The Indicator from Planet Money - Let's 'TACO' 'bout General Motors gassing up V-8s and golden shares

Starting point is 00:00:00 NPR. This is the indicator from Planet Money. I'm Waylon Wong. And I'm Adrienne Ma. And I'm Darien Woods. The three of us are gathered here once again. The tariff troika. Chat GP3.

Starting point is 00:00:24 We're that special time of the week. Taco Friday. What? It's indicators of the week? 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. G.M doubles up on gas-guzzling engines.

Starting point is 00:00:43 And I've got the golden ticket or a golden share. You'll find out more after the break. It's indicators of the week. Adrian, you're up first. 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.

Starting point is 00:01:14 ever made in an engine plant. And the amount they're investing, $888 million. Get it? That's cute. I thought initially it was like a lucky Chinese numerology thing. That is the first thing I thought of also. So this appears to represent a shift in strategy for GM because just a couple 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.

Starting point is 00:01:42 Okay, something in the world has changed? What was that? 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... One big beautiful bill, Adrian, remember? Sorry, official name. Yeah, the O... One Big Beautiful

Starting point is 00:02:24 Bill. In OBBBB. 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

Starting point is 00:02:41 cars in the state by 2035. GM actually helped lobby for this, and President Trump is expected to sign it. Oh, wow. GM's just all in on internal combustion. Yeah, this newfangled technology called internal combustion. So it seems that way, although GM's 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 U.S. 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, U.S. carmakers face

Starting point is 00:03:24 competition from Chinese car makers, 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 B-Y-D, which makes a car called the Seagull, which is a hatchback that goes for around 55,000 yuan or just under $8,000. So are you telling me that GM CEO said the future will be all electric at the same time the company is investing $88 million in internal combustion engines? 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,

Starting point is 00:04:12 Electric vehicles are the future, but maybe not yet because a lot of consumers are not ready. They still want gas engines. They should invest in very loud amplifiers and vibrations and throttle simulators. To bring the thrill of the V8 to electric. For the electric vehicles. And the horns should go, auga, auga. Thank you so much, Adrienne. Now on to Waylon.

Starting point is 00:04:34 What's your indicator? 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 U.S. Steel? How could I forget? You did the story about this last year. So Nippon Steel from Japan, it's been trying to buy U.S. Steel, the American company.

Starting point is 00:05:01 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, steal. 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. Well, I mean, Trump is a fan of things that are made of gold. All things gilded, 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

Starting point is 00:05:39 decisions. Now, there has not been a ton of details on what the golden share for U.S. 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 U.S. to ensure that, for example, steel production doesn't get cut. So Nippon Steel will be the nominal owner of U.S. steel, but the U.S. government could get a pretty big say on how the company is run. 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 U.S. government taking a stake in a corporation or getting

Starting point is 00:06:24 involved in board member decisions. This is more common in the U.K. and in Brazil. So does this mean that the acquisition is going to finally be a done deal? Well, nothing is signed yet. And as you've seen, things can change in an in instant around here, especially when it comes to cross-border negotiations. So stay tuned. But speaking of cross-border negotiations, Darien, my indicator is an acronym, Taco. I love tacos. Taco, as in this stands for Trump always chickens out.

Starting point is 00:06:58 Oh, their words, not mine. It's a spicy taco. 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. It has been kind of a wild ride, like way down and then way back up. 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 we'll ultimately not do things that hurt companies too much,

Starting point is 00:07:31 like having gigantic tariffs. Mr. President, Wall Street analysts have coined a new term called the Taco Trade. Trump was asked about the acronym this week by a CNBC correspondent. He was going to 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. Yeah.

Starting point is 00:07:56 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 negotiation. Yeah, I'm raising it not just that Trump was. always chickens out is a funny acronym. Although it is a funny acronym. Yeah, because as Welland 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.

Starting point is 00:08:23 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. There are a way to get China or the EU to the negotiating take. And now the strategy is just out in the open. It does seem this way. You know, the more you shout tariff, the less sensitive markets will be. You'll be like the boy who shouted tariff. Well, the president who shouted tariff.

Starting point is 00:08:52 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. 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. So Trump may well have gotten some of that unpredictability back again by accident. This episode was produced by Angel Correras with engineering by Harrison Paul. It was fact-checked by Sierra Juarez. Kicking Cannon is our show's editor and The Indicator is a production of NPR.

The Indicator from Planet Money - Let's 'TACO' 'bout General Motors gassing up V-8s and golden shares

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