00:00 Speaker A
President Trump unveiled a fresh round of tariffs on car imports to the U.S.
00:07 Donald Trump
And what we’re going to be doing is a 25% tariff on all cars that are not made in the United States. If they’re made in the United States is absolutely no tariff. We start off with a two and a half percent base which is what we were at, and we go to 25%.
00:32 Speaker A
The announcement is being felt across automakers in Asia, the EU, and the U.S.. The new import taxes will go into effect on fully assembled vehicles starting April 3rd. Levies on auto parts will follow by May 3rd. Industry experts say the move will drive up the cost of cars for consumers by thousands of dollars. Here to break down the impact is senior reporter Pras Subramanian here. Pras, from what we can evaluate thus far, what does this mean for the car companies, the manufacturers as well as consumers here?
01:04 Pras Subramanian
Man, I mean, it’s just a I I heard someone say that this could cause a recession in the auto industry, right? Just just just one move of 25% on not just the cars but also some finished auto parts, uh, like power trains and engines and things like that. So, you know, even if you’re Ford who builds, you know, 80% of their cars in the US, uh, you have these parts that are going to be affected in a month and that’s going to be a kind of a big problem. But, you know, Brad, you mentioned some of these European automakers we’re talking about the effects there, and I’m looking at this stat here with from the US Commerce Department. Germany imported $24.8 billion worth of cars to the US, billion with a B, by far away the number one importer of cars here. Uh, that’s that’s in terms in terms of European imports. That is a huge number that’s going to be tariff potentially, right? On August 3rd. So just a kind of a monumental thing here. I know a lot of people think, “Oh, there’s this is the possibility for negotiations. This is just Trump’s move to sort of get this on the table.” But it sounds like he’s pretty serious about not wanting to negotiate, and this is what’s going to be like for the not for the for at least the the near future.
03:00 Speaker B
Do you think the auto CEOs are surprised this morning and surprised yesterday that there wasn’t more of a negotiation, or do you think that they’re still hopeful of getting that negotiation?
03:12 Pras Subramanian
You know, I knew I think they definitely knew something was going to happen. I spoke to a source yesterday and and they at 3:00 did not know what Trump was going to say. At least they claimed not to know what he was going to what he was going to to say. And then if you watched the thing yesterday, he he spoke about tariffs on all non-US made cars, and then later on, we got the information about the auto parts, the certain auto parts that came on a fact sheet. So it wasn’t known right away how how much this would affect the industry. And now we’re sort of seeing that. You know, we talk about I know there’s talk about companies like Ferrari and Porsche and Mercedes are going to be affected severely by the there’s a heavy presence in US buyers, but uh, at least for companies like Ferrari, it’s not so bad because their their buyers have a lot of disposable income. They may not they may be okay with spending more on a tariff. But then again, rich people don’t want to spend money they don’t need to, so we’ll see how that shakes out.
04:49 Speaker A
You know, it’s interesting. I was looking through Kelly Blue Kelly Blue Book stats here on some of the most sold vehicles during 2024 here. Ford F-Series tops the list. I mean, that’s pretty much kind of you can print that on a t-shirt and printed every year and it would still be applicable most years, for decades at this juncture. But the Chevy Silverado, most of them produced in the US, but they also have the Mexico plant that services North America as well here. That was the number two vehicle, and mostly throughout some of these vehicles, you’re seeing most production that had been moved to service the North American market to the US. Some of that in anticipation of what could take place here right now, but also in reaction to what already played out in Trump 1.0 as well.
05:53 Pras Subramanian
Yeah, I mean, two things there, right? So you mentioned the Silverado and Sierra. Half of those trucks are made in the US, and half of them are made in Mexico, which is a big deal. But if you’re GM, you thought to yourself, “Hey, Trump negotiated USMCA last last term. Isn’t this all cool where we have a free trade agreement between Mexico and Canada?” Not the case. So that’s a problem, and then the question is can how fast can they reshore that to the US? I knew that takes two or three years minimum to make, right? So you’re not going to see an effect for a long time. Other than the fact that already announced products that are kind of in the works. So yesterday, Hyundai announced an expansion of their of their plant down in Georgia. They call it the meta plant. That’s for EVs and things like that. So that’s a whole another story about EV uh policy, but, you know, you can kind of see where we’re going with this.
07:14 Speaker B
Yeah, and we’re going to continue both the impact of these tariffs and also the impact on these auto stocks throughout our programming. Pras, thank you for kicking it off with a great context. Really appreciate it.