Unadorned Notes: March 2-5, 2025
Trump Defends Agenda in Congress; Trump’s Crypto Reserve Plan Debated; U.S. Economy Faces Trade War; BlackRock Acquires Panama Canal Ports; European Defense Stocks Hit Record
U.S. Politics, Policies, and Geopolitics
Trump Defends Agenda in Congress: President Donald Trump delivered the longest joint address to Congress in history, asserting a strong mandate and touting early policy actions, including tariffs and government spending cuts. The speech was frequently interrupted by protests, with Rep. Al Green removed from the chamber and Democratic lawmakers displaying signs critical of Trump’s claims. Trump praised Elon Musk and the new Department of Government Efficiency (DOGE), emphasizing its role in reducing waste and combating inflation. On foreign policy, he reiterated plans to “reclaim” the Panama Canal, defended tariffs on Canada, China, and Mexico, and suggested Russia was signaling readiness for peace in Ukraine. Trump concluded by reaffirming his commitment to expanding the Abraham Accords and securing the release of hostages in Gaza.1
Automakers Granted Temporary Tariff Relief: The White House announced a one-month exemption from tariffs on vehicles imported from Canada and Mexico that comply with the U.S.-Mexico-Canada Agreement (USMCA), following requests from major automakers. The exemption applies to all qualifying vehicles under USMCA, not just those from Detroit-based manufacturers. President Donald Trump imposed 25% tariffs on Canada and Mexico and an additional 10% on China, prompting retaliatory measures from both countries. Automakers warned that tariffs could add $3,000 to $10,000 to vehicle prices and disrupt supply chains. White House press secretary Karoline Leavitt indicated that while Trump may consider further exemptions, the broader reciprocal tariffs set for April 2 would proceed without exceptions.2
Trump’s Crypto Reserve Plan Debated: President Donald Trump proposed a strategic cryptocurrency reserve, including XRP, Solana, and Cardano, alongside Bitcoin and Ethereum, sparking mixed reactions within the industry. Critics argue that only Bitcoin meets the standard for a reserve asset, while others question the necessity of a government-held crypto reserve. White House AI and crypto czar David Sacks defended the plan, denying it involved taxation or government spending. Concerns have emerged over potential conflicts of interest, with industry figures like Charles Hoskinson supporting the inclusion of XRP after Ripple’s past donations to Trump. The administration will host a cryptocurrency summit to clarify the plan, with congressional approval potentially influencing industry sentiment.3
U.S.-Ukraine Minerals Deal Advances: President Donald Trump announced that Ukrainian President Volodymyr Zelenskyy expressed readiness to sign a minerals deal with the United States and engage in peace talks with Russia. The deal, which grants the U.S. access to Ukrainian natural resource revenues, does not include explicit security guarantees but aims to strengthen economic ties. Zelenskyy called his contentious White House meeting with Trump “regrettable” after he was criticized for being ungrateful. U.S. officials have urged Zelenskyy to publicly express appreciation for U.S. support to facilitate the agreement. France and Britain have offered to deploy peacekeeping troops to Ukraine if a ceasefire is reached, though Moscow has rejected the proposal.4
Europe Strengthens Ukraine as U.S. Shifts: Following the U.S. decision to suspend military aid to Ukraine, European leaders convened an emergency summit to reinforce their support and strategize on strengthening European defense. The European Union is exploring a significant increase in defense spending, potentially unlocking over $1 trillion through joint borrowing, budget reallocations, and arms industry expansion. While President Donald Trump seeks to pressure Ukraine into negotiations, European leaders emphasize “peace through strength”, aiming to bolster Ukraine’s military and deter future Russian aggression. NATO and EU officials stress the urgency of ramping up domestic defense production to reduce reliance on external suppliers and sustain long-term military support. This shift marks a pivotal moment in European security, with leaders positioning the continent as a primary force in countering Russian aggression and defending the global order.5
QZ’s Comment: Sounds promising for Europe, but I’m a little skeptical—many EU nations have prioritized welfare over security for decades (with exceptions like Poland and the Baltics). Free riders are hard to push off once they’ve relied on U.S. protection for so long. The $1 trillion defense push sounds bold, but real change depends on whether major economies like Germany and France actually follow through.
Trump Warns Hamas to Free Hostages: President Donald Trump issued a “last warning” to Hamas, demanding the immediate release of all hostages in Gaza and threatening severe consequences. His statement followed the White House’s confirmation that the U.S. was engaging in direct negotiations with Hamas, despite its designation as a terrorist organization. Israeli officials expressed support for Trump’s pressure on Hamas, while Hamas warned that his comments could undermine the ceasefire agreement. Trump also addressed Gaza’s residents, stating that their future depended on releasing the hostages and hinting at potential redevelopment plans for the region. The ceasefire remains fragile, with Israel blocking humanitarian aid after Hamas rejected a new proposal to extend the truce.6
Economics, Finance, and Business
U.S. Economy Faces Trade War: President Donald Trump imposed tariffs of 25% on most imports from Canada and Mexico and 10% on Chinese goods, prompting retaliatory measures and raising concerns over economic stability. Economists warn that the tariffs could slow growth, increase inflation, and reduce hiring, with some analysts projecting a U.S. recession if the policies remain in place. Markets have reacted negatively, with the S&P 500 declining from its recent high and Treasury yields falling to October 2024 lows. Retailers such as Target and Walmart anticipate higher consumer prices, while small businesses may scale back investment and hiring due to rising costs. The Federal Reserve faces a dilemma as it weighs inflation risks against potential economic downturns, with some analysts drawing parallels to past periods of stagflation.7
U.S. Services Expand Amid Tariffs: The U.S. services sector grew in February 2025, with the Institute for Supply Management’s PMI rising to 53.5 from 52.8, signaling continued economic expansion. However, rising input costs and supply chain disruptions, exacerbated by new tariffs on imports from Canada, Mexico, and China, have fueled inflation concerns. The Atlanta Federal Reserve now projects a 2.8% annualized GDP contraction in the first quarter, citing a widening trade deficit and slowing consumer spending. Economists estimate that the tariffs could raise household costs by nearly $1,000 annually, with retailers like Target planning immediate price hikes on goods such as imported avocados.8
TSMC Announces $100B U.S. Expansion: Taiwan Semiconductor Manufacturing Company (TSMC) will invest $100 billion to build five new facilities in the United States, including three chip plants, two packaging facilities, and a research center. The expansion aligns with President Donald Trump’s push for domestic semiconductor production, following previous investments in Arizona and support from the CHIPS Act. While Taiwan’s government will review the plan, officials stated that the most advanced manufacturing processes will remain in Taiwan. TSMC’s move strengthens U.S. supply chains, benefits major American tech firms, and positions the company as a key player in national security efforts. The announcement comes amid broader efforts to attract semiconductor investment, with companies like Apple and SoftBank also pledging significant U.S. spending.9
BlackRock Acquires Panama Canal Ports: BlackRock and a consortium of investors agreed to purchase the ports of Balboa and Cristobal, along with stakes in 43 other global ports, from Hong Kong-based CK Hutchison for $22.8 billion. The deal follows pressure from President Donald Trump, who has criticized Chinese influence over Panama Canal operations and expressed a desire to reassert U.S. control. The Panama Canal, responsible for 4% of global maritime trade and 40% of U.S. container traffic, remains under Panamanian administration despite Trump’s concerns. The White House has not commented on the acquisition, but it may ease U.S. worries over Chinese involvement. Secretary of State Marco Rubio also advocated for U.S. vessels to traverse the canal without fees, citing America’s defense obligations to the waterway.10
European Defense Stocks Hit Record: European defense stocks surged after an emergency summit in London, where leaders discussed increased military spending amid uncertainty over U.S. support. The European aerospace and defense sector index rose 7.7% on March 3, with Italy’s Leonardo up 16%, Britain’s BAE Systems and Thales gaining over 14%, and Germany’s Rheinmetall rising 13.7%. The shift away from U.S. defense reliance accelerated after President Donald Trump’s contentious meeting with Ukrainian President Volodymyr Zelenskyy, prompting European nations to strengthen domestic industries. Israeli and South Korean defense stocks also saw gains, with Elbit Systems rising 8.1% and Hanwha Aerospace up 16.7%. The stock surge reflects investor confidence in Europe’s push for greater military self-sufficiency in response to geopolitical tensions.11