A MARTÍNEZ, HOST:
President Trump announced that he's imposing a 25% tariff on all car imports.
MICHEL MARTIN, HOST:
He says the money collected will boost government revenues and encourage automakers to build cars and parts in the U.S. rather than import them.
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PRESIDENT DONALD TRUMP: I think our automobile business will flourish like it's never flourished before.
MARTIN: But auto service providers like Cox Automotive estimate that that could add thousands of dollars to car prices if the tariffs go through. And stocks of automakers declined in the hours before the announcement, underscoring the uncertainty Trump's trade policy is having on markets.
MARTÍNEZ: NPR White House correspondent Franco Ordoñez is here to tell us all about this. So, Franco, let's start off with the goals of these tariffs and the concerns they're raising.
FRANCO ORDOÑEZ, BYLINE: Yeah, A, Trump says these tariffs will go into effect next week. Now, they apply to both autos and auto parts. Trump is kind of painting this as a way to jump start the auto industry and raise tens of billions of dollars in revenue. He says auto companies, even foreign ones, will build more operations in the U.S. or expand existing ones. And he's criticized those who took operations in the past out of the U.S.
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TRUMP: So we'll effectively be charging a 25% tariff. But if you build your car in the United States, there is no tariff. And what that means is a lot of foreign car companies, a lot of companies are going to be in great shape because they've already built their plant. But their plants are underutilized, so they'll be able to expand them inexpensively and quickly.
ORDOÑEZ: But as Michel noted, the move is also raising a lot of concerns.
MARTÍNEZ: Ooh, let's talk about those concerns. Who are the winners and the losers here?
ORDOÑEZ: Well, one of the big winners are the auto unions. The United Auto Workers Union, for example, is praising this decision, saying it's time to, quote, "end the free trade disaster." But the big three automakers - Ford, General Motors and Stellantis - are very concerned. You know, they have production spread out across the world, including Canada and Mexico, and the cars and the parts are going to be tariffed. You know, they've raised big concerns in the past when these threats were posed. And a group that represents foreign automakers, like BMW, Honda, has also raised concerns that it's all just going to make it more expensive to produce cars and lead to higher prices.
MARTÍNEZ: So how do these fit into Trump's larger trade policy?
ORDOÑEZ: Yeah, Trump's already imposed a bunch of other tariffs on steel and aluminum, as well as other goods from China, Canada and Mexico. And these new tariffs come just a week ahead of his promised announcement of reciprocal tariffs on imports, which he says are, you know, for those countries that imposed tariffs on the U.S. But he did yesterday back off a bit on how tough those reciprocal tariffs will be. Yesterday, he said people may be surprised that they're going to be more lenient than they once feared. He also did say, though, to expect tariffs on lumber and pharmaceuticals.
MARTÍNEZ: Yeah. You know, it does seem like President Trump loves tariffs or even the threat of tariffs. Economists don't seem to share that view. How do you square those two things?
ORDOÑEZ: Yeah, he really does love tariffs. He says that all the time. I mean, he argues that they're an important tool to be used for leverage on things like national security and other U.S. interests. But you're absolutely right. Most economists say tariffs raise prices for consumers, and that could hurt the economy. Trump often uses them as a negotiating tool, and that has really made economists even more worried. And that's because of the uncertainty that they cause, and you see that in the markets. Now, in some cases, he says these tariffs will go away if countries do things that he wants, like help him with immigration. But this time, he says he's serious and that these car tariffs are here to stay.
MARTÍNEZ: All right, we'll see. That's NPR White House correspondent Franco Ordoñez. Thanks a lot.
ORDOÑEZ: Thanks, A. Transcript provided by NPR, Copyright NPR.
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