President Trump’s 25% Import Tariff
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2023 G550
President Trump’s 25% Import Tariff
The talking heads are out in full force today yammering about President Trump’s newly rejuvenated talk of a possible foreign (German) car import 25% tariff. One report I watched featured a reporter at today’s LA auto show, whilst he stood in front of Mercedes’ new GTR. He said the car costs $112,000, so if the President decides to press his big tariff button, this car will cost $28,000 more. He went on to say maybe this isn’t all bad, as buyers could instead choose to buy a Corvette, helping GM. Then he commented that anyone who can afford a $112,000 car will likely not be deterred by such a tariff. I suppose he is correct on this latter point, at least for the truly rich folk out there, perhaps of the likes of The Kardashian Gals!��
Thankfully, he is wrong assuming 100% of any such import tariff (tax) will be passed on to the consumer. It depends on the supply elasticity of demand, such that part of this tax will be borne by the producer, and part by the consumer. So, unless this reporter thinks the supply elasticity of demand is fully vertical, over the relevant range, the increased price to the consumer will be less than the full 25% tariff. Until some economist puts all of the pertinent data into their econometric model, from a quantitative aspect, this question cannot currently be accurately answered. For qualitative planning purposes, I am assuming it will be something of the ilk of half to each, as a very rough planning estimate. Let’s just hope the President rethinks this.
The other interesting effect to ponder is if any possible new President Trump tariff will apply to G63’s currently held at the ports, or for vehicles currently ordered with deposit (such as my G63), but not yet produced, and or imported. Who knows...
Thankfully, he is wrong assuming 100% of any such import tariff (tax) will be passed on to the consumer. It depends on the supply elasticity of demand, such that part of this tax will be borne by the producer, and part by the consumer. So, unless this reporter thinks the supply elasticity of demand is fully vertical, over the relevant range, the increased price to the consumer will be less than the full 25% tariff. Until some economist puts all of the pertinent data into their econometric model, from a quantitative aspect, this question cannot currently be accurately answered. For qualitative planning purposes, I am assuming it will be something of the ilk of half to each, as a very rough planning estimate. Let’s just hope the President rethinks this.
The other interesting effect to ponder is if any possible new President Trump tariff will apply to G63’s currently held at the ports, or for vehicles currently ordered with deposit (such as my G63), but not yet produced, and or imported. Who knows...
Last edited by JetRanger; Nov 28, 2018 at 04:57 PM.
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Joined: Jul 2018
Posts: 264
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From: Calabasas, CA
2018 G63 AMG x2, 2017 BMW M6
"Let's hope the President rethinks this". LOL. This is assuming he even knows how to think!! SMH!! I tell myself to not watch the news, don't get sucked into his black hole.....and yet.... 
