WSJ Your Money Briefing - What Will a Second Trump Presidency Mean for the Auto Industry and Car Buyers?

Episode Date: November 14, 2024

During his first presidential term, Donald Trump took a special interest in the auto industry – and he’s signaled that he has more in store in his second one. Wall Street Journal reporter Ryan Felton joins host J.R. Whalen to discuss how Trump’s proposals could affect EVs, car prices, battery plants, and consumers. Sign up for the WSJ's free Markets A.M. newsletter.  Learn more about your ad choices. Visit megaphone.fm/adchoices

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3413 and now on to the show And now onto the show. Here's your money briefing for Thursday, November 14th. I'm JR Whalen for The Wall Street Journal. Sticker shock for U.S. car buyers got a little stickier last month. The prices for used cars and trucks rose a seasonally adjusted 2.7 percent from a month earlier. President-elect Donald Trump's proposal to impose broader tariffs as a way to decrease imports and create U.S. factory jobs could result in consumers having to dig deeper for a new set of wheels.

There's a concern that this could lead to higher prices at a time that prices have already been elevated at record heights for a few years since the pandemic. We'll talk to Wall Street Journal guy, he's on the list. He's a naughty lister. Naughty lister? Dwayne Johnson. We got snowmen! Chris Evans.

I might just go back to the car. Let's save Christmas. I'm not gonna say that. Say it. Alright. Let's save Christmas. There it is. Only in theaters Friday

The upcoming Trump administration is expected to have a direct impact on the US auto industry and Consumers in the market for a new car Wall Street Journal reporter Ryan Felton joins me Ryan leadership in Washington over the past decade has bounced between Democrats and Republicans. What impact has that had on the car industry and consumers? Car companies take a very long time to develop and decide what cars they're going to make and sell in a particular marketplace. When the government is ping-ponging between administrations and deciding each time it flips to adjust things like vehicle tailpipe emissions or fuel economy standards which dictate how many miles a car should go on a single gallon of gas, just makes it much more challenging to settle in on what type of cars to bring

to market. President-elect Trump made imposing tariffs on several countries a hallmark of his campaign. How could those impact consumers? The main thing that comes up time and again is if you charge more on the cost of goods to bring those goods into the country, it's just going to trickle down to the consumer. There's a concern that among some of the industry that this could lead to higher prices at a time that prices have already been elevated at record heights for a few years since the pandemic. It's just coming out of time as well when they are trying to figure out how

fast to go toward making more electric cars and just kind of throwing another cost on top of that kind of complicates things a bit further. Trump has mentioned Mexico in particular that could potentially be on the receiving end of tariffs. How does that factor into the car industry? One of the biggest things and why tariffs coming out of Mexico is probably being considered the most is just there is this looming consideration of Chinese owned firm setting up shop in Mexico

Where if you build a car and then import it over because of the trade pact between the countries It's not as expensive as if you were to ship the car over from China. It just leaves open the possibility that these Chinese EV manufacturers, which already produce affordable cars can easily build in Mexico and then ship them over to the U S there isn't any signs of any movement on that per se just yet, but that's a leading consideration of what's driving that discussion in particular with Mexico.

Trump has also proposed making auto loans tax deductible to improve affordability and to lift U.S. production. What would that mean for car buyers? The cost of an auto loan right now is high. Interest rates remain elevated compared to, say, prior to the pandemic, roughly speaking. It would just be a way to kind of help keep costs a little bit in line for consumers. So the simple fact is that it would just make it a little bit more easy to stomach given

how high interest has been in the last few years. Let's talk about electric cars in particular. How is that industry preparing for the Trump administration? At this point, talking to folks last week, they are preparing to make the case to the incoming administration that there's a need for electric cars and that car companies are still going to be moving in that direction no matter what. Some of the main things though that they're going to be kind of lobbying for and discussing relates to tax credits that were passed under federal law a few years ago that provided manufacturers tax credits to build battery plants in the

US and provide customers with tax credits to purchase electric cars, including used cars as well. So there's just this sort of concerted effort at this point to try to prepare to make a case for keeping these sorts of credits around, which for the administration is something that they can tackle pretty swiftly if they do want to say pair them back or get rid of them, because it's something that's a pretty direct lever that they're able to pull. electric car makers the tax credit was beneficial to Tesla whose CEO Elon Musk is a Trump ally. How could Tesla's business be affected if the future of those credits is unclear? That's always a bit of a hot-duck question to poke and prod at just because Tesla is so unique in some sense. Their Model 3 and Model Y cars have sold very well and they I'm sure benefit from the tax credit but it's just the brand recognition is so vastly outpaces a lot

of other companies that it's a little speculative to say how it would or wouldn't be affected at this point but certainly the company on their website they do project what the cost would be with the tax credit included. It's just a little early to kind of really pin down to what extent. Earlier you mentioned regulations on tailpipe emissions which were tightened during the Biden administration. What are U.S. automakers expecting under Trump? The expectation just like during the first Trump presidency with Obama's tailpipe emission standards is that they'll be kind of relaxed.

Generally speaking, what is becoming a bit more evident is that automakers were going to struggle to meet the standards, according to some analysts, for like the 2028 model year and beyond. There's generally this expectation that they'll be relaxed. It's just kind of to what extent. That's WSJ reporter Ryan Felton. And that's it for your money briefing. This episode was produced by Ariana Asparu

with supervising producer Melanie Roy. I'm JR Whalen for the Wall Street Journal. Thanks for watching!