For those keeping score, Tesla is a “relative” US winner, but not elsewhere.
Global Disruption
Reuters reports US Auto Tariffs Shake Global Industry as Higher prices, Job Losses Loom.
U.S. President Donald Trump’s announcement of a 25% tariff on auto imports rippled throughout the world on Thursday, as global carmakers warned of immediate price hikes and dealers raised fears of job losses in big auto-exporting countries, many of which are U.S. allies.
The new levies are a precursor to another expected round of wide-ranging U.S. tariffs to be levied next week. But the auto tariffs alone could add thousands of dollars to the average cost of a vehicle in the U.S. and further dampen demand at a time when the sector is already struggling to manage the transition to electric cars. Most auto stocks tumbled on Thursday, with U.S. electric-vehicle maker Tesla (TSLA), a noted exception.
“The entire automotive industry, global supply chains and companies as well as customers will have to bear the negative consequences,” said Germany’s Volkswagen (VOWG.DE) in a statement.
The United States is the world’s largest importer of cars, most from Japan, South Korea and Germany, along with vehicles from neighbors Canada and Mexico. Nearly half of all cars sold in the U.S. last year were imported, according to research firm GlobalData.
Shares of General Motors (GM) down nearly 7% on Thursday afternoon, while Ford Motor (F), opens new tab and U.S.-listed shares of Stellantis were down about 3%. Tesla’s stock rose about 5%, as Elon Musk’s company is less exposed to tariffs than its competitors.
Higher Prices?
In isolation, tariffs of the magnitude imposed are guaranteed to increase prices.
The same is true even if Trump’s tariffs bring production back to the US.
However, it’s certainly possible for tariffs to collapse the global economy offsetting the inflationary aspects.
The reasons we did not seen price increases in Trump’s first term are 1) strengthening US dollar 2) tariff avoidance (China imports masked as imports from Vietnam or Mexico), and 3) the relative small size of tariffs imposed.
Note that Trump now wants a weaker dollar.
TSLA daily Chart
The Reuters-reported 5 percent bounce is now 2.71 percent.
I expect the dead cat bounce in Tesla is about over.
Tesla production in the US is relatively less impacted, but foreign growth especially Germany and China is dead.
Tesla is the obvious global retaliation against Trump’s auto tariffs.
And EV completion everywhere is increasing.
Tesla Sales in Germany Slump 76 Percent in February
On March 5, Reuters reported Tesla Sales in Germany Slump 76 Percent.
According to Germany’s road traffic agency, Tesla sold 1,429 cars in Germany, a decline of 76%, an even bigger decline than the 60% drop in January. Overall, sales of electric vehicles rose 30.8% to 35,949 in Germany.
EU Tesla February Sales
- Germany -76%
- Netherlands -24%
- Sweden -42%
- Norway and Denmark -48%
- France -45%
- Italy -55%
- Portugal -53%
BYD Annual Sales Hit $100 Billion Eclipsing Rival Tesla
On March 25, CNN reported BYD Annual Sales Hit $100 Billion Eclipsing Rival Tesla
China’s EV giant BYD recorded revenues of 777 billion yuan ($107 billion) for 2024, surging ahead Elon Musk’s Tesla in annual sales amid intensifying competition in the global market for clean-energy cars.
In a filing on Monday, BYD reported a 29% jump in sales from the previous year on deliveries of 4.27 million cars, including fully electric vehicles and hybrids.
By comparison, Tesla’s 2024 revenue was $97.7 billion, and it delivered 1.79 million battery-powered vehicles. Its annual deliveries declined for the first time last year by 1.1%.
In its latest annual report, BYD CEO Wang Chuanfu said the company experienced “rapid development” last year.
“BYD has become an industry leader in every sector from batteries, electronics to new energy vehicles, breaking the dominance of foreign brands and reshaping the new landscape of the global market,” he said.
BYD has been increasingly challenging the once dominant EV player Tesla.
In 2024, BYD had a 32% share of China’s total market for new energy vehicle sales, which includes hybrids. Tesla claimed only 6.1% of the market, despite reaching a record high in terms of shipments, according to the China Passenger Car Association.
Tesla’s Global Growth Rate Surge Is Over
Add it all up and Tesla’s global growth rate surge is over for political reasons (Vance’s and Musk’s interference in German elections), Tariff retaliation reasons, and third, China has already gotten what it needs from its relationship with Tesla in China.
But hey, Tesla is a “relative” winner in the US, at least for now.
Sadly, this is how Trump views global trade. If the US loses an arm, and the EU loses a foot, and Canada loses both legs, that is a “win” to Trump.
Lie of the Day
Yesterday, I commented News Flash: Trump Says “Car Companies Will Be Thrilled With Tariffs”
Who Do You Believe?
The Ford CEO, GM CEO, and Cox Automotive chief economist Jonathan Smoke say they are not thrilled by the tariffs.
But Trump says they are thrilled.
Since Trump has never been known to lie, you have to go with Trump on this one.
See the rest of the post for more sarcasm.
Regarding Reciprocal Tariffs
Reader: “Tariffs are reciprocal. All Canada has to do is to lower the tariffs they charge the US to what they want the US to charge them.”
USMCA IS reciprocal right now.
In extremely minor instances where it isn’t, TRUMP negotiated the deal.
Please read over and over Cheese Was a “Key Achievement” of Trump’s USMCA Trade Agreement
The fact of the matter is Trump has no legitimate right to unilaterally break a deal ratified by the Senate 89-10.
The additional pertinent fact is Trump just proclaimed to the world that he may not honor any deal, even those he signs. At some point there is a cost to this lack of trust.
Related Posts
March 24, 2025: Trump Announces 25 Percent Tariffs on Countries that Buy Venezuela Oil
I eagerly await Trump’s major announcement for Venezuela to be the 53rd state.
Trump Postpones “Liberation Day” to Focus on the “Dirty 15”
On March 24, 2025 I noted Trump Postpones “Liberation Day” to Focus on the “Dirty 15”
Trump proclaimed April 2 as “Liberation Day” on which he would announce specific tariffs on each of 200 countries.
I had my flags out and firecrackers ready.
And as my lead chart clearly shows, we desperately need liberation from Canada.
I am about ready to require logging in to comment or vote on comments.
There is too much nonsense and I am deleting a lot of garbage.
Within 2 weeks I will make the change
will loggin in let us see if there are new replies to comments? Only way now is to remember to go back to older stories and scroll through everything, who has time to do that?
I am already required to log in, Mish. If I try to post without it, it will not allow it. Let me try once more without my credentials now.
It says, below: “Please fill out this field” over my User Name Blank placeholder. I am now logging in with my comment.
He means up/down vote, not comment. You used to be able to up/down vote without being logged in.
Hot does one login?
You’ll need to create a wordpress login which obviously you’ve done if you are able to post 🙂
Long overdue imho Mish, the comment section is unreadable but for maybe 2-3 commenters.
This might fall under nonsense but seriously , is this Trumps delusional way of forcing a recession or slow down in the economy and force the feds hand to lower interest rates??
This week every US car dealer, new & used, probably felt the value of their inventory rose by 24%.
The press is other countries is quoting local car makers that this import restriction in the US is bound to cause an over supply of imports previously destined to the US in their markets, which should lower local prices. As an expat, US tariffs translate into higher standard of living for me. Go, Donald, destroy America yet again! The world thanks you.
Cars made in Mexico and Canada will only be tariffed on their foreign content.
I wonder how this will be calculated.
Imagine an aluminum engine block manufactured in Ontario with aluminum from Quebec. So far so good; all within USMCA. But the bauxite for the aluminum came from Brazil. And that is 30% of the cost of the aluminum. Does that count as foreign content?
The block is sent to Michigan. Over a thousand additional parts are added to the block to complete the engine. Those must all be traced to their point of origin and then added to the foreign content of the engine.
The engine is sent to Mexico where it is added to the vehicle assembly line process along with the 30,000 other parts that go into the vehicle. If 7000 of those parts are foreign, they must be added to the foreign cost of the car. But each individual part could have some foreign content, even if it is produced domestically.
Perhaps the tires were produced in Ohio with synthetic rubber from China, and chemicals from Europe. Multiply this process a thousand times for other components of the vehicle.
It gets complicated.
In the end, the foreign content of the vehicle coming off the Ford Mexican assembly line is determined to be 12%. The 25% tariff is applied and works out to an additional 3% cost to the vehicle. If its a Ford F150 truck that costs $50,000, then that is only an extra $1500.
Meanwhile a Toyota pickup truck from Japan has already had a 25% tariff on it since 1964 (the chicken tax). Trump is adding another 25% tariff on top of that so its now a 50% tariff. Which is why no one imports pickup trucks into the US.
I just read an article that says because it’s complicated it’s just going to be a blanket 25% to save trying to figure out all the bits and pieces. That’s what everyone is up in arms about.
https://driving.ca/column/motor-mouth/trump-double-crosses-canada-tariffs-trade-war
Yep. It’s complicated. And it’s a fluid situation subject to change on an hour by hour basis. Which is why I say, “this is what I understand to be the case, but that doesn’t guarantee it will stay that way”.
Canada and Mexico export more than half of their auto production to the US. Therefore, conceivably the tariffs will crash their economies, not the world’s.
Nope. Canada and Mexico will be less impacted than other countries by these tariffs.
There will be no tariffs on the cars we import from Canada and Mexico because they are part of the USMCA trade deal.
However, there will be tariffs on the foreign made parts that those cars contain. So if a typical car from those countries contains 10% foreign parts, the tariff will only apply to 10% of the car.
While cars from other countries will be hit with the full tariff.
Thanks for clarifying this critical point missing from this article. 👍🏻
You’re welcome. This is as I understand it. I could be wrong, and it is also possible that Trump can change his mind many more times on these tariffs.
If we’re talking the auto segment, it’s been known for decades we have an overcapacity problem. C19 created another problem…. mfg and dealer greed to levels not seen before.
One person I do know very well, works for a European based multi national.
For past couple years after what was once a US owned business got bought up by said European Multi national the formerly US company had been getting strip mined and used to build up an overseas workforce.
Now all of a sudden after Trump got inaugurated this person is getting told Job is secure and they will be getting additional brands to market domestically.
That is power of Tariff threat implied or actual affecting US job market.
Seems early to claim so much adversity as consequence of Trump economic policy.
That by the way is what Trump promised to do during his campaign, bring back Job stability.
Why would he break with a great American tradition; speak with forked tongue?
Americans regard all speech as instrumental.
Only the gullible ever take at face value what Americans aver: there’s always an agenda. Any commitment or treaty is a tactical move.
The US brought Perfidious Albion to the New World.
It surely is a thrilling time for car companies — no boring regular management activity: it’s all frenzy, anxiety, and adrenaline — like being galvanized into action by a tornado.
The EU might impose tariffs on China and Turkey – two dictatorships – in order to re-build their own industries. The bridge to the world was blown up. Trump’s policies are spreading. New modern factories will increase productivity. The US, the EU, China and India will compete with each other in the next decades. By 2050 at least one of them will not survive and break apart.
The Tariffs were a campaign promise and are intended to disrupt the industry. Auto manufacturers had plenty of warning going back to 2016, Managers can pull out their contingency plans and do what Americans emphatically endorsed three times in a row.
Would equal tariffs and regulatory costs be could or for older folks zero tariffs/regulatory be good
as was preached in the past
Where is there any discussion as one only hears that tariffs are bad
I can’t believe that I voted for this insanity, and then I remember what the alternative was.
Biden had the lowest inflation in the world post COVID. Lowest unemployment in the world post COVID. Biden even running on half his cylinders put us above the crowd. Trump during his first term threw money out the door like a proper communist. If you say it was an emergency and that’s why he put trillions on our debt… I would say that you are a proper communist and you don’t know it. You all are hateful of government help, when it’s being paid to people you hate. Guess what…Trump gave money to people you hate. He didn’t do it on purpose, though. Like all things he just shits out his ideas of the day.
Yes, agreed, Trump signing Cares act was bad but Biden signed a deal just as bad with the American Rescue Plan Act. And nearly all the Democrars voted yea for both while the Republicans at least voted against Bidens stimulus, however the Republicans are still responsible for a very large amount of deficit spending. And the Democrats, like the Republicans, appoint and support the federal reserve and their socialist interest rate suppressing debt monetization through debasement of the dollar. But theres hope, America can still turn things around if we start electing politicians of whatever party that are commited to balancing the budget and cutting debt, and abolishing the Fed, as explained by Congressman Thomas Massie:
“Americans have suffered under crippling inflation, and the Federal Reserve is to blame,” said Rep. Massie. “During COVID, the Federal Reserve created trillions of dollars out of thin air and loaned it to the Treasury Department to enable unprecedented deficit spending. By monetizing the debt, the Federal Reserve devalued the dollar and enabled free money policies that caused high inflation.”
“Monetizing debt is a closely coordinated effort between the Federal Reserve, Treasury Department, Congress, Big Banks, and Wall Street,” Rep. Massie continued. “Through this process, retirees see their savings evaporate due to the actions of a central bank pursuing inflationary policies that benefit the wealthy and connected. If we really want to reduce inflation, the most effective policy is to end the Federal Reserve.”
“The Federal Reserve has not only failed to achieve its mandate, it has become an economic manipulator, directly contributing to the financial instability many Americans face today,” said Sen. Lee. “We need to protect our economic future, end the monetization of federal debt that fuels unchecked federal spending, and put American money on solid ground. We need to End the Fed.”
Eliminate the fed? I don’t agree but the fed’s only mandate should be protecting the financial markets in the event of a panic. Fine tuning inflation and employment as mandated is where the fed errors. They even have an informal mandate to protect stocks, along with crazy social planning objectives. Congress is at fault for this nonsense, and I don’t want political brokers in charge of the money supply.
Some people see it as the political brokers are already in charge of the money supply. I’m skeptical of the thinking the Fed doesnt do what Congress, presidents want as Congress and the presidents appoint the Fed govs. With the Fed gone there at least wouldnt be this other group that we pay 4.2 billion/year in salary to that can then be blamed for our problems. Maybe Congress wouid restrain themselves more if at least a few voters knew they were directly in charge, but I understand people would doubt that too. A big part of the problem I think is the continuous monetization of the debt, and Congress might just immediately start doing it themselves as you say. So thats a good point of focus. That particular power should be reigned in for whoever is in charge. And seems like returning to dollars being backed by gold and silver would help with that.
This is but one of the global disruptions. I can’t list all the irons in the fire, there are many. Wouldn’t be too bad if one after the other they could be dispatched, but they can’t seem to die. Always rekindled over something. Please let the decision making be smart else we won’t get any further ahead than the DNC did. I don’t think I am alone in disliking goverment in general.
I would think that 100% of us can agree on this, but predict that it isn’t so:
“Sadly, this is how Trump views global trade. If the US loses an arm, and the EU loses a foot, and Canada loses both legs, that is a “win” to Trump.”
Indeed, He can only think so unilaterally and transactionally I sincerely wonder of he’s starting to “knitting with one needle”.
BTW, thinking of copper tarriffs to me takes the cake. I was a Mining Analyst in Toronto.
We are already:
The #4 copper producer in the world.Exporting around 1/3rd of our production (tell me, why does it need tariffs if we export that much)?~14% of US production is wisely from recycling.We are not copper destitute!
The silly thing is who gives a rat’s ***. Even if we max US copper drilling and produce all we could after being depleted for decades as it has been ALL reasonable cost (“low hanging fruit”) copper has, or is producing. Do we really insist on dusting off our last copper pounds for marginal (net of high production costs) profits? Why must we produce everything Trump thinks of? (Heck, let’s put a retroactive tariff on Balkin models – I.e. Millania?) Come on Donald let US women have the job!! 🙂
NO. Let some POOR artisanal miners in Blightsville, Whattheheckastan produce THEIR abundant copper resources. Why can’t they do it for a fraction of our cost – and WE put our time and capital on something FAR more value add?
This is just stupid to think >90% of the people should pay more for a fleeting resource benefitting only a few.
The mantra, Tariffs will bring back jobs plays well politically to some.
Needless to say when you dig into the economics and actual process of doing so, it is an exercise in insanity.
eg. just yesterday someone mentioned not buying any more potash because the US had so much natural gas to make nitrogen fertilizers. Tell that to any farmer and he will honestly sit there stunned. Not going to go any farther but any farmer purchasing his fertilizer based on his recent soil analysis would balk at now being told he cant purchase potash or that they are going up 25%.
Also the US is going the way of Australia and from my guess will be sharply curtailing natural gas exports in the mid term future.
Also any company contemplating a nitrogen plant based on US natural gas would be a little shocked to build a plant with natural gas possibly going up substantially in the next 2 years. Never mind the US is also approaching an electricity crisis.
etc. etc.
“The U.S. Energy Information Administration (EIA) projects that natural gas prices, specifically the Henry Hub spot price, will increase in 2025 and 2026, driven by rising demand, especially for liquefied natural gas (LNG) exports, outpacing supply growth.
Here’s a breakdown of the EIA’s forecast:
First: There are 3 main fertilizers: Nitrogen (which can be made from natural gas), Phsophorus, and Potassium (made from Potash). Farmers need all 3 of them.
You cannot make Potassium fertilizer from natural gas.You make it from Potash.
The US has very little Potash and must import 96% of what is needed.
It is shocking that folks here don’t understand that.
Trump has put 25% tariffs on the Potash that farmers must import. This will not encourage more domestic production of Potash.
Second: The US will not be curtailing LNG shipments anytime soon. We will continue to build more facilities and export MORE LNG. We will double our LNG exports from 12 bcfpd to 24 bcfpd by 2028.
https://www.eia.gov/todayinenergy/detail.php?id=62984
Third: I agree that natural gas prices will increase because of increased demand. Note that a $4.50 price for natural gas is stiil cheap. It equates to an oil price of just $27 per barrel.
Most citizens can no longer afford a new vehicle which is why automakers push leases [where you bear all costs but own zero] Sounds more like an opportunity for Trump bashing & frankly I doubt the average would notice; everything in life seems to balance out…look at the price of homes where FEWER can purchase one since Biden was at the helm & no one belly ached…
You must not know any Gen Z or Millennials. Frustration over inability to afford a home has led to no end of bellyaching from two entire generations.