RIP to the EV tax credit

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Speaker 3 On the program today, well, yes, tariffs, but some other stuff too.

Speaker 3 From American public media, this is Marketplace.

Speaker 3 In Los Angeles, I'm Kyle Risbell. It is Tuesday, today, 8th July.
Good as always to have you along, everybody.

Speaker 3 We begin today with Element 29 on the periodic table a soft extremely ductile reddish metal with the symbol cu known to we lay people as copper which is right now as expensive as it has ever been in all the time we have been pulling it out of the ground up 17 at one point above five dollars fifty cents a pound now The name of this program is, of course, marketplace, not industrial metals daily,

Speaker 3 but copper does provide us a good window into the key issue in this macroeconomy right now.

Speaker 3 At a cabinet meeting today, President Trump announced that tariffs on imported copper, again, those are taxes paid by American consumers, are going up to 50 percent, 50 percent, likely by the end of the month.

Speaker 3 So now what happens? Not just with copper, but with the tariff letters that went out yesterday and everything.

Speaker 3 Chad Bown is a senior fellow at the Peterson Institute for International Economics. Chad, it's good to have you back on the program.

Speaker 6 Thanks for having me.

Speaker 3 I am obliged to recall here that the last time we had you on was 90 days ago, and we were joking about how the president was going to change his mind and maybe put all this stuff on hold.

Speaker 3 And then lo and behold, we got out of the studio and he had put it all on hold. So here's my opening gambit to you.

Speaker 3 Is this the future of global trade policy in this economy that we're going to do it this way?

Speaker 6 Yeah, it seems like that may be the case. I mean, the putting it on hold this time.
took place yesterday at least. So it wasn't in the moment, but this seems just to be how things are going.

Speaker 3 So let's go to yesterday and the letters that the president sent out.

Speaker 3 And I want to talk specifically about South Korea, with whom we have a free trade agreement, but with whom now Donald Trump is going to impose 25% tariffs.

Speaker 3 Am I overstating it if I say free trade is dead?

Speaker 6 Yeah, I think

Speaker 6 free trade has been dead and probably been dead for a while and isn't looking good for any time in the near future. The South Koreans are in a tough spot.

Speaker 6 On one hand, a lot of what we buy from South Korea, we really, really need.

Speaker 6 So, you know, we buy a lot of semiconductors that you really don't want to put tariffs on because, you know, we need those kinds of things to build out data centers for artificial intelligence, right?

Speaker 6 If we're going to be the frontier of this kind of thing, you don't want to make that kind of stuff more expensive. But they also make a lot of cars.

Speaker 6 And President Trump really likes to put tariffs on cars, right? And so that's another thing, too. And, you know, this is a big, big challenge for how the Korean government is going to deal with this.

Speaker 3 Who do you suppose is

Speaker 3 President Trump's? Well, look, let's set it up this way. The entire global economy now is subject to the whims of one person who, as we have talked about before, changes his mind practically hourly.

Speaker 3 Who's the counterparty? Who's the counterweight? What's the equal and opposite reaction to what's happening in U.S. trade policy?

Speaker 6 Yeah, I think we don't know. It could be markets.

Speaker 6 What's certainly happening that's different this time around is there does seem to be less emphasis in other countries on the potential for retaliation. It seems like

Speaker 6 the president is intent on putting tariffs on.

Speaker 6 And so countries, when that's the situation, have to decide for themselves, you know, well, since me retaliating would be imposing costs on myself, I'd be raising prices and hurting my own economy.

Speaker 6 Maybe I don't want to do that. So it may not be that, right?

Speaker 3 It may be markets or the costs imposed on the u.s's own economy because of these tariffs that ultimately serve as any counterweight uh to the president's actions so if the white house called you and said well let's let's let me back up for a minute the president's stated rationale for putting these tariffs into place is to rebuild american industry and rebuild uh the american manufacturing workforce if he called you and said dr bound

Speaker 3 what is the best way for me to do that

Speaker 3 What would you say?

Speaker 6 I wouldn't go with tariffs. You know, I do think there are some challenges out there, especially in areas of national security concern, things that we probably do need to rebuild.

Speaker 6 But tariffs aren't going to be the most effective way of getting you there.

Speaker 6 The Biden administration chose one approach with industrial policy and tax credits and things of that nature to try to incentivize more manufacturing of certain strategic sectors in the United States.

Speaker 6 But then it was also a lot of working with partners and allies to help them become part of more resilient supply chains with with us.

Speaker 6 And right now, that's not really the approach that President Trump is taking.

Speaker 6 He seems to be going after them, going after those countries with tariffs almost as hard as he's going after the countries of concern, right? The countries like China.

Speaker 6 And that's going to make it difficult, ultimately, I think, to be able to sustain something like us, you know, a robust manufacturing sector in the United States, even if one were to develop.

Speaker 3 So, for all the resilience and all the innovation and all the strength that the American economy has, Are you sanguine

Speaker 3 that

Speaker 3 we, because the economy is us, will find our way through this?

Speaker 6 Boy, you know, I don't know. We've never seen

Speaker 6 a set of shocks of quite the magnitude that what President Trump is imposing.

Speaker 6 Again, you know, all we know today that's different from yesterday is we have an extension to these tariffs, you know, for another three weeks or so, and some of the tariffs might be changing.

Speaker 6 The big question is going to be when he starts to follow through with some of those tariffs and puts a lot of them on. It's not to say we haven't seen tariffs.

Speaker 6 We've got the 10% tariffs across the board. Those are there and those are important, but they're sort of manageable.

Speaker 6 We do have some tariffs on sectors, automobiles again, that are really, really important that are going to start to show up. But I think a lot of the

Speaker 6 big questions are still left to be answered by President Trump himself. What is he going to do with all these tariffs?

Speaker 3 Chad Baume at the Peterson Institute. Chad, thanks a bunch.
I appreciate your time.

Speaker 6 Thanks, Kai.

Speaker 3 On Wall Street today, equities were kind to steady. Bond yields did go up just a little bit.
We will have the details when we do the numbers.

Speaker 6 What's that?

Speaker 3 You say you want a story of an actual company trying to figure out its tariff strategy in real time, working its supply chains to react to the ever-changing trade news?

Speaker 3 Yeah, we can do that for you. It turns out that Walmart has opened its first beef processing plant in Kansas.

Speaker 3 That's Walmart, the world's biggest retailer, running, sorry, just checking my notes here, yes, a beef processing plant, which means it's going to be able to package its own cuts and distribute them directly to its stores.

Speaker 3 There is, I think, a word for that? Marketplace's Kristen Schwab helps me out.

Speaker 8 Not long ago, most retailers focused on selling stuff and left processing, manufacturing, and shipping to specialized companies. Then came the pandemic and all its supply chain snarls.

Speaker 8 Jessica Ramirez, co-founder of retail advisory firm The Consumer Collective, says companies suddenly had more interest in gaining control of the process called vertical integration.

Speaker 9 It gives the ability for brands to be much more agile.

Speaker 8 Companies can quickly address emergencies and the changing demands of consumers.

Speaker 9 You could respond quicker to items that you might need that might be flying off the shelves. You can also respond quicker to trends.

Speaker 8 And save money. which is always important, but extra important these days as inflation and tariffs increase the price of goods and companies scramble to find ways to absorb the costs.

Speaker 11 You can control it.

Speaker 9 You can control your pricing. You can easily see it.

Speaker 8 Vertically integrated companies know exactly what it costs to produce a yard of fabric or process a pound of ground beef. There are no middlemen, no contracts, no markups.

Speaker 8 Some companies even own container ships. Michael Woolwyn is founder of Alpine Supply Chain Solutions.

Speaker 12 If I own multiple brands and it's being made in the same plant in Vietnam or Indonesia or China, I can fill up an international container and come.

Speaker 8 Of course, being an expert in everything is not easy. It's why Matthew Hammery, who leads grocery and food retail at Alex Partners, says vertical integration can work for big companies.

Speaker 13 They've already shown they can manage a complex organization. They have a good talent pool.

Speaker 8 They can poach the best designers, marketers, and logistics managers. And those big companies also have money.

Speaker 13 If you're going to say, build a manufacturing plant, you have to be pretty sure that you're going to get the return for the capital you're going to invest in that.

Speaker 8 Meaning, it's a long-term bet mostly established brands can make. I'm Kristen Schwab for Marketplace.

Speaker 3 There's a liquefied natural gas tanker underway in the North Pacific Ocean right now, Port of Call, Incheon, South Korea, which ordinarily not a big deal. LNG moves by tanker all the time.

Speaker 3 This one, though, started its voyage in British Columbia on the west coast of Canada, a first-of-its-kind Canadian payload, as that country looks to cash in on growing Asian demand for LNG and, oh, by the way, find less tariffed markets for its product than us.

Speaker 3 Daniel Ackerman reports.

Speaker 7 There are two ways to move natural gas long distance, says David Victor, a professor of climate policy at UC San Diego.

Speaker 14 By pipeline and then longer distances by ships.

Speaker 7 Canada has been exporting its gas the first way, by pipeline. And because geography, it all goes to the U.S., which wasn't a huge issue until President Trump's tariffs.

Speaker 14 Those were a wake-up call that Canada needs to diversify its exports.

Speaker 7 But sending gas elsewhere by ship isn't cheap, says Amy Myers-Jaffe, an energy research professor at NYU.

Speaker 15 What you have to do is you have to take the gas, cryogenically lower its temperature to turn it into a liquid, and then you put it as a liquid on a ship, and then you sail it across, say, the Pacific Ocean.

Speaker 7 Then whoever buys that liquefied gas has to reverse the whole process.

Speaker 7 Gas companies in Canada invested around $30 billion in the infrastructure to do all this, says Adam Fremeth at Ivy Business School in Ontario. The payoff?

Speaker 11 The Premier British Columbia, I think, estimates that it's going to add about a half percent to Canadian GDP.

Speaker 11 So a huge lift to the Canadian economy, allowing us to get our natural gas products to new markets.

Speaker 7 Where they'll be competing with another major LNG producer, the United States.

Speaker 16 We're the number one in the world right now.

Speaker 7 Tom Sang is professor of energy finance at Texas Christian University. He says Canada's LNG could have some advantages.
It won't have to transit the Panama Canal en route to Asia like most U.S. gas.

Speaker 16 Still, I see the United States as maintaining its number one position, but for a considerable period of time.

Speaker 7 Although Canada has more export terminals planned, I'm Daniel Ackerman for Marketplace.

Speaker 3 Coming up.

Speaker 10 She goes, How come at this point you don't own your own hair salon? And I said, You're right. How come I don't?

Speaker 3 How come indeed? But first, let's do the numbers. Dow Industrials gave up 166 points today, 4 tenths percent, 44,240 there.
The NASDAQ basically flat 20,418. The SP 500 also basically flat

Speaker 3 and 25.

Speaker 3 Solar energy stocks withered today after President Trump issued an executive order directing the Treasury Department to enforce the phase-out of tax credits for wind and solar that was in the budget law.

Speaker 3 It also told the Interior Department to revise any policies that favored renewables. Shares of Sunrun dipped 11.4%.
Solar Edge Technologies dimmed 1%. Shares of U.S.

Speaker 3 copper miner Freeport McMoran spiked 2.5%.

Speaker 3 Today we went over that. Canadian mining company Eero Copper, their shares fell two and eight tenths of one percent.
Just as in FYI, oil prices are at a two-week high.

Speaker 3 Brent crude, just over $70 a barrel. Bond prices down.
Yield on the 10-year T-note up just a little bit, 4.40%.

Speaker 3 You're listening to Marketplace.

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Speaker 3 This is Marketplace. I'm Kai Rizdahl.
If you're in the market for an electric vehicle and you're counting on federal tax credits to help make said vehicle more affordable, you'd best get to it.

Speaker 3 Deep in the thousand or so pages of the GOP's new tax cut law is a provision that zeroes out those credits after September the 30th. Federal incentives for EVs actually have a reasonably long history.

Speaker 3 So, as those tax credits near their end, Marketplace's Henrietta looks at how they have changed the American car market.

Speaker 21 These credits have been around in some form since 2008, back when EVs were just barely a thing. Gil Tahl directs the Electric Vehicle Research Center at UC Davis.

Speaker 22 It was, for most car companies, a tech demonstration, a very low volume production, mostly because of the high price of batteries.

Speaker 21 At that point, car companies didn't really know if these things would work or if they'd sell, and they were really expensive to produce.

Speaker 22 But with a tax credit, Tall says that allowed them to start thinking about it as a larger volume production.

Speaker 21 And start investing in new plants, battery technology, and supply chains, because a tax credit of up to $7,500 per vehicle allowed car companies to charge more for EVs and let the credits soften some of the sticker shock for consumers, says Sam Fiorani at Auto Forecast Solutions.

Speaker 14 The incentive lowers the price for the end consumer while the manufacturer still gets to keep an additional $7,000 above what the consumer is paying for the electric vehicles.

Speaker 21 Last year, the Biden administration made the credits available at the point of sale. That helped electrics grow to just over 8% of vehicle sales in the U.S.

Speaker 21 Talis Blalak is a consultant on EV infrastructure projects. This meant that you didn't have to worry about having that extra money to pay for the vehicle up front.

Speaker 21 It meant that it expanded the market for the average person to be able to buy the vehicles.

Speaker 21 If you're interested in going electric after the credits go away, Stephanie Valdez-Streaty with Cox Automotive says a lot of leased EVs that benefited from a credit will soon come off lease into the used vehicle market.

Speaker 15 There's going to be a lot more options for consumers at different price points, different segments.

Speaker 21 And that could be one legacy that outlives the EV tax credit. I'm Henry App for Marketplace.

Speaker 3 We got a bunch of labor data last week. The jobs report, of course, we have talked about that a ton.

Speaker 3 Also, the job openings and labor turnover survey, both hiring and job openings, it turns out, were down a tetch in May, both from a month and from a year earlier, suggesting that perhaps things have been about tougher for people trying to find work.

Speaker 3 It was with that in mind that a story in the Wall Street Journal caught my eye about how some companies are advertising, proudly, in fact, a total lack of work-life balance.

Speaker 3 Think a guaranteed 60-hour work week. Lindsay Ellis covers careers for the Wall Street Journal.
She had the story. Lindsay, it's good to talk to you again.
Hey, thanks for having me.

Speaker 3 So these companies are saying outright we expect you to work 60, 70, 80 hours a week, and they're getting away with it?

Speaker 20 Yes, in short.

Speaker 20 I mean, I came across a number of job postings in which companies were pretty blunt about what their expectations were for hires and that if you didn't like the culture, you probably shouldn't even apply.

Speaker 3 So of the many thoughts that went through my head while I was reading this piece, the first one was, Toto, we are not in 2022 anymore.

Speaker 20 Yeah, I mean, and that year stands out, I mean, because the number of open positions just far outpaced the number of candidates on the market. And while the U.S.

Speaker 20 is still adding jobs, I mean, private employers, you know, that growth has stagnated. and companies have so much more leverage in this search than they did even a couple of years ago.

Speaker 3 Which gets to the crux of this piece, which is that it's not about the companies and the hours, it's about the labor market as a whole, right?

Speaker 20 Yeah, yeah. And I think that's, you know,

Speaker 20 a very good point there.

Speaker 20 From companies' vantage points, they have a lot of leverage here, and they can ask specifically for what they want, knowing that there are a number of candidates that very likely will be on board.

Speaker 3 You know, without naming any names or giving away any relationships, I am familiar with some workers in the, say, 25 to 30-year-old age range who have said to me, I will never work in a company that makes me go to the office five days a week.

Speaker 3 You know? So,

Speaker 3 how do we square that circle?

Speaker 20 Yeah, it's a great question.

Speaker 20 And to be sure, I do know a lot of younger, earlier career workers who, in fact, actually, after sort of the COVID disruptions, are more interested than than maybe people in their late 20s in working in person more frequently.

Speaker 20 So, I think it probably depends a bit on the sector and the geography and sort of the circumstance there.

Speaker 20 But

Speaker 20 I think companies might say, and recruiters might say, if that doesn't work for you, I mean, good to know. I mean, that there's sort of a level of honesty and

Speaker 20 the ability to be blunt here

Speaker 20 that maybe can drive people away who otherwise might in a different world have joined a company and then six months, nine months later, just realize this is not for me.

Speaker 3 Right. Companies that are happy, I guess, with how things are going.

Speaker 20 Sure.

Speaker 20 I mean, I did talk to, you know, a number of companies who basically said that this was a way to really set expectations and make sure that when people join, they're not blindsided by the expectations.

Speaker 20 And I think companies would also say that this type of, you work and the time that folks are committing to their jobs would be critical for their development in their future careers.

Speaker 20 I talk to some workers who say, sure, but you're going to have to pay me a lot of money for me to put in that time. So I guess that is a calculation as well.

Speaker 3 It is a trade-off. That is what the money is for.
Lindsay Ellis at the Wall Street Journal. Lindsay, thanks a bunch.
I appreciate your time.

Speaker 20 Thank you so much, Kai. Take care.

Speaker 3 We learned today, courtesy of the National Federation of Independent Business, that small businesses in this economy were just a teeny bit less confident in June than they were in May.

Speaker 3 Still and all, they're feeling a bit better right now than they felt on average over the past 50 years.

Speaker 3 With that, here's today's installment of our series, My Economy.

Speaker 20 My name is Joy Schmidt, and I'm the proud owner of Moxie Salon and Spa, located in Yuli, Florida.

Speaker 10 I've been a licensed cosmetologist for 30 years. I've absolutely loved my career, and I've always known I wanted to be a salon owner.
But, you know, the timing was never right.

Speaker 10 I had a stylist say to me one day, what are you doing, Joy? And I said, What are you talking about? And she goes, How come at this point you don't own your own hair salon? And I said, You know what?

Speaker 10 You're right. How come I don't? I went home, talked to my husband that night, and he said, I've just been waiting for you to say, Let's do it.
And that's kind of where it started.

Speaker 10 We opened Moxie May 13th, 2024. So we have been up and running now for a little over a year.
With us, you know, our startup cost was around $150,000.

Speaker 10 We did take out a loan for that because we just didn't have the funds. Right now, you know, we still have that loan out there, so I can't necessarily say that we're debt-free.

Speaker 10 Business has been better than I ever expected. I mean, I have, you know, eight stylists, two estheticians, and, you know, most of my stylists are 60% booked at this point.

Speaker 10 And, you know, we're bringing on more people to help accommodate the new growth in our area as well.

Speaker 10 So, our haircuts start at $55.

Speaker 10 Thankfully, my oldest daughter, Shana, she really had a lot to do with us getting the salon up and running and figuring out prices and picking out the decor.

Speaker 10 So, what her and I did is we researched every salon in the area to see what everybody was charging.

Speaker 10 I didn't want to be, you know, way high above them, and I didn't want to sell ourselves short being too cheap. So, we kind of find a nice middle.

Speaker 10 And one of the things that I am thankful for that a lot of our clients say is that we're reasonable with our prices.

Speaker 10 When my girls were little and I was, you know, working behind the chair doing hair, I, like I said, I always dreamt of owning a salon, but never in a million years did I think I'd be blessed to do it with all three of my kids and my husband.

Speaker 10 My 25-year-old daughter, she graduated beauty school back in 2019. And then my daughter, Haley, who is going to be 23 soon, she is an esthetician.

Speaker 10 And then my youngest daughter, that's going to be 19, she's a hairstylist as well. Now, I'm hoping that in the future, they'll want to take this over, and I can be like, Okay, bye, guys.

Speaker 10 Call me if you need me.

Speaker 3 Joy Schmidt, she owns Moxie Salon and Spa. Yuli, Florida, is where she is.

Speaker 3 You know, you are the thing that makes this series work, right? So let us know how things are going, would you? Marketplace.org/slash myconnet.

Speaker 3 This final note on the way out today, in which I will offer two data points, due credit to Bloomberg on this one, and then tell you why it's going to matter to you.

Speaker 3 Data point number one, the United States imports 72% of the fresh tomatoes that we consume. Data point number two, 90% of of those tomatoes come from Mexico.

Speaker 3 And if you're the type that likes a nice cool slice of the vegetable that's technically a fruit on a sandwich or something, well, you'd best get ready to pay as much as 17% more starting mid-month or so.

Speaker 3 There has been a decades-long tomato deal with Mexico that is set to expire in a week, and then a new tariff kicks in, 17%.

Speaker 3 All right, that's it. No more tariffs.
Tariff-free show tomorrow. I hope I'm not in charge of that one.
Jordan Manji, Zunil Maharaj, Janet Wynn, Olga Oxman, Virginia K.

Speaker 3 Smith, and Tony Wagner are the digital team. Francesca Levy is the executive director of digital.
I'm Kai Risdahl. We will see you tomorrow, everybody.

Speaker 3 This is 8 p.m.

Speaker 4 Now's the time to start your next adventure behind the wheel of an exciting new Toyota hybrid.

Speaker 4 With the largest lineup of hybrid, plug-in, hybrid, and electrified vehicles to choose from, Toyota has the one for you.

Speaker 4 Every new Toyota hybrid comes with Toyota Care, two-year complementary scheduled maintenance, an exclusive hybrid battery warranty, and Toyota's legendary quality and reliability.

Speaker 5 Visit your local Toyota dealer today, Toyota.

Speaker 4 Let's go places. See your local Toyota dealer for hybrid battery warranty details.