Apple will lose big in a trade war. The $2.7 trillion technology giant designs iPhones in California, assembles most in China, and sells them around the world. President Donald Trump’s decision to slap cumulative tariffs, including those scheduled for April 9, of 54% on Chinese imports, would reduce profit perhaps 15%. Retaliatory levies on overseas sales would be worse. But Apple’s increasing focus on selling services at least offers some consolation. During Trump’s first term in the White House, Apple Chief Executive Tim Cook wrangled a tariff exemption. Perhaps he can again, given he has tried to curry favor, by hyping the

The U.S. tariffs bombshell has detonated across markets worldwide. Yields on 10-year Treasury bonds sagged, the dollar weakened, and the S&P 500 and Nasdaq Composite indexes slumped 4% in New York morning trading a day after President Donald Trump unveiled a bewildering array of levies on imported goods. Combined, they imply an aggregate effective rate beyond 20%, its highest in a century by many estimates. The question now is whether Washington will get the message from Wall Street. The White House professes to no longer react to stock-price gyrations. Treasury Secretary Scott Bessent, for example, has said repeatedly that the administration cares

Over the past decade the trend of hyper-globalisation, which has been one of the defining characteristics of economic growth, has started to wane. More recent changes to the global political climate have further threatened free trade, with the Trump administration is looking set to drive into place a slew of protectionist measures. In light of this backdrop, two other global economic powers, India and the European Union (EU), are increasingly keen to finalise a free-trade agreement (FTA) by the end of the year. It is clear to see why both parties are keen to engage in a free-trade agreement, with

During the U.S. presidential election campaign, Donald Trump promised to fix the economy by eliminating inflation, cutting taxes and increasing tariffs. This raises a challenge for asset allocators as to how these policies will hit expected asset returns in the short and long run. The incoming president will inherit a robust economy with a labor market in rude health and unemployment at only 4.1%. Real wages are rising and job openings, although down from post-pandemic levels, are still at the same highs reached during 2018-19, as shown in exhibit 1. Exhibit 1: U.S. Labor Market Indicators Furthermore, the ex ante

hat do you do when putting the pedal to the metal isn’t enough? For U.S. President Joe Biden’s administration, the answer is to lay down roadblocks for rivals. The White House on Tuesday unveiled a host of bumped-up tariffs on Chinese products, including a quadrupling of the charge on electric vehicles to 100%. A muddled U.S. policy push could end up backfiring. Tuesday’s announcement from Biden also targets steel, batteries and more. It builds on an investigation conducted under former President Donald Trump that claimed China forces the transfer of, or outright steals, technologies from U.S. firms, pours money into resulting industry

TikTok is making the most of the clock. A new bill introduced in U.S. Congress is seeking to ban the popular social media app but offers up similar solutions to the problem that vexed lawmakers and two presidents for four years. Congress could vote to implement a law that is messy. But that just means it’ll take time, all while TikTok grows more powerful. The House of Representatives is set to vote Wednesday on legislation that gives the parent of TikTok, China’s ByteDance, an ultimatum: sell the short-form video app or risk banishment from digital stores. While it cites ByteDance and TikTok

China smashed its previous records on external trade in 2021. Amid the strong global economic recovery, both goods exports and imports surged by 30%, to $3.4 trillion and $2.7 trillion respectively. The overall trade surplus on goods rose from $524bn in 2020 to $676bn in 2021, surpassing the previous high of $594bn in 2015. Despite ongoing tariffs, exports to the United States increased by 28% to $576bn and the trade surplus reached a new high at almost $400bn. External trade has been a key support for the Chinese economy recently, as problems in the property sector and the country’s draconian

The “Three Amigos Summit” on Nov. 18 in Washington D.C. appeared to reinforce President Joe Biden’s shift towards Trumpian protectionism. Biden refused to budge from his position of using tax credits to support domestic production of electrical vehicles, potentially damaging over 50 years of voluntary cooperation and trade integration between U.S. and Canadian firms in the automotive sector. On Nov. 24, the U.S. Department of Commerce stated it will impose duties of 17.9% on imported softwood lumber from Canada, which is twice the previous rate of 8.99%. This shift towards protectionism should be of grave concern for investors as less-open

When it took office, the Trump administration correctly perceived that there was an imbalance in the trading relationship between the US and China. The bilateral trade deficit was not the issue — such deficits exist between many pairs of countries, and usually reflect their relative appetites for saving and the underlying patterns of comparative advantage that each partner enjoys. A bilateral deficit, no matter how large, is not in itself evidence of imbalance in the relationship. Rather, the evidence arises from two sources: first, the tariff regime implemented by China on imports from the US; and second, the net trade

U.S. equity investors in the six year period between 1973 and 1978 would have made no nominal return on their investment, with inflation averaging 7.7%. Hence it is understandable that investors remain so concerned about the potential impact of a higher rate of rising prices. This is why all eyes are currently on the bond market and whether it is signalling a return to the 1970s, and whether firms will be able to maintain and grow profit margins. No need to panic The U.S. February 2021 inflation data showed an increase of 0.4%, resulting in an annualized consumer price index

Despite global trade tensions and recession fears, analysts expect the top five economies to see positive earnings growth in 2020.  

Fathom’s Economic Sentiment Indicators (ESIs) distil the information contained within numerous surveys into composite measures of underlying sentiment. Since peaking at the beginning of last year, the euro area ESI has fallen sharply almost one percentage point as growth slipped and sentiment soured following 2017’s economic boom. The decline in sentiment over the past two years is remarkable, with the gap that emerged between the hard and soft data now fully closed. Fathom had expected this to happen, with weaker sentiment (rather than higher growth) always likely to be the cause. Refresh the chart in your browser | Edit chart in Datastream