Member Info for 1pencil

These are the two salient paragraphs in the notice given by Trump administration on tariffs, with a stick and an olive branch..

(b) Should any trading partner retaliate against the United States in response to this action through import duties on U.S. exports or other measures, I may further modify the HTSUS to increase or expand in scope the duties imposed under this order to ensure the efficacy of this action.

(c) Should any trading partner take significant steps to remedy non-reciprocal trade arrangements and align sufficiently with the United States on economic and national security matters, I may further modify the HTSUS to decrease or limit in scope the duties imposed under this order.

In a nutshell, UK and EU needs to take more of US produce without retaliation.

EU are in for a hard time at a point when things are not great anyway..UK has a privileged and elevate position in all of this.

US has yet to feel the brunt of losing De Minimis which could be a deal breaker imo..

Graphic: The Cost of Losing De Minimis

https://www.nftc.org/wp-content/uploads/2023/07/pricing-pdf.pdf

Not far above cash now post sale ..

That was news to me the whole chicken thing had moved on so far, both Telegraph and Independent running similar articles 'Buy our chlorinated chicken if you want lower tariffs, Trump tells Britain'

Crazy headlines..

EU has to respond with something otherwise going to be hit with auto tariffs straight away, JLR postponing exports for a bit seems a sensible move.

If they over egg it, that runs the risk of even higher tariffs in return (UK keep your head down lol)

The EU response is likely to be very measured as they don't hold the cards, hence limited to what they can do.

Trump has made a big deal out of price reductions on food, most notably eggs, US chicken as crazy as it sounds could be one concession that would help UK with a deal, its been a long standing point so giving in would be fairly significant.

That aside, i still see UK as being in a favourable spot in relation to other countries, many multi-nationals moved to Ireland over the years due to lower corporation tax.

US eggs

https://tradingeconomics.com/commodity/eggs-us

The IPO market will drop away, companies like Klarna unlikely to get the valuation hoped for, as for Shein and Temu where do they stand now?

Removal of the de minimis exemption is arguably more significant in some ways than the tariffs themselves, just on volume alone..

Reaction in US will be interesting.

Xinmei Shen

Published: 7:00am, 4 Apr 2025

The global expansion of Chinese biotech companies accelerated in the first quarter, with the number of overseas deals surging 18 per cent year on year, showing strong momentum in the field of drugs research, according to a new report.

Chinese drug makers landed 33 deals with overseas healthcare firms in the first three months of this year, with transactions totalling US$36.2 billion, according to a report published on Wednesday by mainland pharmaceutical and biotech consultancy DrugTimes.

https://www.scmp.com/tech/tech-trends/article/3305124/chinas-biotech-firms-record-surge-overseas-licensing-deals-first-quarter?module=top_story&pgtype=section

Link below not working

https://www.barchart.com/futures/quotes/DG*0/futures-prices

CD index

https://markets.ft.com/data/indices/tearsheet/summary?s=FTSE_NMX40_S:FSI

I would expect some sort of central bank intervention next week to alleviate further selling, possible options

- Immediate rate cuts minimum 0.5%

- Restrict on short selling

- Subsidies for those caught up in this

China is a big dairy export market for US, that's playing havoc on whey prices and other commodities:

https://www.barchart.com/futures/quotes/DG*0/futures-prices

Yen moved in THG's favour too, not enough mind but right direction - if this is a new trend then it may well continue.

https://www.xe.com/currencycharts/?from=JPY&to=GBP&view=1Y

On the subject of whey prices in US/EU, received detailed replies from USDA, in summary 'sweet whey' as referenced by THG is the same as Dry whey, the naming in one of localisation - US uses the term Dry whey, parts of Europe sweet whey.

More of this later when things settle down..

The weekend maybe enough time for companies to assess the impact releasing updates next week, that would be handy in the case of companies like THG which may not be impacted at all.

We have another round next week with EU response, UK still very much a net beneficiary compared to most other countries.

Trackers only have so many shares to influence moves down, I would hope more of those sold end up with long term holders reducing volatility.

Could be a good time to pick up a new Siber Truck..

https://youtu.be/RSFbWObcT4A

Another 2000 points off the Dow, expect fall out from this with banks, leverage, hedge funds and so on.. the move is just too quick for anyone to react.

US and other countries are hugely dependant on China for goods especially lower value items, replacement car parts, power tools, this is one tariff but wait until the De Minimis Exemption goes in May, how will that affect the millions of Americans using Amazon/EBay , deeply unpopular would be my guess, its far too entrenched in our culture to be removed.

Margin call Monday if not over the weekend for many..

Brent down another 6.45% today, that's close to a 50% drop from 2022 highs.

Rate cuts much be close..

Https://www.xe.com/currencycharts/?from=JPY&to=GBP&view=1M

Tariff Showdown: EU Dairy Faces 20% US Barrier While NZ Gets Half the Heat

Thursday, April 3rd, 2025

https://www.thebullvine.com/news/tariff-showdown-eu-dairy-faces-20-us-barrier-while-nz-gets-half-the-heat/

Many analysts see this move as inflationary, personally think the complete opposite especially for EU as what will they do with their exports previously destined for US?

Reduce prices and sell in home markets has to be one option, car prices should start to come down fairly soon if correct, Brent down 5% today ..

Only option I can see is interest rates, make them negative they did before in EU..

Rock and a hard place ..

'Companies that rely on imports were down the most, since they will now be hit by tarifs as high as 54 percent for cheap goods from Asia.

Five Below and Wayfair were down 29 percent. Ralph Lauren, Dockers and Dell down 17 percent. Nike was down 12 per cent. Apple down 8 per cent.'

https://www.dailymail.co.uk/yourmoney/article-14565937

Yup, sticky hands indeed, might see Patient Capital too as they have a similar long term strategy.

Dermstore which THG purchased in 2021 for $350m accounts for a good proportion of US revenues, well established brand being over 20 years old, not sure of balance between imported v US sourced.

All a bit crazy when you think THG's total market cap is not much higher.

It seems we are still at the mercy of ETF's/trackers and of course the Consumer Index which has taken an absolute pounding recently, hopefully their grip is loosening as shares move to stickier hands (Frasers?), S4 not dissimilar with Third Avenue increasing their holding today.

Surprised Hutch dropped with pharma being left out of tariffs..

Companies like Ocado with US operations are up, v Burberry/JD Sports which presumably imports a lot from Asia.

Its a new paradigm altogether, Yen spiked, commodities (whey) in the US fell due to concerns about export to China.

The next part is how countries such as China/EU respond, EU has a very weak hand only play open is to try and stimulate home markets, wouldn't be surprised to see negative interest rates again in Europe.

Might even forced BoE to cut too..