WrestleMania
In an effort to save US automakers, will Trump put them in a chokehold?
“All this negativity that’s in this town sucks.” – Rick Pitino
Like so many legendary college coaches before and since, Rick Pitino’s jump to the pros was marked by an inability to replicate the success he enjoyed on campus. During his three-and-a-half-year tenure as head coach of the Boston Celtics, the team never reached the playoffs, racking up a disappointing record of 102 wins and 146 losses. After a particularly tough home loss to the Toronto Raptors on March 1, 2000—Vince Carter hit a buzzer-beating three-pointer to win by two—a bitterly frustrated Pitino took to the podium to face the press. What followed was an iconic rant that will forever be part of Celtics lore:
“We’re going to be positive every day. You’re the people being negative. You and some of the fans. Larry Bird’s not walking through that door, fans. Kevin McHale is not walking through that door and Robert Parish is not walking through that door. And if you expect them to walk through that door, they are going to be grey and old.”
Bird, McHale and Parish—basketball phenoms at the core of the 1980s Celtics dynasty—fit into a broader renaissance of optimism that permeated US culture during that period. Ronald Reagan’s “Morning in America” was marked by a booming economy, soaring stock markets, and falling interest rates. The Los Angeles Lakers were showtime, Big Macs were cheap, and Mike Tyson burst onto the boxing scene with an electricity not felt since the times of Cassius Clay. In geopolitics, the Soviet Union was stared down and the space race was won. Heck, even US automakers got in on the action. Famed business icon Lee Iacocca saved Chrysler with the launch of the K-car platform, while Ford introduced the massively successful Taurus. Pitino had hoped to reprise that upbeat energy.
Judging by Hulk Hogan’s repeat appearances in Donald Trump’s campaign, the president clearly yearns to relive the heady days of the Reagan era as well. In a story brilliantly recounted in the February 14, 2025 edition of Grant’s Interest Rate Observer, Trump made a huge splash in 1986 with an audacious plan to rebuild the Wollman skating rink in Central Park, individually accomplishing what the city had pathetically failed to do. The project’s success burnished his personal brand. Four decades later, neither the man’s energy nor the controversy surrounding him show signs of fading.
A return to those glory days—the US manufacturing sector still made stuff back then—was a pillar of Trump’s winning platform in 2024, along with the contention that no self-respecting superpower should be without a vibrant set of assembly lines churning out muscle cars. A growling engine built by American hands and powered by plentiful, domestically produced gasoline is undoubtedly a great and seductive vision.
In Trump’s admittedly blunt view, the rest of the world has ripped off the US for decades by flooding the country with cheap exports while maintaining protectionist policies at home. Such a simple diagnosis comes with an equally straightforward prescription: dramatically ramp up tariffs to level the playing field. For the automotive sector, however, these tactics are likely to backfire. In fact, they could even call into question the solvency of the very companies he aims to help. Let’s explore the six main reasons why.
We begin with the observation that Trump’s main weapon—restricting access to the US domestic vehicle market—no longer delivers the leverage it once did. Total light vehicle sales in the country haven’t grown meaningfully in decades, with 2024 numbers barely reaching levels seen when Mike Tyson first became world boxing champion in 1986. Once the world’s dominant producer and consumer of cars and trucks, the US now accounts for less than a fifth of global unit sales. Additionally, the Big Three domestic players—General Motors (GM), Ford, and Stellantis—already hold roughly 40% of US market share, while foreign competitors like Toyota, Honda, and Hyundai-Kia operate sprawling assembly plants across the country, presumably insulated from the impact of tariffs.
Beyond the diminishing importance of the US market, there’s also the question of what it even means to “manufacture” an automobile in modern times—and whether any tariff regime imposed by Trump can deliver meaningful benefits to domestic champions. A new car today might contain 30,000 parts or more, each with its own complex supply chain spanning multiple countries of origin. A state-of-the-art assembly line operates as a symphony of just-in-time international logistics, making sweeping tariffs practically unworkable. Here’s more from a recent report by CBS News:
“Jessica Caldwell, head of insights at Edmunds, says it is a spreadsheet nightmare.
‘A lot of the vehicles are final-assembled in the United States, but get engines, transmissions from Mexico and Canada,’ Caldwell explained. ‘…If you look across the entire industry, there's nothing that's 100% American.’”
Trump would respond by noting tariffs could be avoided by moving operations to America—but such a massive reshuffling requires extensive product requalifications. Becoming an approved supplier in the auto industry is no small feat, and stringent testing is typically conducted on a factory-by-factory basis.
Third on the list of challenges is the aggregate friction of the transition. Our contacts in industry have been privately sounding the alarm that even the threat of tariffs is pushing the US economy toward recession. Major supply chains—including many critical to the automotive industry—have all but seized up, a dynamic not seen since the early days of the Covid-19 pandemic. The velocity of the proposed policy changes isn’t helping matters, as it’s impossible to know what the next few hours will bring, let alone the coming days or weeks. Perhaps out of fear of becoming the subject of a future Truth Social post, few executives are speaking out publicly, but Trump’s inner circle must be aware of the impending crunch.
Another reality to be confronted is that other countries can retaliate—perhaps none more so than China. In an unsigned letter to the Trump administration, Tesla warned it would likely face retaliatory action if a tariff war erupted. Tesla’s most important factory is located in Shanghai, and the company relies heavily on China throughout much of its supply chain, including for many of its all-important battery packs. China is equally critical for GM, representing the company’s second-largest market for vehicles by unit volume.
Although not directly tied to Trump’s tariff initiatives, another headwind facing the industry is the complete about-face the new administration has executed on electric vehicle mandates. While many in the industry may quietly welcome the shift, the return to business as usual leaves billions of dollars in stranded investments—capital spent in vain to satisfy the unworkable diktats of previous administrations. Worse still, California remains resolute in its push to phase out internal combustion engines, setting the stage for years of regulatory and political battles. Ford, for its part, has already begun writing down prior investments and signaling that EV virtue strutting is no longer a top corporate priority:
“Ford CEO Jim Farley did not mince words while explaining some of the drawbacks of very large, fully electric SUVs and trucks. During Ford’s fourth-quarter 2024 earnings call on Wednesday, the automaker shared its electrification roadmap, reiterating that it would focus on small and medium-sized EVs that are more economically viable instead of going all guns blazing with battery-electric models across all segments.
‘For larger retail, electric utilities, the economics are unresolvable,’ Farley said. ‘These customers have very demanding use cases for an electric vehicle. They tow, they go off-road, they take long road trips. These vehicles have worse aerodynamics and they're very heavy, which means very large and expensive batteries.’”
This brings us to the final (and perhaps most existential) issue facing US automakers. In many of the technologies that matter, China has parlayed decades of unfair trade advantages into what now appears to be an insurmountable lead over the global competition. We have long warned of this developing crisis, and one can’t help but wonder whether the Chinese have reached escape velocity. News of a major battery breakthrough from BYD last week stunned many in the industry who doubted it could be real. Having observed China’s playbook for decades, we don’t share such doubts:
“Chinese electric car giant BYD has unveiled new battery technology it says will overcome one of the biggest criticisms levelled at EVs. The world's biggest electric car manufacturers overnight revealed its 'Super e-Platform' using the latest lithium-ion-phosphate Blade battery technology that it claims can charge at speeds of up to 1,000kW.
Using a new network of ultra-fast charging devices, it is capable of adding up to 470 kilometres (292 miles) of range from a charging session lasting just five minutes. This means it is almost equivalent to the time it takes to fill up a petrol or diesel car at the pumps.”
Trump’s intent to revive America’s manufacturing swagger is admirable and important. He’s correct in diagnosing the problem and remains one of the few US politicians willing to attempt a meaningful course correction. But like Pitino struggling with the Celtics long after their heyday, Larry Bird seems vanishingly unlikely to be walking through that assembly line.
Yao Ming seems a more likely candidate.
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"They" have been ripping us off? That's rich. We sold our souls for cheap products so people could pretend to be well off andlive beyond their means. Meanwhile, countries like China, having been learning from the crap they were selling us. We have gutted our manufacturing base whilst they have been perfecting theirs. The other day I was telling a young friend of mine (in his forties) that I thought China was a good place to deploy some capital. His response to me was basically, you must be senile, all China makes is a bunch of cheap junk. Such hubris. Such ignorance. We have no one to blame but ourselves.
Another well researched article on the lunacy of much of trump’s auto tariff policies. I only wish Doomberg had speculated more on consequences of these auto tariffs….its more than a recession. Much of Trump’s economic polices are needed, especially reforming regulatory environment, cutting government costs, exposing waste and fraud, tax reform….and but much of tariff policies are counterproductive and deny economic sense. Here’s hoping Trump reads this Doomberg article!