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Old 09-22-2018, 02:28 PM  
Lex Luthor Lex Luthor is offline
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Tariffs could mean a 2M drop in car sales and cost 715,000 jobs

This is what happens when you start a trade war. Trump thinks trade wars are good, and they're easy to win.

He's wrong.

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Tariffs could mean a 2M drop in car sales and cost 715,000 jobs, warns auto industry group

"Retaliation by China to tariffs already in place has made U.S. auto exports uncompetitive,” said one industry insider.

The impact of President Donald Trump's escalating tit-for-tat over tariffs is already being felt, say auto industry experts. New car prices are beginning to rise, and auto exports are dropping. But a new report warns that sales could plunge by as much as 2 million vehicles a year, resulting in the loss of up to 715,000 American jobs and a hit of as much as $62 billion to the U.S. GDP.

The Center for Automotive Research cites the biggest concern as the threatened use of trade rules known as Section 232 that would declare foreign-made cars and car parts a threat to national security. That could trigger a “downward cycle” in an auto industry already showing signs of decline after rebounding from the Great Recession, said Kristin Dziczek, a vice president and senior economist at the Center for Automotive Research, or CAR, in Ann Arbor, Michigan.

CAR’s new study is echoed by a variety of other studies looking at the potential impact of the Trump administration’s escalating trade war.

Already enacted tariffs on imported aluminum and steel have added about $240 to the cost of producing a new car, truck, or crossover in the U.S., noted Peter Nagle, a senior economist with research firm IHS Markit. And the first round of tariffs with China is adding still more to the price that manufacturers have to pay for a variety of parts used on American assembly lines.

The impact will grow as a result of the second round of China tariffs, Nagle added, cautioning that a “dizzying” series of trade moves will “exacerbate” the problems the auto industry faces as it struggles to head off the first downturn in sales since emerging from the depths of the last recession. Activating tariffs using Section 232 rules would likely prove devastating, he warned.

Nagel estimated consumers would be “looking at price increases of $1,300 for a typical mass market product, up to $5,800 for a luxury vehicle.” Those increases would not be limited to just imported vehicles. Toyota, for example, has forecast the price of a U.S.-made Camry would rise about $1,600.

In line with the new CAR study, IHS forecasts U.S. new vehicle sales would plunge by around 2 million vehicles annually, to 16.5 million a year from 2019 to 2025.

Add the possible tear-up of the North American Free Trade Agreement and the impact could be devastating. Under NAFTA, automakers have established a continent-wide network of parts and vehicle assembly operations. That’s backed up by a global production system that has been finely tuned, with little room for disruption. But industry experts warn that the Trump administration’s trade moves threaten to fracture that grid.

The impact could mean more than just higher costs. A number of medium-sized and smaller parts suppliers could be forced out of business, unable to afford the cost of relocating their operations back to the U.S. That could result in disruptions at assembly plants, said Nagle, possibly meaning shortages of some products, and a big hit to automakers’ profits.

With auto sales already declining, manufacturers have been struggling to minimize the impact on consumers from tariff-related cost increases. But, at some point, they will have to pass them on, resulting in higher sticker prices. But consumers are already struggling to deal with their car payments, driven up as the cost of the typical vehicle sold in the U.S. approaches $35,000. Vehicle loans are being stretched out to record levels, with 60, 72 and even 84-month financing becoming more the norm than the exception.

But trade is a two-way street, and the U.S. is already beginning to feel the impact in terms of auto exports. Ironically, shortly before the Trump administration enacted the first round of tariffs on Chinese goods, that country announced plans to reduce its own duties on imported vehicles from 25 percent to 15 percent. Now, however, U.S.-made vehicles are subject to 40 percent tariffs, making them even less competitive with auto imports from Europe or Japan, as well as vehicles made in China.

BMW, the largest exporter of American-made vehicles to China, says it is looking for ways to maintain demand for the X5 utility vehicles produced in South Carolina, perhaps boosting sales in the U.S. or Europe. But Ford has already announced plans to cut production of the Mustang and other vehicles shipped to China.

The escalating trade war with China “will further harm the U.S. auto industry and American workers and consumers," said John Bozzella, CEO of the Association of Global Automakers. "Retaliation by China to tariffs already in place has made U.S. auto exports uncompetitive and will eliminate our bilateral auto trade surplus.”

The impact of the trade war is likely to be felt in every corner of the auto industry, experts stress, even at the dealer level. The CAR study, for example, estimates as many as 117,000 employees at the country’s 17,000 new car dealerships could lose their jobs.

Though the Association of Global Automakers said it supports Trump’s efforts to resolve some nagging trade issues, Bozella said he is “concerned that escalating trade tensions will not produce the desired results.”
https://www.nbcnews.com/business/aut...m_npd_nn_tw_ma
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Old 09-26-2018, 03:38 PM   #76
Just Passin' By Just Passin' By is offline
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Originally Posted by patteeu View Post
As I said, that's a different issue.
But it's not a different issue, no matter whether or not you claim it to be so.
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Old 09-27-2018, 12:43 AM   #77
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Originally Posted by Lex Luthor View Post
American manufacturers import a shitload of raw materials in order to manufacture their products. That's why steel tariffs make American-made cars more expensive.
That's why I asked Detoxing in post #60 about the source of the materials. I didn't know where his supplier was getting raw materials from. Domestic or import. Some companies still use American raw materials.
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Old 10-05-2018, 02:56 PM   #78
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Latest anecdote, just received an email from one of our lighting manufactures. As a result of the latest 25% tariffs they were hit with, they'll be raising costs from 10-15%.

A $600 pair of headlights will be a $690(ish) pair of headlights come Dec 1st.
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Old 10-11-2018, 10:44 AM   #79
Detoxing Detoxing is offline
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Just got another email this morning citing tariffs once again for price increases. These guys produce a lot of nice stuff for cheap, everything from valve covers to radiators, heads, headers, air cleaners etc.

They're definitely a Chinese manufacture. These tariffs are hurting the low cost, "budget parts" end of the market. The higher end components i offer i haven't heard a peep from.

I assume this was the intention. Sucks for guys building cars on a tighter budget though.
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Old 10-11-2018, 11:41 AM   #80
IowaHawkeyeChief IowaHawkeyeChief is offline
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Quote:
Originally Posted by Detoxing View Post
Just got another email this morning citing tariffs once again for price increases. These guys produce a lot of nice stuff for cheap, everything from valve covers to radiators, heads, headers, air cleaners etc.

They're definitely a Chinese manufacture. These tariffs are hurting the low cost, "budget parts" end of the market. The higher end components i offer i haven't heard a peep from.

I assume this was the intention. Sucks for guys building cars on a tighter budget though.
Sucks for China's economy way worse... That's why I suspect they will come to the table when they are able... Trump is actually turning them down right now, a little more pain for them in the short run will be better when we start talks again. Glad to see the pain is apparent on your end, with a better deal in the future that will be good for both parties.
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