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Podcast Summary: CNBC's "Fast Money" - A New Round Of Auto Tariffs… And The Data Center Dash (3/26/25)
Episode Overview In this episode of CNBC's "Fast Money," hosted by Melissa Lee, the discussion revolves around the announcement of new tariffs on auto imports by the Trump administration. The episode also touches on the rising demand for hyperscale data centers and the potential implications of these developments for investors.
Key Topics Discussed
- New Auto Tariffs: The announcement of a 25% tariff on imported automobiles and its implications for the auto industry.
- Market Reaction: A decline in major auto stocks, particularly Tesla, and the wider market impact due to tariff fears.
- Hyperscale Demand: Increased demand for data centers driven by advancements in AI and technology, along with implications for major tech companies.
Key Highlights
Auto Tariffs
- Tariff Announcement: President Trump announced a 25% tariff on all imported vehicles not manufactured in the U.S., effective April 2nd.
- Impact on Auto Stocks: Major automakers, including Tesla, GM, and Ford, saw significant drops in their stock prices in anticipation of the tariffs.
- Expected Costs: Analysts estimate that the tariffs could increase vehicle prices by approximately $3,500 to $4,500, affecting consumer demand.
- Industry Concerns: Executives express concerns over the negative impact on the auto industry, with discussions on how automakers will respond to increased production costs and reduced margins.
Market Analysis
- Market Volatility: The episode highlights how the uncertainty around tariffs contributes to market volatility. The Nasdaq fell by 2% during the trading session in reaction to tariff news.
- Technical Analysis: Traders discussed technical indicators, such as the 200-day moving average, as critical levels to watch for market recovery.
- Consumer Sentiment: The hosts discussed the potential impact on consumer behavior, emphasizing that if consumers perceive higher prices, it may deter them from purchasing vehicles.
Hyperscale Data Demand
- Rise of AI: There is a noted increase in hyperscale demand as companies invest heavily in AI technology.
- Competitors in Tech: A significant tech company’s pullback is seen as an opportunity for competitors to gain market share in the AI space.
Investment Strategy
- Staying Defensive: The discussion included strategies for investors to adopt a defensive posture amid market uncertainty due to tariffs. Recommendations included focusing on low volatility investments and certain sectors like staples and financials.
- Potential for Recovery: Some experts expressed optimism for the second half of the year, anticipating clearer market conditions and potential upside opportunities as the effects of tariffs stabilize.
Conclusion The episode emphasizes the immediate and long-term implications of the new auto tariffs on the automotive industry and the broader market. It highlights the complexity of the situation, including potential consumer price impacts and the strategic adjustments that auto manufacturers may need to make. Additionally, the discussion on hyperscale demand reflects broader trends in technology that investors should consider moving forward.
Written by AI. May contain mistakes. Listen to the episode to check what was said.
Transcript
Automatic transcript. May contain errors.0:01Live from the Nasdaq Market Site in the heart of New York City's Times Square, this is Fast Money. Here's what's on tap tonight. Tariff troubles, auto stocks tumbling in anticipation of a new round of tariffs on the industry, the ripple effects and what it means for the rest of the market. And a semi-slide, a drop in NVIDIA shares taking the rest of the chip space down with it. What's behind the move and what is next for the hyperscalers? We'll debate that. Plus, a dollar store deal pulled one name out of the discount bin, at least for today. Nike swooshes to a new post-pandemic low. And how do you know when it's time to buy Novo Nordisk?
0:33We'll look for some answers. I'm Melissa Lee coming to you live from Studio B at the Nasdaq. On the desk tonight, Tim Seymour, C. Grasso, Dan Nathan, and Guy Adami. We start off with brand new auto tariffs expected to be announced at any moment. Reports that these tariffs were coming hit the major automakers hard during the trading session, with Tesla losing almost 6 percent. The news taking momentum out of the broader markets as well. The Nasdaq falling about 2 percent during the regular session, while the S &P 500 dropped more than a percent. The Dow 130 points lower. Megan Cassell is in D.C.
1:03with the very latest on what we should expect. Megan. Hey, Melissa, as you said, we are waiting on the president any moment now to formally announce from the Oval Office that he will be putting tariffs on imports of all automobiles coming into the United States. They are quite behind at the White House. I can tell you we've been waiting for about an hour now. But we do still expect that announcement sometime tonight. This will fulfill a pledge that President Trump has made dating back now to his first term. But we do not know yet any of the hard details. So we'll be watching to see things like, of course, what the ultimate tariff rate will be, when these will take effect, whether they will impact both cars and car parts or maybe one or the other.
1:37And we will have to see whether there will be any exemptions at all, maybe for specific countries or items. Anything along those lines would soften the blow at least somewhat. But either way, still, this is a major escalation of the president's tariff war. And it's on something that clearly has a direct impact here for consumers. We have seen, as you mentioned, the domestic automakers seeing a stock hit today because of that. While we wait on the president, Melissa, I would also highlight just how much this underscores, how much further the president is willing to go than he did in his first term.
2:06Back then, he threatened these tariffs, but he never imposed them. At the time, I will say, Commerce Secretary Wilbur Ross was recommending rates of 25 to 35 percent on cars and car parts. We will have to see where this administration lands later today. Melissa? All right, Megan, thank you. Megan Casella in Washington, D.C. And what we've learned this week is what we've known all along, and that is the market's sway, according to Tariff Talk. We saw that rally based on that report saying that his stance will be softer. Here we are. Auto tariffs are looming. And any moment, and we saw the markets go lower.
2:37So what do we do? I think you're going to have to sort of, we've talked about it. You're going to have to be prepared for these types of, you know, ebbs and flows in terms of the market, in terms of the rhetoric. And we're on the other side of it now. I think in terms of the broader market, you know, 58 and a quarter in the S &P was the level I think collectively we thought we could trade to. We got close. That was a 50 percent retracement of the all-time high in this recent low. It all makes sense. And I think this sell off is just a continuation of what's been in place since early January. What do you think?
3:03Well, I think we failed at the 200 day in the Nasdaq and in the S &P. And the question is, is the is the Trump put really at a fifty five hundred strike? Because that's what we got. It's a day. We also got comments from the Fed just kind of implying that maybe tariff impact isn't just temporary. And I think that would be more reference to the inflationary side. But we've heard auto executives for weeks now and certainly in the last week. And there was apparently a Zoom that went on or a video conference of some kind. And the point was that we don't necessarily need this. The White House is saying that this is aimed at inspiring and spurring domestic growth.
3:42And yet when you're talking about the numbers we're getting through on what this means in terms of the kick higher in auto prices. And there's numbers out. And we don't really know where they are because we don't really know what the tariffs are yet. But the reality is that it's something that the industry isn't necessarily rooting for, even though imports, which are finished good cars, not auto parts, et cetera, are something that conceivably they could be targeting. Well, it's coming at a bad time, right, for the auto industry, if you just think about it, right? And, you know, GM, Ford, and, you know, the rest of Detroit, and then you go over to Tesla.
4:09You probably thought that I was going to avoid that. I mean, this is actually really bad for Tesla. And when you think about the kind of price war that is going on right here, if you start having some disruption in the supply chain of the parts that are coming in here, you think about how do you make that up? They're already doing like 0 % financing and the like. Then you get the reciprocal tariffs and you're going to China and you're saying to yourself, I'm competing right now with BYD. I'm competing with Xiaomi. This new car that they've introduced is outselling Tesla Model 3 right now. So, you know, I think there's a lot of adverse effects that you could see on the auto industry.
4:40And I think it's actually probably worse off for Tesla. I think you have to trade through all of this. You almost have to not listen to it because there's a lot of stuff that is, I would say, algorithmic trading or tape reading trading. So if you think about it, didn't they have to deal with mandates, EV mandates, emissions? How much was that? $3 ,000 to$8 ,000 per car that they had to add? So this is probably the equivalent of$3 ,000 to$5 ,000 in tariffs. I would say avoid them because of recession, not avoid them because of tariffs. If the market's going to slow down, you have to avoid buying all these luxury items because the interest rates are too high.
5:21Isn't recession, though, a function of tariffs? No, I think it could facilitate one. It could push us into one. Recessions are cyclical. They're natural, normal. I think we're overdue for one. I don't think this one will push us into one. There's none in place. So if you think about it, let's see what they are first before we react to them. So the guy's point where he kicked it off, it's got to be like a NASCAR. You drive to the accident. You don't try to avoid the accident, right, because it's not there when you get there. So if we're investing, trying to avoid a tariff, and it never comes to play, then you've actually chased your own tail in this market.
6:01That was the scene in Days of Thunder when Cole Trickle had to drive right at the accident. And remember Robert Duvall said, you're going to make it through, drive through it? You say you remember as if I watched that. Well, it's funny because Tom Cruise is a big fan of the show. This is more of a rubbing his racing situation, right? Because we don't really know, to your point, where this is going to end. And I just think, I actually think you have to take this at its face value right now. You know, my view going into this stuff is that they were going to pull him. They just weren't going to do it.
6:29They were going to use it as a negotiating tactic, which, you know, they did the first time around. So right now, if you do this, I mean, it's just really coming at a time where a lot of the data we're seeing from a consumer standpoint is not particularly great. And I think that, you know, to your point, this is a lot of discretionary sort of thought process around buying a car. And what Tim said, the 200-day moving average is 57.56. We were below it for 11 days. We were below it for nine days back in 2023. We popped above it. We failed. We didn't do that back in 2023. We stayed above it, and we ramped right from there pretty much into year end.
7:02So if you have to look at the technicals, 57-56 in the S &P cash is what we need to reclaim in order for the rally to be back on. I mean, I think that there are a lot of things that we need to know about the auto tariffs that could be answered at this press conference, which could happen again at any moment. First of all, are they stacked or are they on auto parts plus finished goods? So you're paying a percentage on a sum and then a percentage again on the finished good. Are they against companies or are they against countries? And so all of this will help us answer, is the stance softening when it comes to tariffs, or is it getting worse?
7:35Because when Trump pulls forward the idea of copper tariffs, for instance, by 25 percent, when they had 270 days to do the study, Commerce Department, then you question, well, what is the tariff agenda? And that's where this volatility comes from. You know, but I think he's going to be careful in the language because I think he's very focused on not hurting GM and Ford, which he views as iconic American companies. I think we all do as well. So I'll say this is not meant to be derogatory in any way. I don't think they really know what they want to do in terms of tariffs. They just know that they want to sort of throw that out there and see how the dust settles.
8:09Well, that's what's always interesting about how the tariffs are being communicated. Maybe it's the media. Maybe there's dynamics around people just shouldn't be getting kind of detail that they probably need until they're announced. But what you always hear is talks are very fluid. Things are kind of moving. And the sense is we're not even sure what they are. Because, again, if we're back to a place where this is really now targeted and, you know, we gave you a month. Now we're going back to Mexico and Canada. OK. And what's this all about? Is that really about auto parts? Is that really about not finished goods, finished vehicles that are coming into this country?
8:40So it's confusing. More importantly for the market, the confusion is what we are dealing with. And so some of those technical failures, you also have like everything we heard from the strategists that were either out there, some that have even been on this show in the last week and a half is oversold conditions led to a bounce. But everyone was a trader, not an investor. That's what they said. And whether it's, you know, two steps forward, three steps back, three steps forward, two steps back. If this is a trading range and again, you failed at an important trading range and uncertainty has only been, you know, augmented here.
9:10I think that's part of what's going on. And we're also just getting some measures. And there's some some notes I saw on Bloomberg that S &P liquidity in the futures markets is at two year lows and dynamics around. If you start to lose market liquidity, that's a different element altogether. It doesn't necessarily mean fundamentals have broken down, but it does mean there become other factors for the market. Let's get more on the potential industry impact of this latest round of tariffs. Bring in our own Phil LeBeau. Phil. Melissa, as we wait to hear from President Trump, the thing to keep in mind here is just how many vehicles are brought into this country that are manufactured in Mexico, Canada, Korea, Japan, Europe.
9:5153 to 54 percent of the vehicles, it might even be 56 percent, somewhere in that range. There you go. It's 53.7 percent of the vehicles are manufactured here in the United States. By the way, that doesn't mean the content is all from here in the U.S. Most of the parts, a good chunk of the parts, are coming from plants in Canada and Mexico. And there you see how many are brought in from Mexico. These are finished vehicles. Then you have South Korea, Japan, and Canada. Melissa, I just talked with a couple of people in the industry, and I said, look, the speculation is that it might just be 25 % on the finished vehicle, and there won't be any impact on the components.
10:29What would that do to the pricing of a vehicle? The consensus is anywhere between$3 ,500 and$4 ,500 in terms of a cost impact per vehicle. Now, how much of that the automakers would be able to pass along to consumers? How much would they be able to say, okay, we'll bring down the incentives. That'll help us. And how much of it will they have to eat and cut into their margins in North America? Melissa, we've done a number of reports over the years on your show. When we talk about the earnings reports for the automakers, North America is the profit margin driver. Whatever profits there are within the auto industry, the vast majority are coming from North America.
11:08So as we await the president, those are some things to keep in mind. So let's say there's roughly 45 percent of vehicles that are not made in the United States. Where are they coming from primarily? Well, first and foremost is Mexico. If we put that graphic back up, 16 percent from Mexico. then South Korea at about 8.6%, Japan at 8.2%, and Canada at 7.1%. It's about 6 % for Europe. I get this question a lot from people. About 6 % from Europe. By the way, most of the European autos sold in the U.S. are manufactured in the U.S. Whether it's BMW, which is up in South Carolina, or go over to Alabama.
11:49Right now, I'm down in Savannah at the Hyundai plant that just opened up here. That's where the foreign manufacturing is based in the southeast part of the United States. So the Europeans have a lot of manufacturing presence here in the U.S. So do the Asian automakers. But we still see a number of these vehicles coming in from around the world. Phil, thank you. Phil Lebeau. You bet. By the way, that Hyundai plant where Phil is, the plans were in place from the first Trump administration where they were trying to bring auto manufacturing back. $3 ,500 to$4 ,500 per vehicle in terms of an impact.
12:25Can the consumer bear that at this time? Look, this is an average auto price in the U.S. that's gone from$40 ,000 in late 20 into 21 to$48 ,000 and change now. Do you think the auto companies really want this going on? Do you think that's really going to inspire demand? I don't. It's not. It's the opposite. Buying down rates. I mean, it's not good for margins, right? And so we've seen margins come down. You know, we had this period, obviously, during the pandemic and the post-pandemic. And, you know, you screw up these supply chains, you kind of mess with demand a little bit. You know, it's probably going to be hard to get back, you know, some of these sales that were kind of meant to happen here.
12:58So, again, I think the knock-on effects are like, what does it mean for other parts of the U.S. economy? Because they're not going to stop here if they really do put these in place. I'm just really surprised. Tim mentioned, you know, the Trump put, right? So maybe it came in at 5 ,500. You know, as the silver lining guy here on the desk, I'd say that the S &P is only down 3 % on the year, right? And so I just look. It's even more comical. The more you have to say that, it becomes more and more comical. Like funny or no? No, like if you have to call yourself that, you're not that. Proceed, please.
13:30She's getting annoyed. I'm getting laughs over here. I'm just saying. It's the funniest I've ever seen. I'm laughing inside. My point is, what happens when the S &P is down 15 % on the year? You know what I mean? Not down. Not down. So, again, if they start cutting rates, I don't think that's going to be particularly good for the party. I think that kicks in the Powell put. and a Trump put. So you're going in there. But puts are below the market. So that means the markets have to go down here. Yes, they do. So if they're, when President Trump came in, he was head-butting with Powell. And now he's talking down the 10-year.
14:03He doesn't talk about Powell anymore. If you notice that, it's only about the 10-year. So if the market drops, if we hit a recession, that puts Powell into play without Trump having to say cut rates. So I do think there is a put. Yes, of course, the put is below the market. We could have to fall another 10 percent. The market's going to drop precipitously before we know we're in a recession. Like that's just like always hindsight. Yeah. All right. Meantime, St. Louis Fed President Alberto Mousselen warning the tariffs could mean persistent inflation. But when Wall Street Bowl isn't budging from his optimistic forecast, Chris Harvey is the head of equity strategy for Wells Fargo Securities.
14:40Chris, great to see you. Good to see you, too. Are you bracing? I mean, how do you view the markets at this point? The way I view the market, you guys said best, right? What you're trying to do is you're trying to handicap something you really don't know. You don't know the magnitude of tariffs. You don't know the timing of the tariffs. And so what we're doing, what we're counseling clients, you want to stay in the game. It's not time to go to cash and canned goods, but it's also not time to be a hero. So a certain portion of your portfolio should be in low vol, something defensive. We like staples, but low volatility ETF, however you want to play it.
15:14The other part of your portfolio should be in your best risk awards. We think the communications, we think banks and financials are the way to play it. And what you want to do in the first half of the year is it's three yards in a cloud of dust. That approach has been the right approach so far. And by the second half of the year, we can start talking about upside. Because at that point in time, I do think there is a power put. I do think that we'll have more clarity on tariffs. valuations will become better and we'll start talking about taxes not so much tariffs all the time and so the first half is just stay in the game don't be a hero grind it out in the second half it will become much clearer what you need to do and where you can put risk off so presumably you had this view sort of going into this year you're a strategist you put out your forecast the very beginning or at the end of last year has anything changed in terms of how things have played out when it comes to when the market drawdown was when it comes to the timeline I mean, what is the date today?
16:06Today is March 26th, right? Incredible. April 2nd is, quote-unquote, Liberation Day. Actually, you know what? Let's put a pin in this for now. President Trump is speaking in the Oval Office now on the auto tariffs. Let's listen in.
16:25Thank you very much. It's an honor to be with you today. We just celebrated Women's Day at the White House. It was fantastic, attended by a lot of great women. A lot of great women. All women are great. So this is the beginning of Liberation Day in America. We're going to take back just some of the money that has been taken from us by people sitting behind this desk or another desk. That's not quite as nice, but they have their choice of seven, as you know. and we're going to charge countries for doing business in our country and taking our jobs, taking our wealth, taking a lot of things that they've been taking over the years.
17:14They've taken so much out of our country, friend and foe. And frankly, friend has been oftentimes much worse than foe. And this is very modest. And what we're going to be doing is a 25 percent tariff on all cars that are not made in the United States. If they're made in the United States is absolutely not. We started off with a two and a half percent base, which is what we were at. And we go to 25 percent. And basically, as you know, and as you've been seeing, not reporting as accurately as it should be reported because it's a massive story. Businesses coming back to the United States so that they don't have to pay tariffs.
17:52And I think also because of November 5th, the election, They're very happy. AI is coming back to levels that nobody's ever seen before. It's a new sort of a new business, I guess, when you think about it. But it's plants are going up all over the United States and many of them have already been started. We're getting early electricity taken care of. We're getting permits very quickly for them and we're going to make their life very happy. They're coming in with tens of billions of dollars. individual plants will cost 10 15 20 billion dollars we're going to let them build electricity generating plants along with their plant and they can't even believe it but and we're going to get them very quick permits as i've done always i did that in louisiana with two lng plants i got them one permit in one day after waiting 14 years and the other one in one week after waiting for 12 years.
18:47But this is very exciting to me. This is the automobile industry, and this will continue to spur growth like you haven't seen. Before I was elected, we were losing all of our plants that were being built in Mexico and Canada and other places. Now those plants largely have stopped, and they're moving them to our country. And Indiana, the great state of Indiana, I love Indiana. Honda is building one of the biggest plants anywhere. And they've just started. They wouldn't have done it without this. In all cases, they wouldn't have done it without what we're doing. So we'll effectively be charging a 25 percent tariff.
19:26But if you build your car in the United States, there is no tariff. And what that means is a lot of foreign car companies, a lot of companies are going to be in great shape because they've already built their plant, But their plants are underutilized, so they'll be able to expand them inexpensively and quickly. But others will come into our country and build, and they're already looking for sites. They're looking for mostly sites. They don't want to take the old buildings that are empty and falling down. They want to build new. And there's tremendous action. There is likewise for other companies and countries like the chip making process.
20:02Your chip bill was a disaster done by Biden. And all it does is give tremendous amounts of billions of dollars to chip companies that will do nothing with the money. They're not going to use the money here. They're going to just keep it. They have plenty of money. The one thing they have is they have a lot of money. In our case, all we're doing is saying you can't come in unless you build here. And the largest chip company by far is manufactured from Taiwan is building here. And it will give us almost 40 percent of the chip market just with that. They're spending almost 200 billion dollars in the United States to build a plant.
20:38And they've almost started. They'll be doing much of the work in Arizona. So we have a lot of exciting things. But to me, this is one of the most exciting. Now, outside of one specific day, and that's Liberation Day. That's the real Liberation Day of America. And that's going to be in April 2nd. And I look forward to it. We'll have a little news conference. We'll talk about it. But this is very exciting. So we're signing a executive order today that's going to lead to tremendous growth in the automobile industry. As you know, the electric mandate that we did allows you to buy a car now electric or gasoline powered or hybrid.
21:20You can buy any car you want. We had it so that within a short period of time, you had to buy all electric. And the country could never get they could never provide the the money necessary to build all of those power plants that you would need all over the country. As you know, in the Middle West, they built eight power stations. That's like the size of this desk or smaller. And they ended up spending nine billion dollars on eight. And of the eight, four of them didn't work. And we're not doing that. So you can buy electric or you can buy gasoline or you can buy hybrid or you can buy whatever you want to buy.
22:00And that's the way it should be. The market's going to determine that. And you're going to see prices going down. But it's going to go down specifically because they're going to buy what we're doing, incentivizing companies to and even countries, but companies to come into America and build. And we're already setting records for new plants. I think the new plant number, the tally is just within a period of a few weeks. It's very large. I want to be accurate. It's very large. And I'd like to ask Will just to come and give some of the basics and then I'll sign it. And it's off to the races. I think our automobile business will flourish like it's never flourished before.
22:40Yes, please, Will. Thank you, sir. As you stated, we've prepared for your attention a proclamation imposing a 25 percent tariff on foreign-made cars and light trucks. This is in addition to tariffs that are already in place on those goods. In addition to, as you said, spurring increased domestic manufacture of cars and trucks, we expect that these tariffs will result in over$100 billion of new annual revenue to the United States of America in tariff revenue. I think ultimately we could probably anywhere from 600 billion to a trillion dollars will be taken in over the relatively short term period, meaning a year from now.
23:28But starting right away, starting right away, I think we'll go from 600 to a trillion within two years. And I think we'll be very I mean, right from the beginning, we're going to be at a very high number right from the beginning. and right from the beginning you're going to have a lot of construction jobs but you're also going to have a lot of automobile jobs so this is very exciting but it's also exciting because of what's happening with other aspects we're going to be doing tariffs on pharmaceuticals in order to bring our pharmaceutical industry back we don't make anything here for in terms of drugs medical drugs different types of drugs that you need medicines it's in other countries largely made in China, a lot of it made in Ireland.
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24:12Ireland was very smart. We love Ireland, but we're going to have that. We're going to have lumber. We're going to free up some of our land and you'll be able to make a lot of other standards like fire cuts. If Los Angeles had fire cuts, which they didn't have, that's a gap of half a football field between areas. You wouldn't have had the fires. They would have been contained, but you have fire cuts. And by the way, you sell that wood for a lot of money, a lot of profit. It's made from that. But we're going to be doing lumber. We're freeing up our land so that people can, so that we don't have to use outside sources of lumber.
24:48Energy we're doing fantastically well at. You know, the energy prices have been coming down rapidly as we increase supply, and we've already done that. We have, Chris and Doug are doing a fantastic job in that. That's Department of Energy and Department of Interior. And they're working together hand in hand because interior has the land and energy has the ability to do the drilling and do what they have to do. Our coal areas are going to be opened up for clean, beautiful coal. Germany's opening up many coal plants now. You know, they tried the wind and it didn't work. They almost went out of business.
25:24They almost went bankrupt. They tried wind, which is a disaster because it's too expensive and it doesn't look good. Kills all the birds. A lot of problems. But Germany is now building a lot of coal plants. China is building one a week. Think of that. And they're using coal, which is very powerful. Coal is a very powerful energy. And we're opening up our coal mines again. And we're going to do, I call it beautiful clean coal. The technology is so good now that coal can give you tremendous power. At the same time, it can be very clean. But we're also obviously doing oil and gas and various other things.
26:00You can do pretty much whatever you want. We don't like the wind because we think it ruins the landscapes, the plains, ruins them. And it's got a lot of problems. It's also the most by far the most expensive energy. It looks horrible in the oceans. It's dangerous in the oceans in terms of navigation. And if you look at what's happening with whales, you know, in one area, they lost two whales like in 20 years washed ashore. and this year they had 17 wash ashore so there's something happened out there there's something driving the wheels a little bit loco but they lost two in 20 years and now they lost 17 in a short period of time so it's something wrong out there so this is very exciting this is going to lead to the construction of a lot of a lot of plants and a lot in this case auto plants and you're going to have you're going to see numbers like you haven't seen both in terms of employment takes a little while.
26:59You're going to have great construction numbers initially, and then you're going to have ultimately you're going to have a lot of people making a lot of cars. And one other thing we are trying, we have the Speaker of the House with us who's doing a fantastic job. And where's Mike? And we're trying to get approved. Mike, thank you very much for being here. We're trying to get approved if we can. If you borrow money to buy a car, you're allowed to deduct interest payments for purposes of income tax but only if the car is made in America so if the car is made in America you get a loan you can deduct the interest that's a big saving a lot of people in that part of the world in terms of buying cars a lot of them don't think in terms of deductions people that think in terms of deductions are very wealthy people but people are going to start understanding what a good deduction is all about so when you get a loan to buy a car, and I think it's going to pay for itself.
27:57I don't think there's any cost. I think that's going to, you're going to have so many cars built, but you're only going to get that deduction of interest if the car is made in the United States of America. So I'm going to sign this. And Mike, I hope you can get that because I think it's going to be amazing in terms of the number of cars that are going to be made because of it. And I want to thank Howard Lutnik, our fabulous commerce chairman. That's what he is. He's a chairman. He's a very successful guy, a great guy. And we have a big day, Howard, coming up next week. That's Liberation Day. That's going to be on the second.
28:34And that's going to be reciprocal. And I think people will be impressed. We're going to be very fair. We're going to be very nice, actually. We have not been treated nicely by other countries, but we're going to be nice. So I think people will be pleasantly surprised, but it's going to make our country very rich because we're the piggy bank that everybody steals from. And they've been doing it for many years, for decades. And we're not going to let it happen. So but we're going to treat people very nicely. We're going to treat other countries very, very nicely. And I think it's going to have a very positive effect on everybody, including those other countries.
29:11So I'll sign this and we will see you again on April the 2nd. In terms of this, it's going to be another round. And it's about making America great again, making it strong and prosperous again. Thank you very much. Sir, Mr. President, on the car tariffs, how do you assure that a car from the end of the country is fully built? Could an automaker in Germany say, leave the tires off a car? Yeah, we're going to have very strong policing and it's pretty easy to do. If parts are made in America and a car isn't, those parts are not going to be taxed or tariffed. And we'll have very strong policing as far as that's concerned.
29:53For the most part, I think it's going to lead cars to be made in one location. Right now, a car would be made here, sent to Canada, sent to Mexico, sent all over the place. It's ridiculous. So this is a very simple system. and the beauty of the 25 it's one number it's not up or down depending on the cost of the car it's one number and that number is going to be used to reduce debt greatly in the united states and to build things reduce taxes i mean basically i view it as uh reducing taxes and also reducing debt and within a fairly short period of time i think we're going to have a balance sheet that's It's going to be outstanding.
30:31Yeah. Can you assure Americans then that this will not cause a long term increase in prices? Well, look, I think we're going to have a market the likes of which nobody's ever seen before. Not in this country. You know, we had the best market ever in my first term. It was the strongest market ever, the best economy ever. And I think you're going to I think this blows it away. But this is something that people have wanted to do. Presidents have wanted to do for a long time. A lot of them didn't understand it. It wasn't a priority for them. But foreign countries understood it very well. And they've really ripped us off at levels that nobody's seen before.
31:10But that's not going to happen. Mr. President, is this for today or April 2nd, the auto tariffs? Say it. Do these auto tariffs go into effect today or on April 2nd? They go into effect on April 2nd. We're signing today. It goes into effect April 2nd. We start collecting on April 3rd. Are there spending more sectoral tariffs that are coming in on April 2nd? What does that mean? Making more sectoral tariffs on any other sector on April 2nd, for example, chips or pharmaceuticals? Not then, but we will be putting a tariff on lumber. We, as you know, have a tariff already on steel and on aluminum of 25 percent.
31:47And we're taking in tremendous amounts of dollars. More importantly, our steel factories and aluminum factories are roaring. They're starting to roar. They're building new ones. I just heard from Nucor, which is a big, a big company, very big steel company. And they're building a massive, a massive plant for steel that they wouldn't build without this. You're going to see you're going to see things that are going to be actually amazing. And I think you already have. You know, we've had some news conferences where I can't I can't have enough. They want to do news conferences where they announce they're going to spend 20, 30, 40 billion dollars.
32:24But Apple, as an example, is spending five hundred billion dollars. OK, on the signal chat, Senator Roger Wicker. Hold on one second. Go ahead. Reciprocal tariffs next week. Will those be immediately effective April 2nd on all countries or will you focus on the worst offenders? No, we're going to make it all countries and we're going to make it very lenient. I think people are going to be very surprised. It'll be, in many cases, less than the tariff that they've been charging us for decades. So I think people are going to be very, very surprised. I think they'll be pleasantly surprised. I don't know.
33:03I think we're trying to keep it somewhat conservative. And on these auto tariffs, we saw obviously the NASDAQ, 100 go down 2 % at close, S &P, 500 down 1%. What are you, are you concerned about that work reaction? Is that today? I didn't say that. I want to see the jobs. I want to see that'll all take care of itself. That could take care of itself in one day, two days or one week. Are there any conditions under which you'd remove these auto tariffs, sir? Or is this permanent for the rest of your term in office? Oh, this is permanent. Yeah, 100 percent. Yeah. Are you on the auto tariffs?
33:36No, because he may have a conflict. So we don't talk. I've never talked to him. Elon's amazing. He's never asked me for a favor in business whatsoever. I'm actually a little surprised by it. I might do it. I might not do it. I do what's right. And he'd want me to do what's right. No, he's a patriot. He has never, you know, these are big deals we're talking about. This is probably nothing like this. And I've never had Elon come and say, would you do me a favor with the mandate or the electric mandate or anything? He's never asked me for anything. Sir, what's your response to Republican lawmakers who have said today that your administration should take more accountability and not downplay what's happened with the signal that we've seen in these messages today?
34:16Well, I don't know about downplaying. The press upplays it. I think it's all a witch hunt. That's all. I think it's a witch hunt. I wasn't involved with it. I wasn't there. But I can tell you the result is unbelievable because the Houthis are looking to do something. They want to know how do we stop. How do we stop? Can we have peace? The Houthis want peace because they're getting the hell knocked out of them. It's been very, very strong. The Houthis are dying for peace. They don't want this. and they're bad. Look, they were knocking ships out of the ocean. You know, we had in the Suez Canal, they only have about 20 percent of the ships going through.
34:53They have to go through a different way, which takes weeks of travel. And that really affects commerce. But the hoodies have been hit hard and they want to negotiate peace. But I don't think they're quite well. Say it. Do you still believe nothing classified was shared? Well, that's what I've heard. I don't know. I'm not sure. You have to ask the various people involved. I really don't know. I can only tell you this. You know, you don't want to talk about it. The Houthis have been horrible to the world of what they've done, killed a lot of people and knocked down a lot of ships and planes and anything else.
35:32You know, it's not just the ships. And they have been hit. They have been hit harder than they've ever been hit. and they want us to stop so badly. And they've got to stop. They've got to say no mas. But I can only say that the attacks, you know, it's attacks every day, every night. It's not just the one. You're talking about one. The attacks have been very successful, even beyond our wildest expectations. We've hit them very hard, very successfully. And we're going to do it for a long time. We're going to keep it going for a long time. Senator Republicans have asked, said that they have formally asked the administration for an inspector general report on the signal issue.
36:15Will you agree to that? It doesn't bother me. I don't know. I want to find if there's any mistake or if a signal doesn't work. It could be that signal is not very good. You know, it's a company. Maybe it's not very good. I think we'd rather know about it now. Now, there was no harm done because the attack was unbelievably successful that night. And it has been unbelievably successful every single night for the last four or five nights. So that's the thing that you should be talking about. This is something that should have been done by sleepy Joe Biden. But he was asleep at the wheel other than when it came to stealing money, of course.
36:53Joe Biden should have done this attack on Yemen, which is basically a certain group within Yemen. the Houthis. And this should have been done by Joe Biden. And it wasn't. And that's caused this world a lot of damage and a lot of problems. I don't know how he's responsible, but he's also overseeing the investigation to find out what went wrong. Maybe who's responsible. But Waltz says that he's responsible. Well, yeah, Mike Waltz, I guess he said he claimed responsibility, I would imagine, had nothing to do with anyone else. It was Mike, I guess. I don't know. I was told it was Mike. but again the attacks were unbelievably successful and that's ultimately what you should be talking about i think you know mike mike did he took responsibility for it say it should secretary hengseth consider his position over the signal hengseth is doing a great job he had nothing to do with this how do you bring hengseth into it he had nothing to do Look, look, it's all a witch hunt.
37:55Here we are talking about some of the greatest business deals ever made. The greatest companies in the world are moving into the United States. And you want to ask about whether or not signal works. I don't know that signal works. I think signal could be defective, to be honest with you. And I think that's what we have to because you use signal and we use signal and everybody uses signal. But it could be a defective platform. And we're going to have to find that out. Have you been briefed about the soldiers in Lithuania? We're missing. No, I haven't. You have spoken, sir, with the big three automakers about these tariffs.
38:31What was their reaction? I have. It depends on whether or not they have factories here. I can tell you if if they have factories here, they're thrilled. If you don't have factories here, they're going to have to get going and build them because otherwise they have to pay tariffs. Very simple. And most of those have pretty big factories here. Like General Motors has big factories here. They're going to move their parts divisions back to the United States because some of them were made in Canada and some of them were made in Mexico and other places. And they'll be moving their parts division back to the United States in factories where they may be at 60 percent capacity.
39:04So they don't even really have to build too much of a factory. You know, generally speaking, if they have factories here, plants here where they make their cars and equipment, but they make their cars here, they are thrilled. Same thing with the steel industry. Steel industry is now paying a 25 % tariff, as you know, I put it on last week. And the business is roaring in the United States. And we can't, because of military, we can't lose the steel industry. If I didn't put the initial tariffs on steel in my first term, you wouldn't be able to have a military because we wouldn't have. Every steel company, every steel company would be bankrupt in the United States and every plant would be closed.
39:45but now they're booming and putting this tariff on this additional tariff for steel and aluminum it's it's making them thrive and it's already happened for the tick tock sale will you extend that deadline if you don't have a deal do you support well we will have a form of a deal tick tock is very popular very successful very good we're gonna have a form of a deal but if it's not finished it's not a big deal we'll just extend it. I have the right to have the deal and to extend it if I want. So we'll see whether or not we have a deal. We have a lot of interest in TikTok. Is there a way for a U.S.
40:22company to operate it and buy dance to still have a share of the algorithm? Well, it'll be there are numerous ways you can buy TikTok and we will find the one that's best for the country, for our country. I'm worried about our country more than anything else with respect to TikTok. And China is going to have to play a role in that, possibly, in the form of an approval, maybe. And I think they'll do that. Maybe I'll give them a little reduction in tariffs or something to get it done, you know, because every point in tariffs is worth more money than TikTok. If you think every point, tariff is a much bigger world and TikTok is big, but every point in tariffs is worth more than tic-tac.
41:04So in order to get China to do, maybe I'd give them a reduction in tariffs as an example. Sounds like something I'd do. Do you think tariffs are going to be good for Tesla, sir? Good for who? Tesla, which makes it good for Tesla. Well, he makes, he is a fantastic Tesla. Will tariffs be good? I think they may, it could be a net neutral or they may be good. He has a big plant in Texas. He has a big plant in California. And anybody that has plants in the United States, it's going to be good for my opinion.
41:40You know, I haven't seen a mask in so long. You're wearing a mask. So nice of you. I haven't seen anybody wearing a mask in a long time. It's good. You feel more comfortable, right? Good. That's good. So go ahead. You said you want to return education control to the states. How would you handle it if a state like California were to put in place education policies you disagree with? Well, I think that California is going to be tougher because they are they're doing badly on everything they do. You know, everything they touch turns bad. So a place like California would be tougher for education. But what I would see with California is you'd have a Los Angeles department and you'd have Riverside.
42:24You'd have, you know, you'd go to various places. And I think you'd have some great areas in California and you'd have some like everything else. It doesn't work so well. But ultimately, I think it would be very successful. I think in New York, as an example, you'd go to Long Island, Westchester. You may have Nassau County, Queens. You break it up in certain ways. So they'd have maybe five departments because of the size that have five departments instead of one. A state like Iowa, you'd have one. And, I mean, they're just chomping at the bit to get going. So many states are chomping at the bit to get education.
42:56And it's going to happen fast to get the education.
43:07We've been listening to President Trump from the Oval Office, fielding a wide range of questions there. The video froze, obviously. So as soon as we get it back, we'll go back to him. But it is official. He did announce 25 percent tariffs on finished autos coming into the United States. Also talking about bringing manufacturing back to the United States. Let's get to Phil Abou to sort of unpack what was said about the auto tariffs. Phil. Melissa, 7.38 million vehicles were imported and sold in the United States last year. Now, I want you to imagine that if you had that same demand, you're going to put a 25 % tariff on 7.38 million vehicles.
43:49Clearly, that is not going to happen. What's going to happen once these tariffs go into effect is the automakers will respond in a couple of ways. One, they're going to slow down production in foreign plants for vehicles that are imported here to the United States. They're going to also probably have to raise prices and cut incentives. That will probably happen fairly quickly. And the final decision they'll have to make is how much capacity do they have to bring production back into the United States? The president says, well, there's some places that only have 60 percent capacity. It's not as simple as just flipping a switch.
44:25There's tooling. There's also making sure that the plant and the supply chain can adjust and bring production from a particular plant overseas back here. But there's no doubt this is going to be a huge hit for the auto industry. One executive in the industry texted me earlier and he said this is going to drive the auto industry, not the overall economy, strictly the auto industry into a recession. Melissa? So that's what we're seeing the automakers across the board fall. I mean, GM is down 5 percent at this hour. Ford is down something like three. so is Stellantis, even though it seemed like 25 percent on finish coming in would have been actually viewed as not as bad as expected?
45:09Sure. To an extent, it's not as bad as expected. It also leaves leverage for the president, if he's not happy with negotiations with countries, that he could ultimately hit the parts suppliers as well. One quick note, Melissa, I get this question from a ton of people. They're like, well, how quickly could General Motors or Ford, Ford, by the way, is building a plant in Tennessee. That's the only new plant that is currently under construction. But how quickly could an automaker, any automaker, build a new plant like this one here in Savannah, Georgia? Even if you had the site picked out and you said, do it right now, two and a half years to three and a half years, and that's lightning speed, Melissa.
45:49A few people I talked with when I brought this up, They laughed and they said, I've never seen an auto plant built in two and a half to three and a half years. But I guess if you expressed everything, maybe you could get that to happen. So for the people who say, well, they're going to bring all the production back here to the United States, you just don't flip a switch and make it happen. Right. President Trump also spoke about potentially exploring the idea of making the interest paid on auto loans tax deductible if you buy an American made auto fill. I mean, could that offset some of this pain?
46:23It could. I listened to that. When I heard that, I sat there and I thought, that will be appealing to a number of people. On the flip side, if you have to raise the price, and we don't know how much the automakers will have to raise prices, if you have to raise the price$4 ,000, you know, now you're getting into an average transaction price over$50 ,000. Right now, it's close to$49 ,000. Now you're going up into$52 ,000,$53 ,000. dollars. It is an attractive thing to make that that interest tax deductible. But you're also going to be looking at higher costs. Right. Phil, thank you. Phil LeBeau.
47:03Driving the auto industry into a recession, GM shares are down five percent. We're sitting around the desk looking at the declines in the automakers as President Trump is speaking. Well, it's been a difficult run already for the automakers. And we have heard about sensitivity on higher prices. And again, if you're talking about 4 ,000 on a crossover and they're saying three times that in terms of EVs, this is something that at least is going to feed through. And now, ultimately, we'll see what finally comes out. I understand that we've been given a lot of detail here, but I do think you've got a dynamic.
47:34What's also just fascinating to me is that we also heard in the same few breaths that we were talking about tariffs on lumber, tariffs on pharma, tariffs on things that, you know, let's see how they're reacting as well. But there's nothing about this that I think is market-friendly. All right. And we'll go to Washington once again, get the lowdown on everything that President Trump spoke about, because he did talk about reciprocal tariffs and the timeline there and also the other areas that could be tariffed. We're going to take a quick break and we'll be right back.
48:04Welcome back to Fast One. We got a lot out of Washington, specifically from President Trump from the Oval Office. Let's get to Megan Casella with the download on that. Megan. Hey, Melissa, absolutely. So in listening to the president roll out those auto tariffs, you're right. You mentioned this just before the break, that it was a little bit less than it could have been. It appears from what the president said that auto parts were excluded. That's just the 25 percent tariff on finished cars. But there were also a couple of points that I want to highlight that show just how far he is going. He did emphasize that these tariffs will stack on top of any existing tariffs.
48:33So that means if there's already something like a 10 or a 20 percent tariff on the EU, for example, something that we might see next week with the April 2nd reciprocal tariffs, this 25 percent tariff would be on top of that. He also said he's not really interested in any negotiations to try to remove these at any point during his term. He was emphasizing it's not a negotiating tactic, but an endgame, something that he believes could ultimately lower taxes, lower the debt. But he says this is permanent 100 percent when he was asked about it. He also talked about the reciprocal tariffs. And something I would flag there is that he said tariffs on all countries will be rolled out on April 2nd.
49:07That is a little bit of an escalation from what we've been hearing from White House officials in the past few weeks who had said some of the worst offenders in their eyes might get tariffed on April 2nd. But we could see additional tariffs over weeks or months after that. So escalating it a little bit there. But then one final point, he also again emphasized, as we heard him say last night in the Newsmax interview, that he is going to be looking for some leniency in the reciprocal tariffs. And he also said, quote, we're trying to keep it somewhat conservative. So a lot more to come on that front, but getting a little bit more clarity on the reciprocal tariffs at the same time we're learning about these auto tariffs.
49:40Melissa? Megan, thank you. Megan Casella. Let's get more on the impact from Wells Fargo's Chris Harvey, who managed to stick with us. Thank you, Chris, for sticking around. I mean, when you hear things like the auto tariffs will be made permanent, does that change your view of how things play out? It doesn't change our view, right? So, again, you still have to have some defensiveness, some lower volatility. But one thing we've been talking about in the office is a lot of credit card data has still been very good. The consumer has been strong. And what we've been saying is we're not sure it's going to be as predictive as it has been in the past because people walk into the showroom and say, whoa, how'd that happen?
50:15And you can say a lot about the U.S. consumer. When the U.S. consumer sees value, they will buy. When they don't see value, they will step away. And I think that's about to happen. We've seen a pretty decent move back higher in yields. What, if anything, does what you just heard over the last 20 minutes mean for interest rates? Not too much. I think interest rates actually do grind down. I'm not in inflation. I think inflation will continue to grind down. I think one of the things that the administration does have right, if they can get oil lower, then inflation will go lower. And oil has been going lower for the most part.
50:50Right. So we're not too worried about inflation at this point in time. We don't think rates are going to trend up much higher. We think they're more in a downward spiral, but a pretty tight range. In terms of earnings season, which we are going to be in shortly, what do you expect? I mean, it's basically a free pass for CEOs to sandbag or to say there's a lot of uncertainty, etc. So are you saying the second half of the year there will be upside to all those forecasts? Yep. Second half of the year, I think, is a fair amount of upside. But you're right. Earnings season this time around, the thing that we've been seeing from earnings season reports the reaction, not good.
51:23And I think that's going to continue. And you're right. There's no reason to go out on a limb at this point in time. And so you may actually just want to sandbag things a little bit, and that could cause a negative reaction during early season, which is something we haven't seen in a while. Is that a buying opportunity in your view? Eventually. But you're not willing to say that yet. Not yet. You don't want to go out on a limb. Chris, what are you seeing and what are you thinking just about rotation out of the obvious ones, the Mag-7s, in a world where there's been underperformance? You're talking about a barbell approach.
51:51I didn't really hear a high growth part of your barbell. Well, the high growth part of the barbell is communication. But talking about rotation, one of the things, Mel, before we got cut off, what you said is, hey, what surprised us? We were looking for regime change. Regime change was predicated on some sort of resolution between Russia and Ukraine. That, while we haven't had that just yet, there's a lot of optimism around there. And that has sparked that regime change. It's rest of the world versus U.S. It's value over growth. It's low vol over momentum. And so you're seeing people say, we have other opportunities than the Max 7.
52:22The other thing that they're saying is, hey, the growth opportunities, the trends, the absolute numbers may not be strong, but the trends are much better over in Europe. They're better in value. They're better in the rest of the world. And that's where they're putting their money. Miga. Sounds like he's talking about it. What does that sound for again? That's making international great again. Yeah, if you have to remind people, it hasn't caught on. Good point, Mel. Miga. Chris, thank you. Great to see you. Chris Harvey, Wells Fargo. Up next, Final Trades.
52:55Time for the final trade. Let's go around the horn. Tim Seymour. Tyson Foods. There is some cyclicality in chicken and beef right now. Actually, chicken prices looking interesting. Steve. All this tariff talk has me thinking steel. Leonard X. Dan Nathan. Yeah, Carter Braxton Worth. He was waiting in the wings. Did you see him really patiently? He was going to chart SLB. I think he bought the SLB. I think it's a good-looking breakout box. I had no time. Were you very good? I'll take some SLB. Oh, you like SLB too? I like SLB. That's like a little mini SLB segment. Sounds harder. Or blends. Or blends.
53:29Or blends. Because Lyft is going to get shoved in there. You've got to jam it in there. Yeah. McDonald's has been performing very nicely on what's been an interesting tape over the last few weeks. So, Cafe Mac works for me. McDonald's. And on the way home, four cheeseburgers, large fry, medium Coke. every night. Disgusting. Just tonight. And then talk to me in about an hour and a half after that. No, thank you. Thank you for watching Fast. Have a great night. Mad Money with Jim Kramer starts now. All opinions expressed by the Fast Money participants are solely their opinions and do not reflect the opinions of CNBC, NBC Universal, their parent company or affiliates, and may have been previously disseminated by them on television, radio, internet, or another medium.
54:14You should not treat any opinion expressed on this podcast as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of an opinion. Such opinions are based upon information the Fast Money participants consider reliable, but neither CNBC nor its affiliates and or subsidiaries warrant its completeness or accuracy, and it should not be relied upon as such. To view the full Fast Money disclaimer, please visit cnbc.com forward slash Fast Money disclaimer.
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