Tuesday, 3 July 2018

The Thing About this Trump Tariff on German Luxury Cars

Sit and pause over the discussion....which various business journalists are trying to hype but fail to realize.

First, he's not banning (a word often used to confuse people). I've seen three articles in the past hour, which used the word ban.  It's a totally false narrative.

Second, the average working-class American doesn't care for luxury German imports anyway.  In fact, you can ask a hundred Americans if they've ever sat in a BMW, Audi or Mercedes....and the answer is 80-percent saying 'no', they haven't.  If you did military time and was stationed in Germany....it's a fairly high chance you did sit in a older model BMW or Mercedes. 

Third, who can typically afford a German luxury-class import (before all this chatter started up)?  The basic model of the Audi TT runs at 43,000 dollars, with the stuff on it....near 65,000 dollars.  That was before the tariff talk. 

Fourth, I come to the meat and potato discussion....the same guy who could afford the BMW at $70,000 last year....will likely be able to afford the tariff situation at $87,000.  Oh, I admit....he'll grumble.  But if he had $70,000 to throw toward this....he'll accept this.  He might delay the purchase a year....waiting on the collapse of the tariff or some change, and I think this is the Trump 'card' being played.

If Trump prevents 50-percent of the normal sales for the premium German luxury cars....the Germans can't find another market to make up for this, and it'll trigger a slow-down at the factories (my guess, by November). 

By early 2019, I think the Germans will be reviewing options, and trying to fix the problem.  So there are three ways:

1.  Build factories in the US to manufacture the German luxury cars (I think BMW would quickly wise-up to this idea).

2.  Convince the EU to resolve this mess. 

3.  Hope on a defeat for Trump in November 2020 (a long way away).

Any idiot journalist who think that the bulk of American voters cares about this, or that they are big-buyers of German luxury cars....needs to drive around the nation and talk to regular people.  For a top-ten topic.....it doesn't even rate in the top 1,000 topics for most people. 

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