Tesla Least Affected Automaker By Trump’s Proposed Border Tax

7 months ago by Eric Loveday 39

Tesla Emblem On Model S

President Trump’s proposed border tax could increase sticker prices of vehicles sold in the U.S. by up to $17,000, but not if you’re name is Tesla, according to a report by Baum & Associates.

Bloomberg states:

“In what it calls a “thought exercise,” researcher Baum & Associates LLC estimates most automakers would need to raise vehicle prices by thousands of dollars — more than $17,000 per vehicle in Jaguar Land Rover’s case, which imports all its vehicles — to recoup higher costs incurred by a proposed border-adjusted tax. Ford, with significant domestic manufacturing, would need to mull the smallest price hike among major automakers, at about $282 per vehicle, followed by General Motors Co. at $995, according to the report.”

Of course, this is all just guess work at this point in time, since it’s not exactly clear how (and even if) the import taxation will be laid out in the end, but it seems as though Tesla could escape the price hurt entirely, if we’re to believe Baum & Associates.

Witness the graphic below showing Tesla’s added price hike of $0 to recoup from the “border-adjusted tax plan.”

Baum & Associates explains that the affected automakers likely won’t raise prices by the entire amount shown above. Rather, most automakers would be left footing some of the additional tax burden, while at the same time raising prices by perhaps up to a couple thousand dollars.

As for Tesla, Baum & Associates states (via Bloomberg)

“The one automaker that may be able to keep prices steady would be Model S sedan maker Tesla.”

Now, we’re not entirely sure how this could be true, since Tesla does indeed source parts from abroad, but even still Teslas are among the most American made cars out there, so it seems the electric car makers lineup of vehicles could be among those affected the least. If that’s true and if the border tax becomes reality, then it should be a boost for Tesla sales.

Source: Bloomberg

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39 responses to "Tesla Least Affected Automaker By Trump’s Proposed Border Tax"

  1. ffbj says:

    Seems the Trump policy as a number predicted,
    contains an ‘Easter Egg’ for Tesla.

    1. philip d says:

      If Europe responds in kind and levies a 35% tariff on American cars including Tesla then Tesla’s overall sales will be cut in half.

      I’m sure the Model 3 will still sell domestically as fast as demand will allow for maybe a few years but then when production is at full capability they need to sell globally.

  2. Miggy says:

    But it could harm their export sales outside of the US.

    1. (⌐■_■) Trollnonymous says:

      Let’s take China for example outside the US.
      What’s the Tariff on a Model S there?

      1. David Murray says:

        Kind of what I was thinking. It seems our cars are always taxed in other countries. Why isn’t it the other way around?

        1. R.S says:

          Ask the guy driving a VW Pickup.

      2. Daniel says:

        We may not want to “poke the bear” that is China. Not to suggest that we must bow down to them, but the reality of the sheer volume of trade that comes to the U.S. from China cannot be ignored. (whens the last time you bought “anything” NOT made in China?) I’ve even seen “at one point” United States flags that were made in and imported from China.

        Combine that with the amount of our national debt. that China is holding?? It may be unwise to tempt fate in a all out trade war with them again seeing a more “tempered” approach in swinging the pendulum our direction without ruffling feathers which at the end of the day hits only the end user (which is the consumer) in the wallet.

        1. Gsned57 says:

          China holds our debt to keep the value of their currency down. If they dump dollars the value of the US dollar goes down with respect to China, our goods get cheaper and theirs more expensive. It is in China’s best interest to hold onto our currency as long as they can.

          Worse than that for the US is chinas 50% or they tax the crap out of imports. Allows them to steal our tech and hurt our companies.

          Those feathers have long since been due to be ruffled.

          1. Daniel says:

            I’m not suggesting that we don’t go there with regard to a leveling of the playing field, Just that we don’t need to kill flies with sledgehammers. doing so subjects us to perhaps smashing our own fingers / toes so to speak, in the process.

            1. Pushmi-Pullyu says:

              Well said.

              I’d love to see something done about the trade imbalance with China. China has been getting away with murder, so to speak, in imposing high tariffs on foreign imports, and putting red tape in the way.

              Seems nothing much has changed in China, in centuries, regarding foreign trade. British traders in China were forced to go into the opium trade, not because they wanted to, but because at that time, opium was literally the only profitable product that the Chinese officials would allow them to sell there! Sales of almost all foreign goods were banned.

              Now China doesn’t outright prohibit sales of foreign goods… it just discourages them with high tariffs, lots of red tape, and a mandate that foreign companies which want to manufacture in China must partner with a Chinese company to be allowed to, and must also “share” their intellectual property with the Chinese partner. (Scare quotes around “share” because it’s usually a single-direction giveaway, rather than actual sharing.)

              The problem, of course, is that reciprocity in tariffs would mean higher prices that Americans must pay on Chinese goods. In effect, a broad tariff on Chinese goods would create inflation in the USA. Not saying that shouldn’t be done, but if it is, it should be done carefully and thoughtfully… which is the exact opposite of how the Trumpster administration is acting!

              Reciprocity on tariffs on cars won’t help the U.S. at all, since China sells no cars here. That could, of course, change in the near future.

              1. ModernMarvelFan says:

                “British traders in China were forced to go into the opium trade, not because they wanted to, but because at that time, opium was literally the only profitable product that the Chinese officials would allow them to sell there! Sales of almost all foreign goods were banned.”

                Again, here to spin your view on how Opium war was somehow justified. Selling drugs illegally because other trades are banned is somehow justified according to you…

                Geez, is that why Mexico sells so much drugs to the US?

      3. philip d says:

        Tesla isn’t selling well in China anyway. Lowering their tariffs won’t help much. Besides China doesn’t haven’t an urgent desire allow more American cars to compete against their domestic brands.

        Europe is a problem though. They won’t just sit back and say oh golly that Trump really showed us cause our cars are expensive in the US now. They will immediately slap an equal or greater tariff on American cars including Tesla. Tesla sells a lot of cars in Europe

    2. Tom says:

      How does it harm exports? It has the opposite on outbound sales. Any exports will not be counted as revenue for tax purposes which makes them tax free which would be a 39% increase in profit for most companies. This proposal (which isn’t Trump’s and he has called ‘too complicated’) is a two way thing and is common for other countries. It does not create a tariff per se but rather you cannot deduct the cost of imported parts/goods as expense. Therefore it is like a 39% tax on imports. In the opposite direction it doesn’t require you to count export revenue as income.

      1. Daniel says:

        Because if other countries enact similar tariffs on U.S. imports to their countries it can price U.S. goods out of the local reach and put a cap on your potential export market there, hence reducing your demand or (sales) abroad.

        The world different today in the heyday of the U.S. we were the manufacturing Icon of the world, not so much anymore and we can’t regain international manufacturing clout or superiority overnight.

        We made our bed now we must lay in it. For decades Americans chose “cheaper” over “domestic” so by definition we forced our own companies to move manufacturing off shore as U.S. made products made less and less sense from a profit / loss standpoint.

    3. Daniel says:

      Indeed.. if affected countries establish tariffs in kind to match those imposed by the U.S. on imports from the U.S. to their countries. Couple that with the looming threat of Trump attempting to, or pulling out of the U.N.?? Could trigger trade skirmishes where no body wins and consumers globally wind up footing the bill. IMHO this administration needs to take a “longer” view on the who what when why how, etc. of some of the proposed 180 deg. pivots in long standing policy to vet pitfalls and outcomes, gather public support and act more rationally as opposed to the “knee jerk” shifts I’m seeing.

      1. (⌐■_■) Trollnonymous says:

        I recall when Ford and Toyota moved manufacturing of certain models of Trucks and SUV’s.

        What I DO NOT RECALL is the price of the truck/SUV going down by the thousands.
        As a matter of fact, I don’t think it went down at all…….hmmmmmmmm

        1. (⌐■_■) Trollnonymous says:

          “I recall when Ford and Toyota moved manufacturing of certain models of Trucks and SUV’s.”

          Should read…
          “I recall when Ford and Toyota moved manufacturing TO MEXICO of certain models of Trucks and SUV’s.”

          lol, yeah I suck.

    4. Eco says:

      Under NAFTA exports to Canada are NOT TAXED but if Trumps axes NAFTA all bets are off. The current exchange rate adds about 30% to the US price, an extra tax would make American vehicles much more expensive, but since north American manufacturing is highly integrated, most American vehicles go back and forth between Canada and USA about 6 times before a vehicle is complete. How this works is fairly complex and illustrates how axing NAFTA could raise prices for both Americans and Canadians i.e. nobody wins, everybody loses 🙁

      1. Roy_H says:

        The NAFTA agreement states that there is no tax on autos across borders within an auto company as long as there is equal value each way. Most luxury cars are made in the US and the cheaper lines in Canada/Mexico so luxury cars imported into Canada are not taxed. It all balances out.

  3. Michael Will says:

    Yeah you got to add the tax also the other way round, Mexico is not going to see a US imposed 30% border tax without taxing each and every GM Bolt or Tesla Model 3 with those 30% when imported to mexico.

  4. Markp1950 says:

    Tesla Vertical Integration…
    Raw materials in one end
    A bunch of stuff happens
    Cars come out the other end….

    1. That is the abbreviated GF2 Plan. Not fully there yet, still spread about in at least 2 places: Fremont & Sparks.

    2. philip d says:

      But the car itself is a product. If a tariff trade war starts then Tesla won’t be able to export their product and will be stuck making and selling them domestically.

  5. ModernMarvelFan says:

    The problem is that other countries might/will retaliate. So, all exports will be affected.

    There are no winners in trade war. Trade wars often lead to real wars. Maybe that is what stupid people want.

    At the end, Tesla’s export will be affected until it builds factories in other countries. Other automakers are already ahead in that aspect.

    The only company will benefit from it are those that makes stuff in the US and exclusively depends on US market.

  6. acevolt says:

    When I look at my window sticker of my Model S, its states that the vehicle contains 50% Domestic content. So 50% of the other components will be hit with a import tax. I can’t see how this would not be passed on to the consumer.

  7. Nicholas Littlejohn says:

    You’re name is Tesla?

  8. Pushmi-Pullyu says:

    I question that even President #45* is crazy enough to actually impose an across-the-board 20% or 35% tariff on cars imported from Mexico. Even die-hard supporters of 45 are gonna be disenchanted pretty quick whey they realize they, and not Mexico, are gonna be the ones paying that tariff.

    Now, we might see that high a tariff on certain products; perhaps even certain car parts. But not entire cars.

    *Amusingly enough, and in this case fittingly, “45” is also South African slang for… Well, read it for yourself:
    😉

    http://www.bilingo.co.za/tsotsitaal-translate/four-five/

    1. philip d says:

      He also threatened BMW and Germany with a 35% import tariff.

  9. Pushmi-Pullyu says:

    The article says:

    “Now, we’re entirely sure how this could be true…”

    Hmmm, I rather think an important word is missing there: surely y’all meant “Now, we’re not entirely sure how this could be true…”

    1. Jay Cole says:

      Indeed…thanks PP, fixed

  10. Pushmi-Pullyu says:

    “Now, we’re not entirely sure how this could be true, since Tesla does indeed source parts from abroad…”

    But President #45 lately has only been talking about cars imported from Mexico, not from everywhere overseas. If Tesla Inc. imports no parts or assemblies from Mexico, then it’s easy to see how they could avoid the hypothetical tariff.

    1. speculawyer says:

      I’m pretty sure they do import some parts from Mexico.

      1. Acevolt says:

        Tesla definitely imports parts from Mexico, I have seen the “made in Mexico” stamp on many of my Model S parts. This so called analysis is fake news!

  11. Foo says:

    Caption: “Mwu-ha-hA-HA-HA”

  12. speculawyer says:

    A border tax may also increase the price of gasoline since we import so much oil.

    That doesn’t hit Tesla wither.

  13. Just_Chris says:

    I’m not sure how this will all end but blocking Chinese goods might not end in a predictable way. I really don’t think taxing Mexican or Chinese built cars will result in a direct trade war where China taxes American made cars in retaliation.

    I could see China playing havoc in the bond market, where I believe they are important, or perhaps turning off the rare earth metal taps. I’m really not sure, I still think that the US administration is not all that interested in picking a fight with China with my personal opinion being that countries near the top of the following list with little power or influence are the most likely to cop it in a big way:

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

  14. bogdan says:

    If Trump pulls it off, he will be the greatest job killer in US history. All other countries will get together and isolate the US. That’s very bad news not just for Tesla.
    Just think about it, no empire lasts forever.

  15. Craig Capurso says:

    To bad for the globalists