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<v Speaker 1>One day leftil Liberation Day. If you ask President Trump,

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<v Speaker 1>you know his infatuation with tariffs goes back to the

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<v Speaker 1>nineteen eighties when he said the word tariff is the

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<v Speaker 1>most beautiful word in the dictionary.

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<v Speaker 2>He said it many times since then as well.

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<v Speaker 3>Wall Street journalists reporting the President Trump has settled on

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<v Speaker 3>a plan for the latest batch of tariffs that are

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<v Speaker 3>expected this week, but he's not telling anybody what that

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<v Speaker 3>plan is.

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<v Speaker 1>He has announced a twenty five percent tariff on all

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<v Speaker 1>cars not made in the US, but exempted auto parts

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<v Speaker 1>that comply with the US Mexico Canada agreement. To help

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<v Speaker 1>US boil it all down. What it means for the

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<v Speaker 1>labor industry, for the auto industry in this country is

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<v Speaker 1>Arthur Wheaton. He's the director of Labor Studies at Cornell.

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<v Speaker 1>Joins us now, Arthur, thank you so much for your

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<v Speaker 1>time this morning.

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<v Speaker 4>My pleasure.

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<v Speaker 2>Let's start with some of the basics.

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<v Speaker 3>You wrote a book a long time ago, or at

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<v Speaker 3>least in an article where in the world to do

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<v Speaker 3>they come from? Speaking of today's cars, and that was

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<v Speaker 3>more than twenty years ago. We've talked a little bit

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<v Speaker 3>about sort of the outsourcing of parts of transmissions of engines.

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<v Speaker 3>When it comes to cars that are then assembled in

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<v Speaker 3>the United States, where do our American finger quotes American

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<v Speaker 3>cars come from these days?

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<v Speaker 4>Well, the short answer is is there's no completely American car,

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<v Speaker 4>So they all have parts coming from all around the world.

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<v Speaker 4>And some of the most American content would be Tesla,

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<v Speaker 4>and that's because their two main manufacturing plants for the

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<v Speaker 4>US is here. But you're seeing almost half of all

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<v Speaker 4>the vehicles sold in the US come from outside of

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<v Speaker 4>the US.

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<v Speaker 1>How does this affect the car companies who make the cars,

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<v Speaker 1>like Toyota parts or the vehicles here in the US.

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<v Speaker 4>It's a twenty five percent tiara on all of the

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<v Speaker 4>vehicles coming from Japan from Toyota, and it's a twenty

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<v Speaker 4>five percent tariff down the road for all of the

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<v Speaker 4>auto parts that are sent to the United States to

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<v Speaker 4>go into the Toyota vehicles. And it's a twenty five

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<v Speaker 4>percent tariff for all of the other companies that build

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<v Speaker 4>outside the US. The tricky part here is the parts,

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<v Speaker 4>and those are going to be delayed by a month

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<v Speaker 4>until they can figure out exactly how to precisely account

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<v Speaker 4>for all the parts going back and forth across the borders.

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<v Speaker 3>Transportation, car payments, truck payments, things like that are usually

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<v Speaker 3>the second largest portion of a household's budget.

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<v Speaker 2>Is this going to be an issue?

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<v Speaker 3>Are we going to see immediate impacts on people's household

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<v Speaker 3>budgets as a result of this.

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<v Speaker 4>Absolutely, and there's almost no way to avoid it, because

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<v Speaker 4>you're going to see people's budgets get squeezed. For new

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<v Speaker 4>car prices, they're going to go up from the tariffs.

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<v Speaker 4>Used car prices are going to go up because you're

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<v Speaker 4>going to get priced out. For those that are just

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<v Speaker 4>barely able to make those payments. Add twenty five percent

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<v Speaker 4>on top of it, you won't be able to afford it.

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<v Speaker 4>Rental car prices are going to go up, your car

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<v Speaker 4>insurance is going to go up. All of those directly

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<v Speaker 4>associated with the tariffs that are supposed to start the third.

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<v Speaker 5>I remember in the nineties my mom got a used car.

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<v Speaker 5>She loved it.

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<v Speaker 1>It was used Alpha Romeo and she loved it because

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<v Speaker 1>you know, its Italian. But then something went wrong with

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<v Speaker 1>the car and you had to get the part from

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<v Speaker 1>Italy and it was expensive and it took forever. And

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<v Speaker 1>that was back when there was the push to buy

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<v Speaker 1>American for that. One of one of the major reasons

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<v Speaker 1>was for that alone, that you want your parts to

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<v Speaker 1>get here and to be reasonable. But since then, it

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<v Speaker 1>seems like there has been a globalized model that has developed.

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<v Speaker 1>If we're going to bring back parts being made in

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<v Speaker 1>the US, how long are we looking at And is

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<v Speaker 1>that even something that's feasible with the way that this

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<v Speaker 1>industry has diversified globally.

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<v Speaker 4>Give enough money and enough time, yes, it's feasible you

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<v Speaker 4>could bring that back. But what you would need to

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<v Speaker 4>have is a long term, sustained tariff that people understand

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<v Speaker 4>what the rules are. It's when you keep going on again,

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<v Speaker 4>off again. No one wants to invest the billions of

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<v Speaker 4>dollars to build a new plant and have two or

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<v Speaker 4>three years for it to ramp up. If the next

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<v Speaker 4>president comes in eliminates the tariffs and you just wasted

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<v Speaker 4>a whole bunch of that money. So is it possible, yes?

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<v Speaker 4>Is it going to take time? Absolutely? So you're talking

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<v Speaker 4>about these plants can take three to five years to

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<v Speaker 4>build and get the first product out the door, and

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<v Speaker 4>by then Trump will no longer be president.

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<v Speaker 3>Well, we've been fighting inflation and after the pandemic well,

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<v Speaker 3>let me rephrase this. During the pandemic, we saw a

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<v Speaker 3>lot of problems with the chokehold around supply chains, and

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<v Speaker 3>that impacted the auto industry pretty significantly during the pandemic.

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<v Speaker 3>Did we ever fully recover from that or we back

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<v Speaker 3>to where we were before twenty twenty We are.

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<v Speaker 4>Just now getting back with inventory levels, at least in

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<v Speaker 4>the auto industry back up closer to what normal was.

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<v Speaker 4>So there's going to be a little bit of a

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<v Speaker 4>cushion before it hits US, but it was very disruptive

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<v Speaker 4>for the supply chain. And you're going to see the

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<v Speaker 4>same thing. Some of these parts going into that vehicle

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<v Speaker 4>go back and forth across the border three or four

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<v Speaker 4>times before the finished vehicle is sold, So you don't

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<v Speaker 4>just pay the tariff lunch, you pay it each time

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<v Speaker 4>it goes across the border. So it's going to be

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<v Speaker 4>a huge impact for all of those and most of

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<v Speaker 4>the vehicles in the US have at least twenty to

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<v Speaker 4>fifty percent foreign parts that go in coming from outside

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<v Speaker 4>the US.

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<v Speaker 1>And then at what point do we talk about the

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<v Speaker 1>potential for a government bailout of the American car companies

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<v Speaker 1>if they are hit hard to the point of needing help, Well.

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<v Speaker 4>We've done it more than once. We've done it at

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<v Speaker 4>least a few times. For what's now called Stilantis used

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<v Speaker 4>to be called Chrysler. They've been bailed out multiple times.

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<v Speaker 4>But I think for the most part, you have different

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<v Speaker 4>levels of pain. So Ford has eighty percent of their

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<v Speaker 4>vehicles made in the US. The parts are going to

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<v Speaker 4>become more expensive as they come back and forth across

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<v Speaker 4>but Stillantis has a lot of their content and gender motors.

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<v Speaker 4>Even more of their content susussible to US and Mexico.

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<v Speaker 4>So the best are Canada and Mexico. The best hope

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<v Speaker 4>is that they can negotiate some changes in what is

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<v Speaker 4>or what is not covered by the tariffs, and that

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<v Speaker 4>has been changing, so the USMCA, the NAFTA two point

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<v Speaker 4>zero that President Trump negotiated in this previous administration, If

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<v Speaker 4>they can maintain some of those conditions, it made less

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<v Speaker 4>some of the impact from US, Mexico and Canada. But

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<v Speaker 4>for right now, they're all on the hook.

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<v Speaker 5>When you look at Asia, who needs who more?

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<v Speaker 1>Do we need the parts that are made in Asia

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<v Speaker 1>at the cost that they're made there more? Or do

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<v Speaker 1>they need American consumers buying their vehicles and their parts more.

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<v Speaker 4>I think it's a global dependence on each other. So

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<v Speaker 4>I think they need us and I think we need them.

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<v Speaker 4>But at some point in time, can China survive without

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<v Speaker 4>the US market? Yes? They got more than a billion,

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<v Speaker 4>four one hundred million people there, so yes, they have

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<v Speaker 4>their own market. Can the US survive on their own? Yes?

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<v Speaker 4>Will it cost us all more money, yes, but we

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<v Speaker 4>can get by on our own. But it's a whole

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<v Speaker 4>lot easier if we all work together.

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<v Speaker 2>Art, great stuff. We really appreciate you taking time for

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<v Speaker 2>us today.

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<v Speaker 4>Thank you, my pleasure.

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<v Speaker 3>You bet Arthur Wheaton there again, Director of Labor Studies

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<v Speaker 3>at Cornell.

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<v Speaker 2>You call them art, well, I hope that's why I

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<v Speaker 2>did it.

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<v Speaker 1>At the end, I didn't know if you near him

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<v Speaker 1>because you called him Art like that's that's the next

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<v Speaker 1>level relation.

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<v Speaker 5>I mean, I guess we Art. We talked to him.

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<v Speaker 5>You didn't call him Art right out of the gate.

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<v Speaker 2>No, I waited. I warmed up right. I let him

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<v Speaker 2>think we were friends.

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<v Speaker 1>He could be one of those guys who's only been

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<v Speaker 1>Arthur his whole life.

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<v Speaker 3>Well, the article where we found him from Bloomberg, he

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<v Speaker 3>went by Art. Oh good, I'm so glad I didn't

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<v Speaker 3>break ice on that because I wanted to have him back.

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<v Speaker 3>But if you offended him and burn that bridge. As

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<v Speaker 3>we were saying goodbye. A little bit later in the show,

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<v Speaker 3>we're going to talk about the the A's, not the well,

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<v Speaker 3>the Sacramento A's and the drone that interrupted the games.

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<v Speaker 1>Yes, so I saw pictures from that game, and it

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<v Speaker 1>looked very much like spring training, which is really cool.

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<v Speaker 1>It's the most expensive ticket, by the way, in Major

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<v Speaker 1>League Baseball right now. Oh really, because there's only fourteen

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<v Speaker 1>thousand seats.

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<v Speaker 2>I get and it was packed. Yeah, I don't know

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<v Speaker 2>what I mean. That was opening night, but it was.

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<v Speaker 1>It looked very cool. It's a great ballpark there in

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<v Speaker 1>West Sacramento. Hey, you like botox, you like Waygo V,

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<v Speaker 1>you like zep bound, you don't like cancer. These are

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<v Speaker 1>all drugs or active ingredients for these drugs that suppliers

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<v Speaker 1>are shipping now by air to the United States because

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<v Speaker 1>they're worried about tariffs on pharmaceuticals. EU medicine and pharmaceutical

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<v Speaker 1>product exports to the US totaled about ninety billion euro

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<v Speaker 1>about ninety seven billion dollars in twenty twenty three. Several

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<v Speaker 1>investors and analysts following this whole deal say that well

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<v Speaker 1>shares are already hurting, but there have actually been drug

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<v Speaker 1>makers taking the unusual steps of sending medicines by air

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<v Speaker 1>to the US just to get them here, just to

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<v Speaker 1>get them here before the liberation day tomorrow. To your

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<v Speaker 1>Headquartered drug makers told Reuters they're sending as much of

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<v Speaker 1>their medicines across the Atlantic as possible. They've been doing

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<v Speaker 1>over the past several weeks. They heard other pharmaceutical companies

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<v Speaker 1>are doing the same.

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<v Speaker 3>So on Friday, Trump said that the specific tariffs when

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<v Speaker 3>it comes to pharmaceuticals would be coming soon. And part

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<v Speaker 3>of the issue that has driven the markets crazy over

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<v Speaker 3>these last few days and weeks is that there are

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<v Speaker 3>no specifics about all of this just I mean, literally

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<v Speaker 3>minutes ago. Caroline Levitt in the White House Press briefing said,

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<v Speaker 3>the President has decided on all of these He's just

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<v Speaker 3>not talent anybody yet.

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<v Speaker 6>The President said last night he has made a decision

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<v Speaker 6>in a determination. I was with him in the Oval

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<v Speaker 6>Office earlier, and he is going to announce that decision tomorrow.

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<v Speaker 6>I don't want to get ahead of the president this

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<v Speaker 6>is obviously a very big day. He's with his trade

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<v Speaker 6>and tariff team right now perfecting it to make sure

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<v Speaker 6>this is a perfect deal for the American people and

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<v Speaker 6>the American worker, and you will all find out in

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<v Speaker 6>about twenty four hours from now.

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<v Speaker 3>Yes, so about one o'clock I believe tomorrow is when

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<v Speaker 3>the President's expected to make these announcements.

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<v Speaker 1>Pharmaceutical products have long been spared from trade wars due

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<v Speaker 1>to potential harms, right, we need those. But Trump's move

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<v Speaker 1>to increase tariffs on goods from China, including finished drugs

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<v Speaker 1>and raw ingredients, as well as the early round of

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<v Speaker 1>tariffs on goods like steel and bourbon, has raised the

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<v Speaker 1>expectations that medicines will join the list.

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<v Speaker 3>I am it sounds a lot like the determination about

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<v Speaker 3>how we're going to do these auto tariffs as well,

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<v Speaker 3>whether it's the finished product or the ingredients, the main

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<v Speaker 3>ingredients in them, or both or both. Trump had previously

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<v Speaker 3>singled out Ireland specifically because apparently Ireland is home to

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<v Speaker 3>manufacturing plants for most of the world's top ten pharmaceutical companies.

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<v Speaker 5>Yeah, who knew. I just learned that this morning.

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<v Speaker 3>So again, the details of it still hidden. Somewhere deep

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<v Speaker 3>within the White House, and it turns out that President

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<v Speaker 3>Trump has scheduled a news conference tomorrow to get into

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<v Speaker 3>some of the details we had seen. For the most part,

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<v Speaker 3>another down day on Wall Street because of the uncertainty

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<v Speaker 3>that surrounds all of the all of the tariff decisions,

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<v Speaker 3>and in fact, the announcement, significantly I mentioned, comes at

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<v Speaker 3>one o'clock to one o'clock hour time, after the bell closes,

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<v Speaker 3>after the markets close on Wall Street.

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<v Speaker 1>Coming up next, we touched on the auto industry and

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<v Speaker 1>the tariffs ahead for the auto industry. We're going to

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<v Speaker 1>be talking to a senior editor at Kelly Bluebook and

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<v Speaker 1>Auto Trader about what does this mean if you're in

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<v Speaker 1>the market for a car, maybe you've got a used

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<v Speaker 1>car on your hands. Is this a time to sell

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<v Speaker 1>and to buy because of the uncertainty.

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<v Speaker 3>Well, we're already concerned about inflation. There's some speculation, maybe

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<v Speaker 3>some anxiety even about Liberation Day. When a bunch of

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<v Speaker 3>tariffs are supposed to be imposed on stuff that's imported

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<v Speaker 3>into the United States. One of those imports is going

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<v Speaker 3>to be the price of cars is going to go up.

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<v Speaker 3>I don't know how it couldn't joining us to talk

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<v Speaker 3>more about this. Brian Moody is senior editor at Auto

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<v Speaker 3>Trader in Kelly Bluebook. Brian, first of all, thanks for

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<v Speaker 3>taking time and help us try to untangle some of

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<v Speaker 3>what's about to happen to the economy.

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<v Speaker 7>Yeah, of course, it's it's interesting the way this has

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<v Speaker 7>moved all of a sudden. The automotive space has more

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<v Speaker 7>new news than say the Hollywood Reporter.

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<v Speaker 2>Well, listen, we don't.

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<v Speaker 3>I think one of the issues about the tariffs is

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<v Speaker 3>people are having a hard time kind of wrapping our.

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<v Speaker 1>Heads around, well, do we do we buy now because

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<v Speaker 1>we just don't know what's going to happen with the dealerships?

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<v Speaker 1>Do we sell our used cars now because or do

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<v Speaker 1>we wait because because those prices are going to go up?

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<v Speaker 7>Right, the prices are going to go up. So here's

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<v Speaker 7>the main thing that I would say. If you're looking

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<v Speaker 7>for a used car, and for the purposes of this conversation,

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<v Speaker 7>when I say used, I mean a lightly used car

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<v Speaker 7>between five years old. If you're looking for a ten

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<v Speaker 7>thousand dollars car with one hundred thousand miles or whatever,

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<v Speaker 7>that's probably not going to change that much. It's the

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<v Speaker 7>lightly used cars that, by the way, we're already in

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<v Speaker 7>short supply because of the new cars that didn't get

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<v Speaker 7>made during the pandemic. So if that's you, as a

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<v Speaker 7>customer of a lightly used car, I would absolutely start

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<v Speaker 7>looking right now.

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<v Speaker 3>When it comes to the price increases that we do

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<v Speaker 3>expect on imported cars with the ones that are I mean,

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<v Speaker 3>it's hard to even explain this, but predominantly foreign vehicles,

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<v Speaker 3>even though some of the parts may come from the

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<v Speaker 3>United States, those prices are going to go up.

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<v Speaker 2>Is there a specific.

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<v Speaker 3>Segment of the car industry that we'll see more of

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<v Speaker 3>an impact? Is it the higher price cars, the lower

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<v Speaker 3>price cars?

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<v Speaker 7>You know what's hard to It's not going to go

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<v Speaker 7>by price, however, I say that, But what automakers may

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<v Speaker 7>do is look at their entire PORTFOLI and say, hey,

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<v Speaker 7>these inexpensive cars are built here in the US, and

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<v Speaker 7>these priceier cars are built outside. They can't just raise

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<v Speaker 7>prices on certain cars, not on the other They're going

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<v Speaker 7>to try to even it out, get suppliers to chip in,

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<v Speaker 7>but even it out across their model lines so that

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<v Speaker 7>there's less of a sticker shock. So, for example, an

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<v Speaker 7>economy car that costs twenty five thousand dollars simply can't

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<v Speaker 7>support a three thousand dollars price increase, right, But a

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<v Speaker 7>ninety thousand dollars pickup, if you add thirty five hundred

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<v Speaker 7>dollars to that price, that customer probably can support that.

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<v Speaker 7>And the other thing to remember is when we say

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<v Speaker 7>import and domestic, the truth is many brands that we

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<v Speaker 7>think of as imports, such as Honda, Nissan, Toyota, Mercedes Venz,

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<v Speaker 7>those companies build their cars in the US for the

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<v Speaker 7>most part. And on the other hand, a lot of

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<v Speaker 7>domestic brands, not all, but they build many of their

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<v Speaker 7>models outside the US, specifically Mexico or Canada.

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<v Speaker 1>Do you see this global market? Ask you this question.

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<v Speaker 1>It's become a global market. It's not as easy to

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<v Speaker 1>say buy American anymore because of what you just mentioned.

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<v Speaker 1>A lot of the parts are coming from other places.

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<v Speaker 1>Do you see it being a situation where we could

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<v Speaker 1>bring parts manufacturing back to this country primarily for American

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<v Speaker 1>cars in our lifetime.

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<v Speaker 7>It's possible, and some manufacturers are already doing that. For

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<v Speaker 7>we see Tesla as a model for that. They make

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<v Speaker 7>a lot of their cars in the US, and they

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<v Speaker 7>also have a battery and power train facility inside the US,

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<v Speaker 7>as does the Hyundai Motor Group. Hundai Motor Group solves

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<v Speaker 7>the brands Hyundai, Kia, and Genesis, and they just built

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<v Speaker 7>a new gigantic factory near Savannah, Georgia, but not only

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<v Speaker 7>will manufacture cars for three brands, but also have an

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<v Speaker 7>on site battery facility, So yes, that is possible. Nissan

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<v Speaker 7>has an engine plant in Tennessee that also services vehicles,

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<v Speaker 7>so yes, that's not uncommon.

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<v Speaker 2>But we're hopefully.

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<v Speaker 7>I mean, the whole goal of this is that you

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<v Speaker 7>see more of that, But you know, this is all

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<v Speaker 7>just speculation at the end of the day. Does any

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<v Speaker 7>of that mean lower prices for consumers even five years

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<v Speaker 7>from now? I really don't know.

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<v Speaker 5>Is there a brand that you see faring better?

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<v Speaker 7>A brand that has a diverse portfolio of cars made

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<v Speaker 7>in multiple places will probably do better. Of course, we

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<v Speaker 7>could say any brand where all the cars are made

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<v Speaker 7>inside the US would be great. But the truth is,

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<v Speaker 7>as you said before, parts come from their places. There

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<v Speaker 7>really is no such thing as a one hundred percent

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<v Speaker 7>inside the USA made car. So Tesla has lots of

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<v Speaker 7>cars that come from the US. They probably would be Okay, Rivian,

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<v Speaker 7>same thing. When you look at Nissan, they have a

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<v Speaker 7>large number of cars made inside the US, but also

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<v Speaker 7>some made outside the US. So those types of brands.

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<v Speaker 7>Toyota makes many of the cars they sell in the

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<v Speaker 7>US right here in the US.

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<v Speaker 2>I want to ask you about Tesla specifically.

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<v Speaker 3>Some critics of Elon Musk and the president have said

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<v Speaker 3>that this was a favor to Tesla because it, like

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<v Speaker 3>you said, does produce a lot of vehicles here in

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<v Speaker 3>the US. But don't they also have factories in other

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<v Speaker 3>parts of the world that specifically cater to those other

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<v Speaker 3>parts of the world.

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<v Speaker 7>Yeah, and that's the way that they've been doing business.

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<v Speaker 7>So that's what's so odd about this is that for

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<v Speaker 7>decades we've been sort of helping to orchestrate a system

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<v Speaker 7>whereby manufacturers build where they sell. Now, they don't just

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<v Speaker 7>sell cars in the US. There's a good chance that

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<v Speaker 7>whatever car they sell in the US, they also sell

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<v Speaker 7>in Mexico and South America. It only makes sense to

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<v Speaker 7>centralize the location for building those cars for the purposes

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<v Speaker 7>of a scale and also just economics. So yes, while

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<v Speaker 7>one manufacturer like Bulbo or Tesla might make cars here

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<v Speaker 7>in the US, they also make them other places to

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<v Speaker 7>sell to those marks. And while it may advantage Tesla

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<v Speaker 7>to have a tariff that only goes toward cars coming

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<v Speaker 7>from outside the US, it would also advantage cars like

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<v Speaker 7>the Ford Mustang GT, certain versions of the Jeep Wrangler,

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<v Speaker 7>the Volkswagen ID four, as well as the Honda Odyssey,

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<v Speaker 7>Honda Ridgeline, and other vehicles like that. Anybody who builds

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<v Speaker 7>their cars inside the US. Kia is another one. It's

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<v Speaker 7>going to help them. It wouldn't just only help Tesla.

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<v Speaker 7>That would be silly.

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<v Speaker 5>Brian, you drive a SOB.

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<v Speaker 1>Any chance of the manual transmission making a comeback in

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<v Speaker 1>this country.

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<v Speaker 7>Nobody cares about that.

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<v Speaker 5>I totally do. I miss the manual transmission.

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<v Speaker 7>I know, because you know what you missed from not

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<v Speaker 7>having a manual transmission. You you are required to be

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<v Speaker 7>so focused on what's happening right in front of you.

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<v Speaker 7>It's like you're forced to have a higher level of attention.

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<v Speaker 7>I think all of these self driving programs are going

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<v Speaker 7>to end up being harmful in the end.

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<v Speaker 5>Yes.

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<v Speaker 7>So, while I can brag that I got my daughter

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<v Speaker 7>to be embraced sobs and she has one of those too,

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<v Speaker 7>I fear I'm going to be one of the only

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<v Speaker 7>few people like that in my neighborhood for many years

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<v Speaker 7>to come.

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<v Speaker 3>Well, Mike, both of my kids learned on the stick

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<v Speaker 3>and I can't. It's one of the greatest gifts I

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<v Speaker 3>think that my wife and I gave our kids is

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<v Speaker 3>the ability to drive a manual transmission.

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<v Speaker 7>Yes, and it also I've noticed something in teaching kids

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<v Speaker 7>to drive, Like sometimes at work will have an intern

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<v Speaker 7>and they'll say, oh, well, I want how to drive

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<v Speaker 7>a stick shift, And when you teach them, they'll say

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<v Speaker 7>things like this, how does the car no one to

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<v Speaker 7>stop when you push in the clutch.

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<v Speaker 4>And you're like, oh, my gosh, you know we got

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<v Speaker 4>a switch.

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<v Speaker 2>Oh man, I have.

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<v Speaker 7>A connection with the physical world, the way we turn

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<v Speaker 7>our bikes upside down and put dirt on there and

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<v Speaker 7>change the tires. They don't have that connection with the

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<v Speaker 7>girl they learned to drive on video games.

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<v Speaker 5>Honestly, God, that's suppressing. Brian, Thank you.

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<v Speaker 7>Thank you.

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<v Speaker 3>Brian Moody, their senior editor at Auto Trader and Kelly

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<v Speaker 3>blue Book