Affect of Steel and Aluminum Tariff on New Caterham Kit Pricing?

[SENC]

Thanks Croc - interesting reading, though in summary it seems a wordy way of saying we really dont know the impact, yet.

 

I'm fairly conflicted about all this.  I'm inherently anti-tariff and pro free trade... but I also recognize that for decades the US has been going this route largely alone (though it, too, has been in the tariff/protectionist game on certain items).  Economically I am all for allowing markets to determine where something can be made most efficiently - but recognize there are very real risks to the level of off-shoring that has occurred (and that foreign government subsidization, either directly or through cost controls have made an un-level playing field).

 

In the end, in my opinion, using tariffs as a tool to bring back business will prove to be another failed tactic given the exceptionally high cost of doing business (producing products) in this country due to regulation and corporate taxation (including supply tariffs).  Fix those and we still have a manpower problem that won't be resolved without immigration reform (that neither political party seems willing to address from an economic impact perspective).  

 

Ultimately, the national and global slowdown in population growth (and expected decline) are going to require radically different economic models that rely more on efficiency, productivity, and cost reduction than on growth.  How we do that in an era demanding more investment to radically change power generation amd insisting on safety/risk reduction, I'm not sure. 

Edited May 3 by SENC

[Croc]

9 hours ago, SENC said:

Thanks Croc - interesting reading, though in summary it seems a wordy way of saying we really dont know the impact, yet.

 

I'm fairly conflicted about all this.  I'm inherently anti-tariff and pro free trade... but I also recognize that for decades the US has been going this route largely alone (though it, too, has been in the tariff/protectionist game on certain items).  Economically I am all for allowing markets to determine where something can be made most efficiently - but recognize there are very real risks to the level of off-shoring that has occurred (and that foreign government subsidization, either directly or through cost controls have made an un-level playing field).

 

In the end, in my opinion, using tariffs as a tool to bring back business will prove to be another failed tactic given the exceptionally high cost of doing business (producing products) in this country due to regulation and corporate taxation (including supply tariffs).  Fix those and we still have a manpower problem that won't be resolved without immigration reform (that neither political party seems willing to address from an economic impact perspective).  

 

Ultimately, the national and global slowdown in population growth (and expected decline) are going to require radically different economic models that rely more on efficiency, productivity, and cost reduction than on growth.  How we do that in an era demanding more investment to radically change power generation amd insisting on safety/risk reduction, I'm not sure. 

 

 

 

Yep - no one has a clue on how to implement tariffs, including the US government.  All I know is that things will cost a LOT more money for me to buy and shipping (if it is still possible) will be prohibitively expensive as the red tape will be supercharged. 

 

Your reaction is very close to where my head is at.  Every time I have seen an economy somewhere around the world try and pivot its foundational base structures it NEVER happens within the time frame promised by a politician.  It can happen but it takes sustained 10-20 years of effort.  In the meantime you can lay waste to the economy and its people.  Plus tariffs are an imperfect mechanism to do this - fiscal policy, then monetary policy, or preferably those two combined, are always the better approaches as they are stronger tools.  Trade policy is a long way back in third place.  Logistic channels have such long lead times in production cycles - they are years long.  R&D investment is such a big part of the equation - something this administration does not get with its anti STEM mentality.  Plus you pick up on the lack of employable labor - the US economy is structurally at full employment (well it was until we hit a recession this year - wait for the stats to release in 3Q), so immigration is part of the puzzle to solve but cannot with this lot of politicians.   This is what has me thinking we are on a journey into weakness before any turnaround can occur.  Trying this on a such a politically polarized country is a big unknown. 

 

 

 

 

[SENC]

I am afraid you are right, and that we're in for a bumpy road (at best).

[Mark IV]

Here is the list of affected auto parts from my broker:

 

Attachment 2_Auto Parts HTS List 1.pdf

[Mark IV]

So, will we bring back all of the coffee and banana plantations that have been offshored? How about the cacao trees? Will North Dakota once again be the chocolate capital of the world? And of course, we will open factories to produce products for Dollar Tree and Wal Mart. There are billionaires just chomping at the bit to invest in factories that earn 2 cents on each product.

Edited Friday at 12:25 PM by Mark IV

[MV8]

Wait.

 

[Rustler]

Quick reminder the topic here is how recently imposed tariffs will effect Caterham kits and parts. 

 

There was a big announcement yesterday that was light on details but shows promise for Caterham owners, current and prospective.  Two of the product groups specifically discussed are relevant here, steel/aluminum and automobiles.  I think the tariffs that kit buyers will be subject to are steel/alum and auto parts since the kit comes in as component parts and not a complete auto (true?).  So I'm unclear on where the present deal leaves auto parts imported from the UK.   But right now (and literally subject to day to day change), I'm thinking that the kit is going to be subject to a 10% tariff on the entire value?  Does that sound right? 

 

Here are few excerpts from WSJ on yesterday's announcement:

 

"Under the deal, most U.K. goods will still be subject to the global 10% tariff the U.S. imposed on all countries in April. But U.K. steel and aluminum will be exempt from the U.S.’s 25% levy and U.K. car tariffs will be lowered to 10% from 25% for the first 100,000 vehicles...

 

...U.K. officials say that they are continuing to negotiate with Trump officials to reduce the baseline 10% tariffs the U.S. imposed." 

[Gene_W]

I read the available information the same as Rustler. I think most recent pricing (from US distributors) included the 2.5% existing tariff so kits delivered may have an additional 7.5% which while unfortunate is not as bad as what was originally proposed. This is of direct interest to me also as I have a kit that is targeted to deliver in the US around late summer early fall. Of course the "negotiations" could change or go off track. One thing I have investigated is the possibility of "parking" the kit in a bonded warehouse in England and slowing the delivery. I hope it doesn't come to that since that would be like trying to "time" the stock market.