Does anyone really believe that a 25% tariff on the non-US parts of cars imported into the US will be charged starting a week from today? What will that even look like?
Let’s take my van as an example. The body and engine are built in Saltillo, Mexico. The rest of the parts are from all over North America. It’s assembled in Saltillo. How do you figure the tariff on this thing? You’d have to get a bill of materials, and go line-by-line to determine what gets a 25% tariff and what doesn’t. Some of those parts probably crossed over from Canada on their way to Mexico, so is that a double tariff? I think so:
This diagram from the Bank of Canada illustrates the complexity of the issue.
Anyway, if anyone takes Trump seriously, wouldn’t there be a run on auto dealerships to snatch up F-150s and other vehicles that have parts from all over North America? Let’s see if that happens. My guess is that it won’t, because nobody believes the guy. Even if prices jump up, unless someone needs a vehicle right away (poor them), the rest will just wait it out for the inevitable back down by Trump.
This whole thing has been such a tedious display of waffling that I had to google what happened two weeks ago when Canada instituted retaliatory electric surcharges. I guess Trump backed down? It’s pretty telling that someone who pays pretty close attention to politics is so bored with this nonsense that I don’t see the point of following it closely.
I know the Mexican position, because it’s easy: they don’t believe Trump will do anything so they’re keeping their retaliation cards close to their chest.
Today’s announcement was a transparent effort on Trump’s part to change the conversation from Signalgate to yet another stove touching exercise. My guess is that either nothing will come of it, or nothing at all good for the Trump administration will come of it. I’ll be interested to see if the markets even react. They’ve all seen this play before, and they know that they won’t miss much if they sleep through the second act.
