Markets Falling From Trump’s 25% Car Tariff?! This week’s stock market hasn’t been doing the best for my portfolio.
I suspect yours is equally affected.
If you’re feeling a little low or worried, don’t worry! You’re not alone.
To be honest, I was happy when the market went up a few days after I took some action.
I mean… knowing you “made” money in 1 day after you buy something.
It sure felt good!
I can’t deny this emotion will surface every time you take new actions.
But, let’s find out what caused this and what you can do!
The big 25% this week
Trump announced an additional 25% tax to new imported car, in effect from 3rd April.
Not only the cars, they want to tax on the car parts too!
Crazy right?!
Currently, the additional tax for the parts are not announced, but any time now BEFORE 3rd May.
This will affects a wide range of countries, with major implications for Mexico, Korea, Japan, Canada, and Germany.
The purpose?
Trying to incentivize consumers to buy American-made cars.
At the same time, making a push on american car brands.
He wants automakers to move production back to the U.S., and offer tariff-free access for domestically produced vehicles.
This move directly impacts car makers, and share price since then have reacted negatively.
Taxing car parts is crashing the market?
Taxing car parts is crashing the market?
That’s the igniter, if you think about it.
Not all cars work smoothly after you buy and use them.
So unless it makes more sense to buy a new car, the sensible thing to do is to repair.
Looking at the car parts supplier landscape, here are the top 40.
Notice how many belongs to USA?
Only 5!
When Trump targets the car parts, essentially he’s trying to disrupt the whole ecosystem and the supply chain.
This isn’t good for business and this puts the world one step closer to the FEARED trade war. Not to mention the retaliations that entails.
This isn’t good for U.S. either!
Let’s take Tesla for example.
This table shows the percentage of Tesla’s parts made in North America.
Where the other parts come from? 🤔
That’s why when news broke out about parts getting affected, I believed whole market reacted negatively.
Because, even U.S.-based car companies will also feel the increase in cost, and they too will likely raise their prices.
When everyone raise their prices to cover cost or increase margins, consumers are the one getting slapped.
Of course, buying a new car is not a NEED, so sales will likely drop and share price will reflect.
What can you do now?
Staying invested is key, but having cash on hand to invest when it dips further is important too.
So, if you have already profited from your positions, why not consider taking back your capital to increase your cash pile?
If you don’t feel comfortable doing this alone, why not join our community for weekly discussions and learn a thing or two!
I feel it beats feeling scared and WORST, alone on this!
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