Trump’s Tariffs Spark Global Trade War

FINANCE
Trump’s Tariffs Spark Global Trade War

Former Treasury Secretary Larry Summers, the Wall Street Journal, and JP Morgan are all sounding the alarm on Trump’s latest tariffs, and I have to agree. There is near-universal consensus among economists that these tariffs are not beneficial to the U.S. economy and could trigger a global trade war.

Trump followed through on his threats, slapping tariffs on Mexico, Canada, and China—with a carve-out for Canadian energy. Markets reacted immediately, with global stocks tumbling. The S&P 500 dropped nearly 2% before recovering slightly, but uncertainty remains. Mexico initially planned to retaliate but later struck a last-minute deal with Trump, delaying the tariffs for a month in exchange for deploying 10,000 troops to stop fentanyl trafficking. Canada has already retaliated, and China may soon follow.

There is no economic logic in these tariffs. Summers described them as a “stop or I’ll shoot myself in the foot” kind of policy, and that’s exactly what we’re seeing—higher costs for American consumers, rising economic instability, and threats to multi-decade free trade agreements. Even the Wall Street Journal, typically aligned with conservative policies, called it “The Dumbest Trade War in History”.

JP Morgan and Goldman Sachs both warned that these tariffs could damage business confidence and drive up prices. Capital Economics took it further, warning this could be the first strike in a global trade war, pushing Mexico and Canada into recession and possibly forcing the Federal Reserve to hold off on rate cuts for the next year.

Trump insists this will be “The Golden Age of America”, but that ignores the reality that tariffs act as a tax on American businesses and consumers. The real question is whether these tariffs are a negotiation tactic or if they’re here to stay. The month-long delay suggests Trump is using trade as leverage, but at what cost? If the tariffs return, the economic fallout could be severe.

As I see it, history has shown tariffs rarely work in the long term. Free trade is what drives growth, and businesses thrive on certainty, not volatility. These policies undermine investor confidence, disrupt supply chains, and create more problems than they solve. With Trump 2.0 now in full swing, we should brace for continued economic turbulence.

TECH
China Targets Google Amid Trade Tensions

China announced an antitrust investigation into Google on Tuesday, citing alleged violations of the country’s anti-monopoly laws. The State Administration for Market Regulation launched the probe shortly after China imposed new tariffs on U.S. goods, including 15% duties on coal and liquefied natural gas and 10% tariffs on crude oil, farm equipment, and certain vehicles, effective Feb. 10.

Google ceased its search and internet services in China in 2010 but still operates advertising services for Chinese businesses abroad. Analysts suggest the investigation may conclude without penalties, as it coincides with rising U.S.-China trade tensions.

Google is also under scrutiny in the U.S., U.K., and EU. In August, the company lost a U.S. lawsuit over search market monopolization, and the DOJ is pushing for the divestiture of Google Chrome. Meanwhile, the U.K. is evaluating Google’s market influence under new regulations.

TECH
OpenAI Partners With South Korea’s Kakao

OpenAI CEO Sam Altman signed a partnership with South Korean tech giant Kakao on Tuesday, marking a strategic move as the U.S. firm seeks global alliances. Kakao, which operates South Korea’s top messaging app, taxi-hailing service, and online bank, will integrate ChatGPT into its AI-powered services, strengthening OpenAI’s presence in Asia.

Altman’s visit comes amid growing concerns over China’s AI rival DeepSeek, which has shaken Silicon Valley with its high-performance, low-cost AI models. At a closed-door meeting, Altman admitted OpenAI “hasn’t found a strategy yet” to counter DeepSeek’s rapid advancements.

In addition to Kakao, Altman met with top South Korean chipmakers Samsung and SK hynix, discussing potential collaboration on high-bandwidth memory (HBM) chips crucial for AI servers. Meanwhile, OpenAI is warning U.S. authorities that Chinese firms, including DeepSeek, are actively replicating its AI models, raising concerns over intellectual property theft and technological competition.

DISCLAIMER: None of this is financial advice. This newsletter is strictly educational and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions. Please be careful and do your own research.