US Economic News

[weijian]

For those of us who remember our maths, this calculation doesn't pass the smell test as it doesn't account for population size and spending power - which probably explains why those outlier tariffs are reserved for mainly small and/or poor countries.

How were Donald Trump's tariffs calculated?

But if you unpick the formula above it boils down to simple maths: take the trade deficit for the US in goods with a particular country, divide that by the total goods imports from that country and then divide that number by two.

For example, the US buys more goods from China than it sells to them - there is a goods deficit of $295bn. The total amount of goods it buys from China is $440bn. Dividing 295 by 440 gets you to 67% and you divide that by two and round up. Therefore the tariff imposed on China is 34%.

https://www.bbc.com/news/articles/c93gq72n7y1o

[CY09]

tit for tat trade war has started. China has imposed a 34% tariff on US imports after US imposed a 34% tariff on china imports

https://www.cnbc.com/2025/04/04/china-to...he-us.html

I wonder what is trump's next move

[weijian]

So now, politics and business are more closely intertwined than ever - Trump learning from the CCP it seems.

I suppose in business, profitability is of utmost importance and so Tiktok will never be shut down especially that it more than rivals Facebook/Youtube for our attention. This may also mean that an all-out trade war is probably one of the worst (and to be avoided) outcomes for all parties. Beyond all the chatter, excitement, buying the dips, the call to think long term....all these are really noise because the thoughtful investor is really having his hands full just understanding about the asset, business and structure of companies....

Trump extends TikTok sale deadline by 75 days; sources say China signalled it would reject deal over tariffs

"The deal requires more work to ensure all necessary approvals are signed," Trump said on social media, explaining why he was extending the deadline he set in January that was supposed to have expired on Saturday.

"We hope to continue working in good faith with China, who I understand is not very happy about our reciprocal tariffs."

Some lawmakers have said Trump must enforce the law, which had required TikTok to stop operating by Jan 19 unless ByteDance had completed a divestiture of the app's US assets. Trump began his second term as president on Jan 20 and opted not to enforce it. The Justice Department in January told Apple and Google that it would not enforce the law, which led them to restore the app for new downloads.

https://www.channelnewsasia.com/world/ti...fs-5045216

[EnSabahNur]

I just want to point out that there are some contradictions, in the current situation, that throws some traditional value investment "rules" out of whack.

1) "This may also mean that an all-out trade war is probably one of the worst (and to be avoided) outcomes for all parties."
At this point in time, there is little evidence that Trump himself is acting rationally

https://bsky.app/profile/jarjarfan69.bsk...zt2enoac2b

His inner circle and Congress might be worried but he is sort of the key person here.

In past administrations, we can have some confidence that the govt is/will try to fix some of the bad stuff that is happening. I'm not so sure about the current one.

2) "Beyond all the chatter, excitement, buying the dips, the call to think long term....all these are really noise because the thoughtful investor is really having his hands full just understanding about the asset, business and structure of companies...."

"So now, politics and business are more closely intertwined than ever"

these are contradictions.

It is like how everybody realised the importance of CCP politics when they started cracking down on tuition companies, tech companies.

I don't think you meant that politics and business were not intertwined before, but the risk is now heightened and if the risk is heightened, it doesn't make sense to dismiss it as noise.

It is hard to grapple with this kind of risk, but I think you can reasonably make some adjustments to manage for it. For example, before 20 Jan, one could allocate more to cash vs equities. Or in the current situation, while not losing sight of fundamentals (as you mentioned, there is a lot of work that needs to be done there already!), look for companies where the risk to them is more muted (such as stocks outside of the US,) or areas where the turmoil benefits them (EU defence companies?).

[weijian]

Hi EnSabahNur,

Thanks for pointing out my contradictions. But in investing, aren't there contradictions all the time? My favorite one in italics below:

Is time in the market important? YES
Is timing the market just as important? Absolutely YES

To be honest, with reference to what Trump has done, I think the intelligent investor's current path should be looking for companies which are exposed to this risk, rather than those who avoid/benefit from it.

Some of these companies who are impacted, may have excellent franchises and durable business models that actually come back stronger in future. And since I have the ability to wait out the turmoil, so that's where I will focus instead.

Btw, i am not saying that looking for companies who can avoid the impact or even benefit from it, isn't a good thing. But between good (companies who can avoid the impact or even benefit from it) and great (companies with excellent franchises/durable business models that are impacted), I will choose the "great" every time.

[EnSabahNur]

"Some of these companies who are impacted, may have excellent franchises and durable business models that actually come back stronger in future. And since I have the ability to wait out the turmoil, so that's where I will focus instead."

I agree with this. I think the risk here is catching a falling knife, which if we think we buy with a good margin of safety, that is fine

I guess what I am trying to say is that, what we used to assume, is probably suspect now.

https://www.reuters.com/markets/us/globa...025-04-03/

In the run-up to what Trump had billed as "Liberation Day," investors had sought to remain optimistic that clarity about the administration's tariff policies would help the volatile U.S. stock market stabilize.

But following Trump's unveiling of what some said were larger-than-anticipated tariffs - and in the midst of the market selloff that followed - many of the same individuals said their main takeaway was a sense of heightened risk and plenty of unanswered questions.

I think many professional investors were caught off-guard by Liberation Day.

When Trump was elected, they were cheering the result:

https://bsky.app/profile/davesrants.com/...kumjpzz22b

I think they might be souring on the election outcome.

As timeless as Buffett's aphorisms are, there is a risk of having the same blind spots as these professionals.

[weijian]

"Some of these companies who are impacted, may have excellent franchises and durable business models that actually come back stronger in future. And since I have the ability to wait out the turmoil, so that's where I will focus instead."

I agree with this. I think the risk here is catching a falling knife, which if we think we buy with a good margin of safety, that is fine

I guess what I am trying to say is that, what we used to assume, is probably suspect now.

Hi EnSabahNur,

The price we pay to own the asset, does not determine our MOS. Rather it is the underlying quality of the asset - a company with good business economics, strong balance sheets, durable moats, fairness of controlling shareholder etc that determines our MOS. It may also come from companies which are undergoing some transition (and eventually succeed). The price we pay to own the asset, determines our future returns.

A very simple example here: If we pay 8x for cyclically normalized earnings, then our earnings yield is 1/8=12.5%. If the market price drops such that we can get it for 5x, then our earnings yield is 1/5=20%. It should be pretty obvious that 20% is going to give us better returns than 12.5%

Now if we overestimate the cyclically normalized earnings for whatever reason - the moat is been eroded, or the Mgt is forced to sell good assets or issue cheap equity to delever their balance sheet, or the controlling shareholder turns out to be more chaokuan than expected. And generally when any of these happen, Mr Market rightfully re-rates it as well. Then there will probably be a permanent loss of capital coming from the lack of MOS because of these qualitative issues.

[edragon]

Trump Says, 'Sometimes You Have To Take Medicine,' When Asked How Much Stock Fall He'll Tolerate.
The World can see that the USA is very "sick".
Better, look elsewhere. 

[Big Toe]

Trump is altering what made USA great. Unless agreement is reached, US and SG economy will be hit really hard.
And economy being hit very hard is not the worst case scenario. Of course the odds of worst case happening is relatively low, but increasing.

As for Nasdaq and Dow, it is long due for a correction, with or without tariff.

[edragon]

https://www.worldcargonews.com/shipping-...-20-years/LINK

"The steep drop in cargo volumes has resulted in a collapse of U.S.-bound freight rates. For example, spot
container rates from China to the U.S. West Coast dropped sharply from $5,000 per container in early
January to $1,872 by March 21. Despite the reduced impact of tariffs on China, other Southeast Asian
nations face greater challenges. Chinese exporters are increasingly using Latin America as a supportive
trade hub, with seven Asian carriers initiating an Asia-to-Mexico express line and COSCO Shipping Corp.
Ltd. expanding operations in Peru."

Wonder whether De-dollarisation will be hastened further. Many countries of the World will have to work out this RESET quickly. 
Trade among themselves for the slack, not by the SWIFT financial transfers network but by a new system, 
possibly the block chain digital RMB (Renminbi, Chinese Yuan) cross-border settlement system 
or other system of international trade and payments.
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