Articles

Goldman Sachs sought out academic studies on how tariffs impact:

• The broader statistical evidence points to negative net employment effects.
• While the range of estimates is wide, academic studies generally find that a 1Opp increase in tariff rates raises employment in protected industries by 0.2-0.4% but that each 1pp increase in tariff-driven costs lowers employment by 0.3-0.6%.
• Scaling these estimates to the US economy imply a boost of just under 100k to manufacturing employment from tariff protection but a roughly 500k drag on downstream employment from input cost pressures.

Bolding is mine. Manufacturing jobs added, around +100K, but the wider impact is negative, 500K of job losses.

This article was written by Eamonn Sheridan at www.forexlive.com.

UBS has cut its China GDP growth forecast to 3.4% for 2025

• Downgraded on assuming current tariff hikes will remain and China rolls out additional stimulus

UBS say the forecast comes with high margins of error

more to come

This article was written by Eamonn Sheridan at www.forexlive.com.

Trump tariffs unlikely to bring manufacturing back to U.S., CNBC survey shows.

Efforts to revive U.S. manufacturing through tariffs may backfire, with most companies saying the high cost of reshoring would keep production overseas, according to a new CNBC Supply Chain survey.

Nearly half of the firms surveyed said bringing manufacturing back to the U.S. would double their costs. As a result, instead of reshoring, companies are more likely to seek out new low-tariff regions to base operations, potentially shifting global supply chains rather than reversing them.

Among companies that would consider moving production to the U.S., 81% said they would rely primarily on automation rather than hiring local workers—undermining hopes of a large-scale industrial jobs revival.

The broader economic outlook painted by the survey is cautious. A majority of respondents (61%) expect consumer prices to rise and demand to soften in the near term. Meanwhile, 63% said a recession is now their base case scenario as tariff uncertainty weighs on confidence.

The findings highlight the growing disconnect between political pressure to reshore manufacturing and the financial realities businesses face in a globalised economy.

Link here to the CNBC piece for more.

This article was written by Eamonn Sheridan at www.forexlive.com.

Police in Harbin, northeastern China, announced on Tuesday that they are seeking three U.S. National Security Agency operatives suspected of conducting cyberattacks on the city during February’s Asian Winter Games.

According to the Harbin public security bureau, the individuals were linked to the NSA’s Office of Tailored Access Operations, which allegedly targeted critical IT infrastructure for the event, including systems handling registration, travel logistics, and competition entries.

Chinese investigators said the attacks aimed to access sensitive personal data and were disguised through front companies that procured global IP addresses and rented overseas servers to mask the source.

Authorities say the investigation is ongoing.

Info comes via Xinhua, link for more.

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Indicative of the ongoing deterioration in IUS-China relations

This article was written by Eamonn Sheridan at www.forexlive.com.

Via Bloomberg:

• Morgan Stanley and Citigroup Inc. slashed their estimates for 2025 earnings
• joining a wave of Wall Street banks warning that tariffs will curb profit growth

Citi’s lowered 2025 prediction for the S&P 500 to 5,800 from 6,500

• predicated on earnings of $255 a share for companies in the index, down from a previous $270 projection

Morgan Stanley cut 2025 earnings-per-share forecast to $257 from $271.

This article was written by Eamonn Sheridan at www.forexlive.com.

Japan finance minister Kato

• Planning to attend spring meetings of IMF, World Bank in Washington

• Forex rates should be determined by markets

• Excessive volatility would negatively affect economic and financial stability
• Have agreed with Bessent to closely communicate on forex
• Closely monitoring financial markets as they have been unstable recently

Kato gets a bit of extra bang for buck from his comments if he manages to conjure up some sort of cooperation with Bessent.

This article was written by Eamonn Sheridan at www.forexlive.com.

British consumer spending showed modest growth in March. There do seem to be signs of strain beginning to emerge beneath the surface.

British Retail Consortium (BRC) data:

• total retail sales rose 1.1% year-on-year in March, matching February’s pace
• like-for-like sales also held steady at 0.9%

BRC chief executive Helen Dickinson highlighted the resilience of both food and non-food categories, suggesting a quiet strengthening in consumer appetite despite geopolitical pressures.

In contrast, Barclays’ broader measure of UK consumer spending — which includes debit and credit card transactions — painted a more subdued picture:

• spending rose just 0.5% year-on-year, down from 1.0% in February and falling short of inflation
• supermarket sales dropped 2.6%, although warmer weather did support spending at garden centres and specialty food retailers

Barclays chief UK economist Jack Meaning warned of a possible softening in consumer activity ahead.

• “We expect spending to remain muted through mid-2025, before gradually recovering into 2026 as interest rate cuts and stabilising conditions take hold”

This article was written by Eamonn Sheridan at www.forexlive.com.

The New Zealand Food Price Index (FPI) is a measure of the changes in the average price of food items sold in New Zealand.

For the y/y, +3.5%

• prior +2.4%

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The New Zealand Food Price Index (FPI) is a measure of the changes in the average price of food items sold in New Zealand.

• calculated and published monthly by Statistics New Zealand
• the FPI tracks the prices of a basket of food items that represent the typical spending patterns of New Zealand households
• the FPI is an important indicator of inflation in New Zealand, as food prices account for a significant portion of household expenditure

This article was written by Eamonn Sheridan at www.forexlive.com.

Adam has the info on demand destruction posted on Monday here, ICYMI:

• OPEC lowers its demand growth forecast this year

I posted a while back on the despair in the US fossil fuel sector:

• administration’s chaos is a disaster for the commodity markets. “Drill, baby, drill” is nothing short of a myth and populist rallying cry.
• Oil producers starting to hold back capital – “the opposite of what the president wants”

This article was written by Eamonn Sheridan at www.forexlive.com.

Reserve Bank of New Zealand chief economist Conway:

• higher tariffs and uncertainty about global trade policy mean economic activity globally and in New Zealand will most likely be weaker than expected
• The likely impacts on inflation in New Zealand are more ambiguous, but the balance of risks has shifted to the downside

This article was written by Eamonn Sheridan at www.forexlive.com.

Goldman Sachs CEO David Solomon spoke to analysts on Monday (US time) after releasing first quarter results:

• prospect of a recession “has increased”
• Solomon cited:
• the uncertainties of a trade war
• firms unsure about how to plan for the future
• “we are entering the second quarter with a markedly different operating environment than earlier this year”
• economic growth had been “slowing down”
• implementation of new trade policies from Trump “reset the prospect of forward growth pretty significantly all over the world”

Soloman pointed to clients of GS:

• “concerned by the significant near-term and longer-term uncertainty that has constrained their ability to make important decisions”
• uncertainty about the path forward amounted to “material risk” for the US and global economy
• “The prospect of a recession has increased with growing indications that economic activity is slowing down around the world”

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Most of us here are clicking to buy and sell financial instruments, on varying time frames from scalper to longer-term. Carry on! Don’t dismiss the risks to main street though, decisions to build new factories, open outlets and what have you, are MUCH more difficult now in this environment.

This article was written by Eamonn Sheridan at www.forexlive.com.

• The US has begun its investigation ahead of pharmaceutical tariffs
• Major US indices are closing the day with gains to start the trading week
• Crude oil futures settled $61.53
• Six reasons why the US dollar is struggling (and will continue to)
• Fed Waller: New tariff policy one of the biggest shocks to affect US economy in decades
• Pres. Trump: Will do tariffs on imported pharmaceuticals
• Copper snaps back higher after sharp fall last week stalled at a swing area
• NY Fed March one-year inflation expectations rise to 3.6% from 3.1%
• China’s Xi calls on China and Vietnam to jointly oppose unilateral bullying
• US port import volumes set to plunge as tariffs bite
• Canada February wholesale trade +0.3% vs +0.4% expected
• The USD is lower vs the major currencies to start the new trading week
• White House’s Hassett: We’re making enormous progress on tariff talks with EU
• ForexLive European FX news wrap: Dollar struggles continue as markets stay on edge

It was a relatively quiet day in the markets with only Canadian wholesale trade data on the economic calendar. However, tariffs remained front and center in market discussions.

Last week, the Trump administration raised tariffs on Chinese goods to 145%, prompting swift retaliation from Beijing. At the same time, the U.S. delayed tariffs on several other countries by 90 days—though earlier tariffs remain in effect. Then, in a late-Friday development, the administration said electronics would be excluded from the broader “reciprocal tariffs,” offering a boost to tech names like Apple.

But that relief was short-lived. By Sunday, Commerce Secretary Lutnick clarified that electronics would still fall under upcoming semiconductor-specific tariffs set to roll out in a month or two. President Trump added further confusion by stating there were no “exceptions” at all—only that the goods were now classified under a different tariff bucket subject to a 20% levy, aimed at punishing China for its role in fentanyl trafficking.

Despite the whiplash of announcements, markets appear to be growing numb to the erratic tariff headlines—perhaps invoking the old adage: “Fool me seven times, shame on you; fool me eight times, shame on me.” Stocks opened higher and held onto gains, though the session saw its fair share of intraday swings.

What is the latest Fed interpretation of the tariffs? Fed Governor Chris Waller weighed in by describing the new tariff policy as one of the most significant economic shocks the U.S. has faced in decades. He noted that March’s 12-month PCE inflation is likely to come in at 2.3%, with core PCE around 2.7%. In the first quarter, the economy grew modestly, the labor market remained solid, and inflation, while still too high, showed signs of slow improvement. Waller emphasized that monetary policy is currently restricting economic activity in a meaningful way and expressed hope that underlying inflation will continue to moderate. He added that inflation expectations remain anchored and projected inflation to return to more moderate levels by 2026.

Waller warned that partial suspensions of tariffs are creating additional uncertainty, complicating the timing of any policy shifts. Given this backdrop, he said the outlook is highly uncertain and called for flexibility in monetary policy. He outlined various tariff scenarios: under a smaller tariff scenario, the Fed could afford to be more patient, potentially cutting rates in the second half of the year. However, if tariffs average 10%, inflation could peak around 3%, while a 25% average tariff could push inflation as high as 5%. In that case, the drag on output and employment could be long-lasting, with unemployment potentially rising to 5%. Still, Waller believes the inflationary impact of higher tariffs would be temporary.

Looking at the closing levels for the market shows

Market Close Snapshot

• S&P 500: +0.79%

• NASDAQ: +0.64%

• Dow: Higher as well by 0.78%

Despite index gains, mega-cap tech lagged:

• Amazon: -1.48%

• Broadcom: -1.97%

• Nvidia: -0.20%

• Meta: -2.20%

• Microsoft: -0.16%

The advance was not broadly supported, reflecting caution under the surface.

Bond Market

U.S. yields moved lower following last week’s dramatic rise (10-year yield jumped 50 bps—marking a multi-decade record). Today’s closing snapshot:

• 2-year yield: 3.855% (-10.1 bps)

• 5-year yield: 4.020% (-13.5 bps)

• 10-year yield: 4.35% (-10.07 bps)

• 30-year yield: 4.15% (-6.0 bps)

FX Market

The U.S. dollar ended the day mixed versus major currencies:

• EUR: +0.06%

• JPY: -0.31%

• GBP: -0.80%

• CHF: -0.07%

• CAD: +0.09%

• AUD: -0.64%

• NZD: -0.89%

Commodities & Crypto

• Crude oil: +$0.10 at $61.55

• Silver: +$0.005 at $32.33

• Gold: -$25 (-0.78%) to $3,211.44

• Bitcoin: +$1,045 to $84,756

This article was written by Greg Michalowski at www.forexlive.com.