Car prices to rise due to tariffs and certain vehicles possibly ...

[eljefino]

Now if said parts are made here we get inflated materials costs (union steel workers and pensions) etc. etc. as well as the parts cost, because instead of the people making said parts used to get paid what $5 per hour? Now the ones making the parts will get $40. per hour

I think this was kind of the point of the thing that's changing things.

As a point of reference, when Ford used to make Tauruses in Atlanta, each car took 24 man-hours to assemble. That doesn't count all the supplier labor, of course-- they were just throwing assemblies into a chassis. But 24x40 is under a thousand bucks. Add benefits and you're probably 1600-1700.

I find it hypocritical to think I deserve one wage and the guys making the stuff I consume to make a lower wage.

Now if the materials costs are inflated because of convoluted logistics, emergency re-planning, working three shifts at one of the few remaining factories because supply chains are artificially shifting rapidly... that's inefficient.

 

[fdcg27]

I think even GM could do a little better than a Fiat 124 recycled as a Lada.

 

[eljefino]

If the economy does crash and burn, manufacturers will be forced to offer some reasonably priced US built cars since the high margin and costly pickups and SUVs will become unsalable and the captive imports that make up the majority of GM's sales will become untenable under the current high tariff regime.
They'd either come up with something that they can move at volume or they become history.

They could do knock down kits-- Plenty of other countries did this to support some sort of domestic auto industry. US has not done much of this but we did put rust-prone beds on 1980s Toyota trucks and we're still rejiggering Transit Connects to avoid the chicken tax.

 

[CKN]

The Ford Contour was one but it started life in Europe then of course they softened the suspension. They followed up on this by making most of them fleet rental specials with steel wheels, 4 cylinders, and automatic transmissions.

I'm confident a Kentucky built Camry would outperform the best Contour, just owing to 25 more years of power train and tire technology.

I owned three. The 4 cylinder was a pig. But the Duratec V6 I had in the other two were phenomenal motors. I used these cars for business-30,000 miles a year. Again-a great motor coupled to an extremely poor, unreliable (CD4E) transmission. Sound familiar?

 

[fdcg27]

I find it hypocritical to think I deserve one wage and the guys making the stuff I consume to make a lower wage.

Have to agree with you. Why should I make more than the people who make the stuff I buy?
Let's set aside the notion that I'm just smarter or better educated, as many like to pretend and let's all recognize that all of us benefit when all of us do well and earn a good living.

 

[CKN]

They could do knock down kits-- Plenty of other countries did this to support some sort of domestic auto industry. US has not done much of this but we did put rust-prone beds on 1980s Toyota trucks and we're still rejiggering Transit Connects to avoid the chicken tax.

Ford was fined by shipping these vans with seats and then taking them out to avoid the tax.

 

[JeffKeryk]

I find it hypocritical to think I deserve one wage and the guys making the stuff I consume to make a lower wage.

Have to agree with you. Why should I make more than the people who make the stuff I buy?

I have do strongly disagree. Incentive is the foundation of Capitalism. I had a dear co-programmer for about a year, from Russia. Michael was a PhD and one of the flat-out smartest people I have ever met. He told me there were lotsa PhDs in Russia that did very little work because they got paid the same regardless of their output.

The profit motive and the pursuit of self-interest, fueled by incentives, are fundamental to capitalism, driving innovation, efficiency, and economic growth.

There is no fair. But if you are willing to go for it, and opportunity abounds, the entire society rises up. That's why I love California and Silicon Valley. Even someone who has made as many mistakes as I have still has a chance. No where else in the world offers such promise.

 

[SC Maintenance]

I'm not even sure how much I want a small car... cheap yes, but small vehicles tend to just do everything that much worse.

I'm not much of one for rolling back standards but... roll back a bit and you could shave a few percent. Removing the backup camera isn't going to save much (unless if semiconductor products really do get expensive). But if you took out a couple airbags, anything "smart" with forward collision detection etc, and otherwise decontented, could you shave more than a few percent off?

I'm probably tilting at windmills on this one. Only if the economy crashes and burns would low content cheap cars sell again.

I don't think much needs to be rolled back. $20K in Jan of 2020 is about $25K now. Can't blame auto OEM's for that. If you go to just about any manufacturer's website they have a reasonable car or small SUV "starting at" around $25K. Problem is, by the time they get to the lot there $32K.

Maybe now, we will actually see some $25K cars available to actually buy. I don't need 19 inch wheels and whatever other junk they wish to force me into.

 

[GON]

That, and maybe people will start shopping for vehicles that are within their financial means; or repair what they have. Not everyone needs a Mercedes, an $80K F-150, or a brand new car when all their current vehicle needs is some routine maintenance.

Scott

Great comment.

I remember as a kid in the 1960s/1970s, most adults in the U.S. drove Vega, Pinto, Chevette, VW Beattle, etc. Air conditioning in a car was almost exclusively for the "high flutters". Government had very small debt/deficit, and overall lived within its means. Manufacturing and exports was a key component of the U.S. GDP in the 1960s/1970s. One might do a chart showing as the U.S. debt/deficit grew beyond comprehension, so did the niceness of personal vehicles.

I watched a law enforcement vehicle chase on video yesterday. The chase was through rural Arkansas. Every single vehicle filmed on the highway in the opposite direction was a later model full-size pickup. Not dinging anyone for their selection of vehicle. But for a nation catastrophically deep in debt and deficits, along with unending year over year trade deficits, we sure do seem like we are living large. What happens when the federal government credit card "gets rejected"?

When individuals live a "high" lifestyle, above their means, using credit cards, the end-state is always bankruptcy. These individuals are able to recover from bankruptcy. I am not sure a federal government has the ability to declare bankruptcy. So, a government might try and take the hard and painful road of making tough but very necessary changes. Or the government can keep applying for more credit cards, kick the can down the road--- and we all know how that story ends.

 

[GON]

Sales tax is a consumption tax. Everyone pays but it "costs" the working man more. Income tax, if progressive, "costs" the higher income more in shear dollars but not as a lifestyle factor.

Expect some of the income tax to be replaced with the consumption tax. Yay!

I know you know this Scott; just completing the picture for anyone who may be interested.

Earlier today I read an article that Nike is very upset over the tariffs on Vietnamese exports into the U.S.

Note I don't pay for name brand athletic shoes.

The article stated Nike's Air Jordan's are made in Vietnam and are retailed in the U.S. at $180 a pair. The article calculated the tariffs on Air Jordans would rise $18 per pair. Further, the article estimated Nike's gross cost, including transport into the U.S. for a pair of Air Jordans is in the $19-$28 USD range.

I am not so smart. I don't have a magic ball. But maybe Nike will pay college athletes going pro seven figures for an initial endorsement, instead of a nine-figure lifetime endorsement, regardless of how the athlete performs and represents themselves as a professional athlete.

And maybe the professional athlete, having reduced initial endorsement income from nine figures to seven figures, will buy a Cadillac Escalade built in North America, then a European built Rolls- Royce Cullinan, as their first vehicle straight out of college "oh the humanity".

 

[JeffKeryk]

Great comment.

I remember as a kid in the 1960s/1970s, most adults in the U.S. drove Vega, Pinto, Chevette, VW Beattle, etc. Air conditioning in a car was almost exclusively for the "high flutters".

Wasn't a '65 VW Bug around $1500 MSRP, and sold for even less? Great cars!

 

[GON]

That's a key reason I bought 2 Teslas. Made right up the road from me, maybe 15 miles. I used to work across the freeway at Lam Reaearch. The workers were important to me; the CEO, not so much.

You might want to take a second look at your statement.

If not for that CEO, more likely than not the Fremont, CA former GM/ Toyota plant would be a vacant property, instead of employing thousands.

Surely the Tesla CEO can't lead. During Tesla production challenges he slept on the factory floor for reported months, to help the Tesla team make critical revisions to their vehicles to ensure success. The Tesla CEO didn't take a salary but instead tied his compensation directly to the success of Tesla in its equities. Unlike most every CEO of publicly traded U.S. companies during the same time frame did stock buybacks, often borrowing monies and going into debt to do the stock buyback; the Tesla CEO invested Tesla revenue in a brand new world class manufacturing plant in Texas. Of note, Tesla is the only major vehicle manufacturer in the world with what is reported as no debt.

Your comment "The workers were important to me; the CEO, not so much." It tremendously sad to read. The one CEO in the U.S. that is getting it done, building a new manufacturing plant in the U.S., instead of importing the vehicles on a MACRO basis from China-- which would have increase profits for Tesla, and you chose to kick him.. very sad..

 

[JeffKeryk]

You might want to take a second look at your statement.

If not for that CEO, more likely than not the Fremont, CA former GM/ Toyota plant would be a vacant property, instead of employing thousands.

Surely the Tesla CEO can't lead. During Tesla production challenges he slept on the factory floor for reported months, to help the Tesla team make critical revisions to their vehicles to ensure success. The Tesla CEO didn't take a salary but instead tied his compensation directly to the success of Tesla in its equities. Unlike most every CEO of publicly traded U.S. companies during the same time frame did stock buybacks, often borrowing monies and going into debt to do the stock buyback; the Tesla CEO invested Tesla revenue in a brand new world class manufacturing plant in Texas. Of note, Tesla is the only major vehicle manufacturer in the world with what is reported as no debt.

Your comment "The workers were important to me; the CEO, not so much." It tremendously sad to read. The one CEO in the U.S. that is getting it done, building a new manufacturing plant in the U.S., instead of importing the vehicles on a MACRO basis in China-- which would have increase profits for Tesla, and you chose to kick him.. very sad..

I am very familiar with the Tesla story.
My point was simply, I support local labor. Of course the Fremont plant would likely still be empty without Elon Musk. Fremont employs over 25K workers (GM max was 6,000). I salute and support that. Fremont is the most productive auto plant in America.
What Musk has done with Tesla, and his other companies, is business legend; Elon has changed the world. My favorite company is Neuralink.

Would I have bought the Model 3 in Dec 18th if it were not made 15 miles up the road? Probably not. My car was made in one of the tents...

Interestingly (at least to me), I had a hand in Operation Warp Drive with then CIO Jay Vijayan.

 

[4WD]

Earlier today I read an article that Nike is very upset over the tariffs on Vietnamese exports into the U.S.

Note I don't pay for name brand athletic shoes.

The article stated Nike's Air Jordan's are made in Vietnam and are retailed in the U.S. at $180 a pair. The article calculated the tariffs on Air Jordans would rise $18 per pair. Further, the article estimated Nike's gross cost, including transport into the U.S. for a pair of Air Jordans is in the $19-$28 USD range.

I am not so smart. I don't have a magic ball. But maybe Nike will pay college athletes going pro seven figures for an initial endorsement, instead of a nine-figure lifetime endorsement, regardless of how the athlete performs and represents themselves as a professional athlete.

And maybe the professional athlete, having reduced initial endorsement income from nine figures to seven figures, will buy a Cadillac Escalade built in North America, then a European built Rolls- Royce Cullinan, as their first vehicle straight out of college "oh the humanity".

Yeah, I have been asked by young guys to take a picture of them coming out of an airport sports store. Then, out of curiosity figured out what they spent. Easily what a business casual outfit would - main difference is only one can be used for a six figure job.

 

[BMWTurboDzl]

This whole situation is like burning down the house to cook a steak. The percentages of the tariffs are not based on actual tariffs. They factored in any trade deficit with the country also. Doesn’t make sense to tariff Colombian coffee, which has no American equivalent, and the trade imbalance is due to us buying everything they can produce and their population is too poor to buy an 80k dollar F150. No thought at all was put into this. Depressing to say the least.
I wonder why islands with only penguins on it are called out but one big notable exception wasn’t?

Ya. The numbers are made up based on funny logic from one economists who like to tell people what they want to hear.

 

[JeffKeryk]

Ya. The numbers are made up based on funny logic from one economists who like to tell people what they want to hear.

Economists?

 

[dnewton3]

I owned three. The 4 cylinder was a pig. But the Duratec V6 I had in the other two were phenomenal motors. I used these cars for business-30,000 miles a year. Again-a great motor coupled to an extremely poor, unreliable (CD4E) transmission. Sound familiar?

I owned a base Contour v-6 the first year they came out. I had a lot of various problems with the car; typical of first-year production stuff. But as they matured through the model years, they did get refined and problems sorted out. The Contour SVT was most certainly a little screamer; fun car. That Duratec engine was spirited in that little car; paired with a manual it was a hoot. My friend who owned one and DD'd it got over 300k miles out of it before he retired it.

The first and second gen Taurus SHOs with manuals were fun also. For their time, they were quite peppy. Nowadays the average DOHC n/a v-6 puts out way more HP.

What I'd like to see is a v-6 300hp n/a engine in a reliable mid-size sedan, with good-handling in RWD, and a manual trans, from a major Big 3 effort. I'd buy American if an American company made what I wanted. But they have pretty much abandoned the sedan market.
Yes; it's a pipe dream likely to never be seen.

 

[JeffKeryk]

Do we have an available workforce to fill more lower and middle income positions?

You could make the arguement we don't want to produce some of those imported products.
Our Novellus Corp President used to say, "If you swim with the bottom fish you gotta eat a lotta fish ..."

This is a key reason global tariffs make zero sense.

 

[PandaBear]

Have to agree with you. Why should I make more than the people who make the stuff I buy?
Let's set aside the notion that I'm just smarter or better educated, as many like to pretend and let's all recognize that all of us benefit when all of us do well and earn a good living.

I am always happy to pay people more than I make if they provide a value to me and they are charging what the market demand and supply. I pay my plumbers what is an agreeable amount to both of us, or either he refuse my work or I find someone else. What I expect is to get what we agree on done right the first time without mistakes.

I am always free to go get a license and be a plumber myself, but I am probably going to be a better engineer than a plumber and I'm ok with them making more than me. I also always tell my coworker who complains they probably should find a job in a different industry who pay more than complain at work, because they would be happier in the long run and make more, but they probably have to work harder for their pay there.

It is a free market.

 

[PandaBear]

I am not sure a federal government has the ability to declare bankruptcy. So, a government might try and take the hard and painful road of making tough but very necessary changes. Or the government can keep applying for more credit cards, kick the can down the road--- and we all know how that story ends.

Argentina pretty much did, same with Zimbabwe. You can always refuse to pay but that also likely mean your country's bond and currency will free fall. As for the US we likely will end up have bond yield going from 4.X% to 10-20% if we free fall like Argentina, it won't be as bad but we will do real bad, and that means inflation will be real bad, and some states may want to break off to protect its own economy and let the other less healthy state stay in the union, and then that's basically civil war, and more financial cost and loans, and more inflations.

That's typically how most super power in history collapse: financially implode.