The LIT Sunday News

Global Stocks Soar as Trump Pauses Most Tariffs Amid Trade War Tensions

Key Developments

President Donald Trump stunned markets by announcing a 90-day pause on new tariffs for countries that had not retaliated against the US. This unexpected move marked a retreat from a broader trade war strategy and triggered a massive global stock rally. However, Trump simultaneously escalated tensions with China by increasing tariffs specifically against Beijing.

• S&P 500 jumped 9.5%, adding $4.3 trillion in market value — its best day since 2008

• Nasdaq posted its strongest daily gain since 2001

• The pause excludes China, whose tariff rate was increased from 104% to 125%

• A 10% blanket levy on most global imports remains in effect

Trump framed the pause as a response to over 75 countries seeking to negotiate rather than retaliate, but described China as disrespectful and justified heightened penalties accordingly.

Market and Industry Impact

• The Asian rally followed suit, with Japan’s Topix up 8% and Taiwan’s Taiex up 9.3%

• European stocks surged, led by Germany’s Dax (+8.3%), FTSE 100 (+6.1%), and Stoxx 600 (+5.5%)

• Bond markets stabilized after recent turbulence, with the 10-year Treasury yield settling at 4.35%

• Oil prices recovered slightly from pandemic-era lows after a brutal sell-off

Wall Street and global investors had feared that Trump’s protectionist stance would tip the US into recession. Goldman Sachs had just issued a recession warning, which it reversed hours later following Trump’s announcement.

Strategic and Political Context

• Trump’s reversal is seen as a strategic retreat aimed at calming markets while maintaining pressure on China

• Commerce Secretary Howard Lutnick claimed the world is now “ready” to work with the US, while dismissing China’s defiance

• Trump's team, including Treasury Secretary Scott Bessent and trade negotiator Jamieson Greer, is preparing for parallel trade talks with key partners like Japan

• Citigroup and other economists caution that uncertainty remains high, and the partial tariff rollback may not fully offset inflation and growth risks

The administration’s mixed signals have sparked confusion, with Democratic Representative Steven Horsford publicly questioning trade negotiator Greer about whether the White House was coordinating its messaging.

TL;DR

Global stocks surged as President Trump paused most tariffs for non-retaliating countries, temporarily backing down from a full-scale trade war. While markets celebrated, tariffs on China were sharply increased, maintaining tensions with Beijing. The S&P 500 saw its largest daily gain since 2008, but economists warn that uncertainty persists and inflation risks remain due to ongoing levies and trade instability. Negotiations are now expected with major US trade partners.

Federal Reserve ‘Absolutely’ Ready to Stabilise Markets if Needed

Key Developments

Susan Collins, President of the Boston Fed, affirmed the Federal Reserve's readiness to intervene if financial markets become disorderly. While current conditions are stable and liquidity issues are not apparent, Collins emphasized the Fed has tools to act swiftly if necessary.

Her comments follow a week of sharp volatility across US financial markets, triggered by President Trump’s aggressive tariff measures, raising fears of recession and inflationary pressure. The Fed's statements aim to reassure markets amid intensifying global and domestic economic uncertainty.

Financial and Regulatory Challenges

• Collins noted that emergency rate cuts would not be the primary response to liquidity issues. Instead, the Fed would rely on alternative tools better suited for restoring market function.

• The 10-year Treasury yield spiked 0.5 percentage points to 4.5% in just a week, a rare and significant move in the traditionally stable government bond market.

• Wall Street analysts, including JPMorgan’s Jay Barry, acknowledged worsening liquidity due to high volatility, though market functioning remains intact.

Market and Industry Impact

• The Treasury sell-off reflects broader investor concern, as this market underpins pricing for trillions of dollars in global assets.

• Market players are comparing the current environment to past crises. The Fed’s pandemic-era interventions — including large-scale asset purchases and emergency lending facilities — are being viewed as possible templates for future action.

• The central bank is closely monitoring whether market turbulence escalates into dysfunction requiring direct intervention, particularly in the Treasury and short-term funding markets.

Strategic Context

• John Williams of the New York Fed warned that Trump’s tariffs could sharply raise inflation, increase unemployment, and dampen growth — reinforcing the complex trade-offs facing policymakers.

• Collins reiterated the Fed’s ability to react quickly based on real-time data and conditions, echoing the flexible stance adopted during the 2020 COVID crisis.

• The Fed maintains “standing facilities” already in place, such as the Standing Repo Facility and the Discount Window, which can be activated to ease market stress without major policy shifts.

TL;DR

Boston Fed chief Susan Collins confirmed the central bank is ready to act if markets destabilize, though current conditions remain orderly. Amid rising Treasury yields and fears over Trump’s tariffs, the Fed is signaling confidence in its toolkit beyond interest rate changes — including liquidity backstops and emergency lending facilities. Market volatility is high, but functioning remains intact — for now.

China Deploys ‘National Team’ to Defend Stock Market Amid Trade War Escalation

Key Developments

Following Donald Trump’s announcement of heightened tariffs on China — branded “liberation day” — Beijing initiated a large-scale, state-led effort to support domestic equity markets. China’s “national team” of government funds and institutions was mobilized to stabilize stocks, reflecting the strategic importance of capital markets amid a slowing economy.

• Central Huijin, a major sovereign wealth fund, issued a rare statement committing to increase equity holdings and labeled itself part of the “national team”

• Other state actors, including China Chengtong Holdings (Rmb100bn), China Reform Holdings (Rmb80bn), and the National Council for the Social Security Fund, announced large-scale market investments

• Insurance purchase rules were loosened by the National Financial Regulatory Administration to facilitate institutional buying

• Over 100 major Chinese listed companies announced share buyback programs, including Sinopec, China Mobile, and Moutai

Financial and Regulatory Response

• Monday’s 7% plunge in the CSI 300 index triggered a wave of coordinated market interventions

• By Tuesday, ETFs for A-shares saw Rmb170bn in inflows, according to Goldman Sachs

• China’s central bank previously launched Rmb800bn in equity support facilities, including:

  • Rmb300bn for share buybacks

  • Rmb500bn swap facility for funding purchases

• Regulators and local SOEs held repurchase-focused symposiums to align on market support messaging and execution

This effort mirrors China's response to its 2015–2016 stock market crash, but has since evolved into broader, index-level support with strategic use of exchange-traded funds (ETFs) and coordinated communications.

Strategic Context and Market Impact

• The intervention follows months of real estate market strain and weak consumer confidence

• Authorities now treat the stock market as a critical policy tool, aligning KPIs of state companies with investor returns

• Central Huijin and the People’s Bank of China moved quickly post-tariff announcement to shape investor expectations and prevent further panic selling

Despite Trump’s tariffs, the CSI 300 rebounded 1% on Wednesday, showing relative calm after the policy response. Analysts anticipate additional stimulus measures, including potential rate cuts, to further stabilize the economy.

TL;DR

China has mobilized its “national team” — state-owned funds and enterprises — to defend the stock market after a steep sell-off triggered by Trump’s new tariffs. Sovereign funds, central regulators, and SOEs coordinated large equity purchases and buybacks, aiming to restore market confidence and offset broader economic headwinds. The stock market is now a central pillar of China’s stimulus strategy, with more domestic easing likely as the trade war escalates.

U.S.-China Trade War Intensifies: $650 Billion in Trade Now at Risk

Key Developments

The ongoing U.S.-China trade war escalated sharply this week, with President Donald Trump raising tariffs on Chinese goods to 125%, following an earlier hike to 104%. China retaliated by raising tariffs on U.S. exports up to 84%, and tensions are showing no signs of easing. These moves now threaten approximately $650 billion in bilateral trade — $439 billion in U.S. imports from China and $200 billion in U.S. exports (goods and services combined) to China.

• Tariff hikes apply to a wide range of goods, including electronics, apparel, appliances, toys, and footwear

• Trump has temporarily lowered tariffs for non-retaliating countries to open space for trade negotiations

• China has issued a travel advisory against the U.S., potentially impacting the U.S. tourism sector during peak season

Market and Economic Impact

• Tariffs could increase consumer prices by 50% or more on affected goods like iPhones, clothing, TVs, and shoes

• The U.S. economy risks higher inflation and weaker consumption, especially in sectors reliant on Chinese imports

• Clothing example: In 2024, the U.S. imported $75 billion in apparel, with nearly $15 billion from China — while only 2% of clothes sold domestically were made in the U.S.

• Footwear: U.S. imports $9.6 billion annually from China, about one-third of total purchases

Economists warn that sourcing alternatives to Chinese suppliers is not feasible in the short term. Building up manufacturing capacity in other countries would require years of investment and workforce development.

Strategic Context and Trade Balance

• U.S. goods exports to China totaled $143.5 billion, including major categories like Boeing aircraft, soybeans, and oil

• The U.S. holds a $55 billion services trade surplus with China, heavily reliant on Chinese tourism and education

• China’s export sector also depends heavily on U.S. demand, with millions of jobs tied to production for American markets

Despite mounting pressure, neither side appears ready to de-escalate. The U.S. is betting on a tariff-driven leverage strategy, while China continues coordinated retaliation.

TL;DR

The U.S.-China trade war has intensified, with $650 billion in goods and services now at stake. Trump raised tariffs on Chinese imports to 125%, and China responded with steep duties of its own. Consumer prices in the U.S. could soar on key goods, inflation may rise, and both economies face risks to growth and employment. Meanwhile, shifting supply chains away from China remains a long-term challenge.

BlackRock’s Larry Fink Warns: US Economy ‘Weakening as We Speak’ Amid Tariff Fallout

Key Developments

BlackRock CEO Larry Fink has sounded a stark warning about the state of the US economy, describing it as actively weakening under the weight of recent market turmoil sparked by Donald Trump’s sweeping new tariffs. Speaking at the Economic Club of New York, Fink cautioned that both Wall Street and Main Street are feeling the effects of the market's rapid decline.

• “There’s a real downturn” developing, Fink said, with consumption slowing and business activity pausing

• Tariff-driven market volatility has shaved trillions off global equity values

• Fink emphasized the long-term inflationary risks if the proposed tariffs are fully implemented

Financial and Economic Impact

• The sudden drop in equities has led to margin calls for hedge funds and forced liquidations

• Stocks of major financial institutions, including BlackRock itself, have slumped—BlackRock shares are down 25% from January peaks

• Fink noted that many stocks are down 30–40% from their 2025 highs, with no guarantee the bottom has been reached

Despite the turbulence, he suggested long-term investors may view current conditions as a buying opportunity, but added: “That doesn’t mean we can’t fall another 20 per cent from here too.”

Monetary Policy Outlook

Fink cast doubt on the likelihood of near-term Federal Reserve rate cuts, countering investor expectations. He argued that inflationary risks tied to tariffs make cuts improbable, even as markets price in looser policy.

• He stated there's “zero chance” of Fed easing in the current environment

• Cited persistent inflation as the key constraint on monetary flexibility

His comments imply that fiscal and trade policy volatility—not central bank action—will be the primary driver of markets and growth trajectories in the coming months.

Strategic and Market Sentiment

• The audience at Fink’s speech reportedly reacted with audible gasps, highlighting the deep concern among financial professionals

• The idea of a “Trump put” — where the president might reverse course on tariffs to rescue markets — remains speculative, with Fink saying, “I don’t know how to value that.”

Investors remain wary of corporate defaults, a recession, and further market instability, even as some strategists point to discounted valuations.

TL;DR

Larry Fink warned that the US economy is actively weakening, with market turmoil stemming from Trump’s tariffs starting to affect Main Street. Equities have tumbled, hedge funds face pressure, and inflation risks limit the Fed’s options. While Fink sees long-term buying opportunities, he remains concerned about further declines and the lack of policy coordination.

Apple Turns to India as Trump’s Tariffs Threaten Its China-Centric Supply Chain

Key Developments

Apple has ramped up iPhone shipments from India to the U.S. in response to President Donald Trump’s 104% tariff on Chinese imports, which rose to 125% following China’s retaliation. These emergency measures highlight the tech giant’s growing dependence on India to buffer the blow of trade policy disruptions, but also its vulnerability due to a supply chain still heavily reliant on China.

• At least 10 flights carrying iPhones have departed from Chennai since Trump’s tariff hike

• Apple failed to secure an exemption from new tariffs, losing $700 billion in market value

• About 80% of Apple’s smartphone production remains based in China

• Apple is exploring additional investment in India, but capacity constraints remain

Supply Chain Pressure and Strategic Shifts

Despite its growing footprint in India, Apple’s ability to substitute Chinese production is limited. According to analysts, even if India’s entire output were redirected to the U.S., it would only cover about 30 million out of 50+ million iPhones shipped annually to the American market.

• Apple’s core assembly partners — Foxconn, Pegatron, Luxshare — remain largely China- and Taiwan-based

• The company outsources production to highly specialized facilities developed over two decades, complicating any rapid transition

• India's current capacity, though expanding (e.g., via Tata and Jabil), is insufficient for sustained large-scale replacement

Apple’s supplier list shows that 169 of the 187 key suppliers have a manufacturing presence in China or Taiwan. Analysts estimate that relocating just 10% of supply to the U.S. would take up to three years and $30 billion.

U.S. Tariff Environment and Political Pressure

The U.S. administration has signaled a push for “Made in America” iPhones, with Trump and senior officials pressing the narrative that Apple can manufacture domestically. Experts, however, widely regard this as impractical due to:

• High cost of building facilities and sourcing components within the U.S.

• Continued reliance on Asian-made components, which would still face tariffs even if final assembly were American-based

• Technical feasibility vs. economic and logistical complexity

Apple may be forced to raise global prices — potentially around its next iPhone launch — or absorb tariff costs by squeezing supplier margins. Wedbush and Morgan Stanley analysts agree that neither path is sustainable long-term without structural supply chain overhaul.

India’s Role and Geopolitical Opportunity

India, hit with its own 27% “reciprocal” tariff from the U.S., is actively negotiating a bilateral trade deal that could lighten its burden. As a non-retaliating nation, India is expected to benefit from Trump’s 90-day tariff pause, further incentivizing Apple’s pivot.

• Tamil Nadu, home to four of India’s five iPhone plants, is hosting talks with suppliers to expand capacity

• India’s efforts to court U.S. tech investments are gaining traction, but building full-stack capability will take time

TL;DR

Apple is rapidly increasing iPhone exports from India to offset Trump’s tariffs on Chinese goods, but with 80% of its production still in China, it remains highly exposed. While India offers a partial near-term solution, a full-scale shift would take years and billions. Trump’s push for U.S. manufacturing clashes with global supply chain realities, and Apple now faces difficult decisions about pricing, investment, and long-term diversification.

Nio Power Expands Battery Swap Network with New Yunnan Partnership

Key Developments

Nio Power has signed a strategic cooperation agreement with Yunnan Jiaotou Group Operation Development, a state-owned infrastructure operator in southwest China, to jointly build battery swap stations in Yunnan province. This is the fourth such agreement with a state-owned entity in the past month and part of a broader push to expand Nio’s energy infrastructure footprint across China.

• The partnership will focus on battery swap infrastructure, smart energy systems, and integration with virtual power plants (VPPs)

• Joint construction will take place at highway service areas managed by Yunnan Jiaotou

• The goal is to enhance energy storage, fast charging, and swap capabilities in one integrated system

Network Expansion and Strategic Goals

This latest agreement builds on Nio’s growing presence in Yunnan, where the company already operates:

• 38 battery swap stations

• 150+ charging piles

• 390,000 cumulative battery swaps

Across China, Nio Power now operates 3,255 battery swap stations and has delivered over 71 million battery swaps.

Yunnan Jiaotou plans to invest RMB 265 million ($36.3 million) to expand charging and power capacity across its 99 service areas, providing a strong infrastructure base for Nio’s expansion.

Recent Partnerships

The Yunnan deal is part of Nio's Power Up Partners program launched in August 2024, aiming to rapidly grow charging and swapping stations through public-private cooperation. Recent key deals include:

• April 9: Agreement with Jining Hi-Tech Holding Group to build 50 swap stations in Shandong

• April 1: Deal with Changsha Economic Development Group to build 100 stations in Hunan

• March 26: Strategic partnership with Future Science City Group for 100 stations in Beijing

• October 23, 2024: Agreement with Wuhan Shouyi Investment Group for 100 stations in Hubei

These partnerships span at least 15 provinces, with Nio signaling intentions to further scale this model.

TL;DR

Nio Power has signed its fourth state-backed deal in a month, teaming up with Yunnan Jiaotou to expand battery swap and energy infrastructure in Yunnan. The partnership aims to build integrated battery swap and charging stations at highway service areas and explore VPP integration. It is part of Nio’s aggressive Power Up Partners strategy, which is driving nationwide growth through local public-sector collaborations.

Musk’s Doge-Led Layoffs Hit U.S. Auto Safety Regulator Amid Tesla Self-Driving Push

Key Developments

Job cuts orchestrated by Elon Musk’s Department of Government Efficiency (Doge) at the U.S. National Highway Traffic Safety Administration (NHTSA) have disproportionately affected staff overseeing autonomous vehicle (AV) safety, sparking concerns about regulatory independence. Of the ~30 NHTSA employees dismissed in February, many were part of the “vehicle automation safety” office, formed just in 2023.

• Layoffs come as Tesla ramps up plans for its Full Self-Driving (FSD) system and cybercab fleet, which require NHTSA exemptions
  NHTSA currently has 8 active investigations into Tesla, including 5 related to Autopilot and FSD claims

• Agency morale has plummeted, with former staff calling the layoffs a “clear conflict of interest”

Musk’s Doge initiative has led to at least 20,000 federal job cuts, many of which target agencies that regulate Musk’s businesses. The dismissals at NHTSA — some made on Valentine’s Day — included newly hired staff and individuals who had been promised promotions.

Impact on Tesla’s FSD and Regulatory Landscape

• The layoffs could weaken NHTSA’s expertise in evaluating self-driving technologies just as Tesla accelerates deployment

• Critics say Doge’s actions may delay or compromise regulatory processes, ironically slowing Tesla’s own rollout

• Tesla needs NHTSA approval to operate non-standard vehicles, such as its upcoming pedal- and steering wheel-free cybercabs

Even some Tesla insiders reportedly view the cuts as counterproductive. A Tesla manager warned that scaling FSD or robotaxis without a supportive regulatory framework could severely hinder progress.

Safety Oversight and Consumer Complaints

• Since 2021, NHTSA has required mandatory 24-hour crash reporting for vehicles with driver-assist systems, a tool instrumental in launching major Tesla investigations

• The 2023 recall of 2 million Teslas over Autopilot safety relied heavily on this rule

• FT’s AI analysis of 10,000+ consumer complaints shows FSD and Autopilot continue to dominate Tesla-related safety concerns

Examples include:

• Phantom braking incidents, with one Model 3 suddenly halting in October 2024, nearly causing a collision

• A 2024 Cybertruck acceleration glitch, where FSD disengaged without warning, nearly leading to a head-on crash

Despite software updates, critical FSD errors persist, and some vehicle owners report Tesla service failed to inspect faulty systems after incidents.

Political Tensions and Agency Leadership

• Musk’s past clashes with regulators like the FAA and FCC are fueling speculation about motives behind the layoffs

• The Trump administration has nominated Jonathan Morrison, a former Apple executive, as NHTSA’s new chief — a move drawing scrutiny amid mounting concerns over regulatory capture

• Former NHTSA officials warn of “preventable deaths” if AV oversight is weakened in favor of rapid deployment

Tesla’s view is that their advanced sensor and video tech leads to more comprehensive incident reporting, which they argue unfairly inflates their safety issues in public perception.

Meanwhile, NHTSA continues to issue Tesla recalls, including one affecting 46,000 Cybertrucks due to faulty exterior panels.

TL;DR

Musk’s Doge-led federal layoffs have hit the NHTSA’s self-driving oversight team hard, raising alarms over regulatory independence just as Tesla pushes its FSD and robotaxi plans. With investigations mounting and serious safety complaints still prevalent, critics warn of conflicts of interest and potential public risk. While Tesla aims to innovate fast, weakened oversight could backfire, slowing approvals for its ambitious autonomous ambitions.