Prof G says tariff ‘nonsense' gives away auto industry dominance to other countries — is Trump's protectionism failing?

Yahoo

9 hours ago

America's trillion-dollar auto sector may be past its prime. That's according to New York University Stern School of Business professor and media entrepreneur Scott Galloway, who claimed in a recent YouTube video that 2025 marks 'the beginning of the end of the U.S. automobile industry.'
Galloway argues that U.S. automakers are struggling to compete with rising Chinese manufacturers and that President Donald Trump's ongoing trade war and 'tariff nonsense' are having a counterproductive effect, further undermining the industry's global competitiveness.
He is not alone in sounding the alarm. A growing number of experts — including some U.S. auto executives — have raised concerns about the Trump administration's unpredictable trade policies and their long-term impact on the sector.
Don't miss
Thanks to Jeff Bezos, you can now become a landlord for as little as $100 — and no, you don't have to deal with tenants or fix freezers. Here's how
I'm 49 years old and have nothing saved for retirement — what should I do? Don't panic. Here are 6 of the easiest ways you can catch up (and fast)
Want an extra $1,300,000 when you retire? Dave Ramsey says this 7-step plan 'works every single time' to kill debt, get rich in America — and that 'anyone' can do it
Ceding advantage to Japan
Although the Trump administration's tariff policy remains fluid, as of August it appears to favor some foreign automakers over domestic ones.
For example, Japan currently faces a flat 15% tariff on all exports to the U.S., including vehicles from its globally dominant brands. Meanwhile, most other countries face a 25% tariff on auto imports. As a result, an American carmaker that manufactures domestically but imports car parts from Mexico or Canada may incur higher production costs than Japanese rivals.
According to the American Automotive Policy Council — a group representing G.M., Ford, and Stellantis — this creates a significant advantage for brands like Toyota or Honda at the expense of U.S.-based manufacturers.
'We just struck a deal with Japan that made it easier for Americans to buy, quite frankly, their superior cars,' Galloway explains in the recent YouTube video.
The global auto supply chain is so complex that even the most 'American' vehicles rely on imported components. Tesla's Model 3 Long Range, for example, contains '40% Chinese content,' according to Frank DuBois, associate professor at American University's Kogod School of Business.
As domestic automakers struggle, emerging challengers are rapidly gaining global market share in the industry's fastest-growing segment: electric vehicles (EVs).
Read more: Nervous about the stock market? Gain potential quarterly income through this $1B private real estate fund — even if you're not a millionaire.
Losing the EV race
In addition to tariff challenges, legacy U.S. automakers are also struggling to compete in the rapidly expanding global EV market.
As of 2024, only one U.S. brand — Tesla — ranked among the top 10 global EV manufacturers by market share, according to JD Power's AutoVista Group. However, Tesla has been losing ground, with reports from Reuters and Le Monde attributing the decline in part to CEO Elon Musk's controversial political behavior and growing foreign competition.
In contrast, Chinese rival BYD has taken a commanding lead. As of 2024, BYD held 22.2% of the global EV market — more than double Tesla's share — according to AutoVista.
Galloway sees little chance for a turnaround. 'My sense is the EV race has been lost now, because Tesla has lost it to BYD,' he says.
What does this mean for consumers?
If 2025 is indeed the beginning of the end for the American auto industry, as Galloway predicts, the economic and consumer implications could be significant.
The auto sector contributes $1.2 trillion to national output and supports 10.1 million jobs — about 4.9% of the total U.S. workforce — according to the Alliance for Automotive Innovation. A slowdown in the industry could mean widespread job losses and reduced income for working families across the country.
Consumers are already feeling the effects of the ongoing trade battle. Vehicles priced under $40,000 could see price increases of up to $6,000, while higher-end models may face even steeper hikes, according to Kelley Blue Book.
While the full economic impact of Trump's trade policies remains uncertain, the effects on car prices and American households are already taking shape — and they're not encouraging.
What to read next
Robert Kiyosaki warns of a 'Greater Depression' coming to the US — with millions of Americans going poor. But he says these 2 'easy-money' assets will bring in 'great wealth'. How to get in now
Here are 5 simple ways to grow rich with real estate if you don't want to play landlord. And you can even start with as little as $10
Rich, young Americans are ditching the stormy stock market — here are the alternative assets they're banking on instead
Here are 5 'must have' items that Americans (almost) always overpay for — and very quickly regret. How many are hurting you?
Stay in the know. Join 200,000+ readers and get the best of Moneywise sent straight to your inbox every week for free.
This article provides information only and should not be construed as advice. It is provided without warranty of any kind.