Trump’s proposed 25% tariffs on imported automobiles are predicted to unleash “pure chaos,” according to Dan Ives, an analyst at Wedbush Securities. This bold move has stirred considerable debate, as the Trump administration defends the tariffs as a necessary step to rebuild an industry that, in their view, has been mismanaged over decades of poor trade practices.
Ives has coined a phrase for this situation, dubbing it the “tariff announcement heard around the world.” The analyst articulates a dire forecast, suggesting that no sector will remain unscathed in what he refers to as a coming “Carmageddon,” particularly American consumers. His calculations indicate that the cumulative impact could amount to around $100 billion annually, as automakers transfer the increased costs directly to buyers.
“Every automaker operating in the U.S. market will inevitably raise prices in some capacity,” he commented in a research note released on a Friday. The logistical ramifications of this global tariff announcement are complex and challenging to fully evaluate at present.
Ives estimates that the additional costs to consumers could range between $5,000 to $10,000 per vehicle, influenced by whether the car is a mass-market model or a premium brand. “In our view, there are no winners in this tariff scenario,” he added.
In a response to Fortune, the Trump administration took a different stance, rejecting Ives’s grim predictions about the impact of the car tariffs. They argue that these tariffs are part of a broader “America First” strategy, which includes initiatives like deregulation, providing cheaper and more abundant energy resources, and tax incentives featuring a new deduction for automobiles manufactured in the U.S.
The administration asserts that these tariffs are linked to a larger vision: a commitment to revitalizing an industrial base that has diminished over years of inadequate trade policies, which have led to numerous U.S. factories relocating abroad.
“The Trump administration is dedicated to realizing this vision,” stated Kush Desai, a White House spokesman, in a message to Fortune.
While it’s true that the short-term economic repercussions could be challenging—especially in a climate where investors demand consistent quarterly returns—the White House is aiming for a transformative approach that spans generations, akin to the strategic patience exercised by Beijing.
This long-term perspective is precisely what has led China to outpace the West in terms of advancements in its automotive sector and technological innovation.
At present, only Tesla seems capable of sustaining itself amidst the emerging domestic rivals like BYD in this vast automotive market. The situation has intensified, with an aggressive price war now in its third consecutive year. Even Elon Musk has acknowledged that the future of Tesla may no longer be as straightforward as solely being an automaker.