Monday, January 30, 2017

Trump Eyes Border Tax on Mexico, China and Germany

The Trump White House favors a "flexible" border adjustment tax targeting countries with which the United States runs big trade deficits, including Mexico, China and Germany, the President's top trade and industry adviser, Peter Navarro, said on Saturday.

"There is no question we need a border adjustable tax of some kind," Navarro said on Saturday at the White House.

Navarro said Germany was "one of the worst actors" on strategically increasing the VAT to 20 per cent.

"They're sticking it to us when they send a BMW or a Porsche into our market they rebate the VAT to those manufacturers and it's like a subsidy."

"But when we try to sell them a Ford or Chevy they slap on the VAT."

Two weeks ago in the EPJ Daily Alert, discussing the possibility of some type of import tax, I told subscribers:
What is likely to occur is that some plants will be built in higher cost US instead, whereas other autos just won't be built. This will mean higher car costs---and will impact, to various degrees, all automakers. But it will be particularly damaging to German automakers. If you have been thinking of buying a Mercedes, BMW, etc...  Now is the time.

Prices are very likely to climb and your purchase will likely prove to be a wise investment. At times, it may make sense to lease rather than own but not now. You want to keep hold of ownership since the rising costs are not yet calculated into these cars. What's more, interest rates on auto loans continue to remain very low at 3% or lower for 72 month loans. So buy, take a loan out for as long as possible (even if you don't need to take out a loan), the latter years of your payments will look very cheap as price inflation heats up.

This strategy will work for almost any car but especially for German cars, new or used.


EPJ Daily Alert

Austrailian Financial Review

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