If you snoozed news Friday... you missed a 24-hour drama of Twitter squabbling and real economic punching that unfolded in 4 parts:
- 🇨🇳 🤜 🇺🇸 China announced it was increasing tariffs on a hefty $75B worth of stuff it buys from the US every year (including cars).
- 🇺🇸 🤜 🇺🇸 President Trump wondered aloud on Twitter who was a bigger enemy to the US: China's President Xi or the Chairman of the Fed, Jerry Powell.
- 🇺🇸 🤜 🇨🇳 🇺🇸 Trump ordered US companies to start the process of removing production from China.
- 🇺🇸 🤜 🇨🇳 Trump increased all existing and planned tariffs on China by 5%.
As always with tariffs, there are plenty of losers...
- Cars: Besides Americans, China buys the 2nd-most US-made cars. Tariffs are like a tax raise on Tesla (-5%), Ford (-3%), and BMW (-3% — the Carolina-made X5 is the #1 exported car in America, going mostly to China).
- Toys: Mattel fell 7% because most of Barbie is made in China.
- Electronics: Entertainment staples Best Buy, Apple, and GoPro were destined for punishment after producing in China.
- Everything else: Tariffs will look to us like price increases on the stuff we buy, which JP Morgan estimates will cost every American household $1K/year.
The crazy curve is getting steeper... We've never seen so many economic punches thrown in one day. A crucial element of economic growth is business investment — and it's hard out there for a CEO to do that right now. With President Trump and President Xi openly calling each other names, both sides are less likely to back down and cooperate if it could make them look weak-ish.
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