With 20% of the S&P 500 reporting earnings this week, I’m pleased to announce there haven’t been any blockbuster surprises, unless you happen to be an automaker or a meme stock. Stellantis reported a $2.7 billion loss in the second quarter which it chalks up to tariffs, while General Motors reported its net income plummeted 35% to $2.58 in the same period. We’ll discuss the plight of the auto industry further but as for the markets, they are all poised to finish the week in the green.
Before we get into what’s ailing the auto industry, I want to mention an astonishing report I came across this week. According to Appriss Retail, a data analytics firm that supports 60 of the top 100 U.S. retailers, product returns reached $685 billion in 2024, representing 13% of total retail sales. More shocking is that fraudulent returns resulted in $103 billion in losses for retailers, with 15% of returns deemed fraudulent. I don’t know if this is a sign regarding the economy or simply a result of more purchases moving online, but it seems fraud is on the rise.
As for the automakers, sympathy isn’t at the forefront, but may be warranted. The challenges facing automakers are rising at an alarming pace. As mentioned above, European car maker Stellantis, which owns Chrysler and Jeep among its other brands, is facing considerable problems due to tariffs. General Motors reported that the 25% tariff on cars it manufactures outside the U.S. is hitting its bottom line too, as profits are cratering.
Further exacerbating the issue is the deal struck with Japan this week, which in theory will bring additional production of Japanese cars to the U.S. and increase competition for U.S. auto makers. Tesla, which you might think can weather the storm, reported this week that sales have dropped off for the second consecutive quarter. The One Big Beautiful Bill, which was signed into law on July 4, ends the $7,500 EV federal tax credit as of September 30. Manufacturers are responding by ending or planning to end production of many EV models. Like I said, it is hard to feel sympathy for the auto makers and car dealerships, but this industry is facing colossal challenges.
In other news, the U.S. has still not struck a trade deal with the European Union (EU). Not to be an alarmist, but it appears the EU isn’t ready to capitulate. Recent reports suggest it may use a legal tool that allows the EU’s block of 27 countries to impose new taxes on U.S. tech companies, reduce investment in U.S. firms on EU soil, and prevent U.S. companies from bidding on public European contracts. And that’s in addition to imposing its own tariffs. The U.S. and EU have the world’s largest bilateral trade agreement, totaling $1.96 trillion in 2024. While I don’t think a trade war is imminent, it appears the Atlantic isn’t the only thing separating our countries.
In closing, I came across an interesting article that highlights the most taught books today. I figured a lot has changed since my days in secondary school. Much to my surprise, almost 40 years later, very little has changed. The 10 most popular books taught in U.S. classrooms include: Romeo and Juliet, The Great Gatsby, The Crucible, Macbeth, Of Mice and Men, To Kill a Mockingbird, Night, Hamlet, Fahrenheit 451, and Frankenstein. I read every one of these except for Frankenstein. I suppose there is something to be said for consistency, and I’m sure there are arguments on both sides, but it is striking how little things change despite the progress of time. Now you know.
Bruce J. Mason, MBA
