The curse of living in interesting times is yet again upon product planners in the automotive space, who now have to contend with how literally to take the future President of the United States when he says stuff like he’s going to put a tariff on all goods coming from Mexico and Canada.
I think most readers of The Morning Dump are well aware that when they buy an American car there’s a good chance it’s not made in America, and when they buy a car from a foreign brand there’s a good chance it is. Buying a new Tundra? There’s a 100% chance that Tundra is made in America. A Silverado? Depending on which one you get it could be made in America, or it could be made in Canada or Mexico.
Of course, all of these cars have bits and pieces from all over the world. And companies all over the world are concerned about the potential for a global trade war. This is especially true in Europe, where things are a little shaky at the moment.
I’m not particularly in the mood to write about cars and politics this morning, but the two are colliding as California not-so-quietly implies it’ll retaliate against Tesla if the $7,500 federal tax credit goes away. Companies that aren’t Tesla need that credit, especially as the electric market continues to stumble. Just ask Porsche.
We Must Protect The Ford Maverick At All Costs
I’ve probably said this before, but my old Representative back in Texas once famously said that you should take President Trump “Seriously, but not literally.” What I think he was saying was that you should assume the administration wants something, even if the suggested method to get it isn’t necessarily going to happen.
Presidents threatening to use their power to get what they want is nothing new. When the Supreme Court threatened to derail FDR’s agenda he moved to pack the court, which got them to back off just a little bit and approve certain measures. The difference with President Trump is the scale and magnitude of these threats (or promises, depending on how you look at them), which come fast and, at least in his previous term, he didn’t always follow up on.
Here’s what President-Elect Trump had to say:
As everyone is aware, thousands of people are pouring through Mexico and Canada, bringing Crime and Drugs at levels never seen before. Right now a Caravan coming from Mexico, composed of thousands of people, seems to be unstoppable in its quest to come through our currently Open Border. On January 20th, as one of my many first Executive Orders, I will sign all necessary documents to charge Mexico and Canada a 25% Tariff on ALL products coming into the United States, and its ridiculous Open Borders. This Tariff will remain in effect until such time as Drugs, in particular Fentanyl, and all Illegal Aliens stop this Invasion of our Country! Both Mexico and Canada have the absolute right and power to easily solve this long simmering problem. We hereby demand that they use this power, and until such time that they do, it is time for them to pay a very big price!
I’m not going to address any of the specific reasoning here, though it’s clear that immigration was an issue for some voters and that President Trump will make addressing it a big part of his agenda.
I will try to explain why this might impact the car market, which is heavily globalized and relies on production in Canada and Mexico (as well as China). The United States has largely worked to expand manufacturing to its neighbors in order to increase trade and lower costs, as it did with NAFTA (under President Clinton) and the USMCA (under President Trump).
While this has resulted in job losses, it has also resulted in more affordable vehicles for car buyers either through direct production in Canada or Mexico, or, often, via parts made in one of those countries.
If you’re a car buyer, you want to pay attention this as popular vehicles like the Honda CR-V, Toyota RAV4, Chevy Silverado, Ford Maverick, and Chrysler Pacifica all have at least some of their production north or south of the border. How does a tariff work and who pays it? I’ll let Bloomberg explain:
How do tariffs work?
A tariff, also known as a duty or levy, is usually calculated as a percentage of a good’s value (as declared during the customs clearance process.) It can also be levied as a fixed amount on each item. Goods that cross borders are given numeric codes under a standardized nomenclature called the “international harmonized system.” Tariffs can be assigned to specific product codes relating to, for example, a truck chassis, or to broad categories, such as electric vehicles. Customs agencies collect tariffs on behalf of governments.Who pays tariffs?
Tariffs are paid by the importer, or an intermediary acting on the importer’s behalf, though the costs are typically passed on. Trump argues that, ultimately, it’s the exporter who effectively ends up shouldering the cost of a tariff. Studies have shown the burden is more diffuse. The foreign company that makes the product may decide to lower prices as a concession to the importer. Or it might spend significant sums to build a factory somewhere to sidestep the tariff. Or an importer — Walmart and Target are among the biggest in the US — could raise prices of the item when it’s sold on. In this case, it’s the consumer who shoulders the tariff cost indirectly.
That cost thing is important. While it’s possible that automakers can take the hit themselves, the lesson of the pandemic was that companies will take any excuse to raise prices (check out my favorite economist Isabella Weber’s new paper analyzing earnings calls that shows how this works). In the auto space, we saw that automakers did this via trimflation. Can consumers even stomach pandemic prices again? Probably not.
Car prices have remained stubbornly high this year and increased tariffs, eventually, will find their way to the consumer. That’s assuming Trump is being literal. It’s possible this is all just bluster and new policies from Canada or Mexico will placate him before he takes office.
Or he could start a trade war.
How To Start A Trade War
European carmakers are worried about everything. And they should be worried about everything. In the 20th century, when large nations or groups of nations disagreed, it tended to result in a war across Europe. There’s a way to view the War in Ukraine as a 21st-century equivalent.
The world is a complex place and one small tariff over here can lead to an unpredictable response. As Reuters reports, European car stocks were down today as traders embraced exactly those fears:
European automakers shares fell on Tuesday, as traders reacted to President-elect Donald Trump pledging big tariffs on Canada, Mexico and China, news that fueled jitters over a potential global trade war.
A basket of European autos and parts stocks was the worst performing sector in Europe, down 1.7% versus a 0.7% fall for the broader STOXX 600.
This is basically the mood right now for European automakers and suppliers:
Side note: Do I need to watch “The Hunt For Red October” again tonight? I feel like I need to watch THFRO again.
I’m being a tad dramatic, but just a tad. What happens if China freaks out and retaliates? What about Mexico? If you’re a Stellantis exec what do you even do with this news? Stellantis makes about 25% of its cars for the United States market in Mexico, which is to say nothing of the parts and vehicles made in Canada.
The confusing thing about Trump’s pronouncements is not that he’s saying he will increase tariffs. All modern presidents use the power of tariffs to get what they want. President Biden largely continued or increased tariffs created under the Trump administration. The issue is that they’re aimed at everything as opposed to the usual extremely targeted tariffs the markets are used to (as in President Biden’s tariffs on Chinese EVs or the EU’s tariffs on… Chinese EVs).
If you want to know how much of your car has parts from outside the US you can check out htis table.
California’s War On Tesla
Tesla would perhaps not exist without the EV-forward environmental policies of California. But the Tesla CEO Elon Musk hasn’t exactly thanked the state by moving to Texas and embracing Donald Trump.
So far, Musk’s embrace of conservative politics has worked, with Tesla’s stock (and therefore his wealth) increasing dramatically immediately post-election. It took a quick turn in the other direction yesterday as California Governor Gavin Newsom responded to President-elect Trump’s threat to kill the tax credit for EVs with his own threat aimed at Musk.
Newsom said on Monday that if Trump eliminates a federal EV tax credit, he will propose creating a new version of the state’s Clean Vehicle Rebate Program that ended in 2023 and spent $1.49 billion to subsidize more than 594,000 vehicles.
“The governor’s proposal for ZEV rebates, and any potential market cap, is subject to negotiation with the legislature. Any potential market cap would be intended to foster market competition, innovation and to support new market entrants,” his office said.
There’s a lot to unpack here. First, Tesla is the only carmaker who builds EVs in California, so threatening your one domestic EV-maker seems short-sighted. While Tesla’s cars are cheaper to produce, generally, giving every other automaker a $7,500 credit is going to make Tesla less competitive in America’s biggest EV market.
Even though Tesla is the only company who manufactures their EVs in California!
This is insane. https://t.co/EhVeG2TYqT
— Elon Musk (@elonmusk) November 25, 2024
On the other hand, capped rebates is a way that federal EV credits previously worked and everyone seemed fine with it. This concept of a neverending EV tax credit is a relatively new, IRA-induced idea. Musk himself is for ending subsidies, albeit also on petroleum vehicles and products.
Is any one of this going to happen or is it all bluster? Idek.
Porsche Will Keep Making ICE Vehicles For A Bit Longer
What’s going on with electric cars? Our pal Kristen Lee has a big piece over at MotorTrend above that gets into what’s happening with electrification. I won’t spoil the ending, so go watch it.
Porsche was kind of the tip-of-the-spear when it came to Volkswagen’s larger electric ambitions, which is why it’s noteworthy that Porsche is backing off its plans a bit.
Porsche said it will develop new combustion-engine derivatives across its model range to meet customer demand as sales of full-electric cars fall.
“There is a clear trend in the premium luxury segment in the direction of combustion-engine cars, therefore we will react in our product cycle,” Porsche CFO Lutz Meschke said.
The electric share of Porsche’s vehicle sales fell to 7.3 percent through September from 12 percent the same period the year before as sales of the Taycan battery-electric sedan and wagon slumped.
Welp. The new Taycan wagon looks great. Given unlimited money I think that’s what I’d probably buy if I was going to buy a new EV.
What I’m Listening To While Writing TMD
I’m in a weird mood today, so let’s all put on Detroit’s own Electric Six and their great “Gay Bar.” Let’s start a war, let’s start a [trade] war… at the gay bar, gay bar. I’m sure someone will share the actual video in the comments.
The Big Question
How much of your car was made in the United States or Canada? If it’s a newer car you can refer to this chart for some clues.
Musk has already stated, many times, that he doesn’t need subsidies. Seems like the smart business decision would be to lower Tesla’s vehicle prices by $7500 as an incentive for buyers.
Musk has said, many times, a lot of things that ended up not being true. Remember full self driving in 2 years? or mass transit in tunnels in Vegas? I have no idea about subsidies or price incentives (sounds good to me)- I just won’t take him at his word.
Oh I 100% agree, that’s exactly my point. Musk is full of shit and anyone who covers Tesla in any context should be calling him out over his exaggerations, failed promises, and outright lies.
And now he’s in the DOGE.
My RAV4 Prime shows 100% Japan, and I’m glad I bought now. I had considered waiting, but if we get into a trade war, I don’t want to be trying to find the least terrible deal (of course, things happen and we end up buying when we don’t want to, but I’m trying to reduce that risk).
Also looking at buying a new phone earlier than planned (wanna be sure it’ll get the security updates as long as possible) and stocking up on some non-perishable goods. Not going to bankrupt myself trying to prep for things, but I want to be reasonably prepared. Worst/best case scenario, I’ll use the stuff anyway.
Prep for a potential trade war, as you might glean from context.
I hate that the “preppers” have made it so that prepping for something automatically makes people think of civilization collapse when anyone mentions prepping for anything.
I’m just getting things that I think will get more expensive. Only things I can easily buy and store, and I’m not going to worry so much that I buy more than I can use or more than I can afford.
I make enough that I’m not really worried. But I also have the resources to make sure it doesn’t really impact me much at all. Why wouldn’t I plan ahead if I can? I’m just talking about spending earlier, not spending more. It’s all stuff I’ll use anyway.
It’ll be fine because it doesn’t affect you is what you meant to say.
FIFY
You much crap does anyone really *need* to buy/own? Unless something can’t be fixed and is essential to survival, there isn’t much I can point to and say I *need* to get that.
Nothing massive, just basically these things for me:
Most relevant to this group, it’s a good idea to have anything you’ll be replacing relatively soon on your vehicle already purchased if you have the space and the money. Filters, brake pads, anything you can store until you need it without issue.
A cell phone that will get all the security updates. Hard to get by without a cell phone, and it just means bumping up my timeline for a new phone by around a year.
Deodorant, soap, and toothpaste store well. Buying a bit more in advance won’t hurt me, and will probably save me a little money regardless of tariffs.
Clothing, mostly socks and underwear. I’ve got some socks wearing thin and will still get a bit more use out of them, but I may as well buy the replacements ahead of time. The clothes I currently wear to work will soon either be donated or relegated to home use, since some are showing quite a bit of wear in the cuffs and such. Some of those clothes are 20+ years old, so I’m overdue anyway. So I’ll be buying a few shirts and a couple pairs of pants, but I might have waited a year on them.
Some disposable masks. I usually use a cloth mask if I get sick, but I like to have some good disposables around for some uses, such as travel.
I’m making sure I’m stocked on paper goods (TP, paper towels), even though we produce most of those domestically. Covid wasn’t digestive, but panic-buying hit TP hard. I suspect that prices going up won’t just hit the imported items.
Women I know are stocking up on sanitary items and makeup, and it’s not a bad idea to get things like Plan B (not just for tariff reasons), just in case someone needs it.
It would be awesome if the orange asshole’s IQ was at least close to double digits.
Worry about trade wars etc urged my wife and I to speed up our planned purchase of her replacement car from “maybe in a couple of years but we are casually looking” to “lets do this before the shit his the fan”. Yes, we are Canadian but it is going to impact the entire North American (and world) auto market if this actually happens.
I’ve also sped up some purchases I might have otherwise made next year or so on some stuff that would then cost more if his mess comes to pass.
I’m lucky to be able to afford to spend it early and still be in a decent spot.
45% US
15% Japan
0% Other
Motor US
Transmission Japan
Assembly US
Uh. Are motor and transmission some variable amount of parts? That is good, if so; I would have expected a generic “40% of the vehicle is motor and trans” for a government table.
Wait what?? American cars arent just made in America? And Japanese cars aren’t just made in Japan? And Mexican cars aren’t just made in Mexico??
Unlike quality Canadian cars, made in CANADA.
Like the BRICKLIN. Unparalleled levels of quality and styling! Comfortable and luxurious! Built on the east coast! Possibly the only thing of note to ever come out of New Brunswick.
Thank god that car was a smash hit.
The cover image is peak Autopian.
It gives me a new hope.
In a galaxy far, far, away. *sigh*
My immediate thought as a Canadian, is we drop our proposed tariff on Chinese EVs.
“Oh, you’re going to levy our exports? Fine, we’re not gonna protect your auto industry from cheaper markets”. Drop the goddamn Chicken Tax while we’re at it and get some small diesel pickups over here.
Let them cheap electron buggies come on in! If the US doesn’t want to do business, then we can source cars from a market that will GLADLY work with us after getting shut out in both the US and the EU.
I have no other solutions for the massive hit our export market is gonna take. But if we’re all gonna be poorer, then cheap cars that don’t take gas just makes that much more sense.
Can you imagine parenting in a world where you commit to follow through with all of your exasperated promises?
Before realizing how deeply entrenched you can both get, and how it just really sucks for everyone?
I like it.
I can’t wait until all the performance part manufacturers in the US see what they’ll have to pay for aluminum. Canada supplies over 60% of primary aluminum to the US, I’m sure a 25% price hike won’t hurt TOO much.
(For the “then make it here” crowd, the US can’t make it as cheaply as we can. That’s why we produce over 3 times the primary aluminum you do)
Beer prices are about to go up!
*Doug Ford screams in the distance*
🙂
For the “then make it here” crowd, the US can’t make
itanything as cheaply asweanyone else can.I dunno, the hate factory is so efficient that you didn’t even charge us to import it to Canada.
Thanks for that, the Convoy was a ton of fun (not).
I don’t recall seeing Implements of Husbandry downtown, so probably the truckers.
Yeah it was the truckers. Bunch a fing idiots and their associates.
We get a lot more tanned than the UK folk. Our summers are just as hot & humid as the South East.
But this doesn’t allow me to have my cake and eat it too.
Best I can do is let you bake the cake, then charge you 25% the cost of the ingredients to stare at it through a window.
Trudeau grabs the phone and calls China:
How ya doing Winnie? Look, apparently my loud neighbour doesn’t want to buy my stuff anymore. Interested in oil & aluminium? mwap, mwap, mwap. Yeah, I could drop a few tariffs on your stuff to get this going. mwap, mwap, mwap. Great, my people will get in touch with yours. Have a great day.
I mean, they may take the oil. But China produces over 40 million tons of primary aluminum annually and is in danger of overproduction.
So the US could just import chinese aluminum (spoiler: it already does), but HOT DAMN, it has a 35% tariff on it as well?
Sadly, I didn’t discover Electric Six until I stumbled across Joel Veitch’s old Flash animated shorts at rathergood, back in the OG net/pre-YouTube days. Adding in the Viking Kittens makes a song even better: https://www.youtube.com/watch?v=5WPMP71ngqE
I remember being told “this band sounds like DVDA from the various Trey Parker/Matt Stone” productions. I think it’s a pretty accurate description.
It’s not just the price of goods or inputs facing a tariff that would go up, but the price of alternative goods/inputs not facing a tariff would go up as well. So expect all sorts of things to get more expensive if this threat is actually implemented.
I’ve got a Mexican-Built Ford (2022 Maverick), a Canadian-Built Honda (2014 CR-V), an American-Built Toyota (2004 Tacoma), and a Japanese-Built Mazda (1994 Miata). Gotta love how the trade-system works 😀
Newsom didn’t call Trump’s bluff. He basically said, “OK we’ll pay for it instead” which is a bad kneejerk response when your state is running a big deficit (not that the US isn’t).
The real showdown will come over California’s right to set their own EPA standards.
I’m assuming California already had it’s own incentives in place and is just modifying them?
The American people made their bed, and will soon find out that they can’t stand sleeping in it.
No, but you can rub it in by asking how do they love having all that extra money in their pockets they expected when they picked their choice.
Don’t lump me into this!!! This bed was made specifically by the “Bro’s”.
Really less than half of Americans voted, and 50% of those voted Trump. So less than 25% of citizens are going to make the next 4 years suck. Do people not remember the first Trump administration? It was something crazy every day and everyone was mad all the time.
I remember a political cartoon from the ’20 election. In the first panel, Uncle Sam is in bed but he’s not sleeping. He’s reading tweets, all worked up, and the caption reads “High-energy Trump”.
In the second panel, Uncle Sam is soundly sleeping, and the caption reads “Sleepy Joe Biden”.
I recently realized that for me, a perfect unlimited funds 2 car garage is a Porsche Taycan wagon and Ram TRX. I will never own either, but its a fun garage in my head. I already run the wagon and full size truck thing, this would just be an update to it.
TBQ – 4% US, 47% Mexico, Final Assy – Mexico, Engine – Mexico, Transmission – Mexico
Okay. I’m very happy with it and have no plans to move into another vehicle in the next 5-6 years.
If I’m not arrested and executed for being a gender traitor, I’ll consider my option then.
Yeah I really don’t understand the logic with Canada. Far and away their biggest export to the US is oil (2X the value of cars). That will make the price of gas go down… Also a large Canadian export is, wood for building houses. That will also help with the high cost of housing. Oh, wait, nevermind. All the people that build houses are going to be deported. Almost a quarter of Texas’ workers in construction are undocumented.
I don’t, but I expect that statistic is similar in many other places too.
Almost like undocumented workers don’t commit nearly as many crimes as people want to believe they do.
Oh my mistake, I assumed we were having a good faith discussion. Carry on.
You should leave your hate for people that aren’t like you at the door. The Autopian is a place for automotive enjoyment, not political dog whistling.
Just remember your lived experience is a one off (you are one person in eight billion humans on this earth) and making dog whistle comments like “subsidized debit cards” is irresponsible and reprehensible to a larger community of immigrants that are doing their best to be legal, law abiding residents of the country they live in…whether it’s the USA, Canada, Germany, etc. Undocumented workers do not all carry “subsidized debit cards” or commit crimes. I’m sure there are a few, and more than we’d all like to admit, but comments like yours show a bias that has been used by many politicians and political parties to rally people against immigration and create an environment of hate and anger.
This is a website about cars and potentially the political environment that influences their manufacture, sales, and servicing. It supports the communities of people that love cars, their passions, and quirky things like Torch’s infatuation with VW tail lights.
Undocumented workers carrying debit cards has no place in constructive conversation at the Autopian. If David, Jason, Matt, or any of the other people that run this website disagree I’ll happily change my stance and take my exit. But right now, I’d say your comments are out of bounds.
No pedestals here, just sick and tired of the political bullshit that has found a way to seep into every part of my daily life. I’m sick and tired of it and just want a respite where I can geek out on car culture. That was the Autopian, but apparently it’s found it’s way here as well.
Enjoy rolling in the mud, sir, and I hope you have a wonderful rest of your day.
Don’t forget we get the majority of our oil from Canada too.
While I’m against tariffs I do think something seriously needs to be done about fentanyl being smuggled in the US via our land borders. I could care less if pure cocaine, heroin, etc. gets smuggled over, but fentanyl is so strong it literally has no recreational use, and there are synthetic opioids out there even stronger than fentanyl, but I don’t see how a 25% Tariff will drive Canada and Mexico to suddenly strengthen their border with the US.
As far as the proposed California EV subsidies are concerned, I doubt they’re actually going to support new market entrants, it’ll be mostly legacy automakers who had all the funds, infrastructure, and political capital an automaker could ever want and or need to make BEVs and they didn’t until Tesla beat them at their own game, and so far the overwhelming majority of BEVs that have been produced since by legacy automakers have had less range, worse charging speeds, worse charging standards, all for a higher cost than an equivalent Tesla (for the US market at least). Now Legacy automakers (Mostly the Koreans) are giving Tesla a true competitor since they’re adopting NACS and making BEVs with similar performance as their Tesla equivalents for a similar price point.
If the California Government wants to wage war against Tesla then Tesla should move it’s production. They already make their batteries in Reno Nevada, and they got Cybertruck Production in Texas. Either of those states would make for a better state to make Teslas in than California, and I sincerely doubt Tesla’s factories in California would get bought up by any other automaker since they’re in California, and they can’t avoid having the UAW involved unlike Tesla has. High cost of buisness + High Cost of Living for your employees + Union fees + other California BS = No Sale.
Fentanyl is overwhelmingly brought into the USA by citizens of the USA through legal border crossings, but it’s much easier for the fear mongering to blame the immigrants, which is a tale as old as time
I’m all for US citizens being imprisoned for smuggling Fentanyl and other stronger synthetic opioids.
You need to watch this show to see how complexed the drug smuggling is in real life
It’s crazy at what they to try to hide the crap
https://go.discovery.com/show/contraband-seized-at-the-border-discovery-atve-us
Oh I don’t doubt it in the slightest.
Outright legalizing fentanyl would take the profit out of it on the black market as well as allow predictable/consistent dosages to be sold, removing most of the risk and the deaths that come with it. I lost my sister to it in 2021 when she smoked some meth that was laced with it, leaving behind 2 daughters.
On a more uplifting and car-related note:
https://www.youtube.com/shorts/ovMV7qiqQuI
ding ding. Legalize everything, then control it. Life has been so much better in the Northeast now that we can go buy weed from controlled sources, versus through channels which could easily lace it with fenanyl.
Sorry for your loss, I’m sure it still hurts a lot.
I’m sorry for your loss.
I disagree. While I favor legalization in general fentanyl’s only purpose is to be a cheaper stronger synthetic version of opioids, if we just legalized regular opioids we wouldn’t need to legalize fentanyl. Also because of drugs like scopolamine I don’t support blanket legalization of all drugs.
A friend of mine from college posited a theory that the glut of Chinese fentanyl in the USA is a retaliation for the opium wars of the 19th century.
I favor legalization of everything, including tranq.
Back when heroin was cheap and available people just smoked it, the reason people inject it is to make it make what little they have go further. You can also snort it.
Point being the shooting up is a byproduct of expensive and or rare drugs, when they’re plentiful and cheap people don’t feel the need to shoot up, as they can get the same high without putting a needle in their body.
Fentanyl is actually starting to lose out to Ketamine. Really medicine at the clinical level is looking to change our over-reliance on opioids. There is still a significant amount of money behind opioids in medicine that can make things challenging to change however.
Canada is in America. So is Mexico. And so is everything all the way down to the southernmost tip of Chile.
To quote Crusty: “I could pull a better economic plan outta my ass.”
But since shit went so fucking well the first time around, I expect the Cheeto Faced Turd will make America great again, right? Because he has a concept of a plan…
Does this maggot even understand the concept of economics?
Just keep the focus on the Libs, Migrants, and stacking the Un-Supreme court.
No one will notice the rest of the shit show, except those who choose to live in the real world. YMMV.
lol
Thanks for the grin. Seriously. But writing is an art. Commenting is not.
Wrong, if you write like a third grader you can get elected president. Just saying.
I learned from the president elect, what can I say?
I get Mexico, but Canada? My thought is we should have tariff’s on countries where labor/industry is significantly cheaper. NAFTA was terrible, closing thousands of US plants.
Of course it’s never a good time to do a roll back from cheaper built stuff with no tariffs, there will be pain, but the alternative is open the flood gates and everybody gets a car from Temu which is all they can afford working at the primary industry left in the US, fast food.
“[T]he alternative” to imposing tariffs in goods imported from some of our closest allies and economic partners is not “open[ing] the floodgates.” There are approximately (*calculating*) infinity other alternatives! One of which is to not change anything w/r/t Mexico or Canada, which you’d think Trump would be in favor of since he was the driving force behind the revolutionary, world-changing, totally-not-like-NAFTA USMCA.
A bit of hyperbole on my part, yes we can use a scalpel instead of a chainsaw, but really think there should be more import restrictions on goods from Mexico until they have comparable wages/quality of living compared to the US.
Also don’t agree with the reasoning behind this tariff threat, if the problem is the drug cartels, that answer isn’t choke their economy so they can’t afford increased resources to fight it, but I’m starting to get political and prefer not to.
Accepted economic theory is that the fastest way to elevate wages/quality of living in less developed countries is to support their economic development. Basically setting up trade agreements making it easier to invest in these countries and import from them, especially in labour intensive industries.
My bad!… thinking about how to achieve something without resorting to bullying and threats is so 2014.
Unfortunately theory isn’t reality, wage increases are still only 3-5% yearly in Mexico, on par with US increases but 3% of $3 an hour ain’t much.
not really, minimum wage increased over 80% in Mexico from 2019 to 2024.
Can’t say the same about white collar jobs, though.
Thanks and I get the hesitation on political topics. I don’t want to ruin the Autopian either. 🙂
I’d be very curious to hear the official and unofficial reasons for leaving Tesla out of proposed EV credits. There is some legitimate argument to be made that Tesla is far enough ahead of every other EV startup and Legacy automaker when it comes to EV production. But to say that they’re ahead and no longer deserve a tax credit equivalent to competitors for that reason is absurd.
Also not a good look for Newsom in general. Pushing EVs for their environmental benefits and then spiting the largest EV manufacturer is purely a petty political statement against Musk, rather than actually serving your constituency.
It’s too increase competition. Tesla doesn’t need the subsidy anymore as it’s an established company. That’s the reasoning, at least.
Sunsetting a subsidy when it is no longer needed? Wow, that’s very (traditional) conservative thinking from Newsom! Maybe he’s planning to change parties? /s
I’m skeptical of that being the entire story given I’ve always heard the tax credits defended as a way to increase EV adoption to reduce emissions. Competition is definitely a large part given the OG credits were sales capped, with the assumption that COGS would decrease enough to be on or near parity with ICE models after initial investment was made.
Ford had an electric Model T back in the day. It doesn’t get more established than Ford, but because they dropped the ball on BEVs with the greatest head start, they deserve subsidies?
Almost certainly their reasoning is bullshit, but I hope I’m wrong and it supports actual new entrants to the BEV market like Aptera, Telo, etc. instead of legacy automakers AND Tesla.
Why is it absurd? If the goal of the tax credit is to stimulate competition and support smaller manufacturers, then having a sales cap — the likely mechanism to make this happen — makes sense. Musk himself has been arguing that Tesla will benefit from the disappearance of these tax credits nationally, because it is sufficiently established to not need them.
If you’re an intelligent policymaker, that’s analysis worth taking into consideration.
That’s a completely fair assessment, and not what I had originally considered. I just see it as a bit of grandstanding rather than actually attempting to help, trying to actively and directly punish Tesla and helping competitors. My view of the EV tax credit was that it was to push adoption of EVs for their environmental benefit, as well as subsidize the cost. Sure Tesla has a cost and price advantage, but it seems bold for an individual state to unilaterally decide any given company has their COGS low enough to not warrant a credit, while things like COGS is not publicly known even for publicly traded companies.
To your point, it’s a strategy with pros and cons, and it’s up to them to decide what risks are worth taking. Politically it seems risky given Musk is liable to pull out of California even more should an opportunity come up to build a new giga-factory in a Musk/Trump favoring state. I would think that would really hurt Newsom going forward, but as an east-coaster, I don’t have a great sense of if sticking one to Tesla would play well or not.
And yes, Tesla would absolutely benefit the most from a complete cut of tax credits nationally, there’s simply no way any other automakers can compete on price otherwise.
I think a price cap on the vehicles that qualify for such a credit makes more sense. Say, the vehicle doesn’t qualify unless the MSRP is under $25,000. This keeps the margins of the vehicle narrow, so that the industry can’t just pad the tax credit into the price, it prevents the subsidy of vehicles that no average Joe could realistically ever afford but who has taxes coming out of his check to pay for it, while encouraging the production of an affordable EV above anything else.
$25k is more than twice the cost of a BYD Seagull. First world labor to make such a car is estimated to be $3-5k vs slave prison labor. Plenty of fluff to figure it out.
I think an underrated event in Musk’s turn to outspoken Trump supporter was Biden’s ridiculous decision not to invite him to the EV summit back in 2021.
All the more ridiculous when the justification was a fight with the UAW, who is politically irrelevant if not openly Trump supporting (among rank and file, not leadership).
Yes, not inviting Elon Musk to that was pretty dumb.
Perhaps that’s because the goal isn’t to get affordable, reliable, long-lasting, repairable, ecologically benign EVs on the road for the masses, or to save the environment. Which is a shame. The technology we have today allows wonderous things at inexpensive prices when coupled with mass production, but the market reflects none of it even when expressed demand for such a thing is loud and getting louder.
There will not be a solution to the issues that ail this society and planet through petty partisan politics. The fact that we’re relying on a leadership(regardless of party affiliation) that can only look to the same billionaires that are causing most of the problems for a solution to those problems, a leadership that places the interests of these billionaires ahead of everyone else(again, regardless of party affiliation), is a testament to the real severity of the situation.
A real solution would throw both the political class and the billionaires under the bus. Don’t expect either group to support its implementation.
Sandy Munro sees the writing on the wall. He’s not only coming up with methods to more affordably repair EVs that are deliberately designed to be unrepairable, but he is heavily invested in Aptera, with good reason.
PREACH!!!!
Yes, watch THFTRO. It’s a good flick, even though I prefer Harrison Ford’s Jack Ryan to Alec Baldwin’s. I can even forgive them using an unabashedly-accented Scotsman Sean Connery to play the Russian sub commander because the movie itself is so well done. And Sam Niell’s “I’d have liked to have seen Montana”, just lovely.
As for cars, oof. I’m very close to pulling the trigger on an Alabama-built (thanks, Toyota!) Mazda CX-50. Now that I know the hybrid has the Toyota powerplant and not the Mazda one I’m more likely to get the ICE-only model (I’ve spent a fair amount of time behind the wheel of a 2022 RAV4 Hybrid and not a fan of the engine behavior and noise). I was really hoping the CX-70 was going to be a slightly-bigger CX-60, but alas. So while I’d prefer a RWD-based vehicle for my next purchase, the CX-50 is so darn good it’s acceptable to overlook its FWD-based architecture. But I’m also wary about making a big purchase right before a potential economic shift. My current car is fine; showing its age, yes, but fine. The CX-50 is quite tempting regardless.
As expensive as the Maverick has gotten, I wonder if Ford should consider making it in the US anyway. Once the line was up and running it’d likely lower turnaround time for deliveries, in my mind.
So if the tariffs do happen, the cost of literally everything will go up, drastically, this already happened with steel and aluminum which kicked off the rampant inflation, but hey shareholders get to see more money, so they win.
If the tariffs don’t happen, Trump will just once again claim he won or prevented the trade war.
Yep, politicians will take responsibility for any perceived good, and point fingers at anyone but themselves for any perceived bad.
I hope he does it. The troglodytes that voted for him won’t respond to anything unless it is literally on their doorsteps. They wanted this, so they can fucking suffer greatly for it. I don’t care if it effects me too. I am tired of their bullshit.
Republicans are, almost across the board, corporate stooges. They will tout their 150,000% tariffs on Chinese cars or whatever to appease the rubes who voted them in, but there’s no chance in hell the rest of these tariffs actually come to fruition once the CEOs start making phone calls and reminding them who pulls the strings.
I think you could say that for most if not all high-level politicians (and even low-level ones, like a city/village mayor, to an extent) regardless of political affiliation. They may answer to a conglomerate of “special-interest groups” but there are corporations and wealthy backers pushing their agendas all through the political spectrum using such groups and PACs as a façade for their influencing.
No doubt, but since the Right is in power they’re the ones I called out.
The thing is a lot of tariff policy can be set by the President without Congress (or at minimum the law around it is untested by the courts).
Republicans in Congress might object, but if Trump is a true believer and damn the consequences, he could do a lot without the assistance of any other elected official.
True, but we’re also talking about someone who has proven to be very easily swayed by whoever talked to him last. If enough party members and company bigwigs keep telling him the same things over and over, he’ll eventually go along with them. They let him off the leash when he can’t harm them in any way.
I think that’s true for stuff he doesn’t really care about (abortion, LGBT issues, covid policies, tax cuts, Obamacare repeal, and most other things) but since long before he’s been president, Trump has been beating the drum on two things:
-Immigration
-The idea that foreign countries are taking advantage of us via “bad” trade and defense deals.
He implemented the steel and aluminum tariffs in his first term. I think it’s doubtful that Congressional Republicans were in favor, but they had no input.
Either way it’s fun that our whole economy can be manipulated entirely by whether or not the Fearless Leader woke up and saw his shadow that day.
Were you in Antarctica for the entirety of 2016-2020 or something? The guy literally did whatever he wanted with basically complete impunity. Democrats have absolutely no power to check him now and Republicans lick the ground he walks on. The only things standing in his way are his lack of an attention span, or coercion from massive companies.
They did not check him in his first term, and it is highly unlikely they check him in his second. If you can find me instances of Republicans in Congress, en masse, standing up to Trump and telling him no, I would be delighted to see it, because I don’t remember it happening. I agree that he’s a symptom and not the whole problem, but what he has done is show how delicate our whole political system is and how easily it can be bent to the will of one single person or party.
Tariffs?- Almost always do more damage than they help
Crypto?- Fake capital grifter nonsense that will lead to economic collapse
Corporate tax cuts?- By driving up municipal dept and incentivizing stock buybacks over dividends and investments, they can very clearly hurt rather than help.
The US is not a business, it is a country that exists for the benefit of its citizens. Pretending the US should behave like a business is at the core of many of our countries problems.
exactly. I am not a slave to my country, my country is a slave to me. Stop trying to justify me being a slave. Money does not solve all problems.
Plenty of people have made 4500% returns playing blackjack. Do you think blackjack is a stable economic model for a goverment?
Short term bully tactics are small dick idiocy, not a basis for national policy. Most bullies end up with a pipe to the side of the head and no teeth.
The cool thing about a business is that it’s designed to primarily benefit a select few people at the very top of the organization. That’s not how you should want a society to be structured.
You’re really a shit person, btw.
More like it is about time the US sees what they have become and not the world leader they think they are. We have been losing that fight for the past 20 years. A country isn’t a fucking business. Why don’t the clowns understand that?
535 people do not have a say in it. There is a ton of power in the executive branch to influence trade, including multiple mechanisms to institute tariffs (like … he did during his last term). Congress has no say, and even if they did, the likelihood that Democrats could or Republicans would rein him in is nil.
Sorry if I was unclear. What I meant was the executive has power to impose tariffs without congressional approval.
I can’t wait to see what the USA does with a 25% tariff on Aluminum. It was intentionally lower than steel last time as Canada produces over 3x the aluminum the US does (3mil tons vs 0.9 mil tons). The US aluminum market is dominated by imports.
Mostly because we can make it cheaper, with a lower carbon footprint. Since all 9 of our smelting plants use hydroelectric power, and aluminum specifically uses a fuckload (technical term) of electricity to produce.
+1 for you.
My guess is, all the talk of fentanyl at the border and protecting Americans is to put this discussion of tariffs in the category of security and defense.
For good or ill, the creation of the department of homeland security has given the president wide reaching powers to do a lot, and I think that is why he’s using the language he is.
I don’t believe for a second there is a large crossing of fentanyl and other harmful drugs coming across Canada’s border but if he gets enough people to go along with it he can impose these tariffs all day using that logic.
I suppose we can hope, anyway. I think we all know how well draconian new tariffs worked out back in the late 1920s
Protectionist tariffs were the main cause of the 1929 stock market crash and ensuing Great Depression. And that was back when our economy was drastically less reliant on global trade than it is today. Also, that Depression effectively lasted to 1949 – the full employment during WWII was a temporary blip, things went back into a recession for a few years after, so aside from the war, it was 20 years of economic malaise
That makes absolutely no difference whatsoever, the impact of tariffs on intranational trade and domestic economic performance is well studied and well established, and that is why nobody has tried anything quite as aggressive as Smoot-Hawley since then, you need to stop being so hung up on years and start focusing more on concrete impacts in the real world, which are predictable and reproducible based on past history overlaid with current realities. The economy is vastly more globalized than it was even then, and even at the time, a massive tariff induced contraction in international trade was enough to trigger the worst and longest economic crisis in centuries
Your point that that was 100 years ago is relevant only in as much as things will be much worse this time than they were then.
Tariffs are generally bad policy -especially among countries at similar stages of development. In most cases they just raise the prices to consumers and manufacturers that use the imported goods as inputs (which is most manufacturers one way or another). All our 100% tariff on Magnesium has done is double the domestic price of magnesium and support one environmentally questionable producer in Utah. Although the DoD is investing in a new potential second source. And the interesting thing is we only tax the raw material resulting in very few non-DoD part manufacturers in the country. The tariffs will be passed along unless there is for some reason large, underutilized, efficient domestic manufacturing capacity. Tariffs can be valuable when new entrants dump product on us at artificially low prices – either due to government subsidy or due to large foreign manufacturers that are trying to bankrupt the domestic industry to later raise prices.
Yes, tariffs should be remediation for unfair trade practices, that’s a valid use of the tool
The world has changed to the point that our economy is more deeply intertwined with the rest of the world, we are far more reliant on international trade for our own prosperity, and even domestic industries are highly dependent on imports of raw materials and components, any disruption in trade via tariffs is going to be vastly, vastly more harmful to us today than it was then, and it was crippling then. I think you have a somewhat inaccurate and distorted view on this, I can recommend some reading if you are interested
I recommend Prelude to Trade Wars, No Trade is Free, and Peddling Protectionism
The economic principles that run our world have not really changed in hundreds of years – maybe information can flow a little faster.
By time we had telegraphs information could travel very fast indeed – generally as fast as today. Pre-telegraph google seems to indicate between 3 and 11 mph for long distance information. Your (great) grandparents, if they lived in a city, could have told you about the multiple daily newspapers they had access to, usually with at least one that published in the afternoon – not quite our 24/7 news coverage, but not too far off – and potentially better for all involved.