Written by: Nik D.
During spring break of sophomore year, my family and I got a chance to travel to Sweden to pick up our Xc90 Volvo and get a chance to go on a factory tour. On the right is a visual of the plant we visited. The best part about all of this is that it was all paid for by the car company. Why would a car company pay for the airfare, food, and factory tour for five individual?When delving more into why the company actually benefits, we need to understand why they would pay for us in the first place. It turns out that European governments place large tariffs on brand-new, exported cars. By having our family come to their plant and drive our car around the block, it can be considered used and the tariffs go out the door. Yes, it costs the car company eight to ten thousand dollars to have a family of five to go to their plant, but that just goes to show that the tariffs are larger than this. I argue that the European governments should continue to keep these exportation tariffs on newly crafted cars.
One reason that these tariffs should remain in place is because they help boost the value of the Euro through tourism. Without the tariffs, Americans would just stay within the United States and buy European cars from dealerships. With the tariffs, it provides the car companies with an incentive to pay for Americans to come overseas. When these Americans come overseas, they will likely spend money in Europe. Because the exchange rate of the American Dollar is higher and the value of the American Dollar is more than the Euro, the Euro would raise in value.
Another reason why these tariffs should be sustained is because it allows for more European cars to stay in Europe. The tariffs provide incentives for the car companies to keep European manufactured cars within Europe because they would be cheaper for the car companies to sell their cars within Europe. These tariffs were likely imposed in the first place because the companies were exporting too many cars and there was a deficit of European-made cars in Europe.
In conclusion, the tariffs imposed on European car manufacturers are beneficial for European economies. They allow for more cars to stay within Europe and when Americans want to buy one of their cars, they “need” to go overseas to drive their car and technically make it a used car. When doing so, they will likely spend money in Europe, eventually making the European dollar worth more and have money flow into Europe instead of out.
Sources:
“Amid China Trade Tangle, Trump May Delay Auto Tariffs for E.U.” NBCNews.com, NBCUniversal News Group, www.nbcnews.com/business/business-news/amid-china-trade-tangle-trump-may-delay-auto-tariffs-eu-n1005991.
“EU Is Ready to Retaliate as Trump Auto-Tariff Deadline Nears.” Bloomberg.com, Bloomberg, www.bloomberg.com/news/articles/2019-05-13/eu-is-ready-to-retaliate-as-trump-s-auto-tariff-deadline-nears.
I didn't even realize that this was a thing. Although I have heard of tariffs, I didn’t know that they were that large to pay for other countries. I agree and think that it is a better idea to keep them, because it keeps the value of money higher for Europeans. This makes me wonder how much it costs us to import goods to other countries, or vise-versa. I know that a majority of our products come from other countries so I wonder how different our spending would be if we didn’t import as much.
ReplyDeleteAlthough this tariff seems to be working out well, it is interesting that they would allow the loophole for traveling customers, because the money they would spend would go to the customers expenses rather than the government and leave the Swedish Economy. I wonder how they are addressing this to fix that problem.
ReplyDeleteI agree that Tariffs should be kept there, but they could make the market more of a free market because otherwise the government will be in control to much and then the people won’t be able to control what is being made and who is getting it, and for your example of newly crafted cars is understandable because then people can actually get the cars that they want, and also it is very extraordinary how they want tariffs for the people of Europe so that they can get what they want.
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