MICHEL MARTIN, HOST:
We want to talk about President Trump's plan to impose a 25% tariff on imported cars and car parts next week. Unionized autoworkers are cheering, but investors who own stock in automakers are less enthusiastic. And people who want to buy a new car might have to pay thousands of dollars more. NPR's Scott Horsley has been watching reaction to the president's tariff announcement this week, and he's with us now. Good morning, Scott.
SCOTT HORSLEY, BYLINE: Good morning, Michel.
MARTIN: So President Trump says adding a tax on imported cars and car parts will encourage automakers to build more vehicles here in the United States. Is that likely?
HORSLEY: You know, it's possible. That's why members of the UAW are excited about this proposal, even though the union did not support President Trump in last year's election. UAW President Shawn Fain notes there is extra capacity at U.S. auto plants if automakers wanted to move jobs out of Mexico or other countries and get around this 25% tariff. But it's not a slam dunk that's going to happen. You know, it took decades to build the North American auto supply network. And Karl Brauer, who's an analyst at the shopping site ISeeCars, says automakers aren't going to unwind that overnight.
KARL BRAUER: This is an industry that doesn't operate on a weekly or monthly or even yearly time frame. It operates on a half a decade or more time frame.
HORSLEY: Of the big three Detroit automakers, General Motors is the most dependent on imported vehicles. GM CEO Mary Barra said a couple of months ago her company was not going to spend a lot of money to relocate jobs unless she got some clarity about what the tariff landscape was going to look like. And given the roller coaster we've seen with the president's trade policy over the last few weeks, I'm not sure how big a bet anyone's going to want to place just yet.
MARTIN: And I think I saw that GM stock took a beating yesterday. Am I right about that?
HORSLEY: Yeah. All the automakers' shares suffered, but GM's took the biggest hit - down more than 7%. Nearly half the cars sold in the U.S. are imported, and the half that are assembled here typically contain some imported parts. So most automakers have at least some exposure to these tariffs. Tesla, the electric carmaker led by Elon Musk, relies primarily on American-made parts. Its shares actually went up a little bit on the tariff news.
MARTIN: So President Trump has also said that these tariffs will raise a lot of money for the government. How realistic is that?
HORSLEY: The White House estimates these auto tariffs would generate about $100 billion a year for the government, and Republicans are counting on that to help offset the cost of the president's tax cuts. But here's the thing. The U.S. only gets that tariff revenue if automakers continue producing cars and parts in foreign countries. If production actually did shift back to the U.S., there'd be no tariff. Tariffs can either bring jobs home or they can raise revenue, but the more they do with the one, the less they can do with the other.
MARTIN: OK. Let's talk about consumers now. For people who are in the market for a new car right now, what should they expect?
HORSLEY: They should probably expect to pay more unless they get out this weekend and make a deal before these tariffs take effect. Most cars sold in the U.S. are going to face some tariff expense, and Brauer says that's going to mean higher prices.
BRAUER: There's really no way the cost of producing any vehicle sold in the U.S. doesn't go up from this. The only variable is how much that gets passed onto the consumer.
HORSLEY: Tariffs are likely to add thousands of dollars to the cost of a typical new car. For some people, that'll be a deal-breaker. They might buy a used car, so used car prices could also go up. None of this is helpful when it comes to curbing inflation, which the president likes to say is a big reason he got elected.
MARTIN: That is NPR's Scott Horsley. Scott, thank you.
HORSLEY: You're welcome. Transcript provided by NPR, Copyright NPR.
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