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25% Tariff coming soon (?)

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25% Tariff coming soon (?)

 
Old 02-18-2019, 09:14 PM
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25% Tariff coming soon (?)

Seems that the US Commerce Dep't has concluded its study on European import cars and is about to hand the report over to the president. Apparently, it says that European automobile imports pose a threat to US national security. To meet this threat, the president may call for a 25% tariff on European automobiles. Nothing is official as yet, but announcements may be coming soon.
As many of the cars we drive are European made, they will fall under the tariff levy. I am not sure if MBWorld and this particular forum is the correct place to discuss these possible events however. If moderators see a better place (or no place) for such a discussion, please accept my apologies for posting the topic here.
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Old 02-18-2019, 09:47 PM
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Seems an appropriate place to discuss the tariffs.

I'm not from the US, but in many other countries in Asia they have huge import tarrifs, some are 100%, 105%. What we may pay for here being $65,000 for a base C200 , it would cost AUD ~$200,000 in certain countries with no options. Thailand, Singapore, etc. Even Average cost of owning a car (Corolla) in Singapore : ~$226,000 – $231,600 (SGD) over 10 years.

The US has been lucky with world parity car prices for a long time - but that's because it has been the biggest market, has a huge population, made cars, etc, etc.

No one likes tariffs so I wonder what the President will choose.
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Old 02-18-2019, 10:26 PM
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If Trump does break his EU promise and invokes tariffs, many will walk away from buying their ordered cars. Myself and others were sweating it out last year with our 2019 orders, and most if not all were planning to walk way if it happened. EU has promised swift retaliation if he does.

I doubt if my buying a Mercedes is a threat to National security. More fake emergencies!
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Old 02-18-2019, 10:47 PM
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Your completely missing the point of the tariff threat.

The US wants to build the cars coming to the US, IN the US.

IF the European companies don’t build factories and invest in the US THEN the US will tariff the companies importing the cars, which yes will most likely be pushed onto the consumers.


FYI Mercedes Sprinters are fully assembled in Germany. Then disassembled and shipped as “parts” then reassembled in the US to avoid import taxes.

EU, Japan all the big car companies do this.....they keep the jobs for themselves.

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Old 02-18-2019, 11:31 PM
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^^ Except that's already the case with many of the volume sellers that Amercians actually buy. BMW makes their entire X range in South Carolina and sells to Americans as well as exports to places like China from here. BTW, that factory is the largest BMW factory in the world. Similarly, MB makes their C-Class sedans and GLC and some others in Alabama. Toyota as far as I know makes a lot of their models sold in the USA here as well. Issue is a factory as complex as a car factory relies on a supply chain and a lot of the parts going into cars are not made in the USA, but overseas. Those parts would be subject to the tariffs as well and impact all cars made in the USA, including domestic brands. That's why Detroit is strongly speaking out against the tariffs for example. Also a very likely outcome is that car manufacturers will expand in Mexico once the new trade agreement with Canada and Mexico is signed to avoid US tariffs and instead pay the much lower tariff for imports from Mexico. Even domestic brands may relocate to avoid the tariffs on parts. This is a complex web that needs to be understood. The EU could make the same argument about US car brands and force them to open factories in Europe if they wanna sell more cars there. Ford already makes their European models in the UK and they are now considering moving to Germany due to Brexit. I guess Dodge and Chrysler could start making their cars in Italy at the Fiat factories.

I have a C63S coupe on order, which is still made in Germany as opposed to the Sedan, but coupes are a niche product. I'm doing European Delivery at the beginning of May, which means I will have to pay for the car in about a month. Trump has 90 days to make a decision, so I'm hoping nothing will happen in 30 days.

Last edited by superswiss; 02-18-2019 at 11:36 PM.
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Old 02-18-2019, 11:40 PM
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I've got a fairly decent investment in Benz cars right now between my 2019 E450 Wagon and 2019 E450 Cabriolet. I'd guess if this does happen it'll increase the value of used euro cars 25 percent in addition to the new cars. Demand might actually increase for used euro cars since the new ones will be more out of reach. I'm hoping the tariffs won't apply to parts.
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Old 02-18-2019, 11:48 PM
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It's not like flipping a switch. Businesses need to build facilities, hire and train workers, reorganize the supply chain, and so on. It takes time and, more important, money. Meanwhile consumers will suffer .

The U.S. will see price inflation long before it sees outsourced manufacturing return from abroad. That shipped sailed a long time ago when big US corporations were given incentives to go abroad and build their companies overseas and order to exploit cheap labor. Tariffs only hurt consumers and will not reverse decades of US businesses going overseas. The new tax bill makes it even worse in that it provides them with even a lower tax rate for foreign income. The U.S. lost some 7 million factory jobs since 1979, the peak of manufacturing employment. ... No matter how dogmatically politicians lay their plans for bringing manufacturing back to America, no matter how financially dependent years-long factory workers are on their factory jobs, those jobs aren't coming back.

You not going to convince foreign governments to invest huge sums of money just to build in the USA. It's an internationally economy now, with plenty of other countries to trade with. Tariffs do not work. The trade deficit with China stands at an all-time high as we speak!

I hope all of you that have ordered cars get them before these tariffs kick in.

Last edited by rustybear3; 02-18-2019 at 11:51 PM.
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Old 02-19-2019, 05:05 AM
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If there will be a tariff it will probably take a few years before its applied to make sure that foreign car manufacturers can build facilities for building cars in the us. US is a huge market, and if they charged 25% more they would lose market share to domestic cars. So I wouldnt be worried in the long run, mercedes already have large car factories in the US and can probably build more as they have strong sales there. This might hurt selection though, niche cars like wagons and cab might not be sold or become very expensive.
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Old 02-19-2019, 09:13 AM
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Originally Posted by mobster600 View Post
Your completely missing the point of the tariff threat.

The US wants to build the cars coming to the US, IN the US.

IF the European companies don’t build factories and invest in the US THEN the US will tariff the companies importing the cars, which yes will most likely be pushed onto the consumers.


FYI Mercedes Sprinters are fully assembled in Germany. Then disassembled and shipped as “parts” then reassembled in the US to avoid import taxes.

EU, Japan all the big car companies do this.....they keep the jobs for themselves.

Sprinters are fully made in a North Charleston, SC plant. The deal was made in 2015. The first big customer was Amazon who ordered 20,000 vans. The Sprinter "parts kit" imports stopped long ago.
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Old 02-19-2019, 12:31 PM
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From Bloomberg (https://www.bloomberg.com/news/artic...lanet-fizzle):

"The EU vowed prompt retaliation if the U.S. goes ahead with the vehicle tariffs. The 28-nation bloc has prepared tariffs on a total of 20 billion euros ($23 billion) in U.S. goods should Trump follow through on his threat, which would chiefly hit Germany."

This has nothing to do with cars and everything to do with Germany. Read this op-ed (https://www.bloomberg.com/opinion/ar...h-germany-away).

Of course all of this ignores one simple reason for this negotiating tactic/threat:
"Currently, vehicles shipped from Europe to the US face a low 2.5% tariff. Meanwhile, cars built in America face a 10% tariff when they're shipped to the European Union."

Tit for tat. Candidly, I would just match their tariffs.
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Old 02-19-2019, 12:55 PM
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Originally Posted by nycebo View Post
"Currently, vehicles shipped from Europe to the US face a low 2.5% tariff. Meanwhile, cars built in America face a 10% tariff when they're shipped to the European Union.".
As always, things are not that simple. The EU tariffs try to protect the domestic production of passenger cars, something the USA is not very strong in anymore. American car manufacturers are focusing on SUVs and Light Trucks. The best selling vehicle in the USA is the F-150. To protect domestic light truck production, the USA imposes a 25% tariff on light truck imports, google Chicken tax, it dates back to Lyndon B. Johnson. Tit for that is already in place. The EU can't compete on light trucks with a 25% tariff and the US domestic car manufacturers are getting out of the passenger car business, because Americans are buying X-Overs, SUVs and Trucks.
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Old 02-19-2019, 01:36 PM
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No matter how high Trump raises auto tariffs, I would never buy a Chrysler, Ford or GM product. Unfortunately for the E Class, long term per annum US sales are less than 100k units and lately has been closer to 50k units.
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Old 02-19-2019, 02:32 PM
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Nationalism, protectionism and tariffs caused the great depression. Unfortunately President Trump is not a student of history. As a matter of fact, the man does not read and is poorly informed. He is reluctant to seek advice and prefers to rely on his "gut feeling". Tariffs are a tax on the people and they do not create jobs. As another OP mentioned, production will move to Mexico and imported cars will become even more competitive, forcing domestic manufacturers to move more production to Mexico. The EU will impose more tariffs on American goods, causing more lost jobs. In the end, all we have are losers on all sides. With all countries responding with a tit for tat, jobs are lost everywhere causing loss of consumption of goods. Recession if not depression follows. This genie is not easy to put back in the bottle even after politicians are voted out of office. Humpty Dumpty will not be put back together for a generation, if history is our guide.

It's surprising what one man can do when the congress of cowards can be bullied to the point of submission. We are seeing this now in the senate where no one will stand up for what they believe. Senators McConnell and Graham are the lead cowards, afraid they may lose their party nominations, if they do not cow tow to "dear leader".

Should we be worried? You can bet your sweet axxs, we should.
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Old 02-19-2019, 03:11 PM
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And yet China uses it to surreal gain for exposure to their market.

https://www.forbes.com/sites/baizhuc.../#22ae14187209

Tariffs have existed forever. Dumb but such is life.

What makes us slaves to cheap goods is our complicated and unfair income tax code. Switch to a consumption tax and there'd be no need to tariff at all. We'd capture our share of foreign profits on transaction...as most European companies do.
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Old 02-19-2019, 03:47 PM
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You are right. Consumption taxes are the most efficient and fair form of taxation. However the political party that brings it in will be voted out of office. Visible taxes on all goods remind us of who initiated them. In Canada we have had HST (sales tax) for 25 years and people are still peeved. Tariffs are buried into the retail price and are not visible. That is the reason politicians are not so reluctant to impose them in trade disputes. Most of the public think it's a penalty on the foreign exporter but in actual fact it's a tax on the end user.
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Old 02-19-2019, 04:16 PM
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Tariffs and quotas are legitimate way of leveling the field when under priced goods are being dumped in a marketplace such as Chinese cars labeled as Cadillac, Buick or Volvo. They are also used to protect nascent industry. On the political side tariffs and quotas are used to provide mafia style protection to favored industries such as the US sugar industry that has been protected for 200 years.

The US imports more cars from Canada and Mexico than any other country. Currently US tariffs on passenger cars (2.5%) are lower than our trading partners. As pointed out in a post above that is not the case when it comes to light trucks where the US already has a 25% tariff. IMO tariffs cause producers that wish to be competitive in a market will move production as close as possible to that market. That has happened in the light truck segment. Globalization in the auto industry is being gradually replaced by local production.
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Old 02-19-2019, 05:39 PM
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Good thread. It’s obvious a lot of people posting studied economics well in college. I don’t think Trump will dare go through with a 25 percent Tariff though. More like 10 percent in my opinion.
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Old 02-19-2019, 08:47 PM
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I think the tariff will be more like 20%.. And given his situation, Trump has little to loose. I think he will impose the tariffs pretty fast. When you look at what I drive, frankly I have little to gain or lose. But I think that American workers will get little out of eventual tariffs. The economy at this point is at nearly zero unemployment. If you walk, and breathe and can count to ten, you can find a job. What causes so many to remain unemployed is the fact that a lot of job candidates cannot pass drug testing. The meth and opioid epidemic has brought with it attendant unemployment.
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Old 02-20-2019, 07:43 PM
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Originally Posted by mickhoog View Post
Seems an appropriate place to discuss the tariffs.

I'm not from the US, but in many other countries in Asia they have huge import tarrifs, some are 100%, 105%. What we may pay for here being $65,000 for a base C200 , it would cost AUD ~$200,000 in certain countries with no options. Thailand, Singapore, etc. Even Average cost of owning a car (Corolla) in Singapore : ~$226,000 – $231,600 (SGD) over 10 years.

The US has been lucky with world parity car prices for a long time - but that's because it has been the biggest market, has a huge population, made cars, etc, etc.

No one likes tariffs so I wonder what the President will choose.
We pay 100% in HK which explains why we have models like the E200, E250 which are not available in the US. What I paid for my scantily optioned E250 I could easily nicely optioned E43 or a base S class in the US
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Old 02-20-2019, 07:58 PM
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Originally Posted by mister__p View Post
We pay 100% in HK which explains why we have models like the E200, E250 which are not available in the US. What I paid for my scantily optioned E250 I could easily nicely optioned E43 or a base S class in the US
The thing is too it is like a Tax on those who have less money leading to even more financial inequality between the rich and the middle class. Plus the rich get most of the income tax breaks too. I guess Trump truelly wants stirckly an elite class of the few and the rest of the people peasants that will do whatever he tells them they are gonna do. Might as well get rid of elections while we are at it. Just have one elite family I charge of the whole Shabang.

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Old 02-21-2019, 11:22 AM
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Tariffs affect each buyer of a product equally. In the US people with a higher income pay more in income taxes than people with a lesser income. The recent income tax reforms actually reduce many deductions so that more people will not itemize their tax returns. The few wealth taxes in the US are typically local such as tangible and intangible property taxes.
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