FCA Proposes a Merger with Renault

ShinerBock wrote:

wilber1 wrote:
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It protects US manufacturers from foreign built competition. Any manufacturer that builds trucks in the US has an automatic 25% advantage over foreign competition. If prices didn’t go down when foreign makers started building in the US it was because they are keeping the extra profit, not passing it along to consumers. This allows the domestic makers to keep their prices up as well. Win win for the truck makers, same old for the consumer.

If it protected US manufacturers from competition, then why did they have competition from several brands since it's inception and still do? Again, you are assuming that the cost to build a vehicle in the US is the same as building it the US by saying it is in automatic 25% advantage. This could not be any more false. It costs less to build in most overseas countries that these trucks were being built in therefore the advantage is much less than 25%.

Let me put in in simpler terms. Lets say due to labor costs, regulation, pensions, healthcare, and other factors a truck built by a US manufacturers costs $35,000. Since many countries where these small trucks are being built do not have to abide by the same regulations and have weaker currency to our dollar, it only costs them $30,000 to build the same truck and ship it to the US. Now lets slap on the 25% chicken tax and that brings the cost for the foreign made truck to $37,500 while the US made truck remains at $35,000. That is only a 7.4% advantage, not a 25% advantage.

Although I am not sure why you care so much for US truck tariffs being from Canada and not having a vote. It is almost like you want us to get rid of our tariffs to give foreign countries who can use cheap labor and pollute more due to less regulation the upper so we end up like the Australian auto industry where all manufacturers, even the domestic brands, moved their production over seas. That is what happens when you get rid of all of your tariffs. Tariffs their did not protect the domestics brands their from competition just like it didn't here, but getting rid of them moved all production out of the country because it made it cheaper to build elsewhere.

Your tariffs are your issue but you should understand that they cost you money because not only do they restrict imports, they allow manufacturers to maintain higher prices, particularly when they use non union labour in right to work states. I doubt it is cheaper to build cars in Europe than it is in Alabama, yet the tariff applies to European build vehicles as well.

The bottom line is there will be no trade deals in autos as long as the Chicken tax is in place.