Tariffs in the Rose Garden
Global markets are mostly lower ahead of President Trump’s big tariffs rollout today, but it’s not the tumult that has rocked stocks in recent weeks.
S&P 500 futures are holding steady, in the red, as economists warn that Trump’s protectionist policies could set off a global trade war that slams growth and raises prices.
Business leaders and policymakers are on tenterhooks over what the president might introduce this afternoon. As of yesterday, Trump’s team was still debating what the reciprocal tariffs would look like, Bloomberg reports.
The big questions: Will they involve a blanket flat rate — say, a 20 percent duty? Will the levies be tailored by country, with those running the biggest trade surpluses to the U.S. seeing the biggest hit? Or will it be a tiered system in which targets are put into a bad or a worse category?
Adding to the confusion, the White House says the tariffs would go into effect immediately, but also that the president was open to negotiating.
The uncertainty has forced companies to scramble. Mercedes is weighing whether to pull some cheaper models, like the GLA sport utility vehicle, from the U.S. market, as a round of auto tariffs — set to go into effect tomorrow — challenge the company’s profitability, Bloomberg reports. And Sandoz, the European pharma giant, has warned that the trade war could drive up health care costs and crimp drug availability.
“I don’t believe most investors and, frankly, most Americans fully appreciate how these tariffs are going to translate to higher inflation, lower growth and lower corporate profits,” Ron Temple, a market strategist at Lazard, told Politico.
The geopolitical stakes are high. Leaving trade partners in the dark has aggravated already frayed ties with allies, The Times’s David Sanger reports. And the tariff threat has prompted China to shore up trade relations with Japan and South Korea, though Seoul has played down the significance of those talks and Tokyo denied them outright. The European Union is still hoping to strike a deal, but it has a nuclear option just in case. (More on that below.)
Watch how Trump handles Mexico, whose trade ties to China have grown drastically in recent years and which has a huge trade surplus with the U.S. Separately, Brazil is emerging as an early winner of the tariff chaos — because it can help fill gaps left by Washington.
HERE’S WHAT’S HAPPENING
The law firm Willkie Farr & Gallagher strikes a deal with President Trump. Willkie, whose partners include Doug Emhoff, the husband of Kamala Harris, pledged $100 million in pro bono legal work for causes that Trump backs, the president wrote on Truth Social; he added that it won’t “engage in illegal DEI discrimination and preferences.” The firm is the latest to reach an accord with Trump as he wages a retribution campaign, though those that have struck deals have often faced criticism.
Prosecutors will seek the death penalty for Luigi Mangione. Attorney General Pam Bondi said she had directed the acting U.S. attorney in Manhattan, who is overseeing the case against Mangione over the killing of UnitedHealthcare’s C.E.O., to pursue capital punishment. Karen Friedman Agnifilo, a lawyer for Mangione, said that seeking the death penalty amounted to “state-sponsored murder” intended to protect the “immoral” health care industry.
The Trump administration suspends dozens of federal grants to Princeton. The university, which is losing funding from the Defense Department, the Energy Department and NASA, is the fourth Ivy League institution to see its federal financial support cut or under threat. The administration hasn’t commented on why Princeton was targeted, but the school was one of 60 to receive a letter putting it on notice for how it protects Jewish students.
Visa is said to have offered $100 million to run the Apple Card. The giant payment network’s proposal comes as Visa and American Express seek to oust Mastercard from its role in operating the popular credit card, according to The Wall Street Journal. Banks including JPMorgan Chase and Synchrony Financial have also fought to become the Apple Card’s issuer as Goldman Sachs, which issues the card, seeks to exit consumer lending.
“Big bazooka”
For weeks, European leaders have been looking to Brussels to protect the European Union’s economic interests in the brewing trade fight with Washington. With President Trump’s reciprocal tariffs looming today and no deal in sight, the bloc is beginning to brace for the worst, Bernhard Warner reports.
“We have the largest single market in the world,” Ursula von der Leyen, the European Commission president, said yesterday in a speech before the European Parliament. “We have the strength to negotiate. We have the power to push back,” she said, adding, “All instruments are on the table.”
What are those instruments? Trump has already announced tariffs on aluminum, steel, cars and auto parts, moves that could seriously hobble the bloc’s shaky economy. Brussels has responded by announcing that it will reimpose tariffs on Harley-Davidson motorcycles, whiskey and other goods — some of which were targeted during the trans-Atlantic clash Trump instigated in his first term.
Brussels has an even bigger tool at its disposal, which it can use to go after Big Tech and Wall Street. DealBook obtained one preliminary plan that has been circulating in Europe in recent weeks. It includes a nuclear option: limiting American banks’ access to the E.U.’s enormous public procurements market, which would mean partly cutting the banks off from projects worth roughly 2 trillion euros ($2.2 trillion) each year.
Another idea in the plan is to target the huge sums that European investors put into American companies annually, a roughly €300 billion annual flow that has become a point of irritation for E.U. officials.
The document didn’t make clear the scope, let alone how either proposal might be put in place. But it showed how broadly policymakers are thinking as the bloc weighs its approach.
Brussels could enact tough trade measures like this through something called the anti-coercion instrument. It is a trade policy tool that was adopted two years ago to hit back at China. It has never been used before, but it’s seen as a last resort option in case talks with Trump go south.
“It’s called the big bazooka,” Fabrizio Pagani, a partner at the investment bank Vitale and a former top economic official in the Italian government, told DealBook. “I personally think the big bazooka should be used first of all as a deterrent. So put it on the table, and let’s negotiate.” Olof Gill, a European Commission spokesman, said that the anti-coercion instrument was being considered as Brussels plots its negotiating strategy.
Some worry that such hard-line negotiating could backfire. “Tariffs on services, just like tariffs on goods, hit consumers and businesses directly,” Joachim Klement, the head of strategy at the investment bank Panmure Liberum, told DealBook, adding that it would be a surefire way to escalate the trade war.
“You are just putting fuel on the stagflationary fire,” he added.
What’s next for TikTok
Today could be a big day in the race to change up the ownership of TikTok before a deadline on Saturday that could force the app’s banishment in the U.S. President Trump plans to meet with top White House officials to discuss a proposal that could secure the video platform’s future in the country.
Still, big questions remain, like whether the White House and ByteDance, its Chinese owner, can appease both Beijing and China hawks in the U.S. And what’s in it for the potential blue chip investors for TikTok that have emerged?
What we know: The most likely option is a deal in which existing U.S. investors in ByteDance roll over their stakes into a new, independent TikTok. Additional U.S. investors, like Blackstone, would be brought on to reduce the ownership stakes of Chinese investors.
The venture capital firm Andreessen Horowitz is also in the mix, according to The Financial Times. And DealBook hears that others have been circling.
TikTok remains a tricky bet. It is a huge social media application. But any investment that Blackstone makes would be minuscule compared with the private equity giant’s usual megadeals. Investing in the company means being forced into the regulatory spotlight that shines on most social media apps.
It also means getting involved in a company that’s in the middle of a geopolitical tug of war. Some of ByteDance’s U.S. investors, like General Atlantic, have been unable to monetize their investment in any significant way for years.
Incentives may be more than financial. Some on Wall Street compare the consortium that invests in TikTok to Trump’s inaugural fund: a pool of money that could win big favor for the president.
Of course, some of the big names orbiting the app already have close ties to Trump, like Blackstone’s Steve Schwarzman and Andreessen Horowitz’s Marc Andreessen. Others, like Oracle, may see a benefit in taking a stake in a company with which they already have a commercial relationship.
A referendum on Musk
Voters in Wisconsin last night dealt a blow to President Trump and Elon Musk in a major test of how far the world’s richest man — and often the loudest voice on X — could influence local elections.
Trump, however, did rack up wins in two special congressional elections in Florida, keeping intact the Republicans’ slim hold on power in the House.
The latest: Susan Crawford, the liberal candidate for a Wisconsin Supreme Court seat, defeated Brad Schimel, the judge backed by Trump and Musk. The race was the most expensive judicial election in American history.
Crawford’s victory maintains the 4-to-3 liberal majority on the court, which is expected to decide pivotal cases on abortion, labor rights and, potentially, congressional redistricting.
Musk spent big on the race. He and organizations tied to him spent $25 million to support Schimel, and Musk donated to the state’s Republican Party. Musk also offered Wisconsinites $100 each to sign a petition opposing “activist judges.”
The election became about Musk. Over the weekend, Musk spoke at a rally in Green Bay, where he wore a cheese hat, gave away giant $1 million checks to winners of a sweepstakes that he said was for those who signed his position. All told, he acted much like a candidate.
But the move may have backfired. Democrats seized on Musk’s big spending in their messaging to ramp up their own fund-raising efforts. A Marquette Law School poll last month showed that Musk was disliked by a majority of Wisconsin registered voters.
The result may have broader implications. Musk has been trying to position himself as sort of a central bank for MAGA Republicans. And he cast last night’s outcome as a partial victory when voters approved a Musk-backed effort to enshrine the state’s voter I.D. rules into the Constitution.
The big question after last night: Is his political influence beginning to wane, or was this just a blip?
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In other Musk news: Tesla is set to release first-quarter sales, with analysts forecasting a sharp decline amid growing public backlash against Musk and his politics.
THE SPEED READ
Deals
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Rahm Emanuel, the former Obama administration official and a U.S. ambassador to Japan under President Biden, has rejoined the investment bank Centerview Partners. (Semafor)
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Howard Lutnick, the commerce secretary, has reportedly met with both Nippon Steel and the hedge fund Ancora Holdings about potential deals for U.S. Steel. (Bloomberg)
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“Elon Musk’s Megadeal Between X and xAI Breaks Wall Street’s Rulebook” (WSJ)
Politics, policy and regulation
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