Treasury Secretary Scott Bessent noted that there could be a tax write-off for American auto purchases.
Bank of America Securities managing director John Murphy joins Morning Brief hosts Julie Hyman and Madison Mills to explain that while the proposal could be a talking point, it's unlikely to significantly affect the "broader equation."
To watch more expert insights and analysis on the latest market action, check out more Morning Brief here.
John, I I am my Roman Empire for the morning is this quote from Treasury Secretary Scott Benson on Fox News saying that uh there could potentially be a tax write-off for American auto purchases. How are you thinking about that? How are you thinking about the consumer impact of that? And how do you price in these kind of seemingly flippant comments from members various members of the Trump administration into your models at this time?
Uh well, we're taking everything into account that everybody is saying at the moment. Uh and there are varying degrees of um disagreements in in some some of those statements. I think the idea that you would uh use auto interest expense to the consumer as a deduction uh for their AGI so they would pay lower lower taxes, I think is interesting, but that's peanuts in the equation of what we're talking about right now. It's a good uh talking point, but it really doesn't change equation based on what we're talking about right now. I think the real extreme risk here uh is twofold. Once the seven one the 7.6 million units that are being imported to the United States, um the manufacturers might decide not to make those vehicles and import them to the US. So we might have a whole lot less vehicles available to the American consumer, which actually is pretty bad, as we can all, I think, generally agree. Um, you know, and the second the the the second fold is when we talk about these parts tariffs, uh when you get beyond sort of the known tier ones that we all cover in the public markets, there's a number of tier twos and threes uh that feed into the um into those tier one components. The reality is, some of those parts might just not get made. And we face an extreme risk here in in a short term of North American production going to zero for a period of time. That would be a real shock to the system, but it's not impossible based on the way things are being discussed right now. So, I think everybody really needs to take a step back, particularly in the auto industry, where I where I where I'm at and could could speak as as an expert, uh and and take a breath and figure out what is logical here, uh particularly on the part side, so that we don't have an extreme disruption where half the industry or the entire industry is taken down.
