Tacoma pricing into the future?

Note: I know the T’s and C’s of posting on Tacoma World. “No politics”. If a moderator decides this is “politics” feel free to remove. I will keep this as far away from politics as possible.

With multiple posts talking about pricing of new vehicles, I was interested in how tariffs played into Toyota pricing. For the uninitiated, the major tariff tax going back to LBJ is the “Chicken Tax”, at 25%. This is still in play today.

A quick reference from the Dallas News discussing rising truck prices:

“Chip shortages and supply-chain disruptions because of COVID have played a role, but so too have U.S. government policies. A prohibitive 25% tariff on imported trucks continues to restrict competition in the domestic market, inflating prices and leaving supply chains even more vulnerable to disruption.”

“Contributing to the shortages and lack of affordability is a 25% tariff on pickup trucks that dates back to a trade dispute with Europe in the 1960s. When the European Economic Community raised tariffs on imported chicken from the U.S., President Lyndon Johnson retaliated with a 25% “chicken tax” on imported trucks and other items. The tariff was originally aimed at vehicles made by Volkswagen in West Germany, but even though the original issue over chickens has been resolved, and Germany no longer makes light trucks for the U.S. market, the tariff remains in place out of political inertia.”

Is the chicken tax in play for the 2024 Toyota Tacoma? Yes. In a response to a legal inquiry about the duties to be classified and paid by Toyota for a 2024 Tacoma made in Mexico: “The applicable subheading for the Tacoma i-FORCE pick-up truck will be 8704.31.0040, HTSUS, which provides for “Motor vehicles for the transport of goods: Other, with spark-ignition internal combustion piston engine: G.V.W. not exceeding 5 metric tons: G.V.W. exceeding 2.5 metric tons but not exceeding 5 metric tons”. Concluding: “The general rate of duty will be 25% ad valorem.”

More background. In 2018, the Commerce Dept initiated an investigation into the impact of foreign auto makers in the US on “national security”. The final report was completed in 2019, but unresolved in any attempt to increase the duties: “The Trump Administration initiated its investigation on auto imports on May 23, 2018 (83 FR 24735). The Department of Commerce (Commerce), which has statutory responsibility for such investigations, submitted its report to the President on February 17, 2019, but it has not been made public.

According to the President, the report concluded that U.S. auto imports pose a national security threat because they affect “American-owned” producers’ global competitiveness and research and development on which U.S. military superiority depends. The President’s emphasis on U.S. ownership implies the Administration sees foreign-owned automakers operating in the United States as having fewer benefits to U.S. national security. Toyota and other Japanese-owned auto manufacturers objected to this view, noting significant U.S. investments. According to data from the Bureau of Economic Analysis, foreign firms have invested over $114 billion in the U.S. auto sector, directly employing 435,000 workers.”

There have been some speculative reports that this could change with proposed tariff policies, raising prices on Mexican assembled vehicles in 2026+, perhaps increasing prices in 2025 because of this speculation. (Currently Toyota Tacoma, Ford Maverick, Honda CRV, around a third of the pickups produced by GM and Stellantis. Add to that a new Tesla factory being built in Mexico).

IMO, based on the prior analysis in 2019 not resulting in higher duties on trucks from Mexico, the continuing “chicken tax”, and current USMCA trade agreements in play -- prices on these particular Mexican assembled vehicles will not change based on tariff policy. I was just curious if anyone had a different perspective. [As indicated at top of post be careful with “politics” this is a conversation about pricing, inflation, past, current, and future policy.]

 

Tacos and Tundras are not subject to the chicken tax.

 

Expensive and prices only go one direction.

 

I have conflicting information regarding the exemptions provided under the USMCA.
I know the Tundra built in Texas is exempt, being built in Texas and containing significant NA parts.

For Mexican assembled Tacoma it appears that NAFTA forward to USMCA changed the exemption from 62.5% regional part composition to 75% (along with some labor pay conditions) to meet the exemption requirements? I find at least one reference that indicates that the 2024 Hybrid (iForce Max) (and some other hybrids and EVs) do not meet those requirements. (This might be due to battery origin in this same reference below).

The USMCA Rules of Origin for Automotive Goods
The USMCA ROOs for motor vehicles require a specific amount of North American content in the final vehicle in order to qualify for duty-free treatment under the USMCA. The USMCA raised regional value content (RVC) requirements to 75 percent for passenger vehicles and light trucks, compared to 62.5 percent under the NAFTA. In addition, certain “core parts” must also meet the higher RVC thresholds for the entire vehicle to qualify. The USMCA also requires that at least 70 percent of a vehicle producer’s steel and aluminum purchases originate in North America. Finally, the USMCA introduced a new LVC rule that requires that a certain percentage of each producer’s qualifying vehicles be produced by employees making an average of $16 per hour. Collectively, these new requirements are intended to incentivize increased investment in autos and automotive parts production within the United States and North America.
https://ustr.gov/sites/default/files/2024 USMCA Autos Report to Congress_0.pdf

Do you have a reference indicating that Tacomas are specifically exempt?
I cannot find that when searching for keywords: Toyota USMCA (and adding Tacoma).

Seems, as a layman, I have jumped into a rabbit hole.

 

I don't, I figured that NAFTA covered it. I'm not going down that rabbit hole with you though. Good luck!

 

it's really just too early to tell.

tariff's tend to have a very wide-sweeping effect, far beyond their initial intended effect. much of what's been said so far hasn't taken those factors into account yet. that's the point of advisors.

it's really better to wait and see what tariff's actually get enacted first(after working their way through the process), then the ramifications can become much more apparent.

but one thing always rings true. it won't ever lead to cheaper anything.