De minimis also is $0 now for Canada and Mexico
Car parts often travel back and forth across the borders before full assembly.
Now they have tariffs each time they cross for each part.
No-one is going to be able to afford a new car soon.
Car parts often travel back and forth across the borders before full assembly.
Now they have tariffs each time they cross for each part.
No-one is going to be able to afford a new car soon.
Oh no!
A US company that buys metal castings from Canada and sells finished parts back to a factory in Canada might decide to look for a new source, but it's not a given that they will find one, or that switching would make more sense than losing business to higher prices.
To give more detail, one casting is a low precision structural attachment that connects an heavy anchor chain to a floating buoy. This part is cast from 316 grade stainless steel in China for ~$50/ea. For GSA work in the US, we have to use the same part cast domestically from A897 Ductile Iron (a far inferior material in a marine environment) because none of the few remaining US foundries who do stainless are willing to take on the work.
Unless the government is going to take the tariff revenue, and immediately incentivize more domestic competition and investment in manufacturing infrastructure (dirty industries frowned upon by VC tech bros who have no idea where any of the physical items they rely on to survive come from) at a level greater than FDR’s New Deal, then the result is simply going to be extreme inflation and massive scarcity.
I’d love to just start a foundry making our stainless castings right here in the USA, but anyone with the time for that doesn’t have access to the funding and anyone with the funding doesn’t have the time for the lengthy payback period of building a factory. Industrial prowess in a America is basically far too gone to catch up at this point and even the high value and cutting-edge R&D stuff will fall off as we don’t have all of the legacy “heavy industrial” know how that unlocks the latter part of the value chain.
Everyone knows where it comes from, it just doesn’t make business sense to plow money into high liability, low economies of scale businesses when your competition has far lower labor and environmental compliance costs.
It is unclear if the tariffs are a short term or long term policy. If short term then there's no way to justify the investment.
So you have to wait until you get certainty. And then you need to build industrial plant, train workers. And crucially the new workers have to stop whatever work they were doing previously.
If a foreign country has cheaper raw materials and cheaper manufacturing costs, maybe they will export manufactured parts.
Of course, in the short term this is full panic mode, with the real potential for some manufacturing to be removed in US or retooled to meet new requirements.
Lets say canada make 1 million car a year, that’s still less than what Canadians are buying.
Some Americans seems to think that all that matter is domestic production when they forget that their own companies need to export as well. Canadians do buy cars as well. This isn’t a case where all domestic production was lost from the US.