Trump’s auto tariffs rattle markets

On March 26, President Donald Trump announced a 25% tariff on all cars manufactured outside the U.S., aiming to bolster domestic auto production. This move has introduced volatility in the stock market, particularly affecting auto stocks like General Motors and Ford Motor. Concerns are mounting over disrupted supply chains, deterred investments, and increased consumer prices, with potential trade disputes looming with key partners such as Europe, Japan, and South Korea.

• Trump’s erratic tariff announcements continued to roil markets this week
• While the tariffs themselves are a potential headwind for the economy, the larger effect is the uncertainty about what the eventual policy may be
• In 2024, there were almost 16 million vehicles sold in the United States, translating to total sales of $763 billion
• Roughly half of these vehicles (from both domestic and international brands) are imported
• A 25% tariff has potential implications on both the manufacturer and the consumer of the vehicles, depending on how much of this tariff is passed through versus absorbed
• It is difficult for the leaders of companies in the auto and related industries to run their businesses without clarity
• It is also difficult for the consumer who may have been in the market for an imported car this year or next
• As we have written about, one of the worst things for markets is uncertainty, and thus far, the rollout of Trump’s tariff policy has created a lot of it

China rolls out the red carpet for CEOs

Chinese President Xi Jinping hosted over 40 global CEOs in Beijing this week, urging them to support globalization and resist trade barriers amid growing U.S.-China tensions. The summit, held at the Great Hall of the People, included leaders from Blackstone, FedEx, Mercedes-Benz, and Samsung, among others. Xi emphasized the importance of stable global supply chains and reaffirmed China’s commitment to remaining open to foreign investment. The meeting comes as China seeks to counter slowing foreign direct investment and rising protectionism worldwide.

• The summit comes at a pertinent time for China, given the Trump administration's anti-globalist agenda
• Xi Jinping is attempting to repair China’s reputation with global businesses after taking a stark anti-business tone recently, highlighted by the treatment of Jack Ma in 2020
• It is an interesting chess match between the leaders of the two most powerful nations in the world
• At the end of the day, the future of global business will likely come down to national security
• If the United States continues to treat China as a geopolitical foe, as it has under both Trump's terms and under Biden, business and trade will likely be further strained
• It would take a strategic realignment between the two nations for this to change any time soon

CoreWeave IPO a sign of the times to come or just a bad business?

​CoreWeave, an AI-focused cloud computing company, completed its initial public offering (IPO) today, March 28, 2025, on the Nasdaq under the ticker symbol "CRWV." The IPO was priced at $40 per share, below the anticipated range of $47 to $55, raising approximately $1.5 billion and valuing the company at $23 billion. Shares opened at $39 and declined to an intraday low of $37.61 amid broader market volatility. Even though shares recovered later in the day, and despite the subdued debut, this marks the largest tech IPO since 2021, reflecting both the company's significant role in the AI infrastructure sector and current investor caution.

• The market for initial public offerings has been very soft for the last few years
• CoreWeave is a data center company that has its roots in the crypto industry, but pivoted to AI infrastructure
• The company’s IPO was heralded as an important milestone for tech IPOs as well as the market in general
• With the lower-than-expected valuation, and poor opening dynamic, many have called this AI’s “WeWork” moment
• WeWork had filed for IPO, and famously had to pull the offering due to a lack of demand
• While not wholly analogous, CoreWeave’s business has major easily identifiable flaws
• They have major customer concentration issues, with Microsoft representing over 60% of their business
• In addition, Nvidia is a major supplier of GPUs for the company, but also a major investor in the company
• It was reported that Nvidia also invested in the IPO itself, without which the CEO of CRWV said they would not have been able to go public
• While it may be true that this situation is a sign of a peak in the AI boom, it could also just be representative of a bad business
• Both things can also be true

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