Tractors and (upcoming) tariffs?

[tjandrews]

So do I simply because with existing pre tariff stock, there is no tariff imposed but greedy businesses WILL impose the tariff percentage on items already in stock to make a larger profit which is totally BS.

Nothing new here. For many years, when the price of crude oil went up, the price at the pump would immediately follow, even though the cost of fuel already in the tanks had not changed. The justification? The sellers claimed they would have to pay more to replace the inventory they were selling.

 

[5030]

Additionally, we have an acute labor shortage in this country today and it's not because the labor market isn't there, it's because many of the current labor pool DON'T WANT TO WORK IN THE FIRST PLACE. If they do want to work, they all want a Cadillac wage from the get go and full benefits right from the start and many aren't willing to perform any manual labor anyway, let alone pass a drug test which is still mandatory for employment in an industrial setting.

I know about that first hand and one of the main reasons I retired as a manager. When you cannot hire enough employees to man a full shift because they cannot pass a drug screen or they come to work for a day or two and realize manual labor is involved and never come back because they actually had to do manual labor, it's very frustration. The outfit I retired from was a revolving door for employees because unlike the old days, none of them (or at least a large percentage really don't want to work in the first place. They prefer to collect public assistance and do nothing constructive to better themselves.

Sadly, we live in a society that does not want to work and if they do and pass a drug screen, they don't last at all.

Why I retired as the grief level at least for me was not sustainable.

 

[Muhammad]

No. You brought it up, and it's 100% relevant here because most of these compact tractors come from Korea and other western Pacific and Indian nations.

He is asserting that these tariffs are not being described in honest fashion, and I don't think that's true.

As far as how it's affecting the ability to buy a tractor, it's obvious that there is already an effect. The point is that in the long run this will benefit the U.S.

Yes. Discussing how the administration arrived at their tariff numbers is absolutely a political discussion and this particular thread is not the place for it. We have one thread dedicated to politics so that all other threads can remain free from the endless debate that is associated with politics.

 

[Muhammad]

@5030 One of the biggest questions is how the value of those parts will be determined for the purpose of tariffs. I guess if there's an invoiced cost of an item it's easy but if an engine is manufactured by a mfg in Japan and then shipped to the US where the tractor is assembled, how will they be required to state the value? To the consumer that engine might cost $10,000 but every step back to the mfg factory in Japan cuts a big chunk off that price until you might wind up with a much smaller number to base the tariff. Let's say the material and labor cost is $2,000... now the tariff is about $500 on a $10,000 engine that goes into a $35,000 tractor that is assembled in the U.S. Now do that for a bunch of parts and pieces and maybe you've got $1,000 in tariffs on a $35,000 tractor vs 25% of a wholesale price of a tractor made entirely in South Korea and you begin to see how this can really hurt some brands and be much less impactful for others.

 

[Snobdds]

Folks just don’t get it.

Rates are declining, Bessent is a happy man.
His North Star is the UST 10 yr yield. Not the Fed!

Tariffs will eventually force the Feds hand.

Let the crazies in the equity futures have their fun.

The real information is in the credit markets.

UST 10 yr about to break 4%

This is about putting working americans over asset prices. This is addressing inflation via demand, instead of supply.

Bold...

 

[ruffdog]

So do I simply because with existing pre tariff stock, there is no tariff imposed but greedy businesses WILL impose the tariff percentage on items already in stock to make a larger profit which is totally BS.

People rushing to purchase a tractor, car, or TV at pre-tariff prices is only moving a future purchase to the present. We saw how that worked with cash-for-clunkers. It was only a short term fix. There will come a day that prices will be much higher and there will be a buyer drought. At that time, the retailers will be hurting. Retailer's may be trying to get any money they can before the bottom drops out by raising the costs of pre-tariff stock.

 

[Snobdds]

People rushing to purchase a tractor, car, or TV at pre-tariff prices is only moving a future purchase to the present. We saw how that worked with cash-for-clunkers. It was only a short term fix. There will come a day that prices will be much higher and there will be a buyer drought. At that time, the retailers will be hurting. Retailer's may be trying to get any money they can before the bottom drops out by raising the costs of pre-tariff stock.

No...

Companies are still going to defend market share. While others raise prices, it provides an avenue for companies to boost revenue, by attracting customers through margins.

Like anything, successful companies will navigate this and be better on the other side. It's a reset of sorts...

https://twitter.com/x/status/1907487821079704034

 

[5030]

We saw how that worked with cash-for-clunkers.

That was a fiasco. Lots of perfectly useable vehicles were destroyed, The used car market got crazy and no one really benefitted.

People seem to have short memories today...

 

[Snobdds]

I'll give up some gains in my portfolio if it means that tens of millions of Americans have a better chance of finding stable work so they can feed their families, afford a home, and benefit from lower consumer prices.

The world is dependent upon the US for consumerism. The hotels in Washington will be packed with foreign leaders wanting to meet to get their tariffs reduced.

 

[5030]

I just ordered a new disc mower from Kubota, center swing and interestingly, the advertised price didn't increase from pre tariff price even though the machine was built in Italy and 'imported' to here, I presume in an overseas container.

FYI. Kubota is offering 0 percent financings and a 1500 buck 'loyalty' bonus on select equipment as well.

All of Kubota's hay tools are produced in Italy (I believe at least), my Kubota BV Sileage Special round baler was. I would also suspect that the large Kubota tractors will be subject to the tariff, maybe a higher percentage than the ones produced in Japan because they are coming from Italy as well and I bet the European made units (that Hay Dude likes) will really be impacted by the tariff simply because they are European units.

I have no idea what the tariff percentage is being applied and to which countries of manufacture either. All I know is the whole thing is going to be very complex.

Do I think this tariff thing is a good deal? I'm 100% on the fence with it but having said that, I have no choice or input in the matter anyway and neither does anyone on this forum have a choice, other than not making the purchase in the first place.

 

[quicksandfarmer]

@5030 One of the biggest questions is how the value of those parts will be determined for the purpose of tariffs. I guess if there's an invoiced cost of an item it's easy but if an engine is manufactured by a mfg in Japan and then shipped to the US where the tractor is assembled, how will they be required to state the value? To the consumer that engine might cost $10,000 but every step back to the mfg factory in Japan cuts a big chunk off that price until you might wind up with a much smaller number to base the tariff. Let's say the material and labor cost is $2,000... now the tariff is about $500 on a $10,000 engine that goes into a $35,000 tractor that is assembled in the U.S. Now do that for a bunch of parts and pieces and maybe you've got $1,000 in tariffs on a $35,000 tractor vs 25% of a wholesale price of a tractor made entirely in South Korea and you begin to see how this can really hurt some brands and be much less impactful for others.

They already have to do this for income taxes. The manufacturer has to decide how much of the end-to-end profit on the tractor to declare in each country and pay taxes on. They have a fair bit of latitude, obviously they're going to try to shift as much of the declared profit to the place with the lowest rates. If they get too aggressive the government challenges their allocation of profit, there is a whole field of law called "transfer pricing" that deals with this.

Tariffs are just another tax, they may change how companies choose to allocate their costs but they won't have to do anything they aren't already doing.

 

[ruffdog]

That was a fiasco. Lots of perfectly useable vehicles were destroyed, The used car market got crazy and no one really benefitted.

People seem to have short memories today...

Yep, all it did was steal future purchases and moved them forward. The drought came just the same as it will this time.

 

[2manyrocks]

I will admit to being unsettled by these new tariffs and where this actually leads. Adding 10-20% to prices on top of what inflation has already done seems pretty painful to the buyer.

 

[Hay Dude]

I will admit to being unsettled by these new tariffs and where this actually leads. Adding 10-20% to prices on top of what inflation has already done seems pretty painful to the buyer.

I tell you where it actually leads.
It leads to manufacturing returning to the US and a level playing field with countries like Japan, where all the small tractors are made, who charges obscene tariffs on American goods they import.
More importantly, it leads to more critical goods, like pharmaceuticals and computer chips being made here.

Yes, it’s hard to pay more for a Korean or Japanese tractor, but better for the overall safety & security of the USA and more higher paying American jobs. Also higher revenues.

Buying 90% of your pharmaceuticals or computer chips from Asia is a recipe for disaster.

 

[arrow]

I don’t think there’s any compact or small utility tractor that’s mostly made in USA. So they all will be price affected by tariffs.

I believe the jd’s compacts are mostly made in Georgia.
The company I know about, Mahindra, has 5 assembly plants in the States. It makes me wonder if because of that, the tariff amount for this brand may be a bit more surgical rather than an across the board tariff percentage.
Hoping so anyway.

 

[Hay Dude]

No...

Companies are still going to defend market share. While others raise prices, it provides an avenue for companies to boost revenue, by attracting customers through margins.

Like anything, successful companies will navigate this and be better on the other side. It's a reset of sorts...

https://twitter.com/x/status/1907487821079704034

Correct.

Ford just announced employee pricing for their vehicles.

For all the emotional “sky is falling” alarmists, no…..the sky is not falling.

Like the old Chicago song said: “good things in life take a long time”.

Be patient grasshoppers, this will need a little time.

 

[arrow]

Will millions of people find work (in a tight labor market), or will millions of robots find work? Robots don’t need employer funded health insurance.

Nor pensions or ultimatums from unions nor sick outs.
If anyone wants to know how this will play out, just study a circle.

 

[newbury]

From my point of view (retired, govt pension, 2 tractors) I'm darn glad I bought Kubotas that don't seem to need many parts.
How long does it take to build a tractor?
How long does it take to build a tractor plant?
I'll be surprised if any manufacturer invests in building a new tractor plant just to avoid tariffs. Especially since the tariff king might be limited to ~3.75 years.
Businesses thrive on certainty, not chaos.

Most of the world has low or no tariffs with us now.

And to say the tariffs were "thought out" ignores the fact that tariffs have been slapped on barren islands.
I just hope my stock of popcorn holds out as we watch this new movie where raising prices on farming equipment by 25% is supposed to lower food prices.

 

[ultrarunner]

So do I simply because with existing pre tariff stock, there is no tariff imposed but greedy businesses WILL impose the tariff percentage on items already in stock to make a larger profit which is totally BS.

Yes and no…

I’ve seen what happens when a dealer takes losses when prices fall.

Back in the 70’s there were two nationwide times with gas lines… energy crises was the term used for the crippling of America.

Both times the family auto business lost its shirt because the first time anything with a V8 was dead… muscle cars at give away prices if possible…

If the property had not been free and clear it would not have made it…

Folks were trying to trade in their 455 Oldsmobiles for pintos and Vegas.

We got burned on those too… took in trade Vista Cruiser wagon with 350 on the air cleaner and it was a 455.

No one sheds tears when inventory sells at huge loses…

Smart Dealers will trade carefully but in the end it’s what willing buyers and sellers agree.

 

[Hay Dude]

From my point of view (retired, govt pension, 2 tractors) I'm darn glad I bought Kubotas that don't seem to need many parts.
How long does it take to build a tractor?
How long does it take to build a tractor plant?

Have you overlooked how many American jobs are created or sustained from building the new plants? Feeding the workers breakfast & lunch, selling them work clothing, etc. when they start working in the USA?
There could be thousands of new construction & service jobs created!
Auto makers are already committing to building new auto plants HERE. You want them to be in Mexico/Canada or HERE?

I'll be surprised if any manufacturer invests in building a new tractor plant just to avoid tariffs. Especially since the tariff king might be limited to ~3.75 years.

Political. Please don’t get the thread closed with political nonsense.

Businesses thrive on certainty, not chaos.

“Chaos” is closing American plants and moving them to China. “Chaos” is losing generations of skilled labor. “Chaos” is having a pandemic, but no PPE or pharmaceuticals for the affected. “Chaos” is needing to build military equipment with foreign steel, foreign chips, electronics.
You don’t know what real chaos looks like.

And to say the tariffs were "thought out" ignores the fact that tariffs have been slapped on barren islands.
I just hope my stock of popcorn holds out as we watch this new movie where raising prices on farming equipment by 25% is supposed to lower food prices.

Not farming equipment that’s built in USA! Tractors and equipment built here. What is wrong with that??

I’m not doing the “sky is falling”, weak, little pansy snowflake nonsense. This is a 50 year process of destroying factory after factory. It HAS to STOP.
My state, Pennsylvania, is a wasteland of closed factories, trees growing through abandoned RR tracks and towns ravaged by lost jobs.

Enough!