June 11, 2025 • 27 mins
Watch Joe and Kailey LIVE every day on YouTube: http://bit.ly/3vTiACF.
General Motors Co. plans to invest $4 billion in its US plants over the next two years in response to President Donald Trump’s tariffs in a move that reduces production in Mexico while boosting domestic output of some of its some of its top-selling gas-powered vehicles.
The spending will expand factories in Michigan, Kansas and Tennessee. The moves will boost annual US production capacity by 300,000 vehicles, GM Chief Financial Officer Paul Jacobson said at a Deutsche Bank conference on Wednesday
Assembly of several top-selling models, including its very profitable Chevrolet Silverado and GMC Sierra pickup trucks and the Chevrolet Equinox SUV, will move to factories in the US from Mexico. GM plans to add between 3,000 and 4,000 US jobs when all production is in place, a spokesman said.
Bloomberg Washington Correspondents Joe Mathieu and Kailey Leinz deliver insight and analysis on the latest headlines from the White House and Capitol Hill, including conversations with influential lawmakers and key figures in politics and policy. On this edition, Joe and Kailey speak with:
- Bloomberg's Matt Miller and General Motors CFO Paul Jacobsen.
- House Republican Conference Chairwoman Congresswoman Lisa McClain of Michigan.
- Bloomberg Economics Chief US Economist Anna Wong.
See omnystudio.com/listener for privacy information.
Mark as Played
Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:00):
Bloomberg Audio Studios, Podcasts, radio news. You're listening to the
Bloomberg Balance of Power podcast. Catch us live weekdays at
noon and five pm Eastern on Apple Coarclay and Android
Auto with the Bloomberg Business App. Listen on demand wherever
(00:20):
you get your podcasts, or watch us live on YouTube.
Speaker 2 (00:25):
Joe Matthew adied alongside Kaylee Lions as we bring you
a slightly different series of conversations today sticking in New York,
and a great pleasure to bring in our colleague Matt Miller,
who sits down with the chief financial Officer Executive vice
president of General Motors.
Speaker 3 (00:39):
Matt take it away, Yeah, Joe, Kayley, thanks very much.
And I also have to say it's great to be
on my favorite show on Bloomberg TV. So I watch
Bounds of Power every day and it's really cool to
take part in it. Paul, we're talking to you. I'm
normally focused on automaking as a business. It's now very
close closely related to the kind of stuff that Joe
and Kayley talk about every day. Because of the tariffs.
(01:02):
You've announced a four billion dollar investment or plans to
invest four billion dollars over the next two years bringing
production back to America. This is essentially what Donald Trump
is pushing for. This is what he wants companies to do,
and now you're actually making it work. How much is
this going to offset the five billion dollars worth of
hits GM is expected to take from the tariffs.
Speaker 4 (01:25):
Well, Matt, first of all, thanks for having us. I
think you know this announcement that we made is worth
much more than just the tariff side of it. At
tariffs are obviously a piece of it. Is We're reacting
to the new dynamic that's going to be out there,
and it'll offset a good bit of it. So we'll
move about three hundred thousand units of production. Some of
it is new production and incremental some of it is
a shift but re optimizing our manufacturing footprint and taking
(01:48):
advantage of some underutilized capacity in the US. But it's
also about, you know, creating security for our people. You
look at the orient plant, we would tailor that to
produce and scale. EV's really fast. The market is obviously
changed and pivoted a little bit. This gives us an
opportunity to reallocate that plant better utilize it for internal
combustion engines. On trucks and full size SUVs where we
(02:11):
know the demand is really strong for them, and that's
great for our utilization, our efficiency as well as for
our consumers and our and our people as well. So
it's about more than just tariffs. But with this will
be about two million vehicles produced in the US for
the US and we're continuing to make those investments.
Speaker 3 (02:29):
I bought Silverado z R two a couple of years ago.
Mine came out of Mexico. You're going to be moving
most of that production, I guess to the US, right,
most Sierra production to the US. Equinox production does that
come mostly the US?
Speaker 5 (02:42):
Too?
Speaker 3 (02:42):
What are we seeing in terms of the models that are.
Speaker 4 (02:45):
Swelling out of miss Yeah, we'll have Equinox ice production
in spring Hill, I'm sorry in Fairfax. Spring Hill is
going to be the Blazer. But Fairfax is going to
be another great implementation of where we're going to be
able to produce ice and evs on the same production line,
creating that flexibility for us to be able to respond
to consumer demand as it continues to grow.
Speaker 3 (03:06):
Have you changed sourcing for any of the parts, because
it's not obviously just about the final assembly.
Speaker 6 (03:10):
With these vehicles.
Speaker 3 (03:12):
There's a ton of content and you want to have
that I guess as much domestically sourced as possible as
well to save on costs.
Speaker 4 (03:21):
Well, I think you know, with what the administration is
set up here with the MSRP offsets, is giving us
time to help retool our supply chain, so incentivizing growth
and production in the US. Recognizing that the supply chain
takes time to shift. So we're going to continue to
work with our supply base to try to maximize the
efficiencies across the entire value chain and utilize those offsets
(03:43):
where we need to and shift production where it makes
sense and where we're able to.
Speaker 3 (03:46):
I should say, to save on tariff costs because you
obviously source a lot of these parts outside of the US,
because the actual production costs are lower. How much higher
is it how much more expensive is it toled a
part like an engine or a transmission to assemble a
truck in the US than it is, say in Mexico.
Speaker 4 (04:07):
Well, it's far more complex than that, Matt, because I
mean there's obviously the hourly labor differential, and that's a
big piece of it. But we can save money and logistics,
we can save money and plant utilization and filling up capacity.
So when you when you fill up a plan, it
actually makes it more efficient for every vehicle out there,
not just the ones that you're moving production into. So
(04:28):
we look at that as an enterprise wide calculation and
think we can get to an equivalency where ultimately we
can be competitive with producing in the US as well.
Speaker 3 (04:37):
One of the things that you can produce fewer of
in the US is magnets, the rare earth minerals that
we've all learned much more about than we ever expected
to in the last week or so. How is your
access to those rare earths right now? Because there's concern
that production and a lot of US factories could.
Speaker 4 (04:56):
Slow Yeah, we haven't experienced any slow down as of yet.
It's clearly a risk that everybody is watching from that standpoint.
But what I would say is our supply chain team
does an excellent job. Similar to what they did through
the supply the chip crisis semiconductor shortage that we had
a few years ago. Our team did a great job
of responding, maintaining agility, working with our suppliers to try
(05:19):
to balance production as best we can, and they've done
a great job so far with this situation as well?
Speaker 3 (05:25):
What is your thought on any kind of vertical integration.
I mean, the concern or the problem I guess with
rarest isn't just the mining, but also the refining of
them is mostly done in China. Have you tried to
convince suppliers to do more of that here? Are you
trying to get your own supply here?
Speaker 4 (05:43):
We've done a number of initiatives, whether it's with Lithium
Americas or a joint venture with PASCO, around a lot
of battery raw materials, particularly the lithium side, which is
a little bit easier to do and a little bit
less capital intensive. But we've helped fund that, We've taken
equity positions, we've helped to fund products and projects across
the board. But we've been working on this for a
(06:05):
long time, really since covid is trying to increase the
resiliency of our supply chain, both you know, from a
pandemic from just a de risking perspective, and we're in
a pretty good situation with where we are. We still
have some work to do, but there's a lot of
things that we can do. Thinking creatively with our partners, what.
Speaker 3 (06:22):
Are you thinking about prices right now. You obviously raise
prices on a regular basis. Right if we're not experiencing deflation,
you're going to try and stick.
Speaker 5 (06:33):
With the pack.
Speaker 3 (06:34):
There are you facing pushback from consumers when you try
and raise prices.
Speaker 4 (06:37):
Well, you know, our portfolio has performed really, really well,
and we've adopted a strategy of being very disciplined in
our production, not over producing like some of the challenges
of the past, and that's a strategy that's worked for us.
We announced on our earnings call about six weeks ago
that we don't need to take any price to help
with the offset initiatives that we've targeted going forward, because
(06:58):
we want to be in the position where we're responding
to demand from our customers and being more stable. We
don't want to raise prices because of tariffs, and then
when tariffs come down, expect that prices are going to
come back down. We want to be more consistent with
our customer base, and that's a strategy that's worked really
well for us.
Speaker 3 (07:14):
Can you do it in other ways? To MSRP, I
mean some manufacturers are raising maybe delivery price, you can
also raise the price of options packages and still keep
MSRP level.
Speaker 4 (07:25):
Well, again, we haven't done anything specific to respond to tariffs.
We've looked at where packages are for options, where our
logistics costs are, etc. And we try to price what
we can. But that's irrespective of tariffs, and it's something
that we've done. I think when you look at our
pricing model over the last few years, it's been more
consistent than many of our competitors, with less volatility and discounting,
(07:49):
and that's good for our customers as well. So we're
going to continue to do that across the board where
we can and make sure that we're delivering value for
our customers.
Speaker 3 (07:58):
The being counters at Bloueberg and eligence to want me
to ask questions about cash flow here and how that
looks right now with the tariff effect. You've had obviously
great sales, as I guess some demand is pulled forward.
Do you have to divert some cash though to deal
with teriffs from anything else?
Speaker 4 (08:15):
Well, I mean, clearly, in the short and intermediate term,
tariffs are going to be a drain on our cash flow.
We announced about four to five billion dollars of impact
this year and we think we can offset about thirty
percent of it going forward, but that is going to
be a cash hit. Now. When you look at the
performance of the company, our cash flow generation has been
really strong. It'll continue to be really strong even after
(08:36):
the tariffs, and we're going to work to continue to
drive that efficiency. But we've got to create that stable
cash flow across the board because this is still a
cyclical industry and we need to be able to absorb
these shocks. And I think the team's done a really
good job of managing and being disciplined in order to
continue to drive strong cash flow even in the face
of some of these short to intermediate term hits.
Speaker 3 (08:57):
What are you expecting in terms of SAR because we've
had pretty strong sales numbers over the past couple of months.
I think upwards of seventeen point three million. Does that
continue through the rest of the year.
Speaker 4 (09:09):
No, we don't expect it to. We would love to
see that happen. But what we said about six weeks
ago is we're planning for a year of about sixteen
million units, which is similar to last year. In April
and the first half of May, we were trending much
closer to eighteen million as we saw a lot of
customers trying to get ahead of what they expected to
be price increases. We've seen that come out over the
(09:30):
last couple of weeks, but it's really retreated back to
where it was before that pool ahead demand. So we're
encouraged by the fact that that consistent demand is still
there and that's going to be important for us as
we continue to push forward. But if we see a slowdown,
we'll have to adjust to it and make sure that
we create that agility that we have really come to
(09:51):
be known for over the last few years. But right now,
the customer seems pretty stable. Even though we've seen that
pool ahead demand come out.
Speaker 3 (09:58):
You've had the best margins of the big three enjoyed
I think eight and a half percent margins are thereabouts.
Does it hang at that level through twenty twenty five.
Speaker 4 (10:08):
Well, obviously the tariffs are going to be an operating
hit to us going forward, which is why we're focused
on making sure we take actions quickly. There were a
number of actions that we already took, we called them
no regrets actions, where we increased the line rate in
Fort Wayne to build more trucks in the US, et cetera.
Here we're taking the next step of deploying capital to
(10:30):
increase that production. These are steps that we think are
necessary for us for the long term to be able
to drive that type of consistent margin performance that we
want to be known for.
Speaker 3 (10:39):
I want to ask about the shares as well as
your free float. It's gotten pretty small. How much further
can you go with buybacks?
Speaker 4 (10:47):
Well, I mean, we're going to continue to follow our
discipline capital allocation policy. The first thing we do is
reinvest in the business. That's a capital budget of about
ten to eleven billion dollars. We just announced last night
that that'll be ten to twelve billion dollars for twenty
six and twenty seven, reflecting a little bit of additional
spend for what we're doing. The second is we prioritize
the balance sheet. The balance sheet's been as strong as
(11:09):
it's been in decades, with a pension fund that's nearly
fully funded and debt that's very manageable. And then the
third leg of that still was returning cash to shareholders.
So we reinstated the dividend a couple of years ago,
and we've been deploying that cash to return to our
shareholders to make sure that all the constituencies benefit from
the success that we've been having our employees, our customers,
(11:32):
and our shareholders.
Speaker 3 (11:33):
Paul's been great having some time with you. Thanks so much,
Thank you so much joining us here at seven thirty
one Lex with that, Joe and Haley, I'll toss it
back to you in Washington.
Speaker 7 (11:42):
All right, Bloomberg's Matt Miller, thank you so much. Great
to have you here on Balance of Power. We appreciate
Mats interview and his fandom of the show. He of
course joined there by Paul Jacobson, the CFO of General Motors.
Speaker 1 (11:56):
You're listening to the Bloomberg Balance of Power podcast. Catch
up live weekdays at noon and five pm Eastern on
Apple Cockley and Android Auto with the Bloomberg Business App.
You can also listen live on Amazon Alexa from our
flagship New York station, Just Say Alexa played Bloomberg eleven thirty.
Speaker 7 (12:15):
Four billion dollars that the automaker is planning to invest
in its US plants over the next two years, investments
that will expand factories in Kansas, Tennessee, and in Michigan,
specifically in Lake Orion, Michigan, which happens to fall in
the congressional district of Republican Congressoman Lisa McLay in, the
chair of the House Republican Conference, who is joining us
now live from Capitol Hill on Bloomberg TV and Radio.
(12:40):
Chairman McLain, we appreciate your time. When we consider that
GM says that these investments in aggregate will add between
three thousand and four thousand US jobs. How many of
those are you expecting to be at home in your district?
Speaker 8 (12:53):
Just a little over twenty three hundred jobs for Lake Orion.
Speaker 6 (12:58):
It is a huge investment for the community.
Speaker 8 (13:01):
We are extremely excited and the economic impact that it's
going to have is obvious, right, not just with the
Lake Orient plant, but with the coffee shops and the
new homes and all the money going back into the
economy in Lake Orient. Huge, but also it provides a
lot of hope for our community in my district. And
(13:22):
if I can just say, this isn't just another example
of President Trump promises made, promises kept. He told you
he was going to bring manufacturing back to America and
jobs back to America, and thank you for bringing it
back to my home state and my district in Lake Orion.
So we're very excited.
Speaker 2 (13:40):
Well, it's great to have you back, Congressom and thanks
for your patients. I know you were listening to that
interview with the CFO at General Motors, and I want
to just go a bit further into the labor picture
here before we ask you some other questions about this.
Michigan has an unemployment rate of five point five percent,
and I wonder if you have the labor pool now,
if this will require training or there are unemployed workers
(14:02):
from the business who can move right into these positions.
Speaker 6 (14:05):
I think it's going to be a combination of both.
Speaker 8 (14:08):
And I haven't seen all the details yet, meaning you know,
I don't think there's going to be twenty three hundred
jobs that start tomorrow afternoon, So.
Speaker 6 (14:16):
I think it's going to be a combination.
Speaker 8 (14:18):
I think we have the workforce, but I think we're
going to have to do some investing and retooling, so
to speak, on training of these jobs. But Michiganers are resilient.
We have a good partner with GM, we have a
good partner with the local officials in the local community
of Lake Orion that we're going to be able to
get this done. To make sure that we can get
(14:40):
the plant up and running as soon as possible with
skilled workers.
Speaker 7 (14:45):
Well and for all of the economic benefit that you
are expecting from this investment. Of course, part of the
reason companies like GM are looking at more onshoring is
because of the tariff regime the President has put into place.
To what extent do you expect the positive economic effects
of that might be off set by higher costs that
could result from the said tariffs.
Speaker 8 (15:04):
You know, the said tariffs are exactly what you said,
the said tariffs, And I know there's a lot of
uncertainty around right now, but they're not set in stone.
So I think the tariffs, as I said many times before,
is a negotiation to tool to renegotiate our trade deals
and bring manufacturing in jobs back to America.
Speaker 6 (15:26):
So I don't know what the effect is going to be.
Speaker 8 (15:29):
I believe that there could be a possibility that we
see a reduction in the tariffs. I mean, look at
the deal that we're just the President just signed with China,
not to mention the other eighty countries that have come
to the table to renegotiate trade deals. So I'm optimistic
that it will offset a lot, but maybe there won't
(15:49):
even be that much too offset because the tariffs are
being used effectively as a negotiation tool.
Speaker 2 (15:58):
Yeah, we should note that we are waiting for that deal,
the framework at least that was announced to be formalized
and approved by President SI. But I know as well
that you're crediting President Trump's trade policies here for this
investment in the shift to the US. We know as
well that General Motors is confirming that it has no
plans to produce electric vehicles at the Orient plant. These
(16:21):
are going to be gas only vehicles following the retooling.
Is that also a response to President Trump's approach or
is it a response to customer demand?
Speaker 8 (16:32):
Well, I think you heard the gentleman on before Paul
say it is a demand, right. I don't know that
it's as much a retaliation or whatever words you used.
I think it is more a reflection on the demand
of what consumers want. President Trump, I don't think cares
what type of vehicle you drive, whether it's an electric
(16:54):
vehicle or whether it's a gas powered vehicle. He just
wants the American people to be able to choose. And
I think what you see from GM is without those subsidies,
you're seeing the demand, say from consumers saying, hey, we
prefer a gas powered vehicle. You can still buy an
electric vehicle, but the demand is for the ice engines,
(17:17):
and that's exactly how the free markets are supposed to work.
Speaker 6 (17:20):
Supply and demand should matter.
Speaker 7 (17:23):
Well, we know Elon Musk has had some strong feelings
around this whole conversation around EV's and those tax credits
being rolled back, which may have inspired, possibly, or at
least sped into some of the social media posts we
saw from him in recent days, posts that he has
since said went too far. According to his posts from
earlier today, that he regrets some of the things he said,
specifically about President Trump and The New York Times just
(17:45):
reporting Cherwen would claim that Elon Musk did call Trump
on Monday night before making that I regret post, but
considering the things in addition to commenting about Donald Trump,
specifically that he's been railing against her this one big,
beautiful bill that you have been advocating for vocally. Is
this an apology that you would accept? Do you think
the president should?
Speaker 6 (18:05):
Yeah? I think they are. Listen.
Speaker 8 (18:07):
The President is a very smart man, and Elon Musk
is very smart man. What did we think was going
to happen when you have the most powerful man in
the world and one of the richest men in the
world is I think sometimes your emotions get the best
of you. And they're both businessmen, they both care about
the country and doing what's best. So I think this
(18:28):
will be put to bed rather quickly. And actually it
has been put to bed rather quickly. So I'm optimistic.
Let bygones be bygones, and let's focus on what's best
for the American people.
Speaker 2 (18:40):
Well, does getting over this help passage of the Reconciliation Bill.
I know it's coming back your way, likely with changes
in the Senate Congress. So when there were concerns that
some of the fiscal hawks might have been paying attention
to Elon Musk urging them to.
Speaker 8 (18:53):
Vote no, yeah, well, I think it doesn't hurt.
Speaker 6 (18:59):
Does it help?
Speaker 8 (18:59):
I think I think every little bit helps, right, And
at the end of the day, I think we're going
to get it back. I know the Senate is going
to put their fingerprints on it. They've already told us
they're going to put their fingerprints on it. My hope
is that they don't change it too dramatically because we
have a very thin margin and We worked for almost
a year and had our family, family fights, family scrabbles,
(19:21):
family disagreements on this to put the best, most conservative
package on the floor. So again I'm optimistic that we'll
get this done, hopefully by July fourth.
Speaker 7 (19:31):
Well, and when we consider those Senate changes, we understand
that a Chairman Crapo in the Senate, who leads the
Finance Committee, of course, is going to be briefing Republican
senators about the changes he's looking to make this afternoon.
Which one do you fear most that you've heard rumor
of that could well diminish the chances of it repassing
in the House.
Speaker 8 (19:50):
I hope they don't touch salt too much. And the
reason why I say that is because the Salt Caucus,
which we have here in the House and they don't
have in the Senate for obvious reasons, they've been pretty
dug in. And I'm not here to say they're right,
I'm not here to say they're wrong, but they've been
pretty dug in, and that was one of our biggest
issues in the House that just can't be touched. That
(20:13):
would be the biggest Yeah, that'll be the biggest problem
if they touch salt I believe, and medicaid obviously, which
I don't think they're going to.
Speaker 2 (20:21):
We've got our eyes on the New York, New Jersey,
California delegations. Congresswoman, it's great to have you, and thanks
again for being with us live from Capitol Hill. Lisa
McLean as Chairwoman of the House Republican Conference and a
great update there, real time information, Kayleie. She picked salt.
Isn't that something as the answer? This is what's keeping
them up at night right now.
Speaker 7 (20:39):
Yeah, which is why the details of whatever Chairman Crapo
has to say about the changes they're looking at are
so important, considering Senators, including the Majority Leader John Thune,
have not been shy about saying that the Senate doesn't
care at all about salt, at least.
Speaker 2 (20:52):
On the GOP SID we've come around altogether again for
Matt Miller, I hope that he was listening to that.
Speaker 1 (21:00):
You're listening to the Bloomberg Balance of Power podcast. Catch
us live weekdays at noon and five pm Eastern on
Alma Cockley and Android Auto with the Bloomberg Business App.
Listen on demand wherever you get your podcasts, or watch
us live on YouTube.
Speaker 7 (21:16):
Looking at the market reaction to today's CPI data. Thank
you so much. That data, of course coming in cool
for the fourth consecutive month, with underlying US inflation rising
just a tenth of a percent in May. That was
less than estimates. As we look at that data at
eight thirty am, and then the testimony that began at
ten am, and by the way, is still going with
the Treasury Secretary Scott Besson. This is something he seems
(21:38):
to be pretty proud of today. He called this data
specifically fantastic, So.
Speaker 2 (21:43):
This isn't Biden data anymore.
Speaker 5 (21:45):
Es.
Speaker 2 (21:46):
I guess that's right, though he had the wind at
his back when he walked into the Ways and means
committee room. A good story to tell from the White House.
Let's see if fan of Wong agrees. Bloomberg Economics chief
US economist joins US Now Live, Anna, is that the
story because the headline reads pretty well for this White House?
Speaker 9 (22:04):
Well so, so, I think you can certainly see it
a glass half full, like Bessen does. But what the
signal is telling us from today's report is that consumers
are beginning to see their income prospect dwindle, and that's
why they're pulling back on traveling, on booking hotels, and
(22:25):
on you know, buying cars typically in a in a
you know, slow down economic slow down environment, those two
categories cars and travel are exactly the stuff that people
first pull back on. So I think, what this soft
data is telling us that the economy is slowing.
Speaker 7 (22:46):
Well, so anna to expand on that a little further,
are you suggesting basically that the data is not so
much telling us that companies and businesses aren't passing on
higher costs due to tariffs, but that they can't exercise
that pricing power, that consumers are not going to be
particularly tolerant of it.
Speaker 9 (23:03):
So what it is is that the firms actually have
been passing through some tariffs. We notice that appliances and
some of the more tariff exposed categories are have been
seeing a pickup and inflation. But more than offsetting that
is this deflation in many travels sectors, such as airfares
(23:27):
and hotels. So I think now it's a good time
to travel and book hotels if one has slacked in
their budget. But otherwise, I think this tariff passed through
that everybody has been waiting for is actually happening. And
my team does grape online prices, and those online prices
(23:48):
are showing that in the next couple of months, home
appliances like your toasters microwaves are going to see a
significant price increase.
Speaker 2 (23:57):
Interesting, and we're wid watching testimony continue with the Treasury Secretary,
Scott Bessett now approaching our four before the Houseways and
Means Committee. I don't know if this man ever sleeps.
He's going to be talking later before the Senate as well,
and speaking to what he has described as the economic
benefits and the growth engine that would be this reconciliation bill,
(24:17):
the President's Big Beautiful Bill. If passed, listen to what
he said about cutting red tape, and we'll have.
Speaker 9 (24:22):
You weigh in.
Speaker 5 (24:23):
One big beautiful bill will also incentivize unprecedented investment in
US manufacturing. The legislation will provide one hundred percent expensing
for new factories as well as existing factories that expand
operations and support made in America. It will streamline burdensome
(24:45):
permitting processes that often stand in the way of new
manufacturing projects.
Speaker 2 (24:52):
And when you combine the cutting of red tape, the
permitting reform along with the incentives, this is the kind
of thing that the CBO, to the detriment of the
White House doesn't include in its scoring. Is he correct
about what comes next?
Speaker 9 (25:08):
I think there are some evidence to suggest that American
firms are increasingly thinking about on shoring some manufacturing activities.
ISM Manufacturing release a survey results twice every year, and
it shows that many of the metallic firms and even
appair rolls firms are thinking about increasing operations in the US.
(25:29):
So surely there are some evidence pointing to that. And
also the deregulation on energy prices will lower cost. But
at the same time we're seeing fifty percent tariffs on
steel an alumna, which are key inputs in building factories
in the US. So what is a net impact? I
think that's harder to quantify.
Speaker 7 (25:50):
Well. And finally, Anna, I would like to ask you
about the FED, because of course President Trump had some
thoughts about what the FED should do in the aftermath
of this data. Today he posted on true Social cp
I just out great numbers and reiterates his call for
the FED to lower one full point. I know you
aren't in the camp that the Fed's getting ready to
move one hundred basis points, but does the data today
(26:10):
make it potentially more likely we see a twenty five
basis point cut sooner than expected.
Speaker 9 (26:17):
I don't think so, because what this data shows you
is still the impact negative impact from the April Liberation
Day tariffs, and the paradox of tariffs is that if
they go really, really high, they could be deflationary because
the pullback and income expectations is just so steep. And
(26:38):
that's what we're seeing today. But the de escalation in
Geneva and thereafter has really bolstered the stock market, and
we expect that in July CPI print we're going to
see boost from financial easing of financial conditions as well
as those home appliances price increase that I was just telling.
Speaker 7 (26:59):
You of ut all right, anamong we appreciate it as
always our chief US economists for Bloomberg Economics joining us
here on Balance of Power. Thank you so much, and Joe.
As we wrap up this hour of Balance of Power,
we should know the Treasury Secretary is still going at it.
Speaker 6 (27:13):
In the House.
Speaker 7 (27:14):
Weie and Means Committee about to hit and press four
hours after his late night early morning trip back from
London trade negotiations. And when we come back to air
later today at five pm, He's still going to be testifying,
just in the other chamber too. He has the Senate next.
Speaker 2 (27:28):
Yeah, you think maybe they'd give him like a day
off or something after that, But he had to leave
the talks last evening to get on a plane. He
said goodbye to Anne Marie Hordern in London and showed
up this morning in Washington. So we'll keep tabs if
he makes more news on this. Thanks for listening to
the Balance of Power podcast. Make sure to subscribe if
(27:48):
you haven't already, at Apple, Spotify, or wherever you get
your podcasts, and you can find us live every weekday
from Washington, DC at noontime Eastern at Bloomberg dot com.
Bloomberg Audio Studios, Podcasts, radio news. You're listening to the
Bloomberg Balance of Power podcast. Catch us live weekdays at
noon and five pm Eastern on Apple Coarclay and Android
Auto with the Bloomberg Business App. Listen on demand wherever
(00:20):
you get your podcasts, or watch us live on YouTube.
Speaker 2 (00:25):
Joe Matthew adied alongside Kaylee Lions as we bring you
a slightly different series of conversations today sticking in New York,
and a great pleasure to bring in our colleague Matt Miller,
who sits down with the chief financial Officer Executive vice
president of General Motors.
Speaker 3 (00:39):
Matt take it away, Yeah, Joe, Kayley, thanks very much.
And I also have to say it's great to be
on my favorite show on Bloomberg TV. So I watch
Bounds of Power every day and it's really cool to
take part in it. Paul, we're talking to you. I'm
normally focused on automaking as a business. It's now very
close closely related to the kind of stuff that Joe
and Kayley talk about every day. Because of the tariffs.
(01:02):
You've announced a four billion dollar investment or plans to
invest four billion dollars over the next two years bringing
production back to America. This is essentially what Donald Trump
is pushing for. This is what he wants companies to do,
and now you're actually making it work. How much is
this going to offset the five billion dollars worth of
hits GM is expected to take from the tariffs.
Speaker 4 (01:25):
Well, Matt, first of all, thanks for having us. I
think you know this announcement that we made is worth
much more than just the tariff side of it. At
tariffs are obviously a piece of it. Is We're reacting
to the new dynamic that's going to be out there,
and it'll offset a good bit of it. So we'll
move about three hundred thousand units of production. Some of
it is new production and incremental some of it is
a shift but re optimizing our manufacturing footprint and taking
(01:48):
advantage of some underutilized capacity in the US. But it's
also about, you know, creating security for our people. You
look at the orient plant, we would tailor that to
produce and scale. EV's really fast. The market is obviously
changed and pivoted a little bit. This gives us an
opportunity to reallocate that plant better utilize it for internal
combustion engines. On trucks and full size SUVs where we
(02:11):
know the demand is really strong for them, and that's
great for our utilization, our efficiency as well as for
our consumers and our and our people as well. So
it's about more than just tariffs. But with this will
be about two million vehicles produced in the US for
the US and we're continuing to make those investments.
Speaker 3 (02:29):
I bought Silverado z R two a couple of years ago.
Mine came out of Mexico. You're going to be moving
most of that production, I guess to the US, right,
most Sierra production to the US. Equinox production does that
come mostly the US?
Speaker 5 (02:42):
Too?
Speaker 3 (02:42):
What are we seeing in terms of the models that are.
Speaker 4 (02:45):
Swelling out of miss Yeah, we'll have Equinox ice production
in spring Hill, I'm sorry in Fairfax. Spring Hill is
going to be the Blazer. But Fairfax is going to
be another great implementation of where we're going to be
able to produce ice and evs on the same production line,
creating that flexibility for us to be able to respond
to consumer demand as it continues to grow.
Speaker 3 (03:06):
Have you changed sourcing for any of the parts, because
it's not obviously just about the final assembly.
Speaker 6 (03:10):
With these vehicles.
Speaker 3 (03:12):
There's a ton of content and you want to have
that I guess as much domestically sourced as possible as
well to save on costs.
Speaker 4 (03:21):
Well, I think you know, with what the administration is
set up here with the MSRP offsets, is giving us
time to help retool our supply chain, so incentivizing growth
and production in the US. Recognizing that the supply chain
takes time to shift. So we're going to continue to
work with our supply base to try to maximize the
efficiencies across the entire value chain and utilize those offsets
(03:43):
where we need to and shift production where it makes
sense and where we're able to.
Speaker 3 (03:46):
I should say, to save on tariff costs because you
obviously source a lot of these parts outside of the US,
because the actual production costs are lower. How much higher
is it how much more expensive is it toled a
part like an engine or a transmission to assemble a
truck in the US than it is, say in Mexico.
Speaker 4 (04:07):
Well, it's far more complex than that, Matt, because I
mean there's obviously the hourly labor differential, and that's a
big piece of it. But we can save money and logistics,
we can save money and plant utilization and filling up capacity.
So when you when you fill up a plan, it
actually makes it more efficient for every vehicle out there,
not just the ones that you're moving production into. So
(04:28):
we look at that as an enterprise wide calculation and
think we can get to an equivalency where ultimately we
can be competitive with producing in the US as well.
Speaker 3 (04:37):
One of the things that you can produce fewer of
in the US is magnets, the rare earth minerals that
we've all learned much more about than we ever expected
to in the last week or so. How is your
access to those rare earths right now? Because there's concern
that production and a lot of US factories could.
Speaker 4 (04:56):
Slow Yeah, we haven't experienced any slow down as of yet.
It's clearly a risk that everybody is watching from that standpoint.
But what I would say is our supply chain team
does an excellent job. Similar to what they did through
the supply the chip crisis semiconductor shortage that we had
a few years ago. Our team did a great job
of responding, maintaining agility, working with our suppliers to try
(05:19):
to balance production as best we can, and they've done
a great job so far with this situation as well?
Speaker 3 (05:25):
What is your thought on any kind of vertical integration.
I mean, the concern or the problem I guess with
rarest isn't just the mining, but also the refining of
them is mostly done in China. Have you tried to
convince suppliers to do more of that here? Are you
trying to get your own supply here?
Speaker 4 (05:43):
We've done a number of initiatives, whether it's with Lithium
Americas or a joint venture with PASCO, around a lot
of battery raw materials, particularly the lithium side, which is
a little bit easier to do and a little bit
less capital intensive. But we've helped fund that, We've taken
equity positions, we've helped to fund products and projects across
the board. But we've been working on this for a
(06:05):
long time, really since covid is trying to increase the
resiliency of our supply chain, both you know, from a
pandemic from just a de risking perspective, and we're in
a pretty good situation with where we are. We still
have some work to do, but there's a lot of
things that we can do. Thinking creatively with our partners, what.
Speaker 3 (06:22):
Are you thinking about prices right now. You obviously raise
prices on a regular basis. Right if we're not experiencing deflation,
you're going to try and stick.
Speaker 5 (06:33):
With the pack.
Speaker 3 (06:34):
There are you facing pushback from consumers when you try
and raise prices.
Speaker 4 (06:37):
Well, you know, our portfolio has performed really, really well,
and we've adopted a strategy of being very disciplined in
our production, not over producing like some of the challenges
of the past, and that's a strategy that's worked for us.
We announced on our earnings call about six weeks ago
that we don't need to take any price to help
with the offset initiatives that we've targeted going forward, because
(06:58):
we want to be in the position where we're responding
to demand from our customers and being more stable. We
don't want to raise prices because of tariffs, and then
when tariffs come down, expect that prices are going to
come back down. We want to be more consistent with
our customer base, and that's a strategy that's worked really
well for us.
Speaker 3 (07:14):
Can you do it in other ways? To MSRP, I
mean some manufacturers are raising maybe delivery price, you can
also raise the price of options packages and still keep
MSRP level.
Speaker 4 (07:25):
Well, again, we haven't done anything specific to respond to tariffs.
We've looked at where packages are for options, where our
logistics costs are, etc. And we try to price what
we can. But that's irrespective of tariffs, and it's something
that we've done. I think when you look at our
pricing model over the last few years, it's been more
consistent than many of our competitors, with less volatility and discounting,
(07:49):
and that's good for our customers as well. So we're
going to continue to do that across the board where
we can and make sure that we're delivering value for
our customers.
Speaker 3 (07:58):
The being counters at Bloueberg and eligence to want me
to ask questions about cash flow here and how that
looks right now with the tariff effect. You've had obviously
great sales, as I guess some demand is pulled forward.
Do you have to divert some cash though to deal
with teriffs from anything else?
Speaker 4 (08:15):
Well, I mean, clearly, in the short and intermediate term,
tariffs are going to be a drain on our cash flow.
We announced about four to five billion dollars of impact
this year and we think we can offset about thirty
percent of it going forward, but that is going to
be a cash hit. Now. When you look at the
performance of the company, our cash flow generation has been
really strong. It'll continue to be really strong even after
(08:36):
the tariffs, and we're going to work to continue to
drive that efficiency. But we've got to create that stable
cash flow across the board because this is still a
cyclical industry and we need to be able to absorb
these shocks. And I think the team's done a really
good job of managing and being disciplined in order to
continue to drive strong cash flow even in the face
of some of these short to intermediate term hits.
Speaker 3 (08:57):
What are you expecting in terms of SAR because we've
had pretty strong sales numbers over the past couple of months.
I think upwards of seventeen point three million. Does that
continue through the rest of the year.
Speaker 4 (09:09):
No, we don't expect it to. We would love to
see that happen. But what we said about six weeks
ago is we're planning for a year of about sixteen
million units, which is similar to last year. In April
and the first half of May, we were trending much
closer to eighteen million as we saw a lot of
customers trying to get ahead of what they expected to
be price increases. We've seen that come out over the
(09:30):
last couple of weeks, but it's really retreated back to
where it was before that pool ahead demand. So we're
encouraged by the fact that that consistent demand is still
there and that's going to be important for us as
we continue to push forward. But if we see a slowdown,
we'll have to adjust to it and make sure that
we create that agility that we have really come to
(09:51):
be known for over the last few years. But right now,
the customer seems pretty stable. Even though we've seen that
pool ahead demand come out.
Speaker 3 (09:58):
You've had the best margins of the big three enjoyed
I think eight and a half percent margins are thereabouts.
Does it hang at that level through twenty twenty five.
Speaker 4 (10:08):
Well, obviously the tariffs are going to be an operating
hit to us going forward, which is why we're focused
on making sure we take actions quickly. There were a
number of actions that we already took, we called them
no regrets actions, where we increased the line rate in
Fort Wayne to build more trucks in the US, et cetera.
Here we're taking the next step of deploying capital to
(10:30):
increase that production. These are steps that we think are
necessary for us for the long term to be able
to drive that type of consistent margin performance that we
want to be known for.
Speaker 3 (10:39):
I want to ask about the shares as well as
your free float. It's gotten pretty small. How much further
can you go with buybacks?
Speaker 4 (10:47):
Well, I mean, we're going to continue to follow our
discipline capital allocation policy. The first thing we do is
reinvest in the business. That's a capital budget of about
ten to eleven billion dollars. We just announced last night
that that'll be ten to twelve billion dollars for twenty
six and twenty seven, reflecting a little bit of additional
spend for what we're doing. The second is we prioritize
the balance sheet. The balance sheet's been as strong as
(11:09):
it's been in decades, with a pension fund that's nearly
fully funded and debt that's very manageable. And then the
third leg of that still was returning cash to shareholders.
So we reinstated the dividend a couple of years ago,
and we've been deploying that cash to return to our
shareholders to make sure that all the constituencies benefit from
the success that we've been having our employees, our customers,
(11:32):
and our shareholders.
Speaker 3 (11:33):
Paul's been great having some time with you. Thanks so much,
Thank you so much joining us here at seven thirty
one Lex with that, Joe and Haley, I'll toss it
back to you in Washington.
Speaker 7 (11:42):
All right, Bloomberg's Matt Miller, thank you so much. Great
to have you here on Balance of Power. We appreciate
Mats interview and his fandom of the show. He of
course joined there by Paul Jacobson, the CFO of General Motors.
Speaker 1 (11:56):
You're listening to the Bloomberg Balance of Power podcast. Catch
up live weekdays at noon and five pm Eastern on
Apple Cockley and Android Auto with the Bloomberg Business App.
You can also listen live on Amazon Alexa from our
flagship New York station, Just Say Alexa played Bloomberg eleven thirty.
Speaker 7 (12:15):
Four billion dollars that the automaker is planning to invest
in its US plants over the next two years, investments
that will expand factories in Kansas, Tennessee, and in Michigan,
specifically in Lake Orion, Michigan, which happens to fall in
the congressional district of Republican Congressoman Lisa McLay in, the
chair of the House Republican Conference, who is joining us
now live from Capitol Hill on Bloomberg TV and Radio.
(12:40):
Chairman McLain, we appreciate your time. When we consider that
GM says that these investments in aggregate will add between
three thousand and four thousand US jobs. How many of
those are you expecting to be at home in your district?
Speaker 8 (12:53):
Just a little over twenty three hundred jobs for Lake Orion.
Speaker 6 (12:58):
It is a huge investment for the community.
Speaker 8 (13:01):
We are extremely excited and the economic impact that it's
going to have is obvious, right, not just with the
Lake Orient plant, but with the coffee shops and the
new homes and all the money going back into the
economy in Lake Orient. Huge, but also it provides a
lot of hope for our community in my district. And
(13:22):
if I can just say, this isn't just another example
of President Trump promises made, promises kept. He told you
he was going to bring manufacturing back to America and
jobs back to America, and thank you for bringing it
back to my home state and my district in Lake Orion.
So we're very excited.
Speaker 2 (13:40):
Well, it's great to have you back, Congressom and thanks
for your patients. I know you were listening to that
interview with the CFO at General Motors, and I want
to just go a bit further into the labor picture
here before we ask you some other questions about this.
Michigan has an unemployment rate of five point five percent,
and I wonder if you have the labor pool now,
if this will require training or there are unemployed workers
(14:02):
from the business who can move right into these positions.
Speaker 6 (14:05):
I think it's going to be a combination of both.
Speaker 8 (14:08):
And I haven't seen all the details yet, meaning you know,
I don't think there's going to be twenty three hundred
jobs that start tomorrow afternoon, So.
Speaker 6 (14:16):
I think it's going to be a combination.
Speaker 8 (14:18):
I think we have the workforce, but I think we're
going to have to do some investing and retooling, so
to speak, on training of these jobs. But Michiganers are resilient.
We have a good partner with GM, we have a
good partner with the local officials in the local community
of Lake Orion that we're going to be able to
get this done. To make sure that we can get
(14:40):
the plant up and running as soon as possible with
skilled workers.
Speaker 7 (14:45):
Well and for all of the economic benefit that you
are expecting from this investment. Of course, part of the
reason companies like GM are looking at more onshoring is
because of the tariff regime the President has put into place.
To what extent do you expect the positive economic effects
of that might be off set by higher costs that
could result from the said tariffs.
Speaker 8 (15:04):
You know, the said tariffs are exactly what you said,
the said tariffs, And I know there's a lot of
uncertainty around right now, but they're not set in stone.
So I think the tariffs, as I said many times before,
is a negotiation to tool to renegotiate our trade deals
and bring manufacturing in jobs back to America.
Speaker 6 (15:26):
So I don't know what the effect is going to be.
Speaker 8 (15:29):
I believe that there could be a possibility that we
see a reduction in the tariffs. I mean, look at
the deal that we're just the President just signed with China,
not to mention the other eighty countries that have come
to the table to renegotiate trade deals. So I'm optimistic
that it will offset a lot, but maybe there won't
(15:49):
even be that much too offset because the tariffs are
being used effectively as a negotiation tool.
Speaker 2 (15:58):
Yeah, we should note that we are waiting for that deal,
the framework at least that was announced to be formalized
and approved by President SI. But I know as well
that you're crediting President Trump's trade policies here for this
investment in the shift to the US. We know as
well that General Motors is confirming that it has no
plans to produce electric vehicles at the Orient plant. These
(16:21):
are going to be gas only vehicles following the retooling.
Is that also a response to President Trump's approach or
is it a response to customer demand?
Speaker 8 (16:32):
Well, I think you heard the gentleman on before Paul
say it is a demand, right. I don't know that
it's as much a retaliation or whatever words you used.
I think it is more a reflection on the demand
of what consumers want. President Trump, I don't think cares
what type of vehicle you drive, whether it's an electric
(16:54):
vehicle or whether it's a gas powered vehicle. He just
wants the American people to be able to choose. And
I think what you see from GM is without those subsidies,
you're seeing the demand, say from consumers saying, hey, we
prefer a gas powered vehicle. You can still buy an
electric vehicle, but the demand is for the ice engines,
(17:17):
and that's exactly how the free markets are supposed to work.
Speaker 6 (17:20):
Supply and demand should matter.
Speaker 7 (17:23):
Well, we know Elon Musk has had some strong feelings
around this whole conversation around EV's and those tax credits
being rolled back, which may have inspired, possibly, or at
least sped into some of the social media posts we
saw from him in recent days, posts that he has
since said went too far. According to his posts from
earlier today, that he regrets some of the things he said,
specifically about President Trump and The New York Times just
(17:45):
reporting Cherwen would claim that Elon Musk did call Trump
on Monday night before making that I regret post, but
considering the things in addition to commenting about Donald Trump,
specifically that he's been railing against her this one big,
beautiful bill that you have been advocating for vocally. Is
this an apology that you would accept? Do you think
the president should?
Speaker 6 (18:05):
Yeah? I think they are. Listen.
Speaker 8 (18:07):
The President is a very smart man, and Elon Musk
is very smart man. What did we think was going
to happen when you have the most powerful man in
the world and one of the richest men in the
world is I think sometimes your emotions get the best
of you. And they're both businessmen, they both care about
the country and doing what's best. So I think this
(18:28):
will be put to bed rather quickly. And actually it
has been put to bed rather quickly. So I'm optimistic.
Let bygones be bygones, and let's focus on what's best
for the American people.
Speaker 2 (18:40):
Well, does getting over this help passage of the Reconciliation Bill.
I know it's coming back your way, likely with changes
in the Senate Congress. So when there were concerns that
some of the fiscal hawks might have been paying attention
to Elon Musk urging them to.
Speaker 8 (18:53):
Vote no, yeah, well, I think it doesn't hurt.
Speaker 6 (18:59):
Does it help?
Speaker 8 (18:59):
I think I think every little bit helps, right, And
at the end of the day, I think we're going
to get it back. I know the Senate is going
to put their fingerprints on it. They've already told us
they're going to put their fingerprints on it. My hope
is that they don't change it too dramatically because we
have a very thin margin and We worked for almost
a year and had our family, family fights, family scrabbles,
(19:21):
family disagreements on this to put the best, most conservative
package on the floor. So again I'm optimistic that we'll
get this done, hopefully by July fourth.
Speaker 7 (19:31):
Well, and when we consider those Senate changes, we understand
that a Chairman Crapo in the Senate, who leads the
Finance Committee, of course, is going to be briefing Republican
senators about the changes he's looking to make this afternoon.
Which one do you fear most that you've heard rumor
of that could well diminish the chances of it repassing
in the House.
Speaker 8 (19:50):
I hope they don't touch salt too much. And the
reason why I say that is because the Salt Caucus,
which we have here in the House and they don't
have in the Senate for obvious reasons, they've been pretty
dug in. And I'm not here to say they're right,
I'm not here to say they're wrong, but they've been
pretty dug in, and that was one of our biggest
issues in the House that just can't be touched. That
(20:13):
would be the biggest Yeah, that'll be the biggest problem
if they touch salt I believe, and medicaid obviously, which
I don't think they're going to.
Speaker 2 (20:21):
We've got our eyes on the New York, New Jersey,
California delegations. Congresswoman, it's great to have you, and thanks
again for being with us live from Capitol Hill. Lisa
McLean as Chairwoman of the House Republican Conference and a
great update there, real time information, Kayleie. She picked salt.
Isn't that something as the answer? This is what's keeping
them up at night right now.
Speaker 7 (20:39):
Yeah, which is why the details of whatever Chairman Crapo
has to say about the changes they're looking at are
so important, considering Senators, including the Majority Leader John Thune,
have not been shy about saying that the Senate doesn't
care at all about salt, at least.
Speaker 2 (20:52):
On the GOP SID we've come around altogether again for
Matt Miller, I hope that he was listening to that.
Speaker 1 (21:00):
You're listening to the Bloomberg Balance of Power podcast. Catch
us live weekdays at noon and five pm Eastern on
Alma Cockley and Android Auto with the Bloomberg Business App.
Listen on demand wherever you get your podcasts, or watch
us live on YouTube.
Speaker 7 (21:16):
Looking at the market reaction to today's CPI data. Thank
you so much. That data, of course coming in cool
for the fourth consecutive month, with underlying US inflation rising
just a tenth of a percent in May. That was
less than estimates. As we look at that data at
eight thirty am, and then the testimony that began at
ten am, and by the way, is still going with
the Treasury Secretary Scott Besson. This is something he seems
(21:38):
to be pretty proud of today. He called this data
specifically fantastic, So.
Speaker 2 (21:43):
This isn't Biden data anymore.
Speaker 5 (21:45):
Es.
Speaker 2 (21:46):
I guess that's right, though he had the wind at
his back when he walked into the Ways and means
committee room. A good story to tell from the White House.
Let's see if fan of Wong agrees. Bloomberg Economics chief
US economist joins US Now Live, Anna, is that the
story because the headline reads pretty well for this White House?
Speaker 9 (22:04):
Well so, so, I think you can certainly see it
a glass half full, like Bessen does. But what the
signal is telling us from today's report is that consumers
are beginning to see their income prospect dwindle, and that's
why they're pulling back on traveling, on booking hotels, and
(22:25):
on you know, buying cars typically in a in a
you know, slow down economic slow down environment, those two
categories cars and travel are exactly the stuff that people
first pull back on. So I think, what this soft
data is telling us that the economy is slowing.
Speaker 7 (22:46):
Well, so anna to expand on that a little further,
are you suggesting basically that the data is not so
much telling us that companies and businesses aren't passing on
higher costs due to tariffs, but that they can't exercise
that pricing power, that consumers are not going to be
particularly tolerant of it.
Speaker 9 (23:03):
So what it is is that the firms actually have
been passing through some tariffs. We notice that appliances and
some of the more tariff exposed categories are have been
seeing a pickup and inflation. But more than offsetting that
is this deflation in many travels sectors, such as airfares
(23:27):
and hotels. So I think now it's a good time
to travel and book hotels if one has slacked in
their budget. But otherwise, I think this tariff passed through
that everybody has been waiting for is actually happening. And
my team does grape online prices, and those online prices
(23:48):
are showing that in the next couple of months, home
appliances like your toasters microwaves are going to see a
significant price increase.
Speaker 2 (23:57):
Interesting, and we're wid watching testimony continue with the Treasury Secretary,
Scott Bessett now approaching our four before the Houseways and
Means Committee. I don't know if this man ever sleeps.
He's going to be talking later before the Senate as well,
and speaking to what he has described as the economic
benefits and the growth engine that would be this reconciliation bill,
(24:17):
the President's Big Beautiful Bill. If passed, listen to what
he said about cutting red tape, and we'll have.
Speaker 9 (24:22):
You weigh in.
Speaker 5 (24:23):
One big beautiful bill will also incentivize unprecedented investment in
US manufacturing. The legislation will provide one hundred percent expensing
for new factories as well as existing factories that expand
operations and support made in America. It will streamline burdensome
(24:45):
permitting processes that often stand in the way of new
manufacturing projects.
Speaker 2 (24:52):
And when you combine the cutting of red tape, the
permitting reform along with the incentives, this is the kind
of thing that the CBO, to the detriment of the
White House doesn't include in its scoring. Is he correct
about what comes next?
Speaker 9 (25:08):
I think there are some evidence to suggest that American
firms are increasingly thinking about on shoring some manufacturing activities.
ISM Manufacturing release a survey results twice every year, and
it shows that many of the metallic firms and even
appair rolls firms are thinking about increasing operations in the US.
(25:29):
So surely there are some evidence pointing to that. And
also the deregulation on energy prices will lower cost. But
at the same time we're seeing fifty percent tariffs on
steel an alumna, which are key inputs in building factories
in the US. So what is a net impact? I
think that's harder to quantify.
Speaker 7 (25:50):
Well. And finally, Anna, I would like to ask you
about the FED, because of course President Trump had some
thoughts about what the FED should do in the aftermath
of this data. Today he posted on true Social cp
I just out great numbers and reiterates his call for
the FED to lower one full point. I know you
aren't in the camp that the Fed's getting ready to
move one hundred basis points, but does the data today
(26:10):
make it potentially more likely we see a twenty five
basis point cut sooner than expected.
Speaker 9 (26:17):
I don't think so, because what this data shows you
is still the impact negative impact from the April Liberation
Day tariffs, and the paradox of tariffs is that if
they go really, really high, they could be deflationary because
the pullback and income expectations is just so steep. And
(26:38):
that's what we're seeing today. But the de escalation in
Geneva and thereafter has really bolstered the stock market, and
we expect that in July CPI print we're going to
see boost from financial easing of financial conditions as well
as those home appliances price increase that I was just telling.
Speaker 7 (26:59):
You of ut all right, anamong we appreciate it as
always our chief US economists for Bloomberg Economics joining us
here on Balance of Power. Thank you so much, and Joe.
As we wrap up this hour of Balance of Power,
we should know the Treasury Secretary is still going at it.
Speaker 6 (27:13):
In the House.
Speaker 7 (27:14):
Weie and Means Committee about to hit and press four
hours after his late night early morning trip back from
London trade negotiations. And when we come back to air
later today at five pm, He's still going to be testifying,
just in the other chamber too. He has the Senate next.
Speaker 2 (27:28):
Yeah, you think maybe they'd give him like a day
off or something after that, But he had to leave
the talks last evening to get on a plane. He
said goodbye to Anne Marie Hordern in London and showed
up this morning in Washington. So we'll keep tabs if
he makes more news on this. Thanks for listening to
the Balance of Power podcast. Make sure to subscribe if
(27:48):
you haven't already, at Apple, Spotify, or wherever you get
your podcasts, and you can find us live every weekday
from Washington, DC at noontime Eastern at Bloomberg dot com.
Popular Podcasts
On Purpose with Jay Shetty
I’m Jay Shetty host of On Purpose the worlds #1 Mental Health podcast and I’m so grateful you found us. I started this podcast 5 years ago to invite you into conversations and workshops that are designed to help make you happier, healthier and more healed. I believe that when you (yes you) feel seen, heard and understood you’re able to deal with relationship struggles, work challenges and life’s ups and downs with more ease and grace. I interview experts, celebrities, thought leaders and athletes so that we can grow our mindset, build better habits and uncover a side of them we’ve never seen before. New episodes every Monday and Friday. Your support means the world to me and I don’t take it for granted — click the follow button and leave a review to help us spread the love with On Purpose. I can’t wait for you to listen to your first or 500th episode!
The Breakfast Club
The World's Most Dangerous Morning Show, The Breakfast Club, With DJ Envy And Charlamagne Tha God!
The Joe Rogan Experience
The official podcast of comedian Joe Rogan.