Automotive suppliers in the United States make up about 4.8 million jobs and, according to those suppliers, this constant back-and-forth over tariffs isn’t helping an “already-fragile” industry. The good news for suppliers is that those tariffs are on hold, maybe. I don’t know.
The Morning Dump is yet again dipping into supply problems. When we started writing these news roundups a couple of years ago, the industry was facing shortages of workers and, worse, a shortage of the materials necessary to make a car. The root cause was the global pandemic. What’s the root cause now? A global trade war that may or may not be happening. It’s not all bad news on the trade front. Tesla needs good news right now and it seems like President Trump is about to make cars cheaper… in India.
Toyota’s cars are extremely popular and the company can’t make cars like the RAV4 fast enough, but a recent explosion and the tragic death of an employee of a supplier that provides springs for the Rav4 is shutting down production across Japan.
Fear Is The Mind Killer, Uncertainty Is The Job Killer
One of the best reports I’ve read yet about all of the will they/won’t they on tariffs comes from Jackie Charniga at the Detroit Free Press, and I suggest you read the whole thing because it would be inefficient and unethical for me to just copy and paste all of it. The lede is stellar, but let’s get to the root of it:
“The number of communications going out to automakers from suppliers is undoubtedly in the thousands,” he said.
Commerce Secretary Howard Lutnick said Thursday that auto suppliers adhering to USMCA trade agreements could get a month’s respite from tariffs alongside their automaker counterparts — until Trump makes broader tariff decisions April 2.
Depending on their relationships, those communications from suppliers could either be pleadings for tariff relief or aggressive negotiation tactics to ensure automakers keep contract terms, Hearsch added.
“There are a lot of suppliers already at the edge of real financial distress,” he said. “They might ask automakers to pay ahead for parts orders; they can’t wait months for their partners to figure out how to deal with this.”
According to MEMA, which is the country’s vehicle suppliers association, the timing of this is pretty awful:
“The community of vehicle suppliers remains fragile from years of industry volatility, workforce shortages, supply chain disruption and the pandemic. Tariffs of this scale place a significant burden on U.S. manufacturers, increasing costs, reducing profitability, impacting American jobs and the industry’s ability to compete globally,” said Bill Long, President and CEO of MEMA, The Vehicle Suppliers Association.
Vehicle suppliers operate in all 50 states and are essential to the US economy, representing the largest sector of manufacturing jobs in the U.S. The tariffs have raised profound concerns across the sector placing additional pressure on the already-fragile supplier industry and its ability to operate absorb the costs, businesses, grow and invest.
A survey by MEMA showed that a six-month long trade war would cause 47% of companies to cut U.S. jobs and about a third to shift production outside the United States. This is a big issue for automakers, as supply chains take years to build and losing even one key part can shut down production for days, weeks, or even longer.
Tariffs Could Go Higher According To President Trump, Powell On Deck To Address Stagflation Concerns
First, the tariffs happened. And then they sort of un-happened. There’s a month-long pause in effect for most goods being shipped between Canada and the United States. Whether or not they’re coming back is roughly as vague as what Americans did or did not get out of all this hassle.
From Bloomberg, here’s what President Trump had to say about it:
President Donald Trump said tariffs on Mexico and Canada could go higher than a 25 percent rate imposed earlier this week, injecting further uncertainty into trade policies that have rattled markets and left businesses on edge.
Trump’s comments came in an interview that aired March 7, a day after he paused those tariffs until April 2 for Mexican and Canadian goods covered by the USMCA trade agreement he struck in his first term — a move that offered a brief reprieve for two major U.S. trading partners.
Asked in an interview with Fox Business host Maria Bartiromo if businesses would receive more clarity on his trade strategy, Trump responded “I think so, but, you know, the tariffs could go up as time goes by, and they may go up and, you know, I don’t know if it’s predictability.”
Trump imposed the duties on Canada and Mexico earlier this week — along with doubling a levy on China to 20 percent — moves he said he was taking to pressure those countries to do more to stop the flow of illicit drugs and undocumented migrants across U.S. borders.
If you’re thinking this might upset the market, it’ll be hard to discern the reaction between a bad jobs report and whatever Fed President Jerome Powell will say today.
India Might Get Cheaper Teslas
Tesla has had a bit of a rough quarter in some markets, though an end to subsidies sent sales spiking in Canada for a couple of days. The company is looking for new places to sell cars, and it sounds like CEO Elon Musk’s friend President Trump is willing to help him get India to reduce the country’s frankly ridiculous tariffs on imported cars.
Taxes on cars imported into India are as high as 110%, which Tesla chief Elon Musk has criticized as being among the steepest in the world. The EV giant last year shelved its plans to enter the world’s third-largest car market for a second time. It recently signed a lease deal to open its first showroom in Mumbai, registration papers show.
Musk has now found support from President Donald Trump, who has repeatedly railed against India’s high taxes and in an address to Congress on Tuesday slammed the country’s auto tariffs of more than 100%, threatening reciprocal action.
“The U.S. ask is for India to bring tariffs down to zero or negligible in most sectors, except agriculture,” the first source said, adding the expectation on New Delhi eliminating auto tariffs was “clearer than any other.”
See, someone is getting cheaper cars! It’s not us, but this should help absorb some potential capacity from Tesla’s plants, which could help with job creation, especially in the nearby Shanghai production facility.
Toyota Cuts RAV4 Production After Supplier Explosion Kills One Worker
One of the reasons I didn’t end up buying a Toyota RAV4 is that the idea of paying well above MSRP for a vehicle I might have to wait weeks for was not appealing to me. Toyota has not been hamstrung by bad products, but by the inability to produce as many as the market wants.
A supplier that provides springs for the Toyota RAV4 and Harrier had a rare explosion, which killed a worker and has disrupted production. This could impact availability of vehicles here in the United States.
After assessing the latest incident, Toyota Motor Corp. said on the evening of March 7 that it will suspend operations on three lines at two plants in Japan for the first shift on Monday, March 10.
The automaker will halt one of two lines at its Takaoka assembly plant, which makes the RAV4 and Harrier. It will also halt two lines at a Toyota Industries Corp. factory that assembles the RAV4.
The stoppages could impact output of RAV4 crossovers headed Stateside. Last year, Toyota sold 475,193 RAV4s in the U.S., and imported about 101,683 of them, or 21 percent of the volume.
A shortage of cars means nothing next to the loss of a human life, but if you’re in the market it’s something to be aware of.
What I’m Listening To While Writing TMD
Did you know that “Have You Ever Seen The Rain” by Creedence Clearwater Revival is a deceptively hard karaoke song? I tried this one out the other day and it was not as in my range as I initially thought.
The Big Question
What car do you see on the road that always makes you smile? For me it’s the Isuzu Vehicross.
The Murano CrossCab. I can’t help but smile at the absurdity. Also, convertibles are good and I wish there were more of them still being built.
Late to the discussion (thus the username), but….
Many other articles have comments bemoaning the lack of color on today’s roadways. Why am I the first one to say that colorful cars are smile-inducers? Somewhere in my vicinity lives a mint green Camry, a bright blue Mazda 3, and a few other colorful cars. The cars may be commonplace other than the color, but they make me smile.
Toyota is lucky it was only 1 worker killed in the dust explosion. It’s been 22 years since there was a similar explosion at a pharmaceutical plant in Kinston, NC; a city nearby to me. At the time I lived about 15 miles from said plant, and when it exploded it woke me up and rattled the windows in my house. 6 workers were killed and dozens injured.
TBQ; IH Scouts. Completely involuntary smile every time.
The automakers haven’t ponied up enough Republican campaign contributions yet. They will.
Cars in bright colors, rare cars, electric cars, etc.
I think all tariffs should be passed on to the customer and clearly marked on the invoice. This goes for all products, not just cars. The general public needs to see and feel the impact of Trump’s policies so they can understand how tariffs actually work (and maybe get that much closer to comprehending the decision they made in the voting booth).
“What car do you see on the road that always makes you smile?”
Can’t beat seeing a clean mid-century VW Beetle in the wild. “No punch back!”
But honestly any early aughts econobox that’s somehow in pristine condition always makes me happy.
I saw a showroom new Toyota Matrix in gold the other day. I was like the Fantastic Mr. Fox spotting Canis lupus.
Any car with a Jatco Xtronic CVT being used to its fullest potential. Can’t help but smile at perfect human ingenuity at its finest.
Bonus points if the rest of the car is also intact.
Wow, did you create an account just to post that? That’s next level! I like the cut of your jib!
What would be the fullest potential of a Jatco CVT? Lasting 100k miles?
They’ve been here for a while.
Your dedication always makes my day. Never change, bud!
“President Donald Trump said tariffs on Mexico and Canada could go higher than a 25 percent rate imposed earlier this week,”
Sure Donny… and we will see how well you do when we cut off the electricity and add EXPORT TAXES to the oil/gas and other resources we send you.
And you’ll see how happy Elon Musk will be with you once 100% tariffs are slapped onto Teslas and Starlink contracts get cancelled.
And think about how happy fund managers will with you as the value of their company shares continue to drop because people like me are pulling their money out of the US and are boycotting US companies and US products.
You know the whiny bitch of a CEO at the company that makes Jack Daniels?
Expect more whining from bitches like that.
You’ll find there will be a whole lot less love for you before long.
Please just hit us with a full-blown, Arab style oil embargo – we deserve it…
I’ve got an overtly racist retired cop uncle in Oklahoma on food stamps and medicare/aid (not sure which or both, as he’d qualify across the board) who is a huge Trump supporter. I know it sounds like a caricature of a redhat, but I am not making that up. 100% true and factual. He is going to get hit with the biggest shock of his life as the orange faced cotton candy haired clown (who wouldn’t dare make an announcement on April 1st lest we all figure out he’s a joke) and his capricious sidekick wreck what he has left of a life. And he’ll go down cursing the libs the whole way… He deserves it more than anyone I know, but without two brain cells to rub together, he won’t learn a thing.
Yep – PA is facing a bunch of PSU branch campus closures and almost every one of them will be in Trump country. A lot of it is just aging and youth population decline (coming to a state near you!), but it’s also a lack of state funds and lack of support for college attendance. Now they’re all crying “save our campus!” Sorry, you get what you vote for.
And we will enjoy the schadenfreude.
Why are Canadians so MEAN? /s
The two categories that are most smile inducing for me are the random survivors that have been decently cared for and are still out doing their thing, and the vehicles that just seem improbable from a major manufacturer (vehicross, prowler, crosscabriolet, aztek, ssr, pulsar nx, svx, etc.)
I couldn’t think of the words but that’s exactly it. It’s heartwarming to see a car out and about still doing car things long after most people would’ve scrapped it.
I saw a 30 year old Camry back in Chicago that was the spitting image of the one my sister bought new in 1983. Maybe it was the one she bought!
I love a random survivor as well.
36 year old Toyota Tercel.
48 year old Dodge Aspen.
Redemption arc from “who cares” to Heroes.
“What car do you see on the road that always makes you smile? For me it’s the Isuzu Vehicross.”
OG Mini.
Easy. The Nissan Murano Cross Cabriolet. Just knowing it exists makes me smile. I don’t know why.
Mad at you for making me visualize that abomination.
I saw one once with the license plate “oddball.”
In Canada, where they didn’t sell them.
I respected the dedication of that oddball.
What cars does the US have that the Indian market actually wants to buy? Dodge Rams? GMC Yukons? Chinese-built Teslas?
Old Ford Ranger, Nissan Hardbody and Geo Metro
“See, someone is getting cheaper cars! It’s not us, but this should help absorb some potential capacity from Tesla’s plants, which could help with job creation, especially in the nearby Shanghai production facility.”
Say what? Trump is certainly not negotiating with India so that India reduces tariffs on China.
Trump doesn’t think he’s negotiating with India to get reduced tariffs on China, but we all know that’ll be the end result.
I do not think you have a good understanding of Hindu nationalism if you think that they are going to surrender to the Chinese. The Indian car makers do not really need high tariffs to protect their domestic automakers from carmakers from the US because the market for $80k pickup trucks is limited. Making a big deal about making this concession is in order to sooth Trump’s ego.
As far as what I like to see on the road, imported vehicles that were never for sale in the US. Saw an awesome Jimny the other day with Mexico plates while at lunch, and a Holden Commodore SS, which may have actually been a Chevy SS with Holden grill and badges as it had Utah plates sanded was at least a 2013, probably newer.
There’s a charming little Chevy Tornado pickup with Mexico City plates near me. One of my favorite sights.
Many of our rural route mail folks are driving vintage JDM vehicles now. Our mail is delivered by a 25+ year.old Honda minivan that was never sold here.
Any 20+ year old underwhelming, workaday vehicle – think Camry, Escort, etc. – that has been well taken care of makes me smile.
I saw an absolutely mint Chevy Corsica a few weeks back, casually driving around in mid-Michigan. White with red cloth interior, just like the one my mom had in the late 90’s. Instantly brought a smile to my face but also a million questions!
The Geo Tracker and any of it’s various derivatives.
Side note, Jesse Welles and Mt Joy do a FANTASTIC cover of this song.
Welles is definitely a modern era Folk singer.