Reference：https://www.youtube.com/watch?v=97m8W1S1KB8
Introduction
President Donald Trump announced a 25 percent tariff on all imported US cars that will go into effect April 3. Trump believes these tariffs will boost US manufacturing, but economist Mark Zandi predicts the tariffs will result in higher prices and less US jobs.
How about this for a warning from one auto industry expert? The price of new cars in the U. S. will skyrocket in coming weeks and maybe even sooner than you think after President Trump announced 25% tariffs are coming on all cars and car parts shipped to the U. S. Quote, ‘There’s probably not a vehicle on the market today that wouldn’t be affected in some form or fashion by tariffs.’ Leaders of some of America’s biggest trading partners, also known as some of America’s closest allies, are pushing back hard overnight about this. Tryon, another warning for size. From the Premier of Ontario, Doug Ford.
That $65 billion of tariffs that we have on the table that we can launch towards the U. S., we have to run through every tariff and minimize the pain for Canadians, for Americans. And I feel terrible for the Americans, but it’s one person, it’s President Trump that’s creating this chaos.
Joining us right now is Mark Zandi, the chief economist for Moody’s Analytics. It’s good to see you, Mark. Thank you for coming in. 25% tariffs coming for cars and basically all cars, since it also applies to car parts. What is this going to mean? What’s your analysis on what people need to be preparing for?
Well, Kate, it means higher prices and it means fewer jobs. I mean, on the higher price side, you know, a lot of moving parts here, a lot of uncertainty. But I think if the tariffs are imposed as articulated and stay in place by this time next year, the typical car price will be somewhere between five thousand and ten thousand dollars more. So, you know, right now the average car price is 50K. So that means you’re going to be paying 55K to 60K as a result of the tariffs. And then I do expect that it’s going to cost jobs. You’ll see retaliation. You just heard the Canadians talk about this. Other countries will respond, no doubt. And that means U.S. Manufacturers are going to have trouble selling what they produce to those countries. And it’ll cost jobs and you don’t really need to go too far back to see this if you go back to President Trump’s first term and look at uh, what happened with manufacturing activity, jobs, and prices; the tariffs resulted in the kind of damage that I’m talking about so, and here we’re talking about much higher tariffs, so I’d buckle up. I think this means higher prices and fewer jobs.
And that was what I was going to ask you next, because Donald Trump, the President, says that this is being done to protect American manufacturers, to save American workers. The UAW president, Sean Faín, applauded the decision, saying it’s a step in the direction to end the free trade disaster, is how he put it. What are the chances this does not negatively affect American consumers?
I just don’t see it. I really don’t. Take a step back and put yourself in the position of a CEO of a major global manufacturer. You’re looking at this and you’re thinking, ‘Should I build a vehicle factory in the United States?’ And by the way, Kate, building a factory takes years-you can’t build it for next month, next quarter, this is something that takes two, three, four years and then you’re building it to last for years after that maybe even decades. And what’s the tariff going to be tomorrow? What’s the tariff going to be six months from now? What’s the tariff going to be a year from now? What’s the tariff going to be five years from now? Because all this is done under executive order, it’s not in the legislation. This can be changed in the stroke of a pen. So that CEO is going to say, ‘I’m not going to invest. I’m just going to sit on my hands.’ So I just don’t see it. I’m confused by it.
HELP ME BE LESS CONFUSED ABOUT ALSO NOW THE FOLLOWING, if you like add it all together. I mean, you said a couple of weeks ago, the risk of recession is uncomfortably high because of how markets were reacting to tariffs in part. We learned this week consumer confidence slid to its lowest level since January 2021. Add it all up. What is the economic outlook looking like since the new administration came in?
Well, highly uncertain. You know, Kate, I’ve been a professional economist for 35 years, and there’s few other times in that 35 years where the uncertainty is as thick as it is today. I mean, you know, maybe 9-11, the global financial crisis, the pandemic. I mean, it’s incredibly uncertain. And in that kind of world, people freeze at first, and then they start pulling back and cutting back. And you can see it in the surveys. You mentioned the consumer sentiment survey, the Conference Board survey. That’s a really good leading indicator of recession. Now, it’s not screaming recession yet. I don’t see red flags going off yet, but it’s moving in the wrong direction. And I do think if prices, if we do see these kinds of tariffs go into place and prices do rise to the extent that seems likely, I think it’s going to be a lot of pressure on consumer psychology, on business sentiment, on what the Federal Reserve Board decides to do or not do. And all those things mean recession risks are on the rise.
Mark, thank you so much for jumping on this morning. Appreciate it.
There is some real concern still about what President Trump will do ahead of what he is calling ‘Liberation Day.’ And that is April the 2nd when these next levies are set to go into place. And analysts are warning U. S. car buyers to prepare for some serious sticker shock. The president announcing a 25% tariffs on imported vehicles and auto parts. It is a move that will significantly raise the cost of producing all cars sold there, even those built in American factories. The White House claims the levies are needed to strengthen America’s manufacturing industry and because of unfair trade practices and U. S. national security concerns. All this set to take effect, of course, April the 3rd, a day after Liberation Day, after tariffs hit a wide variety of other goods produced by America’s trading partners. Right, CNN’s Anna Stewart following this story for us. Good to have you here. Analysts warning consumers to brace themselves, at least in the US, for price increases to come fast. Just how fast and by how much?
We’re looking at a considerable price increase for U. S. consumers, and this could take really only a few weeks. It depends on stock levels for car manufacturers. This is one of the most interconnected sort of global sectors in the world. The Trump administration, of course, is very aware of this. But it’s interesting to consider that, yes, this will impact U. S.-branded, U. S.-made cars. You’re looking at stock prices here for General Motors, Stellantis, which makes Jeep, Ford, GM down more than 8 percent today. And that’s because they are very reliant on car parts from around the world, particularly Canada and Mexico. So we are going to see a big increase in prices. In fact, some analysts today putting that at thousands of dollars a car. I think the Anderson Economic Group said that for vehicles built in the U. S., the cost could be between $3,500 and $12,000 a car. This is a huge cost increase. This, of course, feeds into inflation. This is not what President Trump wants. It will impact international carmakers as well. But it will even punish those that have factories in the United States, like Volkswagen or BMW, because they, too, rely on car parts from elsewhere. And, Becky, of course, it takes many, many years to shift that. So even as we see a car manufacturer like the South Korean one last week, Hyundai, investing or committing to invest a lot of money in a steel manufacturing facility, it will take years for that to come on board. And in the meantime, who is getting hit? Not just economies around the world, but U. S. consumers.
Yeah. What’s been the reaction to President Trump’s escalating global trade war?
We’ve had a lot of reaction, Becky. You won’t be surprised to hear that. Plenty of stock market reaction in Asia, Europe, and, of course, we’re now seeing the U. S. car stocks down really across the board, more so for those that are more impacted. And we actually can show you the countries that will be most impacted by this. Mexico, Japan, Canada, South Korea are all up there, and we are now getting responses from pretty much all of them. Mexico’s president due to speak soon. Canadian Prime Minister Mark Carney called it a direct attack on Canada. Interesting. Kind of said the EU will continue to seek negotiated solutions. They have actually delayed half of their retaliatory tariffs from a few weeks ago. They’re hoping clearly to have some sort of negotiation. Germany’s trade minister, though, much stronger, Becky. Unsurprising given Germany is such a big automaker. What counts now is to have a firm response to these tariffs from the EU. It needs to be clear that we will not take this lying down. And of course, President Trump really doesn’t like retaliation. So, what are we going to see? Is it going to be negotiation or escalation?
