Let's 'TACO' 'bout General Motors gassing up V-8s and golden shares

0:01NPR

0:11This is The Indicator from Planet Money. I'm Waylon Wong. And I'm Adrian Ma. And I'm Darian Woods. The three of us are gathered here once again. The Tariff Troika. The ChatGP3. We're that special time of the week. Taco Friday. What? It's indicators of the week. Yes, and my reference wasn't completely out of the blue. I'm here to taco about a new acronym referring to Trump's tariff behavior. GM doubles up on gas guzzling engines. And I've got the golden ticket or a golden share. You'll find out more after the break. This message comes from NPR sponsor Capella University. Learning doesn't have to get in the way of life.

0:58With Capella's game-changing FlexPath learning format, you can set your own deadlines and learn on your own schedule. That means you don't have to put your life on hold to earn your degree. Instead, enjoy learning your way and pursue your educational and career goals without missing a beat. A different future is closer than you think with Capella University. Learn more at capella.edu. This message comes from the Hartford. Every day, they create unique risk solutions for unique businesses. They understand the challenges businesses face today and are ready to anticipate the risks of tomorrow. Their teams know the ins and outs of specific industries, so the Hartford can help provide insurance solutions for midsize and large businesses.

1:44If a business needs it, chances are they've got it and get it. Connect with your underwriter at the Hartford or visit thehartford.com. It's Indicators of the Week. Adrian, you're up first. My Indicator of the Week is$888 million. General Motors announced this week that it's going to be investing more money into producing a new generation of V8 engines at this plant in New York. And they say this is the largest investment they've ever made in an engine plant. And the amount they're investing? $888 million. Get it? That's cute. I thought initially it was like a lucky Chinese numerology thing. That is the first thing I thought of.

2:28So this appears to represent a shift in strategy for GM because just a couple of years ago, the company announced it would be spending$300 million to turn this very same plant into a factory for electric motors, you know, for electric cars. Okay, something in the world has changed. What was that? It could be more than a couple of things, right? This announcement comes at a time when sales for new electric vehicles have slowed down and also at a time when a lot of people in Washington are hostile to policies aimed at speeding up electric vehicle adoption. For example, remember the Biden administration helped pass the Inflation Reduction Act, and that included tax incentives for people to buy electric cars.

3:13Well, the big, beautiful bill passed by the House last week would. One big, beautiful bill, Adrian. remember? Sorry, official name. Yeah, the old big beautiful bill in OBBB. But this bill would actually eliminate those tax credits. And on top of that, Congress last week passed this resolution aimed at blocking a California regulation. This regulation is aimed at banning the sale of new gas only cars in the state by 2035. GM actually helped lobby for this and President Trump is expected to sign it. Oh, wow. GM's just all in on internal combustion. Yeah, this newfangled technology called internal combustion.

3:56So it seems that way. Although GM's CEO was asked this week, you know, what does this mean for the company's electric vehicle strategy? And the CEO, Mary Barra, said that she still expects the U.S. to eventually go all electric in the future. But until then, there are going to be some challenges with making sure there are enough charging stations, with the battery technology becoming more efficient. And on top of that, U.S. car makers face competition from Chinese car makers, which actually lead the world in electric vehicle sales and battery technology. Not to mention that these cars are super cheap.

4:35So, for instance, there's China's BYD, which makes a car called the Seagull, which is a hatchback that goes for around 55 ,000 yuan or just under 8 ,000 bucks. So are you telling me that GM's CEO said the future will be all electric at the same time the company is investing$888 million in internal combustion engines? Well, what the CEO has said in response to that is that they're just trying to give consumers what they want. You know, they do think that electric vehicles are the future, but maybe not yet because a lot of consumers are not ready. They still want gas engines. They should invest in very large amplifiers and vibrations and throttle simulators.

5:24To bring the thrill of the V8 to electric. For the electric vehicles. And the horns should go, auga, auga. Thank you so much, Adrian. Now on to Waylon. What's your indicator? My indicator is one, as in one golden share. And before I explain what this is, we have to do a little recap of a long simmering will-they, won't-they business saga. Do you guys remember this proposed deal between Nippon Steel and U.S. Steel? How could I forget? You did a story about this last year. So Nippon Steel from Japan has been trying to buy U.S. Steel, the American company. Yes. And this deal is an interesting one because both presidents Biden and Trump have opposed it.

6:07Biden cited national security concerns, you know, a foreign company acquiring an iconic American company that makes something really important, steel. But Trump now supports the acquisition, and that's because the two sides have worked out some new terms, including something called a golden share. Well, I mean, Trump is a fan of things that are made of gold. All things gilded, yes. And typically with the golden share, the owner of that share gets to control a majority of the voting rights in a company, or it may get veto power on certain decisions. Now, there has not been a ton of details on what the golden share for U.S.

6:45Steel will look like. The few nuggets we have come from Republican Senator Dave McCormick of Pennsylvania, which, you know, is where U.S. Steel is headquartered. The senator went on CNBC this week. He said the government will get to approve a number of the company's board members. He also said that will allow the U.S. to ensure that, for example, steel production doesn't get cut. So Nippon Steel will be the nominal owner of U.S. Steel, but the U.S. government could get a pretty big say on how the company is run. Yeah, I mean, that is the appeal of the golden share. And this is a pretty unique structure for an American company.

7:20You don't typically see the U.S. government taking a stake in a corporation or getting involved in board member decisions. This is more common in the U.K. and in Brazil. So does this mean that the acquisition is going to finally be a done deal? Well, nothing is signed yet. And as you've seen, things can change in an instant around here, especially when it comes to cross-border negotiations. So stay tuned. But speaking of cross-border negotiations, Darian. My indicator is an acronym, TACO. I love tacos. TACO, as in this stands for Trump always chickens out. Their words, not mine. It's a spicy taco.

8:02TACO was coined by Financial Times journalist and opinion writer Robert Armstrong to explain why the stock market has shot back up again since it dropped in April. It has been kind of a wild ride, like way down and then way back up. People are wondering what the heck is happening. One explanation is that many investors now believe that the Trump administration is sensitive to markets. And so we'll ultimately not do things that hurt companies too much, like having gigantic tariffs. Mr. President, Wall Street analysts have coined a new term called the taco trade. Trump was asked about the acronym this week by a CNBC correspondent.

8:41I'm going to survive and you ask a nasty question like that. It's called negotiation. You set a number. And if you go down, you know, if I set a number at a ridiculous high number and I go down a little bit, you know, a little bit, they want me to hold that number. Yeah. So he's saying that the high tariffs are bargaining chips, which is something we've heard from the Trump administration, right? Like this is just part of the grand plan they have for a negotiation. Yeah, I'm raising it not just that Trump always chickens out is a funny acronym. Although it is a funny acronym. Yeah, because as Waylon said, the key question that the world has been grappling with over the past few months has been whether or not these tariffs are serious.

9:20I did this whole episode on that question. And what Trump seems to be saying in response to these questions about the taco term that financial journalists came up with is that the very, very high tariffs aren't serious. They're a way to get China or the EU to the negotiating table. And now the strategy is just out in the open. It does seem this way. You know, the more you shout tariff, the less sensitive markets will be. You'll be like the boy who shouted tariff. Or the president who shouted tariff. Well, it seems like he's going to need a new approach if he's going to retain this unpredictability that he's famous for.

9:57Yes, and his strategy just got a little more complicated after Wednesday. A federal court blocked Trump's tariffs that he justified on national emergency grounds. Then on Thursday, a federal appeals court said the tariffs could continue, at least for now. So Trump may well have gotten some of that unpredictability back again by accident. This episode was produced by Angel Correras with engineering by Harrison Paul. It was fact-checked by Sarah Juarez. Kicking Cannon is our show's editor, and The Indicator is a production of NPR. This message comes from BetterHelp. To mark World Mental Health Day, BetterHelp is thanking the therapists who change people's lives all around the world by providing accessible mental health support.

10:41With over 12 years of experience matching clients with therapists and one of the world's largest online therapist networks, BetterHelp can help you find the right therapist. Visit BetterHelp.com slash NPR for 10 % off your first month. Are you looking for the inside scoop on Virginia politics? Well, then tune in to the Virginia Press Room, a new podcast from the Virginia Public Access Project and VPM. Every Monday morning, we'll be joined by top reporters from the Virginia Press Corps to break down this week's biggest headlines and give you a sneak peek at what's coming next. Listen to the Virginia Press Room from VPAP and VPM, part of the NPR network.