Tariffs [ADMIN WARNING: NO POLITICS; POLICY DISCUSSIONS ONLY]

[jkernitzki]

If a US built vehicle has 50% of its parts made outside the US (conceivable ) then what will be that impact ?

According to the AALA MY2025 report, the Bronco Sport is 36% US made, so 64% is coming from other countries, with Mexico, Canada, and Spain representing the largest share.

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[Dadio]

According to the AALA MY2025 report, the Bronco Sport is 36% US made, so 64% is coming from other countries, with Mexico, Canada, and Spain representing the largest share.

Yes , this is a great example. The current USMCA North America trade agreement allows car parts to pass between Mexico / USA / Canada without tariffs (import taxes) being charged and effectively allows the automakers to manufacture or buy components where it’ most cost effective.

 

[hellb0y]

Fords retail cost of all vehicles is partly calculated based on the sum of the landed cost of its components. Landed cost includes tariffs, material costs, insurance, labor, overhead fees and transportation. When any aspect of the landed cost increases it will impact the retail price.

It’s not clear if the proposed tariffs would apply only to finished vehicles from Mexico and Canada or also to the many thousands of components (interiors, engines, hardware) that also come from Canada and Mexico and China. If a US built vehicle has 50% of its parts made outside the US (conceivable ) then what will be that impact ?

In this case the tariff increases will also impact the price of US assembled vehicles that use these components. Either way , Ford or any other company will pass the costs to the consumer. So yes , call it a business expense or not - it will have an impact.

Interesting discussion ….

it’s clear now - anything 25%, Canadian energy 10%. This is broad…hard to understand why the US would want to start a trade war with Canada?! If they shut down the flow of oil & energy we will have gas at $10 and rolling black outs!

I can see reasons for Mexico, since the south border is a hot mess…

 

[sajohnson]

From CNN Business:
https://www.cnn.com/2025/02/01/economy/trump-tariffs-mexico-canada-china-increased-costs/index.html

Cars and car parts
"The US imported $87 billion worth of motor vehicles and $64 billion worth of vehicle parts from Mexico last year, not accounting for December, the top two goods imported from there that year, according to Commerce Department data. (December trade data is due out next week.)

Motor vehicles were also the second-largest good the US imported from Canada last year through November, for a total of $34 billion.

The auto sector is likely “apoplectic” about the new potential tariffs, said Mary Lovely, a senior fellow at the Peterson Institute for International Economics. US car companies have been able to keep production costs down by hiring lower-wage workers, particularly in Mexico, where much of their production has shifted to in recent years.

But that cost saving will essentially be erased if there’s a 25% tariff, she said. Car manufacturers are unlikely to move their production elsewhere, given they’ve made sizable investments in existing plants in both countries and it is difficult to source all the raw materials to build cars and their parts from other places."

 

[Major Kong]

Trade War>Currency War>Hot War
Qui Bono?
Hegelian lead up to the digital currency

 

[Mark S.]

it’s clear now - anything 25%, Canadian energy 10%. This is broad…hard to understand why the US would want to start a trade war with Canada?!

As I understand it, the Trump administration believes it has evidence that Mexican drug cartels are operating labs producing Fentanyl in Canada, and that the Canadian government isn't doing enough to stop them.

 

[RushMan]

My take on these Tariffs: Unintended Inflation that will take its toll on citizens, on household and business budgets, and on jobs. When companies lose money due to increased operating costs, the options are to streamline operations, cut material costs, and/or raise prices for goods and services.

 

[hellb0y]

As I understand it, the Trump administration believes it has evidence that Mexican drug cartels are operating labs producing Fentanyl in Canada, and that the Canadian government isn't doing enough to stop them.

“Evidence” —> make it public if it’s a concern! Let’s see this evidence…even if this was true, it would be much more helpful if the authorities from the 2 countries worked together, not creating this kind of reckless behaviour - again, I can see why with Mexico…but Canada is a rule of the law country!

And let’s be honest here, there is evidence of cartel in the Nevada caves cooking Fentanyl!

 

[RushMan]

The number of foreign and domestic brand cars produced in Mexico and Canada for the U.S. market may surprise you.
It surprised me.

 

[Dadio]

As I understand it, the Trump administration believes it has evidence that Mexican drug cartels are operating labs producing Fentanyl in Canada, and that the Canadian government isn'

Hi Mark, in October 2024 the RCMP (our Federal police agency) raided a Cartel operated lab that was operating in Falkland, BC, so this is documented and easily verified. It’s definitely alarming and although we have very small amount going south of our border, any amount and any lab and trafficking is unacceptable because it’s a risk to lives north and south. The tarrifs will hurt us all and possibly bring auto production to a halt by next week. However this crisis does create a dialogue and perhaps some major issues will be addressed and some good comes out of all this ….

 

[Colonel Angus]

What will a 25% tariff on products from Mexico do to Bronco Sport sales ?

Smart people will purchase cars made in the USA.

 

[jkernitzki]

Smart people will purchase cars made in the USA.

Or just wait until this is all resolved.

Speaking only for myself, I don’t need a new car, I just felt like getting one now. I can happily continue to wait. Mine hasn’t even been scheduled for production yet, so I’m looking at probably another 8 weeks at a minimum. There’s a greater than even chance It’ll be yesterday’s news by then.

 

[Mark S.]

“Evidence” —> make it public if it’s a concern!

You can search on the Whitehouse website for document. In the meantime you can check out Rob's post above.

https://www.broncosportforum.com/forum/threads/tariffs-admin-warning-no-politics-policy-discussions-only.13191/post-219979

 

[sajohnson]

U.S. auto industry is in the tariff crosshairs
https://www.axios.com/2025/02/02/trump-tariffs-cars

Cars that are made in America aren't only made in America — they're made across North America.

As a result, [name redacted] across-the-board tariffs on all trade with Mexico or Canada risks making U.S. autos much more expensive than foreign imports.
Why it matters: The U.S. auto industry could shut down within a week, by some estimates, thanks to these tariffs. Even if it doesn't, there is no automaker that's set up to operate in a world of high-friction North American border duties.

The big picture: With modern supply chains, a single component in a vehicle can cross the U.S. border between six and eight times before final assembly.

[The] order makes it clear that duty is payable every time any component crosses into the U.S. — there's no "drawback" allowed that limits the tariff to just the value added abroad.
Zoom out: What that means is that the 25% tariffs won't just be payable on full vehicles that have their final assembly in Mexico, like the Chevrolet Equinox or the Ford Maverick.

They're also going to affect nearly all of the components in nearly all cars made in North America, often multiple times over.
Aside from the actual tariffs themselves, there's also no infrastructure in place to even place a precise dollar value on all the components that travel back and forth, let alone fill out customs paperwork on them.
The bottom line: If you add up all the tariffs that are going to apply to U.S.-made vehicles, they could easily end up dwarfing total tariffs on finished cars imported from Europe, Japan, or Korea.

Far from boosting the U.S. auto industry, these tariffs, if they stay in place for any length of time, could end up decimating it.

 

[jkernitzki]

Warning: Geeky & oversimplified macroeconomic stuff follows. The price of avocados notwithstanding, this is a high-level (the macro part) observation.

Something that’s being overlooked is currency exchange rates. Since the announcement, and now, imposition of tariffs, the USD vs CAD and MXN is rising sharply (along with other global currencies).

What this means in simple terms is that the dollar buys more than even yesterday, and that trend is likely to continue as long as tariffs continue.

So, even a tit-for-tat tariff will hurt other countries far more than the US, even if one assumes trade was equal in the first place, which it isn’t. Taking those relative trade volumes into account means that the US can easily absorb tariffs against it while being extremely punishing to trade partners.

On top of this, the US’s ability to produce and manufacture internally outstrips Canada and Mexico for most goods. There are significant exceptions to that, but the net effect still favors the US overwhelmingly.

I just hope cooler heads prevail on all sides and we can all get back to bitching about the lack of physical buttons in the ‘25’s.

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