Forum Discussion
wilber1 wrote:
ShinerBock wrote:
How did the chicken tax prevent outside competition when US truck manufacturers had competition from several foreign manufacturers since it's inception?
You don’t think a 25% tax would discourage competition? What do you think would happen to domestic truck prices if a 25% tax was applied to every truck when it left the factory?
DittoShinerBock wrote:
How did the chicken tax prevent outside competition when US truck manufacturers had competition from several foreign manufacturers since it's inception?
You don’t think a 25% tax would discourage competition? What do you think would happen to domestic truck prices if a 25% tax was applied to every truck when it left the factory?- How did the chicken tax prevent outside competition when US truck manufacturers had competition from several foreign manufacturers since it's inception?
wilber1 wrote:
ShinerBock wrote:
wilber1 wrote:
You don’ think they could have sold a lot more of those small trucks here if they had been 25% cheaper? How many trucks do you think Toyota and Nissan would sell here if they were 25% more expensive? It didn’t protect the UAW because none of the plants are unionized and most are in right to work states where they pay substantially less. Basically, those states are doing the same thing as Mexico.
You are stuck on this 25% as if they were exactly 25% more expensive which is false. If you look at original MSRP of Toyota pickups in the early 90's, the MSRP of these pickups actually increased when they start building the pickup in Fremont, California. The prices never decreased from that point on either so where you are getting this notion that the trucks built overseas were 25% more? Please show me links that these trucks cost 25% more because I am not seeing it.
1990 Toyota Pickup
1991 Toyota Pickup
The UAW was the one that negotiated the 25% chicken tax with President LBJ to protect UAW jobs, and it is them who continue to lobby to keep it in place. Not the US truck manufacturers because it did nothing to help protect them. The UAW wants you to believe that it is the greedy US manufacturers that were the ones that want to keep it in place, but that is not true based on lobby records.
I'm not saying they are 25% more expensive but it does restrict competition which allows them to charge more than if they had that competition.
The Chicken tax also protects Toyota and Nissan from foreign built trucks. It allows them and US manufacturers to charge more for their trucks because they don't have to fear foreign built vehicles. Toyota and Nissan can now charge the same for their trucks without paying the 25%. That 25% now stays in their pockets instead of going to government. Their profit per truck can now equal or exceed the US manufacturers because they aren't paying the tax and are non union.
Toyota, Nissan and other foreign car builders are not UAW. Right to work states allow them to build their vehicles in the US at much lower labour rates. Just like Mexico.
People have some strange ideas about the real consequences of tariffs.
Totally correct Tariffs are used as a trade weapon, very much in evidence between China and the US now
You also have hidden Tariffs, not mentioned above.that does not allow products that do not conform to regulations being sold . As those non NA Pickups are small 3litre Diesels amongst other things they cannot be sold in the US.
UAW is in lockstep with US manufacturers, the Manufacturers are very happy to have a 25% Tariff, it prevents outside competitionwilber1 wrote:
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.
Well we kind of want to restrict imports because we don't want a trade deficit(which was over $600B in 2018) like we have with many countries that do not have the same regulations and red tape that we do. If we eliminate all tariffs on vehicles, then we would end up like Australia where all of the manufacturers, even the domestic ones, move production out of the country because it is cheaper to build elsewhere. Did vehicles prices fall in Australia (like you claim they will here) when the tariffs were removed and production moved to out of the country? NO!
While the tax does restrict trucks made overseas, it does not restrict them from being sold here or building a factory here if they think their product can sell. The chicken tax did not restrict VW, Honda, Toyota, Nissan, Isuzu, Suzuki, or Mitsubishi from selling trucks. They sold trucks for many years in the US, but most did not sell full size trucks like we wanted and were pulled just like every vehicle that doesn't sell well.
Most of the mid-sized trucks today built in countries like Thailand, Brazil, or Indonesia, not Europe so I am not sure why Europe is mentioned here.
Also, you do know it is illegal in the US for manufacturers to collude with each other to keep prices high, and you would have to be living under a rock if you said the US truck market is not competitive. From midsize to HDs, we have more pickup truck models to choose from than any other market in the world. I am not sure how you can say that the one of the worlds largest(if not the largest) pickup truck market with the worlds largest selection of different models is not competitive.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.- Consumers pay the tariffs.
If the foreign made truck price is 37,500, you can bet the US truck price will be set at 37,499. 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.ShinerBock wrote:
wilber1 wrote:
You aren't listening. Not having to pay that 25% because they build their trucks in the US means they cay pocket the 25% they used to give government and charge the same for their trucks. It also means US manufacturers can keep their prices up.
You just said "You don’ think they could have sold a lot more of those small trucks here if they had been 25% cheaper". You did NOT say, you don't think they would have been more profitable if the cost of goods was 25% cheaper.
And you are not listening to me. You are assuming that they are exactly 25% cheaper which is false. In the US you have to pay higher labor rates, provide healthcare and pensions, abide by tougher and costlier regulations both local and federal, and many other things that foreign manufacturers don't have to abide by. By the time you add all of this up, that 25% higher cost you keep claiming as fact(even though you don't know 100%) is probably dwindled down to maybe a 5-10% cost difference between building in the US and paying the chicken tax. Could be less, could be more depending on the value of the US dollar versus other currency at the time.wilber1 wrote:
The UAW can't stop foreign manufacturers from locating in the US but they can protect US manufacturers from vehicles built outside the US and that is what they are doing by lobbying for the chicken tax. For a foreign manufacturer to sell light trucks in the US, it has to commit to building a plant here, otherwise it won't make financial sense.
This is exactly what I have been saying in how the UAW has been the benefactor of the chicken tax, not the US truck makes because it certainly did not deter foreign competition ......
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.wilber1 wrote:
You aren't listening. Not having to pay that 25% because they build their trucks in the US means they cay pocket the 25% they used to give government and charge the same for their trucks. It also means US manufacturers can keep their prices up.
You just said "You don’ think they could have sold a lot more of those small trucks here if they had been 25% cheaper". You did NOT say, you don't think they would have been more profitable if the cost of goods was 25% cheaper.
And you are not listening to me. You are assuming that they are exactly 25% cheaper which is false. In the US you have to pay higher labor rates, provide healthcare and pensions, abide by tougher and costlier regulations both local and federal, and many other things that foreign manufacturers don't have to abide by. By the time you add all of this up, that 25% higher cost you keep claiming as fact(even though you don't know 100%) is probably dwindled down to maybe a 5-10% cost difference between building in the US and paying the chicken tax. Could be less, could be more depending on the value of the US dollar versus other currency at the time.wilber1 wrote:
The UAW can't stop foreign manufacturers from locating in the US but they can protect US manufacturers from vehicles built outside the US and that is what they are doing by lobbying for the chicken tax. For a foreign manufacturer to sell light trucks in the US, it has to commit to building a plant here, otherwise it won't make financial sense.
This is exactly what I have been saying in how the UAW has been the benefactor of the chicken tax, not the US truck makes because it certainly did not deter foreign competition ......
