Let's 'TACO' 'bout General Motors gassing up V-8s and golden shares

Summary

Summary of "Let's 'TACO' 'bout General Motors gassing up V-8s and Golden Shares" – The Indicator from Planet Money

Release Date: May 30, 2025

Hosts: Waylon Wong, Adrienne Ma, and Darian Woods

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Introduction

In this episode of The Indicator from Planet Money, hosted by Waylon Wong, Adrienne Ma, and Darian Woods, the trio delves into significant developments in the automotive and steel industries, coupled with an insightful analysis of recent trade policies. The discussions center around General Motors' substantial investment in V-8 engines, the complex acquisition saga of US Steel by Nippon Steel involving a golden share, and the intriguing acronym "TACO" that encapsulates the Trump administration's tariff strategy.

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General Motors' $888 Million Investment in V-8 Engines

Adrienne Ma kicks off the episode by highlighting General Motors' (GM) unexpected pivot back to internal combustion engines. GM has announced an $888 million investment in producing the next generation of V-8 engines at their New York plant, marking the company's largest investment in an engine plant to date.

Adrienne Ma (02:30): "General Motors announced this week that it's going to be investing more money into producing a new generation of V8 engines at this plant in New York. And they say this is the largest investment they've ever made in an engine plant."

Waylon Wong humorously notes the significance of the number 888, initially considering its auspicious connotations in Chinese numerology.

Waylon Wong (02:54): "That's cute. I thought initially it was like a lucky Chinese numerology thing. That is the first I thought of."

Adrienne elaborates on this strategic shift, pointing out that just a few years prior, GM had committed $300 million to convert the same plant for electric motor production, signaling a reversal influenced by market dynamics and policy changes.

Adrienne Ma (03:01): "This appears to represent a shift in strategy for GM because just a couple of years ago the company announced it would be spending $300 million to turn this very same plant into a factory for electric motors, you know, for electric cars."

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Shifts in Electric Vehicle Strategy and Market Challenges

The hosts discuss the broader implications of GM's pivot back to V-8 engines, contextualizing it within the declining sales of electric vehicles (EVs) and the waning support from U.S. policymakers for EV incentives.

Darian Woods (03:20): "This announcement comes at a time when sales for new electric vehicles have slowed down, and also at a time when a lot of people in Washington are hostile to policies aimed at speeding up electric vehicle adoption."

Adrienne Ma references the One Big Beautiful (OBB) Bill, officially aiming to eliminate tax credits for electric car purchases, reversing key aspects of the Inflation Reduction Act that previously incentivized EV adoption.

Adrienne Ma (03:54): "This bill would actually eliminate those tax credits."

Furthermore, recent congressional actions have blocked California's regulation to ban the sale of new gas-only cars by 2035, a move GM actively supported through lobbying efforts, with President Trump expected to endorse the resolution.

Adrienne Ma (03:54): "Congress last week passed this resolution aimed at blocking a California regulation. This regulation is aimed at banning the sale of new gas-only cars in the state by 2035. GM actually helped lobby for this, and President Trump is expected to sign it."

Though GM CEO Mary Barra maintains that the future will eventually be electric, she acknowledges current hurdles such as inadequate charging infrastructure, evolving battery technologies, and stiff competition from more efficient and affordable Chinese EV manufacturers like BYD.

Adrienne Ma (04:25): "GM CEO Mary Barra still expects US to eventually go all electric in the future. But until then, there are going to be some challenges with making sure there are enough charging stations with the battery technology becoming more efficient."

Waylon emphasizes the apparent contradiction in GM's strategy:

Waylon Wong (05:20): "So are you telling me that GM CEO said the future will be all electric? At the same time, the company is investing $888 million in internal combustion engines?"

Adrienne clarifies that GM is responding to current market demands, suggesting that while electrification is the long-term goal, immediate consumer preferences still favor gasoline-powered vehicles.

Adrienne Ma (05:35): "They do think that electric vehicles are the future, but maybe not yet, because a lot of consumers are not ready. They still want gas engines."

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Golden Shares and the US Steel Acquisition by Nippon Steel

Transitioning to the steel industry, Waylon Wong introduces the concept of a golden share in the context of the longstanding acquisition attempt by Nippon Steel to purchase US Steel. This deal has garnered considerable attention due to its political and economic implications.

Waylon Wong (06:07): "My indicator is one, as in one golden share. And before I explain what this is, we have to do a little recap of a long simmering will they, won't they business saga."

Both President Biden and President Trump had previously opposed the acquisition, with Biden citing national security concerns over a foreign entity controlling a critical American industry. However, recent negotiations have introduced the golden share mechanism, leading to Trump's support for the deal.

Waylon Wong (06:34): "Nippon Steel from Japan, it's been trying to buy US Steel, the American company."

A golden share typically grants the holder significant control over the company's decisions, often including veto power on major strategic initiatives. Senator Dave McCormick from Pennsylvania revealed that the golden share for US Steel would allow the U.S. government to approve board members and ensure that steel production remains stable.

Senator Dave McCormick (07:39): "The government will get to approve a number of the company's board members. He also said that will allow the US to ensure that, for example, steel production doesn't get cut."

Waylon notes the rarity of such arrangements in the U.S., where government involvement in corporate governance is uncommon compared to countries like the UK and Brazil.

Waylon Wong (07:47): "This is a pretty unique structure for an American company. You don't typically see the US Government taking a stake in a corporation or getting involved in board member decisions."

While the deal remains unsigned, the introduction of the golden share suggests a possible path forward, contingent on ongoing negotiations and political dynamics.

Waylon Wong (08:08): "Well, nothing is signed yet. And as you've seen, things can change in an instant around here, especially when it comes to cross border negotiations. So stay tuned."

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The 'TACO' Acronym: Understanding Trump's Tariff Strategy

Darian Woods introduces the episode's second indicator: the acronym TACO, an acronym coined by Financial Times journalist Robert Armstrong to analyze Trump's trade policies.

Darian Woods (08:22): "My indicator is an acronym. Taco."

TACO stands for Trump Always Chickens Out, a tongue-in-cheek reference to the pattern of high tariffs being used as bargaining chips rather than permanent trade measures. This strategy is believed to influence stock market behavior, contributing to recent market recoveries despite previous downturns.

Darian Woods (08:34): "Taco was coined by Financial Times journalist and opinion writer Robert Armstrong to explain why the stock market has shot back up again since it dropped in April."

The hosts discuss investor sentiment, noting that many believe the administration uses tariffs strategically to bring trading partners like China and the EU back to the negotiation table without committing to long-term protectionist policies.

Darian Woods (09:06): "People are wondering what the heck is happening. One explanation is that many investors now believe that the Trump administration is sensitive to markets and so will ultimately not do things that hurt companies too much, like having gigantic tariffs."

When pressed by a CNBC correspondent about the TACO acronym, Trump deflected by framing tariffs as negotiation tactics rather than indicators of policy direction.

Darian Woods (09:13): "Trump responded by saying, 'It's called negotiation. You set a number, and if you go down, you know, a little bit they want me to hold that number.'"

The discussion highlights the dual nature of Trump's tariff strategy: projecting strength to pressure trading partners while maintaining flexibility to scale back tariffs if negotiations falter.

Waylon Wong (10:10): "Mr. President, Wall street analysts have coined a new term called the taco trade."

The hosts conclude that Trump's approach adds complexity to trade negotiations, as evidenced by recent legal challenges where tariffs first faced blocking by federal courts and then were upheld by appeals.

Darian Woods (10:30): "Yes, and his strategy just got a little more complicated. After Wednesday, a federal court blocked Trump's tariffs that he justified on national emergency grounds. Then on Thursday, a federal appeals court said the tariffs could continue, at least for now."

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Conclusion

This episode of The Indicator from Planet Money provides a comprehensive examination of significant shifts in the automotive and steel industries amidst evolving economic policies. GM's substantial investment in V-8 engines amidst a broader EV industry slowdown underscores the tension between traditional manufacturing and the push for electrification. Concurrently, the intricate dynamics of the US Steel acquisition by Nippon Steel through the mechanism of a golden share illustrate the complexities of international business dealings influenced by national interests. Lastly, the analysis of the TACO acronym offers valuable insight into the strategic maneuvers of the Trump administration's trade policies and their impact on market perceptions.

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Produced by Angel Carreras with engineering by Harrison Paul. Fact-checked by Sarah Juarez. Kicking Cannon is the show's editor. The Indicator is a production of NPR.

Transcript

[NPR]

Npr.

[Waylon Wong]

This is the indicator from Planet Money. I'm Waylon Wong.

[Adrienne Ma]

And I'm Adrienne Ma.

[Darian Woods]

And I'm Darian Woods.

[Waylon Wong]

The three of us are gathered here once again.

[Adrienne Ma]

The tariff troika ChatGPT3 for that special.

[Darian Woods]

Time of the week Taco Friday.

[Adrienne Ma]

What?

[Waylon Wong]

It's Indicators of the Week.

[Darian Woods]

Yes. And my reference wasn't completely out of the blue. I made a taco about a new acronym referring to Trump's tariff behavior.

[Adrienne Ma]

GM doubles up on gas guzzling engines.

[Waylon Wong]

And I've got the golden ticket or a golden share. You'll find out more after the break.

[NPR]

This message is from Spectrum Business. From independently owned storefronts just open for business to established professional services run from large offices, Spectrum is committed to delivering connectivity solutions for any size business. Create a plan made for your business with fast, reliable Internet, TV packages, phone mobile services and more. All backed by the Spectrum commitment. From one employee to thousands, Spectrum keeps your business connected. Learn [e-mail] business this message comes from Capital One.

[Adrienne Ma]

With the Capital One Saver card, earn.

[NPR]

Unlimited 3% cash back on dining and entertainment. Capital One what's in your wallet? Terms apply [e-mail] this message comes from Capital One. Your business requires commercial banking solutions that prioritize your long term success with Capital One. Get a full suite of financial products and services tailored to meet your needs today and goals for tomorrow. Learn [e-mail] Commercial Member FDIC this message comes from NPR sponsor Intercom. Want to make your customer service dramatically better with fin? You can fin, the leading AI customer service agent is now available on every help desk. Fin can instantly resolve up to 80% of your tickets, which makes your customers happier. And you can get off the customer service rep hiring treadmill fin by Intercom named the 1 AI agent in G2's winner. Report [e-mail] NPR.

[Waylon Wong]

It'S indicators of the Week. Adrian, you're up first.

[Adrienne Ma]

My indicator of the week is 888 million. General Motors announced this week that it's going to be investing more money into producing a new generation of V8 engines at this plant in New York. And they say this is the largest investment they've ever made in an engine plant. And the amount they're investing, $888 million. Get it?

[Waylon Wong]

That's cute. I thought initially it was like a lucky Chinese numerology thing. That is the first I thought of.

[Adrienne Ma]

So this, this appears to represent a shift in strategy for GM because just a couple of years ago the company announced it would be spending $300 million to turn this very same plant into a factory for electric motors, you know, for electric cars.

[Darian Woods]

Okay. Something in the world has changed. What was that?

[Adrienne Ma]

It could be more than a couple of things, right? This announcement comes at a time when sales for new electric vehicles have slowed down, and also at a time when a lot of people in Washington are hostile to policies aimed at speeding up electric vehicle adoption. For example, remember, the Biden administration helped pass the Inflation Reduction act, and that included tax incentives for people to buy electric cars. Well, the big beautiful bill passed by the House last week would.

[Darian Woods]

One big beautiful bill, Adrian, remember.

[Adrienne Ma]

Sorry, official name. Yeah, the OBB. One big beautiful bill in OBB. But this bill would actually eliminate those tax credits. And on top of that, Congress last week passed this resolution aimed at blocking a California regulation. This regulation is aimed at banning the sale of new gas only cars in the state by 2035. GM actually helped lobby for this, and President Trump is expected to sign it.

[Waylon Wong]

Oh, wow. GM's just all in on internal combustion.

[Adrienne Ma]

Yeah, this newfangled technology called internal combustion. So it seems that way. Although GM CEO was asked this week, you know, what does this mean for the company's electric vehicle strategy? And the CEO, Mary Barra, said that she still expects the US to eventually go all electric in the future. But until then, there are going to be some challenges with making sure there are enough charging stations with the battery technology becoming more efficient. And on top of that, US Carmakers face competition from Chinese carmakers, which actually lead the world in electric vehicle sales and battery technology. Not to mention that these cars are super cheap. So, for instance, there's China's byd, which makes a car called the Seagull, which is a hatchback that goes for around 55,000 yuan, or just under 8,000 bucks.

[Waylon Wong]

So are you telling me that GM CEO said the future will be all electric? At the same time, the company is investing $888 million in internal combustion engines?

[Adrienne Ma]

Well, what the CEO has said in response to that is that they're just trying to give consumers what they want. You know, they do think that electric vehicles are the future, but maybe not yet, because a lot of consumers are not ready. They still want gas engines.

[Darian Woods]

They should invest in very loud amplifiers and vibrations and throttle simulators to bring.

[Adrienne Ma]

The thrill of the V8 to electric.

[Darian Woods]

For the electric vehicles.

[Waylon Wong]

And the horns would go, ooog, ooga.

[Darian Woods]

Thank you so much, Adrian. Now on to Waylon. What's your indicator?

[Waylon Wong]

My indicator is one, as in one golden share. And before I explain what this is, we have to do a little recap of a long simmering will they, won't they business saga. Do you guys remember this proposed deal between Nippon Steel and US Steel?

[Darian Woods]

How could I forget? You did a story about this last year. So Nippon Steel from Japan, it's been trying to buy US Steel, the American company.

[Waylon Wong]

Yes. And this deal is an interesting one because both Presidents Biden and Trump have opposed it. Biden cited national security concerns, you know, a foreign company acquiring an iconic American company that makes something really important, steel. But Trump now supports the acquisition, and that's because the two sides have worked out some new terms, including something called a golden share.

[Adrienne Ma]

Well, I mean, Trump is a fan of things that are made of gold, all things gilded.

[Waylon Wong]

Yes. And typically with the golden share, the owner of that share gets to control a majority of the voting rights in a company, or it may get veto power on certain decisions. Now, there has not been a ton of details on what the golden share for US Steel will look like. The few nuggets we have come from Republican Senator Dave McCormick of Pennsylvania, which, you know, is where U.S. steel is headquartered. The senator went on CNBC this week. He said the government will get to approve a number of the company's board members. He also said that will allow the US to ensure that, for example, steel production doesn't get cut.

[Darian Woods]

So Nippon Steel will be the nominal owner of US Steel, but the US Government could get a pretty big say on how the company is run.

[Waylon Wong]

Yeah, I mean, that is the appeal of the golden share. And this is a pretty unique structure for an American company. You don't typically see the US Government taking a stake in a corporation or getting involved in board member decisions. This is more common in the UK and in Brazil.

[Adrienne Ma]

So does this mean that the acquisition is going to finally be a done deal?

[Waylon Wong]

Well, nothing is signed yet. And as you've seen, things can change in an instant around here, especially when it comes to cross border negotiations. So stay tuned. But speaking of cross border negotiations, Darian.

[Darian Woods]

My indicator is an acronym. Taco.

[Waylon Wong]

I love tacos.

[Darian Woods]

Taco, as in this stands for Trump always chickens out. Ooh, their words, not mine.

[Waylon Wong]

It's a spicy taco.

[Darian Woods]

Taco was coined by Financial Times journalist and opinion writer Robert Armstrong to explain why the stock market has shot back up again since it dropped in April.

[Adrienne Ma]

It has been kind of a wild ride, like way down and then way back up.

[Darian Woods]

People are wondering what the heck is happening. One explanation is that many investors now believe that the Trump administration is sensitive to markets and so will ultimately not do things that hurt companies too much, like having gigantic tariffs.

[Waylon Wong]

Mr. President, Wall street analysts have coined a new term called the taco trade.

[Darian Woods]

Trump was asked about the acronym this week by a CNBC correspondent.

[NPR]

Survive. And you ask a nasty question like that. It's called negotiation. You set a number, and if you go down, you know, if I set a number at a ridiculous high number and I go down a little bit, you know, a little bit, they want me to hold that number.

[Waylon Wong]

Yeah. So he's saying that the high tariffs are bargaining chips, which is something we've heard from the Trump administration. Right. Like this is just part of the grand plan they have for a negotiation.

[Darian Woods]

Yeah, I'm raising it. Not just that Trump always chickens out.

[Adrienne Ma]

Is a funny acronym, although it is a funny acronym. Yeah.

[Darian Woods]

Because as Wayland said, the key question that the world has been grappling with over the past few months has been whether or not these tariffs are serious. I did this whole episode on that question. And what Trump seems to be saying in response to these questions about the taco term that financial journalists came up with is that the very, very high tariffs aren't serious. They're a way to get China or the EU to the negotiating table.

[Waylon Wong]

And now this strategy is just out in the open.

[Darian Woods]

It does seem this way. You know, the more you shut tariff, the less sensitive markets will be. You'll be like the boy who shouted tariff or the president who shouted tariff.

[Adrienne Ma]

Well, it seems like he's going to need a new approach if he's going to retain this unpredictability that he's famous for.

[Darian Woods]

Yes, and his strategy just got a little more complicated. After Wednesday, a federal court blocked Trump's tariffs that he justified on national emergency emergency grounds. Then on Thursday, a federal appeals court said the tariffs could continue, at least for now. So Trump may well have gotten some of that unpredictability back again by accident.

[Waylon Wong]

This episode was produced by Angel Carreras with engineering by Harrison Paul. It was fact checked by Sarah Juarez. Kicking Cannon is our show's editor, and the indicator is a production of npr.

[NPR]

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