Trump will retaliate to VAT. This is potentially catastrophic for EU exporters
*TRUMP: VAT TAX WILL BE VIEWED AS A TARIFF *TRUMP: WILL CONSIDER COUNTRIES THAT USE VAT *TRUMP: PROVISIONS WILL BE MADE FOR NON-MONETARY TARIFFS The VAT response is notable because the tariff differential for the EU, for example, with and without VAT is massive and rises from just 2% (without VAT) to a whopping 18% with! And judging by Trump's comments, which said that the EU is "absolutely brutal" on trade, the inclusion of VAT is precisely meant to punish Europe. The chart below shows the amount that each country's VAT exceeds the US sales tax. And so, if indeed Trump imposes a reciprocal tariff policy also accounted for foreign VATs, it could add another 10% to the average US effective tariff rate. That could be catastrophic to exporters, and Deutsche Bank's George Saravelos agrees writing that if reciprocal tariffs are applied on a VAT basis, "European countries would be much higher on the list of impacted countries given high consumption taxes." Like Goldman, the DB strategist notes that the overall US tariff rate would increase by more than 10% Source: zerohedge
Goldman's basket of Ukraine reconstruction beneficiaries has dramatically outperformed defence stocks since Trump's election.
It's composed of industrials/infrastructure stocks. Source: www.zerohedge.com, Goldman
A nice one by Robin Brooks on X: There's 3 drivers of Trump tariffs:
(i) border security (Canada, Colombia, Mexico); (ii) geopolitics (steel & aluminum); (iii) fairness (reciprocal tariffs & currency manipulation). China is the only country to be tariffed - and will get tariffed more - as it hits all of these...
Canada just can't quite make it out of the crosshairs of the new US administration.
Canada is biggest foreign supplier of steel (lhs, blue) - just edging out the EU (lhs, orange) - and by far the biggest foreign supplier of aluminum (rhs, blue). China is NOT a big supplier... Source: Robin Brooks
Western Biotech’s “DeepSeek Moment” – China’s Rise in Pharma Innovation.
A WSJ artivcle >>> https://lnkd.in/eSua5PBt The WSJ article opens with how Summit Therapeutics’ cancer drug, licensed from China’s Akeso, outperformed Merck’s $30B Keytruda. But apparently this isn't all that special — Chinese companies now account for 31% of major pharma licensing deals, up from just 5% in 2020. Why Chinese Biotech Is Winning ✅ Lower costs & streamlined clinical trials ✅ Lean operations with minimal bureaucracy ✅ Better drug candidates at lower prices ✅ Faster R&D with Wuxi and other CDMOs driving efficiency Source: Rui Ma 马睿 on X, WSJ
*TRUMP: WILL ANNOUNCE 25% TARIFFS ON STEEL, ALUMINUM MONDAY The largest exporter of steel & aluminum to the US? canada followed by mexico
What happened to the 30 day moratorium on tariffs from Canada & Mexico? Source: Vic_Turbendian
Trade Policy Uncertainty Index hits 2nd highest level in AT LEAST the last 25 years
source : barchart
The chart below - courtesy of LSEG - explains why canada and mexico both "kiss the ring" yesterday...
Source: LSEG Datastream
