Possible effects: Tarrif Would Make The Toyota Camry $1,800 More Expensive To Build

Toyota says the Camry will cost $1,800 more to make if the Trump administration goes through with an auto tariff. Toyota did not say how much of the cost it would pass on to customers. But it called the possible tariff "just a tax on consumers" and said it would "increase the cost of every vehicle sold in the country." The tariff is under consideration by the Commerce Department. Toyota's cost estimate was based on the threat of a 25% trade penalty on imported cars and parts. Toyota makes the Camry, the nation's best-selling sedan, in Georgetown, Kentucky. But only slightly more than half the parts come from the United States or Canada, according to an estimate by the National Highway Traffic Safety Administration. About 30% come from Japan. A tariff on imported parts could also raise the price of domestic parts.

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So, just take the bus then...

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Generally, the materials are increasing cost. American companies will also increase their prices because of steel and aluminum imports.

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I hope that will not come to.... Otherwise, the price of everything is going to explode as a result of tariffs...

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Buckle your seat belts! The ride gonna get rough...

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Never had a Toyota and never will so makes no difference to me...:)

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Before NAFTA, Toyota had 2 US plants. Now they have 10 plants and 136,000 people working in the US. Of course Toyota is not the only foreign car company with this result, there are more similar companies....

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3 minutes ago, pinto said:

Before NAFTA, Toyota had 2 US plants. Now they have 10 plants and 136,000 people working in the US. Of course Toyota is not the only foreign car company with this result, there are more similar companies....

In 2016 there were 12 foreign car companies with plants in the US.

See the link below to a list from TIME I published in another thread.

 

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14 minutes ago, Guillaume Albasini said:

In 2016 there were 12 foreign car companies with plants in the US.

See the link below to a list from TIME I published in another thread.

 

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The prices on everything have already been going up. Grocery prices are up even when people thought they'd be going down as a result of Amazon acquiring Whole Foods. Healthcare costs continue to go up even though our technology is better than ever. Housing costs continue to go up because inventory dropped tremendously. Airfare prices continue to go up. So do hotels. And just wait until companies decide how much it is going to cost us to browse certain websites. It never ends, until they have every last cent.

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In most of the western world, the ticket price is irrelevant. Consumers will take on as much debt as they will be given, then the only question is: How much are the monthly payments?

$1800 over 60 or even 120 months won't be noticed, especially after being dressed up in a 'special offer'. 

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On 6/29/2018 at 7:32 AM, Jason Lavis said:

In most of the western world, the ticket price is irrelevant. Consumers will take on as much debt as they will be given, then the only question is: How much are the monthly payments?

$1800 over 60 or even 120 months won't be noticed, especially after being dressed up in a 'special offer'. 

Not really. I don't think that is the whole story.  In the USA, only one auto sale in five is of a new car.  All the rest are re-sales of used cars.  So the real question is: will increases in new car prices result in current owners holding on for another year, or will a small segment of new-car buyers opt for a used model (there are year-old used cars out there, with very little mileage), or will used car markets generally increase in price as demand shifts?  And, of course, some buyers of used cars will then drop out and go by electric bicycle. The last word on the impact is not yet written. Cheers.

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On 6/29/2018 at 6:32 AM, Jason Lavis said:

In most of the western world, the ticket price is irrelevant. Consumers will take on as much debt as they will be given, then the only question is: How much are the monthly payments?

$1800 over 60 or even 120 months won't be noticed, especially after being dressed up in a 'special offer'. 

Except our current path in increasing interest rates, which will hit that monthly payment.

It depends on the vehicle of course, but the Toyota Sienna I had a few years ago had a higher North American content than a Ford Mustang of the same year. And companies can play games with transfer costs.

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It may be noted that Toyota in particular is being a bit disingenuous with this press release of higher car retail pricing due to importing.  Toyota, and the other Asian manufacturers, have long ago adopted this policy of setting up (non-union) US plants, and (union) Canadian plants, specifically to get out from underneath what they saw as an inevitable tariff wall coming down against them.  These guys are not stupid;  they knew perfectly well that their success in the US market would result in a tariff at some point.  The entire exercise of going to US and Canadian plants was to avoid getting caught when they had developed a nice customer base.

What the Asian builder had not counted on was the possibility that the US, as was threatened by Trump, would institute a stiff tariff wall against Canadian production.  Canada was always a tempting place for North American assembly, as the health care costs are absorbed by the government,and the currency exchange gave them a subsidy, which today is running at 25 to 30 percent.  That is a significant subsidy.  Set against that is the strong, and militant, Canadian Auto Workers union, and under Ontario labor laws the provincial government can (and has) draft a labor contract and ram it down the manufacturer's throat, if the parties cannot agree on their own contract. As some 85% of total car production in Canada is headed straight for the USA market, having that disrupted gets expensive fast. 

Bottom line:  I do not place much stock in Toyota's laments, they knew that was coming and have long ago set in motion plans and protocols to offset such tariffs.  Don't believe everything you read from those guys. 

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8 minutes ago, Jan van Eck said:

Bottom line:  I do not place much stock in Toyota's laments, they knew that was coming and have long ago set in motion plans and protocols to offset such tariffs.  Don't believe everything you read from those guys. 

What you say makes sense, sensei.  But why miss the profits of Trumped up charges, so to speak.  Gotta get on that old time American Bandwagon.

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On 6/30/2018 at 8:54 PM, Jan van Eck said:

Not really. I don't think that is the whole story.  In the USA, only one auto sale in five is of a new car.  All the rest are re-sales of used cars.  So the real question is: will increases in new car prices result in current owners holding on for another year, or will a small segment of new-car buyers opt for a used model (there are year-old used cars out there, with very little mileage), or will used car markets generally increase in price as demand shifts?  And, of course, some buyers of used cars will then drop out and go by electric bicycle. The last word on the impact is not yet written. Cheers.

There are also generational changes happening - the price of used small cars and 'compact' SUVs has been rising as the younger generation places less value on the status symbol of cars and more on the economics of ownership and purchase. Additionally, they are driving less, keeping cars longer, and even owning fewer cars. Uber/Bird/Electric bikes are also accelerating this trend.

Add in the fact that cars are lasting longer (more reliable designs) we may see a shift in demand preferences.

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