1 00:00:00,080 --> 00:00:10,119 Speaker 1: Bloomberg Audio Studios, Podcasts, radio news. You're listening to the 2 00:00:10,119 --> 00:00:13,880 Speaker 1: Bloomberg Balance of Power podcast. Catch us live weekdays at 3 00:00:13,920 --> 00:00:17,119 Speaker 1: noon and five pm Eastern on Apple Coarclay and Android 4 00:00:17,160 --> 00:00:20,520 Speaker 1: Auto with the Bloomberg Business App. Listen on demand wherever 5 00:00:20,600 --> 00:00:25,040 Speaker 1: you get your podcasts, or watch us live on YouTube. 6 00:00:25,280 --> 00:00:27,720 Speaker 2: Joe Matthew adied alongside Kaylee Lions as we bring you 7 00:00:27,760 --> 00:00:31,520 Speaker 2: a slightly different series of conversations today sticking in New York, 8 00:00:31,880 --> 00:00:35,160 Speaker 2: and a great pleasure to bring in our colleague Matt Miller, 9 00:00:35,200 --> 00:00:37,920 Speaker 2: who sits down with the chief financial Officer Executive vice 10 00:00:37,960 --> 00:00:39,680 Speaker 2: president of General Motors. 11 00:00:39,720 --> 00:00:42,760 Speaker 3: Matt take it away, Yeah, Joe, Kayley, thanks very much. 12 00:00:42,840 --> 00:00:45,120 Speaker 3: And I also have to say it's great to be 13 00:00:45,320 --> 00:00:47,839 Speaker 3: on my favorite show on Bloomberg TV. So I watch 14 00:00:47,920 --> 00:00:50,040 Speaker 3: Bounds of Power every day and it's really cool to 15 00:00:50,080 --> 00:00:53,240 Speaker 3: take part in it. Paul, we're talking to you. I'm 16 00:00:53,520 --> 00:00:56,600 Speaker 3: normally focused on automaking as a business. It's now very 17 00:00:56,640 --> 00:00:59,160 Speaker 3: close closely related to the kind of stuff that Joe 18 00:00:59,160 --> 00:01:02,440 Speaker 3: and Kayley talk about every day. Because of the tariffs. 19 00:01:02,800 --> 00:01:05,480 Speaker 3: You've announced a four billion dollar investment or plans to 20 00:01:05,520 --> 00:01:07,600 Speaker 3: invest four billion dollars over the next two years bringing 21 00:01:07,680 --> 00:01:10,479 Speaker 3: production back to America. This is essentially what Donald Trump 22 00:01:10,959 --> 00:01:13,640 Speaker 3: is pushing for. This is what he wants companies to do, 23 00:01:14,319 --> 00:01:16,959 Speaker 3: and now you're actually making it work. How much is 24 00:01:17,000 --> 00:01:21,800 Speaker 3: this going to offset the five billion dollars worth of 25 00:01:21,880 --> 00:01:25,080 Speaker 3: hits GM is expected to take from the tariffs. 26 00:01:25,200 --> 00:01:27,039 Speaker 4: Well, Matt, first of all, thanks for having us. I 27 00:01:27,040 --> 00:01:29,720 Speaker 4: think you know this announcement that we made is worth 28 00:01:29,840 --> 00:01:31,760 Speaker 4: much more than just the tariff side of it. At 29 00:01:31,800 --> 00:01:34,480 Speaker 4: tariffs are obviously a piece of it. Is We're reacting 30 00:01:34,520 --> 00:01:36,520 Speaker 4: to the new dynamic that's going to be out there, 31 00:01:37,080 --> 00:01:39,320 Speaker 4: and it'll offset a good bit of it. So we'll 32 00:01:39,360 --> 00:01:41,840 Speaker 4: move about three hundred thousand units of production. Some of 33 00:01:41,880 --> 00:01:44,480 Speaker 4: it is new production and incremental some of it is 34 00:01:44,520 --> 00:01:48,440 Speaker 4: a shift but re optimizing our manufacturing footprint and taking 35 00:01:48,480 --> 00:01:51,920 Speaker 4: advantage of some underutilized capacity in the US. But it's 36 00:01:51,960 --> 00:01:54,600 Speaker 4: also about, you know, creating security for our people. You 37 00:01:54,600 --> 00:01:57,120 Speaker 4: look at the orient plant, we would tailor that to 38 00:01:57,720 --> 00:02:01,080 Speaker 4: produce and scale. EV's really fast. The market is obviously 39 00:02:01,160 --> 00:02:03,680 Speaker 4: changed and pivoted a little bit. This gives us an 40 00:02:03,680 --> 00:02:08,440 Speaker 4: opportunity to reallocate that plant better utilize it for internal 41 00:02:08,440 --> 00:02:11,560 Speaker 4: combustion engines. On trucks and full size SUVs where we 42 00:02:11,639 --> 00:02:14,040 Speaker 4: know the demand is really strong for them, and that's 43 00:02:14,080 --> 00:02:17,400 Speaker 4: great for our utilization, our efficiency as well as for 44 00:02:17,440 --> 00:02:20,480 Speaker 4: our consumers and our and our people as well. So 45 00:02:20,520 --> 00:02:23,280 Speaker 4: it's about more than just tariffs. But with this will 46 00:02:23,320 --> 00:02:26,480 Speaker 4: be about two million vehicles produced in the US for 47 00:02:26,600 --> 00:02:28,880 Speaker 4: the US and we're continuing to make those investments. 48 00:02:29,080 --> 00:02:33,160 Speaker 3: I bought Silverado z R two a couple of years ago. 49 00:02:33,240 --> 00:02:35,680 Speaker 3: Mine came out of Mexico. You're going to be moving 50 00:02:36,000 --> 00:02:38,120 Speaker 3: most of that production, I guess to the US, right, 51 00:02:38,200 --> 00:02:41,440 Speaker 3: most Sierra production to the US. Equinox production does that 52 00:02:41,440 --> 00:02:42,440 Speaker 3: come mostly the US? 53 00:02:42,480 --> 00:02:42,600 Speaker 5: Too? 54 00:02:42,680 --> 00:02:45,000 Speaker 3: What are we seeing in terms of the models that are. 55 00:02:45,000 --> 00:02:47,440 Speaker 4: Swelling out of miss Yeah, we'll have Equinox ice production 56 00:02:47,800 --> 00:02:52,560 Speaker 4: in spring Hill, I'm sorry in Fairfax. Spring Hill is 57 00:02:52,560 --> 00:02:54,880 Speaker 4: going to be the Blazer. But Fairfax is going to 58 00:02:54,880 --> 00:02:56,880 Speaker 4: be another great implementation of where we're going to be 59 00:02:56,880 --> 00:03:00,720 Speaker 4: able to produce ice and evs on the same production line, 60 00:03:00,760 --> 00:03:03,720 Speaker 4: creating that flexibility for us to be able to respond 61 00:03:03,800 --> 00:03:06,160 Speaker 4: to consumer demand as it continues to grow. 62 00:03:06,200 --> 00:03:08,600 Speaker 3: Have you changed sourcing for any of the parts, because 63 00:03:08,600 --> 00:03:10,840 Speaker 3: it's not obviously just about the final assembly. 64 00:03:10,880 --> 00:03:12,480 Speaker 6: With these vehicles. 65 00:03:12,520 --> 00:03:16,720 Speaker 3: There's a ton of content and you want to have 66 00:03:16,760 --> 00:03:19,960 Speaker 3: that I guess as much domestically sourced as possible as 67 00:03:19,960 --> 00:03:21,040 Speaker 3: well to save on costs. 68 00:03:21,120 --> 00:03:23,160 Speaker 4: Well, I think you know, with what the administration is 69 00:03:23,200 --> 00:03:25,880 Speaker 4: set up here with the MSRP offsets, is giving us 70 00:03:25,919 --> 00:03:30,240 Speaker 4: time to help retool our supply chain, so incentivizing growth 71 00:03:30,240 --> 00:03:34,000 Speaker 4: and production in the US. Recognizing that the supply chain 72 00:03:34,040 --> 00:03:35,960 Speaker 4: takes time to shift. So we're going to continue to 73 00:03:36,000 --> 00:03:38,600 Speaker 4: work with our supply base to try to maximize the 74 00:03:38,600 --> 00:03:43,000 Speaker 4: efficiencies across the entire value chain and utilize those offsets 75 00:03:43,000 --> 00:03:45,080 Speaker 4: where we need to and shift production where it makes 76 00:03:45,080 --> 00:03:46,400 Speaker 4: sense and where we're able to. 77 00:03:46,720 --> 00:03:49,880 Speaker 3: I should say, to save on tariff costs because you 78 00:03:49,920 --> 00:03:52,320 Speaker 3: obviously source a lot of these parts outside of the US, 79 00:03:52,880 --> 00:03:57,080 Speaker 3: because the actual production costs are lower. How much higher 80 00:03:57,200 --> 00:04:00,840 Speaker 3: is it how much more expensive is it toled a 81 00:04:00,920 --> 00:04:04,520 Speaker 3: part like an engine or a transmission to assemble a 82 00:04:04,760 --> 00:04:07,480 Speaker 3: truck in the US than it is, say in Mexico. 83 00:04:07,680 --> 00:04:10,240 Speaker 4: Well, it's far more complex than that, Matt, because I 84 00:04:10,240 --> 00:04:14,080 Speaker 4: mean there's obviously the hourly labor differential, and that's a 85 00:04:14,120 --> 00:04:16,760 Speaker 4: big piece of it. But we can save money and logistics, 86 00:04:16,760 --> 00:04:20,400 Speaker 4: we can save money and plant utilization and filling up capacity. 87 00:04:20,480 --> 00:04:22,479 Speaker 4: So when you when you fill up a plan, it 88 00:04:22,560 --> 00:04:25,239 Speaker 4: actually makes it more efficient for every vehicle out there, 89 00:04:25,279 --> 00:04:28,240 Speaker 4: not just the ones that you're moving production into. So 90 00:04:28,360 --> 00:04:30,800 Speaker 4: we look at that as an enterprise wide calculation and 91 00:04:30,880 --> 00:04:34,359 Speaker 4: think we can get to an equivalency where ultimately we 92 00:04:34,400 --> 00:04:36,960 Speaker 4: can be competitive with producing in the US as well. 93 00:04:37,160 --> 00:04:40,640 Speaker 3: One of the things that you can produce fewer of 94 00:04:40,680 --> 00:04:43,440 Speaker 3: in the US is magnets, the rare earth minerals that 95 00:04:43,440 --> 00:04:46,080 Speaker 3: we've all learned much more about than we ever expected 96 00:04:46,120 --> 00:04:48,440 Speaker 3: to in the last week or so. How is your 97 00:04:48,520 --> 00:04:52,160 Speaker 3: access to those rare earths right now? Because there's concern 98 00:04:52,320 --> 00:04:56,799 Speaker 3: that production and a lot of US factories could. 99 00:04:56,640 --> 00:05:00,880 Speaker 4: Slow Yeah, we haven't experienced any slow down as of yet. 100 00:05:00,960 --> 00:05:04,159 Speaker 4: It's clearly a risk that everybody is watching from that standpoint. 101 00:05:04,160 --> 00:05:05,920 Speaker 4: But what I would say is our supply chain team 102 00:05:05,960 --> 00:05:09,000 Speaker 4: does an excellent job. Similar to what they did through 103 00:05:09,040 --> 00:05:12,880 Speaker 4: the supply the chip crisis semiconductor shortage that we had 104 00:05:12,880 --> 00:05:15,039 Speaker 4: a few years ago. Our team did a great job 105 00:05:15,080 --> 00:05:19,000 Speaker 4: of responding, maintaining agility, working with our suppliers to try 106 00:05:19,000 --> 00:05:21,840 Speaker 4: to balance production as best we can, and they've done 107 00:05:21,839 --> 00:05:24,960 Speaker 4: a great job so far with this situation as well? 108 00:05:25,360 --> 00:05:28,359 Speaker 3: What is your thought on any kind of vertical integration. 109 00:05:28,440 --> 00:05:30,359 Speaker 3: I mean, the concern or the problem I guess with 110 00:05:31,120 --> 00:05:35,840 Speaker 3: rarest isn't just the mining, but also the refining of 111 00:05:35,880 --> 00:05:38,760 Speaker 3: them is mostly done in China. Have you tried to 112 00:05:38,839 --> 00:05:40,839 Speaker 3: convince suppliers to do more of that here? Are you 113 00:05:40,880 --> 00:05:42,840 Speaker 3: trying to get your own supply here? 114 00:05:43,360 --> 00:05:46,039 Speaker 4: We've done a number of initiatives, whether it's with Lithium 115 00:05:46,080 --> 00:05:49,760 Speaker 4: Americas or a joint venture with PASCO, around a lot 116 00:05:49,760 --> 00:05:53,080 Speaker 4: of battery raw materials, particularly the lithium side, which is 117 00:05:53,480 --> 00:05:55,800 Speaker 4: a little bit easier to do and a little bit 118 00:05:55,880 --> 00:05:58,760 Speaker 4: less capital intensive. But we've helped fund that, We've taken 119 00:05:58,839 --> 00:06:02,599 Speaker 4: equity positions, we've helped to fund products and projects across 120 00:06:02,640 --> 00:06:04,960 Speaker 4: the board. But we've been working on this for a 121 00:06:05,000 --> 00:06:07,640 Speaker 4: long time, really since covid is trying to increase the 122 00:06:07,680 --> 00:06:10,839 Speaker 4: resiliency of our supply chain, both you know, from a 123 00:06:10,880 --> 00:06:15,040 Speaker 4: pandemic from just a de risking perspective, and we're in 124 00:06:15,080 --> 00:06:17,400 Speaker 4: a pretty good situation with where we are. We still 125 00:06:17,440 --> 00:06:19,440 Speaker 4: have some work to do, but there's a lot of 126 00:06:19,520 --> 00:06:22,360 Speaker 4: things that we can do. Thinking creatively with our partners, what. 127 00:06:22,240 --> 00:06:25,440 Speaker 3: Are you thinking about prices right now. You obviously raise 128 00:06:25,520 --> 00:06:30,640 Speaker 3: prices on a regular basis. Right if we're not experiencing deflation, 129 00:06:30,800 --> 00:06:33,800 Speaker 3: you're going to try and stick. 130 00:06:33,520 --> 00:06:34,000 Speaker 5: With the pack. 131 00:06:34,040 --> 00:06:36,560 Speaker 3: There are you facing pushback from consumers when you try 132 00:06:36,600 --> 00:06:37,360 Speaker 3: and raise prices. 133 00:06:37,600 --> 00:06:40,640 Speaker 4: Well, you know, our portfolio has performed really, really well, 134 00:06:40,680 --> 00:06:43,719 Speaker 4: and we've adopted a strategy of being very disciplined in 135 00:06:43,760 --> 00:06:47,279 Speaker 4: our production, not over producing like some of the challenges 136 00:06:47,279 --> 00:06:49,720 Speaker 4: of the past, and that's a strategy that's worked for us. 137 00:06:49,760 --> 00:06:52,479 Speaker 4: We announced on our earnings call about six weeks ago 138 00:06:52,600 --> 00:06:54,880 Speaker 4: that we don't need to take any price to help 139 00:06:54,960 --> 00:06:58,440 Speaker 4: with the offset initiatives that we've targeted going forward, because 140 00:06:58,480 --> 00:07:00,560 Speaker 4: we want to be in the position where we're responding 141 00:07:00,600 --> 00:07:03,479 Speaker 4: to demand from our customers and being more stable. We 142 00:07:03,520 --> 00:07:06,200 Speaker 4: don't want to raise prices because of tariffs, and then 143 00:07:06,279 --> 00:07:09,080 Speaker 4: when tariffs come down, expect that prices are going to 144 00:07:09,120 --> 00:07:11,080 Speaker 4: come back down. We want to be more consistent with 145 00:07:11,160 --> 00:07:13,400 Speaker 4: our customer base, and that's a strategy that's worked really 146 00:07:13,400 --> 00:07:14,040 Speaker 4: well for us. 147 00:07:14,880 --> 00:07:16,840 Speaker 3: Can you do it in other ways? To MSRP, I 148 00:07:16,880 --> 00:07:20,760 Speaker 3: mean some manufacturers are raising maybe delivery price, you can 149 00:07:20,760 --> 00:07:23,600 Speaker 3: also raise the price of options packages and still keep 150 00:07:24,120 --> 00:07:24,920 Speaker 3: MSRP level. 151 00:07:25,200 --> 00:07:29,080 Speaker 4: Well, again, we haven't done anything specific to respond to tariffs. 152 00:07:29,360 --> 00:07:33,160 Speaker 4: We've looked at where packages are for options, where our 153 00:07:33,280 --> 00:07:37,000 Speaker 4: logistics costs are, etc. And we try to price what 154 00:07:37,040 --> 00:07:40,320 Speaker 4: we can. But that's irrespective of tariffs, and it's something 155 00:07:40,360 --> 00:07:42,600 Speaker 4: that we've done. I think when you look at our 156 00:07:42,640 --> 00:07:45,000 Speaker 4: pricing model over the last few years, it's been more 157 00:07:45,040 --> 00:07:49,440 Speaker 4: consistent than many of our competitors, with less volatility and discounting, 158 00:07:49,440 --> 00:07:51,400 Speaker 4: and that's good for our customers as well. So we're 159 00:07:51,400 --> 00:07:55,000 Speaker 4: going to continue to do that across the board where 160 00:07:55,000 --> 00:07:57,120 Speaker 4: we can and make sure that we're delivering value for 161 00:07:57,160 --> 00:07:57,800 Speaker 4: our customers. 162 00:07:58,120 --> 00:08:00,760 Speaker 3: The being counters at Bloueberg and eligence to want me 163 00:08:00,800 --> 00:08:03,240 Speaker 3: to ask questions about cash flow here and how that 164 00:08:03,320 --> 00:08:07,560 Speaker 3: looks right now with the tariff effect. You've had obviously 165 00:08:08,160 --> 00:08:11,160 Speaker 3: great sales, as I guess some demand is pulled forward. 166 00:08:12,000 --> 00:08:13,920 Speaker 3: Do you have to divert some cash though to deal 167 00:08:13,920 --> 00:08:15,080 Speaker 3: with teriffs from anything else? 168 00:08:15,280 --> 00:08:17,920 Speaker 4: Well, I mean, clearly, in the short and intermediate term, 169 00:08:18,400 --> 00:08:20,720 Speaker 4: tariffs are going to be a drain on our cash flow. 170 00:08:20,760 --> 00:08:23,920 Speaker 4: We announced about four to five billion dollars of impact 171 00:08:24,000 --> 00:08:26,040 Speaker 4: this year and we think we can offset about thirty 172 00:08:26,040 --> 00:08:28,400 Speaker 4: percent of it going forward, but that is going to 173 00:08:28,400 --> 00:08:29,920 Speaker 4: be a cash hit. Now. When you look at the 174 00:08:29,960 --> 00:08:33,079 Speaker 4: performance of the company, our cash flow generation has been 175 00:08:33,120 --> 00:08:36,880 Speaker 4: really strong. It'll continue to be really strong even after 176 00:08:36,920 --> 00:08:38,719 Speaker 4: the tariffs, and we're going to work to continue to 177 00:08:38,800 --> 00:08:42,000 Speaker 4: drive that efficiency. But we've got to create that stable 178 00:08:42,080 --> 00:08:44,160 Speaker 4: cash flow across the board because this is still a 179 00:08:44,200 --> 00:08:47,200 Speaker 4: cyclical industry and we need to be able to absorb 180 00:08:47,280 --> 00:08:49,040 Speaker 4: these shocks. And I think the team's done a really 181 00:08:49,080 --> 00:08:52,040 Speaker 4: good job of managing and being disciplined in order to 182 00:08:52,080 --> 00:08:54,520 Speaker 4: continue to drive strong cash flow even in the face 183 00:08:54,559 --> 00:08:57,040 Speaker 4: of some of these short to intermediate term hits. 184 00:08:57,120 --> 00:09:00,600 Speaker 3: What are you expecting in terms of SAR because we've 185 00:09:00,640 --> 00:09:04,240 Speaker 3: had pretty strong sales numbers over the past couple of months. 186 00:09:04,280 --> 00:09:07,440 Speaker 3: I think upwards of seventeen point three million. Does that 187 00:09:07,480 --> 00:09:08,760 Speaker 3: continue through the rest of the year. 188 00:09:09,000 --> 00:09:11,439 Speaker 4: No, we don't expect it to. We would love to 189 00:09:11,480 --> 00:09:15,160 Speaker 4: see that happen. But what we said about six weeks 190 00:09:15,160 --> 00:09:17,360 Speaker 4: ago is we're planning for a year of about sixteen 191 00:09:17,400 --> 00:09:20,560 Speaker 4: million units, which is similar to last year. In April 192 00:09:20,640 --> 00:09:22,640 Speaker 4: and the first half of May, we were trending much 193 00:09:22,640 --> 00:09:25,240 Speaker 4: closer to eighteen million as we saw a lot of 194 00:09:25,280 --> 00:09:28,160 Speaker 4: customers trying to get ahead of what they expected to 195 00:09:28,200 --> 00:09:30,760 Speaker 4: be price increases. We've seen that come out over the 196 00:09:30,800 --> 00:09:33,280 Speaker 4: last couple of weeks, but it's really retreated back to 197 00:09:33,320 --> 00:09:36,400 Speaker 4: where it was before that pool ahead demand. So we're 198 00:09:36,480 --> 00:09:40,760 Speaker 4: encouraged by the fact that that consistent demand is still 199 00:09:40,840 --> 00:09:43,120 Speaker 4: there and that's going to be important for us as 200 00:09:43,160 --> 00:09:46,240 Speaker 4: we continue to push forward. But if we see a slowdown, 201 00:09:46,280 --> 00:09:48,040 Speaker 4: we'll have to adjust to it and make sure that 202 00:09:48,080 --> 00:09:51,480 Speaker 4: we create that agility that we have really come to 203 00:09:51,520 --> 00:09:53,800 Speaker 4: be known for over the last few years. But right now, 204 00:09:54,040 --> 00:09:56,880 Speaker 4: the customer seems pretty stable. Even though we've seen that 205 00:09:56,880 --> 00:09:58,120 Speaker 4: pool ahead demand come out. 206 00:09:58,280 --> 00:10:02,440 Speaker 3: You've had the best margins of the big three enjoyed 207 00:10:02,440 --> 00:10:04,960 Speaker 3: I think eight and a half percent margins are thereabouts. 208 00:10:05,160 --> 00:10:07,880 Speaker 3: Does it hang at that level through twenty twenty five. 209 00:10:08,120 --> 00:10:10,319 Speaker 4: Well, obviously the tariffs are going to be an operating 210 00:10:10,400 --> 00:10:13,920 Speaker 4: hit to us going forward, which is why we're focused 211 00:10:13,920 --> 00:10:16,520 Speaker 4: on making sure we take actions quickly. There were a 212 00:10:16,600 --> 00:10:19,800 Speaker 4: number of actions that we already took, we called them 213 00:10:19,840 --> 00:10:23,480 Speaker 4: no regrets actions, where we increased the line rate in 214 00:10:23,559 --> 00:10:26,040 Speaker 4: Fort Wayne to build more trucks in the US, et cetera. 215 00:10:26,880 --> 00:10:30,680 Speaker 4: Here we're taking the next step of deploying capital to 216 00:10:30,800 --> 00:10:33,520 Speaker 4: increase that production. These are steps that we think are 217 00:10:33,679 --> 00:10:35,960 Speaker 4: necessary for us for the long term to be able 218 00:10:35,960 --> 00:10:38,480 Speaker 4: to drive that type of consistent margin performance that we 219 00:10:38,520 --> 00:10:39,240 Speaker 4: want to be known for. 220 00:10:39,640 --> 00:10:42,000 Speaker 3: I want to ask about the shares as well as 221 00:10:42,040 --> 00:10:45,560 Speaker 3: your free float. It's gotten pretty small. How much further 222 00:10:45,640 --> 00:10:47,120 Speaker 3: can you go with buybacks? 223 00:10:47,360 --> 00:10:49,760 Speaker 4: Well, I mean, we're going to continue to follow our 224 00:10:49,800 --> 00:10:52,760 Speaker 4: discipline capital allocation policy. The first thing we do is 225 00:10:52,760 --> 00:10:55,720 Speaker 4: reinvest in the business. That's a capital budget of about 226 00:10:55,760 --> 00:10:58,520 Speaker 4: ten to eleven billion dollars. We just announced last night 227 00:10:58,800 --> 00:11:01,120 Speaker 4: that that'll be ten to twelve billion dollars for twenty 228 00:11:01,160 --> 00:11:04,120 Speaker 4: six and twenty seven, reflecting a little bit of additional 229 00:11:04,160 --> 00:11:07,120 Speaker 4: spend for what we're doing. The second is we prioritize 230 00:11:07,120 --> 00:11:09,160 Speaker 4: the balance sheet. The balance sheet's been as strong as 231 00:11:09,160 --> 00:11:13,480 Speaker 4: it's been in decades, with a pension fund that's nearly 232 00:11:13,520 --> 00:11:16,600 Speaker 4: fully funded and debt that's very manageable. And then the 233 00:11:16,640 --> 00:11:19,319 Speaker 4: third leg of that still was returning cash to shareholders. 234 00:11:19,320 --> 00:11:21,720 Speaker 4: So we reinstated the dividend a couple of years ago, 235 00:11:22,040 --> 00:11:24,800 Speaker 4: and we've been deploying that cash to return to our 236 00:11:24,840 --> 00:11:28,400 Speaker 4: shareholders to make sure that all the constituencies benefit from 237 00:11:28,400 --> 00:11:31,679 Speaker 4: the success that we've been having our employees, our customers, 238 00:11:32,200 --> 00:11:33,160 Speaker 4: and our shareholders. 239 00:11:33,280 --> 00:11:35,240 Speaker 3: Paul's been great having some time with you. Thanks so much, 240 00:11:35,280 --> 00:11:37,240 Speaker 3: Thank you so much joining us here at seven thirty 241 00:11:37,240 --> 00:11:39,920 Speaker 3: one Lex with that, Joe and Haley, I'll toss it 242 00:11:39,960 --> 00:11:41,000 Speaker 3: back to you in Washington. 243 00:11:42,160 --> 00:11:45,640 Speaker 7: All right, Bloomberg's Matt Miller, thank you so much. Great 244 00:11:45,640 --> 00:11:47,840 Speaker 7: to have you here on Balance of Power. We appreciate 245 00:11:48,160 --> 00:11:50,560 Speaker 7: Mats interview and his fandom of the show. He of 246 00:11:50,559 --> 00:11:54,280 Speaker 7: course joined there by Paul Jacobson, the CFO of General Motors. 247 00:11:56,440 --> 00:11:59,840 Speaker 1: You're listening to the Bloomberg Balance of Power podcast. Catch 248 00:11:59,880 --> 00:12:03,040 Speaker 1: up live weekdays at noon and five pm Eastern on 249 00:12:03,160 --> 00:12:06,400 Speaker 1: Apple Cockley and Android Auto with the Bloomberg Business App. 250 00:12:06,440 --> 00:12:09,400 Speaker 1: You can also listen live on Amazon Alexa from our 251 00:12:09,480 --> 00:12:14,360 Speaker 1: flagship New York station, Just Say Alexa played Bloomberg eleven thirty. 252 00:12:15,600 --> 00:12:18,320 Speaker 7: Four billion dollars that the automaker is planning to invest 253 00:12:18,320 --> 00:12:21,880 Speaker 7: in its US plants over the next two years, investments 254 00:12:21,920 --> 00:12:26,200 Speaker 7: that will expand factories in Kansas, Tennessee, and in Michigan, 255 00:12:26,280 --> 00:12:29,520 Speaker 7: specifically in Lake Orion, Michigan, which happens to fall in 256 00:12:29,559 --> 00:12:32,760 Speaker 7: the congressional district of Republican Congressoman Lisa McLay in, the 257 00:12:32,840 --> 00:12:35,200 Speaker 7: chair of the House Republican Conference, who is joining us 258 00:12:35,200 --> 00:12:38,680 Speaker 7: now live from Capitol Hill on Bloomberg TV and Radio. 259 00:12:40,160 --> 00:12:42,640 Speaker 7: Chairman McLain, we appreciate your time. When we consider that 260 00:12:42,720 --> 00:12:46,160 Speaker 7: GM says that these investments in aggregate will add between 261 00:12:46,200 --> 00:12:49,720 Speaker 7: three thousand and four thousand US jobs. How many of 262 00:12:49,760 --> 00:12:52,520 Speaker 7: those are you expecting to be at home in your district? 263 00:12:53,480 --> 00:12:57,360 Speaker 8: Just a little over twenty three hundred jobs for Lake Orion. 264 00:12:58,120 --> 00:13:00,880 Speaker 6: It is a huge investment for the community. 265 00:13:01,559 --> 00:13:05,640 Speaker 8: We are extremely excited and the economic impact that it's 266 00:13:05,679 --> 00:13:08,559 Speaker 8: going to have is obvious, right, not just with the 267 00:13:08,640 --> 00:13:12,200 Speaker 8: Lake Orient plant, but with the coffee shops and the 268 00:13:12,240 --> 00:13:15,240 Speaker 8: new homes and all the money going back into the 269 00:13:15,400 --> 00:13:19,000 Speaker 8: economy in Lake Orient. Huge, but also it provides a 270 00:13:19,040 --> 00:13:22,480 Speaker 8: lot of hope for our community in my district. And 271 00:13:22,880 --> 00:13:25,320 Speaker 8: if I can just say, this isn't just another example 272 00:13:25,400 --> 00:13:29,640 Speaker 8: of President Trump promises made, promises kept. He told you 273 00:13:29,760 --> 00:13:32,680 Speaker 8: he was going to bring manufacturing back to America and 274 00:13:32,760 --> 00:13:35,920 Speaker 8: jobs back to America, and thank you for bringing it 275 00:13:36,000 --> 00:13:38,480 Speaker 8: back to my home state and my district in Lake Orion. 276 00:13:38,520 --> 00:13:39,480 Speaker 8: So we're very excited. 277 00:13:40,760 --> 00:13:42,800 Speaker 2: Well, it's great to have you back, Congressom and thanks 278 00:13:42,800 --> 00:13:44,280 Speaker 2: for your patients. I know you were listening to that 279 00:13:44,920 --> 00:13:47,439 Speaker 2: interview with the CFO at General Motors, and I want 280 00:13:47,480 --> 00:13:49,880 Speaker 2: to just go a bit further into the labor picture 281 00:13:49,920 --> 00:13:52,760 Speaker 2: here before we ask you some other questions about this. 282 00:13:52,800 --> 00:13:56,200 Speaker 2: Michigan has an unemployment rate of five point five percent, 283 00:13:56,320 --> 00:13:58,400 Speaker 2: and I wonder if you have the labor pool now, 284 00:13:58,440 --> 00:14:02,520 Speaker 2: if this will require training or there are unemployed workers 285 00:14:02,600 --> 00:14:05,040 Speaker 2: from the business who can move right into these positions. 286 00:14:05,880 --> 00:14:08,160 Speaker 6: I think it's going to be a combination of both. 287 00:14:08,400 --> 00:14:12,360 Speaker 8: And I haven't seen all the details yet, meaning you know, 288 00:14:12,400 --> 00:14:14,240 Speaker 8: I don't think there's going to be twenty three hundred 289 00:14:14,360 --> 00:14:16,559 Speaker 8: jobs that start tomorrow afternoon, So. 290 00:14:16,520 --> 00:14:17,840 Speaker 6: I think it's going to be a combination. 291 00:14:18,280 --> 00:14:20,840 Speaker 8: I think we have the workforce, but I think we're 292 00:14:20,880 --> 00:14:24,160 Speaker 8: going to have to do some investing and retooling, so 293 00:14:24,280 --> 00:14:29,200 Speaker 8: to speak, on training of these jobs. But Michiganers are resilient. 294 00:14:29,320 --> 00:14:31,720 Speaker 8: We have a good partner with GM, we have a 295 00:14:31,760 --> 00:14:34,880 Speaker 8: good partner with the local officials in the local community 296 00:14:34,880 --> 00:14:37,600 Speaker 8: of Lake Orion that we're going to be able to 297 00:14:37,680 --> 00:14:40,680 Speaker 8: get this done. To make sure that we can get 298 00:14:40,680 --> 00:14:42,920 Speaker 8: the plant up and running as soon as possible with 299 00:14:43,000 --> 00:14:44,280 Speaker 8: skilled workers. 300 00:14:45,360 --> 00:14:47,360 Speaker 7: Well and for all of the economic benefit that you 301 00:14:47,400 --> 00:14:49,880 Speaker 7: are expecting from this investment. Of course, part of the 302 00:14:49,880 --> 00:14:52,520 Speaker 7: reason companies like GM are looking at more onshoring is 303 00:14:52,560 --> 00:14:55,760 Speaker 7: because of the tariff regime the President has put into place. 304 00:14:55,800 --> 00:14:59,000 Speaker 7: To what extent do you expect the positive economic effects 305 00:14:59,000 --> 00:15:01,320 Speaker 7: of that might be off set by higher costs that 306 00:15:01,320 --> 00:15:03,360 Speaker 7: could result from the said tariffs. 307 00:15:04,120 --> 00:15:07,000 Speaker 8: You know, the said tariffs are exactly what you said, 308 00:15:07,000 --> 00:15:09,200 Speaker 8: the said tariffs, And I know there's a lot of 309 00:15:09,280 --> 00:15:12,400 Speaker 8: uncertainty around right now, but they're not set in stone. 310 00:15:12,840 --> 00:15:15,920 Speaker 8: So I think the tariffs, as I said many times before, 311 00:15:16,520 --> 00:15:21,840 Speaker 8: is a negotiation to tool to renegotiate our trade deals 312 00:15:21,960 --> 00:15:26,240 Speaker 8: and bring manufacturing in jobs back to America. 313 00:15:26,680 --> 00:15:29,600 Speaker 6: So I don't know what the effect is going to be. 314 00:15:29,800 --> 00:15:33,240 Speaker 8: I believe that there could be a possibility that we 315 00:15:33,320 --> 00:15:35,960 Speaker 8: see a reduction in the tariffs. I mean, look at 316 00:15:35,960 --> 00:15:39,040 Speaker 8: the deal that we're just the President just signed with China, 317 00:15:39,120 --> 00:15:41,680 Speaker 8: not to mention the other eighty countries that have come 318 00:15:41,680 --> 00:15:45,840 Speaker 8: to the table to renegotiate trade deals. So I'm optimistic 319 00:15:46,320 --> 00:15:49,920 Speaker 8: that it will offset a lot, but maybe there won't 320 00:15:49,960 --> 00:15:54,080 Speaker 8: even be that much too offset because the tariffs are 321 00:15:54,120 --> 00:15:57,440 Speaker 8: being used effectively as a negotiation tool. 322 00:15:58,520 --> 00:16:00,680 Speaker 2: Yeah, we should note that we are waiting for that deal, 323 00:16:00,720 --> 00:16:03,480 Speaker 2: the framework at least that was announced to be formalized 324 00:16:03,480 --> 00:16:07,640 Speaker 2: and approved by President SI. But I know as well 325 00:16:07,680 --> 00:16:10,520 Speaker 2: that you're crediting President Trump's trade policies here for this 326 00:16:10,600 --> 00:16:13,120 Speaker 2: investment in the shift to the US. We know as 327 00:16:13,120 --> 00:16:15,880 Speaker 2: well that General Motors is confirming that it has no 328 00:16:16,040 --> 00:16:21,200 Speaker 2: plans to produce electric vehicles at the Orient plant. These 329 00:16:21,240 --> 00:16:24,640 Speaker 2: are going to be gas only vehicles following the retooling. 330 00:16:25,040 --> 00:16:29,120 Speaker 2: Is that also a response to President Trump's approach or 331 00:16:29,160 --> 00:16:31,640 Speaker 2: is it a response to customer demand? 332 00:16:32,800 --> 00:16:35,960 Speaker 8: Well, I think you heard the gentleman on before Paul 333 00:16:36,080 --> 00:16:40,480 Speaker 8: say it is a demand, right. I don't know that 334 00:16:40,520 --> 00:16:44,600 Speaker 8: it's as much a retaliation or whatever words you used. 335 00:16:44,600 --> 00:16:47,600 Speaker 8: I think it is more a reflection on the demand 336 00:16:47,760 --> 00:16:51,960 Speaker 8: of what consumers want. President Trump, I don't think cares 337 00:16:52,040 --> 00:16:54,600 Speaker 8: what type of vehicle you drive, whether it's an electric 338 00:16:54,720 --> 00:16:57,920 Speaker 8: vehicle or whether it's a gas powered vehicle. He just 339 00:16:58,000 --> 00:17:01,400 Speaker 8: wants the American people to be able to choose. And 340 00:17:01,440 --> 00:17:05,120 Speaker 8: I think what you see from GM is without those subsidies, 341 00:17:05,160 --> 00:17:09,840 Speaker 8: you're seeing the demand, say from consumers saying, hey, we 342 00:17:10,040 --> 00:17:12,959 Speaker 8: prefer a gas powered vehicle. You can still buy an 343 00:17:12,960 --> 00:17:17,120 Speaker 8: electric vehicle, but the demand is for the ice engines, 344 00:17:17,440 --> 00:17:20,200 Speaker 8: and that's exactly how the free markets are supposed to work. 345 00:17:20,240 --> 00:17:22,000 Speaker 6: Supply and demand should matter. 346 00:17:23,520 --> 00:17:25,880 Speaker 7: Well, we know Elon Musk has had some strong feelings 347 00:17:25,920 --> 00:17:29,560 Speaker 7: around this whole conversation around EV's and those tax credits 348 00:17:29,560 --> 00:17:32,480 Speaker 7: being rolled back, which may have inspired, possibly, or at 349 00:17:32,520 --> 00:17:34,679 Speaker 7: least sped into some of the social media posts we 350 00:17:34,720 --> 00:17:37,360 Speaker 7: saw from him in recent days, posts that he has 351 00:17:37,440 --> 00:17:40,680 Speaker 7: since said went too far. According to his posts from 352 00:17:40,720 --> 00:17:42,920 Speaker 7: earlier today, that he regrets some of the things he said, 353 00:17:42,960 --> 00:17:45,399 Speaker 7: specifically about President Trump and The New York Times just 354 00:17:45,480 --> 00:17:49,200 Speaker 7: reporting Cherwen would claim that Elon Musk did call Trump 355 00:17:49,280 --> 00:17:52,560 Speaker 7: on Monday night before making that I regret post, but 356 00:17:52,640 --> 00:17:55,360 Speaker 7: considering the things in addition to commenting about Donald Trump, 357 00:17:55,400 --> 00:17:57,639 Speaker 7: specifically that he's been railing against her this one big, 358 00:17:57,640 --> 00:18:01,000 Speaker 7: beautiful bill that you have been advocating for vocally. Is 359 00:18:01,040 --> 00:18:03,440 Speaker 7: this an apology that you would accept? Do you think 360 00:18:03,440 --> 00:18:04,160 Speaker 7: the president should? 361 00:18:05,119 --> 00:18:07,120 Speaker 6: Yeah? I think they are. Listen. 362 00:18:07,200 --> 00:18:09,760 Speaker 8: The President is a very smart man, and Elon Musk 363 00:18:09,840 --> 00:18:12,119 Speaker 8: is very smart man. What did we think was going 364 00:18:12,200 --> 00:18:14,480 Speaker 8: to happen when you have the most powerful man in 365 00:18:14,480 --> 00:18:16,639 Speaker 8: the world and one of the richest men in the 366 00:18:16,640 --> 00:18:20,040 Speaker 8: world is I think sometimes your emotions get the best 367 00:18:20,080 --> 00:18:23,719 Speaker 8: of you. And they're both businessmen, they both care about 368 00:18:23,880 --> 00:18:27,800 Speaker 8: the country and doing what's best. So I think this 369 00:18:28,600 --> 00:18:32,000 Speaker 8: will be put to bed rather quickly. And actually it 370 00:18:32,000 --> 00:18:35,160 Speaker 8: has been put to bed rather quickly. So I'm optimistic. 371 00:18:35,280 --> 00:18:38,080 Speaker 8: Let bygones be bygones, and let's focus on what's best 372 00:18:38,080 --> 00:18:39,159 Speaker 8: for the American people. 373 00:18:40,640 --> 00:18:45,040 Speaker 2: Well, does getting over this help passage of the Reconciliation Bill. 374 00:18:45,080 --> 00:18:48,200 Speaker 2: I know it's coming back your way, likely with changes 375 00:18:48,240 --> 00:18:50,240 Speaker 2: in the Senate Congress. So when there were concerns that 376 00:18:50,280 --> 00:18:52,479 Speaker 2: some of the fiscal hawks might have been paying attention 377 00:18:52,520 --> 00:18:53,720 Speaker 2: to Elon Musk urging them to. 378 00:18:53,720 --> 00:18:58,600 Speaker 8: Vote no, yeah, well, I think it doesn't hurt. 379 00:18:59,040 --> 00:18:59,720 Speaker 6: Does it help? 380 00:18:59,800 --> 00:19:02,800 Speaker 8: I think I think every little bit helps, right, And 381 00:19:02,880 --> 00:19:04,520 Speaker 8: at the end of the day, I think we're going 382 00:19:04,600 --> 00:19:06,760 Speaker 8: to get it back. I know the Senate is going 383 00:19:06,800 --> 00:19:09,320 Speaker 8: to put their fingerprints on it. They've already told us 384 00:19:09,320 --> 00:19:12,119 Speaker 8: they're going to put their fingerprints on it. My hope 385 00:19:12,200 --> 00:19:14,800 Speaker 8: is that they don't change it too dramatically because we 386 00:19:14,840 --> 00:19:17,760 Speaker 8: have a very thin margin and We worked for almost 387 00:19:17,760 --> 00:19:21,600 Speaker 8: a year and had our family, family fights, family scrabbles, 388 00:19:21,640 --> 00:19:24,639 Speaker 8: family disagreements on this to put the best, most conservative 389 00:19:24,680 --> 00:19:28,200 Speaker 8: package on the floor. So again I'm optimistic that we'll 390 00:19:28,200 --> 00:19:29,920 Speaker 8: get this done, hopefully by July fourth. 391 00:19:31,440 --> 00:19:34,080 Speaker 7: Well, and when we consider those Senate changes, we understand 392 00:19:34,160 --> 00:19:36,320 Speaker 7: that a Chairman Crapo in the Senate, who leads the 393 00:19:36,320 --> 00:19:39,600 Speaker 7: Finance Committee, of course, is going to be briefing Republican 394 00:19:39,640 --> 00:19:42,760 Speaker 7: senators about the changes he's looking to make this afternoon. 395 00:19:42,800 --> 00:19:45,560 Speaker 7: Which one do you fear most that you've heard rumor 396 00:19:45,640 --> 00:19:49,280 Speaker 7: of that could well diminish the chances of it repassing 397 00:19:49,320 --> 00:19:49,760 Speaker 7: in the House. 398 00:19:50,480 --> 00:19:53,000 Speaker 8: I hope they don't touch salt too much. And the 399 00:19:53,080 --> 00:19:56,240 Speaker 8: reason why I say that is because the Salt Caucus, 400 00:19:56,240 --> 00:19:57,960 Speaker 8: which we have here in the House and they don't 401 00:19:58,000 --> 00:20:01,520 Speaker 8: have in the Senate for obvious reasons, they've been pretty 402 00:20:01,640 --> 00:20:03,720 Speaker 8: dug in. And I'm not here to say they're right, 403 00:20:03,760 --> 00:20:05,960 Speaker 8: I'm not here to say they're wrong, but they've been 404 00:20:06,040 --> 00:20:09,520 Speaker 8: pretty dug in, and that was one of our biggest 405 00:20:09,520 --> 00:20:13,480 Speaker 8: issues in the House that just can't be touched. That 406 00:20:13,520 --> 00:20:16,920 Speaker 8: would be the biggest Yeah, that'll be the biggest problem 407 00:20:16,960 --> 00:20:19,480 Speaker 8: if they touch salt I believe, and medicaid obviously, which 408 00:20:19,480 --> 00:20:20,480 Speaker 8: I don't think they're going to. 409 00:20:21,720 --> 00:20:23,800 Speaker 2: We've got our eyes on the New York, New Jersey, 410 00:20:23,840 --> 00:20:27,359 Speaker 2: California delegations. Congresswoman, it's great to have you, and thanks 411 00:20:27,359 --> 00:20:29,440 Speaker 2: again for being with us live from Capitol Hill. Lisa 412 00:20:29,520 --> 00:20:32,320 Speaker 2: McLean as Chairwoman of the House Republican Conference and a 413 00:20:32,359 --> 00:20:35,800 Speaker 2: great update there, real time information, Kayleie. She picked salt. 414 00:20:35,880 --> 00:20:38,520 Speaker 2: Isn't that something as the answer? This is what's keeping 415 00:20:38,560 --> 00:20:39,560 Speaker 2: them up at night right now. 416 00:20:39,760 --> 00:20:42,439 Speaker 7: Yeah, which is why the details of whatever Chairman Crapo 417 00:20:42,520 --> 00:20:44,480 Speaker 7: has to say about the changes they're looking at are 418 00:20:44,480 --> 00:20:47,800 Speaker 7: so important, considering Senators, including the Majority Leader John Thune, 419 00:20:47,840 --> 00:20:50,040 Speaker 7: have not been shy about saying that the Senate doesn't 420 00:20:50,080 --> 00:20:52,560 Speaker 7: care at all about salt, at least. 421 00:20:52,440 --> 00:20:54,960 Speaker 2: On the GOP SID we've come around altogether again for 422 00:20:55,040 --> 00:20:57,000 Speaker 2: Matt Miller, I hope that he was listening to that. 423 00:21:00,440 --> 00:21:03,960 Speaker 1: You're listening to the Bloomberg Balance of Power podcast. Catch 424 00:21:04,000 --> 00:21:07,000 Speaker 1: us live weekdays at noon and five pm Eastern on 425 00:21:07,160 --> 00:21:10,400 Speaker 1: Alma Cockley and Android Auto with the Bloomberg Business App. 426 00:21:10,560 --> 00:21:13,840 Speaker 1: Listen on demand wherever you get your podcasts, or watch 427 00:21:13,880 --> 00:21:15,439 Speaker 1: us live on YouTube. 428 00:21:16,600 --> 00:21:19,560 Speaker 7: Looking at the market reaction to today's CPI data. Thank 429 00:21:19,600 --> 00:21:22,119 Speaker 7: you so much. That data, of course coming in cool 430 00:21:22,760 --> 00:21:26,440 Speaker 7: for the fourth consecutive month, with underlying US inflation rising 431 00:21:26,520 --> 00:21:28,080 Speaker 7: just a tenth of a percent in May. That was 432 00:21:28,160 --> 00:21:31,280 Speaker 7: less than estimates. As we look at that data at 433 00:21:31,280 --> 00:21:33,879 Speaker 7: eight thirty am, and then the testimony that began at 434 00:21:33,880 --> 00:21:35,679 Speaker 7: ten am, and by the way, is still going with 435 00:21:35,720 --> 00:21:38,480 Speaker 7: the Treasury Secretary Scott Besson. This is something he seems 436 00:21:38,480 --> 00:21:41,399 Speaker 7: to be pretty proud of today. He called this data 437 00:21:41,440 --> 00:21:43,520 Speaker 7: specifically fantastic, So. 438 00:21:43,520 --> 00:21:45,000 Speaker 2: This isn't Biden data anymore. 439 00:21:45,880 --> 00:21:45,920 Speaker 5: Es. 440 00:21:46,320 --> 00:21:48,199 Speaker 2: I guess that's right, though he had the wind at 441 00:21:48,280 --> 00:21:50,320 Speaker 2: his back when he walked into the Ways and means 442 00:21:50,560 --> 00:21:53,600 Speaker 2: committee room. A good story to tell from the White House. 443 00:21:53,640 --> 00:21:56,639 Speaker 2: Let's see if fan of Wong agrees. Bloomberg Economics chief 444 00:21:56,760 --> 00:21:59,879 Speaker 2: US economist joins US Now Live, Anna, is that the 445 00:22:00,240 --> 00:22:02,880 Speaker 2: story because the headline reads pretty well for this White House? 446 00:22:04,440 --> 00:22:06,800 Speaker 9: Well so, so, I think you can certainly see it 447 00:22:07,119 --> 00:22:11,280 Speaker 9: a glass half full, like Bessen does. But what the 448 00:22:11,400 --> 00:22:15,520 Speaker 9: signal is telling us from today's report is that consumers 449 00:22:15,680 --> 00:22:19,560 Speaker 9: are beginning to see their income prospect dwindle, and that's 450 00:22:19,600 --> 00:22:24,720 Speaker 9: why they're pulling back on traveling, on booking hotels, and 451 00:22:25,040 --> 00:22:28,960 Speaker 9: on you know, buying cars typically in a in a 452 00:22:29,600 --> 00:22:33,480 Speaker 9: you know, slow down economic slow down environment, those two 453 00:22:33,560 --> 00:22:38,240 Speaker 9: categories cars and travel are exactly the stuff that people 454 00:22:38,280 --> 00:22:41,840 Speaker 9: first pull back on. So I think, what this soft 455 00:22:42,280 --> 00:22:44,960 Speaker 9: data is telling us that the economy is slowing. 456 00:22:46,040 --> 00:22:48,240 Speaker 7: Well, so anna to expand on that a little further, 457 00:22:49,200 --> 00:22:51,720 Speaker 7: are you suggesting basically that the data is not so 458 00:22:51,800 --> 00:22:55,119 Speaker 7: much telling us that companies and businesses aren't passing on 459 00:22:55,280 --> 00:22:58,199 Speaker 7: higher costs due to tariffs, but that they can't exercise 460 00:22:58,280 --> 00:23:00,840 Speaker 7: that pricing power, that consumers are not going to be 461 00:23:00,880 --> 00:23:02,360 Speaker 7: particularly tolerant of it. 462 00:23:03,720 --> 00:23:07,280 Speaker 9: So what it is is that the firms actually have 463 00:23:07,480 --> 00:23:12,760 Speaker 9: been passing through some tariffs. We notice that appliances and 464 00:23:13,320 --> 00:23:18,320 Speaker 9: some of the more tariff exposed categories are have been 465 00:23:18,320 --> 00:23:21,800 Speaker 9: seeing a pickup and inflation. But more than offsetting that 466 00:23:22,080 --> 00:23:27,560 Speaker 9: is this deflation in many travels sectors, such as airfares 467 00:23:27,600 --> 00:23:30,119 Speaker 9: and hotels. So I think now it's a good time 468 00:23:30,440 --> 00:23:34,879 Speaker 9: to travel and book hotels if one has slacked in 469 00:23:34,920 --> 00:23:39,120 Speaker 9: their budget. But otherwise, I think this tariff passed through 470 00:23:39,160 --> 00:23:43,600 Speaker 9: that everybody has been waiting for is actually happening. And 471 00:23:44,160 --> 00:23:48,760 Speaker 9: my team does grape online prices, and those online prices 472 00:23:48,800 --> 00:23:51,440 Speaker 9: are showing that in the next couple of months, home 473 00:23:51,480 --> 00:23:54,919 Speaker 9: appliances like your toasters microwaves are going to see a 474 00:23:54,960 --> 00:23:56,480 Speaker 9: significant price increase. 475 00:23:57,720 --> 00:24:02,680 Speaker 2: Interesting, and we're wid watching testimony continue with the Treasury Secretary, 476 00:24:02,720 --> 00:24:06,359 Speaker 2: Scott Bessett now approaching our four before the Houseways and 477 00:24:06,400 --> 00:24:08,479 Speaker 2: Means Committee. I don't know if this man ever sleeps. 478 00:24:08,520 --> 00:24:11,360 Speaker 2: He's going to be talking later before the Senate as well, 479 00:24:11,400 --> 00:24:14,720 Speaker 2: and speaking to what he has described as the economic 480 00:24:14,720 --> 00:24:17,920 Speaker 2: benefits and the growth engine that would be this reconciliation bill, 481 00:24:17,960 --> 00:24:20,560 Speaker 2: the President's Big Beautiful Bill. If passed, listen to what 482 00:24:20,600 --> 00:24:22,280 Speaker 2: he said about cutting red tape, and we'll have. 483 00:24:22,240 --> 00:24:22,639 Speaker 9: You weigh in. 484 00:24:23,640 --> 00:24:28,480 Speaker 5: One big beautiful bill will also incentivize unprecedented investment in 485 00:24:28,640 --> 00:24:34,199 Speaker 5: US manufacturing. The legislation will provide one hundred percent expensing 486 00:24:34,280 --> 00:24:38,280 Speaker 5: for new factories as well as existing factories that expand 487 00:24:38,359 --> 00:24:44,480 Speaker 5: operations and support made in America. It will streamline burdensome 488 00:24:45,200 --> 00:24:49,360 Speaker 5: permitting processes that often stand in the way of new 489 00:24:49,400 --> 00:24:50,760 Speaker 5: manufacturing projects. 490 00:24:52,520 --> 00:24:56,080 Speaker 2: And when you combine the cutting of red tape, the 491 00:24:56,080 --> 00:24:59,800 Speaker 2: permitting reform along with the incentives, this is the kind 492 00:24:59,800 --> 00:25:02,960 Speaker 2: of thing that the CBO, to the detriment of the 493 00:25:02,960 --> 00:25:05,760 Speaker 2: White House doesn't include in its scoring. Is he correct 494 00:25:05,800 --> 00:25:07,280 Speaker 2: about what comes next? 495 00:25:08,320 --> 00:25:11,440 Speaker 9: I think there are some evidence to suggest that American 496 00:25:11,520 --> 00:25:15,720 Speaker 9: firms are increasingly thinking about on shoring some manufacturing activities. 497 00:25:16,080 --> 00:25:21,080 Speaker 9: ISM Manufacturing release a survey results twice every year, and 498 00:25:21,160 --> 00:25:24,920 Speaker 9: it shows that many of the metallic firms and even 499 00:25:24,920 --> 00:25:29,200 Speaker 9: appair rolls firms are thinking about increasing operations in the US. 500 00:25:29,480 --> 00:25:32,639 Speaker 9: So surely there are some evidence pointing to that. And 501 00:25:32,680 --> 00:25:36,359 Speaker 9: also the deregulation on energy prices will lower cost. But 502 00:25:36,640 --> 00:25:39,639 Speaker 9: at the same time we're seeing fifty percent tariffs on 503 00:25:39,800 --> 00:25:43,879 Speaker 9: steel an alumna, which are key inputs in building factories 504 00:25:43,920 --> 00:25:46,439 Speaker 9: in the US. So what is a net impact? I 505 00:25:46,440 --> 00:25:48,920 Speaker 9: think that's harder to quantify. 506 00:25:50,280 --> 00:25:52,520 Speaker 7: Well. And finally, Anna, I would like to ask you 507 00:25:52,600 --> 00:25:55,280 Speaker 7: about the FED, because of course President Trump had some 508 00:25:55,320 --> 00:25:57,399 Speaker 7: thoughts about what the FED should do in the aftermath 509 00:25:57,400 --> 00:25:59,880 Speaker 7: of this data. Today he posted on true Social cp 510 00:26:00,119 --> 00:26:03,119 Speaker 7: I just out great numbers and reiterates his call for 511 00:26:03,160 --> 00:26:06,199 Speaker 7: the FED to lower one full point. I know you 512 00:26:06,280 --> 00:26:08,480 Speaker 7: aren't in the camp that the Fed's getting ready to 513 00:26:08,520 --> 00:26:10,800 Speaker 7: move one hundred basis points, but does the data today 514 00:26:10,800 --> 00:26:13,720 Speaker 7: make it potentially more likely we see a twenty five 515 00:26:13,760 --> 00:26:16,160 Speaker 7: basis point cut sooner than expected. 516 00:26:17,520 --> 00:26:21,040 Speaker 9: I don't think so, because what this data shows you 517 00:26:21,400 --> 00:26:27,680 Speaker 9: is still the impact negative impact from the April Liberation 518 00:26:27,840 --> 00:26:31,280 Speaker 9: Day tariffs, and the paradox of tariffs is that if 519 00:26:31,320 --> 00:26:34,800 Speaker 9: they go really, really high, they could be deflationary because 520 00:26:34,880 --> 00:26:38,639 Speaker 9: the pullback and income expectations is just so steep. And 521 00:26:38,680 --> 00:26:42,040 Speaker 9: that's what we're seeing today. But the de escalation in 522 00:26:42,119 --> 00:26:47,080 Speaker 9: Geneva and thereafter has really bolstered the stock market, and 523 00:26:47,160 --> 00:26:50,520 Speaker 9: we expect that in July CPI print we're going to 524 00:26:50,600 --> 00:26:56,200 Speaker 9: see boost from financial easing of financial conditions as well 525 00:26:56,240 --> 00:26:59,880 Speaker 9: as those home appliances price increase that I was just telling. 526 00:26:59,720 --> 00:27:03,439 Speaker 7: You of ut all right, anamong we appreciate it as 527 00:27:03,440 --> 00:27:06,959 Speaker 7: always our chief US economists for Bloomberg Economics joining us 528 00:27:06,960 --> 00:27:09,240 Speaker 7: here on Balance of Power. Thank you so much, and Joe. 529 00:27:09,280 --> 00:27:11,240 Speaker 7: As we wrap up this hour of Balance of Power, 530 00:27:11,240 --> 00:27:13,680 Speaker 7: we should know the Treasury Secretary is still going at it. 531 00:27:13,640 --> 00:27:14,000 Speaker 6: In the House. 532 00:27:14,040 --> 00:27:16,840 Speaker 7: Weie and Means Committee about to hit and press four 533 00:27:16,880 --> 00:27:19,920 Speaker 7: hours after his late night early morning trip back from 534 00:27:19,960 --> 00:27:22,840 Speaker 7: London trade negotiations. And when we come back to air 535 00:27:22,960 --> 00:27:25,800 Speaker 7: later today at five pm, He's still going to be testifying, 536 00:27:25,880 --> 00:27:28,280 Speaker 7: just in the other chamber too. He has the Senate next. 537 00:27:28,359 --> 00:27:30,280 Speaker 2: Yeah, you think maybe they'd give him like a day 538 00:27:30,280 --> 00:27:31,840 Speaker 2: off or something after that, But he had to leave 539 00:27:31,880 --> 00:27:34,119 Speaker 2: the talks last evening to get on a plane. He 540 00:27:34,200 --> 00:27:36,720 Speaker 2: said goodbye to Anne Marie Hordern in London and showed 541 00:27:36,760 --> 00:27:39,439 Speaker 2: up this morning in Washington. So we'll keep tabs if 542 00:27:39,440 --> 00:27:45,080 Speaker 2: he makes more news on this. Thanks for listening to 543 00:27:45,119 --> 00:27:48,520 Speaker 2: the Balance of Power podcast. Make sure to subscribe if 544 00:27:48,520 --> 00:27:51,280 Speaker 2: you haven't already, at Apple, Spotify, or wherever you get 545 00:27:51,280 --> 00:27:54,320 Speaker 2: your podcasts, and you can find us live every weekday 546 00:27:54,320 --> 00:27:58,160 Speaker 2: from Washington, DC at noontime Eastern at Bloomberg dot com.