25% Tariffs on All Imports - Effect on Rivian prices?

[André]

You haven't looked very hard on the Rivian then, there are so many parts labeled as foreign made. The only things that seems to be made in the US are the steel components like frame and suspension lines, most everything else has a foreign label.

And even the steel used to build these components is most likely imported…

Sponsored

 

[AlphaSnowbordergirl]

Maybe I'm wrong about this (probably not) but isn't the battery the most expensive part of the vehicle? Aren't most of the battery components sourced outside the US at least for R1 vehicles?

Asking for a friend.

"Rivian sources its battery cells from Samsung SDI in South Korea, which are then assembled into battery packs at Rivian's plant in Normal, Illinois."

I know for the R2 they are switching to LGES batteries and the factory is supposed to be in Arizona, so we'll see if its just for the R2 or if they will be providing for the R1 as well.

 

[André]

Canada announced today a 25% tariff on all imported cars from the US. Unfortunately, this means no more sales for Rivian in Canada.

 

[andrewgrhogg]

Stelantis just announced layoffs of 900 workers in US factories. Because the cars they produce in Canada use parts made in those US factories. And they won’t be selling those cars anymore in the US.

As I said previously, the people in charge of workers unions here are utter morons who have no clue about economics or international trade.They and their workers were/are cheering these tariffs because they’re dumb enough to think this will lead to an increase in employment! I for one will have zero sympathy as they lose their jobs to a combination of lost sales and increased automation.

 

[Donald Stanfield]

Jobs coming back isn’t some overnight thing. Tariffs take time to work and yes, there is some pain to get there. What’s the alternative, let our ever shrinking manufacturing base whither and die until our economy collapses? Doesn’t sound good to me.

 

[doit82]

The alternative is targeted tariffs and support of growing infrastructure within the country via legislation like the chips act while reducing regulations to stimulate infrastructure growth. Blanket tariffs are a giant tax hike on the most vulnerable and terrible economic policy.

 

[manitou202]

Jobs coming back isn’t some overnight thing. Tariffs take time to work and yes, there is some pain to get there. What’s the alternative, let our ever shrinking manufacturing base whither and die until our economy collapses? Doesn’t sound good to me.

Do we just bring back automotive manfacturing? What about shoes, electronics, etc?

Nike employees over 600k people in Vietnam and a few other countries. Could we find 600k people in the US to make shoes for minimum wage?

The global economy has worked extremely well. The US now benefits from lower cost labour and manufacturing from other countries, while we shift resources (people) to other higher skilled jobs in tech, health care, and services.

There are a few instances where we should bring back manufacturing for security reasons, like semiconductors, but we don't want all manufacturing to come back.

 

[andrewgrhogg]

Jobs coming back isn’t some overnight thing. Tariffs take time to work and yes, there is some pain to get there. What’s the alternative, let our ever shrinking manufacturing base whither and die until our economy collapses? Doesn’t sound good to me.

You misunderstand the economics of manufacturing.
1. other countries can produce most of what we consume in America at much lower cost, and therefore prices, than America can.
2. you can drive manufacturing of all goods back to the US and your economy will stagnate. Parts and products will cost radically more to produce, driving prices significantly higher. So yes, you can have all cars and all their parts produced in America, but a $40k car will now cost $50k+. Same for every other product where the US has cost disadvantages. Overall spending will stay the same but what you can buy for that spending will go down, leading to a lower standard of living.
3. most manufacturing jobs in the auto business can be done cheaper and better and faster by robots. Companies are never bringing back car manufacturing jobs. They will instead invest in greater automation.
4. on a micro scale your argument is that a few auto manufacturers should get more jobs and higher paying jobs so the rest of us can pay more for our cars. Like 25% more. So you’re basically advocating for socialism of work. That’s over 100 million households paying 25% more for a US produced car so a few thousand workers can have jobs that didn’t exist previously.
5. on a macro scale if we export all such jobs then no one will have money to buy any cars, wherever they are produced. However, that ignores moving our manufacturing base and other industries to other more skill- based jobs. Which is what we should really be doing.
6. the issue is not really manufacturing jobs. Those aren’t actually jobs we want. The issue is having an educated and trained workforce that can do more skilled jobs with higher pay that other nations can’t do. That’s a longer and more complicated effort of providing excellent schooling and skills development to all, for free, which of course the republicans don’t want to do.

regardless - these tariffs will lead to lost jobs long term, and will not fix our economic issues. They will just accelerate inflation and job losses, accelerate automation and AI, and make the lower half even worse off. If you don’t believe me then just wait 6 months and get back to me on where we are at.

 

[SANZC02]

 

[Dark-Fx]

Jobs coming back isn’t some overnight thing. Tariffs take time to work and yes, there is some pain to get there. What’s the alternative, let our ever shrinking manufacturing base whither and die until our economy collapses? Doesn’t sound good to me.

Incentivize the businesses to make the investments, not suddenly make their goods unaffordable because the government wants to take an enormous percentage off the top.

 

[ndmiller]

Curious if any Forum members have heard from Rivian Corporate how the new tariffs (assuming it doesn’t get recalled or postponed like several of the others) might have on Rivian. I know they are US built but I would think many of the parts, especially the electronics, are foreign supplied.

From what I understand, the tariff applies to the percentage of the vehicles cost which is made of foreign parts. So say $15k of the total cost to build a Rivian are foreign sourced parts, the tariff on a Rivian would be $3,750.

If anyone has other info or a different understanding please chime in.

Every manufacturer/wholesaler/retailer did some type of analysis today on the additional Tariff costs on parts/materials/finished goods. They estimated the value of the April 3-EOY expected imports and calculated the Tariff by item by country.

The strategy on how companies will respond is interesting as these tariff costs are likely more than a companies entire annual earnings (EBITDA 0-30% Revenue estimate). It's a HUGE number and remember for the most part almost nothing is majority made in the USA without importing something. The US even imports gasoline and oil although we export essentially the same amount (i.e. types of crude differences not a production problem).

What that means is the majority of these costs will be passed onto consumers plain and simple. I guess companies can defer capital expenses to cover profit shortfalls, but most of that stuff is baked by now.

No product is immune as the Tariffs are worldwide (i.e. China 54%, EU 20%, Japan 24%, Vietnam 46% ), so the price of everything will be going up not immediately but over time, Rivian included.

Forgot to add, companies won't change investment decisions in the US until there is some consistency. This is to say no-one is reinvesting in US manufacturing under these daily flip flop decisions. No way no how. For example, starting manufacturing of clothing in the US will cost more than the 54% Tariff from China so who would invest $5B to open a clothing factory, train workers (who don't exist here) just to try and sell a $50-70 Tee Shirt at Walmart.

 

[Donald Stanfield]

You misunderstand the economics of manufacturing.
1. other countries can produce most of what we consume in America at much lower cost, and therefore prices, than America can.
2. you can drive manufacturing of all goods back to the US and your economy will stagnate. Parts and products will cost radically more to produce, driving prices significantly higher. So yes, you can have all cars and all their parts produced in America, but a $40k car will now cost $50k+. Same for every other product where the US has cost disadvantages. Overall spending will stay the same but what you can buy for that spending will go down, leading to a lower standard of living.
3. most manufacturing jobs in the auto business can be done cheaper and better and faster by robots. Companies are never bringing back car manufacturing jobs. They will instead invest in greater automation.
4. on a micro scale your argument is that a few auto manufacturers should get more jobs and higher paying jobs so the rest of us can pay more for our cars. Like 25% more. So you’re basically advocating for socialism of work. That’s over 100 million households paying 25% more for a US produced car so a few thousand workers can have jobs that didn’t exist previously.
5. on a macro scale if we export all such jobs then no one will have money to buy any cars, wherever they are produced. However, that ignores moving our manufacturing base and other industries to other more skill- based jobs. Which is what we should really be doing.
6. the issue is not really manufacturing jobs. Those aren’t actually jobs we want. The issue is having an educated and trained workforce that can do more skilled jobs with higher pay that other nations can’t do. That’s a longer and more complicated effort of providing excellent schooling and skills development to all, for free, which of course the republicans don’t want to do.

regardless - these tariffs will lead to lost jobs long term, and will not fix our economic issues. They will just accelerate inflation and job losses, accelerate automation and AI, and make the lower half even worse off. If you don’t believe me then just wait 6 months and get back to me on where we are at.

These other countries you’re talking about have high tariffs on our goods or VATs on our goods and we have trade deficits with just about everyone. That’s not good for us, and it has little to do with saving a few jobs here.

Not to mention that taxes can be lowered with the money being paid by tariffs, keeping net costs similar for America. Also 6 months is way too short of a timeline to see any benefits to balancing trade deficits.

 

[manitou202]

These other countries you’re talking about have high tariffs on our goods or VATs on our goods and we have trade deficits with just about everyone. That’s not good for us, and it has little to do with saving a few jobs here.

Not to mention that taxes can be lowered with the money being paid by tariffs, keeping net costs similar for America. Also 6 months is way too short of a timeline to see any benefits to balancing trade deficits.

VATs are not country specific. They are applied to all goods regardless of origin (or goods in a certain class) within a country. Essentially a sales tax. So they are not comparable to tariffs in any way. They are comparable to sales tax.

Most major countries we trade with do not have large tariffs on imports from the United States. There are some exceptions for specific products, but not general across the board tariffs anything close to what Trump has just proposed.

https://en.wikipedia.org/wiki/List_of_countries_by_tariff_rate

 

[usofrob]

I think it's interesting to think about tariffs as similar to VAT. I wonder what you all think about using the money from the tariff's to reduce taxes? It seems very possible, but it also seems like the current leaders will more likely distribute the tax rebates to the higher tax brackets. Has anyone seen an analysis about how much an average person in each income range might be effected by the tariffs?

 

[doit82]

I think it's interesting to think about tariffs as similar to VAT. I wonder what you all think about using the money from the tariff's to reduce taxes? It seems very possible, but it also seems like the current leaders will more likely distribute the tax rebates to the higher tax brackets. Has anyone seen an analysis about how much an average person in each income range might be effected by the tariffs?

You can't pay down the deficit and give giant tax breaks (which always preferentially favor the wealthy). Also, if the plan works perfectly, and manufacturing comes back to the US the products will still be more expensive, and then there is no tax revenue from tariffs to offset with tax breaks. Dumb dumb dumb.

Sponsored