Three Things (3/28)

Driven to tension

Markets stumbled Thursday as investors digested the fallout from Donald Trump’s move to impose a 25% tariff on imported automobiles and parts, effective April 2nd. While campaign rhetoric had hinted at some protectionist measures, the scale and immediacy of the action shocked investors. Earlier expectations centered on more targeted or phased tariffs—perhaps focused on electric vehicles or countries like China—but the blanket rate and sweeping scope caught analysts and automakers off guard.

Stocks of GM, Ford, Toyota, and Stellantis dropped sharply as investors braced for ripple effects: costlier vehicles, disrupted supply chains, and potential retaliatory tariffs from key trade partners. Broader indexes dipped as well, signaling fears that rising trade tensions could stoke inflation and undercut global growth. While Trump framed the policy as a move to “rebuild American industry,” markets are now recalibrating for a more volatile trade landscape—with autos just the start. It’s a signal that economic nationalism is back in full force, and may carry broader market and inflation implications in the months ahead.

Scrolling the line

In other tariff news, a reduction in tariffs on China may be used as a negotiation tactic to help facilitate a deal for ByteDance to sell TikTok’s U.S. operations. With an April 5 divestment deadline looming, the former president’s comments suggest a willingness to ease trade pressure in exchange for Beijing’s cooperation. The move marks a strategic shift—blending national security priorities with trade diplomacy—and revives efforts to find a buyer for TikTok that satisfies both U.S. regulators and Chinese authorities. This announcement comes just days after the U.S. imposed fresh auto tariffs on Chinese electric vehicles and other imports, showing that tariff policy is now being used both as a pressure tactic and a bargaining chip.

This isn’t the first time TikTok has been in political crosshairs. In 2020, Trump issued executive orders to ban the app, citing national security concerns, though legal challenges and a lack of follow-through left the issue unresolved. Now, with TikTok’s massive U.S. user base and influence on everything from culture to commerce, the stakes are even higher. For consumers, a successful sale could preserve uninterrupted access to the platform. And for content creators and brands, TikTok remains a crucial gateway to reaching younger, highly engaged audiences—making platform stability vital for the digital economy.

Core correction

CoreWeave, the Nvidia-backed AI infrastructure startup, has sharply scaled back its IPO plans, now aiming to raise around $1.5 billion, well below the original target of $2.7 billion. The move comes as questions mount over the durability of its revenue growth, particularly given the company’s heavy reliance on Microsoft, which accounted for 62% of its 2023 revenue. With hyperscalers like Microsoft signaling a more measured pace of AI infrastructure spending, investors are growing wary of overexposure to single-client risk. Despite explosive growth—revenues surged to $1.9 billion in 2023, up from just $32 million the year prior—CoreWeave’s revised IPO reflects concerns about capital intensity and customer concentration. The downsize is a sign that even in AI’s hottest corners, momentum must now be backed by diversification and operational resilience.

CoreWeave operates one of the most important behind-the-scenes businesses in the AI boom, providing GPU-powered cloud infrastructure to train large language models and power generative AI. Its close alignment with Nvidia gives it credibility, but also ties its fate to the ongoing arms race in AI compute. Investors are now signaling that AI’s next phase requires more than exponential growth—it demands financial discipline, customer diversification, and a clearer path to long-term viability. The takeaway? The AI story isn’t over, but it’s entering a more mature, valuation-sensitive chapter—one where infrastructure players will need more than momentum to win.