor can be done elsewhere. China is attractive because the larger cities offer a ready made consumer on your doorstep.
The only reason it may bite them in the hiney is because a âthought leaderâ decided to tap in to the resentment that has been building up, for decades, over, production being offshored, so that poorly educated USians canât make a middle class living working production jobs.
So, they voted for the âthought leaderâ. Now what? Will the âthought leaderâ deliver on good paying, menial, jobs? Or will they be sold out?
Steve
When Linda McMann was running for Senate in CT she offered a tax cut of $2000 per family. We all went around saying, âSure $20 for me and $20000 for the wealthyâ. She was ridiculed.
TI likes being ridiculed. It makes him look better.
Thatâs just great. Sarcasm.
You voted for that. We all did. Itâs ok to change your mind but you canât change your past vote.
Well not yet but it is going to be here when the inflation starts going up. You will hear it loud and clear. It takes time and money to put all this back together along with the knowledge.
My college logic professor said I could not change my mind.
He was drinking heavily.