Friday 30/05/25

US appeals court gives temporary reprieve to Donald Trump’s tariffs (Financial Times, Lauren Fedor, James Politi, Kaye Wiggins and Stefania Palma) follows on from yesterday’s dramatic development on the tariff front and highlights a subsequent ruling by the US Court of Appeals for the Federal Circuit that paused the previous day’s ruling by the US Court of International Trade that classed his “liberation day” trade tariffs as “illegal”. This decision means that the US can continue as before to collect tariffs. It seems that many observers reckon Trump will be able to bulldoze his way through and get his tariffs one way or another while Trump tariff ruling risks slowing down delivery of UK trade deal (Financial Times, George Parker, Peter Foster, Kana Inagaki and James Politi) suggests that Wednesday’s ruling put the US-UK deal in doubt, particularly as it’s not legally binding (yet), although yesterday’s ruling probably got that back on track again. On a related note, ‘Trump always chickens out’: Taco jibe ruffles president’s feathers (The Guardian, Jasper Jolly) describes recent volatile market movements as being prompted by the “TACO trade”, which stands for “Trump Always Chickens Out” and refers to the phenomenon where he implements something extreme (markets go down), faces market backlash and then backs down a bit from his original stance (markets rebound). He certainly seems to be the traders’ friend at the moment as they make money from all this market volatility!

Elon Musk Is Leaving Washington. How That Affects Trump’s Agenda. (Wall Street Journal, Scott Patterson and Ken Thomas) takes a stab at what comes next after Musk’s departure. In essence, DOGE’s work will shift to the White House Office of Management and Budget and Musk will go back to running his companies. * SO WHAT? * As I’ve said before, Musk claims to have saved the government $175bn versus the $2tn he had originally targeted – but there’s a lot of scepticism about that $175bn figure. You do wonder about the monetary value of the damage he’s done to his own brand though – both until now and in the coming years. For instance, a recent news report highlighted the decision of Denmark’s biggest construction company, Tscherning, to return its entire fleet of Tesla vehicles because of Musk’s politics. Will we see more of this kind of thing in future?

Meanwhile, US economy shrank at 0.2% rate in first quarter (Financial Times, Myles McCormick) shows that the US economy had its first contraction since 2022. Q4 in 2024 saw a 2.4% expansion, but that was largely down to a flood of imports as companies rushed to buy foreign goods in anticipation of Trump trade shenanigans (which turned out to be correct). More pain is expected.

Then in Donald Trump tells Jay Powell the Federal Reserve is making a ‘mistake’ by not cutting US interest rates (Financial Times, James Politi) we see that Fed chief Jerome Powell was invited to the headmaster’s office White House yesterday to discuss “economic developments including

for growth, employment, and inflation” with the president, who told him that he should have loosened monetary policy because not doing so puts America “at an economic disadvantage to China and other countries”. For now, it looks like interest rates will stay higher for longer.

Foreign tax provision in Trump budget bill spooks Wall Street (Financial Times, Kate Duguid, Harriet Clarfelt, George Steer and Alex Rogers) highlights a provision tucked into Trump’s recent budget bill that gives the US government the power to raise taxes on foreign investments in the US. Section 899 of the bill passed last week allows the government the slap additional taxes on companies and investors from countries that it judges to have punitive tax policies. This means that US-based companies with foreign owners, international firms with American branches and investors could all be targeted – and it’s freaking Wall Street out because this could choke off investment at a time when foreign investors are already wary of US assets. Germany eyes 10% digital tax on tech giants (Financial Times, Olaf Storbeck) shows that Germany is considering taxing Big Tech – which I would have thought is precisely the sort of thing that could prompt retaliatory action under Section 899!

Back home, Bailey calls for closer EU ties to counter ‘negative effects’ of Brexit (Daily Telegraph, Tim Wallace) shows that the governor of the Bank of England wants PM Starmer to get closer to the EU to counter the “negative effects” of Brexit. * SO WHAT? * The governor was supportive of Starmer’s dealings with the EU so far but reckons that more could be done to boost commercial links with the bloc. Given what’s happening across the Atlantic, I would have thought that even Brexiteers can see the need to improve relations with our continental neighbours. As I’ve said before, I believe that the EU as a collective has a better chance of standing up to America than we do on our own. This is one of the reasons why Trump wants to “break” Europe. The EU is clearly not perfect but it is still an important trading partner for us and, as things stand currently, is probably going to be more reliable to deal with.

Dismay as UK prepares to sign ‘values-free’ £1.6bn trade deal with Gulf states (The Guardian, Jessica Elgot) shows that the UK is on the verge of signing a chunky trade deal with the Gulf Cooperation Council – which comprises of countries including Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates. This would be the fourth big trading agreement under Starmer following ones with the US, India and the EU. * SO WHAT? * The hope is that this will add an extra £8.6bn a year of trade between the UK and GCC countries by 2035 and is likely to be a boon to the car industry and financial services. There’s likely to be a backlash against this from human rights groups and others but I think that’s all going to fall on deaf ears as the PM’s surely going to prioritise trade, particularly in today’s environment.

UK business confidence jumps in May (The Times, Jack Barnett) cites the latest data from the Lloyds Bank business barometer which shows a strong reversal in business confidence from April’s big decline to reach its highest point for nine-months. * SO WHAT? * I think is particularly impressive because confidence was riding high in the aftermath of the election. This was largely due to a recovery in global financial markets and the pause on Trump’s “reciprocal tariffs” although I’d also wager that it’s because the shock of “Awful April” is subsiding.

In consumer news, Inflation-weary Americans queue for toilet paper and cheap Bordeaux (Financial Times, Gregory Meyer) shows that American consumers are increasingly migrating to retailers like Costco, Sam’s Club and BJ’s Wholesale Club to seek out lower prices at warehouse clubs. These chains are trying to improve the customer experience which is putting pressure on traditional retailers who have higher mark-ups. * SO WHAT? * Consumer prices in the US are

now 26% higher than they were in 2019 and Trump’s tariff tirade has already started to push prices up further. Membership of these warehouse clubs costs between $50 and $65 a year and demand continues to rise! You do wonder whether these companies will be tempted to expand more aggressively abroad as well…

Then in One in 10 UK civil service jobs facing axe (Financial Times, George Parker) we see that about 50,000 civil service jobs are facing the chop as part of a “brutal” public spending review that chancellor Reeves wants to complete by the beginning of next week. Over half of government departments have now settled their budgets now for the next three years. A 10% reduction in headcount here is seen as do-able given the sharp rise in centralised bureaucracy since Brexit and the pandemic.

Retailers, Ducking Trade-War Curveballs, Stick to Their Plans (Wall Street Journal, Sarah Nassauer, Suzanne Kapner and Te-Ping Chen) shows the effect so far of Trump’s tariffs on retailer behaviour. First off, many have already put prices up, reduced spend and cut headcount – but they are also having to think of the future and are moving supply chains out of China. * SO WHAT? * These companies are having a nightmare as they are having to deal with Trump’s constant manoeuvres whilst also trying to do their best to keep their businesses afloat. I would have thought, though, that larger companies are better equipped to cope with this because they are more likely to have a cash buffer than many smaller companies. Second-guessing Trump will be very difficult so everyone’s got to do the best they can – so cut costs and get China out of your supply chain if at all possible.

I’ve already mentioned Costco earlier from a consumer trend point of view but Costco to Rely on Advancing Orders, Production Shifts to Offset Tariffs (Wall Street Journal, Connor Hart) highlights what’s going on from the retailer’s point of view as it tries to reduce the impact of Trump’s tariffs on the business. At the moment, it’s front-loading orders (particularly of seasonal goods like garden furniture etc) and shifting the sourcing of its private-label products to the regions where they are sold. Costco had a decent quarter powered by increased average ticket prices and an uptick in new members.

In Abercrombie and Gap get a boost from the ’90s revival (Financial Times, Lex) we see that two 90’s retail superstars are making a comeback after years in the wilderness. A&F has had a major image overhaul and become more inclusive – helping its share price skyrocket by 290% since 2023 – while Gap’s turnaround under its new CEO Richard Dickson continues to take shape, something reflected in its 235% share price rise over the last couple of years. A lot of this is thanks to Gen Z’s enthusiasm for ’90s nostalgia. A&F’s sales rise in the latest quarter was its best ever start to a fiscal year and management raised full year guidance. * SO WHAT? * What a journey! A&F has had some serious image problems over the years while Gap has just fallen off the radar. It’s good to hear that they have taken their respective medicines but the key now will be how to STAY relevant!

Meanwhile, AutoTrader’s lower growth forecasts send shares down by 11% (The Times, Robert Lea) highlights a weaker-than-expected performance by the online trading site in the current “hot” market. Fun fact: AutoTrader is ten times bigger than its nearest rival! In a world where companies like this decide to try to conquer other markets, AutoTrader sticks to its knitting and does what it does in its home market with no intention to go elsewhere. I wish more companies were more like this and staying true to their expertise!

In a quick scoot around some of today’s other interesting stories, Chinese tech groups prepare for AI future without Nvidia (Financial Times, Zijing Wu and Ryan McMorrow) shows that China’s companies are embarking on the long road towards using domestically sourced chips to power their own AI growth as the supply of Nvidia’s chips dwindles and US export controls continue to tighten. * SO WHAT? * Thus far, the biggest buyers of Huawei’s chips have been state-owned companies like China Mobile and those in sensitive areas like defence, healthcare and finance – but I’m sure that both the number of suppliers and the number of clients will increase as capability improves. As for Nvidia, they’re sitting pretty at the moment because of mammoth demand but I’m sure there will come a time in the not-too-distant future that Chinese chip makers will catch up – and possibly overtake – them.

New York Times agrees first AI deal with Amazon (Financial Times, Anna Nicolaou and Rafe Uddin) is an interesting article that highlights the New York Times’s first ever deal to licence its editorial content to train a tech company’s AI models. Summaries and short excerpts of NYT

stories and recipes will be used by Amazon’s products including Alexa speakers. No financial details were provided. I suspect more of these deals will be happening over time as media outlets move to monetise their content.

Then in French business schools fast-track entry for foreign students blocked from US (Financial Times, Leila Abboud) we see that some French business schools are taking the initiative and fast-tracking or extending application deadlines for foreign students who might get caught up in Trump’s current battle with academia. About 100 French universities and top-level grandes écoles are already talking about co-ordinating steps to help the affected foreign students. * SO WHAT? * Trump’s recent moves have been absolutely shocking and I think they will alienate a whole generation of young people. If I was part of a uni set-up over here I would be busting a gut to attract those foreign students. I would have thought the UK would be well-placed to benefit given the reputation of our universities – and the fact that we also speak English.

Following on from yesterday’s omelette, I thought it was only right to share some entertaining kitchen hacks! The eggshell thing looks like a bit of a faff though…have a great weekend!