Since my previous column detailing US President Donald Trump’s tariff illogic, two US trade “deals” plus talks have materialised. Many pundits point to these as “proof” that Mr Trump’s tariff chaos is solely leverage for deal making and freer trade ahead.
Slow down. While no one can read Mr Trump’s mind, don’t overstate his talk or actions’ positive impacts. Endless tariff flip-flopping chiefly fans rising uncertainty, which stocks always hate – hurting America worst. Let me show you – and where to uncover opportunities.
First, you may not believe it, but stocks are intermediate and longer-term truthtellers, particularly big moves and spreads. Through May 23, non-US stocks returned 13.7 per cent this year in USD. China’s gained 16.3 per cent, Europe 19.6 per cent and Mexico 29.1 per cent! Booming! And the US’s S&P 500? Down 1 per cent. Striking lag!
Seen differently: Of the 47 MSCI All-Country World Index (ACWI) countries, America’s return fell from first over 2023-2024 to 43rd this year. A stunning shift.
What happened? Mr Trump’s on, off, back and forth whipsawing vacillations made funds flee America. Tariffs always hammer the imposing country most.
Stocks know attempts to reduce trade deficits are senseless. A trade deficit means a capital account surplus by definition – that capital is foreign investment into America. Why is reversing that desirable? Why is the government intervening on prior successes – versus letting free markets sort out the most efficient use of capital – positive? How is policy that changes on a whim good?
Stocks know it is bad. Stocks’ truth-telling shows you exactly that. Markets weigh reality, not efforts aimed at discerning Mr Trump’s “true” goals.
What “deals” have emerged since April 9? Looking past Mr Trump’s boastful bluster, only two materialised – Britain and China. Both are fluff. Britain’s is a one-year, non-binding, cancellable agreement to mitigate a few tariffs until a full trade deal can happen – maybe. A deal to make a deal! It affects only a handful of industries. Crucially, Mr Trump’s 10 per cent tariff remains on most UK goods.
The China deal impresses, but only because expectations were incredibly low. Yes, it cuts 145 per cent tariffs on Chinese goods to 30 per cent, while China dropped retaliatory levies from 125 per cent to 10 per cent. Yet it lasts only 90 days – buying time – another deal to make a deal! Plus, tariffs on China remain 30 percentage points higher than in January. Both countries remain impaired, especially the US.
Then, on May 16, Mr Trump boasted 150 nations now sought “deals”. Flip-flopping again, he says there isn’t time to negotiate them. His “solution?” Simply telling nations “soon” what rates they must pay – and perhaps offering chances to appeal.
Didn’t he already do just that on April 2’s “Liberation Day?” How did that work? Badly! How will this work? Will rates be higher or lower than after April 2? He hasn’t said, further fanning uncertainty.
Days later, he threatened the EU with new 50 per cent tariffs – and 25 per cent on Apple products – only to flip again days later, postponing EU tariffs through July 9 after plans to fast-track trade talks emerged.
Does this show Mr Trump’s talk and actions are somehow clever? That he plays 4D chess while we all play checkers? No! No one wins from crazy vacillations or the higher tariff “deals” so far delivered.
Meanwhile, legal challenges to Mr Trump’s tariffs progress maybe killing some of this. And maybe real deals come, actually lowering trade barriers and uncertainty – a huge potential upside. Maybe not.
But as my last column said, even if all tariffs return, the pain will be less than feared – bullish.
Importers can readily skirt America’s understaffed, overwhelmed tariff-collecting Customs and Border Protection staff through illegal and legal means.
The latter include “tariff splitting” – stripping out services-related costs like marketing to reduce goods’ values – or storing imports in bonded warehouses. Or shipping in values under $800, skipping tariffs. And myriad illegal ways like misclassifying and undervaluing goods.
Exporters can “tranship” or re-export through lower tariff nations. Hence, China’s April exports grew despite shipments to America tumbling 21 per cent. South-east Asia absorbed the difference – shipping them on. This drove surges in April re-exports to America – like Singapore’s 113 per cent year-on-year spike! Vietnam and Taiwan enjoy similar surges.
Manufacturers can even reship through Canada or Mexico, gaming the United States–Mexico–Canada Agreement tariff exemption. Chinese middlemen advertise such services on TikTok!
Hence, while Uncle Sam’s April total tariff collections rose, they missed administration forecasts by 75 per cent. That will persist.
The good news? Tariff fear exceeds reality, especially outside America. That is bull market fuel – helping non-US stocks maintain their leadership, particularly in Canadian, Chinese and Mexican markets – and in Europe, as I predicted on February 3.
Killing of Qassem Suleimani
The five pillars of Islam
BIGGEST CYBER SECURITY INCIDENTS IN RECENT TIMES
SolarWinds supply chain attack: Came to light in December 2020 but had taken root for several months, compromising major tech companies, governments and its entities
Microsoft Exchange server exploitation: March 2021; attackers used a vulnerability to steal emails
Kaseya attack: July 2021; ransomware hit perpetrated REvil, resulting in severe downtime for more than 1,000 companies
Log4j breach: December 2021; attackers exploited the Java-written code to inflitrate businesses and governments
Mohammed bin Zayed Majlis
The five pillars of Islam
1. Fasting
2. Prayer
3. Hajj
4. Shahada
5. Zakat
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Killing of Qassem Suleimani
The burning issue
The internal combustion engine is facing a watershed moment – major manufacturer Volvo is to stop producing petroleum-powered vehicles by 2021 and countries in Europe, including the UK, have vowed to ban their sale before 2040. The National takes a look at the story of one of the most successful technologies of the last 100 years and how it has impacted life in the UAE.
Read part four: an affection for classic cars lives on
Read part three: the age of the electric vehicle begins
Read part one: how cars came to the UAE
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Our legal columnist
Name: Yousef Al Bahar
Advocate at Al Bahar & Associate Advocates and Legal Consultants, established in 1994
Education: Mr Al Bahar was born in 1979 and graduated in 2008 from the Judicial Institute. He took after his father, who was one of the first Emirati lawyers
COMPANY PROFILE
Name: Kumulus Water
Started: 2021
Founders: Iheb Triki and Mohamed Ali Abid
Based: Tunisia
Sector: Water technology
Number of staff: 22
Investment raised: $4 million
Graduated from the American University of Sharjah
She is the eldest of three brothers and two sisters
Has helped solve 15 cases of electric shocks
Enjoys travelling, reading and horse riding
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MATCH INFO
Tottenham Hotspur 1
Kane (50')
Newcastle United 0
The years Ramadan fell in May
The years Ramadan fell in May
Dhadak
Director: Shashank Khaitan
Starring: Janhvi Kapoor, Ishaan Khattar, Ashutosh Rana
Stars: 3
Killing of Qassem Suleimani
Killing of Qassem Suleimani
MATCH INFO
Manchester City 3 (Sterling 46', De Bruyne 65', Gundogan 70')
Aston Villa 0
Red card: Fernandinho (Manchester City)
Man of the Match: Raheem Sterling (Manchester City)
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Company profile: buybackbazaar.com
Name: buybackbazaar.com
Started: January 2018
Founder(s): Pishu Ganglani and Ricky Husaini
Based: Dubai
Sector: FinTech, micro finance
Initial investment: $1 million
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Essentials
The flights
Emirates, Etihad and Malaysia Airlines all fly direct from the UAE to Kuala Lumpur and on to Penang from about Dh2,300 return, including taxes.
Where to stay
In Kuala Lumpur, Element is a recently opened, futuristic hotel high up in a Norman Foster-designed skyscraper. Rooms cost from Dh400 per night, including taxes. Hotel Stripes, also in KL, is a great value design hotel, with an infinity rooftop pool. Rooms cost from Dh310, including taxes.
In Penang, Ren i Tang is a boutique b&b in what was once an ancient Chinese Medicine Hall in the centre of Little India. Rooms cost from Dh220, including taxes.
23 Love Lane in Penang is a luxury boutique heritage hotel in a converted mansion, with private tropical gardens. Rooms cost from Dh400, including taxes.
In Langkawi, Temple Tree is a unique architectural villa hotel consisting of antique houses from all across Malaysia. Rooms cost from Dh350, including taxes.
RESULTS
6.30pm: Emirates Holidays Maiden (TB) Dh 82,500 (Dirt) 1,900m
Winner: Lady Snazz, Richard Mullen (jockey), Satish Seemar (trainer).
7.05pm: Arabian Adventures Maiden (TB) Dh 82,500 (D) 1,200m
Winner: Zhou Storm, Connor Beasley, Ali Rashid Al Raihe.
7.40pm: Emirates Skywards Handicap (TB) Dh 82,500 (D) 1,200m
Winner: Rich And Famous, Royston Ffrench, Salem bin Ghadayer.
8.15pm: Emirates Airline Conditions (TB) Dh 120,000 (D) 1,400m
Winner: Rio Angie, Sam Hitchcock, Doug Watson.
8.50pm: Emirates Sky Cargo (TB) Dh 92,500 (D) 1,400m
Winner: Kinver Edge, Richard Mullen, Satish Seemar.
9.15pm: Emirates.com (TB) Dh 95,000 (D) 2,000m
Winner: Firnas, Xavier Ziani, Salem bin Ghadayer.
Sarfira
Director: Sudha Kongara Prasad
Starring: Akshay Kumar, Radhika Madan, Paresh Rawal
Rating: 2/5
Healthy tips to remember
Here, Dr Mohamed El Abiary, paediatric consultant at Al Zahra Hospital Dubai, shares some advice for parents whose children are fasting during the holy month of Ramadan:
Gradual fasting and golden points - For children under the age of 10, follow a step-by-step approach to fasting and don't push them beyond their limits. Start with a few hours fasting a day and increase it to a half fast and full fast when the child is ready. Every individual's ability varies as per the age and personal readiness. You could introduce a points system that awards the child and offers them encouragement when they make progress with the amount of hours they fast
Why fast? - Explain to your child why they are fasting. By shedding light on the importance of abstaining from food and drink, children may feel more encouraged to give it there all during the observance period. It is also a good opportunity to teach children about controlling urges, doing good for others and instilling healthy food habits
Sleep and suhoor - A child needs adequate sleep every night - at least eight hours. Make sure to set a routine early bedtime so he/she has sufficient time to wake up for suhoor, which is an essential meal at the beginning of the day
Good diet - Nutritious food is crucial to ensuring a healthy Ramadan for children. They must refrain from eating too much junk food as well as canned goods and snacks and drinks high in sugar. Foods that are rich in nutrients, vitamins and proteins, like fruits, fresh meats and vegetables, make for a good balanced diet
The years Ramadan fell in May
KILLING OF QASSEM SULEIMANI
Name: Colm McLoughlin
Country: Galway, Ireland
Job: Executive vice chairman and chief executive of Dubai Duty Free
Favourite golf course: Dubai Creek Golf and Yacht Club
Favourite part of Dubai: Palm Jumeirah
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UAE currency: the story behind the money in your pockets
Maestro
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Mohammed bin Zayed Majlis
HEADLINE HERE
- I would recommend writing out the text in the body
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The five pillars of Islam
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DEADPOOL & WOLVERINE
Starring: Ryan Reynolds, Hugh Jackman, Emma Corrin
Director: Shawn Levy
Rating: 3/5
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Tree of Hell
Starring: Raed Zeno, Hadi Awada, Dr Mohammad Abdalla
Director: Raed Zeno
Rating: 4/5
Zayed Sustainability Prize
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How to vote
Canadians living in the UAE can register to vote online and be added to the International Register of Electors.
They'll then be sent a special ballot voting kit by mail either to their address, the Consulate General of Canada to the UAE in Dubai or The Embassy of Canada in Abu Dhabi
Registered voters mark the ballot with their choice and must send it back by 6pm Eastern time on October 21 (2am next Friday)
MOUNTAINHEAD REVIEW
Starring: Ramy Youssef, Steve Carell, Jason Schwartzman
Director: Jesse Armstrong
Rating: 3.5/5
Killing of Qassem Suleimani
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