Tariffs on!
Trump’s trade policies continued to dominate the headlines, as the President said he would “probably” announce 25% tariffs on imports of Cars, Semiconductors, and Pharmaceuticals on April 2nd. The new proposal, taxing new cars, will also raise second-hand car prices and the cost of car insurance (costs more to rebuild or repair the car you already have).
The impact of these tariffs will create a significant financial burden for American households. Currently, the average U.S. household spends $674 per month ($8,088 annually) on auto loans and insurance combined. Even US cars get 40% of their parts from Canada and Mexico and the cars “Made in America” only make up 40% of our fleet so 40% of that is 16% so we’re down to 24% of “real” American cars and the rest is a 25% tax on every American family to the tune of about $2,000 per year/per car.
And that, of course, is based on the fact that you are an “average” American, whose car payments are currently $400/month with insurance payments of $200 monthly – fancy car drivers, German and Japanese, British and Italian car drivers will pay a significantly larger share but let’s not complain – THIS is what we voted for!
And, speaking of what we voted for, co-President Musk just so happens to make 900,000 cars per year in the US with about 1/3 of the parts imported from Canada and Mexico which does, in fact, make them the MOST “American” cars and least affected by Trump’s tax proposal – what an AMAZING coincidence!
Speaking of Trump, yesterday he essentially blamed Ukraine for the war that started when Putin launched a large-scale invasion three years ago. “You should have never started it. You could have made a deal.” Trump said of Zelensky, who was not even invited to the “peace talks” with Putin so, apparently, the talks are going very well – for Putin….
Zelensky said President Trump was repeating Russian propaganda points: “Unfortunately, he is living in this disinformation space,” Zelensky told reporters Wednesday. “I want there to be more truth in Trump’s team.” A fresh poll by the Kyiv International Institute of Sociology that put his approval rating at 57% in February, a rise of 5 percentage points from December. “We saw this disinformation. We understand that it is coming from Russia,” Zelensky said. “We understand this and have proof that these figures are being discussed between America and Russia.”
Zelensky also pushed back at Trump’s claims that the U.S. had given Ukraine around $350 billion in support. The Ukrainian president, repeatedly stressing Ukraine’s gratitude, said the U.S. had given $67 billion in military aid and $31.5 billion in support for Ukraine’s budget. He criticized a U.S. proposal presented to him last week that would have seen Ukraine hand over hundreds of billions of dollars in future revenue from natural-resource extraction. “That’s not a serious conversation,” he said. “I can’t sell our state.”
At least we won’t have to worry about Bird Flu as the Department of Health and Human Services, who oversee America’s food safety and coordinate Health Issues has been gutted by “Thousands of indiscriminate layoffs”, which will cause chaos for YEARS to come as key people are being fired from key projects with no review whatsoever – just Emails cutting their positions.
Employees at the Centers for Disease Control and Prevention, Food and Drug Administration, National Institutes of Health and Centers for Medicare and Medicaid Services began receiving emails on Friday stating that they had been terminated. The messages informed employees, many of whom recently received stellar job evaluations, that their “ability, knowledge and skills do not fit the Agency’s current needs, and your performance has not been adequate.”
As a reminder, the above is Trump staring at an early COVID map during his last term – thank goodness he’s in office again as we face another pandemic, right? Only 1.1M Americans died of COVID (10 TIMES the rate of the rest of the World) but, of course, we had a functioning HHS at the time…
The abruptness and indiscriminate nature of the firings have caused confusion and chaos. Even agency leadership was uncertain who was affected by the cuts or how various teams within the NIH or FDA, for example, could move forward with their work. The administration’s actions swiftly dismantle a health infrastructure that cannot be simply put back together.
The CDC was the first to feel the squeeze when reports surfaced Friday that nearly half of the Epidemic Intelligence Service, an elite group that investigates disease outbreaks, had been fired. Meanwhile, cuts at the FDA began on Saturday evening and included some 89 staffers in the food division, prompting Jim Jones, the division’s deputy commissioner, to resign. Jones’ resignation letter said the layoffs included people with “highly technical expertise in nutrition, infant formula, food safety response,” Bloomberg News reported.
The FDA also lost a substantial number of staff responsible for reviewing medical devices, including the head of device safety. As one of those fired reviewers explained, these people regulate everyday products millions of Americans use. If you have diabetes, for example, these scientists make sure you get the proper dose when you inject your insulin or GLP-1 pen and that the app you use to monitor your blood sugar is accurate. They monitor complaints and help determine when a product should be recalled, and partner with inspectors to make sure products are being correctly manufactured.
Key parts of CMS, which oversees Medicare and Medicaid, were also affected. Those affected include people responsible for ensuring consumers aren’t overpaying for health care. Politico reported that 80 people were cut from a center that helps implement the Affordable Care Act and protects consumers from surprise billing.
“It’s not just the individual feeling of uncertainty,” a National Cancer Institute scientist said. “It’s a hostile workplace all of a sudden, because you look at your computer and don’t know who the hell is behind the next email you’re going to get.”
That’s not the kind of environment that fosters breakthrough cancer discoveries. Rather, these cuts have shaken the foundation for science and health in the US, and the consequences will reverberate across Americans’ well-being for years to come.
8:30 Update: Yesterday, the NAHB Housing Market Index fell from 47 to 42 (down 10.6%) and this morning – that is being confirmed by a 6.6% drop in Mortgage Applications and Housing Starts fell from 1.515M in December to 1.366M in January, a 9.8% decline for the month and Housing is 16% of our entire economy so these numbers are… BAD! As in heading back to Covid levels BAD!!!
Fortunately, we upped our hedges in our Short-Term Portfolio (STP) yesterday and we’ll review our Long-Term Portfolio and Income Portfolio tomorrow but let’s expect a generally conservative review, with a lot more covers being sold to help protect us for the uncertainty that lies ahead.
We thought we’d have more clarity as Earnings Season comes to a close but the political turmoil is making things worse and who knows when this nonsense will ever calm down?
