Bank of America CEO Brian Moynihan unravels the impact of car rates and the future of a moving economy with the “Claman Countdown.”
Bank of America CEO Brian Moynihan has stoked the new automobile import taxation and how consumers are responding to banks' expectations of the administration's tariffs and interest rates.
The new measures announced Wednesday by the president will put 25% tariffs on passenger cars, mild trucks and several auto parts imported into the US.
“I don't think this concept was a surprise. The campaign talks about it, but with reality coming, people are beginning to adjust what it means,” Moynihan said on Thursday in the “Kraman Countdown.”
President Trump announces new car rates
Analysts at Bank of America believe the new tariffs will raise car prices and slow down to buy vehicles, he told host Liz Kraman, “That's what you think is reflected in the market.”
Bank of America CEO Brian Moynihan will appear in the second day panel session at the World Economic Forum (WEF) in Davos, Switzerland on January 18, 2023. (Stefan Wermuth/Bloomberg via Getty Images)
“If they think about it more widely, it might add a quarter of inflation. They might slow growth in places like Japan because they export more to the US, but overall, these will be absorbed over time,” Moynihan said. “But no one really knows it until they get it. These are unprecedented waters in terms of quantity and different works, etc.”
Auto tolls are expected to come into effect early next week, marking the latest collection of imports from other countries since taking office in January.
President Donald Trump will gesture during the Women's History Month event held at the White House in Washington, DC on Wednesday. (Reuters/Carlos Barrier/Reuters)
“With all the customs dialogue and trying to take that into consideration, if we go back and talk about the team, and considering our Bank of America research team, they will grow in the US, growing to 2% and 1.5% in the first few quarters, moving to 2%, which is a rather constructive view,” Moynihan told Kraman.
He also said Bank of America did not view the Federal Reserve cuts this year as “Because they think inflation is sticky and continues to be sticky.”
The Federal Reserve leaves key interest rates unchanged amid uncertainty over the economy, inflation
Inflation measured by the Consumer Price Index showed an increase of 0.2% year-on-year in February and a 2.8% year-on-year increase.
Bank of America is still watching customers spend their money as of Tuesday, Moynihan said.
“Not only is credit and debit cards, but not just a little above 5%, but more than 5% in the first quarter of March 2025 to the first quarter, money travelling from your account is at a slightly faster pace than in the fourth quarter.
“So we haven't seen it yet because we're stopping spending,” Moynihan said.
He said that spending on food has increased due to rising prices, according to Bank of America's credit card data. The restaurant and entertainment spending was also positive.
The Bank of America logo will appear on January 20, 2010 on the side of the San Francisco branch. (Justin Sullivan/Getty Images/Getty Images)
“Credit quality is good for consumers, especially the main consumer,” Moynihan said. “They are locking their mortgages at very low rates despite the higher rates and difficulties in the housing market. This adds to that as cars are already under a bit of pressure because of the higher car rates.
It “really” comes down to consumer employment, he said. He pointed out that the current unemployment and wage growth in the United States is “still relatively strong.”
The Bureau of Labor Statistics fixed the unemployment rate at 4.1% in February.
“It keeps them in good condition and it will work because we are working through this period of uncertainty.
Consumer sentiment fell by about 11% in February, according to a University of Michigan consumer survey.
“American consumers are interesting because they're going to say things,” Moynihan told Kraman. “And despite their confidence shattered last month, they spent this month as well. At the end of the day, as long as they're hired, we pay more and our turnover rates in the company are declining, the job market is solid two or a year ago.”
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He said tariffs and “the issues of tariffs and uncertainty” are more common in small and medium-sized businesses and large businesses.
“But when you look at our small, medium-sized customers, what's interesting is that before the pandemic, they borrow at about 40% of their credit rounds, meaning they use the line on average.
He suggests they are trying to make sure they “have something to use,” suggesting that tariffs “just add another question.”
Such customers “will be a little on the bystander” until more clarifications are available, Moynihan said.
