Of Tesla, Tariffs and Crypto Markets

A roundup of media interviews in the final weeks of March 2025

Image Courtesy: Artur Widak | NurPhoto | Getty Images

Over the course of this week, there have been a flurry of questions from a number of publications as markets continued to tumble (led by Nvidia and Tesla). So, here is the fullness of the commentary proffered along with sources. Read on!

Tesla vis-à-vis Tariffs

Reuters reached out with a number of questions over Tesla as sales figures showed declines and tariff battles intensified, leaving U.S. carmakers particularly vulnerable. Here is the article wherein I was quoted. The full Q&A outlining my position on Tesla follows.

1. How would the tariffs impact Tesla? What is minimizing their exposure relative to other automakers?
   
   Unlike other leading carmakers, Tesla had long favoured “going it alone” over forming collaborations to gain a foothold outside of its home base. “Going it alone” meant that its supply chain is more vertically integrated and predominantly located within the United States. Actions such as Canada withdrawing subsidies from the purchase of Teslas might have an impact on gaining additional market penetration over there.
   
   However, an unusual boost within the U.S. might be due to vigilante actions against Tesla dealerships and some current Tesla owners. Numerous quick surveys indicate that these vigilantes’ actions are extraordinarily unpopular among U.S. consumers regardless of political affiliation. This might be instrumental in converting select buyer demographics who were traditionally loathe to consider any EV — and not just a Tesla — into now consider buying a Tesla. This is an early indicator; whether this will translate into strong sales in subsequent quarters remains to be seen.

2. If the impact is limited, could this boost Tesla stock?
   
   Yes. The likelihood of Volkswagen Group’s and Mercedes-Benz’s offerings continuing to eat into Tesla’s U.S. market share is likely to be impacted while sympathy for the company under attack from vigilante actions on its dealerships and customers could even possibly firm up sales. In other words, there is some support for tailwinds for Tesla's stock valuation.
   

3. Does Tesla have an edge over other automakers because of the tariffs?
   
   Yes. Being vertically and domestically integrated — despite the impact on the company's profitability in its early years — now gives the company an edge over its competitors.
   

4. Could this make Tesla's cheaper relative to other cars and drive more consumers towards them?
   
   Higher input costs for material are likely simply by virtue of the fact that battery prices — on average the third of any EV’s price — are likely to go higher. However, this will be balanced out by the fact that the company serves the U.S. market with predominantly U.S.-manufactured cars, unlike its legacy rivals who leverage plants based outside of the U.S. to shore up their per-car profit margins. In any event, the existing lineup of Tesla models have substantially more brand equity than their rivals in the U.S., and have even commanded a higher asking price. This could be the right time for the company to launch a “budget” marque to take advantage of its rivals’ geographical weakness.
   

5. Would the tariffs have any positive/negative impact on Tesla's results in the short or long term?
   
   The knocking out of subsidies in select regions — as a retaliatory measure against U.S. tariffs — might be a limitation while Elon Musk's involvement with President Trump might be a factor weighing down sales outlook outside of the U.S. However, within the U.S., subsidies are likely to continue (if not be expanded, given that the company manufactures domestically) while Musk’s resolute and continuing support to the Trump administration’s work could even be a boost for sales by creating inroads among certain buyer segments.
   
   It's still early to tell but, on balance, it seems like there is a net positive.

Note: The article was also syndicated on the U.S. News and World Report, AOL, and Wonderful Engineering.

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Bitcoin and Crypto vis-à-vis Tech Volatility and Tariffs

FXStreet reached out to me with two sets of scenarios. The first of which was about Bitcoin/crypto levels in the wake of volatility within the tech-heavy index Nasdaq-100, with which Bitcoin particularly has been particularly strongly correlated with in recent times. Here is the article wherein I was quoted. Full Q&A follows.

1. Given its historical correlation with tech-heavy indices like the NASDAQ, how do you expect the current tariff-driven market uncertainty to impact Bitcoin’s price in the short term?
   
   The correlation with tech-heavy indices is unlikely to subside, given the fact that numerous investors will seek refuge in tech and alternative assets in the wake of uncertainty over the impact of tariffs on U.S. consumption as well as inflation. Any shift towards alternative assets is bound to be bullish for Bitcoin, the de facto leader of the space.
   

2. Given the inverse relationship between the U.S. dollar and Bitcoin, how might the potential strengthening of the dollar due to tariffs affect Bitcoin’s price in the coming weeks?
   
   While it is true that there is an inverse relationship between the U.S. dollar and Bitcoin, an overly-strong dollar also implies that inflation and consumption trends would be impacted while making the dollar's strength increasingly vulnerable to swings. If so, Bitcoin might see an upswing in value.
   

3. What impact could tariffs on semiconductors have on Bitcoin mining profitability, and how might this influence Bitcoin’s price and network security?
   
   If semiconductors become more expensive, the infrastructure for mining becomes more expensive, thus reducing supply and increasing the price. As a result, network strength also might decline if fewer miners are in operation. This will, however, be a temporary blip: if Bitcoin becomes more expensive, mining will become profitable again — in effect, it becomes a self-correcting trend.
   

4. Do you think Bitcoin will act as a hedge against inflation in the long term if tariffs lead to sustained price increases, as suggested by the potential 25% rise in car prices?
   
   Bitcoin’s consideration as a storehouse of value comes into question when considering how closely it moves in tandem with tech-heavy indices. Nonetheless, inflationary pressures – which will likely be triggered by tariffs in the short term at the very least – should raise both tech indices and crypto for a while.
   

5. How might a prolonged trade war with retaliatory tariffs from countries like Canada affect global demand for Bitcoin as a store of value in regions facing currency devaluation?
   
   What impacts Bitcoin’s consideration as a store of value (unlike, say, gold) is its continued limited fungibility relative to the purchase of goods and services worldwide. However, its limited fungibility hasn’t seen a decrease in recent times. We can expect volatility in Bitcoin in the near future but it is too soon to call it a long-term bullish trend.
   

6. What role do you see stablecoins playing in the crypto market during this period of tariff-driven uncertainty, and how might this impact Bitcoin’s market dynamics?
   
   Stablecoins of different denominations potentially act as an effective alternative to existing FX networks that typically come with higher transaction fees. If tariffs still trade, then stablecoins will likely decline in traded volume. Any correlation implied between Bitcoin and stablecoins would be coincidental, not causative.
   

7. Considering Trump’s pro-crypto stance, such as his support for stablecoin legislation, how might his policies mitigate the negative impacts of tariffs on the crypto market in the long term?
   
   Stablecoins of different denominations could theoretically be used to belay some of the costs imposed by tariffs, given that transactions are cheaper relative to legacy FX networks. However, one potential area of retaliation by governments would be to restrict stablecoin transactions to drive home the cost of tariffs in order to force the other country’s hand.
   
   Thus, while there could be some boost to stablecoin volumes, it could shortly thereafter be restricted.
   

8. How do you interpret the high market concentration in tech stocks and its potential to amplify volatility in the crypto market, particularly for Bitcoin?
   
   High market concentration in tech stocks is inherently a volatility-inducing event and this will inevitably translate to Bitcoin volatility as well – as evidenced in recent patterns.
   

9. What are the chances that institutional investors, currently pulling out of U.S. equities, might reallocate capital to Bitcoin as a hedge against tariff-related economic instability
   
   The relatively low-but-stable fungibility of Bitcoin implies that there won’t be a substantial reallocation of resources of Bitcoin as opposed to, say, increasing exposure to Indian equities and debt assets, Thai industrial stocks, Vietnamese commodities firms, etc.
   
   Nonetheless, given the establishment of Crypto Reserves and continued government support for stablecoins by select nations, there might be a slight uptick.
   

10. How might the April 2, 2025, reciprocal tariffs on 15-25 countries, as forecasted by Barclays, influence the long-term adoption of cryptocurrencies in global trade and cross-border transactions?
    
    Currently, the role of cryptocurrencies in global trade and cross-border transactions are relatively unregulated. As the tariff war roils on, this will likely be brought under the scanner and possibly subject to additional costs and restrictions. This is definitely a space to watch.

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FXStreet also had a few questions on an article idea they were exploring regarding the impact of the recently-announced Strategic Crypto Reserve by the Trump administration. If/when an article is published and/or if additional questions are asked, the link and the answers (respectively) will be published here. For now, here is the full Q&A as of now.

1. What are your expectations from the Trump administration's plan for the Strategic crypto reserve?
   
   At least half of the existing crypto assets deemed as forfeited and potentially consigned to the Reserve would likely have to be returned to the victims of Bitfinex hacker Ilya Lichtenstein’s actions. Thus, if the expectations are to establish a leading position in crypto reserves held by nations around the world, the Trump administration might need to figure out means of increasing held assets.
   

2. Do you expect Bitcoin purchases from the US government, or is it more likely the administration sticks to the original plan?
   
   The Trump administration currently holds that it intends to grow the number of assets at no cost to the taxpayer, which is an interesting challenge. Potentially, the only means to do this is to participate in market activities akin to stock loans to, say, the likes of identity-verification networks propounded by the likes of MicroStrategy, et al.
   
   A move to increase reserves without expending fiat assets would likely mean that means must be explored to increase the proliferation of blockchain networks into real-world use cases, which would be a fascinating notion — since that would mean an outright endorsement of crypto transactions along with support mandated by the U.S. government, which is bound to have numerous ramifications around the world.
   

3. What do you think of the Trump administration's impact on crypto in the first three months of his return to office?
   
   While there has been some bullish volatility imparted on cryptos due to President Trump’s stated support, it would be prudent to hold back and wait for concrete policy decisions that would increase its consideration as an alternative to existing currencies before expecting long-term bullish trends.
   

4. What are your top 3 predictions for crypto in H1 2025, in terms of passage of crypto-related bills in the Congress, executive orders and progress on the crypto reserve.
   
   If the administration is to increase its reserves at no cost to the taxpayer, it would have to increase the fungibility of cryptos while figure out on how to monetize on that. For that, the government would have to:
   

   1. deem that private players would be allowed to partake in market activities with the backing/support of government crypto assets,

   2. somehow mandate that blockchain rewards on transactions made on the back of borrowing of government crypto assets would also be held in the reserve, and;

   3. increase fungibility by enabling access to a greater expanse of real-world commercial activities.
      

   All of these are monumental changes to the way the U.S. currency mechanism has been run. If these are achieved, it will only be after a significant number of uphill battles.

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In March 2025, I was also quoted in TheStreet over strengthening trends seen in U.S.-listed Chinese stocks eyeing their prospects in the Hong Kong Stock Exchange (HKEX). Read the full rationale of my commentary here.

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