Weekly Brief #72
Auto tariffs for everyone (but don’t retaliate)... Plus, Hyundai’s $20 billion U.S. investment, Walmart invests $6 billion in Mexico, CoreWeave IPO, downsized by Nvidia, 23andMe is bankrupt, and more.
A huge welcome to the 34 investors who joined The J. Nicholas since last week! Haven’t subscribed yet? Join 917 intelligent investors by subscribing here.
Good morning investor 👋,
Welcome back to the 72nd Weekly Brief.
This week’s performance:
S&P 500: +1.11% | Nasdaq: +1.62% | Dow Jones: +1.28% | TSX: +0.64% | Gold: +0.92% | Bitcoin: +0.48% | The Quality Fund: +0.65%.
*Coughs* Oh, awesome! More tariffs.
Let’s get into it. (10 min read)
In this issue:
🚙 Auto tariffs for everyone (but don’t retaliate)
🏭 Hyundai’s $20 billion U.S. investment
🇺🇦 Ukraine-Russia Baltic ceasefire
FEATURED STORY
🚙 Auto tariffs for everyone (but don’t retaliate)
They say history doesn’t repeat, but it often rhymes.
Try telling that to anyone living through the 21st century.
At this point these stories write themselves.
For the sixth time as the main story of Weekly Brief, Donald Trump and the new American administration have put in place new tariffs (not to be confused with the reciprocal tariffs coming April 2): Automotive tariffs: 25% on all cars imported into the United States of America.
Auto tariffs—because history repeats itself, apparently
On Wednesday, President Trump signed a proclamation invoking Section 232 of the Trade Expansion Act of 1962 to impose a 25% tariff on imports of automobiles and certain auto parts into the U.S., labelling it a “critical threat to U.S. national security.” (Interesting fact to notice: He didn’t sign an executive order like last time, but a proclamation tied to a law passed by Congress. This makes the policy legally binding because of the statute.) The usual responses from world leaders affected by this action came after. South Korea and Canada, as I know, are already planning retaliation. Many more are plotting as I write this article.
As of the time of writing, nearly 50% of all vehicles sold in the United States are imported. Nearly 60% of the parts in said vehicles sold in the United States are assembled outside too. The integration of Mexico, Canada, and the United States' auto sector is what contributes most to these stats. Particularly the stats of car parts, where Canada and the U.S., as well as Mexico and the U.S., can send parts past the border during the production/manufacturing process multiple times before being assembled into the finished product (as we learned at the start of the year when these tariffs were threatened, and more in the weeks that followed, the North American auto industry is hugely integrated).
“Cars and car parts” as a category are Mexico’s and Canada’s first and second largest exports. Both countries, which largely depend on America as an export market. This means American cars are not only going to rise exponentially from these tariffs, but Canadian and Mexican manufacturers will now be less attractive for automakers to do business with and will face downward pressure.
A major aspect of these two economies’ exports is now in the garbage bin. And like with many products, the U.S. is the world’s largest car importer.
For the total vehicles sold in the U.S., this is where the damage goes full circle. The damage is beyond Canada and Mexico (in USD, percentage of total U.S. imported cars as of 2024) (source):
Mexico: $50 billion (22.8%)
Japan: $40.8 billion (18.6%)
South Korea: $38 billion (17.3%)
Canada: $28.4 billion (12.9%)
Germany: $25.6 billion (11.7%)
United Kingdom: $9.8 billion (4.5%)
Slovakia: $6.3 billion (2.9%)
Italy: $3.99 billion (1.8%)
Sweden: $3.97 billion (1.8%)
China: $3.8 billion (1.7%)
To fully conceptualize, here’s how much these car exports to only the U.S. make up of the country of origin’s total exports:
Mexico: 8.4% (Of everything Mexico exports to the world, 8.4% is just cars and car parts sent to the U.S.)
Japan: 5.1%
South Korea: 5.9%
Canada: 5.0%
Germany: 1.5%
United Kingdom: 1.9%
Slovakia: 5.2%
Italy: 0.6%
Sweden: 1.6%
China: 0.1%
These tariffs are expected to raise prices for U.S. consumers from $5,000 to around $10,000 per vehicle.
There isn’t much known on how long these will be in place. But there are reports that Canada will get a downgrade from the 25% tariff to a 12.5% tariff. This may apply to Mexico—that I have not been able to fact-check. Trump has mentioned he plans to ease tariffs come April 2 on some countries, so that may be the same case here. We will have to see. Canada and the EU have been discussing joint efforts for retaliation to hit economic blows to America the hardest. Though Trump quickly threatened much higher tariffs if this partnership were to go through. America’s government want tariffs, but not retaliation.
As of late, Canada is officially off on an election cycle, planned to officially end on polling day scheduled for April 28, 2025. Canada, being the largest buyer of goods from and largest exporter of goods to America, has seen these recent events as a sign for a future with less dependence on America. A signal to move away and diversify our export destinations and strengthen our military, and trade with ourselves more—without the help of America. Things I wholeheartedly agree we should accomplish, no matter the reason.
If you want to learn at least one thing from this short story, just know: When you tariff, your importers import less. They buy less stuff because stuff is more expensive. When you retaliate dollar for dollar, category for category, the same applies to your importers. Every dollar tariffs bring in taxes just means fewer imports to be taxed in the end. For the sixth time: With tariffs, no one wins.
Thank you for reading. For tariff-free stock analysis, exclusive write-ups and reports, and access to join the most knowledgable group of dedicated high-quality investors on the planet, upgrade to paid. Here’s my guarantee: If you don’t learn a single thing after subscribing (in your first month), I will personally refund you all money spent on the membership.
See you next week.
(To paid subscribers and patrons of The J. Nicholas: This week’s stock report went kaput. No guilt-tripping or excuses will be needed; just know the reason for it not being done is because I’m an idiot. It’s a long story.
If you’re paying me for extra content and my effort to provide quality research consistently, that’s what you will be getting. While the research is done for the report, the writing and consolidation aren’t.
That said, while the stock report isn’t ready this week, paid subscribers won’t be left empty-handed: The first paid-exclusive The J. Nicholas Quarterly Report will be sent out in the Discord in a few days. If you’re a paid subscriber and haven’t yet joined the Discord, kindly send me an email and I’ll get you in. Thank you to Kumari who upgraded to paid this week. And for the remaining folks who currently pay and support me. Huge thanks and appreciation to all of you. Please do enjoy the weekend.)
FINANCE
a. 🏭 Hyundai’s $20 billion U.S. investment
South Korea’s Hyundai and President Donald Trump announced a $20 billion U.S. investment this Monday, including a $5.8 billion steel plant in Louisiana—Hyundai’s first in the U.S.—set to produce 2.7 million metric tons of steel annually and create 1,400+ jobs. (The steel will supply Hyundai’s Alabama and Georgia plants.)
The announcement comes ahead of new tariffs which are said to be coming on April 2, 2025, targeting countries like South Korea (on top of the recent auto tariffs announced a few days after this investment announcement). Hyundai’s investment adds to the list of major corporate investments in America in recent months, including Apple, TSMC, Oracle, OpenAI, and SoftBank (Stargate Project). Combined, these companies alone have pledged ~$1.2 trillion.
Related articles:
b. 🛍️ Walmart invests $6 billion in Mexico
Walmart de Mexico (Walmex), essentially Walmart’s Mexican subsidiary1, plans to invest $6 billion in 2025 to expand stores and build robotic logistics hubs across the country. According to the company, this will create ~5,500 jobs. Walmex plans to expand its Bodega Aurrera, Sam’s Club, Supercenter, and Express stores with this capital, and also to open two new AI-powered distribution centers.
Walmex currently operates over 3,200 stores in Mexico, and about 83% of products sold in its stores, are made in Mexico. Walmex’s phone service, Bait, now has over 18 million users and is one of the largest phone services in the country. Walmex is also one of the largest companies in Mexico point blank, and is one of Mexico’s largest employers.
BUSINESS
c. 📈 CoreWeave IPO, downsized by Nvidia
Nvidia-backed GPU cloud company CoreWeave said on Thursday it had now priced down its initial public offering (IPO) at $40 per share, compared with the earlier range of $47 to $55 per share. This leaves the new expected IPO valuation at around $22 billion.
The IPO size was also reduced to about 37.5 million shares, compared with the 49 million shares that CoreWeave and some existing investors had planned to sell earlier. At $40 per share, multipled by 37.5 million shares, CoreWeave will raise $1.5 billion, compared to the potential $2.7 billion at the top of the initial range ($55 x 49 million). It’s a fairly large cut. A sign of potential capital injection from Nvidia? Maybe. Maybe not.
Related articles:
d. 🔚 23andMe files for bankruptcy
The genetic testing company founded by the former CEO of YouTube’s sister—the one you bought from once and never thought of ever again—23andMe, filed for bankruptcy this week. Not only that, but it has received the go-ahead by a court to proceed with the sale of its most valuable asset: its customers’ data. The stock market loves abusing privacy laws, so shares jumped 158% on the news.
In all seriousness, investors are hoping the sale of the data might generate enough to repay the $214 million in debt 23andMe owes. As you may know, for shareholders to receive compensation in a bankruptcy, the company must first pay off its debts and obligations. Bids for the data are due by May 7, and a final sale hearing is scheduled for June 17.
POLITICS
e. 🇺🇦 Ukraine-Russia Baltic ceasefire
The White House announced this week that Ukraine and Russia have officially agreed to “eliminate the use of force” in the Black Sea. A step (albeit small) to achieving full peace in Europe, one month after the war in Ukraine hit its 3 year anniversary. (This agreement does not guarantee Ukrainian port security or the reopening of blockaded ports like in Mykolaiv (Mee-koh-LAH-iv).
Throughout 2022–2023, Ukraine launched regular attacks on Russia’s Black Sea Fleet using naval drones and Neptune missiles to sink or damage vessels. One of the more famous of this was Russia’s flagship Moskva in April 2022 (which has its own Wikipedia article). As it stands today, Ukraine is said to have disabled and/or destroyed 29 of Russia’s 80 Black Sea vessels (according to them2).
Related articles:
📚 Book of the Week
For every book purchased using the links below, 100% of affiliate commissions are donated to charity. (Amount donated so far: $36.42.)
My full bookshelf: Here.
Richer, Wiser, Happier - William Green
Book Description:
Billionaire investors. If we think of them, it’s with a mixture of awe and suspicion. Clearly, they possess a kind of genius—the proverbial Midas Touch. But are the skills they possess transferable? And do they have anything to teach us besides making money.
In Richer, Wiser, Happier, William Green draws on interviews that he’s conducted over twenty-five years with many of the world’s greatest investors. As he discovered, their talents extend well beyond the financial realm. The most successful investors are mavericks and iconoclasts who question conventional wisdom and profit vastly from their ability to think more rationally, rigorously, and objectively. They are master game players who consciously maximize their odds of long-term success in markets and life, while also minimizing any risk of catastrophe. They draw powerful insights from many different fields, are remarkably intuitive about trends, practice fanatical discipline, and have developed a high tolerance for pain. As Green explains, the best investors can teach us not only how to become rich, but how to improve the way we think, reach decisions, assess risk, avoid costly errors, build resilience, and turn uncertainty to our advantage.
Green ushers us into the lives of more than forty super-investors, visiting them in their offices, homes, and even their places of worship—all to share what they have to teach us. From Sir John Templeton to Charlie Munger, Jack Bogle to Ed Thorp, Will Danoff to Mohnish Pabrai, Joel Greenblatt to Howard Marks, Green explains how they think and why they win.
Thank you for reading, partner. If you enjoyed today’s issue, feel free to share it with friends and family. I’ve placed a button below for you to do so (right underneath the paid membership line (see what I did there).
All the best,
Jacob
All of my links here.
My best work is members-only. Don’t miss out on exclusive posts, insights and benefits—upgrade today and join the community!
Walmex is publicly traded on the Mexican Stock Exchange; however, Walmart owns 70% of its outstanding shares.
That looks like a interesting read. I work in the auto industry, I am not losing any sleep over President Trump and his America first policies. After all he is the American President. What does frighten me to my very core is the prospect that low information voters and baby boomers would vote for mark "WEF" carney and the liberano's. If we had a Prime Minister that cared about Canada and Canadian's the last 10 years the effect's of possible tariff's would have much less of a possible effect on us. We should of been building pipelines, mining, attracting industry with low taxes and elimination of mountains of red tape instead of putting any and all barriers up. Now we will hear lies from the liberano's that they will do all these things, don't fall for it people your Kid's future depends on getting this election right.
Thanks.