Trump's new series of tariffs on the auto industry (0:20). Energy executives wary of Trump trade policy (3:35). Copper prices hit another record high, gold poised to rise (4:25). Show links: Energy executives worried about Trump's policies, Dallas Fed saysPresident Trump signs executive order imposing 25% tariffs on foreign-made autosBank of America hikes gold price forecast with $3,500 in sightEpisode transcripts: seekingalpha.com/wsbSign up for our daily newsletter here and for full access to analyst ratings, stock quant scores, dividend grades, subscribe to Seeking Alpha Premium at seekingalpha.com/subscriptions.Moomoo is an advanced investing trading platform that integrates real-time and comprehensive data with no commission on options trading, stocks or ETFs. New users from Seeking Alpha can exclusively enjoy an 8.1% APY* account opening bonus, up to 15 free stocks, and up to $300 in cash rewards. Terms & Conditions apply, visit moomoo.com for more details.
Chapter 1: What are the new Trump tariffs on the auto industry?
Good morning and welcome back to Wall Street Breakfast. It's Thursday, March 27th. I'm Rena Sherbel filling in for Julie Morgan. Wall Street's major averages slumped in Wednesday's trade ahead of the Trump administration's new series of tariffs on the auto industry. The tech-heavy Nasdaq closed down 2% as traders remained averse to riskier tech stocks.
Every member of the Magnificent Seven retreated, led by Nvidia down 5.6% and Tesla down 5.5%. The Dow and S&P 500 also both closed down. Daniel Jones, investing group leader of Crude Value Insights, told Seeking Alpha, it was a relatively brutal day for market participants. A lot of this pessimism seemed to be the result of uncertainty regarding the tariff situation that has embroiled the globe.
President Donald Trump announced new tariffs on automobile imports on Wednesday. A 25% tariff will be imposed on all vehicles not manufactured in the U.S., effective on April 2nd. The tariffs will initially start at 2.5% and gradually increase to 25%. The tariffs will apply to both imported cars and foreign auto parts brought into the U.S.
Chapter 2: How are these tariffs expected to impact the auto market?
While the administration wants to bring back more manufacturing into the U.S., analysts warn it could take years and tens of billions in capital to completely reorient the supply chain to North American production. Detroit automakers and foreign automakers have been warning for weeks that tariffs could hurt the industry overall and lead to significantly higher car prices in the U.S.
Wedbush Securities analyst Anna Ives put a number on the potential pain. In our view, these initial tariffs, if they hold in their current form, would be a hurricane-like headwind to foreign and many U.S. automakers. and ultimately push the average price of cars up $5,000 to $10,000, depending on the make, model, price point, he wrote following the announcement.
Chapter 3: What are analysts saying about the potential effects of the tariffs?
RBC analyst Tom Nerian said the tariffs as set will be destructive to the auto industry and a potential disaster at the 25% level if it were to come to that. Edmunds analyst Jessica Caldwell warned that many vehicle parts are sourced globally, which would increase repair costs for car owners and reconditioning costs for dealers.
She noted insurance premiums will also likely increase as any accidents involving new parts will see increased costs as well. Bank of America thinks negotiations might prevent a major auto industry chaos. Analyst John Murphy highlighted, we continue to expect that rational economic arguments that protect and maximize U.S. workers and companies will prevail.
Chapter 4: Could negotiations mitigate the impact on the auto industry?
Ultimately, this would mean not too much disruption to the status quo, but the process to get there could be volatile. Tesla and South Korean automaker Hyundai are seen as better insulated from the broad tariff battle that's escalating. In terms of share price performance, Chinese EV makers Xpeng and Li Auto are the top gainers in the auto sector this year amid trade war headlines.
Chapter 5: How are energy and commodity markets reacting to the trade policies?
Crude oil futures climbed on Wednesday, helped by U.S. government data showing an unexpected 3.3 million barrel weekly draw in domestic crude inventories and a fourth straight decline in gasoline stocks. U.S. gasoline inventories extended their decline to four weeks, falling by 1.4 million barrels to just over 239 barrels and were 2% above the five-year average.
Gasoline stocks were forecast to have declined by 1.8 million barrels. U.S. oil and gas activity increased slightly in Q1, but energy company executives were wary of President Trump's trade policy and the effects on the energy sector, according to a new survey from the Dallas Fed. Trump has pledged his intention to unleash U.S.
energy dominance, but many executives surveyed by the Dallas Fed expressed worries about Trump's promise to drive down oil prices and said his trade and tariff policies could raise drilling costs.
One anonymous oil field services exec said in the survey, in a strange twist to the administration's hope for more domestic oil and gas production, higher steel tariffs may result in fewer wells completed due to higher completion costs. U.S. copper prices rallied to hit another record high Wednesday as the mounting trade war between the U.S.
and key trading partners threatened to squeeze supplies of the metal. Analysts have been expecting a 25 percent copper tariff would be implemented between September and November, but Bloomberg has reported the tariff could come much sooner. Copper mining companies are gaining ground while the broader stock market has been slipping.
The clamor has been so intense in recent weeks that traders have been offering as much as $500 a ton on top of LME prices to get copper that can be delivered into the COMEX, Bloomberg reported. Gold futures edged marginally higher Wednesday, as did the dollar and U.S. bond yields, but ongoing concerns over the tariffs kept prices above $3,000 an ounce,
As our listeners well know, gold is traditionally seen as a hedge against uncertainty and inflation and has climbed 15% year to date. Citi analysts said that the effect of the upcoming April 2nd reciprocal tariffs on global growth underpin a bullish outlook on gold for the next three months.
Adding the market may be significantly underpricing the effects of the tariffs and that investors should take insurance against adverse outcomes. Gold futures are poised to rise to $3,500 an ounce within the next two years, Bank of America said in a new report, while also highlighting that uncertainty arising from U.S. trade policies will continue to lend support to prices in the near term.
Other news from headlines around Seeking Alpha, OpenAI expects its revenue to more than triple in 2025 and reach $12.7 billion, according to a report by Bloomberg. First Energy discloses workforce cuts as part of reorganization. BP weighs selling stakes in two U.S. Gulf projects, according to Reuters. CRISPR therapeutic COO Julianne Bruno steps down.
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