Morning Brew Daily
Trump's Tariff Reveal Escalates Trade War & Tesla Sales Drop 13%
Thu, 03 Apr 2025
Episode 553: Neal and Toby explain what Donald Trump's tariffs mean for the global economy after his "Liberation Day" reveal in the White House Rose Garden. Then, Tesla sales are down 13% after sharing their Q1 earnings and Nintendo reveals a new Switch for the first time in years. Then Neal shares his favorite numbers from the week and here are the headlines you should know from Wednesday. Subscribe to Morning Brew Daily for more of the news you need to start your day. Share the show with a friend, and leave us a review on your favorite podcast app. Checkout TaxAct for more! Listen to Morning Brew Daily Here: https://link.chtbl.com/MBD Watch Morning Brew Daily Here: https://www.youtube.com/@MorningBrewDailyShow Learn more about your ad choices. Visit megaphone.fm/adchoices
Why did Trump's tariffs escalate the trade war?
Yeah, the big picture from this announcement, according to analysts and banks who were digesting all this information, is this is a massive shock to the economy. JP Morgan put out this note last night as the information was rolling out that was widely shared. And here were their main points.
These tariffs raised just under $400 billion in revenue, which would be the largest tax increase since 1968. The tariffs would boost consumer prices by 1% to 1.5% this year. The hit to purchasing power could take real disposable personal income growth into negative territory by the end of the year and also send consumer spending into negative territory.
To quote JP Morgan here, this impact alone could take the economy perilously close to slipping into a recession. So we are waiting for these tariffs to come into effect. The auto tariffs are coming into effect today, 25% on foreign vehicles. The tariffs that were announced yesterday, the reciprocal ones, are going into effect April 9th, about a week from now.
And you can be sure that the phones are going to be ringing off the hook in the White House as other countries think about retaliating in response to these reciprocal tariffs or try to cut deals with the Trump administration to lower these planned tariffs.
Tesla dropped its delivery numbers yesterday, and they literally dropped. The EV maker reported double-digit shrinkage in the first quarter as it faced everything from increased competition to political blowback against Elon Musk. Tesla delivered just over 336,000 vehicles in Q1, good for a 13% decline from the previous year, and its sharpest year-over-year decline since the pandemic.
It was also the fewest number of deliveries for Tesla in any quarter dating back to 2022. The figure looks even worse when you realize that other parts of the auto industry are chugging along quite nicely. Tesla's Chinese nemesis BYD saw its annual sales jump 60% in the first quarter, while domestic rival GM reported 17% sales growth.
Even the notoriously bullish Tesla analyst Dan Ives struck a more somber tone when covering the numbers. We are not going to look at these numbers with rose-colored glasses. They were a disaster on every metric, he wrote. He then offered his advice for how to stop the bleeding, and that is Musk needs to stop this political firestorm and balance being CEO of Tesla with Doze.
Luckily for Tesla investors, it looks like that day may be coming sooner rather than later. Politico reported that President Trump told his inner circle that Musk was on his way out, which helped the stock climb out of the hole its delivery numbers created. But then Trump's Rose Garden tariff announcement sent the stock down again in the after hours trading. So snip, snap, Neil.
Snip, snap. We kind of saw this coming because early reports from around the world showed Tesla sales falling off a cliff in Australia. In Germany, they declined more than 70 percent in February. In China, it's a key market, second biggest market. Sales were down 11.5 percent in March from last year. In the U.S., sales were down 2 percent in the first two months of the year.
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