Weekly Brief #73
Reciprocal tariffs are in... Plus, xAI acquires X for $33 billion, Rogers extends NHL deal for $11 billion, Amazon places bid to buy TikTok, OpenAI valued at $300 billion, and more.
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Good morning investor 👋,
Welcome back to the 73rd Weekly Brief.
This week’s performance:
S&P 500: -4.98% | Nasdaq: -6.61% | Dow Jones: -4.02% | TSX: -3.05% | Gold: +0.92% | Bitcoin: -1.18% | The Quality Fund: -10.74%.
You’ve read the subtitle: More tariffs; time to talk.
Let’s get into it. (10 min read)
In this issue:
🌎 American reciprocal tariffs are in
📱 Amazon places bid to buy TikTok
🇻🇳 Vietnam to host China, EU leaders
FEATURED STORY
🌎 American reciprocal tariffs are in
Now marking the seventh week as the main story of Weekly Brief, we have (dun dun dun) more tariff news. Please, please, hold the applause. I can understand how exciting this news has been and how original the stories have been in these past month(s).
Don’t worry, this story will be quick so you can go straight back to what you were doing before you started reading. Five minutes or less, I promise.
Let’s break these tariffs down, shall we?
Trump’s reciprocal tariffs, explained
“Liberation day.” “The declaration of economic independence of the United States.” Two phrases that mark the date April 2, 2025—the start of the fall of our portfolios, and the widespread economic weakening of America’s closest allies, with the strengthening of China and its allies as replacements1; all because of a U.S. President with, I don’t know, absolutely terrible economic advisors?
As we’ve expected for most of the year up to this point, President Trump announced his reciprocal tariff policy this week, targeting all countries that have ripped America off (his words not mine), pie slapping each nation with a tariff rate that mimics half of what they ‘tariff’ the U.S.
The White House released a full list of all the nations and the U.S.’s reciprocal rate on social media shortly after the announcement (here that is in alphabetical order), which showed countries like China with a percentage tariff on the U.S of 67%, and Europe with a tariff of 39%, (as seen in the photo above—which defines the percentage as “Tariffs Charged to the U.S.A. Including Currency Manipulation and Trade Barriers.”) These nations will be hit with half of what these “tariff” rates opposed to the U.S are. For China and the EU, for example, the tariff from the U.S will be 34% and 20% respectively, and so forth down the list.
All reciprocal rates will become effective on April 9, 2025. (This includes a baseline 10% tariff for all nations which will go into effect on April 5, 2025.)
Important side note: Canada and Mexico were not included in this new list of tariffs. The same 25% tariff on goods is in effect from the last announcement by Trump for these two countries, but all items under USMCA are excepted, which is most exports for these two. As said by the White House (paraphrased): “For Canada and Mexico, USMCA compliant goods will continue to see a 0% tariff. Non-USMCA compliant goods will see a 25% tariff, and non-USMCA compliant energy and potash will receive a 10% tariff.” (Canada has since launched 25% tariffs on all vehicles imported from the U.S. not compliant with USMCA in retaliation.)
We all know the effects of what tariffs do by now, so I’ll skip over that. But what’s uniquely interesting in this announcement is the way the tariffs on the nations were calculated. They were not calculated by taking into account the tariff rates these countries actually impose, but by dividing the U.S. trade deficit of the country by the total U.S. imports from that country.
This does not equal tariff rates.
If we do the calculation for China (which is in a trade deficit with America), the answer comes out to 67.3% (photo below). The tariff rate the U.S. government says China imposes? Well, 67%. Identical. It’s insane how the U.S. is calculating these rates. It’s completely unfair (dare I say) for that matter, and let me explain why:
Trump has made it a massive issue in these tariff wars that trade deficits are a crucial aspect of a nation “ripping America off.” But all this means is America buys more than it sells to another country, which is not a bad thing in and of itself. The problem isn’t a problem. And even if it were, there would be no way to fix it. Because guess what? The United States is the largest buyer of goods in the world! Both in terms of trade, and household spending.
The U.S. accounts for nearly 30% of global consumer spending alone. The next biggest is the European Union (which is a combined 27 countries) that accounts for a little over 15%.
Americans buy a lot of stuff, and other countries don’t buy as much. Hence, large trade deficits with many of the U.S.’s biggest trade partners such as the EU, Canada, Mexico, and China—these particular countries in question just can’t buy as much stuff as America does from them due to the sheer amount of buying power from Americans. So, with the U.S. government using trade imbalances as a way to place tariff rates, it is not in any way fair or equitable.
So we now have a few problems with all of this:
These are unjustified global tariffs that will cause economic chaos, and
These are unjustified tariffs that are not calculated based on responding to actual tariff rates, but trade imbalances (other than the baseline 10% tariff).
In no way do Vietnam, Thailand, and Cambodia have 90%, 97%, and 61% tariffs on America, even including ‘currency manipulation and trade barriers.’ It’s not even remotely close. The same applies to the other nations.
Look, we know all this does is hurt American consumers the hardest. That’s without retaliation (which is coming). U.S. consumers will be buying fewer things, and at a much higher price. End of story.
Markets haven’t responded kindly to this announcement, and for good reason—though not nearly as bad as expected. But hey, most uncertainty is temporary, and so are these tariffs in my opinion. Time will tell!
Stay rational, stay invested, and put on your seatbelt for a bumpy ride.
See you next week… probably for more tariff news.
FINANCE
a. 🤝 xAI acquires X for $33 billion
Elon Musk announced on X (Twitter) this week that his AI company, xAI, has acquired Twitter (which he also owns) in an all-stock deal valuing xAI at $80 billion and Twitter at $33 billion. The merger is expected to integrate xAI’s AI technology with X’s vast data.
xAI has already been operating on Twitter through Grok, and most of the integration between the two companies had been occurring even before the merger. But this deal simply overlaps between the two companies, which are now together under one name: xAI Holdings Corp. Aside from simplicity, this move is also a way to streamline management and attract better investment.
Related articles:
b. 🏒 Rogers extends NHL deal for $11 billion
Rogers has secured the rights to broadcast NHL hockey in Canada for the second time, in an $11-billion deal that will last 12 years, until the 2037-38 season. The new agreement costs more than double the previous deal—which was worth $5.2 billion—and grants Rogers national broadcasting rights on TV, streaming, and digital platforms for the regular season, playoff games, and the Stanley Cup Final in all languages and regions.
Sports broadcasting is great leverage for Rogers. We see this with the sublicensing agreements Rogers has been making with other companies, like Amazon’s “Monday Night Hockey” Prime deal. I wouldn’t be suprised if more of these deals are announced throughout the coming years.
BUSINESS
c. 📱 Amazon places bid to buy TikTok
Amazon has reportedly made a bid to acquire TikTok as it faces a potential U.S. ban where it is required to sell its American operations (the deadline was extended by Trump so it’s not clear when they need to sell). If Amazon is serious and goes through with it, it would massively improve their online retail presence with younger consumers, and it would be a huge value for its ad platform.
The data for training AI, the users and integration to capture a new consumer audience, the algorithm to improve its customer experience, and advertising analytics to help with targeting—these are just some of the benefits from a potential buyout. As of the latest quarter, Amazon has access to $172 billion in combined liquid cash and annual free cash flow. TikTok is worth about $100–$150 billion. Not including financing, Amazon easily has the best financial position out of the bids to buy TikTok.
Related articles:
d. 💰 OpenAI valued at $300 billion
OpenAI has again raised a record-breaking $40 billion in new funding, valuing the company at $300 billion. The round, led by SoftBank, Microsoft, and other investors, marks the largest private funding round in tech history. History. Literal history. For $3 billion in annual revenue. That’s a worse valuation than Palantir (which is saying something).
The capital will go towards OpenAI’s more ambitious projects, including expanding AI research, scaling compute infrastructure, etc. A large portion of this investment, though—$18 billion—is solely designated for the Stargate project, the AI infrastructure partnership with SoftBank and Oracle (below).
Related articles:
POLITICS
e. 🇻🇳 Vietnam to host China, EU leaders
President Xi Jinping of China and European Union leaders are preparing for diplomatic visits to Vietnam amid the increasing trade tensions with the U.S. after the ‘Liberation Day’ tariffs we talked about above. Xi is set to meet with Vietnamese ministers in Hanoi on April 14, 2025, as part of a broader Southeast Asia tour that includes stops in Cambodia and Malaysia.
Key discussions for Xi will include the development of railway links between northern Vietnam and China and the potential approval and acquisition of China’s COMAC planes by Vietnamese airlines. Next, Spain’s Prime Minister Pedro Sánchez, EU Trade Commissioner Maroš Šefčovič, French President Emmanuel Macron, and European Commission President Ursula von der Leyen are also scheduled to visit. The discussion here? Vietnam’s strategic importance in global trade amidst rising U.S. trade restrictions.
Related articles:
📚 Book of the Week
For every book purchased using the links below, 100% of affiliate commissions are donated to charity. (Amount donated so far: $36.42.)
My full bookshelf: Here.
The Four - Scott Galloway
Book Description:
Amazon, Apple, Facebook, and Google are the four most influential companies on the planet. Just about everyone thinks they know how they got there. Just about everyone is wrong. For all that’s been written about the Four over the last two decades, no one has captured their power and staggering success as insightfully as Scott Galloway. Instead of buying the myths these companies broadcast, Galloway asks fundamental questions.
How did the Four infiltrate our lives so completely that they’re almost impossible to avoid (or boycott)? Why does the stock market forgive them for sins that would destroy other firms? And as they race to become the world’s first trillion-dollar company, can anyone challenge them?
In the same irreverent style that has made him one of the world’s most celebrated business professors, Galloway deconstructs the strategies of the Four that lurk beneath their shiny veneers. He shows how they manipulate the fundamental emotional needs that have driven us since our ancestors lived in caves, at a speed and scope others can’t match. And he reveals how you can apply the lessons of their ascent to your own business or career. Whether you want to compete with them, do business with them, or simply live in the world they dominate, you need to understand the Four.
Thank you for reading, partner. If you enjoyed today’s issue, feel free to share it with friends and family. I’ve placed a button below for you to do so (right underneath the paid membership line (see what I did there).
All the best,
Jacob
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This is expected to happen eventually, regardless of the tariffs. China, India, and other Asian and African nations, projected over the next 80+ years, will have surpassed the total GDP of many Western nations. China and India combined will produce nearly 3x the GDP output as America. (These are only projections, so they do have a high likelihood of being completely off. But I thought it was interesting to note.) (Source)