Get ready for cars to get even pricier

Summary

Marketplace Morning Report: Get Ready for Cars to Get Even Pricier

Release Date: March 27, 2025
Host: David Brancaccio

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1. President Trump's New Auto Tariffs Spark Concerns

Overview:
In this episode, David Brancaccio opens with significant news from President Trump announcing a 25% tariff on cars, trucks, and auto parts imported into the United States. This move is aimed at bolstering domestic manufacturing but has raised alarms among industry analysts and consumers alike.

Key Points:

• Tariff Details and Rationale:

  • Nova Safo reports that Trump intends for these tariffs to be permanent, a bold stance not seen in previous trade policies. [00:54]
  • The administration believes these tariffs will spur more manufacturing within the U.S., reducing reliance on foreign imports. [00:54]

• Industry Impact:

  • An unnamed industry expert highlights the current global distribution of car manufacturing: "Right now a car would be made here, sent to Canada, sent to Mexico, sent all over the place." [00:59]
  • Jonathan Smoke, Chief Economist at Cox Automotive, warns that additional tariffs might lead to the disappearance of certain car models from U.S. dealerships due to reduced profitability. [01:20]

• Economic Forecast:

  • Nova Safo emphasizes that analysts are forecasting higher vehicle prices by thousands of dollars per vehicle, potentially making cars and trucks significantly more expensive for consumers. [01:05]

• Long-Term Implications:

  • David Brancaccio remarks that these tariffs represent massive policy shifts by the Trump administration, which are "far more aggressive than anyone expected so far." [01:14]
  • The combination of lower production, tighter supply, and higher prices is reminiscent of the economic climate in 2021. [01:33]

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2. Uncertainty in Financial Planning Due to Executive Orders

Overview:
The sudden imposition of tariffs through executive orders introduces significant volatility into financial planning for both businesses and households.

Key Points:

• Challenges of Executive Orders:

  • Diane Swonk, Chief Economist at KPMG, notes that trade policies enacted via executive orders—which can be quickly modified or revoked—create a precarious environment for financial planning. [01:52]
  • An unnamed speaker adds that the Congressional Office Budget Office does not score these orders for reconciliation, adding another layer of unpredictability. [02:12]

• Business Hesitation and Relocation Dilemmas:

  • The uncertainty caused by these executive actions leads businesses to hesitate on decisions like relocating production to the U.S., as the stability of tariffs remains in question. [02:12]

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3. Student Loan Repayment Applications Reopen Amid Legal Battles

Overview:
The U.S. Department of Education has resumed accepting applications for Income-Driven Repayment (IDR) plans, following a lawsuit by the American Federation of Teachers.

Key Points:

• Legal Context:

  • Nancy Marshall Genzer explains that applications were previously halted to comply with a Court of Appeals order that blocked the Biden administration's Save Plan aimed at loan forgiveness. [02:51]

• Implications for Borrowers:

  • IDR plans adjust loan payments based on income, with potential for eventual forgiveness. The shutdown of applications had a direct impact on members of the Public Service Loan Forgiveness program, including teachers, government workers, and public health officials. [02:51]

• Current Status and Uncertainty:

  • While applications have reopened, processing has not yet resumed, and there is no clear timeline for when borrowers can expect their applications to be handled. [02:51]

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4. Dollar Tree Considers Price Increases to Mitigate Tariff Effects

Overview:
The CEO of Dollar Tree, a major retailer, has indicated that the company might raise prices on certain products as a strategy to counteract the impact of the newly imposed tariffs.

Key Points:

• Strategic Response to Tariffs:

  • David Brancaccio relays that the CEO is facing a dilemma from both a shareholder and customer perspective. Raising prices would pass along the cost of tariffs to shoppers, balancing financial stability with consumer satisfaction. [03:39]

• Market Reaction:

  • This potential price adjustment reflects broader industry concerns about maintaining profitability amidst rising import costs and uncertain trade policies.

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5. Addressing Workplace Polarization Through Civics Education

Overview:
In a thoughtful segment, David Brancaccio engages with Alicia Tucker, a professor of American history and civics education, to discuss her program aimed at reducing workplace polarization through civic wellness education.

Key Points:

• Program Introduction – Office Politics:

  • Alicia Tucker explains her initiative, Office Politics, which offers lunchtime civics lessons to companies in Utah’s tech corridor, known as Silicon Slopes. The program is designed to be nonpartisan and focuses on fostering understanding among employees. [04:30 - 05:02]

• Benefits for Business Leaders and Employees:

  • For businesses, the program helps mitigate polarization, enhancing workplace harmony. For employees, it motivates learning about civics and understanding the complex political landscape. [05:02]

• Promoting Civic Wellness Over Divisiveness:

  • Tucker emphasizes the importance of civic wellness—understanding rights and responsibilities of citizenship—and differentiates it from the often divisive nature of politics. This approach aims to foster a healthier society and more collaborative business environments. [05:43 - 07:02]

• Visible Hand Project Concept:

  • Drawing a parallel to Adam Smith’s "invisible hand," Tucker introduces the "Visible Hand Project," encouraging business leaders to actively promote civic wellness. This strategy aligns with enlightened self-interest, benefiting both businesses and the broader community. [07:22 - 08:21]

• Measured Outcomes and Feedback:

  • While the program does not rely on extensive surveys, feedback from participants like an employee from Blue Raven Solar indicates positive reception: “I thought they were going to tell me how to think, but they really were just trying to teach me to be a good citizen.” [08:04 - 08:21]

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Conclusion

The episode of Marketplace Morning Report delves into the significant economic shifts driven by President Trump's new auto tariffs, highlighting the broader implications for consumers, businesses, and financial planning. Additionally, it addresses social issues such as workplace polarization, presenting innovative solutions through civics education. The discussions provide listeners with a comprehensive understanding of how these developments interplay within the current economic and social landscape.

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Note: For in-depth analysis and ongoing updates on these stories, listeners are encouraged to subscribe to the Marketplace newsletter every Friday for clear, jargon-free explanations of moving markets and economic trends.

Transcript

[David Brancaccio]

Hi, it's David Brancaccio. Marketplace's March fundraiser is ending on Friday at midnight and we need your help. We can't afford to fall short of this goal. Every dollar you give comes back to you in the form of trustworthy, grounded journalism that helps you understand the economy. We're in this together. Whether it's your first time donating or you're a longtime Marketplace investor, please help us [e-mail] donate and thank you. Prepare for cars and trucks to get significantly more expensive in the name of Made in America, I'm David Brancaccio in Los Angeles. President Trump announced 25% tariffs on cars, trucks and auto parts imported into the US this is on top of other import taxes already in effect. Analysts say tariffs will affect a broad swath of the vehicles sold in the US both foreign and domestic. Marketplace's NovaSafo has more.

[Nova Safo]

President Trump said the new auto tariffs will spur more manufacturing in the US.

[Unnamed Speaker]

Right now a car would be made.

Here, sent to Canada, sent to Mexico, sent all over the place.

[Nova Safo]

It's ridiculous, the president said the auto tariffs will be permanent. Analysts are forecasting higher prices, thousands of dollars more per vehicle.

[David Brancaccio]

The massive policy changes by the administration have been far more aggressive than anyone expected so far.

[Nova Safo]

In a call with reporters before Trump's announcement, Jonathan Smoke, chief economist at Cox Automotive, said the prospect of more tariffs on the auto industry means some models might disappear from U.S. dealership lots.

[David Brancaccio]

Bottom line, lower production, tighter supply and higher prices are around the corner. Reminiscent of 2021, the auto tariffs are.

[Nova Safo]

Set to kick in on Thursday of next week, a day after Trump is scheduled to announce so called reciprocal tariffs on other countries. I'm Nova Safa for Marketplace.

[David Brancaccio]

For another take, I just spoke with Diane Swonk, chief economist at the audit, tax and advisory firm kpmg. She notes that trade policy like this, which does not take the long, more deliberate route through Congress, but instead comes in the form of executive orders and can be triggered, modified or cancelled, makes financial planning a special challenge.

[Unnamed Speaker]

Not only are executive orders complicated when it comes to offsetting tax cuts, the Congressional Office Budget Office does not score those for reconciliation purposes because they could easily be removed as quickly as they are invoked. But they're also complicating issues because not only is uncertainty causing businesses and households to hesitate, it also prevents businesses from knowing should they actually relocate more production to the United States or not.

[David Brancaccio]

The U.S. education Department system to allow student loan borrowers to apply for lower payments based on income is back to taking applications. Here's Marketplaces.

[Nancy Marshall Genzer]

Nancy Marshall Genzer the applications were reopened after a lawsuit by the American Federation of Teachers. The Trump administration says it had to close online applications for Income Driven repayment plans to comply with a U.S. court of Appeals order blocking the Biden administration's Save loan forgiveness plan. But processing of the applications hasn't resumed yet, and there's no clear timeline. Income Driven plans tie payments to a borrower's wages. In some cases, the loans can eventually be forgiven. The teachers union says the application shutdown affected some of its members who are in the Public Service loan forgiveness program. Other public service employees were also affected, including workers in government, public health and law enforcement. I'm Nancy Marshall Genser for Marketplace and.

[David Brancaccio]

The BarGain retailer Dollar Tree's CEO is saying the chain could raise prices on certain products to blunt the effects of tariffs. That's from a shareholder point of view, from a customer point of view, that would be passing along the effect of tariffs to shoppers.

[Unnamed Speaker]

If you want to be savvy about the economy, the Marketplace newsletter is just what you need. Every Friday you'll get explainers and analysis that make sense of everything from the moving markets to grocery prices. No jargon, no hype, just smart takes delivered to your inbox. Sign up [e-mail] subscribe.

[David Brancaccio]

How to run a workplace when people have such polarized views the ongoing project here is called Office Politics. Today we're joined by Alicia Tucker. She's a professor of American history and civics education at Utah Valley University for Constitutional Studies. She has a program that does lunchtime civics lessons for companies in Utah's tech corridor. It's Silicon Slopes. Professor, welcome.

[Alicia Tucker]

Thank you. I'm so glad to be here.

[David Brancaccio]

Your program is nonpartisan, but I would have to give up my lunchtime to attend. What would I get in return?

[Alicia Tucker]

So from the perspective of the business leader, it helps to stop the polarization that happens among employees. But from an employee's perspective that they could be motivated to learn more about some basics in civics. There's a well known Annenberg study from a few years ago that found that only 39% of Americans can name all three branches of government. So just kind of refreshing on civics in general. But for the most part, they're looking for ways to understand our really confusing, divisive political landscape.

[David Brancaccio]

But what's the principle at work? Is it the idea that if Yeshi knew the rules as enshrined in, for instance, the Constitution or the Bill of Rights, there might be fewer arguments?

[Alicia Tucker]

The principle is that we're promoting Civic wellness to overcome divisiveness. So civics, meaning understanding the rights and responsibilities of citizenship and how our system of governments works. And that's different from politics, where it's the jockeying for power and the negotiation around policy decisions. So the principle is that as more Americans embrace civic wellness instead of this divisive battle that's common in the broader political landscape, then we generally will have a healthier society and a healthier system. And I think a lot of Americans care about that.

[David Brancaccio]

I guess if people see that they have a role in politics and that there's a way that you go about it, if you go down to a city council meeting and a way perhaps not to go about it, that could also help lower the political temperature because you know what's expected of you with.

[Alicia Tucker]

This kind of shared common ground, understanding that we're all in this together, that's a different tenor or feeling then what polarization has produced is understanding people who disagree politically as the enemy. So there's a lot of bad consequences for our communities and more broadly nationally if we're seeing other American citizens as the enemy because they have different opinions.

[David Brancaccio]

Now, I appreciate that. I'm not talking to a professor of economics, I'm talking to a history professor. And someone who teaches civics. Econ101, though, will usually have an Adam Smith moment. His concept that markets work things out through a metaphorical invisible hand, but yours is called the Visible Hand Project. How does that relate to civics?

[Alicia Tucker]

So it's a play on the Adam Smith metaphor that we're driven by our self interest in the free market, but we're inviting business leaders to be intentional and visible with their promotion of civic wellness. And actually that promotion is also in their self interest, but what Benjamin Franklin would call enlightened self interest, that it's good for their bottom line, it's good for workforce, but it's also good for the broader community, which when there's high levels of social capital in the community, more broadly, social capital, meaning trust and reciprocity, then it's good for business. There's more collaboration, there's more cooperation, there's people engaged more comfortably in the marketplace.

[David Brancaccio]

Have you measured success of the work.

[Alicia Tucker]

That you're doing with this participation in terms of numbers? But we don't take surveys. One company, Blue Raven Solar, consistently does their own surveys and we have some survey data from them, one employee in particular saying that I thought they were going to tell me how to think, but they really were just trying to teach me to be a good citizen.

[David Brancaccio]

Alicia Tucker is professor of American history and civics education at Utah Valley University's center for Constitutional Studies. Thank you very much.

[Alicia Tucker]

Thank you.

[David Brancaccio]

And in Los Angeles, I'm David Brancaccio. You're listening to the Marketplace Morning report from apm, American Public Media.

[Janelie Espinal]

If there's one thing we know about social media, it's that misinformation is everywhere, especially when it comes to personal finance. Financially Inclined from Marketplace is a podcast you can trust to help you get serious about your money so you can build a life you've always dreamed of. I'm the host, Janelie Espinal, and each week I ask experts important money questions, like how to negotiate job offers, how to choose a college that you can afford, and how to talk about money with friends and family. Listen to Financially Inclined Wherever you get your podcasts.