Study of Macro (Part VI)
- 04/13/2025 – Trump Exempts Smartphones, Other Electronics From Chinese Tariffs – WSJ Announced in a filing late Friday, the move is a big reprieve for Apple and other tech companies
Smartphones, laptop computers, memory chips and other electronics will be exempt from President Trump’s so-called reciprocal tariffs, another step back that could ease some consumer concerns about an immediate jump in costs for tech products imported from China.
New guidance published late Friday by U.S. Customs and Border Protection also exempts machines used to create semiconductors, plus products including computer monitors, tablets, Apple watches and computers from the tariffs Trump imposed in his April 2 executive order, which mandated levies of 10% of the value of almost all U.S. imports, and set higher rates on imports from some countries. Trump later boosted the level of these reciprocal tariffs on China to 125%, and issued a 90-day pause on tariffs above 10% for other countries.
In all, 20 categories of products are affected. The biggest impact is on imports from China, because of the heights to which tariff rates had risen in recent days. In addition to the reciprocal tariffs, the Trump administration has imposed tariffs of 20% on Chinese imports over that nation’s role in the fentanyl trade, which the White House said aren’t subject to the exemptions.
“This represents a small step by the U.S. in correcting its erroneous unilateral approach,” said a statement from China’s ministry of commerce.
The exempted tech products accounted for roughly $100 billion in U.S. imports from China in 2024, according to Census Bureau data, or 23% of total imports from the country. Last year, 26% of all imports of the excluded products were from China—but 81% of smartphones and 78% of computer monitors came from there.
- 04/12/2025 – Buffett’s thought on tarriff from May 2018
Warren Buffett: There are levels of trade deficit that bother me “when you are, in effect, buying more from other countries than they’re buying from you, you are handing them investment funds” “we don’t want it to be a question of where we import 20% of our GDP and we export nothing. Now, we could all quit working, and we could handle little pieces of paper to the rest of the world. They could keep sending us food, they could send us autos, they could send us all kinds of things. But eventually, they have claims on all our wealth” Trust the process: short-term pain for long-term gain.
- 04/12/2025 – Wall Street’s Best Hope to End Trump’s Global Trade War Is One of Its Own – WSJ Treasury Secretary Scott Bessent, a former hedge-fund manager, is trying to execute one of highest-stakes gambles in modern political and economic history
Bessent gave a speech to the American Bankers Association telegraphing the Trump team’s new strategy. “We can probably reach a deal with our allies,” Bessent said. “And then we can approach China as a group.”
- 04/11/2025 – Ackman’s thought experiment
A thought experiment. Imagine if: Within the next 89 days, the US, Europe, and Japan agree to go zero/zero on tariffs and remove all trade barriers. Then Europe and Japan join the US in raising tariffs on China to 145%. Then the US, Europe and Japan as a united front negotiate with China to remove tariffs and trade barriers, and put in place strong structural protections for IP.
- 04/11/2025 – I need to fully understand the bond market and Trump’s decision
The Simple Explanation for This Week’s Treasury Market Mayhem – WSJ
We shouldn’t rely on markets to tame Trump – by Nate Silver
The Simple Explanation for This Week’s Treasury Market Mayhem – WSJ
The Death of US-China Trade || Peter Zeihan
- 04/11/2025 – Grannis’s take on Tariffs Calafia Beach Pundit To repeat what I said months ago, tariffs don’t cause inflation. Only monetary policy causes inflation.
I agree with what Bill Ackman said yesterday. By waiting until panic set in before announcing a reprieve, Trump forced the world to see first-hand what the results of a global tariff war would lead to. And he also put tremendous pressure on China, the biggest bad actor of global trade, to change its ways. It was a master-stroke of persuasion. Until yesterday I had begun to fear that Trump was making a huge mistake. Now my fears have been assuaged. We’re not out of the tariff woods yet, but the prospects for a favorable resolution have improved dramatically. Maybe those tariffs Trump threatened weren’t so bad after all, if they help the world understand how bad they can be.
Now let me comment briefly on today’s CPI release, which was a pleasant surprise. The chart below says it all:
Chart #1 compares the year over year change in the CPI index with the same change in the CPI index ex-shelter. The ex-shelter version of the CPI has increased by 2.3% or less for the past 23 months (since May 2023), and it has averaged a mere 1.7% per year for almost two years. In the past year, ex-shelter inflation was only 1.5%. Only shelter costs have kept the broader CPI from long ago meeting the Fed’s objective, and their impact is continuing to fade away. To repeat what I said months ago, tariffs don’t cause inflation. Only monetary policy causes inflation. So far the Fed has been doing a pretty good job of neutralizing the monetary excesses of 2020 and 2021.
- 04/11/2025 – Tilson’s take on Tariff I’m waiting for my ‘spidey sense’ to start tingling; President Trump is more concerned about interest rates and the bond market than the stock market; Nate Silver on why relying on the markets to ‘tame Trump’ is a mistake; Nobody seems to care much about the March inflation report | Stansberry Research
Most stock investors aren’t aware of this…
But the bond markets are much larger than stock markets – and bond investors are less tolerant of volatility and losses. So major financial crises (like the global financial crisis) generally occur when bond markets rather than stock markets break down.
This risk – and the rise in interest rates – is likely why President Donald Trump announced his 90-day tariff pause on Wednesday. Barry Ritholtz of Ritholtz Wealth Management posted this summary on social platform X yesterday:
And a thread on X from The Kobeissi Letter has more details. As it begins:
And as it continues:
Finally, as the thread concluded:
I will continue to follow interest rates and the bond market more closely than usual – and share it with my readers – because I think it will tell us what Trump is likely to do.
3) Meanwhile, statistician Nate Silver does a good job of analyzing why investors are still very much on edge in yesterday’s post in his Silver Bulletin blog: We shouldn’t rely on markets to tame Trump.
As Silver says, it comes down to investors trying to account for multiple degrees of uncertainty all at the same time:
1. The immediate effect of tariffs;
2. Second-order effects on consumer, business, and investor confidence;
3. Potential spillovers into broader financial markets – particularly the bond market, which had apparently spooked Trump, and
4. What the tariffs imply about Trump’s future actions and the United States’ overall state capacity.
As he puts it:
Investors are relying on a lot of implicit assumptions about an economic world order led by a relatively rational superpower – the United States – that may no longer hold.
And as Silver continues:
True, you’d rather have seen Trump capitulate [on Wednesday] than not. One remarkable feature of markets is that they provide a scoreboard – real-time feedback that even notoriously stubborn Silicon Valley types tend to take seriously. But considering those four buckets above, how secure should investors be feeling? Even with the 90-day pause, consumers and businesses will still be spooked by this and will experience higher prices from the tariffs that remain in place. The long-term effects on the United States’ cultural and financial hegemony are harder to quantify but potentially significant.
Markets and elites “got through” to Trump this time, but what if he wakes up on the wrong side of the bed 90 days from now and isn’t in such a generous mood? Not that I think headline writers should be catering to Trump’s mood swings, but triumphant headlines from Democrats about how Trump “surrendered” might give him second thoughts about doing the same thing next time around if he’s worried about looking like a loser.
In summary, fasten your seat belt… prepare for more volatility… and don’t obsess over the chaotic short-term news flow. Keep your eyes on the horizon.
4) Lost amid all the volatility in the stock market was the March inflation report the government released yesterday…
It showed lower-than-expected price gains, which normally would have made for bigger news. In fact, a month-over-month decline happened for the first time in nearly five years. Meanwhile, year-over-year inflation cooled to 2.4%.
But nobody really cares because of fears that tariffs will spike inflation going forward. Here’s the Wall Street Journal with more on this point: Inflation Eased in March, but Tariffs Threaten to Stoke Price Pressures. Excerpt:
Normally, a slowdown in year-over-year price increases would be welcome news for consumers, who have faced years of high inflation, and the Federal Reserve, which has been struggling to bring down price pressures. But this time, it will be hard for investors, policymakers and businesses to read too much into the March data.
President Trump’s “Liberation Day” announcement of sweeping new tariffs didn’t happen until April 2, which means their direct effects won’t show up until the next consumer-price report a month from now.
The article also cited this point from U.S. Bank Chief Economist Beth Ann Bovino: “It’s good news for the Fed, but the data seems stale.”
While the recent inflation numbers are indeed “stale,” the fact that both overall and core inflation are now below 3% gives the Fed more flexibility to cut rates to offset or at least mitigate a tariff-induced recession.
As a former hedge-fund-manager friend of mine – who posts anonymously on X under the handle BeenThereDoneThat Capital – posted yesterday:
On the plus side, my friend is right that the Fed now has room to cut rates to stimulate the economy if needed. (Investors are now expecting four rate cuts this year, up from one just a couple of months ago.)
But there’s a risk that if tariffs lead to higher inflation and an economic slowdown, the Fed’s cuts could fuel even greater inflation. This is yet another risk factor to monitor…
- 04/10/2025 – (1) Herbert Ong (@herbertong) / X(1) Herbert Ong on X: “🚨 NEWS: The E.U. Will Put Tariff Retaliation on Hold for 90 Days to Match Trump’s Pause European Commission President Ursula von der Leyen said that the commission, which handles trade for the bloc’s 27 member countries, “took note of the announcement by President Trump.” New https://t.co/5zg8FXQRUl” / X
The E.U. Will Put Tariff Retaliation on Hold for 90 Days | TIME
BRUSSELS — The European Union’s executive commission said Thursday it will put trade retaliation measures on hold for 90 days to match President Donald Trump’s pause on his sweeping new tariffs and leave room for a negotiated solution.
European Commission President Ursula von der Leyen said that the commission, which handles trade for the bloc’s 27 member countries, “took note of the announcement by President Trump.”
New tariffs on 20.9 billion euros ($23 billion) of US goods will be put on hold for 90 days because “we want to give negotiations a chance,” she said in a statement.
But she warned: “If negotiations are not satisfactory, our countermeasures will kick in.”
Trump imposed a 20% levy on goods from the EU as part of his onslaught of tariffs of 10% and upward against global trading partners but said Wednesday he will pause them for 90 days to give countries a chance to negotiate solutions to U.S. trade concerns.
Countries subject to the pause will face Trump’s 10% baseline tariff.
Before Trump’s announcement, EU member countries voted to approve a set of retaliatory tariffs on $23 billion in goods in response to his 25% tariffs on imported steel and aluminum that took effect in March. The EU, the largest trading partner of the U.S., described them as “unjustified and damaging.”
The EU tariffs were set to go into effect in stages, some on April 15 and others on May 15 and Dec. 1. The EU commission didn’t immediately provide a list of the goods.
Members of the EU — the world’s largest trading bloc — have said they prefer a negotiated deal to resolve a trade war that damages the economies on both sides. The bloc’s top trade official has shuttled between Brussels and Washington for weeks trying to head off a conflict. The EU has offered Trump a “zero for zero” deal in which both sides would eliminate tariffs on industrial goods including autos. Trump has said that’s not enough to answer U.S. concerns and raised the possibility of Europe buying large additional amounts of U.S. liquefied natural gas.
The EU has targeted smaller lists of goods in hopes of exerting political pressure and avoiding economic damage from a wider escalation of tit-for-tat tariffs.
The EU is also working on a further set of countermeasures in response to Trump’s blanket 20% tariff on all European goods, now suspended. That could include measures aimed at U.S. tech companies and the services sector as well as trade in goods.
Still, von der Leyen said that Europe intends to diversify its trade partnerships.
She said that the EU will continue “engaging with countries that account for 87% of global trade and share our commitment to a free and open exchange of goods, services, and ideas,” and to lift barriers to commerce inside its own single market.
BRUSSELS — The European Union’s executive commission said Thursday it will put trade retaliation measures on hold for 90 days to match President Donald Trump’s pause on his sweeping new tariffs and leave room for a negotiated solution.
European Commission President Ursula von der Leyen said that the commission, which handles trade for the bloc’s 27 member countries, “took note of the announcement by President Trump.”
New tariffs on 20.9 billion euros ($23 billion) of US goods will be put on hold for 90 days because “we want to give negotiations a chance,” she said in a statement.
- President Donald Trump announced a 90-day pause on the full effect of his new tariffs for at least some countries.
- Trump also said that he was raising the tariffs imposed on imports from China to 125% “effective immediately” due to the “lack of respect that China has shown to the World’s Markets.”
President Donald Trump on Wednesday announced a 90-day pause on the full effect of his new tariffs for at least some countries.
Trump also said that he was raising the tariffs imposed on imports from China to 125% “effective immediately” due to the “lack of respect that China has shown to the World’s Markets.”
Trump credited his decision to pause the full effect of tariffs on the fact that “more than 75 Countries” have contacted U.S. officials “to negotiate solution” to trade concerns that he raised in imposing the new duties.
- China is losing the trade war, should come to the table and talk with US
- Tax cut and deregulation are coming by May and June
- business leaders should feel certain by knowing tax cut and deregulation are coming
