Automakers Warn U.S. Tariffs Will Cost Hundreds Of Thousands Of Jobs, Hike Prices

Two major auto trade groups on Wednesday warned the Trump administration that imposing up to 25 percent tariffs on imported vehicles would cost hundreds of thousands of auto jobs, dramatically hike prices on vehicles and threaten industry spending on self-driving cars. A coalition representing major foreign automakers including Toyota Motor Corp, Volkswagen AG (VOWG_p.DE), BMW AG, and Hyundai Motor Co, said the tariffs would harm automakers and U.S. consumers. The administration in May launched an investigation into whether imported vehicles pose a national security threat and President Donald Trump has repeatedly threatened to quickly impose tariffs. “The greatest threat to the U.S. automotive industry at this time is the possibility the administration will impose duties on imports in connection with this investigation,” wrote the Association of Global Automakers representing major foreign automakers. “Such duties would raise prices for American consumers, limit their choices, and suppress sales and U.S. production of vehicles.” The group added: “Rather than creating jobs, these tariffs would result in the loss of hundreds of thousands of American jobs producing and selling cars, SUVs, trucks and auto parts.”
 

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When was the last time car prices declined? They don’t, they go up every year. But, on the end without any doubt result could be loss of hundreds of thousands of American jobs producing and selling cars

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Reality...it’s a global economy. Many of those foreign cars are made here...

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Mercedes- made in Alabama.  BMW - made in South Carolina. Toyota —Made in the Midwest. Nissan - made in Tennessee and Mississippi.  Kia - made in Georgia.  HONDA - made in Alabama.  I'm afraid that tariffs are not going to help u.s. workers. Just the opposite.

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The US auto industry is international and has been for decades...Hard to believe in dead end for Toyota, BMW, VW....

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(edited)

Personally, I don't believe that a 25% tariff on new autos will do anything of the kind  (cost hundreds of thousands of American jobs).  Notice that the protesters recited above were all "foreigners," some apparently with US operations.  Now, why do you suppose BMW builds a plant in South Carolina?  Does anyone seriously think that the Germans are so enamored of the USA that they move a plant here in  honor of American politicians?  I rather doubt that.  The specific Beemer is built there because the vast majority of the customers for that car, a German version of the SUV, is sold to American buyers. And BMW really needs those sales to rich Americans to float the boat. 

Since it is already built here, the tariff does nothing to that plant's output.  But what will happen is that the higher-end sedans will take a sales hit.  At some price point those buyers will go away, and find some "domestic" auto that suits their tastes. 

Far more interesting, in terms of overall market effect, is the treatment of USED autos.  At one time it was not possible to import any used auto into Canada, for example.  There was a total ban.  If you were an American and you wrecked a car in Canada you either had to pay a stiff duty, I think around 17% of  book value, to leave the carcass in the junkyard inside Canada or you had to hire a flatbed and remove it from Canada back to the USA.  And that duty was not on the depreciated figure, either!  I think the ban was put in place by Canadian car dealers faced with rust-free used cars being imported and flooding the market, displacing the rusty heaps in Canada that had only three years' use before disintegrating into a cloud of orange rust dust. The same situation also applied incidentally to shipwrecks; the insurer had to hire a salvage company to cut up the wreck and remove all the steel from Canada or pay the government a stiff duty (again roughly 17%) on the value.  The logic behind that escapes me but there you go.  And again, if you crashed your plane up in the Northern bush, you paid that import duty or you figured out some way to remove it from that bog a thousand miles from civilization. 

If The Donald decides to go create barriers to used cars, it is going to get interesting.  Lots of market disruption on that horizon. 

Edited by Jan van Eck
insert "book value"
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A large % of foreign cars sold in US are actually manufactured here. Toyota alone operates 10 plants in the US...In transcript from Trumps trade meeting, he said people (and specifically mentioned Toyota) who operate plants here will be exempt from the tariff when they do ship in from plants overseas. In same time, if I understand well, this tariff won't just apply to foreign car companies. It'll apply to Ford, Chevy, and Chrysler plants that they've moved to Mexico and other countries.
 

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(edited)

There is a huge market gap for US made electric car production, we find a way around the problems as best we can and US made electric vehicles can be quite competitive ,  especially the SUV and Pick Up market IF China sells $5000 e-cars already, affordability is attainable! US has a huge resource.. Elon Musk

 

Edited by itsAstrangeworld

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In 2016 TIME ranked the automakers selling cars in the US by the share of domestic production.

This list below shows there is not a clear divide between US and foreign carmakers. 12 out of the 22 carmakers with plants in the US were foreign brands. 61% of the Toyotas sold in the US were made in the US but only 33% of the Chryslers. The Kia Sorento is made in the US and the Jeep Renegade is made in Italy.

 
 
Rank Brand % Made in US US Made Cars Cars made elsewhere
1 Tesla
(U.S.)
100% Model S, Model X  
2 Jeep
(U.S.)
89% Wrangler Unlimited, Cherokee... Renegade
3 Cadillac
(U.S.)
86% Escalade, ATS... XTS
4 Dodge
(U.S.)
83% Challenger SXT, Ram 2500 (2015)... Grand Caravan, Journey
5 GMC
(U.S.)
80% Acadia, Yukon... Terrain
6 Acura
(Japan)
71% RDX AWD, RDX 2WD... RLX, RLX Sport Hybrid
7 Chevrolet
(U.S.)
70% Traverse, Corvette... Spark EV, Trax (Mexico)...
8 Ford
(U.S.)
64% F150, Taurus... Edge, Flex...
9 Toyota
(Japan)
61% Sienna, Camry... Rav4, Land Cruiser200...
10 Buick
(U.S.)
60% Enclave, LaCrosse... Regal, Encore
11 Nissan
(Japan)
55% Murano - 4CY, Murano HEV - 4CY... Rogue (Korea), Versa Note...
12 Honda
(Japan)
45% Accord, Pilot... CR-V (MX), CR-V (CN)...
13 Kia
(South Korea)
38% Sorento (2.0L, 2.4L)... Sedona, Cadenza...
14 Chrysler
(U.S.)
33% 200 Town & Country, 300
  BMW
(Germany)
33% X6 X-Drive 35i, X5 X Drive 35i... 228i X Drive Conv/Coupe, 435 X Drive Conv...
15 Subaru
(Japan)
29% Outback, Legacy WRX, BRZ...
16 Infiniti
(Hong Kong)
25% QX 60 (4cyl, QX 60 HEV (4cyl Q50 4CYL, Q50 6CYL...
17 Mercedes Benz
(Germany)
21% C-Class, GL-Class... GLC-Class, C-Class Coupe...
18 Hyundai
(South Korea)
20% Santa Fe Sport Azera, Genesis Coupe...
19 Lincoln
(U.S.)
17% Navigator MKS, MKX...
20 Volkswagen
(Germany)
14% Passat (1.8 liter gas), Passat (TDI)... Beetle Convertible, Beetle (Average)...
21 Lexus
(Japan)
13% ES350, RC RX350, RX450h...
22 Volvo
(Sweden)
6% S80 S60I AWD, S60...

 

 

 

 

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