FCA Proposes a Merger with Renault

RobertRyan wrote:

GM and a few others decided to build a factory in Thailand for truck production after TAFTA was signed. If it weren't signed and Australia had higher tariffs on their utes, then that would have forced these companies to build their trucks in Australia with

Not one factory, factories and the Factoriy for GM existed before the TAFTA was signed.
No Midsize Pickups were ever built in Australia. Higher Tariffs would have done little for imports of Pickups from Thailand, not affected either way. Thailand became the Detriot of Asia as a result economies of scale worked in their favour

They became the Detroit of Asia because of free trade and less expensive labor/regulations made it more cost effective to build there in order to maximize profits. If Australia would have put heavy tariffs on their ute's like the US does with their trucks, then it would force these trucks makers to move their factories to Australia instead of in Thailand. It would also mean that Australia would not have to offer many tax subsidies to get them to stay.

Great example of this is the US Colorado and Ranger. These two trucks were already being built overseas when they were re-introduced to the US market in a mid-size truck market dominated by Toyota. Ford and GM could have easily just ramped up the factories in Thailand or Brazil to meet US sales keeping these jobs overseas. However, due to the 25% tariff, GM and Ford built or refurbished factories in the US because it was more cost effective for them to build them here instead of overseas.

I would grantee you that if Australia slapped a 25% tariff on their trucks, the truck makes will move their factories there without having to give away much(if any) tax subsidies. I would even estimate that the price of these trucks would not increase more than 3-5% either.