Will Steel & Aluminum Tariffs Affect Tesla?

Discussion in 'Tesla' started by Pushmi-Pullyu, Mar 6, 2018.

To remove this ad click here.

  1. Pushmi-Pullyu

    Pushmi-Pullyu Well-Known Member

    Several questions come to mind:

    1. Can the President unilaterally declare a tariff? Isn't that one of the powers which the Constitution reserves to Congress?

    Unfortunately, it seems pretty clear that Presidents have broad powers to impose tariffs, without any action by or approval from Congress. See, for example, this recent CNN Money article:

    "President... can levy tariffs without Congress"

    2. What countries does Tesla get its steel and aluminum from?

    I'm not sure the answer to that is entirely clear. I do see that U.S. steel maker AK Steel is reported to be a major supplier to Tesla. But I also note an InsideEVs news article which claimed that Tesla had signed a deal with S. Korean steelmaker POSCO. That article was taken down, but that doesn't necessarily mean the deal was nixed.

    What about aluminum? Mr. Google points to several online references to Alcoa, which is an American supplier.

    3. Would a tariff affect domestic (U.S.) prices for steel and aluminum?

    Logically, the answer is likely "yes". If the price for imported steel and aluminum rises, why wouldn't domestic suppliers take advantage of that by raising their own prices? Plus, the normal economic forces of supply and demand will most likely apply. Tariffs on imported steel and aluminum would naturally result in domestic manufacturers switching to domestic suppliers, increasing domestic demand for steel and aluminum. With demand increasing, we can expect prices to go up, at least in the short term.

    4. Would tariffs affect the price for parts made of steel and aluminum?

    That's a question which I don't feel qualified to address. I'm hoping someone knowledgeable about that subject will post a response.

    5. Would tariffs force Tesla to raise the price of its cars... in particular, the Model 3?

    It's hard to see why that wouldn't happen. It would be unfortunate if the Tesla bashers turn out to be correct with their incessant FUD claiming that Tesla won't ever make a $35,000 Model 3. But we can't expect Tesla to make and sell cars without making a (gross) profit margin on them!
  2. To remove this ad click here.

  3. NeilBlanchard

    NeilBlanchard Active Member

    All cars are made with steel and / or aluminum. There is a lot of aluminum in engines and transmissions.
  4. Pushmi-Pullyu

    Pushmi-Pullyu Well-Known Member

    I'm guessing this was a response to my question #4:

    4. Would tariffs affect the price for parts made of steel and aluminum?​

    Looks like I didn't make my meaning clear, so I'll reword it:

    4. Would tariffs affect the price for parts from foreign suppliers, if those parts are made of steel and aluminum?

    Or to put it another way: Would the tariff affect only prices for rolls of steel and aluminum, or would it also be imposed on parts (manufactured goods) from foreign suppliers, if those parts were made primarily or wholly from steel or aluminum?
  5. NeilBlanchard

    NeilBlanchard Active Member

    The tariff (as I understand it) only applies to raw steel and aluminum; not to manufactured components.

    I was responding to the question about Tesla.
  6. WadeTyhon

    WadeTyhon Well-Known Member

    I haven't looked into it too deeply yet, but if that is the case, all this will do is hurt parts manufacturers in the US, car manufacturers in the US, and consumers in the US.

    They're not going to be able to just flip a switch and suddenly start using American steel producers overnight if they aren’t already. I'm sure they already have long term contracts in place. So they're either going to eat the costs (not likely) or pass them on to consumers.

    I have no idea about Tesla's steel sources. Have they addressed the matter yet? Ford hasn't that I have seen. GM is downplaying it since they say that 90% of their steel is US sourced. But CNN Money is reporting an analysis by Goldman Sachs that it could cost automakers about $1 billion a year.

    Last edited: Mar 6, 2018
  7. To remove this ad click here.

Share This Page