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Speaker 1: Bloomberg Audio Studios, Podcasts, radio news, Gonor. Thank you for

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Speaker 1: taking the time selfishly. It's always just good to get

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Speaker 1: out of DC and touchgrass, you know, bluegrass or otherwise.

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Speaker 2: Bloomberg's White House reporter Josh Wingrove took a trip down

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Speaker 2: to the Kentucky State Capitol a few weeks ago to

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Speaker 2: sit down with Governor Andy Basheer.

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Speaker 3: Welcome to Frankfurt.

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Speaker 1: Thank you, Kelly.

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Speaker 2: They met inside the old Governor's mansion. In Bashir's office,

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Speaker 2: which featured some very Kentucky touches.

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Speaker 1: He has a bottle of bourbon with his dog's face

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Speaker 1: on it sealed. I should know. We did not get

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Speaker 1: to crack that. I know, heartbreaking. But he also has

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Speaker 1: a KFC bucket with his own face on it, so

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Speaker 1: leaning into the brand a little bit.

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Speaker 2: Bourbon and bluegrass music and Kentucky fried chicken. These are

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Speaker 2: just a few of Kentucky's most famous exports, but Josh

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Speaker 2: says there's a lot more to Kentucky's economy than that.

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Speaker 2: The one time coal producing center is also in auto manufacturing,

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Speaker 2: juggernaut in aerospace hub and one of the country's most

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Speaker 2: prolific importers.

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Speaker 1: Kentucky kind of flies under the radar. As a trade

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Speaker 1: exposed state, its imports are the top in the country

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Speaker 1: as a share of their economy. You might think Michigan

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Speaker 1: or other states that jump to mind more as big

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Speaker 1: manufacturing states, But it's.

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Speaker 2: Kentucky and right now it's in the crossfire of the

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Speaker 2: trade war.

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Speaker 1: The stuff they are building is being hit with the

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Speaker 1: import tariffs, and the stuff they're selling, namely bourbon, but

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Speaker 1: other things including aerospace, is being affected as well with

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Speaker 1: potential countermeasures countries boycotting or applying their own tariffs.

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Speaker 2: Though the pace of tariff news has slowed since the summer,

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Speaker 2: the whiplash isn't over. On Friday, President Donald Trump threatened

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Speaker 2: a new one hundred percent tariff on Chinese goods, but

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Speaker 2: then over the weekend he softened, signaling the US would

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Speaker 2: be open to further negotiations, and next month the Supreme

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Speaker 2: Court will start hearing oral arguments in a case that

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Speaker 2: will decide whether Trump's reciprocal tariffs are even legal. As

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Speaker 2: Trump's tariff policies start to hit Kentucky's key industries, the

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Speaker 2: red state's Democratic governor has been vocal about the consequences

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Speaker 2: for his constituents.

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Speaker 3: The impacts are hitting the economy in Kentucky and across

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Speaker 3: the country. They haven't been fully felt yet, and part

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Speaker 3: of that is because it's constantly changing, right, But what

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Speaker 3: we will see in the United States is increased costs

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Speaker 3: on our people.

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Speaker 2: Basher is one of the only Democrats in Kentucky state leadership,

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Speaker 2: but he's not the only Kentucky politician who's taking the

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Speaker 2: administration to task over Trump's trade war. There's Kentucky Senator

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Speaker 2: Ran Paul So.

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Speaker 4: The number one issue I get wherever I go in

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Speaker 4: the state is tariff's are killing the family of farm.

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Speaker 4: Tariffs are killing the bourbon industry, tariff is killing the

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Speaker 4: cargo transport industry.

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Speaker 2: And Kentucky's other Senator, Mitch McConnell.

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Speaker 5: Put me down as a guy who hopes the trade

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Speaker 5: war isn't very long because if it's prolonged, it means

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Speaker 5: higher prices for all of you.

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Speaker 2: For every cand State Congressman Thomas Massey has been a

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Speaker 2: vocal tariff critic too, all three of them Republicans.

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Speaker 1: The one thing they seem to agree on down there

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Speaker 1: is tariffs are a bad idea, or at least the

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Speaker 1: way they're being done is a bad idea.

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Speaker 2: I'm Sarah Holder, and this is the big take from

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Speaker 2: Bloomberg News Today. On the show, more from Josh's interview

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Speaker 2: with Kentucky Governor Andy Basheer what Trump's trade war and

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Speaker 2: domestic policy agenda means for the Red State's economy and

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Speaker 2: for its voters. President Trump announced his sweeping global tariffs

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Speaker 2: a few months into the start of his second term.

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Speaker 5: April second, twenty twenty five. Will forever be remembered as

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Speaker 5: today American industry was reborn. Today America's destiny was reclaimed,

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Speaker 5: and the day that we began to make America wealthy again.

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Speaker 2: After months of negotiations, escalations, downgrades, and delays, most of

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Speaker 2: those tariffs went into effect on August seventh, But that

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Speaker 2: hasn't been the end of the story.

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Speaker 3: So we've now gone from across the board to reciprocal,

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Speaker 3: to industry specific, to company specific, and now we are

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Speaker 3: at product specific.

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Speaker 2: Kentucky Governor Andy Basheer again, the.

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Speaker 3: Only thing that doesn't change is that it's going to

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Speaker 3: change every day.

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Speaker 2: Bloomberg White House reporter Josh Wingrove wanted to talk to

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Speaker 2: Governor Basher because Kentucky is in some ways a microcosm

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Speaker 2: of the rest of the US as local economies adapt

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Speaker 2: to these shifting tariff policies, But Kentucky is also uniquely vulnerable.

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Speaker 1: Kentucky is a crossroads state, right It is near the

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Speaker 1: manufacturing heartlands of Michigan, Ohio, but a gateway between the

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Speaker 1: coasts and sort of middle and South in America. And

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Speaker 1: that's why they have a lot of logistics hubs type

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Speaker 1: of business. That's why they have a lot of manufacturing.

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Speaker 1: Ford has a huge plant there. Bourbon, of course, has

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Speaker 1: been an iconic part of their industry as well. It's

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Speaker 1: sold a lot domestically, but it sold a lot internationally too,

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Speaker 1: and is often targeted because countries tend to look for

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Speaker 1: sort of tangible things to hit, whether it's Florida orange

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Speaker 1: juice or Kentucky bourbon, and that's why these terrifyts tend

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Speaker 1: to bite in places like this.

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Speaker 2: Levies on imports are hitting the state's manufacturing sector, while

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Speaker 2: retaliatory measures from other trading partners are affecting the state's exports.

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Speaker 1: So, for instance, bourbon is an export but is being

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Speaker 1: impacted because people are simply refusing to buy it because

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Speaker 1: they're ticked off. Kentucky's main export country is Canada. The

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Speaker 1: Canadians are up in arms right now because Trump is

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Speaker 1: more or less trying to annex the country. And then

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Speaker 1: there's individual tariffs like on steel and aluminum. Well, if

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Speaker 1: you have a car plant, you use a lot of

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Speaker 1: steel and aluminum, and so Ford is navigating that.

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Speaker 2: Ford employees more than ten thousand workers in Kentucky, and

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Speaker 2: Bashir told Josh the state depends on the company's continued success.

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Speaker 3: Ford has been a huge investor in Kentucky over the

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Speaker 3: last five years, five and a half years since i'ben governor.

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Speaker 3: Now we also have the largest Toyota manufacturing facility in

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Speaker 3: the world in our state. What Ford is saying is

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Speaker 3: that they believe that this chaotic policy that is not

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Speaker 3: being done through normal channels, that is not having the

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Speaker 3: experts that understand the auto industry and how to create

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Speaker 3: a level playing field. They're not being consulted.

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Speaker 2: Trump says his tariffs are designed to help revive American manufacturing.

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Speaker 2: The industry has lost more than five million jobs and

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Speaker 2: nearly seventy thousand factories since the nineties, But in Kentucky,

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Speaker 2: manufacturing is a major driver of its economy. Thirteen percent

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Speaker 2: of the workforce is employed in the sector, and Bashir

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Speaker 2: told Josh that in his state, Trump's tariff policies are

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Speaker 2: putting the success at risk.

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Speaker 3: The president might think he's helping domestic manufacturers, but in

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Speaker 3: fact he's hurting them.

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Speaker 1: People think about manufacturing, think about giant plants, right, but

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Speaker 1: manufacturing can be pretty small too. And you think of

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Speaker 1: like small companies that, let's say, input their materials from China,

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Speaker 1: build it in America, sell it in America, employ Americans.

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Speaker 1: What should that company do because right now they're kind

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Speaker 1: of caught in the middle of it. Trump thinks that

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Speaker 1: if you want to avoid tariffs, you're just going to

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Speaker 1: build a big new factory in a place like Kentucky.

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Speaker 1: Well you might, but then you have to pay the

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Speaker 1: other tariff. Citi's charging, for instance, some steel to build

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Speaker 1: that factory, and that might just get too complicated for you.

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Speaker 1: Or you might be doing it at a time when

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Speaker 1: there's a lot of questions about the economy and you're

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Speaker 1: worried about consumer demand, you know, maybe falling, and you're like, ah,

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Speaker 1: I know, I'll just kind of hold off and wait.

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Speaker 1: And if every company holds off and waits, and suddenly

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Speaker 1: things grind to a halt pretty quickly, and so I

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Speaker 1: think that that is why manufacturing is so often seen

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Speaker 1: as a canary in the coal mine, if you'll excuse

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Speaker 1: me completely inadvert in Kentucky pun because it is sort

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Speaker 1: of a bell weather.

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Speaker 2: I'm wondering if Basher sees any benefits for domestic automakers

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Speaker 2: from tariffs when it comes to helping them compete globally.

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Speaker 2: For example, how does Basher see the long game here

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Speaker 2: and how does he talk about it?

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Speaker 1: So it's funny because one of the things Trump has

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Speaker 1: done is sort of shift the consensus on this right.

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Speaker 1: Republicans were the anti tariff party until Donald Trump came along.

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Speaker 1: So Governor Basher's position is stealing aluminum tariffs, for instance,

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Speaker 1: can be appropriate when targeted.

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Speaker 3: When you have China dumping steel and or aluminum, then

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Speaker 3: a targeted tariff that is done through the regular process

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Speaker 3: that brings in the experts on the amount those can

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Speaker 3: be helpful to ensure the US economy has certain manufacturing

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Speaker 3: that is critical to our national security.

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Speaker 1: Without being hallowed out by the Chinese. Exactly right. So

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Speaker 1: for Governor Basher on the autopiece, it's interesting because yeah,

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Speaker 1: I think Trump likes the idea of tariffing for an

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Speaker 1: autos to help domestic automakers. The problem is the sequencing

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Speaker 1: so far has hurt domestic automakers. Right Ford in Kentucky

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Speaker 1: is the domestic automaker that makes most of its cars

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Speaker 1: in the US, and right now they are at a

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Speaker 1: disadvantage against their Japanese rivals because of the way the

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Speaker 1: teriffs have all shaken out. But it is complicated because GM,

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Speaker 1: for instance, is a major importer, including from South Korea,

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Speaker 1: and so they're kind of caught in the middle of

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Speaker 1: it too. If they pay a fifteen percent tariff on

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Speaker 1: a car they make in South Korea and pay input

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Speaker 1: tariffs on cars they make in America and have to

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Speaker 1: have a higher paid worker, or this or that, it

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Speaker 1: might actually incentivize them to shift more production to South

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Speaker 1: Korea than having it in places like Kentucky or wherever

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Speaker 1: in the United States.

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Speaker 2: But Shir is far from the only one raising concerns

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Speaker 2: about the way Trump's tariffs have been rolled out. Following

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Speaker 2: a wave of lawsuits filed by businesses and state attorneys general,

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Speaker 2: the US Court of International Trade ruled the President does

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Speaker 2: not have the authority to use the international emergence see

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Speaker 2: Economic Powers Act to impose tariffs. There's a stay on

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Speaker 2: the case while the Trump administration appeals to the US

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Speaker 2: Supreme Court, which will start hearing oral arguments on November fifth.

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Speaker 3: My hope is that the lawsuit brought by Democratic attorneys general,

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Speaker 3: both in the International Court of Trade as well as

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Speaker 3: in a district court, reaches the Supreme Court and they

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Speaker 3: rule what any other Supreme court would have, that the

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Speaker 3: president doesn't have the power to change tariffs on a whim.

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Speaker 3: This is a president who wants to simply set any

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Speaker 3: tariff any time, for any reason, and the law doesn't

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Speaker 3: allow that.

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Speaker 2: After the break, Kentucky's manufacturing industry is up against more

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Speaker 2: than just tariffs. What a rollback of green energy policies

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Speaker 2: means for the Kentucky automakers who've gone all in on evs.

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Speaker 2: Kentucky wasn't always the manufacturing hub it is now. For

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Speaker 2: most of the twentieth century, it was known as one

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Speaker 2: of the country's top coal producers.

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Speaker 3: When you look at the coal miners of eastern Kentucky,

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Speaker 3: West Virginia and elsewhere, they mined the coal that powered

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Speaker 3: the Industrial revolution that created the strongest middle class of

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Speaker 3: the world's ever seen. That powered US through two World wars.

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Speaker 2: But when the US started investing more in green energy sources,

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Speaker 2: Kentucky Governor Andy Basheer says a lot of miners were

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Speaker 2: left behind in the transition.

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Speaker 3: Yet when the energy economy changed, they weren't thanked. In

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Speaker 3: many instances, they were told they were doing something bad,

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Speaker 3: and the new jobs didn't go where the old jobs were.

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Speaker 3: Everybody was talking about environmental justice at the time, no

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Speaker 3: one was talking about economic justice, and these people that

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Speaker 3: broke their backs to help build this country were left behind.

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Speaker 2: Basher told Bloomberg White House reporter Josh Wingrove that his

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Speaker 2: priority now is diversifying Kentucky's economy.

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Speaker 3: I recognized that climate change is and I'm the first

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Speaker 3: Kentucky governor that's ever said that phrase out loud. I

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Speaker 3: say it because it's true, and we're not likely to

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Speaker 3: see a rebound in older areas of energy generation. Why

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Speaker 3: because every company that's coming to Kentucky is still telling

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Speaker 3: me that they want to be more sustainable, is still

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Speaker 3: asking for more diversity in their energy portfolio. And so

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Speaker 3: for me, if I want to recruit that next set

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Speaker 3: of jobs, I've got to make sure that we have

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Speaker 3: multiple means of energy production, including more renewables.

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Speaker 2: A large part of Kentucky's industrial diversification has come in

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Speaker 2: the form of electric vehicles. Since Bashir took office, the

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Speaker 2: state has become a key player in the EV supply chain,

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Speaker 2: attracting billions of dollars in EV related investments in cars, parts,

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Speaker 2: and batteries. One of the most significant EV related projects

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Speaker 2: in Kentucky is a joint venture between South Korea's sk

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Speaker 2: On and Ford called Blue Oval.

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Speaker 1: By the way I think we're supposed to pronounce.

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Speaker 2: Blue Oval is like Louisville, Blueuvolle. I think it's a

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Speaker 2: pun oh okayo, Blueville, Glueville, Louisville.

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Speaker 1: I think, as non Kentuckians, let's say blue Oval, but

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Speaker 1: I think it is. It is a nod to the

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Speaker 1: local pronunciation of Louisville.

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Speaker 2: No thank you. After receiving a nearly ten billion dollar

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Speaker 2: loan from Biden's Department of Energy at the end of

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Speaker 2: last year, Blue Oville began producing batteries for Ford's F

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Speaker 2: one fifty lightning pickup truck in August and so to.

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Speaker 3: Us, it was incredible first to secure Blue Level, and

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Speaker 3: that has two plants Kentucky one US up and operating

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Speaker 3: already over fourteen hundred employees. Kentucky two. They are fully constructing.

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Speaker 3: The only question is when it will go into operation.

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Speaker 3: And what that's done is brought in billions of dollars

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Speaker 3: of additional investment a supply chain that doesn't currently exist.

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Speaker 2: But since Trump was sworn in, the battery plant has

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Speaker 2: been facing headwinds. I made a broader rollback in green energy,

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Speaker 2: and the federal EV tax credit expired in September and

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Speaker 2: demand for electric vehicles has been slowing. That's affected demand

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Speaker 2: for Blue OVAL's batteries.

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Speaker 1: It is sort of facing uncertainty because it was meant

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Speaker 1: to build batteries for the F one fifty Lightning Fords

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Speaker 1: electric truck. Demand for that has just not been anywhere

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Speaker 1: near where Ford thought it would be.

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Speaker 2: Ford lost about five billion dollars on its EV business

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Speaker 2: last year, and the companies said it could lose even

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Speaker 2: more this year. Meanwhile, Trump's immigration policies are also ratcheting

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Speaker 2: up uncertainty for the Blue Oval project. In September, ICE

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Speaker 2: officials rated a Hyundai battery plant in Georgia. They arrested

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Speaker 2: four hundred and seventy five people. Mostly South Korean immigrants.

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Speaker 1: And so the big question right now is what impact

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Speaker 1: does that Georgia rad have on every other Korean project

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Speaker 1: in the country, including the Blue Oval joint venture in Louisville,

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Speaker 1: including other South Korean projects in Kentucky and future projects.

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Speaker 2: There's a potential chilling effect, chilling effect.

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Speaker 1: It is a huge diplomatic crisis. Hanging in the balance

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Speaker 1: of all this is President Trump's trade deal with Korea.

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Speaker 1: It's tariffs and it's immigration, it's investment, and it's trade.

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Speaker 1: I mean, it's all kind of one story.

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Speaker 2: Despite these challenges, Josh says, Ford is committed to building

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Speaker 2: its EV business in Kentucky. It's spending two billion dollars

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Speaker 2: to build budget electric cars at its Louisville plant. And

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Speaker 2: as for the Kentucky governor, his faith in the industry

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Speaker 2: hasn't been shaken.

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Speaker 3: What you see is Ford, and what I see is

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Speaker 3: every other major manufacturer is still continuing to make EV investments.

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Speaker 3: A lot of people have tried to fight the future,

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Speaker 3: and no one's ever won. EV's are where the world

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Speaker 3: is going in terms of automotive The question is the

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Speaker 3: pace or speed at which it moves. In Kentucky, we

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Speaker 3: also know what happens if you aren't on the forefront

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Speaker 3: of change in an industry. I will not let that

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Speaker 3: happen in the automotive sector.

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Speaker 2: Bashir is a Democrat who's betting the farm on EV's

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Speaker 2: Perhaps it's not surprising to hear him critique Trump's protectionist,

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Speaker 2: oil and gas heavy economic agenda, but Bashir told Josh

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Speaker 2: that when the economic consequences of these policies start to

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Speaker 2: hit Kentucky, he believes both Democrats and Republicans will feel them.

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Speaker 1: Democrats, including Governor Vasheer, are still trying to figure out

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Speaker 1: how to talk about the terror question, in part because

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Speaker 1: it's not totally clear where their own party will land,

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Speaker 1: in part because consumers aren't really yet totally seeing it

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Speaker 1: in the sticker shock. They still see the inflationary numbers

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Speaker 1: that they've been dealing with for years, and they assume

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Speaker 1: the prices are just stayed high. But that sticker shock

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Speaker 1: is going to come, and I think then we'll see

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Speaker 1: Democrats wrap up their messaging on it.

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Speaker 3: I don't think you'd find many voters in America who

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Speaker 3: said that they went to the polls and voted because

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Speaker 3: of tariffs.

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Speaker 1: What he told them was he was going to.

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Speaker 3: Make paying bills at the end of the month a

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Speaker 3: little bit easier, but he's governed in any way. But

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Speaker 3: what he promised.

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Speaker 1: Trump is already declaring victory, saying we're not seeing inflation

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Speaker 1: yet so many people, including Governor Bashir, but other industries

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Speaker 1: and companies are saying it's just not there yet because

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Speaker 1: the tariffs are changing so frequently, the companies haven't decided

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Speaker 1: what to do yet, but that eventually some or all

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Speaker 1: of that is going to get passed on to the consumer,

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Speaker 1: and that's when this is, I think, going to become

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Speaker 1: more of a potent political issue.

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Speaker 2: This is The Big Take from Bloomberg News. I'm Sarah Holder.

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Speaker 2: To get more from The Big Take and unlimited access

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Speaker 2: to all of Bloomberg dot com, subscribe today at Bloomberg

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Speaker 2: make sure to follow and review The Big Take wherever

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Speaker 2: you listen to podcasts. It helps people find the show.

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Speaker 2: Thanks for listening. We'll be back tomorrow.