Trump’s Tariff Threats Shake Tech Giants as ‘Made in America’ Mandate Intensifies

Economic

China–U.S. Trade War

Summary:

President Donald Trump’s latest pledge to impose 25% tariffs on Apple and Samsung products unless manufacturing returns to the U.S. has alarmed the global tech industry, threatening cost inflation, supply chain disruption...

Trump’s Tariff Ultimatum Triggers Global Market Ripples

In a stark escalation of his protectionist agenda, President Trump declared that not only Apple but also Samsung—and any company manufacturing abroad—could face a 25% import tax unless production is relocated to the United States. This marks a significant policy shift, extending beyond previous tariffs largely aimed at China and placing two tech giants from the U.S. and South Korea directly in the line of fire.

Apple’s stock dropped by 3% and Samsung’s by nearly 1% following Trump’s remarks. The President confirmed his demand during a conversation with Apple CEO Tim Cook, warning that building iPhones in India would not exempt the company from import duties. Trump doubled down by stating, “If you make it abroad, you’re going to get taxed,” and warned of similar tariffs on other companies, including a possible 50% tariff on the European Union—further rattling financial markets.

Strategic Production Moves Now Under Pressure

Apple has spent recent years diversifying its supply chain to mitigate previous tariff impacts on Chinese goods, notably shifting some iPhone production to India. The company also announced plans to invest $500 billion in the U.S. over four years, including new facilities in Texas and Michigan. However, these efforts have not satisfied the White House, and analysts warn that shifting the entire iPhone supply chain to the U.S. would be economically and logistically unfeasible.

Similarly, Samsung, the world’s largest Android phone maker, faces a deeply entrenched supply network in South Korea, China, and Vietnam. Relocating this ecosystem to the U.S. would involve monumental costs and a lack of supporting industrial infrastructure, making the proposal commercially impractical.

Cost Implications and Industry-Wide Disruption

If implemented, Trump’s tariffs could significantly inflate tech product prices in the U.S. Bloomberg Intelligence projects Apple’s gross margin would shrink by 3 to 3.5 percentage points in fiscal 2026 if tariffs are enacted without production relocation. iPhone prices could soar by hundreds or even thousands of dollars, undermining consumer demand and threatening the company’s global competitiveness.

Despite these projections, Trump insisted that consumers should not bear the financial burden, a claim that contradicts basic economic pass-through logic. Unless the government subsidizes the added costs or companies absorb them—both unlikely—price hikes seem inevitable.

Tech analysts caution that such policies risk igniting a broader industry crisis. Electronics like smartphones and laptops, previously spared from retaliatory tariffs, could soon be targeted. If semiconductor products are included in future tariff rounds, the fallout could engulf the entire technology sector, from chipmakers to software platforms.

A Radical Realignment of Global Supply Chains?

The looming threat of targeted tariffs is part of Trump’s broader “Made in America” push. While intended to revive U.S. manufacturing, the strategy runs counter to decades of supply chain globalization in the tech sector. Companies like Apple and Samsung have spent years optimizing production across borders for cost efficiency, scalability, and specialization.

A forced repatriation of production could force a complete strategic overhaul. Supply chain models optimized over decades may need to be dismantled and rebuilt, which would incur massive transitional costs, workforce dislocation, and potential innovation slowdowns.

Policy Shock Meets Supply Chain Reality

Trump’s tariff ultimatum confronts global tech leaders with a policy shock that challenges the foundational logic of their operations. While the political goal of reshoring production aligns with nationalistic economic narratives, its practical implications risk widespread disruption—not only in costs and corporate margins but also in global trade dynamics and technological advancement.

In an era where geopolitical pressures are increasingly shaping economic policy, the question is not just whether Apple and Samsung can adjust, but whether the global tech economy can absorb such a seismic shift without destabilization. The countdown to Trump’s June deadline may mark a pivotal moment for the future of global manufacturing.

Source: HuffPost

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Economic

Growth Outlook Revised Downward Across Asia-Pacific

In its latest regional economic outlook, the IMF projects a notable deceleration in Asia-Pacific growth, forecasting a decline to 3.9% in 2025 and a modest rebound to 4% in 2026. This marks a sharp fall from the 4.6% growth rate observed in 2024 and falls significantly short of earlier expectations. The revised outlook is shaped by a combination of policy uncertainty, weakening external demand, and rising financial volatility.

Krishna Srinivasan, Director of the IMF’s Asia and Pacific Department, attributes the regional slowdown largely to the sharp rise in trade policy unpredictability since January 2025. Specifically, President Donald Trump’s sweeping tariff announcements targeting nearly all major trading partners have created a climate of economic instability that complicates policy planning for open, trade-dependent economies in Asia.

Trade-Linked Vulnerabilities and Capital Flow Disruptions

Srinivasan notes that many Asian economies—being deeply integrated into global supply chains and heavily reliant on external markets, particularly the United States—are acutely exposed to trade-related disruptions. These exposures, he argues, have amplified Asia’s vulnerability to external shocks, both through direct trade channels and through investor sentiment, which has become increasingly sensitive to geopolitical signals.

The IMF also underscores how financial market turbulence has intensified capital flow volatility and disrupted investment channels. These developments further weaken regional economic resilience and add urgency to policy responses aimed at stabilizing domestic conditions.

Policy Space for Monetary Easing Remains Available

Amid this backdrop, Srinivasan emphasizes that most Asian economies still have sufficient space to maneuver on interest rates. With inflation generally at or below target levels across the region, there is scope to loosen monetary policy without risking price instability. The IMF’s recommendation is clear: monetary easing, in tandem with flexible exchange rate regimes, could serve as a buffer against external shocks.

This strategic leeway is particularly valuable at a time when fiscal policy may be constrained, and when global policy coordination is limited. According to the IMF, interventions in the foreign exchange markets may also play a supportive role but should complement rather than substitute for monetary policy adjustments in turbulent periods.

Structural Risks and Policy Trade-offs in a Fragmented Global Order

The IMF’s assessment also highlights an increasingly fragmented global trade landscape, where the intersection of rising protectionism and reduced multilateral cooperation imposes new structural constraints on emerging economies. For policymakers in Asia, the challenge lies in striking a delicate balance—easing monetary policy to cushion domestic growth while maintaining financial stability amid erratic global capital flows.

The report suggests that ongoing trade distortions, unless reversed, could structurally limit the region’s long-term growth potential, especially for export-driven economies such as South Korea, Singapore, and Malaysia. Meanwhile, those economies with more domestic demand-driven models may find it easier to recalibrate growth under the new trade order.

A Call for Proactive and Coordinated Policy Action

In sum, the IMF’s latest analysis frames monetary policy flexibility as a critical tool in mitigating the fallout from rising geopolitical tensions and global trade realignment. While Asia’s inflation environment grants room for accommodative measures, the institution warns that the window for policy effectiveness may narrow if trade disruptions persist or deepen.

The path forward will require not only responsive central banking but also enhanced regional coordination to ensure that monetary easing translates into broad-based economic resilience. For now, Asia still holds the policy tools necessary to cushion the impact—but the urgency to act is growing.

Source: IMF

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A Tightrope Walk Between Pricing Strategy and Political Pressure

Leading retail giants such as Walmart, Target, and Home Depot are navigating an increasingly volatile trade environment exacerbated by the Trump administration’s aggressive tariff strategy. With nearly half of their inventories sourced from imports—especially from Asia—these companies face mounting pressure to adjust their pricing models. Their options include absorbing higher costs, changing suppliers, raising prices, or shrinking product offerings. However, the political landscape has made even transparent corporate communication a high-stakes gamble.

Walmart, in a notable display of candor during a quarterly earnings report, explicitly warned that tariffs would lead to increased consumer prices. This prompted an immediate rebuke from President Trump, who publicly demanded the company absorb the tariffs rather than pass costs onto consumers. In contrast, Target and Home Depot issued more muted statements in their financial disclosures, seeking to avoid direct confrontation while still acknowledging supply chain risks.

Retail Executives Caught in a Policy Crossfire

This divergence in messaging reflects differing risk appetites among corporations. Some, like Walmart and Amazon, have opted to speak frankly about the impacts of tariffs, accepting the possibility of presidential retaliation. Others adopt a cautious stance, fearing unpredictable policy responses.

President Trump has previously targeted Amazon over its consideration of labeling tariff-related surcharges on its platform and even threatened 100% tariffs on Mattel toys after CEO Ynon Kreiz warned of higher toy prices. These episodes highlight a pattern in which businesses voicing concern may face retaliatory threats, intensifying corporate reluctance to publicly challenge policy.

Still, according to a source close to Walmart, the company anticipated Trump’s reaction but proceeded with transparency to uphold its fiduciary responsibility and avoid misleading consumers about price changes. This reflects an evolving tension between political sensitivities and corporate accountability.

Consumers at the Epicenter of Economic Fallout

Low- and middle-income American households bear the brunt of these trade tensions. These groups are heavily dependent on low-cost imported goods—precisely the items most affected by new tariffs. Research from the Center for American Progress estimates that tariffs could cost the average US household an additional $5,200 annually.

The National Retail Federation (NRF) has also issued stark warnings about the regressive nature of these policies. In a detailed estimate, the group quantified the additional costs consumers might incur on everyday essentials like footwear, appliances, and mattresses. David French, EVP of Government Relations at NRF, stressed that expanding tariffs would only amplify uncertainty and financial strain for both businesses and families.

Strategic Adaptations and Global Ripple Effects

Retailers like Nike and Lululemon face what analysts describe as an impossible choice: absorb the cost and erode margins, or raise prices and risk diminished sales. Compounding the problem, companies are freezing hiring and postponing inventory decisions in anticipation of future policy changes, leading to a slowdown in broader retail investment.

Multinational retailers are experimenting with cost-distribution strategies by modestly raising prices in foreign markets to offset domestic tariff burdens. This approach helps shield US consumers but risks sparking inflation in more stable markets such as the EU and the UK. Central banks in these regions are becoming increasingly cautious, as cross-border price transmission could disrupt recently stabilized inflation rates.

Lack of Collective Corporate Response Raises Concerns

Despite individual efforts to navigate the crisis, the muted response from major retail lobbying groups has attracted criticism. Jeffrey Sonnenfeld and Steven Tian of Yale’s Chief Executive Leadership Institute argue that the absence of unified opposition undermines business leverage in shaping policy. They contend that, without a coordinated lobbying strategy, corporate leaders are left isolated and vulnerable.

This silence from industry coalitions like the NRF, despite its warnings, reflects a broader paralysis within the business community, potentially stemming from fears of political retaliation or internal division over how to approach trade policy.

A Retail Sector Under Siege

America’s retail industry is confronting a uniquely precarious position—tasked with managing global supply chain disruptions, volatile policy shifts, and a politically sensitive consumer base. While some firms push back with transparency, others opt for caution, reflecting the high stakes of navigating economic logic under populist political pressure.

If collective business voices fail to emerge, and policy unpredictability continues, the sector risks systemic disruption—not just in margins and prices, but in its foundational relationship with governance and consumer trust. In this fraught landscape, the cost of silence may rival the cost of tariffs themselves.

Source: The Economic Times

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Economic

Forex

The Inherited Crown: From Sterling to the Dollar

Since the end of World War II, the US dollar has served as the anchor of the global financial system, succeeding the British pound in the role of universal store of value, unit of account, and medium of exchange. As of today, approximately 60% of the world’s foreign exchange reserves are held in USD, far surpassing the euro (20%) and the Japanese yen (5%). The dollar features in 90% of international foreign exchange transactions, and 60% of global debt issued in foreign currency is denominated in USD.

This overwhelming dominance has conferred structural advantages upon the United States. By issuing the world’s reserve currency, the US has been able to sustain high levels of public debt and budget deficits at comparatively low borrowing costs. Furthermore, the global reliance on dollar-based transactions grants Washington unmatched leverage in applying financial sanctions, from freezing Iranian assets to targeting Russian institutions. This dominance—dubbed an “exorbitant privilege” as early as the 1960s by French Finance Minister Valéry Giscard d’Estaing—reflects deep institutional and strategic entrenchment.

The Institutional Backbone Behind Dollar Supremacy

The endurance of the dollar’s status has not been incidental. According to Janet Yellen, former US Treasury Secretary and Federal Reserve Chair, it is underpinned by the credibility of American institutions, open and liquid financial markets, the rule of law, and consistent monetary policy. Since the 1944 Bretton Woods Conference, when the USD was pegged to gold and all other currencies to the USD, the global economy has grown reliant on the stabilizing presence of a single monetary anchor.

The US has long fulfilled the role of global liquidity provider, stepping in during moments of international turmoil, a function theorized by economist Charles Kindleberger as critical to crisis resolution. The implicit trust in America’s financial integrity has allowed the dollar to remain the default global reserve.

Investor Anxieties and Unprecedented Market Behavior

However, recent market behavior suggests that the foundations of this trust are being tested. Following the announcement of aggressive tariffs by President Donald Trump, the typical investor response—flight to US Treasuries and a strengthening dollar—did not materialize. Instead, both Treasury yields rose and the dollar depreciated, defying patterns observed even during the 2008 global financial crisis.

This anomaly indicates a deeper re-evaluation by investors. Rather than distinguishing between risky assets and safe havens, market participants began questioning the reliability of the US itself. Such sentiment is more commonly associated with emerging markets or unstable economies. Should this erosion of confidence persist, central banks may reduce USD holdings, investors may avoid US debt instruments, and global firms may seek alternatives to dollar-based settlements.

No Clear Heir, But Emerging Alternatives

Despite the growing fragility of dollar hegemony, a replacement is not readily apparent. While the euro and yen are structurally sound, neither enjoys the same depth, liquidity, and geopolitical reach as the USD. However, China’s aggressive push for digital currency adoption with the e-CNY (digital yuan) signals a long-term strategic challenge. This programmable central bank digital currency offers features like smart contracts and instantaneous cross-border transfers, potentially reshaping transaction norms.

Even so, the yuan remains constrained by capital controls, limited convertibility, and concerns about legal transparency. The dollar’s dominance, therefore, may be waning, but no currency currently possesses the full spectrum of attributes necessary to take its place.

From Stability to Shock: A Historical Parallel

The emerging doubts about dollar supremacy evoke the evolutionary concept of “punctuated equilibrium”—a period of sudden change after long stability. Similarly, legal scholar Bruce Ackerman’s “constitutional moment” refers to sudden, sweeping political transformation. In this context, the global economy may be entering a comparable phase: a “monetary moment” in which the dollar’s institutional superiority is no longer immutable.

Like the pound sterling before it, the dollar could face a decline not through direct challenge but through gradual erosion of trust and systemic adaptation. This transition, if it unfolds, will likely be nonlinear—slow in perception, sudden in outcome.

A Currency at a Crossroads

The US dollar still dominates the financial architecture of the global economy, but the certainty of its reign is eroding. Market behavior, geopolitical shifts, and digital innovation are converging to form cracks in the once-unchallenged edifice of dollar hegemony.

Whether these developments signal an imminent change or a long-term transformation, the world may be witnessing a historical inflection point. In financial systems, just as in political regimes, legitimacy is not declared—it is sustained through continued belief. That belief, for the first time in a generation, appears to be faltering.

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Economic

China–U.S. Trade War

France’s Resilience in a Fragmented Transatlantic Trade Landscape

In the broader context of the US–EU tariff dispute initiated by former President Donald Trump to counterbalance a €197 billion trade surplus in favor of the EU (as of 2024), France has stood out for its relative immunity. While most European Union countries faced severe tariff repercussions, a report published by the French customs authority on May 20 reveals that France may be considered only an indirect casualty of these protectionist measures.

Unlike Germany or Italy, France maintained a trade deficit with the US since 2021, amounting to €4.2 billion in 2024. With €48.5 billion in exports and €52.7 billion in imports from the US, France’s role as a net importer—particularly of energy following disruptions caused by the Ukraine conflict—partially insulated it from targeted tariff hikes.

Export Structure as a Buffer Against High Tariff Exposure

France’s insulation from steep US tariffs stems largely from the nature of its exports. Whereas countries like Germany rely heavily on automobiles and machinery—high-surplus, high-tariff sectors—France primarily exports aerospace equipment (€9.7 billion), alcoholic beverages (€4.1 billion), pharmaceuticals (€3.8 billion), and cosmetics (€2.9 billion) to the US.

The majority of these products fall under the 10% tariff category or are entirely exempt (as with pharmaceuticals), unlike the 25% duties imposed on steel, aluminum, and automobiles. Only 5% of France’s 2024 export volume to the US fell into the highest tariff categories, resulting in an average tariff rate of 9.6%, closely mirroring the EU average of 9.5%. By contrast, Germany’s export mix led to a steeper average tariff burden of 12.3%, with automotive exports alone comprising 27% of its shipments to the US.

Germany as the Primary Target of American Trade Retaliation

The customs report positions Germany—not France—as the principal focus of US tariff escalation. Germany’s €93 billion trade surplus with the US represented nearly half of the EU’s total surplus, making it a prime candidate for retaliatory measures. German automakers, who contributed €43.7 billion to US-bound exports in 2024, bore a disproportionate share of tariff costs.

Economists argue that Germany’s long-standing suppression of domestic consumption—particularly during the 2000s—amplified these imbalances. According to Thomas Grjebine of CEPII, this internal policy limited demand for imports, hurting intra-EU trade partners like France and contributing to the surplus that provoked Washington’s ire. Anthony Morlet-Lavidalie of Rexecode adds that had Germany adopted a more consumption-driven model earlier, the EU might have avoided such a large trade surplus and the ensuing tariff confrontation.

Challenges Behind the “French Exception” Narrative

However, France’s relative protection should not be misread as an economic advantage. Analysts caution that the country’s distinct export profile, while offering short-term insulation from punitive tariffs, could become a strategic disadvantage in broader EU–US negotiations. Grjebine warns that France’s unique structure might weaken its bargaining position if the EU prioritizes defending automotive and machinery sectors dominated by Germany.

This concern resonates with business leaders like Bernard Arnault, CEO of LVMH, who fears the European Commission could focus on shielding the automotive sector at the expense of luxury and consumer goods exporters. The fragmentation within the EU’s trade profile, therefore, risks diluting France’s influence in collective bargaining scenarios.

Divergence as Double-Edged Sword

France’s relative immunity from Trump-era tariffs illustrates how differences in export structure and trade balances can reshape the impact of international trade tensions. While Paris has avoided the harshest blows thanks to its aerospace, luxury, and pharmaceutical exports, this divergence could complicate its leverage within a unified EU trade agenda.

The “French exception” may shield it from immediate shocks, but it also reveals structural gaps in how EU member states are affected by—and can respond to—external trade policy disruptions. As the EU navigates future transatlantic negotiations, balancing internal asymmetries will be crucial to maintaining both cohesion and effectiveness.

Source: RFI

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Owen Li

Economic

The administration of President Donald Trump appealed on Friday a federal judge's decision that extended a block on mass layoffs by federal agencies, a key piece of the Republican president's plans to downsize the U.S. government.

In an order late Thursday, U.S. District Judge Susan Illston barred agencies from mass layoffs pending the outcome of a lawsuit by unions, nonprofits and municipalities, saying Trump needed permission from Congress before reorganizing federal agencies.

The Trump administration appealed the decision to the San Francisco-based 9th U.S. Circuit Court of Appeals, and will likely ask the court to pause Illston's ruling pending the outcome of the appeal.

The decision was the latest instance of a federal judge checking an aggressive push by Trump and billionaire adviser Elon Musk to drastically shrink or eliminate many federal agencies, make it easier to fire government workers and strip them of the ability to join unions.

On May 9, Illston had blocked about 20 agencies from making mass layoffs for two weeks and ordered the reinstatement of workers who had already lost their jobs.

In Thursday's late-night order, she largely continued the relief provided in the temporary restraining order.

"The President has the authority to seek changes to executive branch agencies, but he must do so in lawful ways and, in the case of large-scale reorganizations, with the cooperation of the legislative branch," wrote Illston, an appointee of Democratic former President Bill Clinton.

Illston said her order "shall not limit federal agency defendants from presenting reorganization proposals for legislative approval or engaging in their own internal planning activities" without direction from the White House.

The administration has asked the U.S. Supreme Court to pause Illston's May 9 ruling, saying she improperly infringed on Trump's constitutional powers to control the executive branch. That bid could be moot after Thursday's ruling.

Federal agencies have broad authority to implement large-scale layoffs, government lawyer Andrew Bernie said at Thursday's hearing.

An executive order issued by Trump merely asked agencies to determine what cuts can be made without calling for any concrete actions such as layoffs or office closures that plaintiffs could sue over at this point, he added.

"Those decisions will be disclosed when they are made, and when they are made, the plaintiffs can challenge them. Indeed, the plaintiffs have challenged individual decisions,” Bernie said, citing pending lawsuits over cuts at the departments of Education, Health and Human Services and Homeland Security.

Danielle Leonard, who represented the plaintiffs, said directives from Trump and other White House officials made clear that agencies had little say in whether to gut their workforces.

"They are saying what to cut, when to cut, where to cut, and all they’re asking the agencies to do is come forward with a plan," she said.

The case involves the departments of agriculture, health and human services, treasury, commerce, state and veterans affairs, among others.

Trump has urged agencies to eliminate duplicative roles, unnecessary management layers, and non-critical jobs while automating routine tasks, closing regional offices and cutting back on outside contractors.

About 260,000 federal workers, most of whom have taken buyouts, have left or will leave by the end of September. And several agencies have been earmarked for deep cuts, such as more than 80,000 jobs at the Department of Veterans Affairs and 10,000 at the Department of Health and Human Services.

Dozens of lawsuits have challenged the administration's efforts, and Illston's earlier ruling this month was the broadest yet of its kind.

An appeals court has paused another judge's March ruling requiring agencies to reinstate nearly 25,000 probationary employees, who typically have been in their current roles for less than a year or two.

Source: Reuters

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Kevin Du

Economic

Canada’s economy is likely in the early stages of a recession, according to forecasters, as unemployment rises and exports fall because of a trade war with the US.

Economists surveyed by Bloomberg say output will shrink 1% on an annualized basis in the second quarter and 0.1% in the third quarter, a technical recession.

Exports are tumbling — they will drop 7.4% on an annualized basis in the current quarter, forecasters estimate, after President Donald Trump’s tariff threats caused US importers to pull forward their shipments earlier in the year. But exporters should be able stage a modest recovery, starting later in the year.

The trade dispute with Canada’s closest trading partner is hitting the labor market and household consumption. Economists now say unemployment will rise to 7.2% in the second half of the year before easing in 2026.

They expect inflation to run above the central bank’s target, at 2.1% in the third quarter and 2.2% in the fourth.

That puts the Bank of Canada in a difficult position, with now a less than 30% probability of a change to interest rates at its June meeting, according to Bloomberg’s World Interest Rate Probability.

“The more we can get uncertainty down, the more we can be more forward-looking as we move forward in our monetary policy decisions,” Bank of Canada Governor Tiff Macklem said on Thursday.

Businesses and consumers are waiting for more clarity on what the US relationship looks like before making major decisions. That uncertainty has contributed to a notable slowdown in the housing market, with home prices and sales falling. Economists say housing starts may be weaker in the second half of 2025 than in the second quarter.

“I know Canada is keen to sit down with the US and work through our differences and come to an agreement,” Macklem said. “If we can get that clarity, we can get back to growth. Clearly if things move in the other direction, yes, it will be worse.”

Prime Minister Mark Carney will get another chance to meet with Trump soon, with the US president set to make his first trip to Canada since returning to power when he attends the G-7 leaders’ summit in Alberta in June.

But Carney has warned that the long period of deepening integration between the two countries is over.

Economists see gross domestic product rising 1.2% in 2025 and 1% in 2026. Those figures are in line with the previous Bloomberg survey.

The survey of 34 economists was conducted from May 16 to May 21.