How Tariffs May Affect Eye Care

How Tariffs May Affect Eye Care
By Gretchyn M. Bailey, NCLC, FAAO


With the recent change in US leadership, tariffs have become part of day-to-day conversation. A tariff is a tax placed on goods entering or leaving a country by that country’s government.

For many, tariffs belong in macro economic discussions. However, tariffs have the potential to do more than affect multinational companies—effects from tariffs are likely to affect small independent businesses and ordinary people, such as optometrists and their patients.

At Vision Expo East in Orlando last week, in coordination with The Vision Council, attorney F.D. “Rick” Van Arnam, Jr., a partner at Barnes, Richardson & Colburn in New York, discussed how tariffs may affect eye care and outlined how today’s looming tariffs first became part of the landscape.

Tariff origins
In 2018, the Office of the United States Trade Representative opened a Section 301 investigation on intellectual property misappropriation by China that officials believe were adverse to US interests. Specifically, American companies were required to release proprietary technology to Chinese business partners as a prerequisite to the US company manufacturing or distributing in China.

Under Section 301 of the law, the federal government is able to take remedial steps to correct such bad actions. Therefore, a 25% tariff was assessed on merchandise made in China. At the time, the tariff was limited to products negatively affected by the Chinese bad actions, such as machinery. However, many more products were added to the tariff list.

China retaliated by enacting its own 25% tariff on US agriculture, of which China was a big consumer. China also identified other products that were subject to additional tariffs.

In return, the US created an additional tariff of 7.5% on a broader list of products—on top of the already established 2.5% duty on many imported items. That additional tariff increased duty on Chinese goods to 10%.

Note that a Court of Appeals case is challenging Section 301 tariffs. The case will likely be decided in the next few months, and the decision is likely to be appealed to the Supreme Court.

Eye care involvement
Eye care was affected by the additional tariffs by the involvement of things like spectacle lenses, plano sunglasses, over-the-counter (OTC) readers, low vision equipment, and lens finishing equipment.

However, companies were able to petition for relief—or exclusion—from Section 301 tariffs. If one company was granted exclusion, all other companies with similar products were also granted exclusion. For about a year, exclusions were issued for spectacle frames and reading glasses. Those exclusions ended in 2020, and attempts to renew them were not successful.

In February 2025, an additional 10% duty was announced for any Chinese origin product.

Says Van Arnam: “That 10% the eyewear company is paying to import those plastic spectacle frames from China just jumped to 20%. The same frame, if you bought it today from say Vietnam, would be a 2.5% duty; it is now 20% if it's coming from China. China is the biggest by far producer of of optical products, particularly frames.”

Mexico and Canada tariffs
Also in February 2025, a 25% tariff was announced for products coming from Mexico and Canada. This tariff was framed as action taken against the countries for allowing fentanyl and illegal immigrants into the US.

Says Van Arnam: “This was a huge deal because Mexico and Canada are two of our largest trading partners. “They are are border allies and historically have had good relations with the United States. “We have free trade agreements with both of them, which allow the vast majority of products that are made in Canada and Mexico to come into the United States free of duty and for products that are made in the United States to go into Canada and Mexico free of duty.”

Due to both Canada and Mexico making overtures to remedy the problems identified by the US, tariff enforcement was paused for 30 days. That 30-day period expires on March 4.

“Some companies in the eyecare industry who weren’t affected by the China trade were panicking because they would now be impacted by Canadian or Mexican trade,” says Van Arnam. “There is a lot of cross-border trade. You might have a lens processing facility on the Mexican side of the border with lenses sent over for processing and brought back into the United States for distribution.”

He wonders how the US will measure success for the remedies proposed by both countries.

“What metric do you use to measure fewer immigrants coming in or less fentanyl coming across the border?” he says.

Aluminum and steel
Within the past two weeks, a 25% tariff on raw aluminum and steel (and their derivative products) was announced. Most manufacturers in the eyecare space use both metals in their production, from frames to equipment.

Says Van Arnam: “These costs will ripple through the supply chain because I don’t believe any company will be big enough to absorb the cost and say it’s all on us.”

The additional duty will eventually end up in the cost of goods everywhere, including eye care. Van Arnam foresees challenges in the future because costs may not necessarily be passed onto patients or consumers due to negotiated contracts.

“Patients may have insurance which is paying only X amount,” he says. “Or maybe you’re selling frames to Veterans Affairs which won’t allow you to increase your price. There won't be a direct line from the 25% paid on the raw material to the finished value of the of the eyewear. Some of it will be absorbed, but at some point, you're going to see price hikes and hear people talking about how these tariffs will be inflationary.”

Tariffs on aluminum and steel were enacted prior to 2020; however, exclusions and agreements with other countries largely mitigated the effects. Those terms expire on March 12.

Reciprocal tariffs
The federal government is looking into imposing a tariff on all imported products, regardless of origin, to match the originating countries’ tariffs.

“There is a perceived injustice that the United States has tariffs that are historically lower than those of other countries while other countries have tariffs that are historically higher,” Van Arnam says. “The federal government is looking at what we charge for an item vs what country X charges for that item. If we are charging 2.5% for a pair of spectacle frames, and hypothetically, India is charging 10%, there is a 7.5% gap. Under the reciprocal theory, you would pay an extra 7.5% duty to import spectacle frames of Indian origin into the United States so the tariff amounts would match.”

Addressing reciprocal tariffs would likely create logistical challenges for smaller companies without the resources to quickly pivot.

Federal agencies involved with international trade are required to report by April 1 where reciprocal duties might apply. For example, will the duty apply to specific countries or specific products?

Upcoming tariff deadlines
• March 4: The 30-day pause on Mexican and Canadian tariffs expires. A 25% tariff may go into effect.
• March 12: Previous exclusions and agreements about raw aluminum and steel expire. A 25% tariff may go into effect.
• April 1: Reports due to identify where reciprocal tariffs might be applied.
 
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I think it's insane that some Americans (and others) don't think the largest economy in the world should expect to be treated fairly when it comes to Trade. Every country gets considerable benefit trading with the USA and almost all of them charge significantly larger Tariffs than we do. Our Northern and Southern neighbors don't respect our economy or border at all. Canadians are threatening not to vacation in the USA or buy our products. If Americans reciprocated who do you think would feel the most pain?

Canada is privileged in having the country with the world's strongest military as a neighbor, meaning they don't have to spend hardly anything on defense. Do they say thank you? Nope. They whine, and cuss, threaten and gnash their teeth that the USA dare to expect to be treated fairly. Instead of gratitude for their security they poke fun at our Defense spending. Pretty darn obnoxious.

Was planning atrip to Vancouver but have decided to boycott Canada. I hope other Americans do the same.
In this context…what does “treated fairly” mean to you?

If you exclude oil and gas, the US actually has a trade surplus with Canada.
 
so should Americans be concerned about the imbalance and use of tariffs against the US? it seems a balanced playing field should be pursued if not able to eliminate them
In theory, yes but at the end of the day, I just don’t see a lot of manufacturing moving back here as long as there are places in the world that pay workers a dollar a day. So if you want to pay $6000 for your next iPhone, go ahead and assemble iPhones in Bakersfield.

Again, big corporations have exploited cheap worldwide labor and lax environmental policies for decades because if there was a way to get one more nickel of profit for a shareholder dividend or a CEO bonus, that was just fine because “Greed is Good.”
 
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Here are some things to think about.

US current account deficit in 2024 was $1.1T or 4% of GDP. This means that all entities in the USA consumed $1T (4%) more than they produced.

Most of that $1T comes back to the USA to purchase treasuries; this boosts the value of the USD, making imports cheaper, and suppresses interest rates. If the goal of tariffs is to tighten the current account deficit then you should expect a lower USD and higher rates.

Reducing the current account deficit could be achieved several ways; 1. Increase the value of your exports by exporting more stuff or exporting more valuable stuff. 2. Reduce your imports. Tariff wars make #1 impossible, so you’re left with #2.

If you reduce imports you can either consume less or make more domestically. But making more at home will require investment in equipment and create more competition for labour. Both will have costs at the same time there is pressure on the USD and rising interest rates.

I think this ultimately means that the US government and US consumers will need to consume less stuff because prices will be rising from the competition for capital investment and labour.

Final thought. Basically you’re trying to remake your economy in the image of Germany which is characterized by current account surplus, balanced government budgets, tight wad consumers (savers). But is that what you really want because Germany is the land of low economic growth, poor stock markets returns and stagnant income growth?
 
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1743303268670.png

We live amidst low-quality junk.
 
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Excellent discussion in this thread.

At one time American workmanship was the best. But I feel that over the years we have priced ourselves out of the market. Honestly how can afford a plumber, or carpenter or electrician at todays rates. If we try to build fine furniture, companies may be hiring a guy for 19 bucks/hour. I feel that they worker will not be a precision craftsman and will have very little loyalty to that job. But can they really afford to pay him/her $40-50/hr to get fine craftsmanship?

I am sure Mexico has some craftsmen, but generally they are hiring cheap labor. I have seen the workmanship in places like Colorado & Florida, done by immigrant workers, and it is shoddy.

Same question for auto workers. Can they get precision craftsmanship, like done in Japan, with US workers at US wages+ benefits? If they pay for those craftsmen in the US it is going to add a lot to cost, unless they continue to further automate the process.

So if these possible tariffs bring jobs back, will it result in shoddy workmanship by lower paid labor, or if high skilled high pay craftsmen do the job, are Americans going to be paying a lot more for an F-150 or Silverado built in the USA?
 
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Excellent discussion in this thread.
I must resort to a classical comment..."In the land of the blind,the one eyed man is king".

ODs discussing economics based not on education but what they learn from media with like mined opinions.

Imagine a group of PhD economists discussing the economic challenges faced by Optometry.

Will the administration have a last minute change in tariff plans?

Would your practice survive if a management consultant came into your practice saying you are spending too much on labor. Vision Care plans are treating you unfairly.

The consultant action without protest from you is fire most of the staff. Drop the Vision Care Plans until they begin treating you "fairly".
 
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Most of our OD comments on this topic are "pro-tariff".

For those undecided a balanced report from the 3/30/25 digital Associated press.

Trump’s promised ‘Liberation Day’ of tariffs is coming. Here’s what it could mean for you
President Donald Trump says Wednesday will be “Liberation Day” — a moment when he plans to roll out a set of tariffs that he promises will free the United States from foreign goods. At stake are family budgets, America’s prominence as the world’s leading financial power and the structure of the global economy. Read more.
 
Most of our OD comments on this topic are "pro-tariff".

For those undecided a balanced report from the 3/30/25 digital Associated press.

Trump’s promised ‘Liberation Day’ of tariffs is coming. Here’s what it could mean for you
President Donald Trump says Wednesday will be “Liberation Day” — a moment when he plans to roll out a set of tariffs that he promises will free the United States from foreign goods. At stake are family budgets, America’s prominence as the world’s leading financial power and the structure of the global economy. Read more.

I didn't make a spreadsheet or review the 115 comments but I don't sense that "most" OD's here are pro-tariff
 
so should Americans be concerned about the imbalance and use of tariffs against the US? it seems a balanced playing field should be pursued if not able to eliminate them
I didn't make a spreadsheet or review the 115 comments but I don't sense that "most" OD's here are pro-tariff
I meant frequent posters such as you, not our 28K membership who rarely post.
 
I meant frequent posters such as you, not our 28K membership who rarely post.
yeah, I don't think any of the frequent posters are pro-tariff

it's exactly why I referenced the 115 comments that doesn't include the 28K lurkers, no idea why you think I meant any of them

I think you sense incorrectly, by a lot what is in the mind of frequent posters on this, maybe on a bunch of things
 
yeah, I don't think any of the frequent posters are pro-tariff

it's exactly why I referenced the 115 comments that doesn't include the 28K lurkers, no idea why you think I meant any of them

I think you sense incorrectly, by a lot what is in the mind of frequent posters on this, maybe on a bunch of things
I only judge by what I read.

I try not to comment unless it will help move the conversation along.
 
I am only trying to help you with your insight/judgement as I think you are misperceiving while you move the conversation along at least in this instance
Thank you.

I was hoping that this topic would have been closed as soon as political comments began.

Now the best we can do is have links to back up personal opinions with expert viewpoints.
 
I must resort to a classical comment..."In the land of the blind,the one eyed man is king".

ODs discussing economics based not on education but what they learn from media with like mined opinions.

Imagine a group of PhD economists discussing the economic challenges faced by Optometry.
Sometimes we also discuss baseball or football, but most of us have never been professional players or professional coaches/consultants. It still makes excellent discussion. If you were ever to go to my barber shop (to get all your hair trimmed), you would hear a high level of sports talk.

Some of them seem quite knowlegable, although none are probably professional sports commentators. The men in the shop seem to enjoy the discussion, and the owner actually actively joins in.
 
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I meant frequent posters such as you, not our 28K membership who rarely post.
It would be interesting to get some input from the other 27,990 or 27,985 other members, just to make sure we are getting a broad balanced perspective. I am sure you agree.
 
It would be interesting to get some input from the other 27,990 or 27,985 other members, just to make sure we are getting a broad balanced perspective. I am sure you agree.
Agree 100%. Sometimes I become annoying attempting to stimulate conversation from lurkers.
 
Agree 100%. Sometimes I become annoying attempting to stimulate conversation from lurkers.
You need to have a Friday after hours mixer with open bar serving beer & wine. That always seems to be a big hit to get a great turnout. What would be the digital version?

Let me Google that for you:


A digital version of an after-hours mixer with an open bar vibe could be a Virtual Happy Hour & Eyewear & Instruments Showcase. Here’s how you could make it engaging:


1. The Theme: "Sip & See: Exclusive Eyewear, Instruments & Wine Night"


  • Attendees bring their own drinks (or you could partner with a local wine/beer shop for a discount code).
  • Create a relaxed, social setting online while showcasing your latest eyewear styles.

2. The Experience

  • Live Virtual Event (Zoom, Instagram Live, or Facebook Live): Feature a fun host (Maybe Paul).
  • Exclusive Sneak Peek of New Frames: Show off a curated eyewear collection and limited-edition styles.
  • Mini Styling Sessions: Offer quick virtual consultations to suggest eyewear based on face shape & style.
  • Q&A + Social Interaction: Use chat/Q&A features to engage with customers and make it fun.

3. Add a "Virtual Open Bar" Feel

  • Signature Drink Menu: Share a digital cocktail/mocktail menu themed around eyewear (e.g., "The Aviator," "Cat-Eye Cosmo").
  • Drink & Win: Random giveaways for attendees who share their drink setup or post about the event on social media.
  • Trivia & Games: Light games related to eyewear fashion, eye health, or fun optical history.

4. Special Offers & Incentives

  • Exclusive Event-Only Discounts: Attendees get special pricing on frames & select opthalmic instruments.
  • Gift Cards & Prizes: Raffle off free blue-light glasses, premium lens upgrades, or a free styling session, a Volk lens, an Alger Brush, and a dose of Xdemvy for licensed pratitioner to use with an appropriate patient.
  • "Book an Appointment, Get a Bonus": Incentivize bookings with a freebie (lens cleaner, small discount, or premium add-on).

5. VIP Upgrade Option

  • Offer an “Optical VIP Kit” (mailed ahead of time) with frame samples, a drink recipe, and a small branded gift (like a cleaning cloth or case).

Would you want to host this as a casual livestream, or more of an invite-only VIP Zoom event?
 
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OK, I'll bite and add my perspective. I don't understand the logic of tariffs being disasterous for our country but an absolute necessity for Canada. Also how come Candadians don't just drop their tariffs if they're such a be all end all economic negative. Theirs isn't a strong economy to begin with, why not bolster it with getting rid of tariffs with your largest trading partner.

Also, I understand decresing our economic dependence on other countries, but there's sectors which defy logic like pharmaceuticals. If we're getting cheap medications from India/China, it certainly doesn't seem to be keeping the cost down to consumers. I paid for medications out of pocket in Africa for various things and the cost was negligible.

Also got an MRI out of pocket along with the report and hard copy for ahem, $140.
 
OK, I'll bite and add my perspective. I don't understand the logic of tariffs being disasterous for our country but an absolute necessity for Canada. Also how come Candadians don't just drop their tariffs if they're such a be all end all economic negative. Theirs isn't a strong economy to begin with, why not bolster it with getting rid of tariffs with your largest trading partner.

Also, I understand decresing our economic dependence on other countries, but there's sectors which defy logic like pharmaceuticals. If we're getting cheap medications from India/China, it certainly doesn't seem to be keeping the cost down to consumers. I paid for medications out of pocket in Africa for various things and the cost was negligible.

Also got an MRI out of pocket along with the report and hard copy for ahem, $140.
I won’t understand where you’re getting this idea that Canada has enormous one sided tariffs against the USA?

As of 2024 both Canada and the USA charged one another about two percent on average as per USMCA (NAFTA 2.0). Most items transited the border with zero tariffs in both directions.

Yes there were some disagreement in some areas, for example;
1. USA has charged tariffs on Canadian lumber for decades despite trade tribunal rulings against it.
2. Canada negotiated large tariffs for dairy in USMCA above a certain quantity of imports (quota) but the quota has never been breached and therefore the tariff never paid.

I’m sure there are other examples but the trade weighted average tariffs were previously about two percent.

If there was real concern about the balance of trade a new agreement should be negotiated instead of ignoring the current USMCA.

Now as to whether the retaliatory tariff imposed by Canada are a good idea; they most certainly are not from a basic economic point of view, except that they are politically necessary to try and change the US administrations policy direction.

Fortunately as of yesterday it sounds like there will be a negotiation starting in May after the Canadian election.
 
Also how come Candadians don't just drop their tariffs if they're such a be all end all economic negative. Theirs isn't a strong economy to begin with, why not bolster it with getting rid of tariffs with your largest trading partner.
Was there zero tariffs during the NAFTA era? How much did the tariffs change after NAFTA?

Okay, I looked this up (no footnotes available)


Tariff Changes After NAFTA (Under USMCA)


When NAFTA was replaced by the USMCA (United States-Mexico-Canada Agreement) in 2020, tariffs remained mostly zero for trade between the three countries. However, some new rules impacted how tariffs apply:

  • Stronger rules of origin for automobiles: Vehicles must now have 75% of their parts made in North America (up from 62.5% under NAFTA) to qualify for tariff-free trade.
  • Higher labor and wage requirements: Some auto parts must be made by workers earning at least $16 per hour to qualify for zero tariffs.
  • Dairy market changes: Canada agreed to allow more U.S. dairy imports with reduced tariffs.
  • Enforcement mechanisms: Stronger enforcement tools were added to ensure labor and environmental protections.

Bottom Line:

  • During NAFTA, tariffs were not zero immediately but were phased out over time and mostly eliminated by 2008.
  • After NAFTA (with USMCA), tariffs mostly remained at zero, but with stricter trade rules in certain sectors like autos and dairy.
 
I won’t understand where you’re getting this idea that Canada has enormous one sided tariffs against the USA?

As of 2024 both Canada and the USA charged one another about two percent on average as per USMCA (NAFTA 2.0). Most items transited the border with zero tariffs in both directions.
Good post Jeff and good input.
 

I won’t understand where you’re getting this idea that Canada has enormous one sided tariffs against the USA?

As of 2024 both Canada and the USA charged one another about two percent on average as per USMCA (NAFTA 2.0). Most items transited the border with zero tariffs in both directions.

Yes there were some disagreement in some areas, for example;
1. USA has charged tariffs on Canadian lumber for decades despite trade tribunal rulings against it.
2. Canada negotiated large tariffs for dairy in USMCA above a certain quantity of imports (quota) but the quota has never been breached and therefore the tariff never paid.

I’m sure there are other examples but the trade weighted average tariffs were previously about two percent.

If there was real concern about the balance of trade a new agreement should be negotiated instead of ignoring the current USMCA.

Now as to whether the retaliatory tariff imposed by Canada are a good idea; they most certainly are not from a basic economic point of view, except that they are politically necessary to try and change the US administrations policy direction.

Fortunately as of yesterday it sounds like there will be a negotiation starting in May after the Canadian election.
I was under the impression there were tariffs in place which Canada had in place (well they do but they're quota based) that the US didn't have a reciprocal of. Your last line is pretty much where this needs to go and probably should have been over the past few months.
 
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Are Trump’s tariffs good or bad? The market right now is unsure, but one thing is certain: The United Auto Workers Union is very much for them.

It shows how politics can make for interesting intersections among people and policy. UAW President Shawn Fain knew his rank-and-file backed Donald Trump, but he endorsed Kamala Harris anyway. Now, he took to the Sunday Morning talk shows to endorse Trump’s tariff policy, which obliterates the Left’s fledgling narrative that there’s buyer’s remorse out there because of this initiative. On Face the Nation, Fain told Major Garrett that a lot of manufacturing jobs in his sector that were shipped to Mexico could return to American soil quickly (via RealClearPolitics):


MAJOR GARRETT: Let's get back to tariffs and the auto industry. Peter Navarro, a top adviser to the president on trade, says that currently, automobile manufacturing plants are at about 60% capacity. He argues that there's lots of untapped capacity, meaning jobs could be created relatively easy, and you wouldn't need to spend two or three or maybe five years building new factories. Is that your understanding? Is that your belief?

SHAWN FAIN: He's spot on. Look, we have a situation right now in Warren, Michigan, where 2,000 workers were laid off this past year. They built the Ram truck there for years under Stellantis, and Stellantis made a decision to shift that production to Mexico. They could shift that work back in very short order and be producing Ram trucks right back there and put those people back to work.

I was just at Volkswagen this week, you know, talking with workers down there that are trying to get their first contract, and the company announced a reduction of a shift. Meanwhile, you know, Volkswagen is the biggest violator of all. 75% of their production for the North American market is made in Mexico, so they can shift product there overnight. There's excess capacity.

You know, people forget this lesson in World War II. The way that we formed the Arsenal of Democracy that won the war was, they took the excess capacity of all the automotive manufacturing plants in the country, and produced tanks and planes and bombs and engines and all those things. And it's no different right now.
We have excess capacity. They could bring work back in very short order. And yes, they're in a situation where they need to build a new plant, yeah, that's going to take a couple years, but- but there is plenty of opportunity for these companies to do the right thing and bring work back here overnight, just as quick as they shifted out of here.

MAJOR GARRETT: And Shawn, for people who are listening to you, how do tariffs make that happen? What is the relationship between a 20 or 25% tariff and getting that capacity back up to where you'd like to see it?

SHAWN FAIN: Well, because, like everything, the companies abuse the process. I mean, they're in the pursuit of driving a race to the bottom. I mean, the tariffs are -- you know, there was a major promise when NAFTA happened in 1992, the big debate, and Ross Perot talked about the "giant sucking sound," that our manufacturing base was going to disappear. He was spot on, you know.

And we saw what happened in the ensuing 30 years. We saw 90,000 plants leave. You know, like I said, we've seen 65 plants in the Big Three close. Look, right now, as we speak, in Wisconsin, we have a Deere plant threatening to be closed, and their work being threatened to go to Mexico. We have a heavy truck plant at Volvo, and Mack Truck in Pennsylvania being threatened to be taken to Mexico. There is plenty of opportunity, and that's the reality that we've seen here in America.

So, tariffs are a tool in the toolbox. They're not the end all solution. We have to fix the broken trade system. But the way tariffs work, I mean, it's a motivator, because there's going to be a penalty for everything the companies ship in here, and I've had companies tell us, point blank, that they're going to have to bring product back here if those tariffs are implemented.
https://townhall.com/tipsheet/mattv...ts-narrative-on-trumps-tariff-policy-n2654731
 
Jeff's Article said:
So, tariffs are a tool in the toolbox. They're not the end all solution. We have to fix the broken trade system. But the way tariffs work, I mean, it's a motivator, because there's going to be a penalty for everything the companies ship in here, and I've had companies tell us, point blank, that they're going to have to bring product back here if those tariffs are implemented.


Again....the issue isn't "broken trade policy" per se.

The issue is one of corporate responsibility. As I have several times, since the 1980s, corporations have taken on the view that if there is a way to wring one more nickel of profit out of a company for a shareholder dividend or a CEO bonus, then to NOT to do so was fiducially irresponsible at best, and completely un-American at worst. Remember....."Greed is good."

It was not acceptable to make 10 billion in profit if you could have made 10.00001 billion in profit.

Of course, the consequences of this can just be damned. Forget that plants close down all over the country and communities are decimated. Bruce Springsteen was singing about this in the early 80s, long before NAFTA was even a thought in anyone's mind.

That tariffs may bring a few jobs in the auto sector back for a short period of time but why would we want to reimport jobs that are only going to be taken over further by robots and AI in the next 10 years? Sure, there might be a few more unionized auto workers working the lines for a bit but when the price of a car rises $5000-$10000 per unit, there are going to be less units sold and less demand for factories and more layoffs.
 
MAJOR GARRETT: Let's get back to tariffs and the auto industry. Peter Navarro, a top adviser to the president on trade, says that currently, automobile manufacturing plants are at about 60% capacity. He argues that there's lots of untapped capacity, meaning jobs could be created relatively easy, and you wouldn't need to spend two or three or maybe five years building new factories. Is that your understanding? Is that your belief?

I am sure there are many plants that are not running at full capacity. I can see that if there are trade restrictions, that U.S. auto workers unions may get very aggressive with salary and benefits demands and future threats of strikes. We have seen it many times. They get greedy.

SHAWN FAIN: He's spot on. Look, we have a situation right now in Warren, Michigan, where 2,000 workers were laid off this past year. They built the Ram truck there for years under Stellantis, and Stellantis made a decision to shift that production to Mexico. They could shift that work back in very short order and be producing Ram trucks right back there and put those people back to work.

In Illinois we have a Chrysler plant--The Belvedere plant, that shuttered their doors a few years ago. It would be huge to that area, up near Rockford, to bring back hundreds, or thousands of high wage jobs done by skilled workers. Would they have to train or retrain many workers to get quality builds? Chrysler had always been #3 or the big 3, with poor engineering and poor build quality. I often heard the joke to buy the Dodge Ram truck with the Cummins diesel, to that you were guaranteed to get at least two quality parts: a great engine & trans.

BTW--there is a deal in the works right now to retool the plant and build a new mid-sized truck in 2027, and to also over $3 billion will be invested to build a new EV battery plant that will launch in 2028.


You know, people forget this lesson in World War II. The way that we formed the Arsenal of Democracy that won the war was, they took the excess capacity of all the automotive manufacturing plants in the country, and produced tanks and planes and bombs and engines and all those things. And it's no different right now.

When I was a boy, living on the S-W side of Chicago, only a couple of blocks away, we had a large abandoned facility--It was called Ford plant. I understood that it was a Ford site to produce engines. During WW2 it was taken over by the government to produce engines for airplanes for the U.S. air force. Dad always told me that it took about 3 years for the U.S. to catch up in airplane production. They used the Ford plant because they had a build location and trained workers.

Later after WW2, the plant was shuttered. All of us young boys used to go there with our bikes, wagons, non-motorized go carts etc. and ride them down a hill that was developed as an overpass and later abandoned. We could play there for hours as long as we were home before the street lights came on. They say that they will bring 2,500 jobs back the the Belvedere site.


See link below about rebuilding the Chrysler Belvedere plant in Illinos:


https://www.mystateline.com/video/s...e-assembly-plant-nearly-5b-investment/9142238


1743425166943.png
 
Again....the issue isn't "broken trade policy" per se.

The issue is one of corporate responsibility. As I have several times, since the 1980s, corporations have taken on the view that if there is a way to wring one more nickel of profit out of a company for a shareholder dividend or a CEO bonus, then to NOT to do so was fiducially irresponsible at best, and completely un-American at worst. Remember....."Greed is good."

It was not acceptable to make 10 billion in profit if you could have made 10.00001 billion in profit.

Of course, the consequences of this can just be damned. Forget that plants close down all over the country and communities are decimated. Bruce Springsteen was singing about this in the early 80s, long before NAFTA was even a thought in anyone's mind.

That tariffs may bring a few jobs in the auto sector back for a short period of time but why would we want to reimport jobs that are only going to be taken over further by robots and AI in the next 10 years? Sure, there might be a few more unionized auto workers working the lines for a bit but when the price of a car rises $5000-$10000 per unit, there are going to be less units sold and less demand for factories and more layoffs.
1. Because my kid is in AI and robotics.
2. Because we don't want Chinese Terminators running roughshod over humans, we want American Terminators. It's "John Connor" not "Shue Fen Huang".
3. Because, unlike a quippy post on ODWire, we have to be responsible and can't just say "oh, screw it".
4. The balance to unfettered capitalism is baked into our system: government, our non-capitalistic institutions like labor unions and insurance. They are to run free, and the government and the unions and collectivization keeps it in check. It's always a balancing act.
 
See link below about rebuilding the Chrysler Belvedere plant in Illinos:]
I would be completely shocked if Chrysler is in business as a brand in 10 years. (Or should I say Stellantis, Chrysler's owner, which is not an American company -- it is a multinational with HQ in the Netherlands. The Chrysler/Dodge/RAM/Jeep brands are just marketing at this point, playing on people's nostalgia. But the cars are about as American as a Toyota Camry built in Kentucky, or a Subaru Outback built in Indiana.

The automotive industry is global, and highly connected. Which makes the idea of tariffs even more inappropriate. They didn't work back in the 30's on ... buggy whips or asbestos mines or whatever the hell people produced back then, and won't work now when every product has a high degree of content sourced from around the world.)

The tariffs will just be a final nail in the coffin for many auto brands, which were already having problems meeting sales targets because of high prices.

So here's an example:




The small pickup truck shown is $63,000 [already ridiculous]. It is made in Mexico, so the "new" post-tariff price will be somewhere around $78,000.

The domestic competition not subjected to a tariff will also raise their prices - probably not by 25%, but by whatever price they can get that will maximize their profits. This is basic economics - in an efficient marketplace, sellers will sell at the profit-maximization point on the P-Q curve. Tariffs are going to shift that curve up and out. It is just what they do.

So expect that a Ford F-whatever or RAM Big-Horn-whatever are going to be at least several thousand dollars more post-tariff. If manufacturers can maximize profits, they will. It is just what they do.
 
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So expect that a Ford F-whatever or RAM Big-Horn-whatever are going to be at least several thousand dollars more post-tariff. If manufacturers can maximize profits, they will. It is just what they do.
As an aside, the heavier-duty RAM pickup trucks (the 2500 and up) are actually made in Mexico -- the very basic ones already start at $60k (!!)

I cannot imagine anyone who isn't innumerate buying one for $75,000 or more, that's just crazytown. It will be long in the junkyard before it is paid off.
 
As an aside, the heavier-duty RAM pickup trucks (the 2500 and up) are actually made in Mexico -- the very basic ones already start at $60k (!!)

I cannot imagine anyone who isn't innumerate buying one for $75,000 or more, that's just crazytown. It will be long in the junkyard before it is paid off.
I know I am getting old with these stories, but I remember when my dad and uncles were buying F250, 4 on the floor, vinyl interior, vinyl flooring (omit carpet) and 8'3" bed, were going for like $15,000, with a 302 V8 for good hauling. They are probably going for 4-5 times that now. Who can afford them.

I know a young man that just bought a Chevy Silverado for like $78K. And I am wondering if he is frickin crazy. Does he max out his annual 401K? Probably not. Gotta have priorities.
 
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So are these tariffs really going to happen as scripted, or are they going to negotiate all the details last minute.

I could see a long term phase in over say 5 years. Say like 5,10,15,20,25% over 5 years to give companies a long term plan on how to deal with that. They can not make significant changes with the turn of a page on the calendar. Also if they do major investments in infrastructure, will it all change in 4 years? Lots of uncertainty.