90-day suspension
Stocks, dollars and oil spiked Monday after President Trump's top negotiators outlined details of their escalation major in the US-China trade war.
There were high expectations for some kind of breakthrough. The market response suggests a mission achieved in terms of reaching a critical delente, although significant trade barriers still remain and much needs to be resolved.
“The consensus from both delegations is that neither side wanted a decoupling,” Treasury Secretary Scott Bescent, who was a point person at a US-China talk in Geneva over the weekend, said Monday. “Now we are implementing a mechanism for further consultation,” he added, noting that the framework agreement will expire in 90 days. Those talks could take place in “the next few weeks,” Bescent told CNBC.
This is what the contract has:
The US will reduce tariffs on Chinese imports from 145% to 30%.
China will reduce its US goods duties from 125% to 10%.
According to US trade representative Jamieson Greer, sector-specific tariffs are not part of the contract. Trump imposes target taxes on items that include imports of Chinese-made semiconductors, medical devices, and aluminum and steel.
China will remove non-export export restrictions, but it did not say it would lift restrictions on critical mineral transport to the US, saying it would look forward to stable and sustainable trade relations.
Both sides appear to see the futileness of being crowded together with huge tariffs. The Tit-for-Tat measure “is equivalent to an embargo, and neither side wants it,” Bescent said. Companies are warning that taxation will overturn global supply chains and force prices to rise. (Apple is considering raising prices with its fall iPhone lineup, but according to the Wall Street Journal, it is determined not to publicly condemn customs duties for movement.)
Analysts said the uncertainty has effectively paralyzed corporate investments and employment, pushing FRED to interest rates as it monitors inflation and labor market fallout.
Trump appears to be on board in line with Monday's agreement. Yesterday he welcomed the state of consultation on a true society, calling it “a complete reset negotiated in a friendly but constructive way.”
However, this condition is far more disrupted than what he called just three days ago. China's 80% tariffs “seems to be correct,” he wrote Friday, adding that it was “until Scott B.”
Investors saw it as the toughest trade hurdle to overcome China's deadlock. Progress there could promote further trade optimism. “Many of his trade war's worst and uncertainty could end within two months of this,” Holger Schmeading, chief economist at Belenberg, wrote in a research note on Monday.
However, tariffs will increase and the biggest losses will be the biggest losses to American businesses and households, Schmeading added.
Among the pre-market deal rally is a high-tech giant with significant exposure in China, including Nvidia, Amazon and Apple.
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This is what's going on
President Trump's drug pricing plan rattles pharmaceutical stocks. The president, true socially, announced on Monday that he would sign an executive order calling for drug prices to be reduced to levels paid by peer countries. (In his first term, Trump tried to do something similar to dozens of drugs covered by Medicare.) The move could face tough court challenges. Still, the global drugmaker stocks fell sharply on Monday. Separately, House Republicans yesterday announced a proposal to significantly weaken Medicaid compensation as the party calls for cost cuts to pay for the vast tax cuts later this year.
Air travel could be destroyed nationwide, according to US officials. After another radar halt at Newar Liberty International Airport on Friday, Transportation Secretary Sean Duffy said he “meets Kristen Welker” on NBC yesterday, opening discussions about expanding backflights there, saying Newark's issues could affect other airports. Duffy said regulators had found “outdated systems” at airport traffic control sites across the country.
Inflation will be on the forefront and center this week. The April Consumer Price Index report is scheduled to be released on Tuesday, and economists hope to see new evidence that Trump's trade war has rekindled inflation. Consumer health will focus on Thursday with retail sales and the release of Walmart's latest quarterly revenue. On Friday, the University of Michigan Consumer Sentiment Survey is set to be released as Trump shows the treatment of the economy that is eroding his approval rating.
What Qatar gets from the talented 747
President Trump's critics were furious over the weekend after reports that he was ready to accept Qatar's Boeing 747-8 (worth $400 million) as an upgraded Air Force 1.
White House officials said such moves will be carried out in accordance with federal law, but skeptics said it represents a clear violation of ethical rules and a conflict of interest. It is worth noting what Qatar has already gained from Trump, and what in the future will be.
Summary: Qatar is in discussions to give the administration the 747, which is now owned by the Emirates royal family, the Times reported, and the plane was later donated to Trump's Presidential Library. That may mean he can use it after his term is over.
Trump has long complained about the state of one plane in the US government's current air force, and Boeing exced it as slow to offer alternatives. That said, the jumbo jet is not available immediately as US contractors need to modify it to meet military standards.
ABC News, which broke the news, reports that the administrative attorney concluded that such a gift would be acceptable because the plane was not conditioned on a particular request and the plane would be given to the federal government. Qatar officials added that such gifts will be temporary loans.
Critics did not write down words about what was deemed a clear violation of federal law. Catalis has vast business interests tied to the US, including energy projects and investments. Good-Government Advocates also said Trump's family business has just announced that it will build a new golf resort in Qatar, partly developed by state-owned companies.
“Corruption is brave,” wrote Sen. Adam Schiff, a Democrat in California. “It's not just bribery, it's a premium foreign influence with extra legroom.” (Trump pointed to such criticism of the true society.)
The president has already faced criticism over his seeming conflict of interest, including his family's business interests in cryptocurrency, and his and Republicans pushing for deregulation.
Worth watching: Trump will begin on Monday, his first major international trip, with a visit to three Middle Eastern allies in Qatar, Saudi Arabia and Abu Dhabi. (The Qatar 747 contract is not expected to be announced during the trip.)
Among Trump's priorities, CNN reports that three governments are shocking the “economic agreement” to invest more in the United States.
Why did copyright regulators get fired?
The Trump administration has attracted criticism for suddenly and seemingly dismissing government officials' scores, without explanation.
But one of the latest such moves is worth noting because of its timing. And for potential benefits on the corner of the tech industry that defended artificial intelligence that President Trump defended.
Shira Perlmutter was fired Saturday as US Copyright Director after holding his first post in the Trump administration since October 2020. There was no reason.
The legality of this movement is unknown. Politico reports that her position has been appointed and overseen by a Congressional Librarian. Congressional librarians must be appointed by the president and approved by the Senate.
Critics of the move pointed to an AI report released by Perlmutter's office last week. From the documentation:
If the model is deployed for purposes such as analysis or research (the type of application that is important for international competitiveness), the output is not a substitute for the work of representation used in training. However, commercial use of the vast majority of copyrighted works to produce competing expressive content in existing markets, especially when achieved through illegal access, crosses the boundaries of established fair use.
Still, the report has not urged direct government action, at least for now.
AI companies are advocating for more tolerant copyright rules to continue creating more tolerant models, and Elon Musk suggests that they prefer to scrap all intellectual property laws last month X. (Disclaimer: The Times sues Openai and Microsoft for copyright infringement of news content related to AI systems.)
AI has announced the vast Stargate Data Center project, a Trump-funded industry, led by Openai and SoftBank. Openai's Sam Altman also donated $1 million to Trump's inauguration, but Musk is a close ally of the president.
“It's certainly not a coincidence,” says that “Eron Musk was fired within a day of refusing to make an effort to mine a horde of copyright work to train AI models,” Joe Morell, a New York Democrat and a ranking member of the House Management Committee, wrote in X.
The White House has not responded to a news organization's request for comment regarding Perlmutter's firing.
Other AI News: Pope Leo XIV said this weekend that it was his Pope's focus, suggesting that he will continue his predecessor's call for greater worker protection amid the rapid commercialization of technology.
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Best remaining
Klarna said that the company has stopped hiring new workers because it focuses on using artificial intelligence. Currently, the lender of the purchase price is turning the course back. (Bloomberg)
“Does California dream?” (NYT)
Even award-winning authors are turning to Substack to publish fiction from their latest works, try new formats, and revive old devices like serialized releases. (New Yorker)
An internal story about how the quiet Americans emerged as the next pope. (NYT)
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