Tractors and (upcoming) tariffs?

[jyoutz]

Trump is doing the crash prevention method to boost the economy. If he does away with income taxes, he will be a hero to all. Hope they do away with a lot of agencies that are nothing but regulatory agencies, EVERYTHING does not need to be regulated.

Doing away with all income taxes would result in much higher sales taxes and fees for just about everything. Nothing is free.

 

[BobLewis]

In the ideal world, the playing field is level and competition is fair. The idea of tariffs is for the threat to get cooperation from the targeted offender. The President can't sooth your concerns, as that would reduce the implied threat. IE... if Mexico cooperates with immigration or cracks down on cartels, reduced or no tariffs. If China opens it's markets to US Goods taxed or prohibited, reduced tariffs. Canada is a puzzle to me, so I obviously don't completely understand that. The best overall benefit is if the importer finds a US source for the product that taxed, perhaps a little more expensive, but more benefits to our economy.

 

[camonica]

I didn't want to mention any names because I don't want to start a flame war.

This was intended as a non-partisan comment on tariffs in general (which we may or may not get, I am not sure they can be imposed by executive order).

If you really want to be bored out of your mind, look up the Smoot-Hawley tariff act of 1930 which raised US import tariffs across the board to between 40 and 60 percent. The result of this was retaliatory tariffs, resulting in as much as a 30% loss in US exports. International trade dropped tremendously. Smoot-Hawley was one of the causes of the great depression, and the depression didn't end until mobilization at the start of WW2.

(If you don't learn from history, you are going to repeat it.)

Best Regards,
Mike/Florida

Just a reminder…. Prices are up with the president administration greater than 20% without tariffs. Again, not mentioning names to avoid a political debate.

 

[Dunno]

These tariffs will level the playing field for American manufacturers. China identifies a product market in the US that they want to destroy and take over. Their government designates that market’s manufacturers to receive assistance from them so they can drastically undercut the existing market. Once the American manufacturers are put out of business, they then own that market and raise prices to their liking. I’m all for protecting America and our workers and workforce. If you want to really help America, get rid of the Teamsters union, et al.

 

[ultrarunner]

Please tell me what has not risen as much. Not anything I buy!!!

The price of commercial real estate is in the dumps… down 60 to 80% in my city…

Building Lots also down.

Actually looking to sell a commercial property and the drop in value from just a few years ago is sobering.

Residential rents are also down slightly…

 

[newbury]

Doing away with all income taxes would result in much higher sales taxes and fees for just about everything. Nothing is free.

Not necessarily during the next administration, they could just keep kicking the can down the road.

 

[saxtonhill]

I know that I’m going to move out of stocks into Treasuries by early January just to be safe until we see what happens.

There are still good rates to be had from 12-18 mo CDs.

 

[MROlson86]

So where is all of the new money going? We know that it is going FROM the customer/consumer to the same place as always. Will wages rise too? Be careful what you ask for. Farmers and ranchers around me are still recovering from the last round of tariffs. More profit for the lenders too.

 

[artc]

It is amazing half doesn't understand, and the other half doesn't care. In other words, they approve of the
rape and murder and all the other things that are going on that are part of this. And if they knew as much as the thought, they did they wouldn't say anything. The tariffs started eight years ago, and most were left intact and not removed by the soon to be past president. And as for new ones to are north and south are stop illegals from coming into country. As for China it is to even up the playing field and also to stop the drug flow from there in case you don't know that is where the fentanyl comes from.

 

[ismilelots]

It appears we are soon going to have tariffs of 20% and more on anything imported from anywhere.

What does this mean for us here at TBN?

Unless tractors, accessories, attachments and parts get an exemption ("necessary services" or something), prices of imported tractors are going to go up by at least 20%. If we finance, payments will go up, since the tractors cost more, insurance (if applicable) will also go up.

Prices for used tractors will also go up (as if they aren't high enough already), just like the prices of used cars rose almost in lock-step with the increased prices and limited availability (from Covid) did on new cars.

As tractors become more and more expensive, we will either keep what we have longer or if we are in a business that relies on tractors, we will have to raise our prices when tractors and parts become significantly more expensive. Fewer tractors will be sold, because WE don't get a 20% raise to compensate for the 20% price increase from the tariffs.

Anyone who uses a tractor as a service (land clearing, mowing, etc.) will also have to raise their prices because their costs just increased.

This all means higher prices for lots of people, many of whom don't even realize there is a tractor somewhere in the "food chain" of goods and services they buy.

This affects Kubota, Kioti, Mahindra, some John Deere, and others. Deere moved part of their production to Mexico to keep the retail price down, and if they decide to come back, their prices will have to go up.

The issues with across the board tariffs are that they increase the cost of anything imported and WE pay these tariffs, not the manufacturers. Tariffs are a tax on US, and they are intended to discourage us from buying imported things, whether or not those things are even produced or available domestically.

A further problem is that when a domestic manufacturer is protected by arbitrary tariffs, they have ZERO incentive to improve their products (because there is no competition) and their prices can rise (again, because there is no competition). You may recall the "invasion" of Japanese cars in the 80s - Detroit had become totally complacent, and protected by tariffs, continued making and selling the same crappy cars they had been making for years. Eventually, they all went broke and had to be bailed out by the government, using OUR tax dollars to do it. (Yes, they eventually paid back most of the loans, and lots of jobs were saved. We may have to do it again because the current crop of Chinese electric cars are very good indeed, and amazingly inexpensive because they often are subsidized by their government.)

Arbitrary tariffs are a mistake. There is, however a rationale for targeted tariffs. If an overseas company is "dumping" their product at or below cost to put a domestic competitor out of business, that is a legitimate reason for a tariff. Interestingly, if it two domestic companies engage in a price war, there is no law against that, and in fact, it happens all the time.

After WW2, the US was the only real market for anything, nobody else had any money and they were busy rebuilding from the war. Now, however, there are lots of countries that can afford to buy imported stuff, and it might be very tempting to a tractor manufacturer (and not just to tractor manufacturers) to abandon what they see as a "hostile" market and sell to customers around the world instead.

Some of them MAY establish factories here, as Honda and Toyota have done, but some of them are simply going to say the US market just isn't worth the trouble and sell elsewhere. Establishing a local factory isn't done overnight, either.

In the interim, we'll have higher prices (new and used) and a narrower selection.

There is an old Chinese curse - "May you live in interesting times." We do.

(Kevlar and fireproof suit on!)

Best Regards,
Mike/Florida

The greatest thing is we live in a country where we can chose who to buy from.
If imported goods are cheaper than the US made products, then people buy imports and US producers suffer, shut down or shift work overseas.
If imported goods are more expensive than US products, then US producers will hire more people to meet demand helping citizens.
More jobs means competitive wages to attract and keep workers.