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Discussion Starter · #1 ·
I've gotta get this off my chest. I expect this might get deleted at some point (as a prior post), even though on this forum of all places it shouldn't be controversial.

Tariffs will KILL Subaru. Subaru sells more than twice as many cars in America than the rest of the world combined. A 20% tariff, which is what's being talked about (possibly as much as 25%), will raise the price of a WRX/STI by $5000 minimum. Most cars are made in Japan, though the Outback and Legacy are made here. However, 60% of these vehicles are sourced outside the country and will be subject to the tariff, so no break there.

https://www.torquenews.com/1084/auto-tariff-could-add-5800-new-subaru-forester-crosstrek-wrxsti

Subaru may be among the most vulnerable of all the foreign manufacturers in depending so heavily on the American market. (Honda, by contrast, sells as many cars in Asia as NA.) NO ONE will pay $33K for a base WRX. Sales will plummet. So I don't think I'm exaggerating by saying tariffs might literally kill Subaru.

I have watched this issue with increasing discomfort. It's like a storm you see coming but can't outrun. The people pushing this tariff are some of the most stupid economics minds alive today. I can't believe we are headed down the trade war path.

For those who say it's just a negotiating tactic...look at steel and aluminum. A robber doesn't put a gun to the head of a banker unless he might actually pull the trigger--at least you can't count on him not to do so.

So what can you do? Contact your representative as I have and make your voice heard against tariffs. If these come into play, I seriously doubt the 2020 WRX/STI redesign will happen because there will be no Subaru.
 

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Discussion Starter · #2 ·

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I don't disagree with your reasoning, but I do have a slightly more optimisticless cynical outlook. I think if they stand to be hurt so badly (which they do), they might take a similar tactic to what Harley has just had to do. If you want to survive tariff BS, you move your production to where the items are bought. Harley didn't move everything to Europe, just what they will be selling there. A lot of Americans are losing jobs over this (and more will), but I think there are a few jobs to be had as Toyota and others have started to enjoy the fruits from the Made In The USA label their Tundra's get. **** is going to get worse before it gets better, but hopefully the course can start to be corrected in this mid-term if we stop ignoring the world-wide benefits of globalization and perhaps start looking at open borders.

TLDR, I hope you're wrong.
 

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The tariffs are killing us at work.

They have cut access to good quality steels in favor of more expensive and lower quality American designed alloys.

But all we can do is chug on. Nothing is forever and the auto industry already has some tricks up their sleeves that help them through in times like these. Like Harley being an “American” motorcycle.
 

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Discussion Starter · #5 · (Edited)
Here's how Subaru is different from the others.

Percent of vehicles sold in the US:

Subaru 61%
Honda 31%
Toyota 33%
BMW 14%

So Subaru's exposure to tariffs is MUCH higher than any manufacturer I am aware of. Re' Harley tariffs in Europe, that is (IIRC) about 17% of their total market, so big, but not as consequential.

Now, of course, Subaru makes some cars in the US: Outback, Legacy, Impreza. (I'm not sure if they make 100% of those vehicles in the US or import some, but I'm guessing the former to avoid our tariffs and import duties.) They account for about 50% of the US Subaru market. As noted above, 60% of the components of these vehicles are sourced overseas and therefore would be subject to tariff.

Subaru sold 650k vehicles in the US in 2017. Based on this, 325K would be exposed to the full tariff, 325K exposed to 60% of the tariff.

Let's assume the average cost of a new Subaru is $30K (about average for the best-selling vehicle, the Outback). Therefore with a tariff of 20% the cost to Subaru would be $3.54 billion. With 25% it would be $4.425 billion, with vehicle sales worth $19.5 billion.

Of course, virtually all of this cost would be passed on to consumers. (By the way, manufacturers are already dealing with a several-hundred dollar increase in car costs based on steel and aluminum tariffs that have ALREADY gone into effect.) Therefore, it is unlikely in the extreme they will sell that many vehicles, in fact may not sell many at all.

Subaru has been kind of quiet compared to Toyota and even American manufacturers, who would see increased costs and depressed sales. Maybe they want to fly under the radar.

What really depresses me is that mercantilism was considered a completely archaic idea when I was in high school and college, akin to bloodletting or serfdom. To see it come back with a vengeance is almost beyond my comprehension.
 

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Nothing will change and it will be business as usual for the most part. Consumers will see a increase of a few thousand dollars on a 30k dollar car and Subaru will eat a few thousand. It will be like nothing happened.
 

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Discussion Starter · #7 ·
Nothing will change and it will be business as usual for the most part. Consumers will see a increase of a few thousand dollars on a 30k dollar car and Subaru will eat a few thousand. It will be like nothing happened.
You think customers will pay 10% more and the company will lose 10% on every vehicle and everyone will be happy?

I respectfully disagree. I'm not sure there's support for that possibility, especially based on the historical record.

Worst case: Smoot-Hawley leading to a worldwide depression. Best case: affected industries suffer until American policymakers realize how useless the tariffs were and roll them back. Happened under GWB.

https://www.aier.org/article/tariffs-history-repeated-failure
 

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Well man. The costs of pickups have doubled in no time and people don’t question shelling out 70k for a truck that was 20k 20 years ago.

As I said in the last thread, I’m not a fan of them, they are killing our business, but we are surviving and they won’t make any long term irreversible damage to anyone in our industry.
 

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Discussion Starter · #9 ·
Well man. The costs of pickups have doubled in no time and people don’t question shelling out 70k for a truck that was 20k 20 years ago.

As I said in the last thread, I’m not a fan of them, they are killing our business, but we are surviving and they won’t make any long term irreversible damage to anyone in our industry.
The profit margin on pickups (and SUV's) is huge. I imagine trucks and luxury cars will survive even with a surcharge. But my impression is Subaru vehicles particularly sedans are not high-margin vehicles and will suffer big sales losses. I did not even realize how vulnerable Subaru was until I found out what a high percentage of their sales are in America.

Time will tell I guess.
 

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The profit margin is huge because they realized people will just pay whatever they ask for them. Just like any automobile.
 

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Discussion Starter · #11 ·
All I can say is I would not pay a 20% premium over what I paid for my WRX, otherwise I would have an STI not a WRX.
 

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I thought people were already paying $33k for a base model WRX? Hell, people lining up to pay $50k+ for the RA. :dontknow:
 

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Discussion Starter · #13 ·
I thought people were already paying $33k for a base model WRX? Hell, people lining up to pay $50k+ for the RA. :dontknow:
Maybe in a parallel universe LOL! I paid way less than that for a premium with a bitchin' aftermarket sound system. There's plenty of availability these days, and at least in these parts they're selling well below sticker price.

In any event, a tariff is an extra 20-25% on top of whatever the man wants to charge. Any smart person (who's not made of money) would try to buy used or wait and hope the tariff was withdrawn down the road.
 

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Sadly, most people do not understand economics and consequently few understand just how pernicious tariffs are.

Tariffs are a bit like corporate subsidies …but more insidious.
Like corporate
subsidies they provide a benefit for a narrow group of people (the producers of the tariff material and perhaps their employees) at the expense of a much broader group (all the individual consumers as well as the other corporations and their employees which need that product with tariffs on it). Practically speaking what they do is prop up a business in the home tariff country at the expense of all citizens in that same country. Tariffs mean that goods & services either cost more than they would otherwise (people get less for the same money) or there is simply less goods and services (less wealth) available to be enjoyed then there would be otherwise... Or some combination of the two. No matter how you slice it, tariffs leave everyone as a whole with less material wealth to enjoy then there would be otherwise.


This means that, like corporate subsidies, all of those citizens living in the tariff country are on
net made materially LESS wealthy. But one thing that makes tariffs WORSE than even corporate subsidies is that the propped up business is only propped up IN that home country.. not in any other countries. Which means corporations that use that tariff material in production are now not as competitive abroad. It also means that in other countries that are not suffering under those same tariffs, their corporations are now made more competitive everywhere else in the world. So perhaps you think it is ok for one country to choose to make all of it's citizens on net less wealthy by making them pay more for some things then everyone else in the world.. but what many often are forgetting is that also makes exports that consume/use tariff products less competitive to market everywhere outside of the tariff country.


Example: US Steel tariffs ostensibly benefit a narrow group (US steel companies and their 140 thousand employees). However, that comes purely at the expense of everyone who consumes steel in the US… so basically at the expense of every citizen in the US… But especially including thousands of US companies (and their 6.5 MILLION employees) that consume/use steel in the production of other things they make to sell
.. BOTH here AND abroad… So now the thousands of US companies that consume steel in the production of other goods and services they produce are made LESS competitive both at home and in foreign markets.


For those who are not aware, the MAJORITY of imports to the US are used in the production of other goods.


If all of this wasn’t bad enough to convince you what a terrible idea tariffs are, consider this additional even more pernicious negative effect: By intentionally causing
mis-allocation of resources into purposefully less efficient enterprise, tariffs also cost the citizens of the home tariff country the opportunity to create even more wealth because those resources tied up in the protected enterprise are not free to be used for much more productive uses/enterprise. That ever-growing misallocation only serves to further make everyone in the tariff country, on net even more materially LESS wealthy than they would be otherwise.


Most people sort of understand that we wouldn't want tariffs between neighborhoods, cities, counties & states. Most seem to have some understanding that those tariffs it would leave everyone in the country less wealthy and actually stifle growth tremendously. ..But for some reason, many people tend to hold a rather strange belief that the same laws of economics we understand benefit us all in the US, suddenly change at an arbitrary government boundary we call an international border. They do not.


http://steshaw.org/economics-in-one-lesson/chap11p1.html
 

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Discussion Starter · #15 ·
+1 Mr. J. My point exactly.

Frankly I didn't want to take the time to detail it because to me it's so obvious. Adam Smith spelled it out over 200 years ago, and nothing has changed to prove him wrong. In fact, after Smoot-Hawley I would think no one in their right mind would support broad-scale tariffs.

I guess what really rubs me on this one is that it would severely affect a product I enjoy a lot and a company I really like, for the benefit of no one.
 
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+1 Mr. J. My point exactly.

Frankly I didn't want to take the time to detail it because to me it's so obvious. Adam Smith spelled it out over 200 years ago, and nothing has changed to prove him wrong. In fact, after Smoot-Hawley I would think no one in their right mind would support broad-scale tariffs.

I guess what really rubs me on this one is that it would severely affect a product I enjoy a lot and a company I really like, for the benefit of no one.
Yes. If, due to tariffs, we were to no longer have as much choice in cars (Subarus) to enjoy and or we would have to pay more to enjoy the same choice of cars, we are all made less wealthy. Most simply do not understand the economics. Most folks do not even understand what wealth is or how it is created.





It is also too easy for those who do understand the economics to appreciate what it was like before they understood. Consequently, we skip over the explanation that many could truly benefit from. Like when you are new to a group and everyone is talking in acronyms/jargon that those outside of the group don't know.
 

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It is easy to forget that most people don't know what a TBE means or what a BOV is or why one may or may not one to have one, if one is not from the Suby forums.
 

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Trade ftw

 

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For the record.. It is not automatically forbidden to discuss things like tariffs or laws. While those discussions CAN tread in to the problematic political arenas they do not need to. The prohibition on politics is more about avoiding debates on specific political parties, specific politicians, super highly charged emotional stuff, etc.

Economic fact-based discussions need not be inherently problematic. Many things can be discussed without bringing up politics, politicians, insults or flame war.

We reserve the right to make up new rules as we go though lol
 
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