25% Tariffs Aren't Enough to Stop China
President Trump's 25% tariffs on Chinese imports are move in the right direction, but certainly not enough to stop China from conquering the world by 2049 or so. Trump tariffs are brilliant as a bold step toward U.S. economic sovereignty and auto sufficiency. However, in the grand scheme of a global trade completely dominated by China as the top manufacturer in the world, 25% may be little more than a speed bump for China’s well-oiled export engine. To curb our reliance on Chinese manufacturing and reinvigorate domestic production, harsher measures—perhaps even a total embargo—may be necessary.
China’s Pricing Power: A Strategic Advantage
Why 25% Is Not a Serious Deterrent
Why a 100% Tariff Should Be the Starting Point
A Total Embargo: The Nuclear Option
Conclusion: It's Time to Make America (Not China) Great Again
China is not a passive actor in this economic chess game. It has decades of experience managing its vast manufacturing base to weather external shocks. In response to tariffs, Chinese firms—often backed by state subsidies—can simply lower prices to neutralize the effect of U.S. import duties.
For example, if a product costs $100, and a 25% tariff raises the landed cost to $125, Chinese exporters can slash their price to $80, keeping the final U.S. price unchanged. This strategy preserves market share, undercuts American competitors, and maintains the flow of capital into China’s export economy.
A 25% tariff may sound punitive, but in practice, it’s a manageable cost of doing business for many Chinese companies. The Chinese government often offsets these hits with subsidies, cheap financing, tax rebates, or free intellectual property (often stolen by cyber hackers), insulating its exporters from the sting. Meanwhile, American importers—still chasing the lowest prices—have shown little reluctance to continue buying Chinese products with the same appetite that we buy Chinese take out food.
The result? U.S. consumers barely notice the tariffs, China absorbs the impact, and American manufacturing remains undercut.
If the objective is to restore industrial independence and revitalize strategic supply chains, a 100% tariff should be considered the opening bid—not the ceiling. A doubling of import costs would finally create strong enough price signals to force American businesses to reconsider sourcing decisions.
It would:
Create genuine financial incentives for reshoring manufacturing.
Level the playing field for American producers who can’t match subsidized Chinese prices.
Signal a serious commitment to ending strategic dependency.
Even then, Chinese exporters might still try to absorb some of the impact. Which brings us to the next logical step.
To truly cut the cord, a full embargo on non-essential Chinese goods may be necessary. This wouldn't mean banning critical rare earths or essential medicines overnight—but it could target non-strategic categories such as consumer electronics, fast fashion, furniture, household goods, and all the plastic junk we buy from China every single hour of the day.
Such an embargo would:
Force American companies to develop or restore domestic manufacturing capacity.
Accelerate diversification of supply chains toward allies and democratic partners.
Finally break the cycle of dependence on ultra-cheap Chinese labor and centralized production.
Yes, prices would rise. Supply chains would strain. But in exchange, the U.S. would regain control over its economic destiny. It would be the best and fastest way to make America great again. The liberal economic model of globalization and free trade agreements worked greatly for China. It's time to pull the plug once and for all before it is too late.
The globalization experiment was a good thing. It proved that rich countries can get nominally richer by having others do the work for them. However, invariably, it is work what makes countries and individuals great. China was the hardest worker and the smartest one. Globalization worked great strategically for China.
A 25% tariff at this stage of the game is way too little and super late. It may be politically palatable, but it is not economically decisive. If we are serious about economic self-sufficiency and stop making China great again, we need a new strategy -- one that starts at 100% and doesn't flinch at the prospect of a full embargo.
Because if we keep asking China to supply everything we need, we’ll be importing more than goods—we’ll be importing dependence on China that will seriously compromise security and defense in a few years. The time to quit China --even if cold turkey -- is now. Tomorrow may prove too late.
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Is Carvana (CVNA) the Liberation Day Stock to Buy?
Morgan Stanley: Upgraded Carvana from "Equal-Weight" to "Overweight" on March 25, 2025, raising the price target from $260 to $280, suggesting over 25% upside from the trading price at that time.
Piper Sandler: Upgraded Carvana from "Neutral" to "Overweight" on March 20, 2025, maintaining a price target of $225, indicating more than 20% potential upside.
JP Morgan: Maintained an "Overweight" rating on March 27, 2025, adjusting the price target from $365 to $325.
As the automotive industry braces for significant shifts due to impending tariffs, investors are evaluating potential opportunities within the sector. One company under the spotlight is Carvana Co. (CVNA), an online used-car retailer that has demonstrated resilience and growth in recent months.
Carvana: Company Overview
Founded in 2012 by Ernest Garcia III, Ryan Keeton, and Ben Huston, Carvana revolutionized the car-buying experience by offering a fully online platform for purchasing and selling used vehicles. The company's innovative approach includes features like multi-story car vending machines and touchless delivery services, catering to the evolving preferences of modern consumers. Carvana went public in April 2017, trading under the ticker symbol CVNA on the New York Stock Exchange.
Carvana's Recent Stock Performance
Over the past six months, Carvana's stock has experienced a notable upswing. As of April 1, 2025, CVNA is trading at $212.59, reflecting a 22% increase from its price six months prior. This upward trajectory indicates growing investor confidence in Carvana's business model and market position before and after Liberation Day.
Analyst Forecasts for CVNA
Analyst opinions on Carvana's future performance are mixed. Some view the recent stock price decline—over 40% from its February peaks—as a buying opportunity, citing a reasonable valuation at approximately 22 times adjusted EBITDA. However, others express caution due to the company's history of financial instability and the broader economic uncertainties introduced by the new tariffs and Liberation Day.
Liberation Day
President Donald Trump has declared April 2 as "Liberation Day," marking the implementation of new tariffs aimed at reducing the United States' reliance on foreign goods. These measures include a 25% tariff on imported automobiles and auto parts, with no exemptions. citeturn0news22 The tariffs are expected to increase the cost of new vehicles significantly, with estimates suggesting price hikes ranging from $4,700 to $10,000 per car.
"Liberation Day" is not only about cars. April 2, 2025 marks the initiation of a series of MAGA tariffs aimed at trumping America's reliance on globalization and trade agreements. Americans are hooked and addicted to cheap foreign good. Liberation Day is the start of a federal government attempt at reducing the United States' reliance on foreign products. While significant attention has been given to the 25% tariff on imported automobiles and auto parts, these measures extend beyond the automotive sector.
Impact on the Automotive Market
As new car prices rise because of tariffs, the used car market may become more attractive to consumers seeking affordable transportation options. As affordability becomes a primary concern, buyers may seek alternatives to new vehicles, bolstering the pre-owned vehicle sector. Carvana, with its expansive online inventory and customer-centric services, stands to benefit from this trend. The company's ability to provide a seamless, contactless purchasing experience aligns well with current consumer preferences, potentially driving increased sales and revenue.
Besides Carvana (CVNA), traditional used car retailers like CarMax Inc. (KMX) could also benefit from Trump tariffs. As of April 1, 2025, KMX is trading at $78.88, reflecting a decrease of approximately 4.45% year-to-date and a 6.78% decline over the past year. Unlike Carvana, which focuses on online sales, CarMax operates physical dealerships in addition to online sales.
Let's compare Carvana and Carmax
Market Capitalization
As of March 27, 2025, CarMax had a market capitalization of approximately $11.8 billion. In contrast, Carvana's market value stands near $60 billion, reflecting its rapid growth and investor optimism.
Full-year 2024 financial performance:
Carvana Co. (CVNA):
Revenue: $13.67 billion, marking a significant increase from the previous year.
Net Income: $404 million, indicating a turnaround to profitability. citeturn0search3
Adjusted EBITDA: $1.38 billion, reflecting improved operational efficiency.
Retail Vehicle Sales: 416,000 units sold, a 33% increase compared to the prior year.
Adjusted EBITDA Margin: Achieved a 10% margin, outperforming competitors AutoNation and CarMax, which reported margins of 6% and 4%, respectively.
CarMax Inc. (KMX):
Net Revenues: $5.6 billion for the fourth quarter, down 1.7% compared to the prior year's fourth quarter.
Retail Used Unit Sales: Increased by 1.3% to 172,057 units in the fourth quarter.
Comparable Store Used Unit Sales: Experienced a modest increase of 0.1% from the prior year's fourth quarter.
Gross Profit Per Retail Used Unit: $2,251, consistent with the previous year's fourth quarter.
Wholesale Vehicle Unit Sales: Declined by 4.0% to 115,546 units in the fourth quarter.
Comparative Insights:
Profitability: Carvana achieved a net income of $404 million, marking a significant turnaround. CarMax's specific net income figures for the full year are not available yet.
Sales Volume: Carvana's retail vehicle sales increased by 33% to 416,000 units, while CarMax's retail used unit sales saw a modest increase of 1.3% to 172,057 units in the fourth quarter.
Operational Efficiency: Carvana's adjusted EBITDA margin of 10% outpaced CarMax's reported margin of 4%, suggesting higher operational efficiency for Carvana during this period.
The P/E ratio is a valuation metric that compares a company's current share price to its per-share earnings, indicating how much investors are willing to pay for a dollar of earnings.
CarMax Inc. (KMX): As of March 31, 2025, CarMax's P/E ratio stands at approximately 26.41.
Carvana Co. (CVNA): Carvana's P/E ratio is notably higher. As of March 31, 2025, the P/E ratio is approximately 142.23.
Comparative Analysis
Growth vs. Valuation: Carvana's substantial revenue and profit growth are reflected in its higher P/E ratio, suggesting that investors anticipate continued expansion. However, the elevated P/E ratio may also indicate a premium valuation, potentially posing a higher risk if growth expectations are not met.
Market Position: CarMax maintains a strong market presence with consistent profitability and a more moderate P/E ratio, appealing to investors seeking stability.
Consensus and Price Targets
Carmax
Overall, the consensus among 13 Wall Street analysts is a "Hold" rating for CarMax. The average twelve-month price target is $90.64, with estimates ranging from a low of $65.00 to a high of $105.00. This average target suggests a potential upside of approximately 15% from the current trading price of around $78.88.
Carvana Co.
Morgan Stanley: Upgraded Carvana from "Equal-Weight" to "Overweight" on March 25, 2025, raising the price target from $260 to $280, suggesting over 25% upside from the trading price at that time.
Piper Sandler: Upgraded Carvana from "Neutral" to "Overweight" on March 20, 2025, maintaining a price target of $225, indicating more than 20% potential upside.
JP Morgan: Maintained an "Overweight" rating on March 27, 2025, adjusting the price target from $365 to $325.
As of April 1, 2025, Carvana's stock (CVNA) closed at $212.59. Consensus Among Analysts:
Average Price Target: Approximately $276.61, with estimates ranging from a low of $165.00 to a high of $340.00. citeturn0search4
Recommendation Breakdown: Out of 22 analysts, 12 recommend "Buy," 1 recommends "Overweight," 7 recommend "Hold," 1 recommends "Underweight," and 1 recommends "Sell."
These assessments suggest that analysts foresee potential growth for Carvana, with an average price target indicating a possible upside of approximately 30% from the current trading price
Conclusion
In summary, while the recent tariffs on imported vehicles and parts could steer consumers toward the used car market, potentially benefiting used car retailers, analysts favor an innovative online seller like Carvana over a more traditional seller like CarMax.
What Other Stocks May Benefit from Trump Tariffs?
The implementation of tariffs on foreign products can significantly impact various sectors of the economy, creating both challenges and opportunities for different companies. Certain domestic firms may stand to benefit as these tariffs make imported goods more expensive, potentially driving consumers toward locally produced alternatives.
1. Auto Parts Retailers
With tariffs increasing the cost of imported automobiles and parts, consumers might opt to maintain and repair their existing vehicles rather than purchasing new ones. This trend could boost sales for auto parts retailers. Notable companies in this sector include:
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AutoZone (AZO): A leading retailer and distributor of automotive replacement parts and accessories.
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O'Reilly Automotive (ORLY): Offers a wide range of auto parts, tools, and professional service equipment.
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Advance Auto Parts (AAP): Provides automotive aftermarket parts to both professional installers and do-it-yourself customers.
Domestic Steel and Aluminum Producers and Suppliers
Beside the automotive sector discussed above, multiple analysts have highlighted companies in the steel, aluminum as potential beneficiaries of Trump tariffs.
- Nucor Corporation (NUE), the largest steel producer in the United States, may experience increased demand for their products.
Cleveland-Cliffs Inc. (CLF): As a major producer of iron ore pellets and a supplier to the North American steel industry, Cleveland-Cliffs is expected to gain from tariffs that increase the cost of imported steel, potentially boosting demand for domestically produced steel.
Century Aluminum Co. (CENX): This U.S.-based primary aluminum producer stands to benefit from tariffs on imported aluminum, which could make domestic aluminum more competitively priced.
Mountain Pass Materials (MP), which owns and operates the Mountain Pass rare earth mine in California, could benefit from reduced competition and increased demand for locally sourced materials.
2. Intel Corporation (INTC): As a leading American semiconductor manufacturer, Intel stands to gain from tariffs that make imported chips more expensive, potentially increasing demand for domestically produced semiconductors.
3. Texas Instruments Incorporated (TXN): Specializing in analog chips and embedded processors, Texas Instruments could see growth in market share as tariffs encourage sourcing from U.S.-based suppliers.
4. Applied Materials, Inc. (AMAT): A key supplier of semiconductor manufacturing equipment, Applied Materials is expected to benefit from increased domestic chip production. Analysts have upgraded the stock to a "Buy" rating, citing recovering demand for memory chips and the company's relatively lower exposure to China, making it less vulnerable to new tariff threats.
5. Lattice Semiconductor Corporation (LSCC): Focusing on low-power field-programmable gate arrays (FPGAs), Lattice Semiconductor may experience increased demand as companies seek domestic sources for specialized chips.
Domestic Oil and Gas Companies
Energy companies with substantial U.S. operations might gain from tariffs on imported oil and gas, as these measures could encourage the use of domestic energy sources. Major players like ExxonMobil (XOM) and Chevron (CVX) are positioned to capitalize on this shift.
Agriculture and Food Production Firms
Tariffs on imported agricultural products may lead to increased demand for domestically produced food items. Companies such as Archer Daniels Midland (ADM) and Tyson Foods (TSN) could see benefits as consumers and businesses turn to local sources.
Considerations for Investors
It's important to note that while these companies are identified as potential beneficiaries, the overall market reaction to the tariffs has been mixed, with concerns about broader economic implications and potential retaliatory measures from trading partners. Investors seeking a hot opportunity on Liberation Day in connection to the MAGA tariffs may get MAGA burned.
Scope of the Tariffs
The Trump administration is considering imposing a 20% tariff on most imports, affecting almost all products in the economy. This approach aims to address trade imbalances and encourage domestic production across various industries.
Beyond automobiles and auto parts, the tariffs are expected to impact several other sectors:
Steel and Aluminum: A 25% tariff on steel and aluminum products has been implemented, affecting industries reliant on these materials.
Agricultural Products: Tariffs on imported agricultural goods will be imposed to increase demand for domestically produced food items.
Consumer Goods: A broad range of consumer products may be subject to tariffs, potentially leading to higher prices for everyday items. As we know, the vast majority of items sold at American retail staples like Walmart and Amazon are foreign good.
Global Response and Economic Implications
The European Union has indicated readiness to retaliate against these U.S. tariffs, highlighting the potential for escalating trade tensions and a MAGA increase in inflation. A trade war could have widespread economic implications, affecting various industries and consumer prices.
In summary, "Liberation Day" encompasses a comprehensive tariff strategy that impacts multiple sectors beyond just cars and auto parts, aiming to reshape the U.S. trade landscape and bolster domestic industries.
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