I’m sure most of us are utterly fatigued with the upending of trade norms and the frenzy around getting deals done before an arbitrary deadline, but the sun doesn’t set in the east for anyone, and this administration’s tariff-heavy approach is shaking the car industry as we speak. The European Union and the White House have settled on a deal that’ll see a 15 percent tariff on most items imported stateside including cars and parts, and while that’s better than a blanket 27.5 percent auto tariff, it means things are going to get more expensive for American fans of European cars.
Speaking of things that make people shake their heads, a report claims that a White House proposal is in the works to gut the EPA’s capacity to regulate greenhouse gas emissions, including those coming from tailpipes (though this seems unlikely), and Tesla appears to have discovered the human-driven taxi. On the plus side, students at a college in Kansas now get to look up in the atrium and see a legendary Ferrari, so that’s pretty cool.
Matt’s on vacation this week, and he’s left me the reins of The Morning Dump, our daily round-up of bite-sized pieces of car news that you’re gonna want to read. Normally, I’d suggest you brew yourself a cup of joe before tucking in, but given this particular news cycle, make that two coffees, or ten double espressos in a Venti cup, or screw it, just snort ground-up coffee beans at this point. (This is a joke; don’t do it).
The White House Has Reached A Tariff Deal With Europe
While cars from the European Union were initially expected to get whacked by a 27.5 percent tariff, a new trade deal has dropped that number to 15 percent, per the White House. It’s a number that still sucks, and it’s higher than the 10 percent figure reached with Britain, but one that seems less catastrophic than 27.5 percent. After all, these European brands — Ferrari, BMW, Porsche, Mercedes-Benz, basically any luxury car brand with a U.S. presence aside from Alfa Romeo — lean heavily on the U.S. market. Is this tariff deal good news? Well, sort-of? As Hildegard Müller, president of the German Association of the Automotive Industry wrote in a statement:
It is fundamentally good that EU Commission President Ursula von der Leyen and US President Donald Trump have announced a framework agreement and thus averted a further escalation of the trade dispute. Thanks also go to the Chancellor for his efforts.
What will now be crucial is how the agreement will be structured in concrete terms and how reliable it is.
But one thing is also clear: the US tariff of 15%, including for automotive products, will cost the German automotive industry billions annually and will burden them in the midst of the transformation.
Prior to the current disorganization of everything, cars brought into the United States from the European Union faced a modest tariff of 2.5 percent. Considering that roughly $45 billion worth of cars flowed from the EU into the United States last year as per the U.S. Census Bureau, that would’ve resulted in about $1.1 billion in tariff revenue collected. Sextuple that, and we’re going to see both a drop in demand and an increase in prices as manufacturers pass tariffs onto consumers. Yes, that means you’ll probably be paying at least some of the tariffs, should you buy a car made in Europe. It’ll likely be less impact than we’d have seen at a long-term 27.5 percent, but man, it still isn’t great. Plus, even that 15 percent rate comes with strings attached. Per Automotive News:
The EU agreed to purchase $750 billion in American energy products, invest $600 billion in the U.S. on top of existing expenditures, open up countries’ markets to trade with the U.S. at zero tariffs and purchase “vast amounts” of military equipment, Trump said.
Bernd Lange, the German Social Democrat who heads the European Parliament’s trade committee, said the tariffs were imbalanced and the hefty EU investment earmarked for the U.S. would probably come at the bloc’s own expense.
Trump retains the ability to increase the tariffs in the future if European countries do not live up to their investment commitments, a senior U.S. administration official told reporters July 27.
Knowing that the 15 percent tariff rate isn’t exactly set in stone doesn’t make this deal seem like phenomenal relief, even if some promise of stability is here. Also, car parts will be covered under the blanket rate, so your quality made-in-Europe oil filters, suspension components, and speed parts? Yeah, expect prices on them to stay elevated. Of course, there’s still a lot we don’t know about this blanket trade deal, but in the context of cars, American car buyers and European manufacturers both seem to be the losers compared to the state of things in 2019. Maybe it’s just me, but threatening to increase a cost of business by 1,000 percent then settling on a 500 percent increase doesn’t seem like strategic dealing with a key ally.
Maybe Don’t Panic About The Latest Emissions Rumors Yet
Speaking of government dealings, there’s a new report bubbling up out of the ooze of Washington. Relatively hot off the heels of the revocation of California’s ability to set its own emissions standards, the Wall Street Journal reports that the current administration is working on repealing a key declaration that gives the EPA the teeth to go after greenhouse gas emissions.
The proposed Environmental Protection Agency rule rescinds a 2009 declaration known as the “endangerment finding,” which scientifically established that greenhouse gases like carbon dioxide and methane endanger human lives.That finding is the foundation of the federal government’s only tool to limit the climate pollution from vehicles, power plants and other industries that is dangerously heating the planet.
That doesn’t seem like a great thing, and it’s probably not set in stone considering how it seems to fly in the face of Massachusetts v. EPA, a judgement that found that states could sue the EPA if it didn’t regulate greenhouse gases. However, we do live in weird times, so who knows.
If this reported plan goes through, will it immediately affect tailpipe emissions? In many cases, probably not drastically. After all, most cars these days are engineered for global markets, and so long as other jurisdictions maintain vehicle pollution restrictions, the vast majority of new cars in America shouldn’t change much. Plus, there’s also the role of consumer demand. In the age of the four-figure car payment, drivers really don’t like rabbit-earing their pockets at the pumps, and hybrids continue to be hot stuff for shoppers looking to save on running costs.
Oh, and then there’s the simple fact that the car industry is one of long lead times. It takes years for a new car to go from early ideation to production, meaning much of the near-term future of the automotive landscape, say over the next three-and-a-half years, is pretty much set in stone. Outside of dedicated U.S.-market vehicles like heavy duty pickup trucks, no matter what happens, expect showrooms to remain more-or-less the same for now.
Full…Human Driving?
In the wake of announcing autonomous taxi service expansion in Austin, Texas, Tesla claims it’ll be launching Robotaxis in San Francisco, except they won’t be autonomous taxis in the same manner as Waymos because, well, the automaker reportedly isn’t allowed to do that because it doesn’t have the right permits. Here’s the reality, per Reuters:
With the Bay Area service, Tesla “is not allowed to test or transport the public” in an autonomous vehicle, even one with a human safety driver, according to the CPUC spokesperson, who added Tesla can only transport people using a human driver in a “non-autonomous vehicle.”
The spokesperson said Tesla told the CPUC on Thursday that it plans to offer rides to “friends and family of employees” and “select members of the public” under a permit the company has that allows a human driver to transport passengers in a “traditional vehicle” for “charter services.”
See, this whole thing started on a July 23 earnings call, when VP of AI Ashok Elluswamy announced plans to start up a Robotaxi service in the Bay Area “with the person in the driver’s seat, just to expedite, while we wait for regulatory approval.” However, Reuters reports that Tesla hasn’t applied yet for the proper DMV permits to test autonomous vehicles without safety drivers or transport paying passengers. The result isn’t a Robotaxi, it’s just a taxi. Sure, FSD will be used because it’s not actually self-driving and instead classified as a Level 2 system that requires constant human monitoring and potential human intervention, but pretty much every car on the road these days comes with Level 2 autonomy, and your last Uber ride probably used at least some of those features.
The Talk Of Campus
Why does it always seem like everyone’s alma mater gets some serious student life upgrades just after they graduate? From new cafeterias to serious investments in campus commons, upgrades to student life tended to miss many of us by a whisker. However, even if the school you graduated from now has a cooler campus, there’s always something to show that up. McPherson College in McPherson, Kan. might have the coolest campus commons showpiece of all, because it now has a Ferrari 365 GTB/4 hanging in its atrium.
Not exactly. See, McPherson College is the only institution in America offering a four-year Bachelor of Science program in automotive restoration, covering everything from paint to metalwork to small parts to trimming to mechanicals. It’s a seriously legit path of study, producing some high-grade results. A 1953 Mercedes-Benz 220 S restored by its students managed to podium in the Pebble Beach Concours d’Elegance back in 2023. Add in two scholarships established by Jay Leno, and suddenly the suspended Daytona makes a ton of sense.
What I’m Listening To While Writing TMD
It’s Monday, which means it’s time to get pumped up, and “Coast 2 Coast” by Michigan-native producer GRiZ featuring renowned grime MC Flowdan is just the ticket. From the trippy visuals of the video to the thumping drumline, this saw-heavy track has some serious groove to it that goes well with enough caffeine to jumpstart a megalodon.
The Big Question:
How have tariffs affected your personal automotive experience? Have you put off or fast-tracked a car purchase, been dinged on parts, or hurried up with non-critical repairs and/or modifications in anticipation of change?
(Top graphic image: Mercedes-Benz)
The tariff war/rhetoric/psycho babble (and interest rates, TBH) has pushed me into committing to a couple thousand dollars in repairs and replacing consumables (shocks and struts) for my 13 year old truck that I’d have otherwise likely traded off.
It should hold me for several more years, though the road salt is taking its toll on the sheet metal. I’d love to get a new one, but a car payment higher than my first mortgage payment isn’t something I’m ready to stomach.
Thomas, any chance you could give us a few iconic music videos of Nu Rave this week? I’ve always wondered what it is exactly since the first time I read your little bio thing on this site.
Does the video today fall into that genre? It sure is bangin!
I do appreciate the acknowledgement that the potential effect on consumer prices isn’t cut and dried. Many news outlets considered more distinguished than this one usually just throw in a little link with the text “consumers pay tariffs” or similar.
Reality, of course, contains a surprising amount of detail, and this topic is no exception. Consumers seeing increased prices from tariffs is certainly the Econ 101 approximation, much as cows may be approximated as perfect spheres.
Second order effects are even harder to predict. This is essentially the argument that proponents of unrestricted free trade make: it’s too hard to predict so we shouldn’t do it. There’s value in that, but I think we’ve learned that leads to a hollowed out service economy where you’re dependent on other countries for all your critical inputs. So we’ll need to find the balance, but increased trade barriers are here to stay in one form or another.
There are NO news organizations as distinguished as this one.
Agreed. Not anymore anyway.
I had been looking for an 8th or 9th gen Civic Si Sedan for a while, when one popped up for sale last September I jumped on it and bought it while I could. Prices on used cars have held, or possibly increased a bit since then, and I didn’t want to be in a position where I HAD to buy whatever I could find if my 200K mile 03 Civic LX decided enough is enough.
Working for a Tier 1 sure has been interesting though.
My “personal automotive experience” hasn’t been impacted yet. But I work in the legal department of a domestic Tier 1 so my “professional automotive experience” has been heavily, depressingly impacted.
Same here – no personal effect but big professional ones. I work for an automaker so tariffs mean there is basically zero chance of a bonus this year. But at least I still have my jobs unlike others who have been laid off.
We’ve had several tier 1 suppliers go under due to the raw material tariffs. I suspect doubling steel and aluminum tariffs to 50% and adding in copper will only accelerate that trend.
Odd that Trump is wrecking the industry that he pretends to be helping.
So does the EU tariff deal override the chicken tax? 15% is better than 25%. So maybe I can finally get a VW PHEV T7 van? Please?
I know that it would have the opposite effect of what is intended by the tariffs, but I really hope they screw up and accidentally eliminate the 25 year import rule. I’ve had my eye on the second gen aqua (Prius c) and the prices are hovering around 10k USD for used with 50k km. There’s so many A segment cars that I am interested in both euro and JDM we won’t get for 20 more years
An “announcement of a deal” is not significantly more important than a “concept of a plan”. Lemme know when it’s written out and signed by all parties.
Then again, a signed document isn’t very important unless there’s some sort of enforcement in place. See also: US Constitution.
Yup! I’m a licensed custom broker and until we receive guidance from US CBP, nothing is set in stone.
Also, it will most likely be 15% on top of the regular duty rate, not in place of.
Oh yeah, I saw this coming a long while ago.
I got a lamp I always wanted. Ordered it ASAP, and it was delivered in mid-May.
I got the W204 C63 Edition 507. That got the Continentals it should have, and I’ve been going through it and getting it sorted to where it’ll be like an 18-month old car.
There’s paint and cosmetic work to do, plus some proper Alcantara replacement, but that’ll be all US labor when it starts getting done towards end of year. I think Tamco
So I mostly avoided it by pushing up my timeline, just getting everything done.
It is always funny to watch people attempt to understand tariffs because it is like looking back in time to when Mercantilism was the primary economic model. But the pro-tariff crowd is so ignorant of history that everything old is new again.
Taxation happens for a lots of reasons, but we could simplify a bit and create two general categories. The first is to fund the government’s necessary activities, and the second is to influence the behavior of citizens, businesses, or other governments.
On the first category, generally, it is best to pay for the things the government does by taxing the people who benefit most, to avoid moral hazard issues where a group of constituents encourages additional taxation because they benefit more than they pay. An example would be international petroleum and other corporations and the U.S. Military, or the court system and the very wealthy who are the ones who reap the largest financial benefit from a generally stable and compliant population.
The second category includes things like high taxes on tobacco, which are intended to reduce an unhealthy activity. Despite counterintuitively, the fact is that smokers tend to require less healthcare over their lives than non-smokers because they just up and die rather than live with protracted illness.
Tariffs are sold as the second category because they are designed to change behavior. The behavior they want to change is access to low-cost labor and natural resources. The issue with that is that the incentive to find lower-cost labor and resources is the very foundation of capitalism, and if corporations pay more to access it overseas, they will want low-cost labor and resources at home. U.S. labor costs are more than they are in most places overseas, even with the tariff, so it won’t do much for the job market here. Especially since the tariffs are applied to the things those companies need to do the work in the U.S, like steel and Aluminum.
The dumbest part is that the degree to which the tariffs do encourage domestic production, it will increase the cost of things beyond any potential increase in wages for the people in lower economic castes. The population in the United States enjoys its standard of living exclusively because we have access to low-cost resources and labor overseas.
If middle-class people in the U.S. needed to pay everyone who works on everything they consume the same hourly/yearly rate that they earn, they would have a tiny fraction of their current wealth. That is what tariffs are designed to do.
Tariffs are sold as the second category because they are designed to change behavior. The behavior they want to change is access to low-cost labor and natural resources.
Historically yes, like silver tariffs in the 18th century, 1. you’re trying to prevent foreign imports from undercutting the domestic products, 2. you’re leveling or even skewing the playing field to promote increasing production of domestic products.
However, history is dead, long live Newspeak: Trade is supposed to be 100% balanced, any delta between one country and the US is “unfair” period! (yeah yeah, Sony in the 70’s) Not only is this ridiculous as there is no domestic cocoa or coffee, but it pretends that Germans are dying to purchase… What? F250s? Are there actually any US cars that would fill the average German’s garage? Not to mention the (justified) quality issues, and price. Of course all this ignores the lie, that fits into neither category; the country pays the tariffs. The president is bragging that we’re swimming in cash from tariffs, so he’s bragging about how much money his new sales tax is getting sucked out of America’s pockets.
Lower expenditures for Social Security and retirement too.. And nicotine is (imperfect) self-medication for ADHD, which would increase productivity if we could all smoke at work like we did when America Was Great. The vast majority of tobacco production from farm to lung was domestic (and exports are still, um, healthy), so it would keep more of our money here and attract more from overseas.
“Yo dawg, I heard you like taxes, so now you can pay an import tax on top of your sales tax, and your registration taxes.” – Howard “Epstein’s neighbor” Lutnick
“But you know what, if my 94 year old mother-in-law had to pay an import tax, she wouldn’t complain.”
Before I got my 25 Leaf S I was under contract for a 2024 Jeep Wrangler Sport 2 Door V6 6MT. It was the last of its configuration in the country unsold (hardtop with trailer tow package). During the test drive the dealer discovered something wrong with the suspension and took it into their shop. Dealer ordered the parts to do a warrantied repair (thing had like 20 miles on it, was still brand new). They got all the parts necessary except for one, and after a month of waiting Jeep Corporate still didn’t give them an ETA on the part so they were reaching out to other dealerships trying to find if they had one in stock they’d part with. Meanwhile Jeep was putting said part on OODLES of 2025 Wranglers, yet refused to allocate one part to a major Jeep dealership or at least give them an ETA between now and the heat death of the universe.
This was just after the tariffs were announced but before the tariffs kicked in. I don’t know where that part was made but it likely wasn’t the USA, and my thinking was ‘If Jeep Corporate won’t allocate a part they have so many of they can mass produce Jeeps with said part, to a major dealership, to fix a new Jeep they built wrong and still sent to the dealer, what’s going to happen when my used Jeep needs a part, and the tiny Jeep dealership in my podunk little town in my podunk state requests one?
So I canceled my contract. 4 Days later I got my 2025 Leaf S for ~$8500 under MSRP with free delivery.
Given a manual Wrangler and Nissan Leaf are on different ends of the spectrum, I’m curious what your intentions were given you were cross shopping them.
In town runabout for short jaunts 99% of the time.
With the Jeep I would have put the new BFGs on it, put lockers in it front and rear, an engine block heater, put a winch on it, hard plastic floor, and a clear “freedom top” but otherwise kept it stock.
With the Leaf I did what I planned on doing if I got it, put plastic floormats in, put a NISMO (by Quaife) 2 Way Helical Limited Slip Diff in it, put Michelin Crossclimate 2s on it, and while the tires were being put on have them leave the wheel covers off the steelies.
The Leaf was definitely the more practical of the 2 options for my use case 99% of the time, though I prefer the manual locks, hand crank windows, manual rear hatch release, manual mirrors, etc. of the Wrangler, and having 4WD with straight axles and lockers front and rear would be nice.
Where I’ve been the past two years it gets very frigid during the winter but we hardly get any snow. I’ve been told it has been unseasonably light when it comes to snow these past two years, but for the way the winters have been I doubt that 4WD is necessary for the driving conditions here as my main concern is black ice which really nothing is good at dealing with besides studded tires.
A Fiat 500e would almost certainly be more practical for me than either the Leaf or the Wrangler, but I can’t get a LSD for it, and it comes with stupid electric door handles which I refuse to purchase, also I still would have to deal with Stellantis.
The thing is, the Wrangler has been using the same suspension since 2019, so whatever part you needed most likely had an aftermarket Moog equivalent available down the street at Autozone or Advance.
I’ve heard of an issue where the cams in the 3.6 go bad, and there’s a big issue getting those because they’re only available from the OEM.
Call me old fashioned, but I think if you fuck up building a car, and the dealership that received that fucked up car asks for the parts necessary to unfuck your fuckup, you should allocate them IMMEDIATELY. I would have paid out of pocket for the factory parts even though I shouldn’t have had to.
Instead they dragged more ass than a dog with worms.
I agree, I should have clarified I was talking to your point about finding parts in the future.
The dealer really should have just grabbed one off another vehicle on the lot to be order to facilitate your sale.
No worries. Maybe they could have managed that, but that was probably their last ditch effort, and they didn’t offer that when I told them I was seriously considering canceling the contract.
Instead they offered to place an order a 2025 Wrangler that hadn’t been built yet, which I didn’t want because of the now mandatory electric locks and electric windows.
Wranglers do have pretty decent aftermarket parts availability, but as you said in your comment above it could just as easily be an issue with something much harder to replace (like the cams) in the future and by then it’s a used Wrangler that needs parts requested by a Podunk Jeep Dealer in a Podunk Town in a Podunk state. If they won’t allocate new parts currently in production to fix a new car they built wrong, I doubt the odds will go up when it’s used, in my podunk state.
My Alma Maters engineering building has a Rolls Royce Trent 1000 Turbofan engine, designed for the 787 Dreamline, hanging in the Atrium, which is pretty incredible. Rumors were that the first one they tried to install got banged up and ruined in transit, so RR sent us a second one to hang, and the buster up original is in storage somewhere on campus. It is slightly unnerving walking under a 14,000lb engine hung by a handful of wires, but the building was sort of built around it, so it’s hung in the midst of several open floors, so you can see it from a dozen different angles and really take it in.
Does this apply to used cars?
Details to follow but it looks like everything from the EU will have a base 15% tariff and some will have additional segment specific tariffs.
Basically everything from the EU just got 15% more expensive because the idea that this isn’t going to get passed on to customers is a fantasy. That is what happened last time around and it will happen again
It sucks for everybody. You’re being taxed on EVERYTHING you fucking morons. Where’s the rage? I use the Edge Browser at work which has built in price trackers and sure is a coincidence that the price of lots of things I look at has gone up about 6% on average in the last month.
I just bought a full set of struts that were 7% higher than usual. Coincidence, I’m sure.
It inadvertently expedited our most recent car purchase. The leading candidate was a CX90, so I made my wife drive it and a few others to see which one she liked. She picked the Pilot, so likely we would have been fine to wait, but she got the taste for a new car, and we had the funds, so I found and worked out a deal that worked for our budget. I was planning on waiting on Honda to announce the ’26 MY changes before buying, but we were given a price under msrp, and a trade in offer too good to pass up on
I’m sure I’ll see some nasty increases when I take the Macan in for service next month. Luckily it’s under warranty for any repairs for a few years but that service using “genuine parts” is likely going to suck even more than usual.
I’m still not going to make a purchase decision based on that though. I’ll buy the vehicle I want in the best shape I can afford. Hopefully some of them do come over here and build capabilities to service us locally but I doubt Porsche is going to be one of them anytime soon.
We need one of The Autopian designers to design what Porsche would design and build in the US to deal with the changing market.
You know how manufacturers went all-in on California way back in the day? Well, it’s time for US to learn about the Porsche Missouri and how it appeals to the modern day American’s needs for luxuries, design and performance.
EDIT: Remember, Porsche originally was considering creating actual gun racks for the Tequipment accessories catalog for the Cayenne.
Ha, so many cupholders. Porsche would have to bring in all new talent for it because they give absolutely no thought to it now.
I support this experiment. I would love to see the Porsche Missouri, a Porsche-ified VW Atlas, to be built right here in Chattanooga.
You got a Macan AND a Boxster?
I do yes. I am a glutton for car maintenance punishment but they are pretty nice and reliable otherwise.
I’d love a Macan, but I’d feel like I’d be abusing it with my short 4-mile commute.
Honestly, my wife and I both work from home. We probably put a combined 6K miles per year across the two cars.
They are both a blast, they are both paid for but the maintenance cost does not at all make any financial sense for how we use them. Once one of us retires I’ll likely sell the Boxster. Maybe. If I can.
I really just need to find a good Porsche specialist, independent mechanic around here. If anyone knows of one in the North Atlanta metro area please let me know!
They are definitely emotional purchases that defy logic which is the hurdle I can never overcome.
I work in an auto repair adjacent industry and we are definitely starting to see prices climbing. Its been quite a roller coaster as we try to plan our business for the next year or two, as impact of tariffs and inflation are a key factor in our plans, and the instability has made planning quite difficult. Personally, I’m not impacted yet, but I expect to be on the repairs and maintenance side.
Not only this, but think also in terms of how much insurance rates will increase to offset the higher prices for replacement parts and labor on claims.
Tariffs haven’t affected my automotive experience yet. I have no plans to buy a vehicle anytime soon, although my wife was talking about it to beat the tariffs but I was finally able to convince her that making a large purchase right now isn’t the best move.
This probably would have affected my racing endeavors, as my 24 Hours of Lemons racer is an E30 BMW, but I just decided to retire it from racing. Part of the reason was that parts aren’t cheap and easy to find anymore. When I first started racing pick-a-part yards were overflowing with E30s and I was working for parts distributor where I was able to buy parts at cost. I saved literally thousands of dollarts. Nowadays if I need a part I have to buy a new one from one of the several online retailers of Euro car parts and pay shipping too. It was getting a little rich for my blood already and now 15% tariffs on top sealed the deal.
This trade “deal” is another “framework”. Foreign leaders have learned that they can distract with a shiny object and then get down to real numbers at a later date. Or, when the headlines have moved on to something else there won’t be any changes to current policies.
“The concept of a plan”
Kind of saw this coming back in November last year.
This’ll be interesting for the mainstream luxury German manufacturers. I suspect they’ll phase this in over a few years, willing to eat margin now, as just spiking their prices will cause a significant customer backlash. They’ll instead boil the frog slowly.
Much of it is in the event things are eventually reduced or eliminated entirely, their pricing structure won’t whipsaw and elicit yet another reaction from their customers.
This will be interesting. Luxury car spending started to contract in Q1 2025, and has been on the decline since. Any immediate price adjustments will hasten the decline, which will cause concern for the manufacturers as their US sales volume in some cases is back down to 2018 levels at the moment, and they could be on the road to heading back down to 2010 levels. That’ll be interesting.
I wonder what the response will be. I’d hope it’d be less gadgets and just focusing on stuff that matters, at a higher quality. Which itself is an opportunity to eliminate points of failure in all of those accessory systems, and increase perceived reliability.
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As for helping US auto sales, I’m skeptical. There’s some segments the Americans just don’t compete in. Crossovers and full size SUVs? Sure. But people still buy sedans and coupes, and there’s nothing to buy over here in that segment.
Honestly, I wonder if the real effect is the further of decline of traditional 3-box vehicles in the US, leaving only the Japanese and Koreans to serve that market.
That’s always been one of my sticking points with this legislation. Despite my far left leanings I think helping American jobs is a good thing. Strong American automotive manufacturing is good for everyone. It means more unionized middle class jobs and the benefits that come along with them, it stimulates local economies in areas that have historically struggled, etc. Bringing back American manufacturing is one of the very few things I can agree (in principle, if I squint really hard) with the current administration on.
But you’re 100% right. There are multiple classes of cars that American companies have just given up competing in. They have no sedans outside the luxury segment and their crossovers are a generation behind the Asian competitors in every class. Unless you’re someone that only buys American why would you choose a Traverse/Acadia over a Highlander? They’re roughly the same price but the American versions get way worse fuel economy/have no hybrid option, are less reliable, aren’t as well put together, and have worse residuals.
It’s the same story with CUVs. There is 0 reason to choose an Equinox or Escape over a CRV, RAV4, or even a Tucson/Sportage. When it comes to the small ones that are essentially lifted hatchbacks, which sell in pretty substantial numbers (I don’t think I ever drive any substantial distance without seeing Konas, HRVs, etc), the only good American offerings are *checks notes* made by South Koreans in South Korea.
If you want a BOF truck or affordable sports car then I would have 0 reservations about recommending an American car…but that’s it, and unfortunately I don’t think trying to weaken the competition is going to inspire the American companies to make better cars. Unfortunately that’s not how capitalism works. The idea that corporations and well off individuals will simply choose to do the right thing for the greater good has been proven to be hilariously wrong time and and time again…and it’s why I roll my eyes whenever someone tells me they’re a Libertarian.
And right now what are the American companies doing? That’s right-revving up to make even more gas guzzling pickup trucks, because that’s always the answer. I think we may see some very short term gains, but long term? I don’t think is going to make American cars better, and while we might like our massive gas guzzlers here the rest of the world doesn’t.
To me it just feels like more of the “the next quarterly earnings are all that matters” thinking that’s plagued American corporations under crony capitalism. It never ends well, by why learn from history when you can lobby the powers that be to shield you from consequences?
Price, particularly with incentives. That’s been the reason for a long while, especially on the used market. You’d be amazed at how much a $3000 difference or $50-75/mo payment difference can sway a buyer.
The other is in certain parts of the country you’ll be drowning in American cars (excluding trucks here). I noticed this when I circumnavigated the US , where there are large swathes of the country where American cars are everywhere and German luxo cars are few, to where you get to certain parts (west coast, US northeast) where it’s the exact opposite.
We’ll see if that holds true when steel prices and such go up. Someone pointed out that the steel tariffs may actually increase prices of American vehicles more than the tariffs on Japanese vehicles increase those prices. I don’t know enough details to check that claim, though. It may have easily been a case of someone assuming that the cost of steel directly correlates with the cost of the vehicle.
I’ve read the same.
Essentially, people will be paying an extra 15% for a VW, but a car manufactured in the US will have to deal with the 27.5% tariff on parts, and whatever the tariffs happen to be on steel, aluminum, and other imported bits necessary to mfg the car in the US.
I work for an automaker.
When Trump added 25% steel and 10% steel tariffs and random tariffs on auto parts in his first term …… we shifted production from the USA to Mexico.
When Trump added 50% tariffs on steel, aluminum, copper, and 25% to 100% tariffs on auto parts in his second term ……… we shifted production from the USA to Mexico.
You absolutely can increase the cost of manufacturing in the USA enough with tariffs that it become cheaper just to pay one tariff on the final vehicle.
Thank you for the inside info. It seemed like it made sense, but I didn’t know if the math worked out.
At the end of the day companies will follow the money and right now the actual financial impact of tariffs is telling companies the US does not want domestic manufacturing.
This is compounded by the lack of any certainty. We have US industrial policy and vehicle regulation flipping back and forth every 4 years. We have a president that negotiated and update to NAFTA and declared it the best trade deal ever who then was elected and unilaterally ripped up that trade deal. Companies like predictability when they are going to spend billions and several years to build a new factory.
I support the sentiment of bringing back American manufacturing jobs as well but I don’t think that will happen. At least not in the way you hope with droves of American workers returning to a vibrant manufacturing sector. The only way that American manufacturing returns in a significant capacity is through automation. This means good paying American factory wages aren’t going to materialize(unless you’re the specialist overseeing robots). It’s not remotely competitive to use American labor when lower cost labor is found elsewhere in the world. Companies are looking to streamline and cost save through the reduction of labor. Take Teslas gigacasting process, the goal is to streamline production increasing production while lowering costs. They’re not hiring more people, they’re saving money by not needing more assembly line workers. And this is where I see it going for mainstream manufacturing. Defense and more specialized manufacturing may be different
I saw a poll where 80% of Americans agreed with bringing mfg jobs back to the US, but only 20% of the people would actually want to work those jobs.
And it’s not like the republicans are thinking of high wage union jobs, these are going to be in right to work, non-union red states with low pay and minimum worker protections and benefits.
We manufacture more today than we ever have – we just do it with MANY less workers. (For example we make more cars in the USA today than in the heyday of automotive employment in the mid-70’s)
We also simply do not have the workers to staff new manufacturing even if the were suddenly going to open a bunch of assembly plants. We have a hard enough time just staffing the factories we have today and replacing retiring workers. Last time we tried to add a shift you could get a job if you could show up on time and pass a drug test – many people could not do that. Others simply walked off the job mid-day and said screw this assembly line work.
Part of that problem is the UAW structure. EVERYTHING is based on seniority: Shift, job, vacation, etc. So a new worker is going to start on an off shift, with the crappiest job, and get last pick on when to use those vacation days. This used to be just taken as a given – start and the bottom and work up but a lot of younger workers have a issue with it.
Then there is the pay, The labor rate is outrageously expensive and a lot of that is due to very expensive benefits that older workers that dominate the union care about but younger workers don’t. Things like basically free platinum health insurance and great retirement plans. Your typical 20 year old isn’t concerned with cheap doctor visits and retirement – they care about how much money ends of in their check at the end of the week.
If you just look at starting pay it looks like a lot of work for a pretty average pay. Hang in there for a few years and the wages rapidly increase and people start to appreciate being able to go to a doctor and eventually retire.
“you could get a job if you could show up on time and pass a drug test”
Does this drug test include cannabis in a state where voters decided to legalize? Next we are going to have to pass a proposition to fine companies $10k for every potential employee they test for a legal substance.
No. We no longer test for cannabis in the initial drug screen and the state in question has not legalized cannabis. Random drug screens still check for cannabis as do screens after a workplace accident.
I think that the problem manufactures have in finding labor is mostly due to these tests. In the past there were a lot more hard core alcoholics to hire that could manage to pass a breathalyzer to get a job. Alcohol usage from the night before would be gone in a blood test after an accident, so you would not have to fire them for that either. Now we have tests that will return positive for usage 3 Saturdays ago. The quality of applicants for manufacturing labor has not actually decreased over the last 30 years, just that more are being excluded due to the sensitivity of the testing.
I think the problem is more the 3.6% local unemployment rate. At that point you are basically trying to hire the unemployable. We have more of a problem with new hires failing to meeting attendance during the union probationary period than drug tests. Still crazy to see people fail a pre employment drug test when they know they will have to take the test.
I’d say be are being pretty lenient in not testing at hiring for a drug that is illegal under state and federal law.
Cannabis does present a unique problem though because there is no good and cheap test to measure impairment. With alcohol it is easy. If you are in a workplace accident or show actions that qualify for “reasonable suspicion (odor, unsteady gate, slurring speech) you go to the nurses office for a breathalyzer. Blow more than 0.02 and you are impaired and disciplinary action follows. With Cannabis all a test tells you is that they have used pot in the past and the time frame varies based on frequency.
“Still crazy to see people fail a pre employment drug test when they know they will have to take the test.”
There is still a decision being made as to what concentration level is the threshold for a test being considered positive. Going with a higher level would mean fewer days of not taking drugs before testing negative. I would assume some of those people actually do stop taking drugs for the test and hope to pass, it just does not clear their system in time.
“you are basically trying to hire the unemployable.”
Just like it has always been since industry was invented and the first factories were built. The fines for worker fatalities are just higher now.
My buddy has a Macan GTS on order, getting delivered end/August…early/sept. Wondering if this tariff impacts him?
EDIT: Last time, Porsche did ultimately grandfather people based on their build dates, even if things had left Emden. That’s likely going to be the case again here. They won’t ding people over something they couldn’t expect and will eat it for now, but make clear that production that started after a certain date will be affected and by how much.
I read that as “people who are less likely to rat out Tesla for using autonomous functions anyway”.
More likely to rave about what a great “robo-taxi” ride it was when in reality it was just a guy intervening every fifteen seconds to keep the car from plowing into the back of a firetruck.
Dodge Hornet, Fiat 500e, Alfa Romeos leaving the US Market soon? They barely sell, add 15% to their pricing. The dream of having Peugeot/Citroen under the Chrysler brand is now dead with this.
I saw a Guilia on I-93 this weekend. My passenger commented that it was the first one they ever saw on the road.
I think I’ve seen maybe five on the road in the Boston area since they released.
The Hornet was already rumored to be getting killed off soon. This will likely be the nail in that coffin.
to be slightly pedantic, the tariffs are calculated on the cost to manufacture the product, not the retail price, so figure it’s probably more like 10-12% increase, rather than a full 15%. Otherwise though, yeah, talk about making an already bad product that much less compelling.
I have brought forward some maintenance items for my older vehicle. Fortunately, I’m in a pretty good place on the transportation reliability front and should be able to ride most of this out. I have also been stockpiling spare consumables for my mountain bikes.
If I squint, I can see the merits of encouraging domestic auto production by tariffing imports. Doesn’t make it ideal, but I at least get the reasoning.
What I don’t understand is tariffing the primary inputs to auto manufacturing (steel, etc).
If policy remains as-is (a big if of course), it’s the domestic manufacturers that are going to be disproportionately hurt, and on-shoring that is going to be disincentivized, because they will be paying the 50% tariffs on their materials vs 15% on imported cars.
The problem is the domestic auto industry outside of Tesla and Lucid don’t build cars anymore.
Only the transplants build cars – and much of their parts are imported.
The specific product mix is less of a worry for me than the overall impact.
As I’ve said often, even as a sedan owner I don’t really understand the nostalgia for them in anything but the highest performance niches.
Bush put a 25% tariff on steel in his first term and those tariffs cost 100K US manufacturing jobs. Trump did the exact same thing is his first term – and got the same results.
Now his second term Trump has decided on 50% tariffs on steel and added in aluminium and copper tariffs for some extra spice. Not to mention tariffs on imported auto parts. Yes, this absolutely encourages manufacturers to simple import a finished vehicle and just pay the 15% tariff.
There are ways to encourage US manufacturing and we have seen them work in the past. Reagan put a numerical cap of imports. This lead Japanese automakers to build assembly plants in the USA for their high volume vehicles while allowing them to import low volume cars without a tariff that would increase the price to the consumer. It worked and not only provided manufacturing jobs in the USA but also helped train US auto workers and engineers in modern manufacturing methods. There was a lot of knowledge transfer.
Biden went a different approach and offered monetary incentives to build new factories in the USA – and got hundreds of billions in US investment.
Unfortunately those companies are getting burned as the Trump administration is killing those promised incentives just as the factories are coming online. Lesson learned – it risky to invest in US manufacturing as the rules and incentives change every 4 years.
Especially when it’s things we can’t easily make in the US, like aluminum and copper.
If only there was another country, possibly one that borders the US, that actively produces tons of high quality aluminum, cheaply…
The future 51st state – or will that be Greenland?
Seriously though – starting a trade war with Canada is beyond dumb.
The fight against Canadian Aluminum is always the funniest one to me. Between the dollar balance and the fact that we have abundant, cheap hydroelectricity supplies, the US could never come close to us for aluminum production. Because it takes a SHITLOAD of electricity to make.
Last time I checked the numbers, the largest aluminum producer in Quebec produces more aluminum than the top 5 US aluminum producers, combined.
Look, I get it if you wanna up domestic manufacturing rolling in the states. But MAN are we Canadians ever good at raw materials export. It seems to insane to blow up that nearly perfect arrangement.
When Canada stops smuggling fentanyl we can get back to normal relations. /S
A trade war with Canada is dumb. Claiming it is to stop the flow of fentanyl across the US / Canadian border is beyond dumb. How would Canada get your fentanyl without the USA smuggling it north?