The trade and economy mega-thread (3 Viewers)

[superchuck500]

Is there a trade deal with China? Is it really a deal or just a pull-back to status quo ante? Is Trump advancing US interests in this well-executed trade battle plan or was this poorly conceived from the start . . . and harmful?

I think the jury's still out, but I haven't seen that the Chinese are offering much in compromise - and it's not even clear if there's going to be an agreement. But it's clear they are working on something and I'm sure Trump will sell it as the greatest trade deal ever. The proof will be in the details.

 

[bird]

The auto tarrif is so stupid. Japanese cars are popular well made, and a solid value. Also, the big 3 US car makers have some manufacturing in Mexico and Canada. This is going to jack up prices more, and cars/trucks are already stupid expensive.

Yup. Not to mention it will cause the prices of used cars to skyrocket as well.

 

[efil4]

25% is insane. Glad I bought my German car a month ago.

So BMW has "said" they will "eat" the tariff - for now. What that means? no one knows lol. Eat 100%? 50% and are they doing for 1 mo? 2 mo?

i suspect they waiting on MB/Volvo/Porsche/Audi to see what they will do before committing

 

[efil4]

The auto tarrif is so stupid. Japanese cars are popular well made, and a solid value. Also, the big 3 US car makers have some manufacturing in Mexico and Canada. This is going to jack up prices more, and cars/trucks are already stupid expensive.

If you didnt catch in video at end.

Trump is pushing Mike Johnson to pass legislation that if you buy AMERICAN, the interest you pay on financing is tax deductible in its entirety.

Know what that means? Banks are simply going to keep interest rates WAY higher than they need to because they know the consumer is getting a break. So they will simply profit more off this tax break.

IT AINT HELPING JACK SQUAT.

the out-the-door price of car will still be 10-25% higher than it was just 6 mo ago.

 

[bird]

So BMW has "said" they will "eat" the tariff - for now. What that means? no one knows lol. Eat 100%? 50% and are they doing for 1 mo? 2 mo?

i suspect they waiting on MB/Volvo/Porsche/Audi to see what they will do before committing

Hmmm. Maybe it has to do with orders in process. Once they are done then they won't "eat" the tariff anymore.

 

[bird]

If you didnt catch in video at end.

Trump is pushing Mike Johnson to pass legislation that if you buy AMERICAN, the interest you pay on financing is tax deductible in its entirety.

Know what that means? Banks are simply going to keep interest rates WAY higher than they need to because they know the consumer is getting a break. So they will simply profit more off this tax break.

IT AINT HELPING JACK SQUAT.

the out-the-door price of car will still be 10-25% higher than it was just 6 mo ago.

Not only that but the car payment will still be high each month as the deduction only occurs at tax time. And how many will actually get back the total interest that they pay? Deducting the interest does not arbitrarily mean that the total interest will be refunded.

 

[TampaJoe]

Not only that but the car payment will still be high each month as the deduction only occurs at tax time. And how many will actually get back the total interest that they pay? Deducting the interest does not arbitrarily mean that the total interest will be refunded.

Deductions are one thing. The benefit you receive ins deduction is the amount of the deduction multiplied by the effective tax rate. So the actual tax reduction is less than the interest deduction. Credits are applied against the tax owed and in some cases are refundable.

Further, you only benefit from a deduction when and if you itemize deductions. If you don’t itemize, you don’t benefit. During the last tax reform, the standard deduction was practically doubled and therefore many tax payers no longer itemize.

I have my doubts that making auto loans deductible will have much impact on auto loan rates long term. We have always been able to deduct mortgage interest for instance but it didn’t really impact mortgage rates.

 

[Sendai]

The auto tarrif is so stupid. Japanese cars are popular well made, and a solid value. Also, the big 3 US car makers have some manufacturing in Mexico and Canada. This is going to jack up prices more, and cars/trucks are already stupid expensive.

And most Japanese cars are made in the United States.

List of automobiles manufactured in the United States - Wikipedia

en.wikipedia.org

And Mercedes, Volvo, BMW, Hyundai, Subaru, etc.

 

[UriUT]

And most Japanese cars are made in the United States.

List of automobiles manufactured in the United States - Wikipedia

en.wikipedia.org

And Mercedes, Volvo, BMW, Hyundai, Subaru, etc.

C'mon. Your own link has the % of models made in the US AND Canada. Just a quick browse and one can see that not even close to half are made in the US AND Canada.

 

[Sendai]

C'mon. Your own link has the % of models made in the US AND Canada. Just a quick browse and one can see that not even close to half are made in the US AND Canada.

It not % of models. Models produced are actually listed in the column tilted Models.

 

[UriUT]

It not % of models. Models produced are actually listed in the column tilted Models.

Yes, the % of each model produced in the US or Canada is to the far right. A company can produce model X in the US or Canada, and that sounds great. However, if the % of that model is 1%, then, well, that doesn't sound great now does it?

FYI, that OR means the % made in the US can be considerably lower.

edit: Either way, one cannot grasp the full extent of the tariffs without the import data. Do we assume that 100% of these are domestically consumed and does it satisfy 100% of domestic demand? This doesn't tell us any of that. No import data.

edit deux: I was wrong in my interpretation thanks to @efil4. Above point about the tariff effects still hold.

 

[efil4]

Deductions are one thing. The benefit you receive ins deduction is the amount of the deduction multiplied by the effective tax rate. So the actual tax reduction is less than the interest deduction. Credits are applied against the tax owed and in some cases are refundable.

Further, you only benefit from a deduction when and if you itemize deductions. If you don’t itemize, you don’t benefit. During the last tax reform, the standard deduction was practically doubled and therefore many tax payers no longer itemize.

I have my doubts that making auto loans deductible will have much impact on auto loan rates long term. We have always been able to deduct mortgage interest for instance but it didn’t really impact mortgage rates.

To be clear- this isnt even legislation - he simply implored Mike Johnson to "get it done" as if some magic economic elixir.

And thats precisely right- in fact I personally stopped itemizing in 2017 because the standard ded was actually more than when i would itemize

As for loan rates, there are no standard loan rates- everyone knows what everyone else is doing/charging. We wont see 2.9% rates because the interest is so low, that any tax deduction is offset by the increased cost of the vehicle from tariff.

This simply isnt helping the $32,000 buyer. It would absolutely help the $100,000 buyer.

Showing us, yet again, where is loyalty truly lies.

 

[superchuck500]

 

[superchuck500]

And most Japanese cars are made in the United States.

List of automobiles manufactured in the United States - Wikipedia

en.wikipedia.org

And Mercedes, Volvo, BMW, Hyundai, Subaru, etc.

This is true - although it’s not all models. And most of the US makers are not made in the US.

 

[efil4]

And most Japanese cars are made in the United States.

List of automobiles manufactured in the United States - Wikipedia

en.wikipedia.org

And Mercedes, Volvo, BMW, Hyundai, Subaru, etc.

that list includes Canada and is for "contents" ( components )

pretty sure you gonna need to parse out Canada here soon to get a factual % of "components" mfg in US. ( not car- components ) not affected by tariffs.

So if 80% of vehicle components are mfg outside/imported for final assembly, and that cost is 80% of the vehicle price, on a $40,000 MSRP, the new MSRP would be $48,000
( 40,000 x.80 = $32,000 x 25% = $8000. Add $40,000 plus the tariff charge of $8000 on components imported )

 

[UriUT]

that list includes Canada and is for "contents" ( components )

pretty sure you gonna need to parse out Canada here soon to get a factual % of "components" mfg in US. ( not car- components ) not affected by tariffs.

So if 80% of vehicle components are mfg outside/imported for final assembly, and that cost is 80% of the vehicle price, on a $40,000 MSRP, the new MSRP would be $48,000
( 40,000 x.80 = $32,000 x 25% = $8000. Add $40,000 plus the tariff charge of $8000 on components imported )

My mistake, you are right. % of the contents of each model made in Canada or the US.

 

[wardorican]

And most Japanese cars are made in the United States.

List of automobiles manufactured in the United States - Wikipedia

en.wikipedia.org

And Mercedes, Volvo, BMW, Hyundai, Subaru, etc.

Last I read last night, the tariffs would include engines, transmissions, and other sub assembly items. Most Japanese engines and transmissions are built in Japan for those models that happen to be manufactured (final) in the US.

This will have a big impact on prices. The big 3 didn't seem happy about this.

 

[efil4]

Last I read last night, the tariffs would include engines, transmissions, and other sub assembly items. Most Japanese engines and transmissions are built in Japan for those models that happen to be manufactured (final) in the US.

This will have a big impact on prices. The big 3 didn't seem happy about this.

i think thats a big misunderstanding-

car mfg PLANTS are "Assembly" lines. Everything needed to "assemble" is shipped in to the plant for them to "put together"

There are no engine plants next door, walking over an engine upon completion. No gear shift maker next door, no transmission maker, no upholstery, no audio maker etc etc.

It all arrives at assembly plant separated and then assembled.

Ever see a diagram of an engine and its parts? over 50 individual parts- all of which are made elsewhere. So THAT has an effect.

here is a 2004 honda accord engine diagram



Trump has folks thinking the Honda plan in Indiana builds everything the car needs from engine to final product. They dont

 

[efil4]

My mistake, you are right. % of the contents of each model made in Canada or the US.

which actually makes it even worse. thats % of content.

And depending where the content is coming from and how many times its shipped, tariff each time.