Investor Kevin O’Leary, better known as “Mr. Wonderful” from the “Shark Tank” TV show, believes the U.S. market is stabilizing despite recent trade tensions because President Donald Trump has figured out a workaround on tariffs.
Trump’s Strategy: Tariffs As A Value-Added Tax Substitute
“This tariff drama? It's settling,” O’Leary wrote on X on Thursday. “The market’s calming because Trump found the loophole. He can’t add a value-added tax like other countries, so he calls it a tariff and gets the same result.”
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O’Leary told Fox Business the same day that global markets are beginning to understand how Trump’s reciprocal tariff system works. What they care about now is predictability. “The market wants a headline number,” he said. “What do you got, 10? You got 15? … The rest of the stuff, that’s sausage being made. Nobody gives a damn.”
O’Leary pointed to General Motors (NYSE:GM) as an example of how U.S. companies are adapting. He said that GM reportedly lost 45% on margins due to tariffs, but the auto maker’s finance chief, Paul Jacobson, laid out a plan: absorb one-third of the cost, pass one-third to consumers, and rely on artificial intelligence to cover the rest.
He argued that while the U.S. cannot impose consumer taxes like those in Europe or Japan, Trump’s use of tariffs acts as a substitute. “Poof, ‘Puff the Magic Dragon.’ He’s getting his dollars from tariffs the same way the Japanese, the Canadians are with value-added taxes.”
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Detroit Automakers Raise Red Flags
However, not everyone is cheering. The American Automotive Policy Council, which represents Ford (NYSE:F), GM, and Stellantis (NYSE:STLA), is pushing back on a recent trade deal with Japan. The agreement would lower tariffs on Japanese auto imports to 15%, while imports from Canada and Mexico still face a 25% rate.
“Any deal that charges a lower tariff for Japanese imports with virtually no U.S. content than the tariff imposed on North American built vehicles with high U.S. content is a bad deal for U.S. industry and U.S. auto workers,” AAPC President Matt Blunt told Reuters on Wednesday.
The criticism comes as GM announced a $1.1 billion hit from tariffs in the second quarter, with more expected. Stellantis reported $350 million in losses over the first half of the year tied to tariffs and said it had to reduce shipments and cut production.
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Despite the concerns, the White House spokesman Kush Desai defended the Japan deal as “a historic win for American automakers” that will remove long-standing trade barriers. But similar criticism was raised by AAPC over a U.K. deal that allows 100,000 British cars to enter the U.S. at a 10% tariff, nearly the entire volume Britain exported last year.
For now, O’Leary said the market is showing signs of confidence, especially since the chaos seen in early April has subsided. “Proof is in the pudding. Let’s wait, you know, another quarter or whatever. So far, so good.”
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