Trump Unveils 25% Auto Tariff; White House Tries to Contain Signal Text Backlash
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Good morning, I'm Nathan Hager. And I'm Karen Moscow. Here are the stories we're following today. Karen, we begin with the global trade war ratcheting up. President Donald Trump has announced a 25% tariff on all car imports into the United States. The levy will apply to passenger vehicles and light trucks, as well as key parts like engines, transmissions, and electrical components. If parts are made in America and a car isn't, those parts are not going to be taxed or tariffed.

And we'll have very strong policing as far as that's concerned. For the most part, I think it's going to lead cars to be made in one location. You know, right now, a car would be made here, sent to Canada, sent to Mexico, sent all over the place. It's ridiculous. In remarks heard here on Bloomberg, President Trump said the charges will take effect next Wednesday and come on top of any other duties.

Well, Nathan, reaction to the auto tariffs are pouring in from around the world. Canadian Prime Minister Mark Carney says it's a direct attack on Canada's auto sector. You know, this will hurt us.

But through this period, by being together, we will emerge stronger. And Canadian Prime Minister Mark Carney says the tariffs are a clear violation of the U.S.-Mexico-Canada agreement that Trump signed during his first term. And Karen, we are seeing immediate reaction to the proposed auto tariffs. Stellantis, which makes the Jeep Compass SUV in Mexico, is down about 6%. We're seeing similar losses in Mercedes-Benz Group and BMW. And the European Union is preparing to retaliate.

the EU has a range of options available, including retaliatory tariffs, as well as the anti-coercion instrument, the enforcement regulation targeting U.S. technology and services companies, and restricting access to the EU market for U.S. financial firms. Well, in the U.K., Nathan, Chancellor of the Exchequer Rachel Reeves told us moments ago that they're working with the Trump administration to make a deal on tariffs.

I do understand the concerns of the US administration about countries that run large, persistent surpluses with the US. The UK, though, is not one of those countries, which is why at the moment the UK and the US, after Prime Minister Keir Starmer's visit

to meet the U.S. president a couple of weeks ago. We are now in intensive discussions with the U.S. administration ahead of the increase in tariffs next week to try and secure an agreement. U.K. Chancellor of the Exchequer Rachel Reeves added that she believes a trade deal can be worked out between Britain and the United States. Now, Karen, carmakers in Asia are getting hit

This morning, shares of Toyota, Nissan and Honda all fell about 2 percent. Kia dropped more than 3 percent. Hyundai was off more than 4 percent. Mazda plunged 6 percent. Well, Nathan, there could be a winner emerging from these auto tariffs. And we get that part of the story with Bloomberg's John Tucker. And, John, good morning. Good morning, Karen. And that would be Tesla, run by billionaire Trump adviser Elon Musk.

There's large factories in California and Texas that churn out all the cars it sells in the U.S. Now, that will insulate it to a larger degree from President Trump's new levies. Tesla itself has been boasting this week about its U.S. credentials, saying in a post on X that its models are, quote, the most American-made cars.

Still, Elon Musk says Tesla won't go entirely unscathed. Between 60 and 75 percent of the components that Tesla uses are manufactured in the U.S., depending on the model. This is according to a filing by the U.S. National Highway Traffic Safety Administration. The majority of the remaining parts, they are sourced from Mexico.

Now, with the value of the imported parts kind of unclear at this point, the financial impact on Tesla is still unknown. In the pre-market, you have shares of Tesla. They're actually down 1%, but that's still less than General Motors, down over 6%. And Ford, those shares down over 3%. I'm John Tucker, Bloomberg Radio. Okay, John, thank you. While President Trump focuses on trade, his administration continues to face fallout from the Signal chat that inadvertently included Atlantic journalist Jeffrey Goldberg.

The magazine released the transcript of the conversation. It showed Defense Secretary Pete Hegseth giving a timetable of attacks on Houthi targets in Yemen, including the weapons used. During the tariff announcement, President Trump said he's not downplaying the situation. Well, I don't know about downplaying. The press uplays it. I think it's all a witch hunt. That's all. I think it's a witch hunt. The president says the chat did not amount to war plans or classified information. But some Republicans, like New York Congressman Mike Lawler, say those kinds of conversations need to be more secure.

There is great potential, not just that somebody be mistakenly added, but we all know, you know, people screen, screen grab. And Democratic Senator Elizabeth Warren says the incident raises even more questions. How many other times are they using Signal and what are they using it for? So this is a moment where...

We need some of those congressional investigations. We need a hearing in the Senate. We need a hearing in the House. Senator Elizabeth Warren spoke with Bloomberg's David Gurra. You can hear more of their conversation in the Bloomberg Big Take podcast.

When we turn back to the markets now, Nathan, and stocks in Europe and Asia are lower on the planned Trump auto tariffs. Futures, they're pretty much little changed after tech stocks led a sell-off on Wall Street. Market strategists, including New Edge Wealth's Cameron Dawson, expects the market choppiness to continue.

We think that volatility is going to be a key feature of the market throughout this year, simply because even if we get that tariff clarity, we don't think that it's being fully captured in current earnings estimates, which are around $270 a share for the full year. You're also still trading at about 20.5 times forward. So there's not a lot of wiggle room for incremental bad news, which we think just translates into staying in this choppy wide range.

New Age Wealth's Cameron Dahlson. The so-called Magnificent Seven led yesterday's declines. They're on track for their worst quarter in three years. And Karen Minneapolis, Fed President Neal Kashkari says tariffs are causing a dramatic shift in confidence. He spoke at an event in Minnesota. I've been at the Fed for 10 years.

And this is the most dramatic shift in confidence that I can recall, except for when COVID hit in March of 2020. A lot of it is uncertainty around the tariffs. Right now, nobody knows how high are the tariffs going to go? What are they going to get applied to? What are other countries going to do? And how long are they going to be sustained? And Minneapolis Fed President Neil Kashkari says the central bank has more work to do on lowering inflation.

Time now for a look at some of the other stories making news in New York and around the world. And for that, we're joined by Bloomberg's Michael Barr. Michael, good morning. Good morning, Karen. An appeals court refused to lift an order keeping the Trump administration from deporting migrants to El Salvador using the Alien Enemies Act.

Loyola Law Professor Lori Levinson. The court said that it would not interfere at this point with the current ban that said that, in fact, the people being deported had a right to some type of hearing, even if they're being removed under the Alien Enemies Act.

President Trump has been trying to use the 1798 law to deport hundreds of people the administration believes are affiliated with the Venezuelan gang. Meanwhile, a lawyer for a Turkish national and doctoral student at Tufts University says she has been detained by Department of Homeland Security agents without explanation. A lawyer for the 30-year-old woman says she had just left her home in Somerville, Massachusetts on Tuesday when she was stopped by agents.

Four U.S. soldiers in a vehicle went missing in eastern Lithuania, where authorities have been carrying out a search and rescue operation since Tuesday. The Baltic nation's armed forces said no deaths had been confirmed as the rescue effort continued. NATO Secretary General Mark Rutte had earlier signaled that the service members had died, but a spokesperson for the alliance said he was referring to news reports and apologized for any confusion.

In Waterbury, Connecticut, the woman accused of holding her stepson captive for decades appeared before a judge. The stepmother, 56-year-old Kimberly Sullivan, faces kidnapping and assault charges. The stepson, now 32 years old, was reportedly held in the home for over 20 years with little or no food before he reportedly set fire to his room to escape last month.

Officials say he weighed just 68 pounds after he was rescued. The man's biological mother, Tracy Valorand, also came to the court. She spoke to reporters, including ABC7. What did you know about Kimberly Sullivan before this had happened? Nothing.

absolutely nothing. My son said that it started when he was around three. That would be about the time that those two met. Sullivan's attorney, John Colloitis. Those allegations are serious, but those allegations are made by one person. I understand the whole world has jumped on those allegations and has already convicted my client. But the good thing about America is that's not how we work.

Sullivan received a court continuation until tomorrow. Global News 24 hours a day and whenever you want it with Bloomberg News Now. I'm Michael Barr and this is Bloomberg, Karen. All right, Michael Barr, thank you.

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Time now for the Bloomberg Sports Update brought to you by Tri-State Audi. Here's John Stashower. John, good morning. Good morning, Karen. Hope Springs Eternal on opening day. Five months after the Met and Yankee seasons both ended with the loss of the Dodgers, Mets and the NLCS, Yanks and the World Series. Big news of the offseason was Juan Soto going from one New York team to the other. Soto's debut comes today in Houston. Also going from the Yanks to the Mets was Clay Holmes. He was a Yankee reliever.

He's the Mets opening day starter with the Garrett Cole injury. Carlos Rodon starts for the Yanks at the stadium against Milwaukee. The Yanks are using Austin Wells as their leadoff hitter. Today will be the first time in Yankee history spending over 18,000 games at a catcher.

We'll be right back.

Then lost to Vancouver 5-2. The Devils won 5-3 at Chicago. The NCAA tournament resumes tonight with doubleheaders in Newark and San Francisco. After 31 wins, but the upset loss last weekend, St. John's looking towards next season. The Red Storm just added Jason Sanon, transferring in after one season at Arizona State a year ago. He was a top recruit. Russell Wilson sat courtside of the Knicks game last night. You get good seats when you're the Giants' starting quarterback.

I expect to be a starter and come in here and be ready to rock and roll every day. I think to get a lead, I think this team is really looking for somebody to lead them in every way in terms of the process, you know, in the offseason, during the season, our habits and our thought process and how we create a great winning culture and how do we continue to establish that. Wilson signed his contract yesterday. The big question now with the Giants, do they still draft a quarterback next month? John Staschauer, Bloomberg Sports, Karen Nathan.

Coast to coast on Bloomberg Radio. Nationwide on Sirius XM. And around the world on Bloomberg.com and the Bloomberg Business App. This is Bloomberg Daybreak. Good morning. I'm Nathan Hager. As President Trump revs up the trade war with less than a week until the reciprocal tariff announcement, the president has signed a proclamation imposing a 25% duty on automobile imports.

And he's threatening even more on Europe and Canada if they act against the U.S. This is very exciting to me. This is the automobile industry, and this will continue to spur growth like you haven't seen before.

And that was the president as he signed the proclamation inside the Oval Office and remarks heard here on Bloomberg. This morning, we were joined by Bloomberg's Kevin Whitelaw. Kevin, we know U.S. automakers had lobbied against this tariff pretty hard, but it looks now as though that has fallen on deaf ears. So how is this 25 percent levy going to work? Good morning.

Well, I think, you know, this is still something everyone's still trying to make sense of. The levy applies to, you know, imports of cars made outside the U.S. and a number of auto parts. There are some very limited exclusions, but it goes into effect next week, which basically on the same day that Trump is set to announce.

another flurry of tariffs that's going to be what he's calling reciprocal tariffs. These are ones that are supposed to apply broadly across sectors across the globe. So there's these layers and layers and layers of varying tariffs that are starting to come into effect and be announced. And I think Europe and the rest of the world are sitting here trying to figure out, so is this

real and is this going to stick or are there negotiations and other conversations to be had down the line? To that point, I mean, we've already had conversations. The EU trade chief was in Washington and has been in Washington this week. And now we have this truth social post overnight that the European Union and Canada could face even more tariffs if they work together against the U.S. How to make sense of all this, Kevin?

Yeah, I mean, we know that the EU officials were having, you know, reasonably intensive conversations with folks in the US, but they came away from it, you know, convinced that, well, they weren't going to be able to head anything off. This was all going to go into effect. So the conversations will obviously continue down the line. So I think they were a little discouraged, obviously.

But, you know, I think there's still some, you know, uncertainty about just what we're going to see from these tariffs next week. The you know, what we've heard is the EU is expecting something in sort of double digits by way of percentages for for what these other across the board tariffs are going to be. But what that means, what kinds of exclusions, how it's going to work, that is still all entirely unclear. One way or the other, if this all sticks together.

together and sticks, you know, and Trump sticks with it, it is going to have a dramatic impact on U.S. companies and European companies, on consumers in various places and on the economies. And in the short to medium term, it does look like it's going to be disruptive and potentially painful. Trump's

you know, has said that in the long term, he thinks it's going to help bring manufacturing and other jobs back to the U.S. But it's not really clear that how much turmoil is going to take place then and what the what the fallout from that is. What are the U.S. trade partners considering in terms of reaction or even retaliation against these tariffs?

Yeah, the EU has been working on various retaliation plans for a while, and so we know that they've been very closely held, so we don't know all of the details, but we do know that they're essentially ready to go. But because Trump is sort of rolling things out one after the other, first we had steel and aluminum tariffs, now we have the auto tariffs, then we're going to have these reciprocal tariffs. He's talked about pharmaceutical tariffs.

They kind of want to wait and get a bunch of – see what he rolls out at least through the next week, step back, look at it, figure out is there a negotiation or not, and if there's not –

come and hit with some firm retaliation. And so I think that maybe by mid-month, late April, I think we'll see what the EU is actually going to do. But it may take them a little while. They are also trying to find ways to not provoke a more severe reaction and some more severe steps in the first place by Trump. Let him get through this.

And then they'll come back with their response. This is Bloomberg Daybreak, your morning podcast on the stories making news from Wall Street to Washington and beyond. Look for us on your podcast feed by 6 a.m. Eastern each morning on Apple, Spotify or anywhere else you listen.

You can also listen live each morning starting at 5 a.m. Wall Street time on Bloomberg 1130 in New York, Bloomberg 99.1 in Washington, Bloomberg 92.9 in Boston, and nationwide on Sirius XM Channel 121. Plus, listen coast-to-coast on the Bloomberg Business app now with Apple CarPlay and Android Auto interfaces.

And don't forget to subscribe to Bloomberg News Now. It's the latest news whenever you want it, in five minutes or less. Search Bloomberg News Now on your favorite podcast platform to stay informed all day long. I'm Karen Moscow. And I'm Nathan Hager. Join us again tomorrow morning for all the news you need to start your day right here on Bloomberg Daybreak.

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