The unlikely pig-shaped victim of US tariffs
Ships from Panama and weapons from Finland.
Hello,
I tend to steer clear of the week’s headlines because you get enough of all that elsewhere. It feels more relevant to write about the skyrocketing price of turnips or whatever.
It would be a bit odd, however, not to mention all the tariff malarky that has been going on this week. Every business, aside from perhaps Mrs Goggins’ jam stall at the Sunday market, is likely to be affected. Even then, I’ll bet her sugar isn’t coming from down the road. Maybe sugar prices will increase as production becomes more expensive, maybe they’ll plummet as producers like Brazil look to divert stock from the US. Who knows?
There are two main scenarios we are looking at:
This is all just a big negotiating tactic to reduce America’s trade surplus and there will be a rash of deals with different countries to try and reduce or get rid of trade imbalances. On paper, this is the administration's position, as they’ve said the tariffs are reciprocal (not to tariffs but to trade deficits) and will be dropped if a deal is agreed. Companies with manufacturing bases in Vietnam have already seen their share prices rebound after “a really great, maybe the best call ever” between Trump and Vietnam’s leader.
The tariffs are much more ideological and not simply a negotiating tactic. Trump has been saying since the 80s that he thinks goods bought in America should be made in America. Tariffs are, therefore his way to try and force manufacturers into doing this. He and many in the administration also want to recreate the era when there was no income tax and money was generated for the government solely through tariffs.
For any number of reasons, 2) cannot work. Companies can’t just up sticks from overseas manufacturing bases and move them to America, and even if they could, it wouldn’t suddenly result in amazing wages in the US; there would just be lots of automation or worse, no competition. Even if the strategy were stuck to, it would cause so many problems for Americans in the medium term that it is not politically feasible.
So it looks like we can expect a parade of national leaders into Mar-a-Lago over the next few weeks to bend the knee and do a deal. The President of Madagascar will have to pledge to buy more bourbon and pickups in order to sell vanilla into the US market at a reasonable price, and so forth. Time the market right on Madagascan vanilla and you are absolutely laughing.
Buy and sell,
Hugo
Trader-of-stuff
The Business of Stuff
The Stuff
Percy Pigs are a potential early victim of the trade war 🐽 - they only recently went on sale in the US and were being hailed as the best British import since The Beatles, but they may be subject to steep tariffs as they are made under license in Germany. Thirty-six bags are sold in the UK every minute and were described by the M&S chairman as “our gift to America”.
Samsung turns to China to sell more chips 🍪 - despite investing tens of billions in American manufacturing facilities, they’ve struggled to secure major customers. Exports to China have jumped 54% through deals with companies like Baidu. China is also scrambling to get its hands on advanced chips in the face of restrictive export controls put in place by the US.
Russia hasn’t done anything about AI 🚶 - Putin reportedly doesn’t use a computer and forced his staff to use typewriters until about ten years ago. This is a big problem for them. Western defence companies are ploughing billions into advanced technology, so it stands to reason that in ten years, they will be completely ill-equipped to fight a modern war. Unless they team up with China.
Finland has loads of defence technology startups 🏹 - mostly known for saunas and chilled Nordic vibes, the country with a population of just five million has 368 defence technology companies. The Ukraine war and their entrance into NATO have supercharged these companies which are building everything from advanced headsets to surveillance airships. Stick that up your sauna.
Musical biopics are out of control 🎶 - between 1990 and 1994, there were just 16 biopics about musicians, but that has risen to 68 between 2020 and 2024. A lot of this is down to back catalogues being sold off to private equity, who have seen the marketing value in making a film about the musician. There is obviously also just more history now, that’s the thing about time.
YouTube set to be the world’s largest media business 📽️ - currently the top spot is held by Disney, but the Google subsidiary is forecast to take over with revenues of $54.2 billion in 2024. Their success is at least in part due to the breadth of the platform, which has everything from movies to podcasts to amusing videos of people falling over.
Deel spy complies with authorities 🥸 - despite being offered an all expenses paid one-way ticket to Dubai by the leadership of Deel, Keith O’Brien has decided to cut his losses and comply with the investigation. The espionage was orchestrated by the CEO of Deel who paid Keith $6000 a month to gather corporate intel through various Slack channels.
Per capita spending on music has increased over the last decade 📈 - whilst streaming has been fairly disastrous for artists, it has meant that people are actually spending more money on music. It is far less hassle to spend a few quid a month on a subscription than copying your mate’s CDs or getting them off some dodgy illegal website that will give you a virus. Shame the money isn’t reaching the musicians!
Panama has the largest ship registry in the world 🇵🇦 - there are more ships with a Panama flag than any other country. Ship flags have very little to do with who actually owns them and more to do with the tax and legal regime of the country to which they are registered. Panama is, however cracking down as shockingly their favourable regime has resulted in some dodgy customers.
Alix Partners gets in Goldman to sell a stake 🥩 - the sale comes amidst a wave of deals involving professional services firms as demand continues to increase amongst private equity firms. Public Sector Investment Pension Investment Board is understood to be selling its share in the company which is estimated to be valued at between $5 billion and $8 billion.
Quote of the week
"Earlier on today, apparently, a woman rang the BBC and said she heard there was a hurricane on the way. Well, if you're watching, don't worry, there isn't!" - Michael Fish