Phil Donahue was awarded the Presidential Medal of Freedom, as were Willie Mays, Yogi Berra, and Frank Gehry. What ties all these people together is anyone’s guess, but a commitment to freedom must be part of it. President Trump’s last two medals were given to golfers. Before that, he gave one to noted economist Arthur Laffer. What does Laffer think of all these new tariffs? He doesn’t like them.
Specifically, Laffer thinks that they’ll make the prices of even Big 3 cars go up and disrupt the American automotive industry in a bunch of harmful ways. The biggest impact, he thinks, will be in raising the cost of making cars in a way that makes them uncompetitive. Does this bother President Trump? He reportedly warned automakers not to raise prices, though he told NBC News this weekend that “He couldn’t care less” if carmakers did.
Trump advisor and Tesla CEO Elon Musk recently acknowledged that his government role comes with some significant downsides. Clearly, even without the politics, being a car exec comes with downsides. It’s hard for just about everyone in this industry, as the outgoing Volvo CEO noted, saying that it’s a great job for people who like “sleepless nights.”
Last week was the Book of Job, and this week is the Book of Gob. Or, well, Lucile.
Long-Term Tariffs Could ‘Jeopardize Over 825,0000 Jobs’ According To Laffer Paper
Arthur Laffer runs something called the “Laffer Center For Supply-Side Economics,” which is all most of you should need to know about where his politics lie. Laffer became famous in Republican circles for something called the “Laffer Curve,” which showed that there’s a point at which you tax people so much that it disincentivizes economic production, thus causing government revenue to drop.
Some republicans mention this curve when calling for tax cuts, a strategy more palatable than calling for cuts to popular government programs like Social Security and Medicare. Since then, he’s been one of the go-to economists for many conservatives.
There are many who have argued that the 25% tariffs on imported cars are bad for consumers and car companies in the near term. Laffer, in a just-released paper that was leaked to The Autopian, provides a similar argument that’s a little more sympathetic to President Trump, though it makes a great case for why it’s going to be bad even for American automakers.
It’s not entirely clear to me why this 19-page paper isn’t public, so I can’t post it and link it, but I’ll try to excerpt the key parts so you understand his argument. He starts off by acknowledging that the United States-Mexico-Canada Agreement (USMCA), an update to NAFTA negotiated by President Trump in his first term, has so far been a big success, and that the current temporary exemption to USMCA-compliant vehicles should remain in place.
Why?
A 25% tariff without USMCA exemptions would create immediate and cascading cost pressures throughout the North American auto industry. The cascading effect would be particularly significant, as components crossing borders multiple times during production would face compounded tariff applications, likely multiplying the effective tariff rate far beyond the nominal 25%. This becomes especially problematic when considering the narrow profit margins within the industry. Manufacturers typically operate at around a 10% margin, with suppliers functioning at even lower margins, leaving minimal capacity to absorb these additional costs internally.
The scale of a 25% tariff on the integrated North American supply chain makes it economically impossible for manufacturers to shield consumers from price increases.
How bad would it be? Here’s his estimate:
By applying a 25% tariff and distributing the total impact across projected new light vehicles in 2024, the analysis estimates that without a USMCA exemption, the per-vehicle tariff impact could reach $4,711. With a USMCA exemption, this impact would decrease significantly to $2,765. Importantly, these calculations assume auto parts face tariffs only once, whereas in reality, components typically cross North American borders three to four times during assembly. Consequently, an auto manufacturer with 100% North American production could experience even greater vehicle price increases than a manufacturer with no North American production if there is no exemption for USMCA-compliant auto parts.
This, to me, is the key piece. It’s not only that costs would go up, it’s that American companies would be less competitive, and prices might become even higher for American-made cars from American-made companies because of the highly integrated supply chain that was a result of both NAFTA and USMCA.
The potential damage to North American integration comes at a time when global competitors continue to benefit from their own regionally integrated supply chains. The European automotive sector relies on the seamless trade mechanisms within the EU single market, while Asian manufacturers leverage exceptionally dense supplier networks across China, Japan, and South Korea. Disrupting the USMCA framework would place U.S. manufacturers at a structural disadvantage against these competing regional production networks.
Additionally, tariff-driven cost increases inevitably compress profit margins, leading to reductions in research and development budgets across the U.S. automotive industry. This financial constraint threatens critical technology transitions in electrification, autonomous driving, and connected vehicle systems—areas where global competitors are aggressively investing. The resulting innovation gap could have long-lasting consequences for the U.S. automotive industry’s ability to maintain leadership in emerging vehicle technologies that will define the next generation of transportation.
These disruptions coincide with unprecedented Chinese automotive export expansion, raising additional strategic concerns. Chinese manufacturers are leveraging domestic overcapacity to aggressively capture international market share with competitively priced, increasingly high- quality vehicles. The additional burden of tariff-related costs and operational disruptions intensifies these competitive pressures on U.S. producers, potentially accelerating market share erosion in both domestic and international markets.
Whether you agree with Laffer’s politics or not, he very carefully articulates what a lot of people in this industry have said publicly and privately. For the last 5-7 years, automakers in America, and in particular the Big 3, have created a system that relies on both the support of the Inflation Reduction Act and the open trade policies of the USMCA. Trying to toss both at the same time just creates chaos. In Laffer’s estimation, keeping USMCA goods out of the 25% tariff might have some impact on pricing, but it won’t be as potentially devastating.
Otherwise, it’s possible that the cumulative impact of tariffs could cause a hit to GDP of about 1.1% and cost the economy more than 850,000 jobs.
This paper caused a bit of a stir at the end of last week, so Laffer told the Associated Press that his intention wasn’t to be critical:
“The report shows the economics of what would happen were the tariffs to be put in place,” he said. “This is about facts, not how we feel.”
[…]
“Donald Trump is more familiar with the gains from trade than any politician I’ve ever talked to in my life,” Laffer said. ”Do not take this paper in any way, shape or form as criticizing Donald Trump and what his strategies are.”
How has President Trump responded to all of this? Well…
President Trump ‘Couldn’t Care Less If They Raise Prices’
There was a story last week in The Wall Street Journal that said President Trump had a conversation with automakers and told them they better not raise prices if tariffs go up:
When President Trump convened CEOs of some of the country’s top automakers for a call earlier this month, he issued a warning: They better not raise car prices because of tariffs.
Trump told the executives that the White House would look unfavorably on such a move, leaving some of them rattled and worried they would face punishment if they increased prices, people with knowledge of the call said.Instead, Trump said, they should be grateful for his elimination of what he called former President Joe Biden’s electric-vehicle mandate, which involved subsidies and emissions requirements to encourage electric-car production. He made a lengthy pitch for how they would actually benefit from tariffs, two people on the call said, adding that he was bringing manufacturing back to the U.S. and was better for their industry than previous presidents.
President Trump denied saying that, or even implying that, on a call with NBC News this weekend:
When pressed if he told CEOs not to raise prices, as reported in The Wall Street Journal, Trump added, “No, I never said that. I couldn’t care less if they raise prices, because people are going to start buying American-made cars.”
Trump continued, “I couldn’t care less. I hope they raise their prices, because if they do, people are gonna buy American-made cars. We have plenty.”
To be clear here, I don’t think the president is talking about domestic automakers here, he’s talking about foreign ones. Or, specifically, he’s talking about foreign-made cars. The challenge, Laffer argues, is that the supply chain is a little too stretched at this point, and without any long-term exemptions, it’s foreign companies who might have a price advantage.
Why? As Laffer points out in his paper, a vehicle like the Cadillac CT5 is built in the United States with a motor and transmission also built in the United States. Yet, only a total of 15% of the share of North American content is U.S. or Canadian (to further complicate matters, the law makes it so that it doesn’t matter whether it’s from Canada or the United States, so we don’t even know what that mix is). Another 49% of the content is from Mexico. And the rest is presumably from somewhere else. On top of that, the steel and aluminum used to build the car are also subject to hefty tariffs.
The competitive Lexus IS is made in Japan, and it’s likely that most of the parts also come from regional Asian suppliers entirely unaffected by these tariffs. The 25% tariff only gets applied once to the car coming into the United States. That’s a lot of money, of course, but if the Cadillac’s parts aren’t USMCA-compliant or don’t get a USMCA waiver permanently, then it’s possible that it’ll be harder to keep the CT5 cheap than the Lexus IS.
There have been complaints, including from the president, about parts criss-crossing the border numerous times. It sounds strange, but it’s often way more efficient, or that’s not what would be happening. People want nicer cars with more features and don’t want to pay a lot more for them. Extreme efficiency is the only way to do that given how narrow the margins are in making cars, selling cars, and providing supplies for making cars.
Elon Musk Says Political Backlash ‘Costing Me A Lot’
I was driving around suburban New York yesterday and passing through a slightly more middle-class town when I noticed a mix of protestors. What were they protesting? Tesla. It was one of hundreds of Tesla Takedown protests aimed at Elon Musk’s company over his role in DOGE.
Indeed, Tesla’s share price has fallen a lot. Is this politics? Is this the slow update of models? Is this the Cybertruck falling short of its promise? Who knows, but it’s clearly bothering him according to this Bloomberg story:
Elon Musk acknowledged that his job as head of President Donald Trump’s effort to cut the size of government is “costing me a lot” when it comes to his other big job, as CEO of Tesla Inc.
Political backlash from Musk’s recent political forays in the US and around the world have weighed on Tesla at home and abroad. “It’s costing me a lot to be in this job,” Musk said at a town hall event in Wisconsin, noting some of his political opponents have highlighted the stock’s retreat.
“What they’re trying to do is put massive pressure on me, and Tesla I guess, to you know, I don’t know, stop doing this,” Musk said. “My Tesla stock and the stock of everyone who holds Tesla has gone, went roughly in half. I mean it’s a big deal.”
Musk was saying this at an event during which he handed out million-dollar checks to volunteers working in a state supreme court race. Over the last few weeks, Musk has seemed to want people to be empathetic to his plight. Which, lol. Car CEOs have been involved in politics in the past and are, in general, conservative. None that I can think of have been quite so vocal in such a specific way. Perhaps this is the reason why.
If You Want ‘Mental Stimulation’ And ‘Sleepless Nights’ Come Work In The Auto Industry, Says Departing Volvo CEO Jim Rowan
Former Dyson exec and, most recently, Volvo CEO Jim Rowan, is departing the company and being replaced by the guy who was there before him. On the way out of the door, he gave an earnest and insightful interview to Autocar that details the many challenges facing his company and the industry at large.
In addition to the quote above, he focused on how difficult times are right now:
Rowan expects a significant change in around 18 months as brands start to disappear, from legacy car makers and from Chinese upstarts.
“They’re just not all gonna survive,” he says. “There’s not enough business for everybody. A lot of them are not making money already. They’re selling cars at a loss just to keep cash coming in. Eventually, that plays itself out and you’re going to see a thinning out of the multi-brand car companies that are going to need to say: ‘I can’t keep all these brands alive, so I’m going to need to shrink.’
“I don’t think you’re going to see car companies buying car companies. There’s just not enough business for everybody. So those guys will die out. The ones that are left will be much stronger because there’s less competition, and we’re going to be forced to be pretty lean to get through this.
I can’t excerpt the whole thing, so go and read it because he makes a lot of interesting points about the importance of software and how much an electric skateboard platform changes the game:
“With internal combustion engines, ‘premium’ is derived by [the likes of] ride quality,” he says. “If that was your brand attribute, you spent a ton of money because you put a big, heavy engine in the front of the car. You want to throw that car through the corners at 120kph [75mph]. You’d spend a lot of money on making a really smooth engine, on a really nice chassis, on suspension.
“Then, bang, all of a sudden there’s a new technology. You take a flat skateboard design and you get a nice low centre of gravity. Now you don’t have to offset this big, heavy engine in the front of the car, so suspension and, to some extent, chassis design becomes far less important. With battery technology, it’s not about the explosiveness and the smoothness of your engine, because you get torque for free. So now, what’s your brand attribute?
These are all good questions.
What I’m Listening To While Writing TMD
Have I not done “The Final Countdown” by Europe here? That seems impossible. This might be a rerun, but it’s a perfect one.
The Big Question
If you had to guess, what would the North American Content of your cars be?
Top Photo: The White House, all Arrested Development GIFS via Giphy.
Schizophrenia is a serious mental health condition that affects how people think, feel and behave. It may result in a mix of hallucinations, delusions, and disorganized thinking and behavior. Hallucinations involve seeing things or hearing voices that aren’t observed by others.
Adding that to a mix of dementia & fundamental stupidity isn’t helping anything.
Pilots are I think top 10 as far as US domestic content go. My Civic came from Japan, but the engine came from Ohio.
The new Passport is acutely on my radar because of tariffs and the fact that it looks great
I got a new 4th gen Pilot as a loaner because the dealer botched a simple fix on my 3rd gen. Pilot and it was very nice. I assume the Passport would be largely similar.
Hopefully Laffer was born in the US and can prove it, ideally with Mayflower roots, otherwise he’s gonna get snatched off the street soon like multiple others and thrown in a hole. But seriously, you really wonder why his paper isn’t “public”? His last sentence takes great pains to get that point across, B.S. that it may be.
Dammit Hardigree, can’t you buy your broken Subaru back and whinge about that instead? You can probably snap off some wheel studs or have a headgasket failure or something. ‘Cause if this is going to be a daily thing, I’m going to have a headgasket failure.
I have to suffer the involuntary stupidity already and will have to deal with it for the next…oh, 40 plus months or so. If something is actually happening, sure, put it in the headlines, but the worst goddamned thing about social media/the 24-hours nonstop news cycle is that about 90% of it is trash filler.
I don’t need the two-minutes hate every weekday.
I hear you, I’m trying to keep it to once or twice a week. We were completely free of it Friday.
It’s probably not all that productive to center the topics on the day-to-day moves of the executive branch, if only because it devolves into an echo chamber of “yodeling off a cliff”.
Not that any of it is less important. In fact, it’s all very important, it’s just not really all that conducive to fostering anything positive here.
For instance, I happen to think that some of these moves can be argued for, but I ain’t going to comment and try to convince the great wall of whina. Even if I wrote the most stellar comment of all time, what would that accomplish? Nothing.
You do a great job encapsulating things for the most part, but it doesn’t do all that much. Therein lies the dilemma. Does the site write for clicks, or for fostering a positive vision of the world…hmm.
I understand that there is a lot of pressure to keep things politics-free. I think “economist who president touted as real-good-guy says all cars are going up by $4700 on average” is important car related news and should be reported.
My only US vehicles aren’t cars (International pickup, HMV Freeway, and American Microcar Tri-Ped) but their North American content is fairly high. Well, the Tri-Ped has a Minarelli engine so there’s that.
My cars, on the other hand, are British, Dutch, French, Swedish, and Czechoslovakian with, I’m guessing, little to no North American content. I haven’t had a reason to examine every last part on them but I assume it’s only a matter of time as they continue to age.
Remember that Rush Limbaugh received a Presidential Medal of Freedom… so I just doesn’t mean that much.
Always celebrate Feb. 17th!!!
There’s a limited pool of vehicles I’m interested in, it would be disingenuous for me to get picky about the country in which it’s made.
It does, however, make it very frustrating to keep the older vehicles on the road to pay another tax on parts – regardless where that vehicle may have been assembled in the first place.
Start looking for lightly used parts on ebay from reputable sellers…
Those are going to be more expensive too, because now their competition costs more.
Lessee: I have two cars from brands that begin with T. Tesla and Toyota. One assembled in Fremont, CA and the other in Brampton, ON. I’d wager 40% for the Toyota and 60% for the Tesla. The lithium sure wasn’t mined here. Nor the cobalt or manganese. Maybe some of the bauxite or magnetite was. The plastics could be from US or Canadian crude.
Never thought I’d agree with Mr. Laffer about anything economic. What interesting times we live in.
While the “Laffer Curve” is a simple mathematic fact, the “Laffer Opinion” that we are always on the right side of the hump (“lower taxes to increase revenue”) is highly suspect.
Also, no need to lower taxes on the ultra-rich. They can afford it (assuming not all of their assets are illiquid).
My car was built in Canada, and the running headlights are off only when the engine is off, or if the engine is turned on and the parking brake is still engaged. The engine is Japanese, the 2ZZ-GE. The rest? No idea.
This is exactly the problem. The Laffer curve was turned into the Laughter Curve when the GOP seized upon it as an excuse to cut taxes under any and all economic conditions.
This. Without any reliable data to determine its actual shape, the Laffer curve is purely a theoretical exercise and therefore was destined from the beginning to be nothing more than a Rorschach test for one’s political preferences.
The only reason the Laffer Curve has a place in the popular imagination is because a bunch of conservative politicians were told (famously involving a young Dick Cheney and Donald Rumsfeld, of all people, drawing the curve on a cocktail napkin in a bar) basically that the existence of this curve meant they could actually increase tax revenue by decreasing tax rates. (“And you know it’s true, because look at this drawing that proves it!!”) You don’t have to be much of a student of human behavior to understand what people choose to believe when presented with the idea that they can have their cake and eat it too.
The only thing Musk and his share holders have lost is the massive gain they saw since November. That’s it. He has nothing to complaign about because his actions showed that the anticipation that Musk would be good for Tesla in the WH turned out to be false because of his own actions, and those gains were reversed. Nobody owes him shit.
The stock should have every expectation to crater further due to his alienation of consumers and destructive actions that will further diminish the brand. Yet it’s at the same value as before he started that, which means it hasn’t been priced in. The only reason it has the value it does is because he’s got a massive cult as an investment base, and cult members don’t tend to act rationally.
I’m kind of baffled how this isn’t self evident.
Thanks. I needed a Laffer today.
If they get the car prices up high enough, I would hope it encourages more domestic production of transit vehicles.
We learned all about Laffer, Friedman, and the other supply-side goofballs in high school economics. H.W. even confirmed it in a campaign speech- “Voodoo economics”.
Don’t listen to these people. They work only to preserve wealth and power in the hands of those who already have it.
Clarification: Milton Friedman was not a “supply-side” economist. But he was a bit naive to think that cutting taxes, and thus tax revenue (something he did believe), would result in the government cutting expenses, as if politicians cared about the deficit.
We have 6 cars and I’m rather confident that the cumulative North American Content is 0%. They are all European (3 German and 3 Italian) that were all assembled in the EU.
The famous 1975 New York Daily News headline “Ford to City: Drop Dead” referring to President Ford refusing to assist New York City with its fiscal crisis.
Today’s equivalent: “Trump to Car Buyers: Drop Dead.”
Car Buyers, US Economy, Decency, Democracy… it works for so many things!
The GS’ last model year in the US was 2020, and it wasn’t even competitive then. Did you mean the IS or ES?
Yes
One of my biggest frustrations with conservative economic policy outside of the fact that most of it doesn’t do anything but funnel more money to the wealthy is the fact that so much of it operates under the assumption that corporations, which exist to print money, will just choose to do the right thing. I get it, government BAD, wealthy people GOOD, businessmen should run everything, etc.
…but like, do they REALLY think that American manufacturers won’t just raise their prices by 24% once the tariffs hit? They’ve been absolutely gouging Americans for years, particularly with their marquee products (trucks trucks and more trucks). I personally can’t see them passing up an opportunity to make more money with basically 0 ramifications until Republicans are out of power (which at this rate may never happen).
Car prices are already unsustainably high, tariffs will make them even higher across the board, and we’re currently already sitting on a car loan timebomb that looks a lot like the 2008 housing bubble. People can’t afford cars, but they’re still buying them, and fast and loose financing with ridiculously long terms is making it easier than it should be.
I mean…what could possibly go wrong? We’ve never seen something like this under Republican leadership before, right? The same reheated Reaganomics leftovers that have never actually worked are surely going to work this time, right? I genuinely just don’t get it. If you’re wealthy and your primary interest is yourself and your money pile then I understand why you’d vote Republican.
But the average American is going to get absolutely hosed by this stuff. They’ll wind up paying more for inferior products. I’m the furthest thing from anti American manufacturing, I’m just trying to be a realist here. Ford, GM, and whatever shambling zombie remnants of Dodge et al were talking about have long and storied histories of phoning it in at times and color me skeptical that once competition is eliminated and they’re given a free pass to hike prices even more that they’ll choose to do the right thing.
What makes me laugh about all this is the fact that it will actually hit the domestic manufacturers harder than many of the “foreign”. For years the vehicle with the highest percentage of NA parts content and production was the Tundra, not sure if it still is, but Toyota stands to gain a ton from the tariffs, as do Hyundai, Honda, and several other foreign companies. As has been talked about here, many of the domestic cars are built in Mexico and Canada, not actually in the USA.
Fun to be lead by someone with as much economic acumen as the guy who drives a 30-year-old S10 with ‘Out of a job yet? Keep buying foreign!!11’ stickers on it.
Didn’t you hear? That guy is going to get a six figure manufacturing job! They all are! Within a few months those will grow on trees.
“And they will be the most beautiful trees you ever saw.
So many jobs you won’t be able to fill them all.”
Well that’s a relief! Surely manufacturers will finally start lowering prices after spending billions building dozens of new factories and paying American labor wages!
Funny that my ownership of an early 90’s S10 made me swear off domestic cars FOREVER.
You’re going to see very pared-down lineups as a result of these, coupled with increased prices on the models that do survive. Banks will also likely swoop in and start offering 6 and 7 year car loans.
They already offer up to 8 year loans. 6-7 have been the norm for a long time.
Taking out a loan of more than 5 years seems absolutely insane to me and per my best judgment (which you can value as much or as little as you’d like) it’s a pretty good sign that you can’t afford the car. If you can’t make the payments comfortably within 5 years it’s probably a wise idea to shop for something more affordable.
Same. The longest I ever did was 66 months, I could have afforded less, and had it paid off far sooner than that, but the credit union offered their lowest interest rate (4.24% at the time) for any loan out to that amount so I figured it made sense to have a low required payment if it wasn’t going to cost me more in interest, but the majority of my loans have been 48 month and even then they are usually paid off early because I hate car loans with a passion.
Great, so we’ll have lineups made up entirely of crossovers and trucks that cost $60,000+. That sounds like a blast.
I’m in Canada, so we feel ramifications to some degree here as well, and it’s not like out governments have been stellar examples of ‘for the people’. I keep telling myself, “can’t get worse” but then it does. Seems it can (and does) get much worse lol.
I just wanted to mention I love you all and think you have a lovely country up there…and that the actions of the deranged lunatic and his cult don’t speak for all of us but unfortunately they do seem to speak for many of us.
Yes it sucks for you guys to be a target of a lunatic.
But we do love you guys and your country. And wish you all the best in your efforts to not become our 51st state.
In the words of Walter Sobchak: “Shut the fuck up, Donny!” “Forget it, Donny, you’re out of your element!”
Auto execs almost HAVE TO raise their prices. Publicly traded companies that advertise decreasing margins see their stock prices plummet. We are trapped in this system.
Our household income is probably in the top 5-7 or so nationally (just for context, money is fake anyway and who knows how long we’ll have our jobs for at this rate) and the current average transaction price for a new car is on the upper end of what we’re comfortable paying for a vehicle.
The fact that it’s about to go up significantly from there is nuts to me. I’d say “I have no idea how people are affording it” but I do…predatory financing.
Even if nothing else changes, a decrease in the volume of cars manufactured/sold means the unit cost of each individual unit increases. There’s not really any reason to think that a 24 or 25% increase in price leaves the manufacturer at the same or greater profit level as before for some models.
And once models get cut, production somehow gets realigned, supply chains are built differently, American workers are employed at far greater hourly cost than others, and there is a new status quo with minimally if at all profitable automakers, even if everything is cancelled (say a year from now) or reversed say 3.5 years from now, you can’t/won’t just get back to “how it was”, in other words once prices go up the are staying up or increasing more, likely to the eventual end of at least one automaker.
I don’t want to get into a whole thing here, but how exactly do you envision Corporations acting any different with regard to gouging if a Democratic leadership was running the game?
My opinion is that there would be none, and that the tariffs are warranted. That’s not to say they are a good idea for almost anyone individually, but they are overdue to be done. Kinda like not going to the dentist for a long time and having to get a bunch of cavities fixed.
The oddest part of it all is that in the TrumpTown, USA city I live in, there are a small group of grandpas and grandmas “protesting” the one Tesla dealership. Everyone else just kinda wonders what these people never learned, to be wasting their precious time left on some foolishness.
We don’t have to go into it, Dems are just as beholden to corporate interests as Republicans are. I personally think that there are better ways to increase American manufacturing without asking regular people to foot the bill, but that’s a discussion for another day. And yeah…if I were a retiree down there in God’s waiting room with you I’d be spending the rest of my days getting stoned on the beach during the day and driving a Corvette convertible to Jimmy Buffett karaoke and all you can eat coconut shrimp night.
Just guessing, but I’d say the North American content of my most recent car is the air in the passenger.cabin. Although, according to Trump, China has been stealing our good air and sending us their bad air for years, so maybe not.
Hmm, didn’t Druidia have really good air?
Haha! Yes, Perri-Air. Hey, I wonder what kind of air they have in Wisconsin? Dairy-Air?
Yes, but nobody wants to breathe cow farts.
Economically impossible? Build smaller, more-efficient, simpler cars with less bells and whistles, and take less profit margin per unit sold. Cut dividend payments and pay scales of C-suite if needed. Solved.
That would force customers to accept backsliding on features. That might be a good thing but it’s a hard sell.
“How do you get them back to the farms after they’ve seen Paris?”
Or Karl Hungus
Nuke Paris.
LOL.
Agreed, only car people want more basic vehicles. Literally anyone else wants as many BS features as they can get and they buy accordingly.
That would put the company under because they adjust their operating budgets every two to five years based on current positive margins. Their operating budget’s based, if I were to guess, on the 2022 financial year. That means they need to make at least half of what they did in that year to cover their operating costs. So what they’re likely going to do is not actually go for more final sales or increase the MSRP of the car, but force a guaranteed monthly wealth extraction through even more subscriptions. They’re going to go rent-seeking.
Paying the $50,000 for your base model mid-size sedan will be the entrance fee to a triple digit monthly subscription on top of every other cost for the car.
The low end of the car market of size and feature set is already incredibly slim-margined, and is even more susceptible to economic swings. Reducing margin per vehicle even further on some of the cheapest models would move them into an entirely unprofitable place, which would be by definition, economically impossible.
Not to mention that while every vehicles sales will be impacted by large tariffs, the cheapest cars in the NA Market are all foreign built, which means they are all effectively guaranteed to have the maximum percentage hit, while middle tier vehicles built in the US may not be to the same extent.
The point the article was making, is that the cars built in the US might actually get hit WORSE because of individual parts collecting tariffs as they cross the Canadian and Mexican borders into the USA. Where as a complete car from Asia will only collect tariffs once.
So yes- cheaper vehicles theoretically have less margin to absorb the tariffs, but ironically it’s the American cash cows (trucks) that have been subsidizing low-margin entry level vehicles, and R&D for new vehicles and EV tech.
It’s a big double whammy that makes everything more expensive all at once. Just goes to show how poorly considered all of this is.
lol
Yes. Dictating what the consumer wants to the consumer certainly worked for the Soviet bloc.
That’s exactly what has been going on in the USA for the last 25 years. You’re endlessly told that you WANT an SUV, even if you can’t afford one, even when a sedan is capable of providing the same or an improved level of comfort, utility, and/or safety at a lower cost and reduced operating expense for the application it is actually used for.
You can buy any vehicle you want, as long as it is a needlessly-bloated, designed-by-committee, high-margin, feature-laden, soulless appliance vehicle designed to appeal to 95 IQ housewives that will gladly and unnecessarily drive their husbands into crippling debt and threaten divorce thereof to force the purchase of said vehicle all in order to impress the other soccer mom’s they are competing to show off to.
The only ones actually benefitting? The auto manufacturers and the banks financing the entire scheme.
The money is now drying up. Government bailouts incoming.
‘Does this bother President Trump? He reportedly warned automakers not to raise prices, though he told NBC News this weekend that “He couldn’t care less” if carmakers did.’
Dementia’s a mean bitch, ain’t it?
They’re already making legal arguments for him to seek a third term when he’ll be *checks notes* 82. I was told by conservatives that that that makes you unqualified to lead the country but I guess that only applies to Dems.
It’s okay if you’re a Republican.
I wish that was snark.
In Futurama, Nixon got another term in the year 3000 by having his head in a jar placed onto a new robot body. Hopefully, this is the strategy.
I don’t get that CT5 comp to the Lexus GS. The model has been out of production for a few years now so I don’t understand how it’s relevant to all this tariff nonsense.
I think it makes sense to show an example of how two similar cars would be affected. The foreign car would be hit with the tariff once, while the “domestic” could be hit multiple times. The make and model is irrelevant, but point is still there.
And, also, I meant the IS.
My Eunos Roadster probably has a NA parts percentage ranging from 0-0%. No idea on the Sienna, but I know it was built in Indiana. I’ll go with 35% just to put a number on it.
I don’t know if Lucille and Trump would get along that well, I mean, she was actually fun at parties/drinking contests
Yeah he’s too busy oggling his own daughters.
Yeah, Lucille didn’t have that problem, she only liked two of her kids and it was completely platonic
Pretty sure “daughter” is singular.
My 69 chevelle most likely is the most american, followed by my 88 comanche- which was partnered with renault for parts. So a big drop in 19 years.
Single dumbest man who ever lived.
He has children, so…..
Those are just the fully-grown homunculi of the Florida swamp demons he sold his soul to in order to live the life he does.
You know that they are all diehard NYC people, though. Right?
I know a Florida swamp demon when I see one.
Sitting this one out today, enjoy, everyone.
I too, am going to save myself 10-30 BP points and stick to commenting on Arrested Development memes.
I see ducks outside. What do you see?
Mostly storm damage. Had some serious wind come through yesterday and lost a few trees, including one big one.
Fortunately it fell away from the house this time and we never lost power. Lots of people in town not so lucky.
We had crazy storms last night. I was staring out the window thinking that if a tree fell on my GTI, I could get a car with a functional infotainment system and real buttons… I would really miss driving her though.
I walked the dog at 6am this morning in the dark. Two ducks were waddling down the sidewalk near my house. The nearest body of water is a quarter mile from the house. The dog and I both looked at each other like, “WTF is going on?!”