Wedbush analyst Dan Ives has warned that President Donald Trump’s proposed 25% import tariffs on automobiles could result in significant disruption, which he describes as "pure chaos." According to Ives, this decision by the Trump administration is part of their effort to rebuild an industry that has dwindled over decades due to previous trade policies.
Ives has referred to the tariffs as the “tariff announcement heard around the world,” cautioning that the repercussions will be far-reaching, impacting all parties involved, especially American consumers. He estimates that these tariffs will cost U.S. consumers approximately $100 billion annually as car manufacturers will likely pass on the tariffs’ costs. According to his analysis, car prices could increase by $5,000 to $10,000 per vehicle depending on whether they are mass-market or premium brands, suggesting that no one benefits from these tariffs.
The Trump administration has provided a different perspective on these tariffs. They see them as part of a broader "America First" strategy that includes deregulation, cheaper energy, and tax cuts, including new deductions for U.S.-manufactured cars. Their goal is to restore industrial strength lost over the years due to unfavorable trade policies, which led to numerous American factories relocating overseas. White House spokesman Kush Desai reiterated the administration’s commitment to this vision.
The administration draws parallels with China’s long-term strategic approach to industry building, expressing a desire for a similar mindset where the focus is on long-term growth rather than short-term gains. This approach has allowed China to surpass Western nations in technological advancements in the auto industry.
Currently, Tesla remains among the few able to compete with domestic Chinese automakers like BYD in China’s vast automotive market. However, a prolonged price war has affected even Tesla, leading CEO Elon Musk to reconsider the company’s primary role as an automaker.
Desai emphasized the need for the U.S. to become a manufacturing leader rather than merely assembling foreign parts, underscoring critical industries’ significance to national security and economic interests. However, Ives, known for his positive views on Tesla’s recent focus on humanoid robots, is skeptical of the feasibility of this ambition. He notes that even American-made cars include 40% to 50% foreign parts, making the goal of a completely U.S.-manufactured car unviable in the present scenario, especially for labor-intensive components such as wire harnesses and high-tech semiconductors that have never been produced domestically.
In conclusion, Ives characterizes the notion of an all-American car, built entirely with U.S.-made parts, as a fictional concept. This story was initially reported on Fortune.com.
