@steve203 These companies all have substantial production here. It is a marginal issue with all of them. We also do not know if parts made in Mexico will have the tariff but not the sticker price in the showroom.
But but but… the unions love the tariffs:
Fain, who announced UAW’s endorsement of Harris over Trump last year by declaring Trump to be “all talk” on labor issues, hailed his administration this week “for stepping up to end the free-trade disaster that has devastated working-class communities for decades.”
Yes, they do. The local Detroit news reported Fain trying to get back out in front of his rank and file recently. Last fall, the local news was reporting a significant number of workers who were publicly, and loudly, diverging from his leadership. regarding who to vote for.
If you think about it, screwing on lugnuts is perfect for the “base”, as they can do that work with an 8th grade education. They don’t care if “others” are priced out of higher education. They don’t care if “others” lose their Medicaid, or SNAP, or rent assistance, because screwing on lugnuts, in a union shop, pays well enough that they don’t need government assistance. If there are enough jobs screwing on lugnuts, a lot of other people can get off the dole too, because they can leave that WalMart greeter job behind.
As said before, i don’t have a problem, in principle, with burning Milton Freidman, and his advocacy of buying everything from where it’s cheapest, in effigy. I have no problem with domestic content laws, to prevent USian industry being wiped out, by Pac Rim companies that pay near slave labor wages. I do have a problem with the way it’s being done. The USMCA could have been written with escalating US content requirements, over a period of years, so manufacturers can adjust in a rational manner. The way it is being done, precipitously, seems more intended to pocket a great deal of tariff revenue, for a couple years, as well as windfall profits for a select few, who happened to be well positioned to exploit the removal of competition from the market.
Steve
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Ha. Rear view mirrors have worked for decades.
In this particular case the rear camera was working [she could see the image] but it affected the data network so none of the electronic components were communicated with each other and thus stopped her vehicle.
@steve203 Considering the coming layoffs the car companies are all in trouble. Businesses won’t do well for a few years.
High tariffs lasted until after WW2, including during the Roaring '20. In 1922 Congress passed the Fordney-McCumber Act, raising the average import tax to some 40%.
DB2
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Looks like someone acknowledges the simple fact that tariffs increase prices:
https://www.wsj.com/business/autos/trump-tariffs-automaker-prices-warning-928bc7a9
When President [Trump] convened CEOs of some of the country’s top automakers for a call earlier this month, he issued a warning: They better not raise [car prices because of tariffs].
Trump told the executives that the White House would look unfavorably on such a move, leaving some of them rattled and worried they would face punishment if they increased prices, people with knowledge of the call said.
Instead, Trump said, they should be grateful for his elimination of what he called former President [Joe Biden’s] electric-vehicle mandate, which involved subsidies and emissions requirements to encourage electric-car production. He made a lengthy pitch for how they would actually benefit from tariffs,
And what the Wall Street Journal editorial board thinks of it all:
Trump’s Giant New Car and Truck Tax
So much for the idea that President Trump views tariffs as a negotiating tool to reduce everyone else’s tariffs. That was always implausible, and the illusion went poof Wednesday with Mr. Trump’s executive order imposing 25% tariffs on all imported cars and trucks. He wants border taxes for their own sake, so get used to it.
“We’re going to charge countries for doing business in our country and taking our jobs, taking our wealth,” the President said in unveiling the tariffs. It’s pointless trying to persuade him that nobody is stealing Americans’ lunch and that trade can be good for both parties. But readers should know they are about to pay more for their cars and have less choice to boot.
Mr. Trump justifies his car tariffs as a “national security” threat under Section 232 of the 1962 Trade Expansion Act. As we wrote in 2019 when he tried this gambit, he apparently fears the attack of the killer Toyotas.
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A return to the tactics we saw during the “shortage” in 21-22: lower priced trims of models not available, lower priced models not available, no incentives, no cur-rate financing. The automakers are expert at raising prices without “raising prices”.
Steve
Re: Ford 4% margin on new car sales
So they make their money on parts and service. New cars can even be a loss leader.
Price increases on parts have no limits.
In the short term but quickly followed by deflation.
Tariff wars often cause mass layoffs.
4% net profit margin for the corporation as a whole.
Not a lot of room to hide a 25% tariff on half your inventory. (More, if the “domestic” ones use transmissions or other parts made elsewhere.
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Except 77% of fords sold here are built here.
Factually wrong statement. Prices on parts (and many, many other things) have limits.
Uh, no. 77% are assembled here. A majority of Ford engines, especially for their (so called) Super Duty models are built in Ontario. Subject to 25% tariff. Also many transmissions, although I can’t find a specific figure.
There is this, from 2023 (latest available):
As shown in the table, VW, Toyota, Nissan, and Honda all increased their US content while GM, Ford, and Stellantis witnessed drops in domestic sourcing.
In this report Ford’s “total” domestic content was put at 52%, down from 65% 8 years before.
Ford has some models which are much higher (The Mustang GT at 88%) but also many which are far lower.
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The local Detroit media has reported Ford has been running Essex engine full blast, and leasing warehouse space all over metro Detroit to house the inventory.
Steve
I remember the local newspapers reporting the first OEM purchases of parts from China, over 20 years ago, and, iirc, Ford was the first one in line to buy their cheap parts.
The broader question is, are the tariffs high enough to compensate for the higher USian labor costs? I assume that TIG has had very good advice about where to put the tariffs to remove the cost advantage of final assembly in Mexico. But what of the smaller parts? Mexican factory labor makes a tenth of what USian labor does. Indian labor rates are so low, they make Mexicans look rich, and India has a well developed car industry.
Steve
Yes, in many cases you can buy generic parks that work fine. But if you want genuine Ford parts you have to pay their price and their mark-up. This way you get good quality part rather than cheap imitations. But it does cost you.
But note Autos like the Mustang. Perhaps not including trucks.