Could proposed tariffs make BMW prices in the US go up?

[LogicalApex]

Lots of great discussion here already.

Tariffs won't do anything except choke off the US economy without actually benefiting the American public as has been pitched. The biggest challenge tariffs will face is America can't quickly pull manufacturing back domestically. Lost in the framing that many have around them is that restarting manufacturing isn't just as simple as "Apple wants to build the iPhone in the US so let's build a factory" or something like that. You have all of the hundreds of thousands of auxiliary suppliers they need to manufacture the device.

The NYT did a write up of why Apple wasn't able to easily move manufacturing its computers back to the US. Apple failed to secure access to something as simple as the screws they needed since all of the manufactures for the screws were in China. So the American manufacturing had week long delays for screws to arrive that would take hours to drive over from one factory to another in China. None of this is a surprise though. When we were a manufacturing powerhouse you had manufacturing hubs filled with these suppliers. So the timing would have been similar here...

Then you have the knowledge issue. We haven't manufactured here in so long it will take a long time to build back the expertise that has been lost. So American made will actually cost more and be lower quality for a while...

We have massive domestic economic issues caused by globalization. The concept was a stupid one that ruined many parts of the American economy. We need to fix them, but tariffs aren't the path to it. We've let the globalization ship sail for fare too long already. American not depend on the cheap goods from places like China that without will negatively impact MANY. Realistically, we need to be negotiating trade deals that require the offshoring of American jobs to be fair & equitable so American workers are competing on common ground. Meaning, you can't just move your manufacturing to China due to no environmental or labor laws and you can't just sell in the American market without adhering to fair standards. Companies should be required to ensure similar labor law practices and environmental rules are adhered to in China or wherever they offshore the job out to. To help reduce the "race to the bottom" that globalization causes. We could then impose sanctions, etc, based on policies laid out in our trade agreements. That's the proper long term path.

The near term path is we need to invest domestically into ensuring the workforce is capable of ensuring we stay dominant in the industries we currently lead and may lead in the future. Ironically, we're failing to do that as well. The industries we lead by wide margins globally are in the STEM space which require advanced education and skills. Yet we're focused heavily on defunding our education system all but guaranteeing that we'll eventually lose our competitive advantage in these industries.

Sadly, the average American barely reads anymore let alone understands complex topics like economics and tariffs. They are hoping for a magic wand where none exists and will experience a lot of pain and misery in its pursuit. Much like all who seek magical solutions in a world devoid of magic... But there are opportunist who will, and are, exploiting their suffering for their own gain. Not with the intent of helping them, but with the intent purely of enriching themselves off them in a parasitical manner. Much like the televangelist who preaches riches and miracle cures to them in return for their "donations" who lives lavishly while they still endure their pain and often can barely afford to sustain themselves...

To answer the OP question though: BMW will certainly be squeezed by tariffs, but they are not yet worried because they don't know what the tariffs look like and they likely feel they have pricing room to pass it onto consumers at this point or they've pre-purchased enough of their supplies to help slow their need to absorb them. They can also be betting on increased growth in China or other markets even while the US market craters. Time will tell where it lands for BMW.

[DrVenture]

I think that BMW may well be worried, and having all sorts of backroom discussions, but they are not going to go public with a statement like "Our prices will go up more than usual". That would be idiotic. If it affects the price of cars it will also impact the cost of parts and maintenance. If tariffs cause overall inflation, they will impact affordability of all sorts of things from a consumer perspective.

What is notable about this tariff initiative is that it isn't coming from economists or business leaders or anyone like that. They hate the idea. It is populism, and appears to be rooted in fear and misinformation. Economic policy designed by people who are ignoring the business community. And based on misconceptions. How could that go wrong?

There is always a lot of talk about the dire state of U.S. manufacturing. "Manufacturers in the United States account for 10.70% of the total output in the country, employing 8.41% of the workforce. Total output from manufacturing was $2.5 trillion in 2021. In addition, there were an average of 12.5 million manufacturing employees in the United States in December 2021, with an average annual compensation of $95,990.00 in 2021." - National Association. of manufacturers.

https://www.cato.org/blog/united-sta...ing-powerhouse

"Contrary to common perception, US manufacturing continues to be a vibrant source of growth and economic dynamism. Provided Washington can avoid ill-advised schemes to “rescue” the industry it should remain so for many years to come."

Is the "solution" to a robust manufacturing sector to turn inward and service only our economy (5% of the world's population), at the expense of losing the other 95% of the world's business? All those emerging economies begging for a consumerist lifestyle? We decide we can't compete anymore, we don't like the situation, so we are going to take our ball and go home to throw it against the wall?

Doing business in China certainly has its share of hurdles. Not a level playing field. It has been that way for 50 years. But. U.S. corporations still see value in that, or they would not still be there after 50 years. And those same businesses do not see tariffs as the "solution" to anything.

[mks]

Originally Posted by Gemini562

When we placed tariffs on Chinese goods, China retaliated by taxing American products, which especially hurt our farmers, who then needed government assistance. For consumers like us, these tariffs mean higher prices on everyday items, so any savings from tax cuts often disappear into those added costs. In the end, it’s middle- and lower-income families who pay the price, as tariffs take back any gains from the tax cuts.

I get a little firsthand insight about the impact on agriculture as I have relatives in KS. In the case of the fallout from previous administration’s futile tariff tactics, followed by a failed trade war and the subsequently unsuccessful trade agreement with China, many may not be aware that aside from the block of subsidies and financial incentives famers already receive (commodity programs, insurance offsets, disaster relief, conservation program payouts, etc), more than 90% of the nominal gains were siphoned back out to the famers to help offset the pain caused by the persistently imprudent strong-arm economic tactics that amounted to an embarrassing episode of showboating. Apparently, trade wars are not good and easy to win. The myths surrounding the effectiveness of tariffs (in the face of other tools of political leverage, the 16th Amendment, historical evidence, etc) should by now by fully busted but....

Weird, but sometimes the narrative about the demonstrable impacts of “national interest” subjects (e.g., tariffs) in this stage of our modernity kinda playout like sports reporting. A game is announced, bets placed on which team (position, tactic, strategy) is favored to win, after kickoff, some focus very anecdotally on the play by play, while others holdout for the slightly less myopic quarterly analysis, but as we get nearer the final seconds of the game, coverage and attention experiences a kind of blackout and, somehow, no one knows who won—and lost.

The story of the fallout for the automotive, aero, and agriculture industry resulting from the previous administration’s failed trade war and the commensurate net negative results of the failed trade agreement experienced the same kinda of “blackout.” Maybe publications like the Council on Foreign Relations could work on bolstering their readership.

Sources:
PIIE: https://www.piie.com/blogs/realtime-...mps-trade-deal
CFR: https://www.cfr.org/blog/92-percent-...-angry-farmers
TF: https://taxfoundation.org/blog/tarif...e-food-prices/
TF: https://taxfoundation.org/research/all/federal/tariffs/
EWG: https://farm.ewg.org/
EWG: https://www.ewg.org/interactive-maps...der-trump/map/ (Agriculture Risk Coverage and Price Loss Coverage Map)
WSJ: https://www.wsj.com/economy/trade/ch...ugher-8e9e3e21
Atlantic Council: https://www.atlanticcouncil.org/blog...ect-this-time/
BBC: https://www.bbc.com/news/world-43512098

[julienjj]

Originally Posted by IanH

Am I living in a parallel universe where NAFTA is still in place?

Not a single mention of the USMCA?

Man, that guy who negotiated the USMCA should get better at negotiating!

Anyway, as this is like the 4th or 5th thread on this topic, maybe someone should give the real answer and we can stop talking about it...

No the tariffs will not go into place as campaigned upon, because like most campaigns by most politicians 95% of what was promised was a lie.

Mainly because USMCA isn't as clear as NAFTA, and i have a feeling the name was chosen because it rings close to the YMCA song.

On the topic, the tariffs will 100% impact BMW prices because most the cheap interior plastic stuff they like to put in cars now is made in china. nearly the all LCD screens found in everything are made in china. So cluster, screens all will go up in prices. Keys, PCB for most modules, M badges etc...

All those low cost parts adds up to a noticeable amount.