CPT_RSV
Active Member
There are tons of European cars in America. I’ve owned a very large handful of them. Like you said there are virtually no American cars seen in Europe. That creates a trade deficit and the reasons matter very little when viewing the bottom line. A great example was in the 80’s when the Reagan administration placed harsh tariffs on Japanese motorcycles. If they didn’t, there would be no Harley Davidson. Free trade, in a perfect world, can work only if there are no other obstacles to American corporations doing business in those countries we trade with. Perfect example, East Asia. They have been purposefully saturating the world markets with everything from steel to rubber dog poo at a deep discount due to the benefits of slave labor. As a result, tens of thousands of businesses were forced to shutter around the world, as they could no longer compete in their own domestic markets. In addition, this resulted in East Asia riding a trillion-dollar-per-year trade surplus, and that’s considering only the US. This was not incidental, rather done with purpose to seize control of the world supply chains in order to gain power, which they did. And if any country placed tariffs on them to compensate for the massive trade losses, they would simply send their products to the same country through other countries (even countries that house only penguins), then re-stamp those products so they showed as being manufactured in the chosen country rather than its actual point of origin….hence the reason the Trump administration placed blanket tariffs on every country in the world. East Asia works with a 5% profit margin. The blanket tariffs placed on all other countries was 10%, double what East Asia requires to survive. This war is not with our allies. Over the coming months, it will become painfully apparent (if it hasn’t already) who the geopolitical target is. My uneducated guess is the US will have fair or fairer trade deals with every country in the world, sans one. And that “one” has been more destructive to world trade than any other entity in history. Interestingly, the US makes up less than 5% of the world population, yet its consumers are responsible for 30% of goods purchased. Do the math and you’ll find that East Asia, who’s economy can exist only by exports, isn’t going to last very long after decoupling. Sadly, I also believe none of this is going to end well for anybody. Harsh tariffs look a lot like sanctions and embargo’s. World wars break out over ____ like that. Even so, if that be the case, it’s a worthy endeavor. If things were allowed to carry on as they were, America and its dollar would be worth nothing within twenty years.I typed an edit in my post with a longer answer. I'll paste it here:
Edit: if you want a longer answer, the US has always had a 25% tax on light trucks imported from other places and Europe was a largesupplier of that for many decades, which is why the initial 10% tariff was always there. Trump in his first term put a massive tariff that the EU responded with, as did the rest of the world. And now Trump thinks he can do the same playbook and get results again, but the world has woken up to this and learned.
This also isn't taking into account that the demand for american cars across the world is not as high as it is in their own country. This is a key part about why Trump's understanding of this trade war doesn't make sense. The trade deficit exists because Europeans are simply not as interested in American cars compared to their own or other countries'. It doesn't help nor hurt Ford because no one wants to drive a gigantic F150 down the streets of paris or rome when their own cities are not built for these large vehicles. EDIT here: (side note, apologies for a lot of edits on posts, I just have a lot of thoughts that tend to come after I've already posted). If you talk to people in Europe, the reason why the demand for cars from America specifically is not high is because of the cost and the size. American cars cost too much because of labor costs as well as supply costs (hint, this is why American companies themselves offshore a ton of the vehicle production). Bringing those cars into Europe essentially prices them against European companies who already produce cars that are fit for their cities and roads and also have more demand in general to support themselves locally. This is essentially the same as how it works in America too. The EU has floated a zero for zero tariff, which is essentially free trade. And I don't think Americans, especially republicans as of late would like the results if there was a world where there was free market capitalism. Especially in a world where the EU has also been working with China to get their EVs into market. This is a key point to understand. Doug Demuro who is a massive car enthusiast touched upon this with EVs here:
Also I love the argument that tariffs are helping American workers and bringing back american jobs, because I'd love for you to point out how many companies actually end up bringing manufacturing jobs back to the US. Announcements /= actual action. Look up foxconn in trump's first term, apple has been promising this for years. Auto makers have also promised this for years and not delivered. The hard truth is the US is not the manufacturing giant it once was and pivoted its economy to more service based goods, but the people of yesteryear cannot accept that as a reality and want to return to a manufacturing economy. Young people, especially gen z and millenials, do not want to work in a manufacturing economy. ESPECIALLY one where tech seems to be pushing hard for automation, hence making those manufacturing jobs useless.
EDIT: and ironically enough, european car companies have some of their biggest manufacturing plants in America, which is supplying American jobs. BMW's biggest plant is in America
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