Trump Gives Automakers Some Wiggle Room On Tariffs
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Hi, this is Laura Lee, a dairy farmer calling from rural northwest Illinois, where it's my favorite day of the year as we send our cows out to grass for the first time. This podcast was recorded at 1:07 p.m. Eastern Time on Wednesday, April 30th, 2025. Things may have changed by the time you hear the show, but my cows will still be frolicking in the field and munching on the tender shoots of spring grass.

Here's the show. That's how we get our cheese, so I'm a fan. Very idyllic. Idyllic and windy. I feel seen. Midwestern farm person.

Yeah, I love it. Hey there, it's the NPR Politics Podcast. I'm Sarah McCammon. I cover politics. I'm Danielle Kurtzleben. I cover the White House. And I'm Don Gagne, national political correspondent. President Trump held a rally in Michigan to celebrate the first 100 days of his second term.

And we're here tonight in the heartland of our nation to celebrate the most successful first 100 days of any administration in the history of our country. And that's according to many, many people. Despite declining support in the polls and the news today that the U.S. economy shrunk since he took office, Trump is standing by his on-again, off-again tariff policy.

So, Danielle, let's start with you. As we mentioned, the president has been all over the map when it comes to his tariffs. His latest move was designed to give automakers a break on some of the tariffs he signed in his first 100 days. So where exactly do we stand right now? Right. So he signed a couple of executive orders yesterday that would ease up some of those tariffs, particularly on automakers. Let me run through what the two of those are. So

The lay of the land right now is there's a 25 percent tariff coming on automobiles and auto parts that are coming into the U.S., with the exception of parts covered under the USMCA or U.S.-Mexico-Canada agreement that was negotiated during Trump's first term. Besides that, there are a lot of other tariffs, for example, on steel and aluminum from all over the world. Again, that's a 25 percent tariff and on some other goods from Mexico and Canada.

So here's what Trump did to change that for automakers. It walks their tariffs back in two ways. One is helping them avoid tariff stacking. So one example is that an automaker assembling cars in the U.S. would not pay, for example, the auto part tariff and the steel and aluminum tariff on the same good that they're importing. They wouldn't have to stack both of those. They would just pay whichever one is bigger.

Now, the other change that Trump signed is a rebate of sorts. What it is is a temporary program where automakers, again, assembling in the U.S., bringing in foreign parts would get some cost of the tariff on those parts offset. That offset will decrease by year and it'll be phased out after two years. Now, the idea there is to allow those automakers some time to build factories here in the U.S. One of Trump's major goals with these tariffs is

get more manufacturing and manufacturing jobs in the United States. But building factories to do that does not happen overnight. It can take years. And so the idea is give the automakers some time to build those factories. And kind of soften the blow a little bit, at least initially, right? Right, yes. Now, Trump being Trump at that rally last night,

He said this move is not a change. It's flexibility. That was how he parsed it. Now, what I take from that is Trump, we all know this. He can't back down from anything or at the very least, he can't admit he's backing down. And tariffs are one of his big policy areas where he uses these to really try to muscle in changes that he wants to see.

Okay, Dawn, Danielle just talked about how difficult it might be to actually achieve this grand vision of bringing manufacturing back through tariffs. I mean...

Put that in context for us. How tough would it be to actually do this this way? It takes years to build new factories. It just does. There's no two ways about it. I mean, think of how long it takes to build your new house if you're in the market for a new house, right? And now it's this huge project. These are not pop-up shops. They have to design the factory. They have to build it. It's three, four, five years down the road, billions in investments.

And that kind of long-term planning not only just takes time all by itself, but it also requires certainty in the economic outlook so you know it's all going to be worth it. Things like...

What will the level of tariffs be on what products? What will the taxes be, etc., etc.? Some factories that are currently relatively modern and maybe are sitting idle could be retooled and get up and running maybe a little bit more quickly, but still years, still not overnight.

Easiest would be to add shifts in current plants that are underutilized. But again, that part doesn't get you to massive employment numbers. And it's not the big dramatic splash that Trump seems to be looking for. That's right. The big announcement is a splash, but the actual results takes a long time.

I would add something here. I've talked to quite a few economists about these tariffs and about the various goals that Trump has put out there, one of them being to increase manufacturing and manufacturing jobs. I specifically recall one economist telling me, if you want to bring manufacturing, manufacturing jobs back to the U.S., if you want to increase those levels,

Tariffs can be a tool you can use to do that, but what this guy was baffled by was

Often, a president or a leader would want to couple that stick of a tariff with a carrot, a carrot like some form of, for example, government investment and like, all right, we really want these factories here. We are going to help you somehow, whether through the tax code, whether through some kind of government spending to help you get those factories up and running. Trump has not done that. It's all stick right now. So I'm curious if he's thinking at all about bringing some carrots into this.

Danielle, we also talked about the way that Trump has sort of dialed back some of these tariffs with an eye toward allowing automakers to have some time to develop a plan or build some plants. Who knows? He keeps saying he's going to make these specific deals as well with individual countries. What is the White House saying about where that stands?

They're saying very little. I mean, that's the short answer. I mean, and they have been asked quite a bit about this. Yesterday morning, Treasury Secretary Scott Besant, of course, one of the top economic officials, had a press briefing at the White House and was asked about how that dealmaking is going. And generally, the White House is not naming countries. What Besant said is,

And I'm quoting here, we have 18 important trading relationships. We will be speaking to all of those partners or at least 17 of them over the next few weeks. Many of them have already come to Washington. Now, occasionally countries will get mentioned sort of offhand, like India, South Korea, Japan often come up in terms of countries' trade.

that have sent officials or who are talking to the president and his teams. But we really know very little about dealmaking. And one of the countries we want to know most about is China, because the U.S. has that big, big 145 percent tariff on Chinese goods. China has a very high tariff on U.S. goods right now. That could be massively disruptive considering the amount of Chinese goods that come into the U.S.,

But the White House has been tight lipped about whether anybody is talking to each other, who that might be. Again, Besson was asked about that yesterday and he said, I'm not going to talk about who's talking to whom. And that is speaking of uncertainty. That is an area that everybody business consumers want certainty on is what is happening with China, this country we get so much from and send so much to. And we don't have that.

Yeah, we've talked so much about the need for predictability for businesses, and it seems like there are just lots of questions swirling around how this might play out and who's going to be affected how and when. Right. Okay, let's take a quick break. We'll have more in just a moment.

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On the Indicator from Planet Money podcast, we're here to help you make sense of the economic news from Trump's tariffs. It's called in game theory a trigger strategy, or sometimes called grim trigger, which sort of has a cowboy-esque ring to it. To what exactly a sovereign wealth fund is. For insight every weekday, listen to NPR's The Indicator from Planet Money.

Tariffs, recessions, how Colombian drug cartels gave us blueberries all year long. That's the kind of thing the Planet Money podcast explains. I'm Sarah Gonzalez, and on Planet Money, we help you understand the economy and how things all around you came to be the way they are. Para que sepas. So you know.

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Now, Don, you were outside of Trump's rally in Michigan last night talking to autoworkers who support him. What are you hearing from them? How are they feeling about these tariffs? It's interesting. There's this large contingent there wearing T-shirts that say autoworkers for Trump.

And I will tell you, these are hardcore Trump supporters, and they think he has the answers for the domestic automobile industry to kind of revive manufacturing in the United States. You ask them about what his plan actually is. You know, the tariffs are on, the tariffs are off, the tariffs are at this level, suddenly they're at this level, suddenly there's a 90-day pause on the tariffs.

I want you to listen to these two gentlemen. They are auto workers, one current, one retired, but proud members of the United Auto Workers Union. Their names are Jimmy Souter and Bill Beers. The general public does not understand negotiating. Trump has his entire life built on negotiating. Let the man who's been doing it every day, all day for 50 plus years.

do it. I agree. Don't standing on the outside looking in. They don't have no idea what he's doing. Everybody's trying to coach the game from the bleachers. Let the man we elected, the businessman we elected,

Do what he's wanting to do. And then we'll see what happens. You can hear the confidence there. Yeah, so much confidence that somehow Trump is going to solve this. Although it hasn't materialized yet. So far, what we're seeing is a lot of overall public concern about these policies, right? And certainly concern from businesses.

And let me play another piece of tape for you. This gentleman, his name is Mike Sienkowski. He was also at the rally, a Trump supporter, wearing a Trump hat. He is not a UAW member, but he's recently retired from a career in the auto industry. He is still a Trump supporter, but he's a little bit nervous. Give a listen. I think that it's a good idea. I think

I've been asked this before. It seemed like he was being pretty heavy-handed about it, I have to admit. And I tell my buddies, I go, man, I certainly hope this works, you know, because if it doesn't,

That's a problem. I have my faith in him. But the one thing that I wish he would have done a little different is the terror thing and maybe not have been so heavy handed with it and using it as a like a threat almost. And here's the other thing he said. He said, I'm still with him. Again, he was there at the rally. But he said, I did the next six months are going to be key. So he's he's not, you know, do or die. There are things that are making Mike Sienkowski nervous.

Danielle, we've talked about these first 100 days polls, lots of concern about Trump's policies overall. But when it comes to the specific idea that the U.S. manufacturing sector has declined and that's costing American jobs and it would be a good thing to reverse that, I mean, that's a fairly popular idea, isn't it?

Oh, yeah. I mean, who doesn't want high-paying jobs with good benefits? I mean, you can ask anybody of any political persuasion. And of course, they want more of those in the U.S. And that is often what people think of when they think of manufacturing jobs, is high-paying jobs with good benefits, for example.

A lot of these autoworker jobs are, first of all, unionized, so someone is negotiating for those benefits and for that pay. But yes, there is plenty of high-skilled manufacturing where people have great employment. And so this is something that politicians have been saying they want, of course they want it, for decades.

And what prompted that is, you know, China becoming more integrated into the world economy. NAFTA was a big part of that, too. What's fascinating about all of this is that trade has for a very long time, since well before Trump, split parties. I remember when Barack Obama was trying to negotiate that big trade deal with lots of Asian nations. Democrats were split on how much they liked it. Republicans were split on it.

You can find Democrats over the years who have supported tariffs as well in limited use. What's different about Trump is how he's doing that. And you heard those guys in that tape that Don played sort of nodding to this. Trump is doing it differently.

in a big, blunt way, raising tariffs, in some cases, very, very high, and also doing it very haphazardly. He put out what he called reciprocal tariffs. They weren't reciprocal, but that's what he called them. And then he walked them back and said, wait a minute, we're going to pause 90 days. He put tariffs on Canadian and Mexican goods. And then he said, wait, hold on, maybe not all those goods. I'm sorry.

If he keeps doing that, that makes it very hard for countries to reach deals with him. Now, we don't know what the deals he's making are going to end up looking like. It is possible that Trump is a master dealmaker and that he will come up with something with these countries that benefits the U.S.,

Thus far, his tack has been so highly risky. So the question is, are there high rewards to go with all of that? Because what is possible right now is fewer goods coming into the U.S., goods that people want and much higher prices for those goods. You know, another thing, Don, we talked about how long it takes to build new factories, even if these tariffs prompt companies to try to do that.

Can cars actually be made in America? I mean, fully made in America in this global economy? First, no mass-produced car that you can buy at a dealership hits 100% American content.

So the National Highway Traffic Safety Administration, a lot of people call it NHTSA for short, they keep track of these percentages according to the value of the automobile, the car and truck parts.

And when you buy a car in the U.S., maybe people don't know this, but you can look at the sticker that's on the window of the car as it sits in the showroom. And it will list the amount of U.S. Canadian content that is included in that vehicle.

Let me just give you a few examples. General Motors, the big American car company, right? Scores about 25% on domestic, and domestic in this case means US slash Canadians.

domestic content, 25% for GM overall, something like the Chevy Blazer. I mean, what sounds more all-American than that Chevy Blazer sport utility vehicle, right? I will tell you that 35% of the Chevy Blazer, again, this is according to NHTSA, 35% of that vehicle made in Mexico. That is also where it's assembled. 31% of the parts are from the U.S. slash

Canada. That doesn't add up to 100, obviously. A bunch of other parts come from a bunch of different places. Anyway, so Ford overall, 35%. Honda, the Japanese car maker, because it has American plants, higher than Ford and GM overall. Again, a different volume we're talking, but these are percentages.

But here's the thing. Ultimately, each consumer decides if this car that they're thinking of buying is American enough for them. And a lot of cars that are distinctly American maybe have less American content than one that might have a Japanese nameplate. Yeah, those numbers are so fascinating. It really sort of does beg the question of what does it even mean to be an American car or a Japanese car? It doesn't mean what it used to.

And is there any indication that these automakers are actually responding to the stated wishes of the White House and trying to move more factories, more production to the U.S.? I think it's too early to answer that.

They are in the mode of looking to build a product as cost-effectively as possible. These companies don't have huge profit margins. Now, to the UAW, we'll be very quick to point out that their executives make

huge salaries and that there are big bonuses and that they do things like have stock buybacks, which the UAW doesn't like. But in terms of where they are, in terms of their thinking on all of this, we don't have anything yet.

I would add, and I do this a little cautiously, but there have been some announcements of shifts being added to some plants and some investments in U.S. plants, but nothing that would be the kind of wholesale reshoring that the president is talking about and that these autoworkers are hoping for.

All right. Let's leave it there for today. I'm Sarah McCammon. I cover politics. I'm Danielle Kurtzleben. I cover the White House. And I'm Don Gagne, national political correspondent. And thank you for listening to the NPR Politics Podcast.

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