A.M. Edition for Mar. 27. Shares in global carmakers are sliding after President Trump said he’d impose a new duty on automotive imports starting next week. European autos reporter Stephen Wilmot discusses how that move could affect car prices and demand. Plus, leaders meet in Paris to plan for a European armed force in Ukraine to implement a potential ceasefire with Russia. And the WSJ’s Stu Woo on how the used phone market is taking off, as shoppers - feeling ripped off by $1,000 devices - hunt for cheaper alternatives. Luke Vargas hosts. Sign up for the WSJ’s free What’s News newsletter. Learn more about your ad choices. Visit megaphone.fm/adchoices
Chapter 1: What are the implications of Trump's 25% tariff on car imports?
President Trump makes good on his pledge to penalize foreign carmakers, announcing plans for 25 percent tariffs on global imports. Plus, European leaders move to build a Ukraine support force without the U.S. And the used phone market takes off.
If you buy a secondhand phone, you pay a third of the price, maybe half the price for a phone that's pretty similar to a brand new one.
It's Thursday, March 27th. I'm Luke Vargas for The Wall Street Journal, and here is the AM edition of What's News, the top headlines and business stories moving your world today. global reaction is pouring in after President Trump yesterday evening announced that the U.S. would impose 25 percent tariffs on all automotive imports starting April 3rd.
The announcement appeared to dispel any chance of an exemption for countries like Mexico and Canada, which have a free trade agreement with the U.S. and would be added on top of 25 percent tariffs on goods from those countries that Trump had already imposed.
Chapter 2: How will the tariffs affect North American trade relations?
Canadian Prime Minister Mark Carney was quick to respond, invoking the interests of the country's unionized auto workers and its bilateral trade with the U.S.
And this is a direct attack, to be clear, a direct attack on the very workers that I stood in front of, uniform workers I stood in front of this morning at the Ambassador Bridge, a bridge that is a symbol and a reality up until now. of the tight ties between our two countries, ties of kinship, ties of commerce, ties that are in the process of being broken.
Carney pledged to respond to the U.S. tariffs, but said he'd first wait to see the details of Trump's executive order. The province of Ontario is home to the bulk of Canada's auto industry, and its premier said yesterday that car plants on both sides of the border would shut if Trump's plans went ahead. Meanwhile, we've yet to hear a response from Mexico, the biggest auto exporter to the U.S.
The country sends a number of popular vehicles north of the border, including GM, Ram, and Toyota pickups, luxury models from BMW and Audi, and affordable sedans from Nissan, though industry officials are warning that the tariffs could trigger price hikes that put vehicles further out of reach for Americans after sizable cost increases since the pandemic. Glenn Stevens Jr.
is the executive director of Misch Auto, a business group that represents Michigan's auto sector.
What we're concerned about is the average transaction price of a vehicle is already at around $49,000, near an all-time high. So incremental or even major shifts in that pricing is going to affect demand, and that's a concern of us because that has a backward push on the supply chain with regards to production cuts and maybe employment cuts.
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Chapter 3: What is the European and Asian automakers' reaction to the tariffs?
So what reaction are we seeing from automakers beyond North America and how are major players in the industry responding? For more, I'm joined by Journal European Autos reporter Stephen Wilmot. Stephen, first, what has the broad reaction been to this from a sector that has very much been in Trump's crosshairs since even before he took office?
Were there any details of what was announced yesterday that have caught folks off guard?
Well, I think this really was about the worst case scenario for global automakers and the US trading partners. So we have seen quite a strong negative share price reaction. The German players are down 4% to 5% in Europe this morning. That followed falls on Asian stock markets. The worst affected was Hyundai.
which isn't surprising because it's actually one of the companies that ships most to the US. It always used to be Japan that was number two, but South Korea has taken it over. And one of the reasons for that is, well, Hyundai and Kia have been extremely successful in the US.
And because their success is relatively recent, they haven't localized as much of their production as the Japanese players who are more mature in the market.
Japanese carmakers also falling today, and unsurprisingly, Japan's prime minister shot back pretty quickly to Trump's announcement, adding that Tokyo will be looking at all options as it decides how to respond. The European Commission president also saying that the bloc would safeguard its economic interests. Where is all of this leading?
Well, absolutely, there could be retaliatory tariffs. The US's trading partners haven't yet said what they might be, but they're saying they're preparing things. So we're likely to see some kind of tit for tat response. The share price reactions do show some kind of scepticism on the part of investors that this is for real.
For example, UBS was estimating recently that the German automakers profits could be impacted by 10 to 20%. Well, we haven't seen their share prices fall by that amount, right?
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Chapter 4: How might the tariffs impact global car prices and demand?
Though a concern for the automakers in the long term is, let's say, if tariffs lead the whole automotive supply chain to get more expensive, that could weigh on demand, which is obviously a massive long-term risk.
Absolutely. I mean, they have the choice to put prices up to keep their margins, but that has an impact on demand. Analysts are sort of saying... Anything between $5,000 and $10,000 could be added to the price of a car. Clearly, carmakers could choose to absorb the tariff hit to some extent. BMW is one of the carmakers that's been most transparent about this so far.
It said that it will maintain its prices in the US until early May, and then it will reconsider. So there are short-term responses and long-term responses in this.
The president of the United Auto Workers Union, Sean Fain, who's very enthusiastic about Trump's move here, saying that the tariffs were, quote, a major step in the right direction for auto workers and blue collar communities. What of that? How widespread is that sentiment? And is there a sense that this U.S. trade policy could have a positive effect on American manufacturing in the long run?
Yeah, it's fair to say that the UAW has been one of the most consistent voices in favour of President Trump's tariff policy, despite the historic alignment of the UAW with the Democratic Party. And that reflects a very long held belief in trade union circles in Michigan that the North American free trade agreements have been bad for US auto workers.
Pretty much everyone else points more to the added costs that you get with tariffs. But there is a grain of truth in what Trump has said, that the offshoring stopped during his first term and you got more factory investment since. That there is some nuance in there because the shift to electric vehicles have also triggered a wave of investment.
So Mercedes-Benz has, for example, invested a lot in Tuscaloosa, BMW in Spartanburg, Hyundai. As they've been successful in the US, they've been onshoring more and more of their production. They still import a lot and that's the big problem for them. and Trump's tariff policy could accelerate some of those investments, and we could see further announcements in that vein.
That was Journal European Autos reporter Stephen Wilmot. Stephen, thank you so much for stopping by. Thank you. And coming up, a coalition of the willing gathers in Paris in order to put boots on the ground in Ukraine. We've got that story and much more after the break.
Military delegations from some 30 nations are in Paris today to discuss plans for a European armed force that could be deployed to Ukraine to implement a potential ceasefire with Russia. French President Emmanuel Macron and UK Prime Minister Keir Starmer have been leading efforts to build a so-called coalition of the willing to put boots on the ground.
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Chapter 5: Could the tariffs benefit American auto workers?
And ahead of the summit, Macron said the force could respond if Russia launched an attack.
So we are not on the front lines. We don't go to the fight. But we are there to guarantee a lasting peace. It's a pacifist approach. And the only ones who would, at the moment, trigger a conflict, a bellicose situation, would be the Russians, if they decided again to launch an aggression. The U.S.
is notably absent from the Paris talks, with Trump's special envoy Steve Witkoff dismissing the idea of a European deployment or even the need for it. Earlier this week, the White House said it had reached an agreement between Russia and Ukraine to eliminate the use of force in the Black Sea, which came after Russian President Vladimir Putin agreed to end attacks on energy infrastructure.
However, President Trump said Russia appeared to be slow-walking negotiations on an unconditional ceasefire, with Moscow trying to extract further concessions from the West. Brazil's Supreme Court has ordered former President Jair Bolsonaro to go on trial for an alleged plot to overturn his 2022 election laws.
In a blow to one of President Trump's closest allies in Latin America, the justices ruled that Bolsonaro should stand trial on five charges, including planning a coup and running an armed criminal organization.
In a post on X, the right-wing leader said the court was trying to lock him up ahead of elections planned for October 2026, with some recent polls showing Bolsonaro would narrowly win the election against President Lula da Silva. An appeals court has dealt a setback to the Trump administration's bid to restart deportation flights of alleged Venezuelan gang members using 1798's Alien Enemies Act.
The law allows a president to deport citizens of countries considered U.S. enemies. However, lawyers successfully argued that deportees weren't given a fair chance to contest their membership in the Tren de Aragua gang, a recently designated foreign terrorist organization. leading a U.S. district judge to block deportation flights earlier this month. In its two-to-one decision yesterday, the U.S.
Court of Appeals for the D.C. Circuit upheld that block, with the judge saying the administration hadn't shown it was likely to prevail. The administration has signaled it's prepared to ask the Supreme Court to hear the case if necessary. The U.S. government will probably run out of money to pay its bills by August or September.
That's the first official estimate provided by the Congressional Budget Office of the so-called X date that will require lawmakers to raise the federal debt limit, though the CBO added that significantly weaker revenue collection could push up the X date to before a mid-June tax payment deadline. The projection puts lawmakers on the clock to figure out how and when to raise the debt limit
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