Unadorned Notes: April 13-16, 2025
Stocks Slide on Trade Fears; Retail Sales Surge Before Tariffs; China Faces Tariffs at 245%; UK Court Defines Woman Biologically; Trump Threatens Harvard’s Status
Economics, Finance, and Business
Powell Warns on Tariff Impact: Federal Reserve Chair Jerome Powell signaled that interest rates will remain unchanged as the central bank assesses the evolving economic effects of tariffs. Speaking at the Economic Club of Chicago, Powell highlighted slowing consumer spending, weaker growth projections, and inflation risks tied to recent import surges and trade policy. Powell rejected the idea of a “Fed put”, stressing the Fed’s dual mandate and cautioning against premature rate changes amid conflicting economic pressures. Analysts described his tone as hawkish, noting increased uncertainty around inflation, growth, and future monetary policy direction.1
Stocks Slide on Trade Fears: U.S. stock markets fell sharply on Wednesday, amid renewed concerns over escalating trade restrictions targeting China and their economic fallout. The S&P 500 dropped 2.2%, the Dow Jones Industrial Average declined 1.7%, and the Nasdaq Composite lost 3.1%, led by tech sector losses. Nvidia warned that new U.S. export controls on its H20 chips could reduce quarterly earnings by $5.5 billion, while AMD and ASML also flagged significant financial risks. Meanwhile, the World Trade Organization projected a potential 1.5% decline in global merchandise trade in 2025 if tariff tensions intensify.2
Retail Sales Surge Before Tariffs: U.S. retail sales rose 1.4% in March 2025, the largest monthly increase since January 2023, as consumers rushed to make purchases ahead of new tariffs, particularly on vehicles. Auto sales led the gains, with dealership receipts jumping 5.3%, while other categories such as dining, building materials, and sporting goods also saw notable increases. Despite this strength, economists warned the surge was likely temporary, driven by panic buying and offset by falling consumer confidence and mounting economic uncertainty. Manufacturing output benefited in March, but overall GDP growth for the first quarter is expected to be below 0.5%, weighed down by weak service spending and a front-loading of imports.3
Import Prices Dip Before Tariffs: U.S. import prices fell 0.1% in March 2025, marking the first monthly decline since September 2024, as lower fuel costs offset modest gains in other categories. The data, released by the Labor Department, suggest inflation was easing before President Donald Trump’s broad tariffs took effect in April 2025. Economists warn, however, that trade policy uncertainty, a weakening dollar, and supply chain disruptions may push up prices in the coming months. Core import prices, excluding fuel and food, rose 0.1% and are up 1.1% year-over-year, while prices for Chinese imports fell 0.2%.4
Automakers Struggle With Tariff Rules: The Trump administration’s 25% tariff on vehicle imports includes a deduction for U.S.-made content, but automakers are uncertain how to calculate it due to vague definitions and lack of federal guidance. Industry leaders say the ambiguity around what qualifies as “U.S. content” is delaying implementation and creating significant compliance challenges. The Commerce Department is developing a process for claiming the deduction, but no timeline has been provided, leaving manufacturers to pay the full tariff in the interim. Automakers such as Toyota, General Motors, and Stellantis could save billions annually if the rules were clarified, but misreporting content levels risks retroactive penalties. The tariff has disrupted supply chains and raised concerns about production shifts, with some companies already adjusting operations or pricing in response.5
U.S. Politics, Policies, and Geopolitics
China Faces Tariffs at 245%: The United States has announced tariffs of up to 245% on Chinese imports, combining existing Section 301 duties, a 125% reciprocal tariff, and a 20% fentanyl-related levy. This action follows President Donald Trump’s executive order initiating a national security investigation into reliance on imported critical minerals. China has condemned the move as unjust and vowed to protect its interests, while responding with new export controls on rare earth materials. The trade escalation coincides with Beijing appointing Li Chenggang, a proponent of free trade and former WTO ambassador, as its new chief trade negotiator. Despite heightened tensions, both nations have expressed conditional openness to future negotiations.6
QZ’s Comment: As I predicted last Friday, Trump will find domestic shock absorbers like tax cuts or pressuring the Fed, while The Art of the Deal suggests he will push harder on China given their “restraint” (capping tariffs at 125%), which he sees as weakness or a lack of leverage.
California Sues Trump Over Tariffs: California Governor Gavin Newsom and Attorney General Rob Bonta filed a lawsuit against President Donald Trump, challenging the legality of his use of the International Economic Emergency Powers Act to impose tariffs without congressional approval. The state argues that the tariffs have caused significant economic harm to California’s trade-dependent industries and exceed presidential authority under existing law. This marks the first legal challenge from a U.S. state against Trump’s tariff policies and the most direct confrontation from California since his return to office. The White House defended the tariffs as necessary to address persistent trade deficits, while California officials criticized the unpredictable and unilateral nature of their implementation. The lawsuit aligns with broader efforts by California to shield its economy and global partnerships from the impact of U.S. trade conflicts.7
White House Weighs Farm Aid: The White House announced it is considering relief measures for U.S. farmers affected by the ongoing trade conflict with China. Farmers are facing declining commodity prices and surplus inventories due to disrupted export markets. White House spokesperson Karoline Leavitt confirmed discussions between President Donald Trump and Agriculture Secretary Tom Vilsack on potential assistance. The administration has not yet detailed the scope or timeline of possible support.8
China Halts Boeing Deliveries: China has barred its airlines from accepting Boeing aircraft and related parts in response to heightened U.S. tariffs imposed by the Trump administration. The move affects all existing orders and adds further strain to Boeing’s access to a critical aviation market, which had been projected to account for 20% of global demand over the next two decades. Boeing’s shares fell sharply following the announcement, though later recovered some losses, while the company declined to comment publicly. China’s aerospace ambitions, centered on the domestically produced C919, remain limited in export reach, underscoring ongoing reliance on foreign aircraft manufacturers.9
Judge Moves on Trump Contempt: U.S. District Judge James Boasberg found probable cause to hold Trump administration officials in criminal contempt for defying an order halting the deportation of Venezuelan migrants. The dispute stems from the administration’s use of the Alien Enemies Act to remove alleged members of the Tren de Aragua gang, with deportations proceeding despite Boasberg’s oral directive. Although the Supreme Court later vacated his written order on jurisdictional grounds, Boasberg ruled the administration must still answer for its earlier actions. The Justice Department plans to appeal, arguing the judiciary is overstepping in matters of foreign policy. Separately, El Salvador’s government announced plans to expand a maximum-security prison now housing hundreds of deportees linked to U.S. immigration enforcement.10
Trump Administration Sues Maine: The Trump administration filed a lawsuit against the state of Maine, alleging its education policies violate Title IX by allowing transgender girls to compete in female sports. The legal action follows the state’s refusal to accept a federal settlement banning transgender athletes from girls’ teams, prompting threats to withhold funding. President Donald Trump has prioritized restricting transgender participation in sports and signed an executive order defining sex based on birth assignment for federal purposes. Maine Governor Janet Mills and Attorney General Aaron Frey defended the state’s stance, citing states’ rights and the absence of legal grounds in the federal complaint. The lawsuit is part of a broader national conflict over transgender issues and the interpretation of sex discrimination laws in education.11
UK Court Defines Woman Biologically: The United Kingdom’s Supreme Court ruled unanimously that the term “woman” in the Equality Act 2010 refers to biological sex, excluding transgender women from that legal definition. The decision, stemming from a Scottish case on gender representation on public boards, has broad implications for single-sex spaces and anti-discrimination protections. While the court affirmed that transgender individuals remain protected under the Act through the characteristic of gender reassignment, it rejected the notion that a gender recognition certificate equates to legal recognition as a woman for all purposes. The ruling was welcomed by gender-critical groups and the UK government as reinforcing clarity and legal consistency, but was criticized by transgender activists as a setback.12
Trump Threatens Harvard’s Status: President Donald Trump threatened to revoke Harvard University’s tax-exempt status, citing its refusal to comply with federal demands related to antisemitism and campus governance. The Trump administration has already frozen $2.26 billion in grants and warned of withholding an additional $9 billion unless the university makes structural and policy changes, including eliminating DEI programs and revising classroom content. Harvard President Alan Garber defended the university’s independence, calling the demands unconstitutional and in violation of academic freedom and the First Amendment. The administration’s task force on antisemitism issued a list of nine required actions, prompting lawsuits from Harvard faculty alleging political overreach. The standoff represents the most forceful resistance to the administration’s broader efforts to reshape policies at elite academic institutions.13