Thursday 17/04/25

Donald Trump’s tariffs put Federal Reserve’s jobs and inflation goals at risk, says Jay Powell (Financial Times, Claire Jones) cites Fed chief Jay Powell as warning that Trump’s policies will make it much more difficult to achieve the goals of keeping inflation under control whilst maximising employment, or as he put it “without price stability, we cannot achieve long periods of strong labour market conditions”. He added that the tariffs so far had been much greater than they’d anticipated and that the consequent economic effects would be greater as a result. Trump tariffs will send global trade into reverse this year, warns WTO (The Guardian, Heather Stewart) cites the World Trade Organization’s director general, Ngozi Okonkjo-Iweala, as she also expressed concern at the “decoupling” of the US and China and that this would have “far-reaching consequences”. The WTO cut its previous forecast of global GDP growth of 2.8% for 2025 to 2.2%. Talking of decoupling, Trump to strong-arm EU into splitting from China (Daily Telegraph, Eir Nolsoe) shows that the president will demand that US trade partners impose tight restrictions on Chinese goods as part of subsequent trade deal negotiations with over 70 countries. This will be particularly tricky for the EU because the US is its largest market for sales but China is the EU’s biggest supplier. China is also the EU’s third biggest destination for its exports. A full-on trade war between the US, China and EU would be very painful indeed. On the other hand, China pounces as Trump turns on Europe (Daily Telegraph, Tim Wallace and Christopher Jasper) suggests that China is seeing that a disgruntled Europe could offer opportunities to forge deeper ties, which is probably why the US administration is keen to do whatever it can to stop trading partners from cosying up to China too much. One recent example of this is China banning the deliveries of Boeing airliners which could effectively hand Airbus a near-monopoly in China.

In terms of immediate reactions to the trade war so far, Temu and Shein slash US ad spending as trade war hits (Financial Times, Rafe Uddin, Hannah Murphy and Eleanor Olcott) shows that the two Chinese e-commerce giants have made deep cuts to ad spend on platforms including Meta, X and YouTube and say that they will raise prices later on this month. * SO WHAT? * This is going to hurt the platforms who rely on the ad income that the two giants generate but it will also hurt the e-tailers themselves because neither brand has sufficiently strong brand loyalty – which is why they need to spend so much on advertising in the first place.

Staying on the subject of advertising, UK advertisers cut spending for the first time in four years on tariff turmoil (Financial Times, Daniel Thomas) shows that British advertisers are now battening down the hatches and cutting their ad budgets in anticipation of a trade war. In a survey carried out by the Institute of Practitioners in Advertising (IPA), almost 25% of companies reported a cut in marketing budgets while around 20% said that there would be an increase. Overall, that means the balance is a reduction in spend. * SO WHAT? * As I often say, ad spend is often seen as a leading economic indicator – so this quite literally doesn’t bode well. Having said that, there’s still the prospect of some kind of special trade deal in the offing with the US

that might pep sentiment up a bit. However, the problem with that is that agreements with the US just aren’t what they used to be so even if we got the deal of a lifetime there would always be that doubt in the back of our minds as to whether it could just evaporate for some reason.

Elsewhere, Trump administration halts Equinor’s $5bn New York energy project (Financial Times, Amanda Chu) shows that the US has put a stop to the $5bn offshore wind project that Norway’s Equinor had been developing. This is the latest nail in the coffin for renewable energy (and especially offshore wind energy) in the US. Equinor was ordered to “immediately halt all construction activities” on its Empire Wind projects off the coast of New York City. Consultancy Rystad Energy said that over 90% of America’s planned offshore wind projects are deemed to be at “serious risk” because offshore wind projects in the US are reliant on federal government approvals. Trump is not a fan.

Back home, UK inflation falls to 2.6%, increasing pressure on Bank to cut interest rates (The Guardian, Phillip Inman) cites the latest figures from the ONS which show that inflation fell by more than expected but then Good news on UK inflation may be short-lived amid trade war and rising household bills (The Guardian, Richard Partington) warns that the feelgood may not last long because of the cumulative impact of higher bills in “Awful April” and both the direct and indirect Trump tariff impact will filter through. Many forecasters reckon that inflation will be back up to almost 4% by the summer!

That being said, I thought I’d mention Tariffs more likely to bring UK price cuts than inflation, says WH Smith boss (The Guardian, Sarah Butler) because it highlights the opposing view to most, as the CEO of WH Smith reckons that the tariff war could lead to falling inflation as east Asian suppliers look for alternative trading partners to the US. The company announced that profits at the high street business had fallen by almost a third, something that new owner Modella will be mindful of when it takes on WH Smith’s 480 high street stores when the deal completes this summer. Overall, though, WH Smith put in a decent performance in the six months to February thanks to its travel business, which it will be be focusing on from now on.

In markets news, Gold price hits high and dollar falls as investors seek safe havens (The Times, Emma Powell) shows that investors are still seeking out safe places to park their money amid the current tariff storm, sending the gold price through $3,300 for the first time and Investors turn their backs on US stocks and dollar amid tariff war (The Times, Mehreen Khan) cites the gloomy outlook of the Bank of America’s fund manager survey which highlighted the ongoing trend of institutional money flowing out of America. It is worth noting that in times of turmoil, the dollar has often been seen as a safe haven asset – but that’s not the case now as it has fallen by almost 10% from the peak it hit in January.

In consumer trends news, US consumers rushed to buy cars ahead of Trump’s auto tariffs (Financial Times, Stephanie Stacey and Claire Bushey) cites the latest automotive sales figures from the Census Bureau for last month which show that US auto sales jumped by 1.4% in March as buyers tried to get ahead of Trump’s new tariffs. Given that his threatened tariff was a 25% tax on imports of foreign-made cars, this is hardly surprising!

In employment news, Hays is latest UK recruiter to warn about uncertain outlook (Financial Times, Mari Novik) shows that the FTSE250 recruitment group has become the latest UK recruitment company to get gloomy about economic uncertainty as its performance weakened across the board. The company said that the challenging conditions were likely to continue into 2026. Rivals PageGroup and Robert Walters also expressed similar sentiment in their results.

Bosses warn Rayner’s workers’ rights bill will cause more strikes (Daily Telegraph, Szu Ping Chan and Lucy Burton) shows that business groups are getting together to warn that Rayner’s

plans to give more powers to unions will lead to more strike action. This is because the forthcoming Employment Rights Bill will make it easier for trade unions to call strikes. The “B5” group comprising of the BCC, the CBI, the FSB, the IoD and Make UK between them represent the majority of British businesses and have put together a joint letter to members of the House of Lords warning of the dangers. * SO WHAT? * Of course workers’ rights need to be protected but I think that the likely effect of many of the elements of the Bill will be that there will be more strikes and more abuse of employers. We are already seeing what’s going on in Birmingham – and we haven’t even dipped into recession yet! When things get worse in the economy, more strikes will occur which will hasten a further downward spiral and give cause for businesses to be cautious when thinking of investing and expanding.

Nvidia blindsided by Trump’s curbs in multibillion-dollar blow to China sales (Financial Times, Zijing Wu, Cheng Leng and Michael Acton) follows on from what I said yesterday regarding the negative impact on Nvidia of Trump’s latest attempts to strangle China of the supply of advanced chips. It highlights the fact that Nvidia thought that their H20 chips were good to go to China – so the news hit them particularly hard. Tech stocks sink after Nvidia reveals hit from US curbs on sales to China (Financial Times, George Steer and Will Schmitt) shows that negative sentiment spread to the whole sector in another tech sell-off.  Staying with Nvidia-related news, US House panel probes whether DeepSeek used restricted Nvidia chips (Financial Times, Demetri Sevastopulo and Michael Acton) alerts us to the US House of Representatives China committee’s request to Nvidia to explain whether and how DeepSeek managed to source export-controlled chips to power its AI app that caused a storm earlier this year. * SO WHAT? * This has been a bad week for Nvidia. The thing is that Nvidia is right on the cutting edge of AI and if its chips are being used to enrich China’s AI capability, this administration is unlikely to just let that go. But the problem there is how much do you punish it for allowing its chips to be sold over in China? Would punishing it too harshly be self-defeating? Would being too lenient send out the wrong signal?

In Google sued for £5bn in UK over allegations of shutting out rivals (The Guardian, Rachel Hall) we see that Google is being sued in a class action in the UK for up to £5bn in damages for allegedly excluding rivals in internet search and using its dominance in the market to overcharge businesses for advertisements. Competition law expert, Or Brook, filed the claim on behalf of thousands of businesses, saying that businesses had almost no choice but to use Google ads to promote their products and services. The CMA’s investigation into Google’s search services was launched in January and it is still ongoing. Google accounts for 90% of searches…

In chip-related news, ASML Warns on Tariff Uncertainty, Logs Weak Orders (Wall Street Journal, Mauro Orru) shows that orders for the company’s chip-making equipment over Q1 were

weaker-than-expected and the outlook wasn’t great either given the uncertainty that Trump’s new policies are creating. Tricky times for the company that makes the machines that make all those cutting-edge AI chips!

Japan hosts unlikely winners of the global AI boom (Financial Times, Lex) is an interesting article that highlights Japan’s winners from the AI boom. Makers of motors, fans and electrical components like Nidec, Sanyo Denki and Murata Manufacturing have taken a drubbing from sluggish global EV sales but they have started to benefit from the AI boom because their respective wares are used in the physical infrastructure that it all depends on. Nidec, for instance, reported record operating profits recently, partly thanks to increasing order flow from data centre clients. Other companies such as Hitachi, Sanyo Denki and Murata also look well-placed to benefit as well. It looks like these industrial dinosaurs are now getting a welcome second wind!

ChatGPT founder escalates Elon Musk feud by launching X rival (Daily Telegraph, James Warrington) heralds a fascinating development in the whole Altman vs Musk rivalry as OpenAI’s founder said that he’s looking at plans to build an alternative to X based on its newly-released AI image generator. At this moment it’s not clear as to whether the new social media platform would be released as a standalone or integrated into ChatGPT itself. * SO WHAT? * I think this is a great idea from OpenAI’s point of view because it will give it another source of information to learn from. However, given the hype surrounding OpenAI, why faff around with building a social media platform from scratch? Why not just buy Bluesky and adapt it if necessary?? That would actually feed quite nicely into the whole Altman vs Musk thing as well as accelerating the whole process of building another social media app.

In a quick scoot around some of today’s other interesting stories, Tesla sales decline in California amid backlash against Elon Musk (The Times, Marieta Marinova) highlights the latest disappointing stats for Tesla as EV registrations in the state dropped by 15.1% over Q1 in another example of its decline and the ongoing challenges it is facing. The aging product lineup and backlash at Musk’s political affiliations and DOGE activities aren’t helping Tesla’s cause.

In Electric cars break down more than petrol vehicles, warns AA (Daily Telegraph, Christopher Jasper) we see that data from the AA shows that EVs break down more frequently than petrol and diesel vehicles. They are particularly prone to punctures and flat batteries, jammed charging cables and technical problems. Although most problems with EVs can be fixed at the roadside, it’s a real problem when they can’t. They have no neutral gear, which means they can’t be towed.

Also, the weight of the batteries means that some cars can’t be moved with a standard trailer. No doubt consumers will think about this when they find themselves considering an EV purchase…

Then in Chinese tea chain Chagee aims for $400mn New York IPO despite tariff war (Financial Times, George Steer) we see that the Shanghai-based chain famous for “teaspressos” and oolong “teapuccinos” is ignoring tricky market conditions and will move forward with plans for its New York IPO. It hopes to raise almost $400m on its debut this week. If it goes well, it will be the second-biggest Chinese listing in the US for over three years, beaten only by EV maker Zeekr in May last year. It’ll be interesting to see how this IPO is received.

Every now and again I think it’s nice to dream, don’t you think?? Well if you had $40m to spend on a jet (remember I said dream, right 😁) what sort of thing do you think that’d get you? Here are the options. However, if you’re a bit of a pauper – like me – and can’t afford $40m right now then perhaps you’d have to slum it with a private jet. Don’t forget the cashmere blankets, buddy 😱! BTW, if I did have this amount of money then I would not buy a private jet or rent one! I think you could do a lot more good with that money and still have a nice time. Gotta spread the wealth, right??