Trump's Auto Tariffs Will Mean Higher Car Prices And Could Trash Canada's Industry

Illustration for article titled Trumps Auto Tariffs Will Mean Higher Car Prices And Could Trash Canadas Industry
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1st Gear: Nobody Wants The Auto Tariffs

That’s to the tune of up to two million fewer cars sold annually, according to analysis by researcher LMC Automotive. That’s around 10 percent of the market. Why are we doing this again? Ah, right, because we’re America, bitch.


What’s interesting is that, unlike with metal tariffs, automakers neither want nor are asking for Trump’s interventions.

Here’s Bloomberg:

If Trump follows through with the 25 percent tariff, [Jeff Schuster, senior vice president of forecasting for LMC Automotive] said U.S. consumers would likely react in three ways. Some would look to the used car market, especially lightly used cars coming off lease.

Others would shift to domestically produced vehicles with cheaper price tags. And a third group might just postpone buying a new car, under the assumption that the tariffs are the result of a temporary political spat.

Trump ordered the investigation into auto imports under Section 232 of the Trade Expansion Act of 1962, the same power he used to impose global tariffs on imported steel and aluminum. While U.S. metal producers have been ravaged by global overproduction and depressed prices, the car market is much healthier. Sales have been slipping from a record of almost 17.6 million units in 2016, but LMC predicts a still-strong 17.1 million deliveries this year, and vehicles sold at record average prices approaching $33,000 last month.

2nd Gear: Also, Canada Would Be In Very Bad Shape

Around 85 percent of the cars made in Canada are exported, a vast majority exported to the United States, which means that a tariff—25 percent has been the number batted around—would have far-reaching consequences for our northern neighbors.


Car manufacturing jobs have already been on the downswing in Canada, as they’ve been on an upswing in Mexico, but a tariff would mean swift doom and gloom.

What’s fun about this, though, for American consumers, is that since you can’t shift production overnight, the cost of the tariffs would likely translate to much higher new car costs for consumers for years.


Here’s Bloomberg:

The problem with auto tariffs is that it takes a long time to shift production, meaning American consumers would pay the price for several years, said Flavio Volpe, president of the Automotive Parts Manufacturers’ Association, which represents Canada’s auto suppliers.

“If your objective is to have the American companies as well as the Japanese set up on the U.S. side of the border, you’re asking private companies to absorb billions of dollars of costs,” Volpe said, adding that it would make the North American industry less competitive against rising Chinese players. “At a time when the U.S. is targeting China, it is infinitely dumb.”


3rd Gear: Dieselgate Will Never End

Audi’s CEO, Rupert Stadler, has been named as a suspect in an ongoing probe by German prosecutors into the Volkswagen Group’s interminable diesel cheating scandal. Audi is Volkswagen’s most profitable unit, and has been stunningly successful in the past few years in the business of selling cars, especially in the U.S. 


From Reuters:

Almost three years after Volkswagen admitted to falsifying U.S. diesel emissions tests, the Munich public prosecutor’s office said it was now probing 20 suspects, and had on Monday searched the apartment of Stadler and one other board member.

The news came after Germany’s Bild am Sonntag reported up to a million Daimler cars had been found to contain illegal emissions devices, showing how the fallout from Volkswagen’s scandal continues to dog the industry.

“Since May 30, 2018 the chairman of the board of Audi AG Prof. Rupert Stadler as well as a further member of the management board are now named suspects,” the Munich prosecutor’s office said.


What are the potential crimes?

Munich prosecutors said the two suspects were being investigated for suspected fraud and false advertising and for their alleged role in helping to bring cars equipped with illegal software on to the European market.


Stadler was just promoted to a different post in April, though this isn’t the first time he has been in hot water. In the past he’s been largely protected owing to his ties to Ferdinand Piech, the madman who once ran all of VW and whose family still largely controls it. Stadler has been Audi CEO for over 11 years, and, indeed, Stadler still had backing at the company as of earlier this year:

In March, Audi’s 20-strong supervisory board recommended that shareholders endorse Stadler as chief executive even as prosecutors raided Audi to investigate who was involved in the use of any illicit software deployed in 80,000 VW, Audi and Porsche cars in the United States.

Audi said last month it had discovered emissions-related problems with a further 60,000 cars.


Good luck, Rupert.

4th Gear: Jaguar Is Slashing Jobs In The UK As It Moves Land Rover Discovery Production To Slovakia 


Range Rovers will still be built in the U.K. though, at least for now. But the Discovery is headed to Eastern Europe.

From Reuters:

“The potential losses of some agency employed staff in the UK is a tough one but forms part of our long-term manufacturing strategy as we transform our business globally,” the company said in a statement.

Moving production from Britain will slash several thousands of pounds off the cost per vehicle, the firm’s Chief Finance Officer Ken Gregor said last year.

The new Range Rover and Range Rover sport will however be built at the firm’s central English Solihull plant on an architecture which is designed to allow for diesel, petrol, electric and hybrid models to be produced.

Monday’s announcement comes after the firm said this year it will cut 1,000 jobs and reduce production at two of its English factories as demand for diesel cars slumps in the face of higher taxes and a regulatory crackdown.


And it isn’t just America who has played themselves, of course.

The firm has also blamed Brexit for hitting demand in Europe’s second-largest autos market, where demand fell 6 percent last year, a source told Reuters in April.


Reuters also notes that the brand’s first all-electric—the upcoming I-Pace—will be manufactured in Austria, though there might still be hope yet for future electric cars to be manufactured on British shores.

5th Gear: Ram Models Delayed To Market, Making FCA Sad

From Automotive News:

Nearly five months after the start of production of the 2019 Ram 1500 — known as the DT — the only models EPA-certified for sale are two- and four-wheel-drive versions equipped with the standard 5.7-liter Hemi V-8.

DT model Ram 1500s began arriving at U.S. dealerships in the second half of March, but dealers haven’t yet received the 3.6-liter V-6 version or the 5.7-liter V-8 with an optional 48-volt belt-start generator. The belt-start generator, a fuel-saving mild-hybrid device, is standard with the V-6.

“I have customers looking for them and asking about them every week,” said one Ram dealer in Michigan, who did not want to be named.

It’s unclear why 2019 Rams with belt-start generators are not available. An FCA US spokesman declined to comment, but company engineers could be working to fine-tune the operation of the belt-start generator before releasing the vehicles.

FCA learned a hard lesson when it began selling the 2014 Jeep Cherokee before the software operating its nine-speed automatic transmission was fully baked.

The delay also could result from the EPA being far more stringent with automakers in its testing in the wake of the Volkswagen emissions scandal.


And it’s also led to a dent in sales, in a year when Ram launched the DT in Detroit and hoped to take on the number-two-selling Silverado. (Ford’s F-Series trucks, the market leaders, have been as dominant as ever.) But the numbers are going the wrong way.

But while Ram sales are off this year, Ford’s F series, the top seller, is up 5.7 percent; Silverado sales are estimated to have increased 11 percent. This time a year ago, Ram and Silverado were running almost neck and neck.


Will the Ford F-Series ever be topped?

Reverse: Edsel VS. The Axis Powers


Neutral: When Was The Last Time You Were A Suspect In A Crime?

For me, it’s been at least 10 years.

News Editor at Jalopnik. 2008 Honda Fit Sport.

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Hagrid's Hairy Hamroll

I don’t understand Trump’s beef with Canada. I can see him having an issue with Mexico, since it is lucrative to build cars there from the cheap labour, but I don’t get going after Canadian imports too.

Companies aren’t building in Canada because it’s cheaper. A mutual, tariff-free trade system between Canada and the US would be nothing but beneficial for the 2 nations.

Trudeau is retaliating, though. We’re about to see the full consequences of a trade war, and both countries are going to lose. I’m just afraid Canada is going to take the most damage.