What is behind door number 1?
President Trump likes big splashes, and he is not awaiting the introduction of mutual tariffs on American trading partners on Wednesday: Expect a major announcement at Rose Garden.
Otherwise, there is a lack of details. It prompted major stock sales and the S&P 500 experienced its worst month's loss since 2022 as economists warn about a potential trade war that governs inflation and stifles global growth. (The futures market points to another rough opening of the benchmark index on Tuesday.)
“We have a strong plan to retaliate if necessary, and we will use it,” European Commission president Ursula von der Reyen warned Tuesday.
The White House doesn't seem to be driven by such threats. That's despite the continued appearance of consumer sentiment and business confidence. A CBS News poll released Monday showed that many Americans are already feeling tariff fatigue and that the president prefers to direct efforts to combat inflation.
White House aides reportedly drafted a proposal to impose a tariff of about 20% on a wide range of US imports, the Washington Post reports.
The president and his team doubled the tariff message. Trump is looking at mutual tariffs – he defines as “whatever they charge us, we charge them” – as a tool to bring jobs back to the US and readjust the country's trade deficit. Meanwhile, he has not refrained from referrals new One: Last week's announcement on the taxation of automobiles and auto parts caught many people in the industry off guard, causing defeat in car inventory.
In his oval office on Monday, the president threw a restrained tone. “We'll be very kind, relatively speaking,” he told reporters.
However, companies have many questions. Who is targeted, what price will it be valid and when will it be valid? And how does the Trump administration define “mutual” after trade policies are considered discriminatory?
For example, do Trump officials consider how the country's Value Added Tax (VAT) or Digital Services Tax will be added to the final price that American businesses and consumers have to pay? Trump has previously opposed the VAT policy, calling it “a lot more punitive than tariffs.”
International leaders and industry lobbyists prepare for the fight. They are threatening to introduce or threaten retaliation measures beyond the European Union, Canada, China and Mexico.
The White House also views tariffs as revenue drivers. That debate could be heavily as Republicans begin their fight to make Trump's tax cuts permanent in 2017 and present something new. Next: “There's no tax on tips, no tax on social security, no tax on overtime, and we're going to make America's automobile tax deductible again,” the Treasury Department told Sean Hannity on Fox News on Monday.
To get those cuts through Congress, Republicans will need to find trillions of dollars in new savings, new revenue streams, or both. Peter Navarro, Hawkish's senior trade policy advisor, is looking at tariffs raising around $6 trillion. But that means a wide range of taxation that lasts for years. This is an unsettling outlook for the party's free trade wing.
Stephen Moore, an economist at the Heritage Foundation, a conservative think tank, “we're talking about the issue of splitting Republicans rather than uniting Republicans,” the Times said.
This is what's going on
Meh reportedly seeks the White House's help in that incident with the European Union. Executives are asking Trump's trade officials to persuade European regulators to step back potential penalties related to rulings regarding the use of personalized advertising, the Wall Street Journal reports. It was one of the first big questions from Meta as CEO Mark Zuckerberg tried to rebuild his relationship with President Trump in his second term.
Openai's value has skyrocketed to $300 billion after its latest funding transaction. The ChatGpt maker closed its $40 billion round on Monday, becoming one of the most valuable private companies in the world as its weekly active user base grows to over 500 million people. The deal also highlights the finances of SoftBank, the round's lead investor. It reportedly seeks $16.5 billion in loans to fund AI ambitions. Apart from that, Microsoft Backed Builder.ai cut its revenue estimates for 2024 and was called by an auditor to check accounts for the past two years.
Johnson & Johnson is struggling with another big talcum powder retreat. On Monday, a federal bankruptcy judge abandoned a $9 billion settlement that would have settled a wave of lawsuits against the company over allegations that the product caused cancer. This decision extends the dispute that has been with the company for many years. The Justice Department's bankruptcy counsel and attorneys for some plaintiffs were opposed to the settlement.
Economic sacrifices of reducing research funds
Harvard, the latest university to be attacked by the Trump administration, is currently considering nearly $9 billion in federal grants and contracts for the university, saying the White House is inadequately handling anti-Semitism in the schools.
The move comes as research institutions across the country are rushing to replace funds drawn by the administration. Critics of those actions say such moves could cause a long-term blow to the wider economy.
Numbers threat to President Trump: According to the Associated Press, 100 universities under investigation by the Trump administration are investigating accusations and anti-Semitism treatment related to their diversity, equity, inclusion policy and treatment of anti-Semitism. That money accounts for around 10-13% of revenue in most schools.
The Trump administration also attempted to effectively delay grants from the National Institutes of Health, which fund biomedical research, and fire workers at the National Science Foundation. Google began as a foundation-funded graduate research project at Stanford University.
Trump has also set a cap on “indirect funds” used for costs for buildings, utilities and support staff.
How government funding is America's R.&D. : An analysis in 2019 found that nearly a third of patents rely directly on government funding, and a recent paper by the Dallas Fed found that government funding for the study accounted for at least five-fifths of productivity growth since World War II.
“This really kills geese that lay golden eggs,” Sabrina Howell, a NYU professor who studied the role of the federal government in supporting innovation, told Ben Kasselman of the Times.
Artificial intelligence is a particular concern. The rise of China's Deepseek, created by the lack of resources, while AI models rival Western offerings, shows that the rise of Deepseek is not given the advantage of American technological research.
The American lead in AI relies on a “symbiotic balance” between federal funding and private investment, two researchers at the University of Chicago argued in Fortune's recent essay. The risk of hurting the United States is upset, especially when “competitors are actively increasing government-funded research programs, which means competitors are quickly gaining positions.”
Other Trump policies could also be at the expense of the country's research talent. Trump has also stepped up immigration policies, and his administration recently revoked visas for some students who were involved in political protests. The overall effect is to make the US unattractive to top-notch international scientists.
Tech companies are already worried about the hurdles to attract foreign talent. “It's almost impossible to bring people here,” Eugenia Kuyda, founder of AI companion startup Replika, said in a December Dealbook Summit. She added an AI scientist.
Market winners and losers
The first quarter of 2025 was featured in the book, and it was brutal as President Trump's tariff move helped to drive the sale in the S&P 500.
Financial assets that emerged from strong gates since election day in November 2018 have plummeted, including Bitcoin (down 12.1% in the first quarter), the dollar (down nearly 4% against a basket of currencies), and Elon Musk's Tesla (down nearly 36%). The so-called magnificent group of seven high-tech stocks has finished over 20% from its December height.
Conversely, European and Asian stock indexes were far above their American counterparts. Hangsen surged nearly 18% in the quarter. This is a rally that went overdrive in January after Chinese chatbot maker Deepseek shook the global market.
Also, DAX, an index of German blue chip companies, won over 10% as lawmakers approved a major stimulus plan in case Trump boosted America's security commitment to Europe.
Remake the chip method
President Trump has made it clear that he dislikes the Chips Act. The bipartisan law was passed under the Biden administration, which aimed to encourage more domestic semiconductor manufacturing.
But Commerce Secretary Howard Lutnick reportedly threatens to withhold federal subsidies promised under the law as a way to strengthen investment in US production.
Lutnick suggests that it may not control the agreed subsidies under the Act; Bloomberg reports. The Secretary of Commerce is reviewing awards held under the law. Many businesses have not hit the milestone to qualify for additional money since Trump took office, but Lutnick appears willing to slowly bore such payments in the future.
That doesn't necessarily mean that Trump and Rutnic are abandoning the Chips Act. On Monday, the president signed an executive order to create a US investment accelerator, the office within the Commerce Department that governs the CHIPS Act, hoping to encourage more than $1 billion in investments.
It is intended to negotiate with “a much better deal than the previous administration.” The aim is to cut off the deficit and promote collaboration with laboratories across the country (even if the White House was aiming to be the centre of American research institutions).
That may include an extension of the Chips Act provisions for a 25% tax credit. According to Bloomberg. For many businesses, these tax credits are more valuable than legal grants. This may not be covered by the type of environmental or labor requirements associated with subsidies.
Last week, Peter Cleveland, senior vice president of Taiwan's chip giant TSMC, said “credit is essential,” according to Bloomberg. Building a chip manufacturing base in America requires collaboration between Washington and the private industry. “And the form that collaboration should take,” he said.
There's a catch. If a major change to a tax credit element is made, it will require council approval.
Net Effect: The chip method can live in some way. “The brand gives the president a license structure to support the underlying policies despite previously attacking the Chips Act,” Jim Secreo, an employee of the Biden administration's Commerce Department, told Bloomberg.
Speed is read
transaction
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The mortgage giant, Rocket Company, has agreed to buy rival Cooper for $9.4 billion. (AP)
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Circle, which issues USDC Stablecoin, is said to be working with JPMorgan Chase and Citigroup on a potential IPO (Fortune).
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Hooters, um, the colorful restaurant chain has filed for bankruptcy protection as part of its plan to sell company-owned restaurants to groups supporting founders. (Reuters)
Politics, policy, regulation
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Former independent Arizona Senator Kirsten Cinema was hired by law and lobbying company Hogan Lovells to advise clients on Washington's policies. (Politico)
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Several consulting companies are said to have provided billions of cost savings to the Trump administration to save federal contracts. (ft)
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President Trump signed an executive order with musician Kid Rock by his side, aiming to see what he said was an exploitative practice by ticket brokers. (WSJ)
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