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Tariffs are a subject that, for weeks, has been difficult to write about. The Trump administration’s plans seem to shift by the hour; certain industries end up with carve-outs; and new announcements seem to come from out of nowhere. Like Wednesday night, when President Donald Trump announced 25% tariffs on imported cars — roughly half the vehicles sold in America — starting in one week.

While carmakers weren’t terribly surprised by the news — even though it arrived a week ahead of schedule — the twist that almost no one expected in this announcement was the inclusion of car parts, which drastically complicates an already tough situation for the global auto industry.

There’s a lot to unpack here. But I’ll try to keep this simple (and pray that the White House doesn’t do a 180 on all of this before this newsletter goes out).

The upshot for consumers is indisputable:

For the US auto industry:

For the economy:

What we can learn from Wall Street

The market reaction to the auto tariffs illustrated how conditioned traders have become to uncertainty under Trump 2.0.

US and foreign auto stocks took a beating, as you might expect, with Tesla being a notable exception. Elon Musk’s electric vehicle company is expected to fare better than its domestic rivals because it builds all of its US-bound cars in California and Texas, and many of its cars are near the top of the list when it comes to American-made parts.

The broader market took the tariff news more or less in stride. Stocks were mostly flat Thursday until a late afternoon slump. That muted response might seem a little surprising given, well, all of the potential damage from the raft of tariffs Trump has promised to unveil next Wednesday, April 2, which he calls “Liberation Day.”

What’s with that?

“To a certain extent, the markets are looking at (tariffs) and they’re saying, ‘I’d like to press the fast forward button 12 months to see where we end up in all this,’” Dan Alpert, managing parter of Westwood Capital Management, told me Thursday. “It’s so much that is being thrown at the economy… so much that it is massively dislocated, and it will end up with a result that is very difficult to predict because of its wide-ranging nature.”

The major stock indexes tend to get the spotlight, but in the coming days and weeks, all eyes will be on the bond market, which acts as a kind of weather vane for economic health.

“If the bond market had sold off… we would have a big problem, and the stock market would tank,” he said. “Right right now, the bond market is not reacting in the way that it might if there was a conviction that this was going to lead to continuous inflationary pressures.”

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