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Rebel Finance Podcast-Episode 6 is out, we talk to Stefan Rust about inflation, modern monetary policy, and stable coins.

Related:

Fidelity plans to launch stablecoin in digital assets push-FT.com

Market Recap

Selling from Wednesday followed through a bit, think it was more related to the negative AI headlines than tariffs. Interestingly, the MSFT headline was pretty much the exact same from a couple of weeks ago that MSFT denied. April 2 is looming though and caution is still warranted. Jefferies take this morning….

SPY is now below the 200 day moving average again…..

News vs. Noise

Quantinuum Claims Quantum Computing Breakthrough. Commercial Applications Are On the Way, Says CEO.-Barron’s

CoreWeave Prices IPO at $40, Well Below Estimates. It’s Another Headwind for AI and Public Markets.-Barron’s

Wall Street analysts say Elon Musk is the clear auto tariff winner: ‘Tesla wins, Detroit bleeds’-CNBC.com

Deep Dive: Trump's Auto Tariffs – Winners, Losers, and Rankings

President Trump’s recent announcement of a sweeping 25% tariff on imported cars and key automotive parts marks a seismic shift in the automotive landscape, significantly exceeding market fears and profoundly impacting the automotive industry's profitability, competitive dynamics, and investment strategies.

What's Happening?

Starting April 2, a 25% import tariff will apply broadly to all vehicles imported into the U.S., including those from Europe, Asia, and significantly, from Mexico and Canada. There is a modest carve-out for U.S. parts content in vehicles from Canada and Mexico, slightly mitigating the full tariff burden for North American manufacturers.

Wall Street’s immediate reaction was severe, particularly hitting General Motors (GM), whose shares plunged nearly 7%, highlighting intense concern over profitability and supply chain disruption.

Winners

1. Tesla (TSLA): 9/10

• Why: Tesla produces almost all its U.S. vehicles domestically, insulating it significantly from direct tariff impacts. This gives Tesla increased pricing power and competitive advantage over foreign-import reliant competitors.

• Investment implication: Clearly the leading winner—strong relative beneficiary, likely gaining market share and margin advantage.

2. Domestic Suppliers (e.g., Magna International (MGA), Lear Corp (LEA)): 8/10

• Why: Suppliers who produce significant automotive components domestically or within tariff-mitigated North America could see increased demand as manufacturers shift sourcing to avoid tariffs.

• Investment implication: Beneficial long-term tailwind; however, short-term uncertainty remains around OEM production disruptions.

3. Ford (F): 7/10

• Why: Ford produces approximately 80% of its vehicles for the U.S. market domestically. While some tariff exposure remains, it's comparatively minimal, placing Ford in a stronger competitive position than many peers.

• Investment implication: Ford may benefit through market share gains but will face near-term volatility.

4. U.S. Steel Producers (U.S. Steel (X), Cleveland-Cliffs (CLF)): 7/10

• Why: A tariff-driven push to domestic manufacturing indirectly benefits American steel producers as demand rises for locally-sourced raw materials.

• Investment implication: Positive longer-term impact, given structural shifts toward reshoring.

5. United Auto Workers (UAW): 6.5/10

• Why: Domestic employment and union leverage improve as manufacturers may reshore production to avoid tariffs.

• Investment implication: Indirect positive sentiment; strengthens union negotiating positions with domestic automakers.

Losers

1. General Motors (GM): 3/10

• Why: GM imports approximately 45% of vehicles sold in the U.S., making it significantly exposed. Margins will likely face severe pressure unless production is reshored rapidly, which is capital-intensive and time-consuming.

• Investment implication: Material downside earnings risk; valuation rerating lower in the near-term.

2. Volkswagen (VWAGY): 2.5/10

• Why: Imports ~80% of U.S.-sold cars, heavily exposed to tariffs, challenging profitability and competitive positioning in North America.

• Investment implication: Major negative structural shift—expect deep margin compression or severe U.S. market retreat.

3. Hyundai (HYMTF), Kia (KIMTF): 2.5/10

• Why: Both Korean automakers import roughly 65% of U.S. sales, implying substantial tariff-related headwinds and margin erosion.

• Investment implication: Near-term and structural negatives; sales volume declines likely without rapid domestic production adjustments.

4. BMW (BMWYY), Mercedes-Benz (MBGYY): 3/10

• Why: High reliance (~50-60%) on imports for U.S. sales exposes these premium brands directly to tariffs, squeezing margins in a critical market.

• Investment implication: Likely margin contraction, especially on U.S.-centric premium segments. Pricing pressures and potential demand erosion.

5. Toyota (TM), Honda (HMC): 4/10

• Why: Significant reliance (~50-65%) on imports means notable earnings pressure. Their existing U.S. factories mitigate some of the impact but won't entirely insulate profitability.

• Investment implication: Moderate negative earnings impact expected; these companies have resources to adapt but face short-term headwinds.

Regulatory and Competitive Implications:

• Tariffs will likely drive structural industry changes, prompting significant reshoring of production capacity, increasing capital expenditures, and raising domestic manufacturing costs.

• Elevated consumer prices may suppress overall demand unless mitigated by incentives (e.g., proposed tax-deductible U.S.-made vehicle loan interest).

• Retaliatory tariffs from Europe, Japan, South Korea, and others are probable, potentially broadening the negative economic implications.

Strategic Investment Implications

• Near-term (2025):

  • Avoid or underweight heavily import-dependent OEMs (GM, Volkswagen, Hyundai, Kia).

  • Overweight domestically-focused producers (Tesla, Ford) and U.S. auto suppliers.

• Intermediate-term (2026-2027):

  • Selectively re-enter well-managed global automakers (Toyota, Honda, BMW, Mercedes) if they adapt quickly by reshoring production.

  • Continued overweight in Tesla due to structural competitive advantages.

• Long-term (Beyond 2027):

  • Increased capital allocation to infrastructure-focused firms benefiting from reshoring trends (domestic suppliers, steel producers).

  • Strategic long positions in companies successfully transitioning production capacity domestically or significantly lowering North American import exposure.

Ranking Summary for Easy Reference (1-10):

Winners:

Losers:

Conclusion:

Trump's tariffs significantly disrupt the auto industry's landscape, fundamentally altering competitive dynamics. Domestic manufacturers and suppliers emerge as winners, while companies heavily reliant on imports face substantial margin erosion and strategic disadvantages. Investors should strategically reposition portfolios accordingly, focusing on companies least impacted by tariffs, positioned to benefit from reshoring, or able to adapt quickly and efficiently to mitigate damage.

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