April 1, 2025 • 26 mins
Gary and Shannon breakdown President Trump's controversial tariff strategy with expert insights from Ryan Sweet, Chief US Economist at Oxford Economics. We'll unpack the potential economic impacts, explore how these tariffs could reshape American manufacturing, and examine the short and long-term consequences for consumers and businesses. From auto industry disruptions to global market reactions, this episode provides a comprehensive look at a pivotal moment in US economic policy. Buckle up for a riveting discussion that breaks down complex economic trends into digestible insights!
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Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:00):
All right, so markets tumbled for the most part as
trading opened today. We are kind of on a countdown here.
We do not know what is going to happen when
it comes to what President Trump is referring to as
Liberation Day on Wednesday. Investors have continued to unload their
(00:21):
holdings in the stock markets around the world in anticipation
of the tariffs announcement that is coming on Wednesday. Just
within the last few minutes, actually, the Dow Jones Industrial
Average did turn back into positive territory, but S and
P five hundred is down about a half a percent.
The Nasdaq is down about a percent and a half.
We've seen similar percentage losses in markets around the world today.
(00:46):
Because of the power that the American economy has and
the impact that the American economy has on the rest
of the world.
Speaker 2 (00:53):
We live in a global economy. The idea that America
is getting screwed over when it comes to tear some
things made here and things not made here is maddening.
And that is Trump's take on all of this. He
believes that the US has long been ripped off by
the European and the Asian powers that be, and if
(01:14):
this is in fact, what he wants, he's going to
be the one probably to pay for it when it
comes to at least short term, long term, you know,
one hundred years down the road. If this all pans out,
and the factories come back to America and they come
back to those communities that elected Trump, the russ Belts,
the Sun Belt, all the Belts, if those factories come back,
(01:36):
things become made in America again. My god, he'll be
lauded as the best president ever. If they don't. If
we struggle, if we are sent into another recession and
we don't pull out of it, it is the worst
president ever.
Speaker 3 (01:50):
Yeah.
Speaker 1 (01:51):
And he did an interview of the weekend with Kristen
Welker from NBC News, and I think there was another
person that he did two separate interviews, and she asked
him about, Okay, we know and everybody seems to acknowledge
there is a temporary pain that comes with tariffs like
this twenty five percent on cars that come into the
(02:11):
United States and other tariffs as well, and he seems
to say, basically, yeah, we know that this is a
temporary thing, but if we have patients, it's going to
in the end of this it's going to benefit the
United States greatly going forward for the future generations, et cetera.
He's gonna have a hard time selling that because we
(02:34):
humans and we Americans like things to be done immediately.
We want to see the impact right now. You know,
we get impatient when egg prices go up, and then
when they go down, we're thinking, why in the world
didn't they go down fast?
Speaker 2 (02:49):
Get It's really not popular politically to do something like
this for that very reason. You know, you don't see
governors and presidents say I'm going to do something now
that's going to hurt us for X amount of years,
for eight, ten, twelve years, so that in fifty years
we are better off, because they don't get credit for that.
Speaker 4 (03:09):
It's very unpopular. Now.
Speaker 2 (03:11):
Is this somebody who's reached the pinnacle of politics in
America as the president and wants his legacy to be
realized after he's dead, that he brought business back to
America and America back to being the bully in the room,
the good bully in the room when it comes to
you're not going to screw us over and we're going
to make things here.
Speaker 4 (03:32):
I don't know, maybe.
Speaker 5 (03:34):
This was him on air force one yesterday.
Speaker 1 (03:37):
I'll tell you I'll play it when we come back,
because he has some comments, he knows what's coming up.
It's weird that there are very few people in the
White House who know what he's going to do. And
we said this last week when we knew that this
deadline was coming up. He's done these before. He's talked
about wide ranging blanket tariffs across industries or across countries,
(04:00):
and then pulled back once we get closer to the deadline.
There's a possibility that he still does that, but nobody
in the White House seems to know what his plan is.
Speaker 2 (04:08):
I'm interested to see how this affects the auto industry
because it's maybe one of the easier things to wrap
your mind around. I have some questions out to people
who work in the industry about what could happen if
these tariffs move forward in terms of cars that are
made in this country but get parts from elsewhere. Trump
did touch on that during the interview as well.
Speaker 1 (04:30):
I got an email from a car dealership, and it's
not worth They don't advertise with this, so I'm not
going to say who it was, but I got an
email that basically explained what the plan is for next week.
Here's what we have, Here's what our cars are, Here's
what the inventory looks like. Here's why you should come
shop with us. I mean, it's a bitch to get
(04:51):
you to go.
Speaker 4 (04:51):
I guess now the time is my question?
Speaker 2 (04:54):
If I'm in the market for a car, do I
buy next week as opposed to six months down the line?
Speaker 4 (04:59):
Because you just don't know. I don't know, so give
me a break.
Speaker 2 (05:02):
We're talking about the tariffs this week Wednesday, the President
President Trump calling it Liberation Day, the day that the
United States stops getting screwed over by other countries. Reciprocal
tariffs in motion. What will it all mean? Already? The
markets are responding globally. Overnight, you saw this happen in Asia,
(05:26):
and the S and P five hundred sank about point
six percent. I haven't seen an updated number, but sank
about point six percent. On track to finish the first
three months of the year with a loss of nearly
six percent. That would make it this it's for its
worst quarter in nearly three years. The Dow erased an
(05:46):
early loss this morning. Slides for big tech slocks stocks
I don't see.
Speaker 4 (05:52):
I can't talk either. Slides for big tech stocks.
Speaker 2 (05:54):
That's a stupid phrase anyway, probably because of what happened
over the weekend with Yesla. Nasdaq was down as well,
so it is a global selloff. There are worries that
the tariffs could not be good, that they could worsen inflation,
and it is it is not to be misremembered that
(06:15):
we've gone through this before. Tariffs are as old as
a conversation, as old as our country is in terms
of are they good, are they bad?
Speaker 4 (06:24):
When are they good? When are they bad?
Speaker 2 (06:26):
You know, you saw tariffs be a problem for the
Great Depression. They precipitated that post World War two. So
and we're coming off the heels of inflation from COVID.
So a lot of people in the know who are
not political at all saying great thought, wonderful thought, bad time.
Speaker 1 (06:48):
Two things I'm going to play for you. This is
the sound from last night Air Force one. President Trump
headed back to DC. He sounds a little off, I
mean like he sounds slow. I didn't do anything to
alter this audio, even though it does sound like I did.
I swear, but this is him last night making comments
about the.
Speaker 3 (07:04):
TERRORIFFTSY tariffs will be far more generous than those countries
were to us, meaning they will be kinder then those
countries were.
Speaker 6 (07:15):
To the United States of America over the decades they
ripped us off like no country's ever been ripped off
in history. And we're gonna be much nicer than they
were to us. But it's substantial money for the country.
Speaker 2 (07:30):
Never those It sounded very weird, he did, But you
know what, he's going to be seventy nine in a month.
He is been going at one hundred and twenty five
miles per hour. For the first three months of this year,
he's been going at one hundred and twenty five miles
an hour.
Speaker 1 (07:43):
You mentioned specifically the audio industry and how it's facing this.
A CNBC reporter was talking about it specifically and talked
about how carmakers are basically scrambling to try to figure
out how they're going to deal with this going forward.
One of the things that President Trump wants to do
(08:05):
by instituting these tariffs on foreign made cars coming into
the United States, it's to ramp up production here in
the United States. But it's not as easy, as Philibo
will tell you. It's not as easy as just flipping
a switch, which President says, well.
Speaker 7 (08:17):
There's some places that only have sixty percent capacity. It's
not as simple as just flipping a switch, right, So
there's tooling. There's also making sure that the plant and
the supply chain can adjust and bring production from a
particular plant overseas back here. But there's no doubt this
is going to be a huge hit for the auto industry.
One executive in the industry texted me earlier and he said,
(08:40):
this is going to drive the auto industry, not the
overall economy, strictly the auto industry into a recession.
Speaker 2 (08:47):
There was a comment that the President made to NBC
News is Kristen Welker over the weekend.
Speaker 4 (08:54):
That's getting a lot of airplay this morning.
Speaker 1 (08:56):
Oh, this is his comment. And by the way, I
don't don't have a recording of this.
Speaker 8 (09:01):
I don't.
Speaker 1 (09:01):
I think she just basically she recorded the interview and
then talked about it. I haven't found anywhere that the
audio exists.
Speaker 2 (09:09):
So he said, I couldn't care less if they raise
prices with regard to the auto industry, because people are
going to start buying American made cars. I couldn't care
less because if the prices on foreign cars go up,
they're going to buy American cars. That is a flipant response,
it but it's also flippant to just roll with that
(09:32):
and not talk about the context of the conversation, right
of you're going to pay more now, you're going to
pay less later.
Speaker 1 (09:40):
Well, and then somebody from the White House had to
call NBC News and clarify that he was specifically talking
about foreign cars raising their prices or foreign automakers raising
their prices for cars. Right, Okay, So I referenced this
email that I got from a car dealer that I
have done business with before, and it explains kind of
(10:01):
what their plan is. It said they have a current
inventory of about three thousand new vehicles that would be
unaffected by all of this.
Speaker 5 (10:09):
It's terriff free.
Speaker 1 (10:10):
And they said, and this is an important thing for
anybody who might be in the market now. The silver
lining is that your trade in is potentially worth significantly more.
So this is kind of a Again, it doesn't matter
which dealer it is, because I'm sure they've all got
similar plans to reach out to customers and say, hey,
this is what we're looking at, but that they also
(10:33):
don't know since the twenty five percent tariff applies to
parts and components. Every vehicle will be affected, even those
built in America, because as every vehicle has parts and
components that are imported, and again some of that stuff
has not been specified by the White House in terms
(10:54):
of how is that going to impact American car makers
who bring in foreign parts.
Speaker 2 (10:59):
There's a little bit of Jerry Brown talking about trains
in this.
Speaker 5 (11:03):
I like trains.
Speaker 2 (11:05):
The President's idealized version of a nineteen fifties America where
everyone buys American made cars and buy local, buy American.
I love it, but we're in twenty twenty five and
it's very difficult to do that.
Speaker 1 (11:20):
It's again, and that's why we need the specifics.
Speaker 5 (11:24):
I don't know how they do it.
Speaker 1 (11:26):
You can't just come up twelve oh one Wednesday morning
and then everybody's looking around going, I don't know how
much I'm supposed to charge for this.
Speaker 5 (11:34):
I just don't know.
Speaker 8 (11:35):
I like trains. I like high speed trains.
Speaker 2 (11:38):
Eating two I do too, Jerry. I also like buy American.
But you know what, I think these ships have passed us. Unfortunately.
We'll see, we shall see. Well, this is the week
we have talked about for quite some time. Now, remember
President Trump put the tariffs in place and decided, I'll
(11:59):
give you some time to acclimate to these new changes,
so I'll actually put them in place in April. Well,
guess what tomorrow is April. The President has set his
aim in imposing these tariffs is to force companies to
move production back to the United States, and if they
make their goods in America, he says, they won't have
to pay the tariffs.
Speaker 1 (12:21):
When you talk specifically about the auto industry, it's not
as cut and dry as saying that car was built
in Germany, this car was built in Detroit. That car
is going to have a twenty five percent tariff, and
this one isn't. It's not that simple, because, as we've
seen over the course of decades, the way that the
auto industry has evolved, a lot of those even American
(12:41):
car makers, get parts and pieces from other countries. So,
according to what the White House has said so far,
imported parts and pieces, cogs and wheels, they will be
subject to that twenty five percent terariff. And then obviously
(13:01):
a car built entirely elsewhere would be subject to the
whole price of it would be subject to that twenty
five percent tariff, but we don't know specifically if the
twenty five percent tariff on a on an O two
sensor in your Ford minivan is going to be subjected,
and how that would impact the rest of the price
of the vehicle that's built for the most part in
(13:24):
the United States.
Speaker 2 (13:25):
It's talking to some people in the industry and pointing
out to me that new vehicles still haven't come down
since COVID because remember.
Speaker 4 (13:34):
The price of new cars, Yeah, the price of new cars.
Speaker 2 (13:36):
So the rates are still high and now this hoping
for some sort of ceiling, but that if you are
in the market to buy a car, it's probably better
now because down the line, someone's going to be paying
the tariffs, whether it's you the customer or the dealership,
(13:59):
and both of those don't translate to you getting a
better deal.
Speaker 5 (14:03):
Well, I mentioned that there.
Speaker 1 (14:04):
I got an email from a dealership over the weekend
in this context and said, we have plenty of cars,
you know, new cars that on our lots that are
not subject to tariffs because they're already made, and now
might be the time to think about your trade in
because people are going to start looking for used cars
a lot more and those prices of used cars are
(14:26):
going to bounce back up, y say, will for right.
So again it's this weird wait and see kind of
attitude for what exactly happens beginning April. It's midnight April second.
So the very very first thing Wednesday morning.
Speaker 2 (14:42):
Well, and the thing is, like some people don't know,
Like Neil today said, oh, we both drive GMCs. Yes
you think you bought American you did, but parts in
those cars are made in other areas.
Speaker 4 (14:54):
It's not as easy as saying.
Speaker 2 (14:55):
Oh I bought Ford, I bought Chevy, I bought GMC's.
There's a lot of the hearts of those cars that
are made in Mexico or Canada or what have you,
across you know, computer systems.
Speaker 1 (15:06):
The two motivations that Trump has said he has behind
this is he wants he wants to lower taxes, and
the way that he would do that, according to Peter Navarro,
senior trade advisor, is that the tariffs would raise about
six trillion over the next decade and that money would
not have to be gathered from taxes, so then they
would be able to cut taxes. The other thing is
(15:28):
that he would want he the president, would want to
drive manufacturing back to the United States where some of
these automakers right now are only running at about a
sixty percent capacity when it comes to cranking out these vehicles,
and that he wants to see them that number increased.
But they've been running at that level for a long time,
and to get it back up to one hundred percent
(15:50):
or whatever percentage he's shooting for, that's going to take many,
many years of retooling the lines, getting everything, hiring the workers,
and that sort of thing.
Speaker 2 (15:58):
So well, market Watch and Bloomberg call Ryan Sweet one
of the most accurate forecasters of the US economy. Ryan's
going to be coming on with us next to talk
about what we can expect.
Speaker 1 (16:10):
We love to have smarter people than us help explain
some of this stuff.
Speaker 5 (16:13):
And Ryan Sweet qualifies.
Speaker 1 (16:15):
He's the chief US economist at Oxford Economics, responsible for
forecasting and assessing the economic outlook. He's an adjunct professor
in economics and finance at Westchester University of Pennsylvania. Ryan,
thank you for taking time out of your smart day
to hang out with a couple of people like us.
Speaker 8 (16:33):
Oh now, thank you very much for having me.
Speaker 2 (16:36):
So it depends, it seems on who you ask on
whether this is going to raise revenue directly if that
contradicts the goal of using tariffs to bring factories back
to the US.
Speaker 4 (16:50):
What is your take on this short term and long term?
Speaker 8 (16:55):
Well, and the short term is going to call us
some economic pain.
Speaker 9 (16:59):
You are inflationary. They are going to raise the price
level for a lot of goods that we import. It
will generate, right venue. I mean, the US Government's going
to collect a boatload of money through these tariffs, and
that might be helped or maybe used to help pay
for some of the fiscal steamulus that's coming down the
(17:21):
road via extension of the Trump tax cuts, maybe some
additional stimulus, or pay for some funding around their bonus
appreciation things like that for businesses. Longer term, you know,
the jury is going to be out on whether or not,
you know, Trump's approach to trade policy is successful, and
it's going to be based on whether or not we
(17:42):
bring back a lot of jobs in manufacturing. And I'm
skeptical in that regards because even with tariffs, comparative advantage.
As an economists, I still believe in comparative advantage, and
you know, the US has a disadvantage when it comes
to wage rates, they're much lower in other parts of
the world. Just the reshoring of a lot of manufacturing
is going to be very, very expensive for a lot
(18:05):
of companies, and the age of the manufacturing capital stock
in the US is pretty old.
Speaker 1 (18:10):
Well, if one of the promoted benefits of this tear
off plan the way it's laid out, at least we'll
see if it actually comes to fruition on Wednesday morning.
But if one of the benefits is to re energize
our manufacturing capabilities here, is that too rosy? An outlook
is that are they overshooting what they think is that?
(18:32):
Are they overshooting what will happen?
Speaker 9 (18:36):
Well, I think it's all on the messaging, And I
mean the messaging can be different from reality when it
comes from an economic perspective.
Speaker 8 (18:43):
I do think there will be reshoring.
Speaker 9 (18:46):
For example, semiconductors, chips, they're the poster child for being
able to get reshored.
Speaker 8 (18:51):
You know.
Speaker 9 (18:51):
I think the Trump administration should kind of level set
and you know, kind of layout. The areas that will
be reshort are more tard. It's not a broad based
reshoring of US manufacturing. So for example, very labor intensive
apparel manufacturing will not come back.
Speaker 8 (19:08):
To the US and North Carolina.
Speaker 9 (19:10):
South Carolina will not see apparel manufacturing come back, just
because the US doesn't have a comparative advantage in that
US's advantage is in very high capital intensive manufacturer goods,
and that's more likely and not going to be reshort
over time. So there's how some of my list would
be further reshoring of chips, personal protective equipment, pharmaceuticals, biomeds.
Speaker 8 (19:33):
Those are the things that will likely.
Speaker 9 (19:35):
Get reshored, whereas apparel will probably be at the very
bottom of that list. And I know steel and aluminum
gets a lot of headlines, but the steel capital of
the US used to be Pittsburgh in the nineteen sixties,
seventies and eighties. That economy has completely reinvented itself. It's
now EDGs and meds and tech. And it's not like
you can turn on and off a switch to a
(19:57):
city like Pittsburgh. They can't just flip over to being
back to the steel capital of the US.
Speaker 3 (20:02):
Right.
Speaker 4 (20:03):
That's a very good point.
Speaker 2 (20:05):
We talked about it a little bit earlier, how some
of these ideas sound good by American made things like
that bringing the jobs back to the Rust Belt and
the sun Belt, and you know all the places of
disenfranchised voters who voted Trump and to hope to bring
back some sort of industry to those various places. Pittsburgh's
(20:25):
one of them that has moved on. So what do
you see, like you bring up a peril that that
would not be something that came back, at least not
at this point. So what kind of impact would that
have on the economy if a peril would not be reshort?
Speaker 8 (20:42):
Oh, not a big impact.
Speaker 9 (20:43):
I mean in the grand scheme of things, you know, separating,
I think you hit the nail on the head early on.
I mean, the short term impacts are going to be
different than the long term impacts. In the short run,
in the price level for a lot of goods is
going to go up. That's going to do people's real
disposable income. So you and I are going to feel
the pinch, and more likely than not, a lot of
(21:05):
people are going to pause or slow their spending. And
consumer spending makes about seventy percent of US GDP, So
you're kind of hitting the most important part of the economy,
and that's the consumer.
Speaker 8 (21:19):
And the other thing.
Speaker 9 (21:20):
In the short run, I think you know what's really
behind the recent softening in the economy is just all
the uncertainty. You know, the tariffs are on, the tarifts
are off. Businesses really don't know the rules of the game.
So in that instance, they just sit on their hands
and they're not investing.
Speaker 8 (21:35):
You know, at some point they may slow hiring.
Speaker 9 (21:37):
Even further if they don't know what tarifs are going
to be next month, next year, two years from now,
and uncertainly can be suffocating to the economy.
Speaker 8 (21:45):
And that's kind of what we're in the midst of
right now. Now.
Speaker 9 (21:48):
Longer term, you know, there's a lot of factors that
are going to play into whether or not you know,
Trump's approach to industrial policy wins. I mean, if the
goal is to eliminate the US trade deficit, then you
know this approach is not going to address it. Trade
deficits aren't a bad thing the US consumer. You and I,
(22:09):
we just buy a lot of stuff and we don't
produce a lot of things here, and bringing some of
back some of those goods that we do produce here,
I think, you know, the hurdles are just too big
to overcome, just given that the US's comparative advantage is
in capital intensive goods, it's not in labor intensive goods
like apparel.
Speaker 1 (22:29):
The uncertainty that we've seen has taken a toll on
Wall Street. Although the Dow has gained another two hundred
and sixty points, it's up to sixty seven as we speak,
but it started in negative territory.
Speaker 5 (22:40):
This morning.
Speaker 1 (22:40):
Overseas markets were not great, they were negative because of
the uncertainty. Are there any are there any positives in
the market right now? Are there any positives in relation
to the threat of tariffs that you can see?
Speaker 9 (22:56):
Well, those segments of the economy that are less immune
or less sensitive to teriffs, and they're hard to find
in the sense that you know, this is different than
Trump's first trade war, if we're going down to trade
war analogy, because this is broad based. I mean, you know,
there's nowhere to hide from these tariffs, and it's going
to raise input costs for a lot of businesses. It's
(23:18):
going to get passed on, some of it, not all
to you and I, so that's going to raise prices.
So I do think that the uncertainty is affecting, you know,
almost every segment of the US economy because businesses just
again they don't know the rules of the game, so
they're they're.
Speaker 8 (23:33):
Sitting on their hands.
Speaker 9 (23:34):
I think the good news is that I've spent a
lot of time in my career looking at the economics
of policy uncertainty, is that once when some of this
uncertainty becomes certainty, whether it's what businesses want or they
don't want, things start to pick back up. You know,
business are going to invest in equipment and software, They're
going to hire workers because the US businesses they're very adaptable.
(23:54):
They just need to know the rules of the game.
And I think on the other side of this, you know,
as these dark clouds are to part, at some point
the economy should start to find its footing again.
Speaker 2 (24:04):
And then used vehicles before we let you go, it
seems like this may be a time for used vehicles
to shine.
Speaker 4 (24:11):
If you've got.
Speaker 2 (24:11):
One, maybe, I mean, I don't know, you know, I've
been talking to people in the car industry and they
just don't know what's going to happen other than it's
probably not going to get better for the consumer or
the dealer for a while.
Speaker 8 (24:27):
I think that's right.
Speaker 9 (24:28):
I mean, that's generally the response that you're getting from
a lot of businesses that we don't know, and consumers,
mostly consumers, some are aware of what terifts are going
to do the prices for various goods, some are not.
But right now with the used vehicle market, I mean,
if you put terraffs on imported vehicles, you know, the
(24:53):
one thing that we kind of have going for us
now is that we do have some inventory. But the
wildcard is whether or not tr puts tariffs.
Speaker 8 (25:01):
On those inventories.
Speaker 9 (25:02):
And you know, say, if they were imported, you know,
six months ago, nine months ago, they're still subject to tariffs,
which is in the purview of his ability. With these
reciprocal terrafs, vehicle prices are going to go up. I mean,
I think that's the only you know, guarantee over the
next few months, is that we're going to see higher
vehicle prices.
Speaker 8 (25:21):
Hopefully down the road. It may not be tomorrow.
Speaker 9 (25:25):
Or Wednesday or next week that the Trump administration does
start to water down some of these terrafs by excluding
motor vehicle and parts, because you know, that's a that's
an important sector to the US.
Speaker 8 (25:35):
Economy, and also hopefully building materials.
Speaker 9 (25:38):
We do import a lot of building materials from China, Canada, Mexico,
and we're trying to aims to improve housing affordability over time.
Putting tariffs on you know, building materials is not the
best way of going about that.
Speaker 5 (25:54):
Ryan, great stuff.
Speaker 1 (25:55):
This is is going to be interesting week as these uh,
these terrafs play out.
Speaker 5 (26:00):
Over the course of the next few days.
Speaker 1 (26:01):
Ryan Sweet again us chief economist at Oxford Economics.
Speaker 5 (26:04):
You can follow him.
Speaker 1 (26:06):
On the Twitter machine at real time underscore econ.
Speaker 5 (26:10):
Ryan, thanks for taking time for us today.
Speaker 8 (26:13):
Thank you so much for having me
All right, so markets tumbled for the most part as
trading opened today. We are kind of on a countdown here.
We do not know what is going to happen when
it comes to what President Trump is referring to as
Liberation Day on Wednesday. Investors have continued to unload their
(00:21):
holdings in the stock markets around the world in anticipation
of the tariffs announcement that is coming on Wednesday. Just
within the last few minutes, actually, the Dow Jones Industrial
Average did turn back into positive territory, but S and
P five hundred is down about a half a percent.
The Nasdaq is down about a percent and a half.
We've seen similar percentage losses in markets around the world today.
(00:46):
Because of the power that the American economy has and
the impact that the American economy has on the rest
of the world.
Speaker 2 (00:53):
We live in a global economy. The idea that America
is getting screwed over when it comes to tear some
things made here and things not made here is maddening.
And that is Trump's take on all of this. He
believes that the US has long been ripped off by
the European and the Asian powers that be, and if
(01:14):
this is in fact, what he wants, he's going to
be the one probably to pay for it when it
comes to at least short term, long term, you know,
one hundred years down the road. If this all pans out,
and the factories come back to America and they come
back to those communities that elected Trump, the russ Belts,
the Sun Belt, all the Belts, if those factories come back,
(01:36):
things become made in America again. My god, he'll be
lauded as the best president ever. If they don't. If
we struggle, if we are sent into another recession and
we don't pull out of it, it is the worst
president ever.
Speaker 3 (01:50):
Yeah.
Speaker 1 (01:51):
And he did an interview of the weekend with Kristen
Welker from NBC News, and I think there was another
person that he did two separate interviews, and she asked
him about, Okay, we know and everybody seems to acknowledge
there is a temporary pain that comes with tariffs like
this twenty five percent on cars that come into the
(02:11):
United States and other tariffs as well, and he seems
to say, basically, yeah, we know that this is a
temporary thing, but if we have patients, it's going to
in the end of this it's going to benefit the
United States greatly going forward for the future generations, et cetera.
He's gonna have a hard time selling that because we
(02:34):
humans and we Americans like things to be done immediately.
We want to see the impact right now. You know,
we get impatient when egg prices go up, and then
when they go down, we're thinking, why in the world
didn't they go down fast?
Speaker 2 (02:49):
Get It's really not popular politically to do something like
this for that very reason. You know, you don't see
governors and presidents say I'm going to do something now
that's going to hurt us for X amount of years,
for eight, ten, twelve years, so that in fifty years
we are better off, because they don't get credit for that.
Speaker 4 (03:09):
It's very unpopular. Now.
Speaker 2 (03:11):
Is this somebody who's reached the pinnacle of politics in
America as the president and wants his legacy to be
realized after he's dead, that he brought business back to
America and America back to being the bully in the room,
the good bully in the room when it comes to
you're not going to screw us over and we're going
to make things here.
Speaker 4 (03:32):
I don't know, maybe.
Speaker 5 (03:34):
This was him on air force one yesterday.
Speaker 1 (03:37):
I'll tell you I'll play it when we come back,
because he has some comments, he knows what's coming up.
It's weird that there are very few people in the
White House who know what he's going to do. And
we said this last week when we knew that this
deadline was coming up. He's done these before. He's talked
about wide ranging blanket tariffs across industries or across countries,
(04:00):
and then pulled back once we get closer to the deadline.
There's a possibility that he still does that, but nobody
in the White House seems to know what his plan is.
Speaker 2 (04:08):
I'm interested to see how this affects the auto industry
because it's maybe one of the easier things to wrap
your mind around. I have some questions out to people
who work in the industry about what could happen if
these tariffs move forward in terms of cars that are
made in this country but get parts from elsewhere. Trump
did touch on that during the interview as well.
Speaker 1 (04:30):
I got an email from a car dealership, and it's
not worth They don't advertise with this, so I'm not
going to say who it was, but I got an
email that basically explained what the plan is for next week.
Here's what we have, Here's what our cars are, Here's
what the inventory looks like. Here's why you should come
shop with us. I mean, it's a bitch to get
(04:51):
you to go.
Speaker 4 (04:51):
I guess now the time is my question?
Speaker 2 (04:54):
If I'm in the market for a car, do I
buy next week as opposed to six months down the line?
Speaker 4 (04:59):
Because you just don't know. I don't know, so give
me a break.
Speaker 2 (05:02):
We're talking about the tariffs this week Wednesday, the President
President Trump calling it Liberation Day, the day that the
United States stops getting screwed over by other countries. Reciprocal
tariffs in motion. What will it all mean? Already? The
markets are responding globally. Overnight, you saw this happen in Asia,
(05:26):
and the S and P five hundred sank about point
six percent. I haven't seen an updated number, but sank
about point six percent. On track to finish the first
three months of the year with a loss of nearly
six percent. That would make it this it's for its
worst quarter in nearly three years. The Dow erased an
(05:46):
early loss this morning. Slides for big tech slocks stocks
I don't see.
Speaker 4 (05:52):
I can't talk either. Slides for big tech stocks.
Speaker 2 (05:54):
That's a stupid phrase anyway, probably because of what happened
over the weekend with Yesla. Nasdaq was down as well,
so it is a global selloff. There are worries that
the tariffs could not be good, that they could worsen inflation,
and it is it is not to be misremembered that
(06:15):
we've gone through this before. Tariffs are as old as
a conversation, as old as our country is in terms
of are they good, are they bad?
Speaker 4 (06:24):
When are they good? When are they bad?
Speaker 2 (06:26):
You know, you saw tariffs be a problem for the
Great Depression. They precipitated that post World War two. So
and we're coming off the heels of inflation from COVID.
So a lot of people in the know who are
not political at all saying great thought, wonderful thought, bad time.
Speaker 1 (06:48):
Two things I'm going to play for you. This is
the sound from last night Air Force one. President Trump
headed back to DC. He sounds a little off, I
mean like he sounds slow. I didn't do anything to
alter this audio, even though it does sound like I did.
I swear, but this is him last night making comments
about the.
Speaker 3 (07:04):
TERRORIFFTSY tariffs will be far more generous than those countries
were to us, meaning they will be kinder then those
countries were.
Speaker 6 (07:15):
To the United States of America over the decades they
ripped us off like no country's ever been ripped off
in history. And we're gonna be much nicer than they
were to us. But it's substantial money for the country.
Speaker 2 (07:30):
Never those It sounded very weird, he did, But you
know what, he's going to be seventy nine in a month.
He is been going at one hundred and twenty five
miles per hour. For the first three months of this year,
he's been going at one hundred and twenty five miles
an hour.
Speaker 1 (07:43):
You mentioned specifically the audio industry and how it's facing this.
A CNBC reporter was talking about it specifically and talked
about how carmakers are basically scrambling to try to figure
out how they're going to deal with this going forward.
One of the things that President Trump wants to do
(08:05):
by instituting these tariffs on foreign made cars coming into
the United States, it's to ramp up production here in
the United States. But it's not as easy, as Philibo
will tell you. It's not as easy as just flipping
a switch, which President says, well.
Speaker 7 (08:17):
There's some places that only have sixty percent capacity. It's
not as simple as just flipping a switch, right, So
there's tooling. There's also making sure that the plant and
the supply chain can adjust and bring production from a
particular plant overseas back here. But there's no doubt this
is going to be a huge hit for the auto industry.
One executive in the industry texted me earlier and he said,
(08:40):
this is going to drive the auto industry, not the
overall economy, strictly the auto industry into a recession.
Speaker 2 (08:47):
There was a comment that the President made to NBC
News is Kristen Welker over the weekend.
Speaker 4 (08:54):
That's getting a lot of airplay this morning.
Speaker 1 (08:56):
Oh, this is his comment. And by the way, I
don't don't have a recording of this.
Speaker 8 (09:01):
I don't.
Speaker 1 (09:01):
I think she just basically she recorded the interview and
then talked about it. I haven't found anywhere that the
audio exists.
Speaker 2 (09:09):
So he said, I couldn't care less if they raise
prices with regard to the auto industry, because people are
going to start buying American made cars. I couldn't care
less because if the prices on foreign cars go up,
they're going to buy American cars. That is a flipant response,
it but it's also flippant to just roll with that
(09:32):
and not talk about the context of the conversation, right
of you're going to pay more now, you're going to
pay less later.
Speaker 1 (09:40):
Well, and then somebody from the White House had to
call NBC News and clarify that he was specifically talking
about foreign cars raising their prices or foreign automakers raising
their prices for cars. Right, Okay, So I referenced this
email that I got from a car dealer that I
have done business with before, and it explains kind of
(10:01):
what their plan is. It said they have a current
inventory of about three thousand new vehicles that would be
unaffected by all of this.
Speaker 5 (10:09):
It's terriff free.
Speaker 1 (10:10):
And they said, and this is an important thing for
anybody who might be in the market now. The silver
lining is that your trade in is potentially worth significantly more.
So this is kind of a Again, it doesn't matter
which dealer it is, because I'm sure they've all got
similar plans to reach out to customers and say, hey,
this is what we're looking at, but that they also
(10:33):
don't know since the twenty five percent tariff applies to
parts and components. Every vehicle will be affected, even those
built in America, because as every vehicle has parts and
components that are imported, and again some of that stuff
has not been specified by the White House in terms
(10:54):
of how is that going to impact American car makers
who bring in foreign parts.
Speaker 2 (10:59):
There's a little bit of Jerry Brown talking about trains
in this.
Speaker 5 (11:03):
I like trains.
Speaker 2 (11:05):
The President's idealized version of a nineteen fifties America where
everyone buys American made cars and buy local, buy American.
I love it, but we're in twenty twenty five and
it's very difficult to do that.
Speaker 1 (11:20):
It's again, and that's why we need the specifics.
Speaker 5 (11:24):
I don't know how they do it.
Speaker 1 (11:26):
You can't just come up twelve oh one Wednesday morning
and then everybody's looking around going, I don't know how
much I'm supposed to charge for this.
Speaker 5 (11:34):
I just don't know.
Speaker 8 (11:35):
I like trains. I like high speed trains.
Speaker 2 (11:38):
Eating two I do too, Jerry. I also like buy American.
But you know what, I think these ships have passed us. Unfortunately.
We'll see, we shall see. Well, this is the week
we have talked about for quite some time. Now, remember
President Trump put the tariffs in place and decided, I'll
(11:59):
give you some time to acclimate to these new changes,
so I'll actually put them in place in April. Well,
guess what tomorrow is April. The President has set his
aim in imposing these tariffs is to force companies to
move production back to the United States, and if they
make their goods in America, he says, they won't have
to pay the tariffs.
Speaker 1 (12:21):
When you talk specifically about the auto industry, it's not
as cut and dry as saying that car was built
in Germany, this car was built in Detroit. That car
is going to have a twenty five percent tariff, and
this one isn't. It's not that simple, because, as we've
seen over the course of decades, the way that the
auto industry has evolved, a lot of those even American
(12:41):
car makers, get parts and pieces from other countries. So,
according to what the White House has said so far,
imported parts and pieces, cogs and wheels, they will be
subject to that twenty five percent terariff. And then obviously
(13:01):
a car built entirely elsewhere would be subject to the
whole price of it would be subject to that twenty
five percent tariff, but we don't know specifically if the
twenty five percent tariff on a on an O two
sensor in your Ford minivan is going to be subjected,
and how that would impact the rest of the price
of the vehicle that's built for the most part in
(13:24):
the United States.
Speaker 2 (13:25):
It's talking to some people in the industry and pointing
out to me that new vehicles still haven't come down
since COVID because remember.
Speaker 4 (13:34):
The price of new cars, Yeah, the price of new cars.
Speaker 2 (13:36):
So the rates are still high and now this hoping
for some sort of ceiling, but that if you are
in the market to buy a car, it's probably better
now because down the line, someone's going to be paying
the tariffs, whether it's you the customer or the dealership,
(13:59):
and both of those don't translate to you getting a
better deal.
Speaker 5 (14:03):
Well, I mentioned that there.
Speaker 1 (14:04):
I got an email from a dealership over the weekend
in this context and said, we have plenty of cars,
you know, new cars that on our lots that are
not subject to tariffs because they're already made, and now
might be the time to think about your trade in
because people are going to start looking for used cars
a lot more and those prices of used cars are
(14:26):
going to bounce back up, y say, will for right.
So again it's this weird wait and see kind of
attitude for what exactly happens beginning April. It's midnight April second.
So the very very first thing Wednesday morning.
Speaker 2 (14:42):
Well, and the thing is, like some people don't know,
Like Neil today said, oh, we both drive GMCs. Yes
you think you bought American you did, but parts in
those cars are made in other areas.
Speaker 4 (14:54):
It's not as easy as saying.
Speaker 2 (14:55):
Oh I bought Ford, I bought Chevy, I bought GMC's.
There's a lot of the hearts of those cars that
are made in Mexico or Canada or what have you,
across you know, computer systems.
Speaker 1 (15:06):
The two motivations that Trump has said he has behind
this is he wants he wants to lower taxes, and
the way that he would do that, according to Peter Navarro,
senior trade advisor, is that the tariffs would raise about
six trillion over the next decade and that money would
not have to be gathered from taxes, so then they
would be able to cut taxes. The other thing is
(15:28):
that he would want he the president, would want to
drive manufacturing back to the United States where some of
these automakers right now are only running at about a
sixty percent capacity when it comes to cranking out these vehicles,
and that he wants to see them that number increased.
But they've been running at that level for a long time,
and to get it back up to one hundred percent
(15:50):
or whatever percentage he's shooting for, that's going to take many,
many years of retooling the lines, getting everything, hiring the workers,
and that sort of thing.
Speaker 2 (15:58):
So well, market Watch and Bloomberg call Ryan Sweet one
of the most accurate forecasters of the US economy. Ryan's
going to be coming on with us next to talk
about what we can expect.
Speaker 1 (16:10):
We love to have smarter people than us help explain
some of this stuff.
Speaker 5 (16:13):
And Ryan Sweet qualifies.
Speaker 1 (16:15):
He's the chief US economist at Oxford Economics, responsible for
forecasting and assessing the economic outlook. He's an adjunct professor
in economics and finance at Westchester University of Pennsylvania. Ryan,
thank you for taking time out of your smart day
to hang out with a couple of people like us.
Speaker 8 (16:33):
Oh now, thank you very much for having me.
Speaker 2 (16:36):
So it depends, it seems on who you ask on
whether this is going to raise revenue directly if that
contradicts the goal of using tariffs to bring factories back
to the US.
Speaker 4 (16:50):
What is your take on this short term and long term?
Speaker 8 (16:55):
Well, and the short term is going to call us
some economic pain.
Speaker 9 (16:59):
You are inflationary. They are going to raise the price
level for a lot of goods that we import. It
will generate, right venue. I mean, the US Government's going
to collect a boatload of money through these tariffs, and
that might be helped or maybe used to help pay
for some of the fiscal steamulus that's coming down the
(17:21):
road via extension of the Trump tax cuts, maybe some
additional stimulus, or pay for some funding around their bonus
appreciation things like that for businesses. Longer term, you know,
the jury is going to be out on whether or not,
you know, Trump's approach to trade policy is successful, and
it's going to be based on whether or not we
(17:42):
bring back a lot of jobs in manufacturing. And I'm
skeptical in that regards because even with tariffs, comparative advantage.
As an economists, I still believe in comparative advantage, and
you know, the US has a disadvantage when it comes
to wage rates, they're much lower in other parts of
the world. Just the reshoring of a lot of manufacturing
is going to be very, very expensive for a lot
(18:05):
of companies, and the age of the manufacturing capital stock
in the US is pretty old.
Speaker 1 (18:10):
Well, if one of the promoted benefits of this tear
off plan the way it's laid out, at least we'll
see if it actually comes to fruition on Wednesday morning.
But if one of the benefits is to re energize
our manufacturing capabilities here, is that too rosy? An outlook
is that are they overshooting what they think is that?
(18:32):
Are they overshooting what will happen?
Speaker 9 (18:36):
Well, I think it's all on the messaging, And I
mean the messaging can be different from reality when it
comes from an economic perspective.
Speaker 8 (18:43):
I do think there will be reshoring.
Speaker 9 (18:46):
For example, semiconductors, chips, they're the poster child for being
able to get reshored.
Speaker 8 (18:51):
You know.
Speaker 9 (18:51):
I think the Trump administration should kind of level set
and you know, kind of layout. The areas that will
be reshort are more tard. It's not a broad based
reshoring of US manufacturing. So for example, very labor intensive
apparel manufacturing will not come back.
Speaker 8 (19:08):
To the US and North Carolina.
Speaker 9 (19:10):
South Carolina will not see apparel manufacturing come back, just
because the US doesn't have a comparative advantage in that
US's advantage is in very high capital intensive manufacturer goods,
and that's more likely and not going to be reshort
over time. So there's how some of my list would
be further reshoring of chips, personal protective equipment, pharmaceuticals, biomeds.
Speaker 8 (19:33):
Those are the things that will likely.
Speaker 9 (19:35):
Get reshored, whereas apparel will probably be at the very
bottom of that list. And I know steel and aluminum
gets a lot of headlines, but the steel capital of
the US used to be Pittsburgh in the nineteen sixties,
seventies and eighties. That economy has completely reinvented itself. It's
now EDGs and meds and tech. And it's not like
you can turn on and off a switch to a
(19:57):
city like Pittsburgh. They can't just flip over to being
back to the steel capital of the US.
Speaker 3 (20:02):
Right.
Speaker 4 (20:03):
That's a very good point.
Speaker 2 (20:05):
We talked about it a little bit earlier, how some
of these ideas sound good by American made things like
that bringing the jobs back to the Rust Belt and
the sun Belt, and you know all the places of
disenfranchised voters who voted Trump and to hope to bring
back some sort of industry to those various places. Pittsburgh's
(20:25):
one of them that has moved on. So what do
you see, like you bring up a peril that that
would not be something that came back, at least not
at this point. So what kind of impact would that
have on the economy if a peril would not be reshort?
Speaker 8 (20:42):
Oh, not a big impact.
Speaker 9 (20:43):
I mean in the grand scheme of things, you know, separating,
I think you hit the nail on the head early on.
I mean, the short term impacts are going to be
different than the long term impacts. In the short run,
in the price level for a lot of goods is
going to go up. That's going to do people's real
disposable income. So you and I are going to feel
the pinch, and more likely than not, a lot of
(21:05):
people are going to pause or slow their spending. And
consumer spending makes about seventy percent of US GDP, So
you're kind of hitting the most important part of the economy,
and that's the consumer.
Speaker 8 (21:19):
And the other thing.
Speaker 9 (21:20):
In the short run, I think you know what's really
behind the recent softening in the economy is just all
the uncertainty. You know, the tariffs are on, the tarifts
are off. Businesses really don't know the rules of the game.
So in that instance, they just sit on their hands
and they're not investing.
Speaker 8 (21:35):
You know, at some point they may slow hiring.
Speaker 9 (21:37):
Even further if they don't know what tarifs are going
to be next month, next year, two years from now,
and uncertainly can be suffocating to the economy.
Speaker 8 (21:45):
And that's kind of what we're in the midst of
right now. Now.
Speaker 9 (21:48):
Longer term, you know, there's a lot of factors that
are going to play into whether or not you know,
Trump's approach to industrial policy wins. I mean, if the
goal is to eliminate the US trade deficit, then you
know this approach is not going to address it. Trade
deficits aren't a bad thing the US consumer. You and I,
(22:09):
we just buy a lot of stuff and we don't
produce a lot of things here, and bringing some of
back some of those goods that we do produce here,
I think, you know, the hurdles are just too big
to overcome, just given that the US's comparative advantage is
in capital intensive goods, it's not in labor intensive goods
like apparel.
Speaker 1 (22:29):
The uncertainty that we've seen has taken a toll on
Wall Street. Although the Dow has gained another two hundred
and sixty points, it's up to sixty seven as we speak,
but it started in negative territory.
Speaker 5 (22:40):
This morning.
Speaker 1 (22:40):
Overseas markets were not great, they were negative because of
the uncertainty. Are there any are there any positives in
the market right now? Are there any positives in relation
to the threat of tariffs that you can see?
Speaker 9 (22:56):
Well, those segments of the economy that are less immune
or less sensitive to teriffs, and they're hard to find
in the sense that you know, this is different than
Trump's first trade war, if we're going down to trade
war analogy, because this is broad based. I mean, you know,
there's nowhere to hide from these tariffs, and it's going
to raise input costs for a lot of businesses. It's
(23:18):
going to get passed on, some of it, not all
to you and I, so that's going to raise prices.
So I do think that the uncertainty is affecting, you know,
almost every segment of the US economy because businesses just
again they don't know the rules of the game, so
they're they're.
Speaker 8 (23:33):
Sitting on their hands.
Speaker 9 (23:34):
I think the good news is that I've spent a
lot of time in my career looking at the economics
of policy uncertainty, is that once when some of this
uncertainty becomes certainty, whether it's what businesses want or they
don't want, things start to pick back up. You know,
business are going to invest in equipment and software, They're
going to hire workers because the US businesses they're very adaptable.
(23:54):
They just need to know the rules of the game.
And I think on the other side of this, you know,
as these dark clouds are to part, at some point
the economy should start to find its footing again.
Speaker 2 (24:04):
And then used vehicles before we let you go, it
seems like this may be a time for used vehicles
to shine.
Speaker 4 (24:11):
If you've got.
Speaker 2 (24:11):
One, maybe, I mean, I don't know, you know, I've
been talking to people in the car industry and they
just don't know what's going to happen other than it's
probably not going to get better for the consumer or
the dealer for a while.
Speaker 8 (24:27):
I think that's right.
Speaker 9 (24:28):
I mean, that's generally the response that you're getting from
a lot of businesses that we don't know, and consumers,
mostly consumers, some are aware of what terifts are going
to do the prices for various goods, some are not.
But right now with the used vehicle market, I mean,
if you put terraffs on imported vehicles, you know, the
(24:53):
one thing that we kind of have going for us
now is that we do have some inventory. But the
wildcard is whether or not tr puts tariffs.
Speaker 8 (25:01):
On those inventories.
Speaker 9 (25:02):
And you know, say, if they were imported, you know,
six months ago, nine months ago, they're still subject to tariffs,
which is in the purview of his ability. With these
reciprocal terrafs, vehicle prices are going to go up. I mean,
I think that's the only you know, guarantee over the
next few months, is that we're going to see higher
vehicle prices.
Speaker 8 (25:21):
Hopefully down the road. It may not be tomorrow.
Speaker 9 (25:25):
Or Wednesday or next week that the Trump administration does
start to water down some of these terrafs by excluding
motor vehicle and parts, because you know, that's a that's
an important sector to the US.
Speaker 8 (25:35):
Economy, and also hopefully building materials.
Speaker 9 (25:38):
We do import a lot of building materials from China, Canada, Mexico,
and we're trying to aims to improve housing affordability over time.
Putting tariffs on you know, building materials is not the
best way of going about that.
Speaker 5 (25:54):
Ryan, great stuff.
Speaker 1 (25:55):
This is is going to be interesting week as these uh,
these terrafs play out.
Speaker 5 (26:00):
Over the course of the next few days.
Speaker 1 (26:01):
Ryan Sweet again us chief economist at Oxford Economics.
Speaker 5 (26:04):
You can follow him.
Speaker 1 (26:06):
On the Twitter machine at real time underscore econ.
Speaker 5 (26:10):
Ryan, thanks for taking time for us today.
Speaker 8 (26:13):
Thank you so much for having me
Gary and Shannon News
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