Tariffs On Products From Mexico

[Gerbear]

Mexico is a major hub of automotive production in the western hemisphere, built up over the last 3 decades from the result of free trade policy and globalization. Ford, Chevy, Toyota, VW, Mazda, Nissan, Audi all have huge plants in Mexico. Much of the material and parts come from Canada. 80% of Mexico’s auto production comes to the US. Everybody is benefiting from the arrangement. Pulling the rug out from NAFTA or the exact same thing trump “renegotiated” called CMFGA or whatever it was, and going all isolationist or whatever isn’t going to make for a productive partnership. We don’t have the labor force or investment in plants and factories to go backwards to making all our own cars and trucks, there is record low unemployment and our standard of living is too high to supply the cheap labor to keep prices down where we can afford our beloved automobiles. Double down on that if you expel all undocumented workers. Anyhow, this is all posturing and it won’t actually happen I hope. This has fuckall to do with fentanyl, it’s just some chest beating to make everyone think we’re batshit crazy and hopefully concede on other negotiations

You nailed it....

Sponsored

 

[tacorancher]

The 2026 SR5 will cost $459,000 MSRP

 

[WKTJR1]

A couple of points: The incoming administration is a known entity, which wasn’t the case in round one. Each country has taken a different approach to how they will handle this. Canada is more moderate and prefers to discuss things privately. Mexico, on the other hand, is taking a more public stance, saying, “Bring it on!” because they have dealt with this before.

Finally, the incoming administration uses the stock market as a barometer to measure success or failure. Many of these statements are trial balloons intended to gauge how the markets will react. Simply put, the markets operate on supply and demand as well as investor confidence.

As we approach January 20th, if the markets believe these tariffs will go into effect, they will respond—and not in a positive way.

 

[JustAnotherDingus]

Also something to bear in mind: Toyota and many of the auto makers have a powerful lobbying presence in the US. Im sure their teams are already speaking to members of congress who rep districts where they employ folks etc. it’ll be interesting to see where the chips fall here

 

[WKTJR1]

Also something to bear in mind: Toyota and many of the auto makers have a powerful lobbying presence in the US. Im sure their teams are already speaking to members of congress who rep districts where they employ folks etc. it’ll be interesting to see where the chips fall here

Concur. Plus lawyers will be involved.

 

[Slappy]

prices r going up , tariffs alway cause price increases , remember 1/4" plywood at $100 a sheet last time around .

 

[SilverSurfer]

Thoughts on retaliatory tariffs from Canada, Mexico, and china. As there’s a massive trade imbalance with all three, they will be hit much harder than American businesses. The US is the number one consuming nation in the world and tarrifs as a tool can be used to bring a closer balance where there is a huge imbalance. Because the US buys so much more than they buy from us, as the cost of their goods go up, less will sell, hurting the manufacturers bottom line. Tarrifs do work, but come with consequences.

So far in 2024, the us imported 217b more from china than we exported to china.
https://www.census.gov/foreign-trade/balance/c5700.html

TOTAL 2024

104,707.7​

322,172.3​

-217,464.6​

So far in 2024 the us imported 125b more from Mexico than we export to Mexico. https://www.census.gov/foreign-trade/balance/c2010.html

Mexico TOTAL 2024

253,405.1​

378,884.5​

-125,479.4​

different chart with Canada from census.gov, we import 46b more from Canada than we export to Canada.

Month	Exports	Imports	Balance
January 2024	26,303.4​	33,309.1​	-7,005.8​
February 2024	28,499.9​	33,395.2​	-4,895.3​
March 2024	30,756.0​	34,218.1​	-3,462.0​
April 2024	30,643.6​	34,883.6​	-4,240.0​
May 2024	30,566.8​	35,669.4​	-5,102.6​
June 2024	29,930.2​	34,393.2​	-4,463.0​
July 2024	27,702.1​	35,798.9​	-8,096.9​
August 2024	29,983.5​	33,036.4​	-3,052.9​
September 2024	29,152.6​	34,633.3​	-5,480.7​
TOTAL 2024	263,538.1​	309,337.2​	-45,799.1​

By using tariffs to make the price of key goods more expensive, fewer of those items get purchased by the American consumer. This hits the manufacturers in the foreign countries hard because there’s a disruptive “shift” in demand. It also creates an opportunity for US production to compete, albeit at a higher price point, because American workers demand higher wages. Pretty straight forward economic principles that you can count on just like gravity.

If the market for these goods dry up, the foreign manufacturers will be negatively affected, go out of business, and or seek capital support from their government. This pressure becomes the instrument of trade policy change that either allows domestic (in the foreign country) manufacturing to fail, or prices to be lowered or supported by govt funds.

Balance will be had, but it will be painful, one way or another. Personally, I think it’s better to pay 20 bucks for a tshirt and have them USA made than the promised 5 dollar t shirt we got when the textile industry was fully offshored 25 years ago. As soon as the foreign textiles had put American textile out of business, they raised their prices, so it was/is a failed economic policy that hurt the US Consumer.

 

[32spoke]

Thoughts on retaliatory tariffs from Canada, Mexico, and china. As there’s a massive trade imbalance with all three, they will be hit much harder than American businesses. The US is the number one consuming nation in the world and tarrifs as a tool can be used to bring a closer balance where there is a huge imbalance. Because the US buys so much more than they buy from us, as the cost of their goods go up, less will sell, hurting the manufacturers bottom line. Tarrifs do work, but come with consequences.

So far in 2024, the us imported 217b more from china than we exported to china.
https://www.census.gov/foreign-trade/balance/c5700.html

TOTAL 2024

104,707.7​

322,172.3​

-217,464.6​

So far in 2024 the us imported 125b more from Mexico than we export to Mexico. https://www.census.gov/foreign-trade/balance/c2010.html

Mexico TOTAL 2024

253,405.1​

378,884.5​

-125,479.4​

different chart with Canada from census.gov, we import 46b more from Canada than we export to Canada.

Month	Exports	Imports	Balance
January 2024	26,303.4​	33,309.1​	-7,005.8​
February 2024	28,499.9​	33,395.2​	-4,895.3​
March 2024	30,756.0​	34,218.1​	-3,462.0​
April 2024	30,643.6​	34,883.6​	-4,240.0​
May 2024	30,566.8​	35,669.4​	-5,102.6​
June 2024	29,930.2​	34,393.2​	-4,463.0​
July 2024	27,702.1​	35,798.9​	-8,096.9​
August 2024	29,983.5​	33,036.4​	-3,052.9​
September 2024	29,152.6​	34,633.3​	-5,480.7​
TOTAL 2024	263,538.1​	309,337.2​	-45,799.1​

By using tariffs to make the price of key goods more expensive, fewer of those items get purchased by the American consumer. This hits the manufacturers in the foreign countries hard because there’s a disruptive “shift” in demand. It also creates an opportunity for US production to compete, albeit at a higher price point, because American workers demand higher wages. Pretty straight forward economic principles that you can count on just like gravity.

If the market for these goods dry up, the foreign manufacturers will be negatively affected, go out of business, and or seek capital support from their government. This pressure becomes the instrument of trade policy change that either allows domestic (in the foreign country) manufacturing to fail, or prices to be lowered or supported by govt funds.

Balance will be had, but it will be painful, one way or another. Personally, I think it’s better to pay 20 bucks for a tshirt and have them USA made than the promised 5 dollar t shirt we got when the textile industry was fully offshored 25 years ago. As soon as the foreign textiles had put American textile out of business, they raised their prices, so it was/is a failed economic policy that hurt the US Consumer.

Do you think the unions won’t exploit the tariff, should this policy truly happen? Because there is less risk of moving more vehicle manufacturing to Mexico. I ask because of the quote from Ford’s CEO after the union dispute with Ford, about a year ago. “Last fall’s contentious United Auto Workers’ strike changed Ford’s relationship with the union to the point where it will “think carefully” about where it builds future vehicles, Ford’s top executive said Thursday.

https://apnews.com/article/ford-aut...ry-locations-ed580b465d99219eb02ffe24bee3d2f7

https://www.carscoops.com/2024/02/ford-ceos-not-so-subtle-message-to-the-uaw-you-screwed-yourselves/

 

[SilverSurfer]

Of course they will. Economics actually relies on a force called the “invisible hand” in the market. That force is self interest. The market works to balance supply, demand, and cost, because everyone is acting in their own best interests to “Make the most profit, Get Paid the most, Buy for the least” in any transaction. Where that balance is found, there is equilibrium.

 

[32spoke]

Of course they will. Economics actually relies on a force called the “invisible hand” in the market. That force is self interest. The market works to balance supply, demand, and cost, because everyone is acting in their own best interests to “Make the most profit, Get Paid the most, Buy for the least” in any transaction. Where that balance is found, there is equilibrium.

Thank you! I do appreciate your insight.

 

[Sagebrush]

I doubt anyone has anything to worry about. Trump is stating this in Nov hoping Mex/Can become more involved in the borders we share before Jan.

Right. It's going to start a trade war and we'll end up paying for the tariffs.

https://time.com/7198692/mexico-retaliatory-tariffs-trump-sheinbaum/

 

[SilverSurfer]

Yes and no. If you don’t buy the products, then you won’t be paying more. That’s the intent of the tariffs in the first place, to artificially raise the cost of foreign goods so they sell less which puts pressure on them to comply with your nations demands, which usually includes a commitment to buy more of your goods.

Or you use them to protect your critical industries from foreign nations subsidizing the cost of their goods to make them artificially cheap to hurt your countries competitiveness. By raising their costs with tariffs, your industries can be competitive at the higher price point.

 

[32spoke]

Yes and no. If you don’t buy the products, then you won’t be paying more. That’s the intent of the tariffs in the first place, to artificially raise the cost of foreign goods so they sell less which puts pressure on them to comply with your nations demands, which usually includes a commitment to buy more of your goods.

Or you use them to protect your critical industries from foreign nations subsidizing the cost of their goods to make them artificially cheap to hurt your countries competitiveness. By raising their costs with tariffs, your industries can be competitive at the higher price point.

Some merchandise has an inelastic demand. For instance, I sell auto parts. Most of our merchandise comes from China. A local consumer that needs a brake rotor will likely pay for it, no matter the cost. Covid did create enough supply chain challenges that our brake rotor manufacturer is now manufacturing some brake rotors within the United States again.. perhaps they would be more incentivized to expand domestic manufacturing.
NAFTA changed manufacturing locations.

 

[SilverSurfer]

100% correct. And if by “changed” manfacturing, you mean “screwed the American worker”, yes, I also agree Since it incentivized auto manufacturers to leave the us and setup shop in Mexico and Canada.

 

[32spoke]

100% correct. And if by “changed” manfacturing, you mean “screwed the American worker”, yes, I also agree Since it incentivized auto manufacturers to leave the us and setup shop in Mexico and Canada.

I could not have said it any better!
Happy Thanksgiving

Sponsored