President Trump’s 25% tariffs on imported cars are coming and the market is reacting. People are buying cars now to avoid the tariffs. But how will the tariffs work? Which cars will be affected? How long will the price hikes last? Will they work to bring manufacturing jobs back to America? Glenn and Stu answer the biggest questions Americans are asking.
Transcript
Below is a rush transcript that may contain errors
GLENN: Hey, Stu. Would you do me a favor?
Would you give me a list of all the car companies that will be hit bit tariffs, beginning next week.
And we will give you these car companies here in just a minute.
But I want you to -- I want you to -- I want you to be prepared for something.
If you're in the neighborhood, and looking for a new car, this would be the week to buy it.
If you buy anything that is foreign made, this would be the week to buy it.
Because as of next week, they will go through the roof, in cost. 25 percent tariff on all foreign-made cars.
And already, if you go into a showroom this weekend, you're probably going to have a hard time getting it. Or doing any kind of negotiation on it.
Because they're going to charge you full price.
Because the business of selling foreign cars right now, is at a peak.
Because everybody who wanted to buy a foreign car, is in there, right now. Is, I have to buy it, before this tariff comes in.
Now, here's a part that I really want you to understand.
This is going to do what COVID did to used cars.
So if you're thinking about buying a used car, and you want a foreign car, then you better buy that one right now. Because as of next week, when the price of all of these cars. The new ones are through the roof.
Most people will say, I'm not paying that. I'm not going to pay an extra 25 percent for that new car.
I just won't do it. So they'll stop buying it.
But if you have to buy a car you'll buy a gently used car. A pre-owned car.
And those will become scarce.
Because those will not fall under the tariff.
So it will be exactly like it was with COVID.
You won't be able to get the new car.
Just for a different reason. I mean, you could. But you're not going to pay for it, like that.
Most people won't. So you'll go out and try to buy a used car. But those used cars are going to become more and more expensive.
I was just talking to somebody about this, and they were like, that sounds like a good investment. Maybe I should go out and buy a bunch of used cars.
I don't know. I don't know if that's a good investment or not. But I just want you to think about that, that things are going to change next week. At least for a little while.
And gosh, if you're a car dealer. And you sell foreign cars.
I feel for you, brother. I feel for you, brother.
Hopefully, this thing will turn around quickly. You know, hopefully Europe will break before we break.
But it will be a tough ride. But if you need to buy a car, right now would be the time to do it.
STU: You want -- before we go out?
GLENN: Yeah. Go ahead.
STU: First of all, pretty much every company imports some of their cars.
GLENN: Right.
STU: So that includes Ford, for example, about 20 percent of the cars, they sell are imported. Honda is about 35 percent. General Motors, about 40.
That's imported.
So you think General Motors. You think of them as an American company. A lot of them too.
It might be imported from Mexico.
Right?
So it's not necessarily from China or whatever.
But the highest percentages of imported vehicles sold here in the United States.
Volvo is about 90 percent.
Mazda and Volkswagen about 80 percent.
Hyundai about 70.
And then Mercedes, about 60.
So are those going to be --
GLENN: But you have to look at BMW.
Doesn't BMW and Volkswagen.
Or is it Audi.
They own like, a billion different brands.
Then they just gobble up a bunch of stuff.
STU: Sure, yeah.
Each one of these companies has a bunch of brands under it, for sure. So that's going to be the situation. Remember too, a couple things under tariffs. First of all, the tariff is on basically what it costs. Not what final retail value is.
So it's not necessarily 25 percent on top of, let's say, $50,000 car. Twenty-five percent of $50,000. If the car takes $30,000 to produce, the tariffs paid on that number.
So it isn't quite as high.
GLENN: Okay. So it's only 25 percent on 30,000, not 50,000.
STU: I'm trying to be helpful here, Glenn. You know I oppose all of these policies, dearly.
GLENN: I know. It will just hurt a lot of people.
It just will crush a lot of people.
STU: Again, will it even go into effect?
It's a big question.
GLENN: I don't know.
STU: Donald Trump has -- more than half of the tariffs he's promised, have been paused or delayed. So we don't know if it's going to actually happen. Could be a negotiation tactic.
But you're right. To your point, hey. Let's start a business on used cars. What if this tariff doesn't go into effect the next week?
It's so hard to tell. But this, I will say, is the weakness of this approach.
Because companies have no freaking idea how to run their businesses as of next week. And, by the way, the reciprocal tariffs are supposed to go into effect on April 2nd as well, which is also next week.
So a lot of this stuff is going on.
We just don't what an it means yet. And for any company that imports anything, this has a real stress on how they run their business.
Remember, it's American importers that are paying these taxes, even though you wind up paying them eventually. On the business side of that, they're like, well, what's my cost of business next week?
Is it $100 or $125? I don't know.
GLENN: Don't know. Don't know. Don't know.
I have a friend who sells foreign cars. And he's just like, I have no idea.
He's like, right now. It's a feast.
Right now, everybody is coming in and buying things, because they don't want to afford these tariffs.
He said, but I feel bad. Because they have not been able to pay the tight, tight price that they paid this week, if the tariffs don't exist.
He said, but they won't be able to afford it, if the tariffs do exist. And so I don't know.
And he said, and nobody is really thinking about the used cars.
He said, used cars will go through the roof.
So we'll be in exactly the same situation we were in, in COVID.
If this actually happens.
And so, you know, go ahead invest in those used cars.
Go buy a bunch of them this weekend. The bulk!
STU: And, Glenn. It's interesting.
It's not just foreign cars. For example, let's say, you want to sell your -- what is going to happen if this goes into effect? Foreign cars are going to go up. The foreign used market will be aggressively higher. By the way, it's still way higher than pre-COVID. There was that spike -- I just did a show on this, this week. Which is all the things that changed through COVID.
You know, some of them spiked and came back to normal. Many of them spiked and never came back to normal.
It's the new normal, if you will.
Used cars are one of those things. They're still way higher than they were, before COVID.
And if this happens.
If you were the type of person who was buying American before this. Right?
I own an American car.
If I -- when I sell it, it's the American car, used car market, that's not going to be going crazy. Right?
It's the foreign cars. So the people that bought foreign cars before. Are going to oddly, be rewarded with this policy, when they tried to sell their car on the used market because those cars are going to be likely more scarce.
So, I mean, there's so many factors, that play into mind.
And the other part of this, Glenn. Almost every time this is attempted, if you are, let's say you're selling an American car.
You're selling your car for $100,000. Your competition is selling for $100,000. They get a 25 percent effective tariff.
Let's say, they raise their prices. They got to raise it $220,000, to compensate for those tariffs.
What are you going to do as a businessperson? Now your closest competition is $20,000, priced higher than you. Do you keep your car at $100,000? Or do you sit back and say, I think we can get 108, 110 for this thing now. Right?
We will still get way below our competition. Why wouldn't we get a little bit of extra profit?
GLENN: That's why we need the government to step in for price gouging!
STU: Yes! Price control, centralize the economy. It always works out so well.
GLENN: Oh, man! It's so good. It's so good.
