Donald Trump: America’s Embarrassment

On July 09, 2017, I read an interesting blog by Margaret Kimberley titled ‘America’s Embarrassment’.  I picked up a few paragraphs from that and copy pasted those. I salute Margaret, her lines look as fresh as written today.

Donald Trump is a national embarrassment. Corporate media pundits have declared this statement to be true and millions of people are in agreement. As a candidate and as president Trump has certainly deviated from the norms of acceptable public behavior, but how much does that really matter?

Many Americans love to brag that theirs is “the richest country in the world.” There are certainly big banks, rich individuals and trillions of dollars in the treasury but the masses of people rarely benefit from this wealth. This country routinely ranks near the bottom when compared to other “developed” nations in any measure of how it treats its people. It is now considered a “second tier” nation in terms of the wellbeing of its citizens.

It is certainly unusual to have such a decidedly boorish president. Trump literally pushes other presidents aside, engages in public feuds with celebrities and makes anyone an enemy who dares to oppose him or his policies. He makes up terms like “bigly” and “modern presidential” and excoriates the press when they criticize him. Condemning this kind of behavior is the lowest hanging fruit.

Trump can be blamed for quite a lot during his first six months in office. His travel ban against citizens of seven nations is an unconstitutional exercise in Islamphobia and has been struck down by federal judges. Trump bans Libyans from traveling to the United States, but Obama destroyed that country and created an ongoing humanitarian disaster.

The concluding remarks are most interesting, “The list of reasons to be embarrassed about America is very long and it existed before Trump was inaugurated. He has surely added to that ledger, but legitimate cause for concern shouldn’t be pushed aside in favor of phony outrage about optics. President Trump is an ill- mannered, impulsive, happily uninformed bigot. Most of his predecessors were better behaved and followed rules of public relations. But they filled the jails, ended the right to public assistance, killed millions of people abroad, kept wages low and used a variety of schemes to make the rich even richer. Despite his obvious shortcomings Donald Trump is not the worst among them. And that is the most embarrassing fact of all”.

Chinese economy remains resilient in April

Chinese economy mostly remained resilient in April, despite feeling the effects of the astronomical tariffs in effect before last week, when Washington and Beijing agreed to remove or pause most of the duties imposed as part of their tempestuous trade war, reports South China Morning Post.

With the new agreement providing a 90-day reprieve in the conflict, last month was the only period where the full force of the triple-digit tariffs could be observed in economic data – at least for now,

Last month, China’s industrial output grew by 6.1% from a year earlier, compared to 7.7% growth in March, according to data released by the National Bureau of Statistics on Monday, higher than the 5.21% growth estimate from a poll of economists by financial data provider Wind.

At a meeting of the country’s Politburo in late April – a Communist Party conclave which typically sets the tone for the country’s economic work in the second quarter – the high-level political body vowed to “resolutely focus on doing our business, steadfastly expand high-level opening up and focus on stabilizing employment, businesses, markets, and expectations” in a statement.

The rhetoric was seen as affirmation of the need to shore up domestic consumption in an environment where the future of global trade is less than certain.

In a research note previewing the data release, investment bank Goldman Sachs said retail growth was driven by strong home appliance and automobile sales, boosted by an ongoing consumer goods trade-in program.

Automobile retail sales volume grew by 14.5%YoY in April, according to data from the China Passenger Car Association.

Official data also showed that during the three-day Ching Ming Festival holiday period, the number of domestic travellers nationwide and domestic tourism revenue were 6.3% and 6.7% higher, respectively, than the same period last year.

China’s overall fixed-asset investment rose by 4% in the first four months of 2025, falling short of Wind’s estimate of 4.26%, following a rise of 4.2% for the period from January to March.

The overall urban unemployment rate for April, meanwhile, stood at 5.1%, compared with 5.2% a month earlier.

 

Dollar edges lower after US rating downgraded

The US dollar trimmed a four-week gain in early Asian trade as markets digested a surprise downgrade of the US government's credit rating and as lingering trade frictions weighed on sentiment, reports Reuters.

The greenback advanced 0.6% against major currencies last week after a temporary trade truce between the United States and China eased fears of a global recession. But economic data pointed to rising import prices and waning consumer confidence.

Moody's cut America's top sovereign credit rating by one notch on Friday, the last of the major ratings agencies to downgrade the country, citing concerns about the nation's growing US$36 trillion debt pile.

"The focus on US growth risks and the US administration's policy agenda may have put the US safe-haven status in question," said Mahjabeen Zaman, head of foreign exchange research at ANZ.

US Treasury Secretary Scott Bessent said in television interviews on Sunday that President Donald Trump will impose tariffs at the rate he threatened last month on trading partners that do not negotiate in "good faith."

Trump is facing resistance within his own party in pushing forward a sweeping tax cut bill that would add an estimated US$3 trillion to US$5 trillion to the nation's debt over the next decade.

The dollar lost 0.3% to 145.22 yen. The greenback was also 0.2% lower against the Swiss franc, another safe-haven currency.

The Australian dollar edged up 0.1% to US$0.6409 after three days of losses. The euro stood at US$1.1185, up 0.2%. Sterling traded at US$1.3299, up 0.1%.

 

US Allies Reject Trump’s Trade War

In recent political developments, close allies of the United States—Australia, Singapore, and Canada—have pushed back against former President Donald Trump’s aggressive trade policies. Last year was politically turbulent, with ruling parties in the United States, Britain and other nations losing elections, while governments in countries like Japan and India suffered setbacks. This year, however, the trend appears to be reversing.

Within a single week, Australia, Singapore, and Canada—despite their geographic and cultural differences—held critical elections. All three countries delivered remarkably similar outcomes: victories for incumbent parties that campaigned on strong opposition to Trump’s tariff threats and his transactional approach to global alliances.

Although foreign policy typically plays a minor role in national elections, this time was different. Voters went beyond domestic issues to send a clear message: they reject Trump's combative trade tactics and support leaders who are willing to stand up to them.

The broader takeaway from these elections is the emergence of a new political consensus among America's allies. Public opinion is coalescing around leaders who oppose Trump’s “America First” doctrine, which has disrupted global supply chains, strained diplomatic relationships, and undermined decades of multilateral economic cooperation. This shift signifies not just electoral continuity, but a popular mandate for resisting a zero-sum approach to international relations.

In Japan, Prime Minister Shigeru Ishiba’s ruling Liberal Democratic Party faces another electoral test this summer, with elections for the less powerful—but still influential—upper house of the Diet. Ahead of this, Japan is eager to secure a trade agreement with the US.

Tokyo is preparing for a third round of tariff negotiations this month, though analysts remain skeptical about a breakthrough. Unlike Brirain, which recently secured a limited deal, Japan faces steeper challenges. It starts from a higher baseline tariff rate and must contend with the Trump administration’s firm stance on automotive trade—one of Japan’s most vital export sectors.

On the cybersecurity front, Sergiy Korsunsky, former Ukrainian ambassador to Japan and now a senior adviser at Nihon Cyber Defence Corporation, warns that excessive data accumulation poses serious risks in the age of artificial intelligence.

Diplomatically, Julia Longbottom, the British Ambassador to Japan, highlights recent British trade deals with India and the United States as evidence of shared values with Japan—particularly a mutual commitment to open and free trade.

United States downgraded by Moody’s Ratings

According to Bloomberg, the US was downgraded by Moody’s Ratings on Friday thanks to government debt that’s approaching a mind-numbing US$37 trillion. It was a dramatic move that cast further doubt on the polarized nation’s status as the world’s highest-quality sovereign borrower. Moody’s lowered the US credit score to Aa1 from Aaa, joining Fitch Ratings and S&P Global Ratings in grading the world’s biggest economy below the top, triple-A position.

The one-notch cut comes more than a year after Moody’s changed its outlook on the US rating to negative. The federal budget deficit is running near US$2 trillion a year, or more than 6% of gross domestic product, and Congressional Republicans are pushing through budget legislation that could add trillions of dollars more.

“While we recognize the US’ significant economic and financial strengths, we believe these no longer fully counterbalance the decline in fiscal metrics,” Moody’s wrote in a statement. 

Earlier on Friday, new data showed US consumer sentiment has fallen to the second-lowest level on record, and inflation expectations climbed to multi-decade highs.

The preliminary May sentiment index declined to 50.8 from 52.2 a month earlier, according to the University of Michigan. That was lower than all but one estimate in a Bloomberg survey of economists. The main reason cited was President Donald Trump’s trade war.

Nearly three-fourths of respondents to the Michigan survey spontaneously mentioned tariffs. The topic crosses partisan lines, including a notable share of Republicans bringing it up. The new, sobering survey data comes as inflation data from the Trump administration’s Department of Labor has been unexpectedly upbeat, coming in softer than estimates three months in a row.

 

First 100 days of Donald Trump as US President

In the first 100 days of his second term (January 20–April 29, 2025), Donald Trump as President of the United States has implemented sweeping changes across domestic and foreign policy, marking a significant shift in US governance. This period is marked by aggressive executive action, political polarization, and early challenges in advancing his legislative agenda. He focused on fulfilling campaign promises, particularly on immigration, deregulation, and trade, but faced setbacks in healthcare reform and legislative coordination. Here's a brief review:

Domestic Policy

Government Overhaul
Trump established the Department of Government Efficiency (DOGE), led by Elon Musk, to streamline federal operations. This initiative led to substantial staff reductions and a freeze on new regulations and hiring, excluding the military.

Immigration Policies
The administration intensified immigration policies by invoking the Alien Enemies Act for mass deportations and signing the Laken Riley Act, which mandates detention of undocumented immigrants accused of certain crimes. Additionally, plans were set to expand the Guantanamo Bay Migrant Operations Center to detain up to 30,000 individuals.

Pardons and Clemency
Approximately 1,500 individuals convicted in connection with the January 06 Capitol attack received pardons, including leaders of groups like the Proud Boys and Oath Keepers. Ross Ulbricht, founder of the Silk Road darknet market, was also granted clemency.

Education and Social Policies
Federal funding was cut for institutions promoting diversity, equity, and inclusion (DEI) initiatives. Trump also challenged birthright citizenship and reinstated bans on transgender individuals serving in the military and participating in women's sports.

Energy and Environmental
Trump declared a National Energy Emergency, rescinded numerous environmental regulations, and withdrew the US from the Paris Climate Agreement for the second time. He also halted new federal leases for wind energy projects.

Foreign Policy

International Relations and Aid
Executive Order 14169 initiated a 90-day pause on foreign development aid, excluding emergency food assistance and military aid to Egypt and Israel. The administration also reinstated Cuba's designation as a state sponsor of terrorism and withdrew from the World Health Organization.

Conflict Resolution
Efforts to swiftly end the wars in Ukraine and Gaza faced setbacks. While initial diplomatic engagements showed promise, renewed hostilities impeded progress. A Kremlin-declared ceasefire in Ukraine offered some hope, but the Gaza ceasefire collapsed in March, exacerbating humanitarian concerns.

Trade and Alliances
Trump's aggressive tariff policies disrupted global markets and strained relationships with traditional allies. His administration's unilateral actions challenged longstanding international alliances and norms.

Domestic and Global Response

Domestically, public approval waned, with only 11% of Americans feeling better off since Trump's inauguration and 44% rating his performance as poor. Internationally, Amnesty International reported that Trump's policies contributed to a global decline in human rights, citing increased repression and erosion of international law.

Gold record run gains further traction

Gold remarkable run higher is reaching new heights, with the market touching US$3,500 per ounce as confidence in the US economy further erodes after President Donald Trump's renewed attack on the Federal Reserve chair. Spot gold was trading around US$3,428 per ounce by 1417 GMT, after hitting a record US$3,500.05 earlier in the session, reports Reuters.

Trump said on Monday the US economy could slow down unless interest rates are lowered immediately, repeating his criticism of Fed Chair Jerome Powell as being slow to act and calling him a "major loser".

That was followed by a furious flight from US assets which undermined Wall Street and the dollar, while concerns about the independence of the Federal Reserve piled fresh pressure on Treasuries.

"Gold is recalibrating to reflect what can only be described as epic changes in the global financial system. And those changes are a widespread and fundamental shift in confidence in the world’s reserve currency and its bond markets," said independent analyst Ross Norman.

Bullion, renowned as a hedge against uncertainties and a highly liquid asset, has surged more than US$800 since the start of the year. It surpassed US$3,300 last Wednesday, and its strong momentum pushed it up by nearly US$200 in just a few days.

Adrian Ash, director of research at BullionVault, said central bank demand is very likely chasing gold's move higher, because Trump 2.0’s chaos only hardens gold’s appeal as a geopolitical asset".

In the final quarter of 2024, when Trump won the US election, central bank purchases accelerated 54% year-on-year to 333 tons, according to an estimate from the World Gold Council.

Data showed that China's central bank added gold to its reserves in March for the fifth straight month. China is considering setting up overseas warehouses to aid international settlement of specific products on the Shanghai Gold Exchange, its central bank said.

ANZ last week also raised its year-end gold price forecast to US$3,600.

Asked about a pause in the rally, analysts and experts said any correction is likely to be short-lived, and greater gains are most likely on the horizon if instability persists.

"It is hard just now to see a scenario where gold could correct sharply lower as a physical floor of Johnny-come-lately buyers would support or cushion the decline," said Norman.

Julius Baer analyst Carsten Menke said a major road block for gold would be a less confrontative President Trump, either on the side of trade or on the side of monetary policy - both of which seem rather unlikely at the moment.

Spot gold has hit 28 record highs so far in 2025, of which 16 are above the US$3,000/ oz milestone. Prices are up 31% so far this year, after ending 2024 with a 27% annual rise.

Threat to Powell tanks markets

According to Bloomberg, President Donald Trump sent the US stock market plummeting again, this time with social media snark and derisive playground nicknames aimed at the Chair of the US Federal Reserve.

The president, under increasing pressure for singlehandedly destabilizing global markets with his trade war, has turned his attention to interest rates in a bid to avoid what economists increasingly fear is a recession dead ahead.

Trump’s public mulling over whether he can legally fire Powell have market watchers eyeing a potential broad-based loss of confidence in the US economy if he were to try it.

The 78-year-old Republican’s taunts came before he met with executives of major retailers at the White House—those whose businesses are set to bear the brunt of tariffs the White House has temporarily suspended. The Monday meeting was said to have included representatives from Walmart, Home Depot, Lowe’s and Target. 

By the time markets closed, the S&P 500 and other major US stock indices had dropped around 2.5%, The gauge of the dollar weakened to a 15-month low. The benchmark 10-year Treasury fell with the yield reaching 4.4%.

As investors turned away from US securities, haven assets climbed. Gold jumped to another record, above US$3,400 an ounce, while the Swiss franc gained around 1% against the dollar. 

United States being labelled untrustworthy

Donald Trump, after assuming charge of president of United States has issued many administrative orders. Though, many of these have been suspended for a predefined period, the super power and the largest democracy is being labelled "untrustworthy". It is also being said that the perception can vary depending on who is saying it, their political stance, and the context. Here are some of the narratives, it is left at the reader to have his/ her own view.

Shifting Foreign Policy

The US has had a tendency to change its foreign policy dramatically between administrations. What one president supports, another might reverse. For allies and international partners, this unpredictability creates a sense of instability and mistrust. The example often cited is that of the US joining and then withdrawing from the Iran nuclear deal, Paris Climate Agreement, and even the Trans-Pacific Partnership.

Military Interventions

The US has a long history of military involvement in other countries—some could be justified, but many remains controversial i.e. Iraq, Afghanistan, Libya. These interventions often came with promises of democracy or stability but often result in prolonged conflict or power vacuums. This forces the people in those regions, and globally, to question US intentions.

Economic Sanctions and Trade Wars

The US commonly uses economic sanctions as a foreign policy tool, which annoys people of these as well as other countries. Though US says, sanctions target governments, but people are the ultimate sufferers. The recent trade war with China and even allies cements the perceptions of unpredictability and economic aggression.

Domestic Issues Tarnish Global Reputation

Events like the Capitol riot, racial tensions, mass shootings, and political polarization have impacted how other countries view the governance and values of the US administration. Not only the image of US administration is tarnished, but its moral authority to dictate other countries is questioned.

Intelligence and Surveillance Concerns

Revelations like the Snowden leaks showed that the US was spying not just on adversaries but on allies also, even leaders of friendly nations like Germany. That definitely dents the trust.

Broken Promises/ Inconsistent Support

Countries/ groups that relied on US support—like the Kurds in Syria or Afghan have often felt abandoned when political priorities changed. That history leads others to question whether American support will endure when it is needed the most.

Way Forward

It must be kept in mind that despite all these broken promises, last minute ditches and sudden and abrupt change in policies, many people still see the United States a global leader in innovation, freedom, and human rights. The “untrustworthy” label is becoming universal and once an alternative currency to the Greenback becomes a reality the United States would be left alone.

 

 

 

 

How high could gold price go?

Gold prices have been on an upward trajectory in 2025, recently reaching a record high of US$3,244.60 per ounce. Now a question is being asked, how high could gold price go. Several key factors are contributing to this surge, these include:

Geopolitical Tensions

The introduction of sweeping tariffs by President Donald Trump, especially those targeting China with rates up to 145%, created upheaval in global financial markets. These policies have led investors to question the reliability of traditional safe assets like US Treasuries and the dollar, prompting a shift towards gold as a more stable alternative.

Economic Uncertainty

Concerns about a potential US recession have intensified, with Goldman Sachs estimating a 45% probability of such an event within the next year. This economic uncertainty enhances gold’s appeal as a hedge against downturns, contributing to its rising demand and price.

Purchases by Central Banks

Central banks worldwide are increasing their gold reserves, partly as a strategy to reduce reliance on the US dollar. This trend of de-dollarization supports higher gold prices, as nations seek to diversify their holdings amid shifting global economic dynamics.

Currency Depreciation

Persistent inflation is eroding the value of paper currencies, prompting investors to turn to gold as a means of preserving purchasing power. As the US dollar weakens, gold's role as a hedge against inflation becomes increasingly significant.

Safe-Haven Demand

The volatility in global markets, exacerbated by trade tensions and economic uncertainties, has led investors to seek refuge in gold. Its status as a safe-haven asset during turbulent times further drives its demand and price upward.

Way Forward

Analysts remain bullish on gold prospects, with forecasts suggesting prices could touch US$3,500 by June end 2025, US$ 4,000 by end December 2025 and US$5,000 by end December 2026. However, a point to remember is that if the trade war intensifies, the price may rise at a faster pace.

A more disturbing fact is that confidence of people around the world in the US administration – as a trustworthy friend and US$ as a dependable currency is eroding. The talk about an alternate currency to replace US dollar is getting louder.

Anti-Trump Demonstrations across 50 States

According to the Hill, hundreds of thousands of demonstrators are hitting the streets across the country on Saturday in protest of President Donald Trump and his administration.

The “Hands Off!” rallies are taking place in more than 1,000 cities across all 50 states, and nearly 400,000 people have signed up to attend the protests, according to the progressive organization Indivisible, which is one of the almost 200 groups partnering to organize the event. 

Protesters are demanding an end to billionaire influence and “rampant corruption” in the administration, a stop to Social Security and Medicare cuts, and an end to attacks on trans people, immigrants and other marginalized communities.

Early Saturday morning, on Capitol Hill, the Senate voted to adopt a budget resolution that will kickstart the implementation of Trump’s domestic agenda. The measure passed with a 51-48 vote after the upper chamber worked through the night.

The deal, which still needs to pass the House, has drawn the ire of some House Republicans, with one lawmaker even calling the resolution “unserious and disappointing.” 

This all comes as the economy reels from Trump’s sweeping tariffs on US trading partners after brutal few days for the stock market.

Former Vice President Kamala Harris praised the “Hands Off!” rallies occurring across the country on Saturday.

“Today in every state across our nation, Americans are standing up to the administration as they implement Project 2025 at full speed,” she wrote on the social platform X, referencing the Heritage Foundation’s political playbook.

“The voices of working people will always be louder than the unelected billionaires” she added, thanking demonstrators for speaking out against the Trump administration and its agenda.

Rep. Melanie Stansbury thanked demonstrators across the US for protesting against the Trump administration on Saturday.

“Across the country and back at home, people are coming out to rally and tell Donald Trump and Elon Musk to hand off our healthcare, our veterans, and our democracy,” she wrote on the social platform X

“Thankful to everyone organizing, standing up, and speaking out,” she added.

Rep. Al Green promised to bring forth articles of impeachment against President Trump within the next 30 days on Saturday.

“You don’t deserve the office you hold,” he said at a Washington rally. “You can’t be entrusted with liberty and justice for all. You can’t be entrusted with the government of the people by the people for the people.”

“I’m coming for you,” the Texas Democrat added, donning a shirt reading “censured not silenced.”

Green made headlines earlier this year after he was censured for his protest during Trump’s joint address to Congress in March.

In February, Green signaled he would introduce impeachment efforts over the president’s comments about Gaza.

Rep. Don Beyer railed against President Trump, stating his recent tariffs are “destroying our economy.”

“Donald Trump says he wants to ‘Make America Great Again,’” he said to a crowd in Washington on Saturday. “But he is going to make America the 1930s again.”

“Herbet Hoover gave us the stock market crash of 1929,” Beyer added. “Donald Trump gave us the stock market crash of 2025.”

The Virginia Democrat went on to encourage listeners to take charge against the administration.

“We will be fearless, relentless, angry, smart, and we will be tireless,” he said.

 

US dollar faces crisis of confidence

In times of market panic investors tend to rush to the safety of greenback, but when stocks swooned in response to US tariffs this week, they ran away from it. Investors say it's a sign that the greenback’s global standing may be eroding.

There is perception that greenback has an inherent competitive advantage. It's backed by the world's largest economy, the deepest capital markets and an established rule of law. There is no real alternative in the near term. However, after the trade war initiated by Donald Trump the creation of an alternative currency seems certain.

The dollar, for decades a safe haven, on Thursday fell about 1.7% in its biggest daily drop since November 2022, after President Donald Trump imposed tariffs on imports at levels not seen since the early 1900s. Stock markets also tanked, as tariffs ignited recession worries.

In interviews and published markets commentaries, many investors and analysts pointed to the Trump administration for the anomaly. Its protectionist policies, upending of the global economic order in place since World War II, and a growing US debt pile have been chipping away at the dollar's appeal, they say. Left unchecked, a crisis of confidence in the dollar could also undermine its position as the world's reserve currency, they added.

"What we're seeing today is a further indication that the structure and nature of the US dollar’s relationship to global markets has changed," said Thierry Wizman, global foreign exchange and rates strategist at Macquarie in New York.

"There's an underlying basis for this, which is the changing role of the US in the world."

Any erosion of the dollar's standing as a safe-haven is bad news for investors and policymakers - at least in the near term.

For investors, who have piled trillions of dollars into buoyant US markets in recent decades, a sharp dollar fall could result in higher interest rates for longer. That's because price pressures at home could make it harder for the Federal Reserve to cut rates.

A rapid strengthening of currencies against the dollar is a headache for other central banks navigating a weaker economic outlook, as it makes their exports more expensive and potentially harder for them to revive growth. The euro, for example, just had its best day against the greenback in more than two years.

The recent depreciation in the dollar showed that concerns about the currency's status had "left footprints in financial markets already," Sweden's central bank deputy governor Per Jansson said at an event in London on Tuesday.

"If the dollar's status would change, that would be a big change for the world economy ... and would basically create a mess," he told Reuters afterwards. "I really do not hope the US goes there."

 

 

Bloodied and Bruised US Markets

According to Bloomberg, Jan-Mar 2025 quarter was full of disappointments due to the plunging indices. While the markets are under pressure, the bigger threat is weakening dollar, making other currencies safe heavens.

The S&P 500 ended the quarter down 4.6%, its worst performance in three years. The Nasdaq 100 posted its worst quarter in nearly three years, down 8.3%, after a pair of warnings last week fanned anxieties about a possible pullback in the hundreds of billions of dollars flowing into data center infrastructure. 

Making matters worse for the United States, the dollar hasn’t been behaving as normal, raising fears that America’s radical policy turns are opening the door for rival currencies to become havens.

Trump’s trade war continues to fuel concern the US economy could stall. Most economists still don’t anticipate America will fall into recession in the next year, but they do say the chance of a contraction has increased.

While many economists have spent the past three years being wrong on recession calls, another worry is the risk that a slowdown in growth will occur alongside accelerating inflation, the dreaded scenario known as stagflation.

Garnering the least support in the Associated Press-NORC poll was Trump’s signature initiative so far—tariffs. Some 60% of Americans disapprove of his trade tactics while 58% disapprove of his handling of the economy in general.

 

 

 

 

Nasdaq sees biggest one-day drop since 2022

US stocks plunged on Monday as relentless tariff wrangling and mounting anxieties from a possible federal government shutdown gave rise to fears that the US economy could be careening into recession.

The previous week's steep selloff resumed, gathering momentum as the session progressed, with all three major US indexes suffering sharp declines.

The S&P 500 had its biggest one-day drop since December 18 and the tech-loaded Nasdaq slid 4.0%, its biggest single-day percentage drop since September 2022.

The S&P 500, coming off of its biggest weekly percentage drop since September, is 8.6% below its record closing high reached less than a month ago.

On Thursday, the tech-loaded Nasdaq dipped more than 10% below its record closing high touched on December 19, confirming that it has been in a correction since then.

The bellwether S&P 500 closed below its 200-day moving average, a closely watched support level, for the first time since November 2023.

"It's a material drop for one day but we're seeing the normal sort of drawdown that you see in an upmarket," said Tom Hainlin, national investment strategist at US Bank Wealth Management in Minneapolis. "Concerns are mounting and investors are moving to the sidelines, but we haven't seen growth worries manifest in data yet."

On Sunday, Trump declined to comment on the negative market reaction to his on-again, off-again tariff actions against the biggest US trading partners, and whether anxieties related to his erratic policy shifts could nudge a softening economy into recession.

HSBC downgraded US stocks, citing uncertainty around tariffs.

A Reuters poll of economists reflected the growing risks of recession for the United States, Canada and Mexico.

Tech stocks are under pressure from a stronger Japanese yen and a spike in sovereign bond yields, as investors unwind yen carry trades on expectations of an upcoming interest rate hike in Japan.

The carry trades involve borrowing yen at a low cost to invest in other currencies and assets offering higher yields, and that unwinding is at least partially responsible for the selloff in tech stocks such as the "Magnificent 7" group of artificial intelligence-related megacaps.

 

 

Can Trump impose tariffs on Chinese drugs?

According to The Hill, President Trump’s tariffs on China are in place and hitting all products imported from the country — including a number of pharmaceuticals that Americans rely upon.

Chinese imports account for a significant proportion of US prescriptions and over the counter drugs. Many of the Chinese-produced medicines are generics, which account for 91 percent of prescriptions dispensed in the United States.

“The Chinese market is a key supplier for key starting materials and Active Pharmaceutical Ingredient (API) to the generic supply chain,” said John Murphy, president and CEO of the Association for Accessible Medicines (AAM). 

“I will say they’re sort of less important any longer for the actual finished fill and final manufacturing,” Murphy noted. “But really, it’s the rare minerals, the key starting materials which are obviously critical to the supply chain.” 

Stakeholders were hopeful that medications would be spared from tariffs. Some noted that the US is a signatory to the World Trade Organization’s (WTO) 1994 Agreement on Trade in Pharmaceutical Products which calls for the elimination of tariffs on many pharmaceutical products. China has vowed to sue over the 10 percent tariffs, which it says are in violation of WTO rules. 

But a White House official said no exceptions are planned, and the administration will not be recognizing the WTO agreement. 

The country’s dependence on China to maintain pharmaceutical supply chains has long been an issue that lawmakers on both sides of the aisle have sought to address.

In 2018, the US-China Economic and Security Review Commission noted that the country was “heavily dependent” on drugs and API originating from China.

A 2023 analysis from the Atlantic Council found that the value of Chinese-imported APIs has continued to grow in recent years. 

According to Monica de Bolle, a senior fellow at the Peterson Institute for International Economics, the US isn’t unique in its dependence on China for drugs, noting that the European Union is similarly reliant.   

De Bolle said China’s dominance in the market grew as it sought to enhance its drug producing capacity while US pharmaceutical companies turned to other manufacturing pursuits. 

“What happened is that we developed this huge biotech sector where we have a lot of stuff going on,” said de Bolle. “The manufacturing market just turned to producing these more sophisticated drugs; the stuff that’s used in treatments, the stuff that’s going through clinical trials.” 

“That’s why we went from, you know, producing a lot of these things to not producing many of these things and buying them from elsewhere. And elsewhere eventually became China,” she added. 

The margins for manufacturing generic drugs are razor-thin, and any disruptions to the supply chain are apt to cause shortages or delays. 

“That additional 10 percent tariff is going to have a fairly significant impact on the cost of goods for the generic and by a similar supply chain,” said Murphy. “We don’t hold massive stockpiles of generic drugs in the United States. It’s a fairly just-in-time inventory.” 

According to Murphy, some manufacturers may find it economically unviable to produce generic drugs, resulting in shortages. 

Across all industries, analysts have warned that increased costs brought on by tariffs will be passed to consumers. But some manufacturers may instead drop out of the market entirely rather than pass on costs, partly due to a key provision in the Inflation Reduction Act (IRA).

As part of its cost-cutting measures, the IRA included a provision that requires drug makers to pay Medicaid a rebate if the price of their drugs rises faster than the rate of inflation.  

Tom Kraus, vice president of government relations at the American Society of Health-System Pharmacists, said incurring that penalty on top of tariffs could mean more than just shortages. 

“You’ve got to sort of factor in paying that penalty, which is going to make you less profitable or you’re going to have to drop out of the market,” said Kraus. 

He noted that group purchasing organizations, companies that help hospitals and pharmacies buy drugs and save money, may decide that manufacturers whose products originate from China are too expensive and turn away from them entirely. 

 

 

United States targets Chinese steel, maritime and logistics sectors

President United States, Joe Biden has called for tripling the existing tariff rate on Chinese steel and aluminium, just as the US Trade Representative’s (USTR) office announced the launch of yet another Section 301 investigation into China’s maritime, logistics, and shipbuilding sectors.

Biden told the USTR to raise the tariff on steel and aluminium imports from China – already under Trump-era duties – from 7.5% to 22.5%, according to a statement by the White House.

He also sent senior envoys to pressure Mexico to prevent Chinese steel and aluminium from transferring through Mexico to evade tariffs.

Biden’s move was made public just ahead of his visit to the headquarters of the United Steelworkers Union in Pittsburgh as part of his re-election campaign in the swing state of Pennsylvania.

The new investigation under Section 301 of the Trade Act of 1974 was launched after reviewing a “serious and concerning” petition by five national labour unions accusing China of using “unfair, non-market policies and practices” to “dominate the maritime, logistics, and shipbuilding sectors”, the USTR office said.

“The allegations reflect what we have already seen across other sectors, where China utilizes a wide range of non-market policies and practices to undermine fair competition and dominate the market, both in China and globally,” US trade representative Katherine Tai was quoted as saying.

“I pledge to undertake a full and thorough investigation into the unions’ concerns.”

A Section 301 investigation examines whether a foreign government’s acts, policies, or practices are unreasonable or discriminatory, and whether they burden or restrict US commerce.

If the investigation determines foreign practices have unfairly affected US commerce, the USTR may take “appropriate and feasible action” to remedy the unfair practices, including imposing duties and other import restrictions such as fees.

The USTR was seeking public comments and would hold a public hearing in connection with the investigation, the statement said.

The USTR added that it had requested consultations with the Chinese government about the investigation.

The 137-page petition, along with hundreds of supporting documents, was presented to the USTR office on March 12.

The petition lists the Chinese government’s actions, including providing loans from state-owned banks, equity infusions and tax preferences as well as provisioning steel at below-market prices and issuing loans to support the construction of thousands of vessels in China for export.

It highlights some unfair practices by Beijing, including ordering Chinese companies to buy and use Chinese-built products, directing mergers, and blocking alliances with foreign companies.

The coalition of labour unions includes the United Steel, Paper and Forestry, Rubber, Manufacturing, Energy, Allied Industrial and Service Workers International Union; the International Association of Machinists and Aerospace Workers; the International Brotherhood of Boilermakers, Iron Ship Builders, Blacksmiths, Forgers and Helpers; the International Brotherhood of Electrical Workers; and the Maritime Trades Department.

The petition was also endorsed by two US senators, Democrats Tammy Baldwin of Wisconsin and Bob Casey of Pennsylvania.

During his administration from 2017 to 2021, former US president Donald Trump launched various Section 301 investigations into Chinese imports and imposed punitive tariffs, which triggered retaliation by China and began a trade war that continues today.

 

Biden Climate Change Obsession Threatens US Security, says Pompeo

Lately, former US Secretary of State, Mike Pompeo said that President Joe Biden’s obsession to decarbonize the United States plays into the hands of adversaries like the Chinese Communist Party (CCP), making them richer and more powerful while imposing costs on Americans and making them less safe.

In an op-ed published on December 05 in the Washington Examiner, Pompeo argued that the Biden administration’s focus on fighting climate change is misguided and will hurt US families while empowering the country’s adversaries.

He took aim at the Inflation Reduction Act, which Biden recently described as the biggest, most important climate bill in the history of our country and which Pompeo said would make life more expensive for American families.

“The statement was telling, Americans were told its purpose was to reduce inflation, but in reality, it was a gas lighting Trojan horse,” Pompeo wrote in the op-ed, referring to Biden’s characterization of the Inflation Reduction Act, which the president made at a recent climate summit in Egypt.

Biden’s description of the measure perfectly encapsulated how climate change and green energy have skewed this administration’s priorities, Pompeo wrote.

When selling the Inflation Reduction Act to the American people, the Biden administration said it was meant to reduce inflation, which has been running close to a 40-year high.

Pompeo argued that in reality, it was a gas lighting Trojan horse meant to conceal the Biden administration’s real priority, which Pompeo said is to fight fossil fuels.

Pompeo also criticized US foreign policy under Biden as being so highly focused on fighting climate change that it diverts attention from the real threats posed by America’s adversaries on the world stage.

“Biden’s obsession to decarbonize America is guaranteed to enrich and empower the Chinese Communist Party,” he argued.

“A sizable portion of the law’s handout will go toward solar energy despite this administration being well aware that Chinese manufacturers dominate 80% of the market for solar panels and that many of them have ties to forced labor in Xinjiang,” he noted as an example.

When Pompeo served as Secretary of State under then President Donald Trump’s administration, he issued a determination that the CCP was guilty of genocide and crimes against humanity over its mistreatment of Uyghurs in Xinjiang.

Chinese officials have denied such allegations.

Congress later passed the Uyghur Forced Labor Prevention Act (UFLPA), which banned the import of goods from Xinjiang and other regions with links to forced labor.

Even though Biden signed the UFLPA into law, Pompeo alleged that the current administration has displayed mixed feelings about enforcing the measure in its bid to win concessions from China on climate change.

John Kerry, the US Special Presidential Envoy for Climate, faced allegations of lobbying against the UFLPA, which his spokesperson denied.

“This is false. Secretary Kerry has a thirty-seven-year record as a Senator and Secretary of State standing up for human rights and defending democracy,” a State Department spokesperson told the Washington Free Beacon.

“As Secretary Kerry has said from the start, the United States and China have mutual interests in solving the climate crisis while there’s still time, even when we fundamentally disagree on other critical issues,” the spokesperson added.

Kerry also sidestepped a question during last year’s COP26 Climate Change Conference, saying the issue was not my lane.

He was responding to a question from a reporter if he had mentioned human rights issues, including forced labor in Xinjiang, in meetings with Chinese officials.

“Well, we’re honest. We’re honest about the differences, and we certainly know what they are and we’ve articulated them, but that’s not my lane here,” Kerry said in November 2021. “My job is to be the climate guy, and stay focused on trying to move the climate agenda forward.”

Pompeo recalled the controversy over Kerry’s remarks and called the climate czar’s comparison of the Biden administration’s climate diplomacy with China to former President Ronald Reagan’s arms reduction talks with the Soviet Union as foolish.

“Reagan was looking to make the world safer, while Biden is enabling genocide in exchange for making energy less affordable and reliable for Americans,” Pompeo said.

“And it is ironic, given the Chinese are building coal-fired power plants at a ridiculous rate and only making the problem worse,” he added.

Pompeo argued that by foolishly prioritizing climate change in its dealings with the CCP over gross human rights abuses, aggressive actions against US allies, and the CCP’s espionage activities in America, the Biden administration has empowered China.

 

Chinese President’s most audacious geopolitical bet

A head-spinning series of seemingly disparate moves over recent months add up to nothing less than a generational wager that Chinese President, Xi Jinping  can produce the world’s dominant power for the foreseeable future by doubling down on his state-controlled economy, party-disciplined society, nationalistic propaganda, and far-reaching global influence campaigns.

With each week, Xi raises the stakes further, from narrowing seemingly mundane personal freedoms like karaoke bars or a teenager’s permitted time for online gaming to three hours weekly to the multi million US dollar investor hit from his increased controls on China’s biggest technology companies and their foreign listings.  

It is only in the context of Xi’s increased repressions at home and expanded ambitions abroad that one can fully understand Australian Prime Minister Scott Morrison’s decision this week to enter a new defense pact, which he called “a forever agreement,” with the United States and the United Kingdom.

Much of the news focus was either on the eight nuclear-powered submarines that Australia would deploy or the spiraling French outrage that their own deal to sell diesel submarines to Australia was undermined by what French officials called a “betrayal” and a “stab in the back” from close allies. France went so far as to recall its ambassador to the United States for the first time in the history of the NATO alliance.

All that noise should not distract from the more significant message of the ground-breaking agreement. Prime Minister Morrison saw more strategic advantage and military capability from the US-UK alignment in a rapidly shifting Indo-Pacific atmosphere, replacing his previous stance of trying to balance US and Chinese interests.

“The relatively benign environment we’ve enjoyed for many decades in our region is behind us,” Morrison said on Thursday. “We have entered a new era with challenges for Australia and our partners.”

For China, that new era has many faces: a rapid rollback of economic liberalization, a crackdown on individual freedoms, an escalation of global influence efforts and military buildup, all in advance of the 20th national party congress in October 2022, where Xi hopes to seal his place in history and his continued rule.

Former Australian Prime Minister Kevin Rudd, one of the world’s leading China experts, points to Xi’s “bewildering array” of economic policy decisions in a recent speech as president of the Asia Society.

They started last October with the shocking suspension of Alibaba financial affiliate Ant Group’s planned initial public offering in Hong Kong and Shanghai, clearly aimed at Alibaba co-founder Jack Ma. Then in April, Chinese regulators imposed a $3 billion fine on Alibaba for “monopolistic behavior.”

In July, China’s cyber regulator removed ride-hailing giant Didi from app stores, while an investigative unit launched an examination of the company’s compliance with Chinese data-security laws.

Then this month, China’s Transport Ministry regulators summoned senior executives from Didi, Meituan and nine other ride-hailing companies, ordering them to “rectify” their digital misconduct. The Chinese state then took an equity stake in ByteDance, the owner of TikTok, and in Weibo, the micro-blogging platform.

Xi was ready to accept the estimated US$1.1 trillion cost in shareholder value wiped from China’s top six technology stocks alone between February and August. That doesn’t factor in further losses among the education, transportation, food delivery, entertainment and video gaming industries.

Less noticed have been a dizzying array of regulatory actions and policy moves whose sum purpose appears to be strengthening state control over, well, just about everything. 

“The best way to summarize it,” says Rudd, “is that Xi Jinping has decided that, in the overall balance between the roles of the state and the market in China, it is in the interests of the Party to pivot toward the state.” Xi is determined to transform modern China into a global great power, “but a great power in which the Chinese Communist Party nonetheless retains complete control.”

That means growing controls as well over the freedoms of its 1.4 billion citizens.

Xi has acted, for example, to restrict the video gaming of school-aged children to three hours a week, and he has banned private tutoring. Chinese regulators have ordered broadcasters to encourage masculinity and remove “sissy men,” or niang pao, from the airwaves. Regulators banned “American Idol”-style competitions and removed from the internet any mention of one of China’s wealthiest actresses, Zhao Wei.

“The orders have been sudden, dramatic and often baffling,” wrote Lily Kuo in the Washington Post. Jude Blanchette of the Center for Strategic and International Studies says, “This is not a sector-by-sector rectification; this is an entire economic, industry and structural rectification.”

At the same time, President Xi has launched a push to share the virtues and successes of the Chinese authoritarian model with the rest of the world. 

“Beijing seeks less to impose a Marxist-Leninist ideology on foreign societies than to legitimate and promote its own authoritarian system,” Charles Edel and David Shullman, the recently appointed director of the Atlantic Council’s new China Global Hub, wrote in “Foreign Affairs.” “The CCP doesn’t seek ideological conformity but rather power, security, and global influence for China and for itself.”

The authors detail China’s global efforts to not remake the world in its image, but rather “to make the world friendlier to its interests — and more welcoming to the rise of authoritarianism in general.”

Those measures include “spreading propaganda, expanding information operations, consolidating economic influence, and meddling in foreign political systems” with the ultimate goal of “hollowing out democratic institutions and norms within and between countries,” Edel and Shullman write.

Within President Xi’s bold bet lie two opportunities for the US and its allies.

The first is that Xi, by overreaching in his controls at home, will undo just the sorts of economic and societal liberalization China needs to succeed. At the same time, the world’s democracies, like Australia, are growing more willing to seek a common cause to address Beijing.

In the end, however, Xi’s concerted moves require an equally concerted response from the world’s democracies. The French-US crisis following the Australian defense deal this week provides just one example of how difficult that will be to achieve and sustain.