Asian nations are ramping up energy imports from the U.S. to gain leverage in tariff talks with President Trump, though concessions in areas like autos and agriculture may prove harder to secure, according to a new report from Nikkei.

“Asian trading partners have been the most forthcoming in terms of doing the deals,” said Scott Bessent, Trump’s chief tariff negotiator, pointing to India, South Korea, and Japan.

Negotiations are underway with Vietnam, Japan, South Korea, Indonesia, and India ahead of the July 9 deadline, after the U.S. paused tariffs for 90 days in April. Except for China—which has retaliated—over 100 countries are engaging to avoid fallout.

Liquefied natural gas (LNG) is a key bargaining chip. Asian economies are pledging more imports of U.S. LNG, which is expected to see demand rise as countries shift from coal. “In the longer term, Asia could buy more U.S. LNG for future decades,” said Alex Froley of ICIS.

The Nikkei report says that Japan, South Korea, Taiwan, Thailand, and Vietnam are expanding LNG purchases, while Indonesia may focus on other fuels like LPG and crude oil. Some are eyeing a potential $44 billion LNG project in Alaska. Bessent hinted that a “big energy deal” there involving “the Japanese and perhaps the Koreans, perhaps the Taiwanese” could influence tariffs.

South Korea is coordinating a visit to Alaska, and Taiwan’s CPC signed a non-binding letter to participate. Japan’s JERA called it “one of the promising procurement sources,” though cost remains a barrier.

Automotive trade remains tense. Trump has criticized the lack of U.S. cars in Asia. Japan had a $48 billion auto surplus with the U.S. in 2024. While Tokyo may ease crash-test rules and expand preferential treatment for imports, actual gains are doubtful. “It’s difficult to drive large and powerful American cars on narrow Japanese streets,” said Takashi Imamura of Marubeni Institute.

Japan’s automakers already produce extensively in the U.S. “Trump’s complaints may be just a ploy to have the upper hand in the overall negotiations,” Imamura added.

In agriculture, the U.S. is pushing for expanded exports of rice, soybeans, and corn. Japan is a key target, though Tokyo refuted claims of a “700%” tariff on rice. Political resistance is strong, particularly ahead of Japan’s upper-house elections.

Still, Japan and South Korea are already top buyers of U.S. rice, pork, and wheat. “Asia already relies on the U.S. for agricultural imports like soybeans, wheat and corn,” said Keisuke Sano of Nomura Research Institute. But broader shifts will be slow: “It will take more time, as that requires a change in culture,” he noted.

Thailand is exploring expanded U.S. imports but faces opposition from farmers and environmental groups.

South Korea is also leveraging shipbuilding. Its Hyundai Heavy Industries signed an MOU with Huntington Ingalls to explore U.S. shipyard investments. The U.S., once a global shipbuilding leader, now seeks Asian investment to revive the industry. “We’ve got to look at all options,” said U.S. Navy Secretary John Phelan.

Security spending may factor in too. Trump called the U.S.-Japan defense treaty “one-sided” and wants allies to pay more. Before an April 16 meeting, Trump said Japan was negotiating both tariffs and “the cost of military support.” Later, he clarified the military issue was “another subject” but repeated that allies “have gone rich” while the U.S. “has been ripped off.”

Defense imports may be included in deals. Taiwan’s President Lai pledged “additional arms procurements” to help reduce its trade gap with the U.S., according to the report. 

Recall, we wrote late last month that India could be the most likely to sign a major U.S. trade deal. 

We noted that India is the nation most likely to announce the first major trade deal with the Trump admin not only because of Apple’s decision to shift all US-focused iPhone production from China to India, but because India and China have a bit of a regional superpower rivalry between them, with the former recently surpassing the latter as the world’s most populous country (China is facing a crippling demographic crisis in several decades that would rival Japan’s), and with ambitions to overtake China’s GDP over the next 2 decades.

Case in point, Indian trade negotiators are planning to showcase the country’s large pipeline of Boeing plane orders and the potential for more to come as they seek a favorable deal with the US, Bloomberg reported citing people familiar with the matter. In the absence of a deal, Indian goods exports to the US face up to 26% levies after Trump’s 90-day pause on implementation of reciprocal tariffs ends in July.

The plan is to get Indian carriers’ existing orders and under-negotiation deals with the American planemaker counted in discussions for a bilateral trade pact that could potentially shield the country from higher US tariffs.

Along with Air India, Akasa Air-operator SNV Aviation and SpiceJet have placed a combined order for 590 aircraft worth $67 billion with Boeing in recent years. With deliveries and payments for 506 of those planes staggered over several years, India wants to highlight how these private purchases would serve to narrow the more than $47 billion trade surplus New Delhi runs with Washington — a key gripe of President Donald Trump.

Via Middle East Eye

Saudi Arabia has been lobbying the US to stop all US attacks on Yemen ahead of President Donald Trump’s visit to the kingdom, warning that it would create an “embarrassing situation” for Riyadh and the US, Middle East Eye can reveal.

Saudi Arabia has resisted the US bombing campaign in Yemen since the Biden administration began strikes in 2024, but their insistence that attacks stop picked up last week as they became more concerned about the scope of the strikes, two US officials told MEE on the condition of anonymity. “Trump appears to be meeting a Saudi ‘ask’ to stop strikes ahead of his visit,” one of the US officials told MEE.

“The pressure from the Saudis to end this has intensified since last week. They told us that attacks on Yemen while POTUS is there would be playing with fire,” the official added, using an acronym for the US President.

Trump announced on Tuesday that “effective immediately”, the US would stop bombing Yemen. The officials could not confirm whether Trump was swayed by the Saudi lobbying alone or decided to stop the campaign based on his calculations.

The US strikes also came under intense criticism from some of Trump’s closest allies, such as media personality Tucker Carlson and Congresswoman Marjorie Taylor Greene.

Shortly before Trump’s announcement, Greene mocked the entire premise of the campaign, writing, “I’ve never seen a Houthi. Nor has anyone else I know.”

Trump says he will ‘honour’ his word with Houthis 

Trump said the Houthis informed the US on Monday night that “they don’t want to fight anymore, they just don’t want to fight”.

“We will honour that. We will stop the bombings,” Trump said, saying that the group promised not to attack ships.

Omani Foreign Minister Badr al-Busaidi confirmed Trump’s announcement on X, adding that his country had been mediating a “ceasefire” between the US and the Houthis. “In the future, neither side will target the other, including American vessels, in the Red Sea and Bab al-Mandab Strait, ensuring freedom of navigation and the smooth flow of international commercial shipping,’ al-Busaidi wrote on X.

Arab and US officials told MEE that Saudi Arabia has been fiercely “pre-negotiating” Trump’s visit. Saudi Arabia wants to focus on economic deals and military sales, Arab officials say.

MEE reported last week that Riyadh sought assurances from the US it would keep discussions of normalization with Israel off the agenda during Trump’s visit.

Saudi Arabia says it needs to see steps toward the creation of a Palestinian state and a ceasefire in Gaza before it recognizes Israel. 

Israel bombs Sanaa same day as US ‘ceasefire’

The “ceasefire” between the US and the Houthis could also reveal deeper schisms between Trump and Israel. Trump announced his halt in attacks the same day Israel pummeled Sanaa airport.

Neither Trump nor Oman’s foreign minister made any mention of the Houthis stopping their attacks on Israel in their announcements. Over the weekend, a Houthi ballistic missile hit a parking lot close to Terminal three at Ben Gurion Airport in Tel Aviv, sending shockwaves through Israel.

Saudi Arabia has been deeply sceptical of the US bombing campaign against the Houthis since it began under the Biden administration in 2024.

All the narratives are wearing off.
Vietnam was a pointless war and we lost.
There were no weapons of mass destruction in Iraq.
Afghanistan was a waste.
And we gained nothing from any of those wars.
Saudi Arabia has nuclear weapons and the 19 terrorists from 9/11 were all Saudis.…

— Rep. Marjorie Taylor Greene🇺🇸 (@RepMTG) May 6, 2025

Yemen descended into civil war in 2014 when the Iran-aligned Houthis seized Yemen’s capital, Sanaa. A year later, Saudi Arabia led a coalition of Arab states, including the United Arab Emirates, to restore the internationally recognized government.

The Saudi-led coalition launched thousands of air strikes on Yemen, which failed to dislodge the Houthis but resulted in hundreds of thousands of civilian deaths and a major humanitarian crisis. The Houthis responded by lobbing missiles and drones at civilian infrastructure in Saudi Arabia and the UAE.

Saudi Arabia and the Houthis struck a truce in 2022. Although technically expired, the two sides have refrained from attacking each other. The Saudis’ efforts to reach a political settlement with the Houthis have been complicated by the group’s attacks on international shipping and US and Israeli strikes.

It’s no secret that US schooling has been in steep decline since the founding of the federal Department of Education in 1980 and the normalization of centralized government curriculum.  Reading, math and science scoring is dismal.  The US ranks 28th out of 37 countries participating in OECD (Organization for Economic Co-operation and Development) math scores and 12th in science.  The US is 36th in the global literacy rankings.  For the richest nation on Earth, these are not encouraging results.

To be sure, demographics do play a role in dragging national scores down, but a greater threat to the learning experience of young Americans is the largely progressive controlled education system infested by a majority Democrat teachers union.  For decades there’s been no escape for children and parents from leftist indoctrination, and Democrats would like to keep it that way. 

This is why the concept of private school vouchers has been stuck in political limbo for years; the ability to choose threatens the status quo.  Democrats claim that school vouchers would primarily benefit students from wealthy families, but the wealthy already have the option of a private education.  The middle class does not, and those are the kids that Dems want to keep on the plantation.

Texas conservatives have something to say about that.

Governor Greg Abbott has just signed school choice vouchers into law after a long fought legislative battle.  Abbott signed the school choice bill on May 3rd, allowing for taxpayer money to be used to help qualifying students pay for private school tuition.

“Today is the culmination of a movement that has swept across the state and our country,” Abbott said Saturday.  The governor also said it wouldn’t have been possible without the “fearless commitment of the members of the House and Senate who put families first.”

“When I ran for reelection in 2022, I promised school choice for the families of Texas. Today, we deliver on that promise,” said Abbott during the bill’s signing before hundreds of applauding supporters gathered outside the Governor’s Mansion. “Gone are the days that families are limited to only the school assigned by government. The day has arrived that empowers parents to choose the school that’s best for their child.”

As part of the $1 billion bill, most students who attend an accredited private school will receive $10,000 per year. Students with disabilities will receive up to $30,000 per year, and home-schooled students will get $2,000 a year.  The money is intended to help students cover what might otherwise be unattainable private school tuition.  The average cost of private schooling is $12,000 a year per student.  Meaning, Texas is likely to see the biggest surge in private school attendance of any state in recent history. 

Democrats are crying doom at the prospect. 

“Remember this day next time a school closes in your neighborhood,” state Rep. James Talarico, D-Austin, said at a news conference with other voucher opponents. “Remember this day next time a beloved teacher quits because they can’t support their family on their salary. Remember this day next time your local property taxes rise because the state government is not doing its fair share of school funding. And if recession comes and we are forced to make even deeper cuts to public education, remember this day.”

In other words, Democrats hate the free market.  If public schools were effective, if public school teachers were actually doing their job, and if schools were teaching academics instead of enforcing propaganda, then no parent would want to pull their child out of class.  If the mere existence of private schools as an option for the average child is enough to implode public institutions, then perhaps they are not worth saving.

The momentum for school vouchers has been gaining in recent years because of two factors:  First, the hysteria over Covid, the useless mandates and attempts to force vaccinate have made millions of parents wary of placing their children within the power of government schools again.  Second, the insane spread of woke ideology and LGBT “sexual awareness” in the classroom, mainly spearheaded by groomer teachers, has left parents utterly disenchanted with government education.

In other words, the teachers did this to themselves.  And, if some of them lose their jobs because Americans now have other alternatives, all the better.

Authored by Debra Heine via American Greatness,

Joe Biden’s floating aid pier in Gaza, which was only operational for 20 days in the summer of 2024, was a much bigger failure than initially reported, according to new Pentagon Inspector General report.

The ill-fated pier system, dubbed “Operation Neptune Solace” and operated by an Army and Navy outfit known as Joint Logistics Over-the-Shore (JLOTS), took about 1,000 U.S. forces to execute at a cost of $230 million.

More than 60 service members were injured and one died during non-combat duties on the mission, according to the Pentagon IG, although the manner of the injuries was not clear.

“Based on the information provided, we were not able to determine which of these 62 injuries occurred during the performance of duties or resulted off duty or from pre-existing medical conditions,” the report said.

Army Sgt. Quandarius Stanley was “critically injured in May when high winds and heavy seas damaged the pier, causing four Army vessels to become beached,” The Air Force Times reported. Stanley died from the injuries he sustained months later.

The Navy reported damage to 27 boats and (Improved Navy Lighterage System) INLS equipment totaling about $31 million, according to the Times. 

The Army’s damage assessment is redacted.

Plagued by bad weather, the 1,200-foot-long floating pier reportedly had to be removed multiple times due to high winds and sea.

The Pentagon IG found that mission planners failed to identify such environmental factors, and that Army and Navy equipment malfunctioned because it was “not interoperable.” 

Lack of training and resources also reportedly hindered the operation’s success.

The Inspector General said that the U.S. military under Biden failed to “organize, train, and equip their forces to meet common joint standards.”

The pier debacle became a major embarrassment to the Biden administration, with congressional Republicans branding it a political stunt to placate the Democrats’ pro-Hamas base during an election year.

Authored by Jeff Louderbeack via The Epoch Times,

President Donald Trump announced on May 7 that Dr. Casey Means – a functional medicine physician aligned with Health and Human Services Secretary Robert F. Kennedy, Jr. – to be his new nominee for surgeon general after withdrawing his initial pick for the role.

In a Truth Social post, Trump said that Means has “impeccable ‘MAHA’ credentials,” referencing the “Make America Healthy Again” platform introduced by Kennedy.

Means will work to eradicate chronic disease and improve the health and well-being of Americans, Trump added.

“Her academic achievements, together with her life’s work, are absolutely outstanding,” Trump said.

“Dr. Casey Means has the potential to be one of the finest Surgeon Generals in United States History.”

Initially, Trump nominated Dr. Janette Nesheiwat for the surgeon general post.

Nesheiwat, a medical doctor for an urgent care company, was originally scheduled to appear before the Senate Health, Education, Labor and Pensions Committee for her confirmation hearing on May 8.

Means graduated from Stanford University Medical School.

Her brother, Calley Means, is also a Kennedy ally who serves as a special government employee at HHS.

One month ago, just as our long-running narrative that US consumers had been living with maxed out credit cards for the past year was becoming mainstream, the Fed’s February consumer credit data confirmed as much: a huge, 6-sigma miss to expectations of a $15BN print, when the actual number came in at a negative $1BN (and far below the lowest estimate)….

… as a result of both Revolving and non-revolving credit coming in flat or negative.

Fast forward to today when amid rising hopes that we would finally get some trend in the soft credit data, the Fed reported that in March, consumer credit… spiked right back to normal, if largely on the back on non-revolving credit. As shown in the chart below, after February $0.6BN contraction, in March consumer credit rose by $10.2BN, just above the $9.4BN expected, and the first time in months consumer credit wasn’t a shock outlier either up or down.

The composition was familiar: revolving credit (i.e., credit card debt) rose by a modest $1.9BN, better than the $0.3BN drop in February, but excluding that, the lowest print since December.

Meanwhile, non-revolving credit jumped by $8.3 billion, the second highest monthly increase since July 2024.

Why? Well, the answer is rather bizarre because while auto loans shrank by $10 billion in Q1, the biggest quarterly decline in a decade, it was student debt, that debt which is now causing widespread defaults as millions can not afford to pay it as the moratorium is over, that unexpectedly surged by $22BN in Q1 to $1,797 billion, a new all time high.

How realistic is it that in a time when millions of former “students” are about to start defaulting en masse, that it is student loans which are again propelling consumer spending, we keep a close eye on this series because while many expect that the student loan bubble bursting will accelerate the recession, we may be getting just the opposite as Trump takes another page from the Biden playbook and starts firehosing “student” loans to anyone with a pulse who can fog a mirror.

U.S. importers who ignored President Trump’s first-term warnings about shifting supply chains out of China have been stunned—some into paralysis—by the renewed tariff war in his second term, which includes a 145% levy on Chinese goods entering the U.S. Now, many importers are frantically reassessing product lines and supply chains amid soaring costs, with some desperately needing financial lifelines to stay afloat. 

HSBC Holdings Plc has understood this need and launched ‘HSBC TradePay for Import Duties’ on Wednesday. The platform allows struggling importers to borrow to meet the increased expenses of shipping products to the U.S. market.

“Many corporates are currently facing changing working capital needs and increased upfront commitments,” HSBC wrote in a press release, adding, “By settling payments of import duties directly and frictionlessly through HSBC TradePay, businesses can simultaneously access credit and complete payments, leading to more efficient settlement times and better visibility over cash flows.” 

The new loans allow import payments to be automatically settled through pre-arranged credit with brokers or direct ACH transfers, enabling companies to manage cash flow more effectively and streamline duty payments.

“Clients’ working capital needs are evolving – and we’re responding swiftly with solutions that deliver the most value to them. By settling import duties directly and frictionlessly through HSBC TradePay, our U.S. clients have more visibility and control over their working capital at the time they need it most,” Vivek Ramachandran, Head of Global Trade Solutions at HSBC, stated. 

Last week, we provided the example of a Seattle, Washington-based Wyze Labs, a popular seller on Amazon of smart home and wireless camera products from China, revealed on X: “Just got our first tariff bill. We imported $167k of floodlights and then paid $255k in tariffs. That’s more than any of our founders were paid last year.”

Wyze said their “first tariff bill” has “accelerated” efforts to leave China in two months, and they are seriously considering restoring supply chains in the United States.

Wyze’s steep tariff bill is just one example of the tariff bills impacting importers with weaker balance sheets—creating an opening for HSBC to step in with targeted financing options.

HSBC Chairman Mark Tucker recently warned that global trade faced a “period of deep and profound change” and “the over-arching impact of the changing approach to global trade relations has been to increase economic uncertainty with serious potential risks to global growth.” 

Goldman offered some good news last week: Peak trade war.

Goldman chief economist Jan Hatzius noted earlier this week: “The mood music with China has improved, and we expect the U.S. tariff rate on China to drop from around 160% to around 60% relatively soon. (China is likely to reduce tariffs on the U.S. by a similar amount.)”

More peak trade headlines appeared in the overnight session:

US, Chinese Delegations To Meet In Switzerland To Launch Trade Talks; S&P Futures Surge https://t.co/8QFfQhOmCb

— zerohedge (@zerohedge) May 6, 2025

In the meantime, HSBC has identified a growing need among importers struggling to manage tariff-related costs—offering working capital solutions to bridge gaps. Some of these importers are now paying the price for not acting sooner on earlier warnings to shift away from China.

Authored by Simon Olech via Campus Reform,

The Association of American Medical Colleges (AAMC), which develops and administers the Medical College Admissions Test (MCAT), was believed to have left DEI (Diversity, Equity and Inclusion) behind until The Daily Wire published an article stating otherwise. 

The AAMC was exposed for continued DEI efforts after a scrutinizing report from the nonprofit Do No Harm, which stated that the group works “to create, promote, and ingrain philosophies that are rooted in controversial belief systems instead of established science.”

However, The Daily Wire received information from an “AAMC insider” who says that the organization is using unorthodox measures to further its DEI agenda, despite recent changes.

An internal “Language Suggestions” document provided by The Daily Wire reveals that the medical association continues to promote DEI by telling employees to “[C]hoose language that defines and translates diversity, equity, and inclusion principles into actionable steps that promote the AAMC’s mission.”

It also tells employees to use clarifying language that it believes “are widely misunderstood or misinterpreted.” Examples include “birthing people,” “Anti-racism,” “Minority” and “DEI.”

Additionally, The Daily Wire reports that employees are introduced to “Reframing the Conversation” so that in order to “communicate the impacts of these efforts more effectively,” they should “focus on the positive outcomes they bring, aligning them with our mission and work.” 

The AAMC states that “[b]y emphasizing the broader benefits, we can better illustrate how these initiatives contribute to our shared goals and long-term success.”

According to the insider, “the AAMC has pushed DEI for about a decade. The leaders are not going to change their views overnight…Even though we now talk about it differently, the AAMC is still very much committed to DEI.”

In its report, Do No Harm revealed that tens of millions of dollars were donated to the AAMC in order to promote initiatives such as “gender-affirming care” and “systemic inequities,” embedding these kinds of goals into medical school accreditation and testing.

Most significantly, the biggest benefactor has been the Robert Wood Johnson Foundation, which contributed more than $24,000,000 for a program called “Confronting Structural Racism to Transform Health.” 

After the release of the report, the AAMC began to delete certain messages and resources dedicated towards expanding and promoting DEI across its network. 

The AAMC deleted a page titled “Diversity, Equity, and Inclusion,” which was archived, along with the “Underrepresented in Medicine Definition,” also archived.

Additionally, a web page capture of a previous AAMC report, “Creating Action to Eliminate Racism in Medical Education,” has also been removed.

Campus Reform has contacted the Association of American Medical Colleges. This article will be updated accordingly.

China’s aggressive push into Cuba is sounding alarm bells, with fears of covert surveillance operations targeting the United States, a concerning new report from Center for Strategic and International Studies (CSIS) reveals. 

The worrying findings, drawn from open-source intelligence, expose a suspected circularly disposed antenna array (CDAA) at Cuba’s Bejucal signals intelligence site, just a stone’s throw from Havana, according to Fox News. The antenna could zero in on radio signals from 3,000 to 8,000 miles away—putting U.S. military bases and even Washington, D.C. within range, the news outlet noted.

“The CCP’s poisonous alliance with Cuba has posed significant threats to U.S. national security for decades,” House Intellience Committee Chairman Rick Crawford (R-AK) told Fox News. “Their alleged involvement in signals intelligence hubs in Cuba is outward, unconcealed adversarial behavior against the U.S. The CCP’s actions are becoming increasingly more bold and thereby detrimental to Western Hemisphere security.”

The report’s findings have sparked so much concern on Capitol Hill that Republicans are seeking a briefing from Homeland Security Secretary Noem.

“The PRC is positioning itself to systematically erode U.S. strategic advantages without ever firing a shot,” read a letter written by Homeland Security Chairman Mark Green (R-TN) and a group of other lawmakers to Noem. “The geographic proximity of suspected PRC-linked facilities in Cuba to sensitive U.S. installations, including Naval Station Guantánamo Bay, Kennedy Space Center, Naval Submarine Base Kings Bay, and Cape Canaveral Space Force Station, may enable the PRC to monitor American detection and response capabilities, map electronic profiles of U.S. assets, and prepare the electromagnetic environment for potential future exploitation.”

“If left unchecked, the PRC’s activities in Cuba could establish a forward operating base for electronic warfare, enable intelligence collection, and influence operations that directly undermine U.S. national security interests,” the lawmakers added.

In 2023, the Wall Street Journal reported that China and Cuba reached an agreement under which Beijing would pay Cuba several billion dollars to establish an electronic surveillance facility on Cuban territory, aimed at monitoring the United States.

“We are deeply disturbed by reports that Havana and Beijing are working together to target the United States and our people. The United States must respond to China’s ongoing and brazen attacks on our nation’s security,” Sen. Mark Warner (D-VA) and then-Sen. Marco Rubio (R-FL) said in a joint statement at the time. We must be clear that it would be unacceptable for China to establish an intelligence facility within 100 miles of Florida and the United States, in an area also populated with key military installations and extensive maritime traffic.”  

Authored by Michael Lebowitz via RealInvestmentAdvice.com,

Risk management is critical to wealth preservation, especially in today’s turbulent market storm. However, during such volatile times, we must also not consider what tomorrow may have in store.  Are you prepared to adjust your portfolio in the coming months for the possibility that calm, tranquil markets and a resumption of the bullish trend emerge?  

While not front of mind for many investors today, Trump’s other economic agenda items could be bullish for stock investors after the tariff storm passes.

Accordingly, let’s discuss a few items on Trump’s agenda that, if enacted, could benefit corporate bottom lines, the economy, and, ultimately, help us look past the stock market storm.

Tax Policy

President Trump has made several proposals regarding tax reductions. These include eliminating taxes on tips, overtime, and Social Security benefits. Furthermore, as we share below, he teases the idea of eliminating taxes on people making less than $200,000.

Those tax relief measures and potentially other ideas yet to be publicized would increase disposable income for many people. Further, if Trump can get Congress to extend the 2018 corporate tax cuts, businesses will have more clarity on future net income. Accordingly, they would be more willing to invest in capital projects. Consequently, the employment rate will be higher than it might have been if the corporate tax cuts had sunset and returned to pre-2018 levels.

Leveraging Tax Policy

Two economic formulas can help us quantify how tax policy impacts the economy. The first is known as the marginal propensity to consume (MPC). MPC measures how changes in income contribute to economic activity. The second is the Keynesian Multiplier. The theory states that additional personal consumption prompts businesses to produce more, which entails hiring more employees and investing in more output. As a result, one dollar of consumption creates more than one dollar of GDP growth over time.

As we will share in a coming article, we estimate the MPC of changes to US aggregate income is .6182. In other words, consumers will likely spend 61 cents of every additional dollar of income in aggregate. Based on the formula (1 / (1-MPC), we should expect 61 cents of consumption to result in $2.63 of GDP growth.

The graph below shows the correlation between changes in income and consumption. We derive the MPC from the slope of the trend line (0.6182).

While the benefits of tax reductions and cuts are bullish for the economy and market, we must consider the fiscal deficit. If said tax cuts increase the fiscal deficit, higher interest rates may occur, offsetting the benefits accruing from lower taxes. Further, if spending cuts are used to offset lower taxes, the net benefit of tax reductions may be reduced or eliminated.

Deregulation

Trump’s policy goals call for reducing regulatory burdens on businesses. With less red tape, corporate compliance costs should decline and, more importantly, companies will be more incentivized to enter productive investments.

Here are a few quotes from Trump on the topic of deregulation:

• February 22, 2025: To turbocharge our economy: we have launched the most aggressive deregulation program in history and will be seeking the largest tax cuts in American history.

• March 25, 2025: We’re going to slash red tape like never before. Businesses are drowning in regulations, and I’m bringing back my 10-for-1 rule—cut ten old regulations for every new one. It’s going to unleash our entrepreneurs.

• February 28, 2025: In my first term, we cut more regulations than any president ever. This time, we’re going even harder. Energy, manufacturing, small businesses, you name it, we’re freeing them up to thrive.

In 2018, Trump’s deregulation of specific economic sectors and industries contributed to the stock market’s strength in the first half of the year. However, tariffs roiled stock market returns later that year. Unlike today, in 2018, there was a calm before the storm!

 The following are examples of regulatory actions Trump took in 2018:

• Roll back Dodd-Frank provisions that freed up capital for banks to make loans and buy financial assets and reduced compliance costs.

• Relaxed EPA rules for energy companies, lowering operating costs while increasing production.

• Manufacturing and industrial companies benefited from more straightforward permitting rules and regulations, including changes to labor laws. Cost reductions and quicker production times ensued, thus raising margins for many companies.

In addition to legislation and executive acts aimed at helping specific companies or industries, a pro-business environment attracts more domestic and foreign capital, leading to economic growth.

“Unleashing American Energy”

Trump’s motto, “unleashing American energy,” is a key element of Trump’s economic plan. His phrase refers to policies that maximize domestic energy production. Further, they reduce energy-related regulatory barriers and achieve energy independence.  Such policies aim to lower energy costs, boost economic growth, and enhance national security.

The risk to Trump’s plan is that lower energy prices may result in fewer new wells and thus less production. Accordingly, the plan may reduce energy costs today but hamper oil production, which could increase prices tomorrow.

The graph below, courtesy of the Dallas Fed, shows the range and average breakeven oil prices for new shale wells.

Looking past the energy industry, it’s worth considering that most companies and consumers benefit from low oil prices. To appreciate how oil prices affect the economy, consider the graphic below. 

“Made In America”

Reshoring jobs and production facilities has the potential to generate significant economic growth. The primary benefits would likely fall to infrastructure and logistics companies. However, higher labor costs and generally more regulations may make onshoring jobs and facilities expensive, thus negatively impacting margins. The counterargument is that more jobs result in more consumption, benefiting many companies.

Summary

The tariff storm is not over. Thus, manage your risk exposure closely today, but don’t lose sight of what tomorrow may bring. We suspect that Trump will soon be more vocal about his plans to lower taxes, reduce regulations, and implement other policies that have the potential to boost the economy and revive a sense of stock market calm.

Use this time to consider which industries and companies will benefit from some of the economic policy items discussed above. Bear in mind that if the market does explore recent lows or hit new lows, the rally from the ultimate bottom could be furious if Trump’s agenda items are enacted, as tariff agreements are being forged.

A plan will help you better take advantage of the market when tariff fears and the market storm blind others.