Bank of America CEO Brian Moynihan unpacks the impact of auto tariffs and the future of the economy moving forward on ‘The Claman Countdown.’
Bank of America CEO Brian Moynihan weighed in on President Donald Trump’s new auto import levies, how consumers are reacting to the administration’s tariffs and the bank’s expectations about interest rates.
The new measure unveiled Wednesday by the president will put a 25% tariff on passenger vehicles, light trucks and some auto parts imported into the U.S.
“I think the concept wasn’t a surprise. It was in the campaign, it’s been talked about, but the reality is now coming, and so people are starting to make adjustments and trying to figure out what it all means,” Moynihan said Thursday on “The Claman Countdown.”
PRESIDENT TRUMP ANNOUNCES NEW AUTO TARIFFS
Bank of America analysts think the new tariff will cause car prices to go up and purchase of vehicles to slow down, he told host Liz Claman, noting “that’s what you’re seeing reflected in the market.”
Bank of America CEO Brian Moynihan appears during a panel session on day two of the World Economic Forum (WEF) in Davos, Switzerland, on Jan. 18, 2023. (Stefan Wermuth/Bloomberg via Getty Images / Getty Images)
“When they think about it more broadly, it may add a quarter percent inflation. It may slow down some growth in places like Japan because they export more to the United States, but overall, these things are absorbed over time,” Moynihan said. “But until they’re figured out, nobody really knows that, and these are unprecedented waters in terms of amounts and different pieces and things like that.”
The auto tariff is slated to come into force early next week, marking the latest levy on other countries’ imports from Trump since taking office in January.
President Donald Trump gestures during a Women’s History Month event at the White House in Washington, D.C., on Wednesday. (Reuters/Carlos Barria / Reuters)
“If we step way back and talk about our team, given all the tariff dialogue and trying to factor it in, our Bank of America research team… they have growth in the U.S., positive growth 2%, one-and-a-half in the first couple of quarters and moving to 2%, which is a fairly constructive view,” Moynihan told Claman.
He also said Bank of America does not see the Federal Reserve cutting rates this year “because they think inflation has been sticky, will continue to be sticky.”
FEDERAL RESERVE LEAVES KEY INTEREST RATES UNCHANGED AMID UNCERTAINTY OVER ECONOMY, INFLATION
Inflation measured by the consumer price index showed a 0.2% increase month-over-month and a 2.8% jump year-over-year in February.
Bank of America is still seeing its customers spend money as of Tuesday, according to Moynihan.
“The money moving out of their accounts — not only on their credit and debit cards, which is a little over 5%, but in total — is 5% over where it was March of ‘24 to March of ‘25 and then in the first quarter, it’s a like amount, which is a little faster paced than it was in the fourth quarter,” he reported.
“So all you hear about consumers are stopping spending, we’re not seeing it yet,” Moynihan said, noting that “bodes well” for America’s economy and will “shake out” in the future.
According to Bank of America credit card data, spending on food has gone up some due to higher prices, he said. Restaurant and entertainment spending was also positive.
The Bank of America logo is displayed on the side of a branch office in San Francisco on Jan. 20, 2010. (Justin Sullivan/Getty Images / Getty Images)
“The credit quality is good for consumers, prime consumers especially,” Moynihan said. “They have their mortgage loan locked in at a very low rate, despite the higher rates and the difficulties that cause in the housing market. Cars are already under pressure a bit because auto rates are higher, so this will just add to that, and we’ll see that shake out.”
It “really comes down to” employment for the consumer, he said, noting the U.S.’ current unemployment rate and calling wage growth “still relatively strong.”
The Bureau of Labor Statistics pegged the unemployment rate at 4.1% in February.
“That keeps them in good shape, and that will bode well as we work through this period of uncertainty as businesses and others shake out what all this means and how they adjust to it,” he said.
Consumer sentiment posted a nearly 11% drop in February, according to the University of Michigan Survey of Consumers.
“The American consumer is interesting because they’ll say things and they’ll do things,” Moynihan told Claman. “And even though the confidence was coming down last month, they still spent this month. At the end of the day, as long as they’re employed and we’re paying them more and turnover rates at companies are down and the job market’s not as tight as it was, you know, two years ago or a year ago… it’s a solid setting.”
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He said the tariffs and the “issues around tariffs and the uncertainty” are more in the small- and medium-sized businesses and large businesses.
“But if you look at our small, medium-sized customers, the interesting thing is before the pandemic, they would borrow at a rate of about 40% of the line of credit round numbers, meaning they would use the line on average 40%. Now, they’re about 3 or 4% behind that,” Moynihan said.
He suggested that they are trying to make sure “they really having something to spend on” and that tariffs “just add another question.”
Such customers are “going to be a little bit on the sidelines” until more clarify becomes available, Moynihan said.
