This is Gary and Shannon and you're listening to KFI AM six forty, the Gary and Shannon Show on demand on the iHeartRadio app One Day leftil Liberation Day. If you ask President Trump, you know his infatuation with tariffs goes back to the nineteen eighties when he said the word tariff is the most beautiful word in the dictionary.
He said it many times since then as well.
Wall Street journalists reporting the President Trump has settled on a plan for the latest batch of tariffs that are expected this week, but he's not telling anybody what that plan is.
He has announced a twenty five percent tariff on all cars not made in the US, but exempted auto parts that comply with the US Mexico Canada agreement. To help us boil it all down. What it means for the labor industry, for the auto industry in this country is Arthur Wheaton. He's the director of Labor Studies at Cornell joins us Now, Arthur, thank you so much for your time this morning.
My pleasure.
Let's start with some of the basics. You wrote a book a long time ago, or at least in an article. Where in the world do they come from? Speaking of today's cars, and that was more than twenty years ago. We've talked a little bit about sort of the outsourcing of parts, of transmissions, of engines. When it comes to cars that are then assembled in the United States, where do our American finger quotes American cars come from these days?
Well, the short answer is is there's no completely American car. So they all have parts coming from all around the world. And some of the most American content would be Tesla, and that's because their two main manufacturing plants for the US is here. But you're seeing almost half of all the vehicles sold in the US come from outside of the US.
How does this affect the car companies who make the cars, like Toyota parts or the vehicles here in the US.
It's a twenty five percent tariff on all of the vehicles coming from Japan from Toyota, and it's a twenty five percent tariff down the road for all of the auto parts that are sent to the United States to go into the Toyota vehicles. And it's a twenty five percent tariff for all of the other companies that build
outside the US. The tricky part here is the parts and those are going to be delayed by a month until they can figure out exactly how to precisely account for all the parts going back and forth across the borders.
Transportation, car payments, truck payments, things like that are usually the second largest portion of a household's budget.
Is this going to be an issue?
Are we going to see immediate impacts on people's household budgets as a result of this.
Absolutely, and there's almost no way to avoid it, because you're going to see people's budgets get squeezed. For New car prices are going to go up from the tariffs. Used car prices are going to go up because you're going to get priced out. For those that are just barely able to make those payments. Add twenty five percent on top of it, you won't be able to afford it. Rental car prices are going to go up, Your car
insurance is going to go up. All of those directly associated with the tariffs that are supposed to start the third.
I remember in the nineties, my mom.
Got a used car. She loved it.
It was used Alpha Romeo, and she loved it because you know, its Italian. But then something went wrong with the car and you had to get the part from Italy, and it was expensive and it took forever. And that was back when there was the push to buy American for that. One of one of the major reasons was for that alone, that you want your parts to get here and to be reasonable. But since then, it seems like there has been a globalized model that has developed.
If we're going to bring back parts being made in the US, how long are we looking at and is that even something that's feasible with the way that this industry has diversified globally.
Give enough money and enough time, yes, it's feasible you could bring that back. But what you would need to have is a long term, sustained tariff that people understand what the rules are. It's when you keep going on again, off again. No one wants to invest the billions of dollars to build a new plant and have two or three years for it to ramp up. If the next president comes in eliminates the tariffs and you just wasted a whole bunch of that money. So is it possible, yes,
is it going to take time? Absolutely? So you're talking about these plants can take three to five years to build and get the first product out the door, and by then Trump will no longer or be president.
Well, we've been fighting inflation and after the pandemic. Well, let me rephrase this. During the pandemic, we saw a lot of problems with the chokehold around supply chains, and that impacted the auto industry pretty significantly during the pandemic. Did we ever fully recover from that or we back to where we were before twenty twenty?
We are just now getting back with inventory levels, at least in the auto industry, back up closer to what normal was. So there's going to be a little bit of a cushion before it hits US, but it was very disruptive for the supply chain, and you're going to see the same thing. Some of these parts going into that vehicle go back and forth across the border three or four times before the finished vehicle is sold. So you don't just pay the tariff lunch, you pay it
each time it goes across the border. So it's going to be a huge impact for all of those and most of the vehicles in the US have at least twenty to fifty percent foreign parts that go in coming from outside the US.
And then at what point.
Do we talk about the potential for a government bailout of the American car companies if they are hit hard to the point of needing help.
Well, we've done it more than once. We've done it at least a few times. For what's now called Stilantis used to be called Chrysler. They've been bailed out multiple times. But I think for the most part, you have different levels of pain. So Ford has eighty percent of their vehicles made in the US. The parts are going to become more expensive as they come back and forth across but Stillantis has a lot of their content and gener motors. Even more of their content susstible to US and Mexico.
So the best or Canada and Mexico. The best hope is that they can negotiate some changes in what is or what is not covered by the tariffs, and that has been changing, so the USMCA, the NAFTA two point zero that President Trump negotiated in this previous administration. If they can maintain some of those conditions, it made less than some of the impact from US, Mexico and Canada. But for right now, they're all on the hook.
When you look at Asia, who needs who more. Do we need the parts that are made in Asia at the cost that they're made there more? Or do they need American consumers buying their vehicles and their parts more.
I think it's a global dependence on each other. So I think they need us, and I think we need them. But at some point in time, can China survive without the US market? Yes, they got more than a billion, four one hundred million people there, so yes, they have their own market. Can the US survive on their own yes? Will it cost us all more money, yes, but we can We can get by on our own. But it's a whole lot easier if we all work together.
Art, great stuff.
We really appreciate you taking time for us today.
Thank you my pleasure.
You bet Arthur Wheaton there again, director of Labor Studies at Cornell.
You call him Art, well, I hope, I mean that's why I did it.
At the end, I don't know if you knew him because you called him Art like that's that's the next level relation. I mean, I guess we aret we talked to him. You didn't call him art right out of the gate, No, I.
Waited, I warmed up right. I let him think we were friends.
He could be one of those guys who's only been Arthur his whole life.
Well, the article where we found him from Bloomberg, he went by Art.
Oh good.
I'm so glad I didn't break ice on that because I wanted to have him back. But if you offended him and burn that bridge. As we were saying goodbye.
A little bit later in the show, we're going to talk about the the A's.
Not the well, the Sacramento A's and the drone that interrupted the games.
Yes, so I saw pictures from that game, and it looked very much like spring training, which is really cool. It's the most expensive to it, by the way, in Major League Baseball right now. Oh really, because there's only fourteen thousand seats.
I get and it was packed. Yeah, I don't know what I mean. That was opening night, but it.
Looked very cool. It's a great ballpark there in West Sacramento.
All Right, we'll talk about that a little bit more on tariffs at the bottom of the hour. We're going to continue this look because specifically, the auto industry is the one that we have at least sort of a better handle on when it comes to how tariffs could affect what goes on in the future.
Ooh, and coming up next, it looks like Trump's next tariffs are going after big pharma.
How that's going to affect your pills? We come back.
You're listening to Gary and Shannon on demand from KFI AM six forty.
Hey, you like botox, you like waygo v, you like zep bound, you don't like cancer. These are all drugs or active ingredients for these drugs that suppliers are shipping now by air to the United States because they're worried about tariffs on pharmaceuticals. EU medicine and pharmaceutical product exports to the US totaled about ninety billion euro about ninety
seven billion dollars in twenty twenty three. Several investors and analysts following this whole deal say that well shares are already hurting, but there have actually been drug makers taking the unusual steps of sending medicines by air.
To the US just to get them here, just to.
Get them here before the Liberation Day tomorrow. Two European headquartered drug makers told Reuters they're sending as much of their medicines across the Atlantic as possible. They've been doing over the past several weeks, they heard other pharmaceutical companies are doing the same.
So on Friday, Trump said that the specific tariffs when it comes to pharmaceuticals would be coming soon. And part of the issue you that has driven the markets crazy over these last few days and weeks is that there are no specifics about all of this just I mean literally minutes ago, Caroline Levitt in the White House Press briefing said, the President has decided on all of these.
He's just not talent anybody yet.
The President said last night he has made a decision in a determination. I was with him in the Oval Office earlier, and he is going to announce that decision tomorrow. I don't want to get head of the president. This is obviously a very big day. He's with his trade and tariff team right now perfecting it to make sure this is a perfect deal for the American people and the American worker, and you will all find out in about twenty four hours from now.
Yes, so about one o'clock I believe tomorrow is when the President's expected to make these announcements.
Pharmaceutical products have long been spared from trade wars.
Due to potential harms.
Right, we need those, but Trump's move to increase tariffs on goods from China, including finished drugs and raw ingredients, as well as the early round of tariffs on goods like steel and bourbon, has raised the expectations that medicines will join the list.
I am it sounds a lot like the determination about how we're going to do these auto tariffs as well, whether it's the finished product or the ingredients the main ingredients in them, or.
Both or both.
Yea.
Trump had previously singled out Ireland specifically because apparently Ireland is home to manufacturing plants for most of the world's top ten pharmaceutical companies.
Yeah, who knew. I just learned that this morning.
So again the details of it still hidden somewhere deep within the White House. And it turns out that President Trump has scheduled a news conference tomorrow to get into some of the details.
We had seen.
For the most part, another down day on Wall Street because of the uncertainty that surrounds all of the all of the tariff decisions, and in fact, the announcement, significantly I mentioned comes at one o'clock, one o'clock hour time after the bell closes, after the market's close on Wall Street.
Coming up next, we touched on the auto industry and the tariffs ahead for the auto industry. We're going to be talking to a senior editor at Kelly Bluebook and Auto Trader about what does this mean if you're in the market for a car, maybe you've got a used car on your hands. Is this a time to sell and to buy because of the uncertainty.
We'll get some answers when we come back.
You're listening to Gary and Shannon on demand from KFI AM six forty.
This is a case that has dissected bisected Boston in terms of opinion, with a lot of people believing that she's the one to blame for the murder of her boyfriend who was a Boston police officer. And then there's the camp that is in Karen Reid's defense and says that it was a cover up by police officers and that it was a drunken night gone wrong and they're pinning it on her anyway. It was a hung jury
the first time, and today jury selection begins again. We'll get into it coming up in the twelve o'clock hour.
Well, we're already concerned about inflation. There's some speculation maybe some anxiety even about Liberation Day, when a bunch of tariffs are supposed to be imposed on stuff that's imported into the United States. One of those imports is going to be the price of cars is going to go up. I don't know how it couldn't joining us to talk more about this. Brian Moody is senior editor at Auto
Trader in Kelly Bluebook. Brian, first of all, thanks for taking time and help us try to untangle some of what's about to happen to the economy.
Yeah, of course, it's interesting the way this has moved all of a sudden. The automotive space has more new news than say the Hollywood Reporter.
Well, listen, we don't.
I think one of the issues about the tariffs is people are having hard time kind of wrapping our heads around, well.
Do we buy now because we just don't know what's going to happen with the dealerships. Do we sell our used cars now because or do we wait because those prices are going to go up?
Right, the prices are going to go up. So here's the main thing that I would say. If you're looking for a used car, and for the purposes of this conversation. When I say used, I mean a lightly used car between one and five years old. If you're looking for a ten thousand dollars car with one hundred thousand miles or whatever, that's probably not going to change that much. It's the lightly used cars that, by the way, we're already in short supply because of the new cars that
didn't get made during the pandemic. So if that's you, as a customer of a lightly used car, I would absolutely start looking right now.
When it comes to the price increases that we do expect on imported cars. With the ones that are I mean it's hard to even explain this, but predominantly foreign vehicles, even though some of the parts may come from the United States, those prices are going to go up.
Is there a specific.
Segment of the car industry that will see more of an impact?
Is it the higher higher price cars, the lower price cars.
You know what's hard to It's not going to go by price, however, I say that, but what automakers may do is look at their entire portfolio and say, hey, these inexpensive cars are built here in the US, and these priceier cars are built outside. They can't just raise prices on certain cars. Not On the other they're going to try to even it out, get suppliers to ship in, but even it out across their model lines so that
there's less of a sticker shock. So, for example, an economy car that costs twenty five thousand dollars simply can't support a three thousand dollars price increase, right, But a ninety thousand dollars pickup, if you add thirty five hundred dollars to that price, that customer probably can support that.
And the other thing to remember is when we say import and domestic, the truth is many brands that we think of as imports, such as Honda, Nissan, Toyota, Merceites, Benz, those companies build their cars in the US for the most part. And on the other hand, a lot of domestic brands, not all, but they build many of their models outside the US, specifically Mexico or Canada.
Do you see this global market, I'll ask you this question. It's become a global market. It's not as easy to say buy American anymore because of what you just mentioned. A lot of the parts are coming from other places. Do you see it being a situation where we could bring parts manufacturing back to this country, primarily for American cars in our lifetime.
It's possible, and some manufacturers are already doing that. For we see Tesla as a model for that. They make a lot of their cars in the US and they also have a battery and power train facility inside the US, as as the Hyundai Motor Group. Hundai Motor Group solves the brands Hyundai, Kia, and Genesis, and they just built a new gigantic factory near Savannah, Georgia, but not only will manufacture cars for three brands, but also have an
on site battery facility, So yes, that is possible. Nissan has an engine plant in Tennessee that also services Nissan vehicles, so yes, that's not uncommon.
But we're hopefully. I mean, the whole goal of.
This is that you see more of that. But you know, this is all just speculation at the end of the day. Does any of that mean lower prices for consumers even five years from now? I really don't know.
Is there a brand that you see faring better?
A brand that has a diverse portfolio of cars made in multiple places will probably do better. Of course, we could say any brand where all the cars are made inside the US would be great. But the truth is, as you said before, parts come from their places. There really is no such thing as a one hundred percent inside the USA made car. So Tesla has lots of cars that come from the US, they probably would be okay, Rivian.
Same thing when you look at Nissan, they have a large number of cars made inside the US, but also some made outside the US. So those types of brands. Toyota makes many of the cars they sell in the US right here in the US.
I want to ask you about Tesla specifically.
Some critics of Elon Musk and the President have said that this was a favor to Tesla because it, like you said, does.
Produce a lot of vehicles here in the US.
But don't they also have factories in other parts of the world that specifically cater to those other parts of the world.
Yeah, and that's the way that they've been doing business. So that's what's so odd about this is that for decades we've been sort of helping to orchestrate a system whereby manufacturers build where they sell. Now they don't just sell cars in the US. There's a good chance that whatever car they sell in the US they also sell in Mexico and South America. It only makes sense to centralize the location for building those cars for the purposes
of a scale and also just economics. So yes, while one manufacturer like Bulbo or Tesla might make cars here in the US, they also make them other places to sell to those markets. And while it may advantage Tesla to have a tariff that only goes toward cars coming from outside the US, it would also advantage cars like the Ford Mustang GT, certain versions of the Jeep Wrangler, the Volkswagen ID four, as well as the Honda Odyssey, Honda Ridgeline, and other vehicles like that. Anybody who builds
their cars inside the US, Kia is another one. It's going to help them. It wouldn't just only help Tesla. That would be silly.
Brian, you drive a sob Any chance of the manual transmission making a comeback in this country.
Nobody cares about that.
I totally do.
I miss the manual transmission.
I know, because you know what you missed from not having a manual transmission. You you you are required to be so focused on what's happening right in front of you. It's like you're forced to have a higher level of attention. I think all of these self driving programs are going
to end up being harmful in the end. So while I can brag that I got my daughter to be embrace sobs and she has one of those too, I fear I'm going to be one of the only few people like that in my neighborhood for many years to come.
Well, Mike, both of my kids learned on stick and I can't. It's one of the greatest gifts I think that my wife and I gave our kids is the ability to drive a manual transmission.
Yes, and it also I've noticed something in teaching kids to drive, Like sometimes at work will have an intern and they'll say, oh, well, I want how to drive a stick shift, And when you teach them, they'll say things like this, how does the car no one to stop when you push in the clutch, And you're like, oh my god, we got to switch. Oh man, I have a connection with the physical world, the way we turn our bikes upside down and put dirt on there
and chain the tires. They don't have that connection with the They learned to drive on video games.
Honestly, God, that's depressing. Brian thank you.
Thank you.
Brian Moody, their senior editor at Auto Trader and Kelly Blue Book.
Hey, I've got a bunch of mail. You want to get to that guy?
Do that when we can do what I've got like several pieces of mail for us.
You're listening to Gary and Shannon on demand from KFI AM six forty.
President Trump has said he settled on a plan for the latest bash of tariffs expected this week, but he hasn't revealed what he decided. At the White House Press conference just a short time ago, Caroline Levett, the Press Secretary, did say that President is going to make a big announcement about one o'clock our time tomorrow. Worries about the tariffs and the economy since the sm P five hundred and the nasdak so their worst quarters since twenty twenty two.
As of right now, all of the arrows are green once again, but that's after a few hours of trading a negative territory.
The Dow is up just a point right now.
S and P five hundred is up seventeen, Nasdaq is up one hundred and thirty one.
Adults are shoplifting, it's not because they don't have money. They're shoplifting from whole Foods. It's called revenge stealing. And we'll tell you about it coming up in the next hour.
Little windy by the way, today southern California, we'll see wind conditions gusts expected up to forty five miles an hour from most areas, some stronger gusts than the deserts and mountains until tomorrow. Frighteningly cold last night, really so I went outside to get the mail and it was really good time, six o'clock sixty. Maybe some reason the wind was whooped the through just not the case where I live.
It bad.
Are you going to be okay? You're gonna make it?
I well, I had to put pants on.
Actually, I know when you're home you hate wearing pants. That must have been a struggle. We got a bunch of mail. We got a postcard. I love this postcard PS that says, don't be a salty bitch Alaska. It's from Casey and Anaheim. Casey says, Hi, Gary and Shannon. I thought you might like the new Betty White stamp. Stay salty and oh Betty White stamp. Thank you, Casey. Casey actually in Hawaii, Anaheim, Oh you said an. I said, alas, Alaska. Are you high having a stroke?
Just high?
Okay, I'm just high. Let's see here. This is from Kenneth. Oh, it's taped shut and it just says my name. Well maybe that's good because this is for private time.
If he tapes it shut, it's a less licking on the envelope for you.
There's several pieces of paper. Is that a receipt for something?
Let's see here. Hi, Shannon, I'm just gonna cold read this.
Go for it. I love one could go wrong.
I love your and Gary show, and I listened to it almost daily. I was listening this morning Wednesday, March twenty sixth when you were commenting that you just can't present yourself a visit the president present. Well, maybe you didn't hear the story, but Elvis did just this when he dropped by the White House. Oh, I guess you can't just go to the White House and say you want to visit the president. I see, maybe you didn't hear the story, but Elvis did just that. Well, Kenneth,
I'm not Elvis. I don't know if you knew that right. He just dropped by the White House. He got a visit with President Nixon. Just let you'd be interested in knowing about it.
So there you go.
And then here's the story about how Elvis met Nixon fifty years ago today and one of the weirdest White House meetings in history.
Well that's cool. I'll give that a read.
But again, I still don't think I could turn up at the White House and say that I wanted to meet the President knock on the door. See here's another one. This one's not taped shut. This is from no name. This is for both of us, and it is typed with a typewriter. This is from Mike, Mike, Gary, and Shannon. A note on your discussing baseball movies early in the show today, this is about AIDS.
Was less cold reading here.
Oh sorry, okay, Shannon, you thought the nineteen seventy three movie Bag the Drum Slowly starring Robert de Niro was a movie about AIDS when it's about a baseball player dying of cancer.
Yeah, we went over that.
Then you guys realized the movie you were trying to think of was and the Band Played On, which is about the emerging AIDS crisis in the eighties and nineties. There's an Iceberg, Leo DiCaprio, Fox Eleven, Steve Gregory, many different things.
Oh, he thinks we're being sued.
By the.
Maybe a tax case anyway, that's something to look into later. And finally, here's one with a lot of eagles on it, a lot of stickers of eagles. That's good. We like eagles. This is from This is also tape shut. It's from Ruth and this is for Deborah too. Uh, there's an eagle with an American flag.
Oh, that's a nice card.
And it's his best show on KFI. That's all the card says. That's pretty cool. The thing is, if we put that up in the office, it'll look like we did it. Dear Shannon, Deborah and Gary. With all of the talk about the big Bear Eagles and their nest, I thought i'd send you this. It's one of my favorite cartoons. It's from the New Yorker magazine. Hope it brings a smile to your faces, like you've brought to mind all the best Ruth. And there's another sticker of
an eagle. There's here's the cartoon. There's always one annoying piece left over. Oh, I see like there the nest is a puzzle and they don't know where the stick goes. Oh that's good. It took me a really long time to figure that out.
It did take you a strangely long time. I was waiting for you to do the math on that.
For me, you know, like a bird putting together an Ikea nest or something like that.
Yeah, I get it now, Thank you, Thank you very nice.
It's always fun to get mail.
I don't know if you felt that, but uh, someone's taken it right out of your wallet without you knowing.
Oh yeah, more tax.
Oh, the sales tax is up today. We'll tell you what you need to know. It's here in La County or La City County.
Great, yeah, more so, more more.
If you miss any part of the show, you can always go back and check out the podcast.
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