Tractors and (upcoming) tariffs?

[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!