Pandering, illegals get paid and Ferraris

Pandering, illegals get paid and Ferraris

I guess President Trump’s campaign pandering to make overtime paytax exempt is going to become a reality. There is a bill to enact the exemption and cap it at $10,000 for individuals and $20,000 for married couples. I wonder if there will follow bills to exempt tips and Social Security payments, two other pandering proposals? Of course, the one exemption that Trump has ignored is the only one that I have suggested for the last 20 years – to exempt from all taxes the pay and purchases by active duty service personnel. I wonder why I can’t get any traction on this?

Did you see where the Administration is bribing illegals to self-deport? Illegals would use a mobile app and would receive $1,000 once they confirm that they have arrived in their home country. One illegal has already received payment after self-deporting from Chicago to Honduras. I wonder how many times an individual could collect? Couldn’t one just come back into the country and self-deport any number of times?

Can you explain to me the new 100 percent tariff on foreign movies? I guess Trump didn’t like Ingmar Bergman. Is he trying to cut off foreign movies made by foreigners or American movies made on foreign soil? I guess they could make a replica of London in south Georgia to film a James Bond movie. Or a replica of the Sahara desert in Death Valley for an Indiana Jones movie. If there are tariffs on foreign made movies, will other countries retaliate by putting tariffs on movies from American studios? Didn’t China ban American movies? Don’t the bulk of movie sales by American studios come from abroad? But like many things Trump, it just seems silly to me.

Some have called Trump’s tariff policy “uneven.” That is kind at best. Better call it chaotic, undisciplined and ad hoc. The president unilaterally imposed a tariff of 25% on imported automobiles. Never mind that the tariffs were on automobiles of US companies. Since the factories were in Mexico or Canada they got hit with the tariffs. He also imposed tariffs on automobile parts. As noted before, some parts cross borders eleven times and are tariffed each time. Since in the initial round of tariffs, aluminum and steel were hit with 25%, Trump then exempted them if they were used in automobile production, thereby avoiding a double tariffation (if there is such a word). Then the Administration said that manufacturers of U.S.-assembled cars could have a rebate equal to 3.75% of their retail price for one year and 2.5% the next year to offset their tariff costs for parts. Whew! This is getting complicated. But if the car is not assembled in the US, then the full tariff would apply. Since Ford’s electric Mustang is assembled in Mexico, it pays the full tariff and will see a price increase of around $12,000.

The impact on the automobile companies is predictable. GM says its costs will increase by $5 billion. Ford, which assembles most of its vehicles in the US (save the Mustang) saw its first quarter profits fall by 64 percent saying that tariffs will decrease its adjusted pretax earnings by $1.5 billion. Like many firms Ford has stopped giving forward guidance. “While Ford’s tariff bill will be lower than many competitors, the impact still amounts to “huge numbers,” said Ford’s Chief Executive Jim Farley. By the way, Ford is still losing about $1 billion a year on its EVs. How long can that be sustained?

Even Rivian, the EV maker, which is produced 100 percent in the US is telling investors that it too will be negatively impacted by the tariffs. It expects over $200 million will be added to its costs, presumably in increased costs for some parts. It will be interesting to watch how the sales of US vehicles are impacted by Trump’s tariffs.

One bright spot is that Ferrari is continuing forward guidance as its earnings beat forecasts. Ferrari reported net earnings of $466 million in the first quarter as its deliveries increased from a year earlier. Ferrari’s CEO said “Another year is off to a great start,” he said. “All key metrics recorded double-digit growth, underscoring a strong profitability driven by our product mix and continued demand for personalizations.” The company said that it was going to increase its prices for US deliveries due to the tariffs. Despite that, US deliveries were up 3 percent. I guess Ferrari’s price elasticity is fairly inelastic. Its owners seem to pooh pooh the increase in price. Ah, life in the fast lane. Ciao!