To no one’s surprise, the world’s largest economy is also the world’s largest consumer economy.

But how much do Americans collectively spend on the goods and services they need? And what items draw the largest share? 

Visual Capitalist’s Pallavi Rao visualizes data from the Bureau of Labor Statistics for further analysis.

Where Americans Spend Their Money

America’s consumer class spent nearly $19 trillion on goods and services in 2023.

For context, this was about 68% of the U.S. GDP that year. It was also larger than China’s overall GDP that year as well ($17.8T).

Housing and utilities ($3.3T) and health care ($3.1T) were the top household expenditure categories overall.

Meanwhile, Americans spent the most money on groceries ($1.4T) in the goods category.

In case these numbers seem too big to comprehend, we’ve also broken down household expenditure by year and by month.

Comparative figures may vary as insurance expenditure can sometimes be included within a broader category (housing, transportation), or spun-off on its own.

In a similar vein, another graphic from eight years ago provides some other useful insights: how the share of each category’s expenditure has changed since the 1940s.

While the data isn’t as recent, other trends are visible: health care and housing expenditure have been trending up, clothing and food have been coming down.

The Pros and Cons of the Service Economy

Tellingly, services account for nearly 70% of America’s personal consumption expenditure.

This is matched by the supply side as well: nearly 80% of America’s jobs are in the service sector.

America’s transition away from manufacturing into services—both as producer and consumer—is a story with many episodes and arcs. While it has driven the growth of high-value technology and financial companies, it has also resulted in the loss of blue-collar jobs in America.

This context is particularly relevant in the Trump administration’s second-term.

Broad-based tariffs on imported goods have been declared to reduce trade deficits and to incentivize companies to move their manufacturing back into the country. However, modern manufacturing is built off global supply chains and just-in-time shipping, and economists worry that the disruption will only raise prices for Americans.

Wondering what China’s economy looks like broken down by sector? Check out: China’s $18.6 Trillion Economy in One Chart for a quick overview.

One of the most detrimental consequences of the stagflationary surge in the US since 2020 was the meteoric rise in housing prices, from rentals to purchases to mortgages, across all markets.  At present the cost of housing stands at around 30% of the average American’s income, with home prices and rentals seeing at least a 60% increase in only 5 years.  In high traffic markets the prices have jumped far higher. 

Inflation in fixed expenses like housing, utilities, gasoline, food, etc. directly reduce disposable income which forces consumers to cut back on retail and recreational purchases.  Higher prices in retail goods can be weathered through savings and spending adaptation, higher prices in fixed expenses is much more difficult to deal with and the results are hard to miss.

There may, however, be a light at the end of the tunnel with new developments suggesting a decline in housing costs is on the way. 

The US Existing Home Inventory is back on the rise after hitting rock bottom in 2022, with a considerable jump occurring in the year (February numbers indicate a 17% jump since 2024).  This is partially because incredibly high prices driving down purchases, but recent events indicate that the inventory trend is going to accelerate in 2025.

Foreign Buyers Exiting The US Market

One of the first actions of the Biden Administration in the face of the housing crisis should have been to enact a moratorium on foreign purchases of US properties.  This didn’t happen, of course, but the tides may be shifting in favor of US buyers in the near term/ 

Canadian real estate investors and “Snow Birds” using secondary properties in the US as vacation homes are now reportedly selling off their holdings in light of the Trump Administration’s tariff blitz.  America’s socialist neighbors to the north are apparently cashing out at record pace.  Oddly, Canadian property owners say they’re “afraid of anti-Canadian sentiment” in the US as the reason for dumping their second homes.  The US and foreign media have these people terrified that there’s a wave of “Canadian hate” rolling through the American heartland.

This isn’t happening, but on the bright side this frees up a considerable number of homes for the US market and will ultimately help to lower prices.  Canadians are the largest foreign property buyers, taking up at least 13% of all home purchases in the US in 2024.  

It’s not just Canadians exiting, though. Chinese and European buyers are backing off with some states moving to block property purchases by foreign interests and hysteria over America-first nationalism frightening prospective investors.  Ultimately, this is a net positive for Americans desperate for some relief in a home market that the vast majority of citizens cannot afford.  

Deportations And Falling Rental Prices

It may be true that most illegal aliens don’t buy houses, but they certainly take a massive bite out of available rentals.  With an estimate 17 million to 20 million illegals in the US at the time Joe Biden left the White House and a shortage of at least 11 million houses as of 2024, the obvious solution would be to kick out as many migrants as possible to free up the rental market.  

This may have already begun.  Trump border restrictions and changes to immigration policy have been wildly successful in cutting illegal border crossing.  In March, Border Patrol reported a 95% drop in encounters on the southern border, an epic decline from the Biden Administration.  ICE also reports that they have deported at least 100,000 and arrested 13,000 others since Trump took office.  Some skeptics might argue that this is nowhere near enough, but it does not account for the millions of migrants that are self deporting.       

At least 900,000 migrants that entered the US under Biden’s CBP One App have been ordered to self deport are or be arrested in the coming months.  US rental prices have been cooling for the past year, but much too slowly.  The drop in housing demand by illegals is expected to create a larger availability pool by the end of 2025, though some leftist media outlets assert that the loss of illegals will cause a decline in home construction and hurt the market instead.

Airbnb Bonanza Fizzles And Opens The Market To 2 million Homes

The Airbnb craze has been dying for at least the past two years.  High property taxes, declining revenues, skyrocketing insurance rates and a drop in tourism means the potential for profits is getting slimmer by the month.  With over 2.4 million homes listed as Airbnb rentals in the US right now, there’s a good chance these properties will end up for sale or as long term rentals by the end of 2025. 

The overall trend is deflationary, which is likely to scare a lot of people, but without this is necessary for any return to affordability in housing. Supply must increase in order to offset demand. Unless there are some dramatic changes soon, millions of Americans may be priced out of a home entirely. 

Authored by Matthew Vadum via The Epoch Times,

Supreme Court Justice Samuel Alito filed a strongly worded dissent from the court’s order issued early April 19 that temporarily blocked the Trump administration from deporting alleged members of the Venezuelan criminal gang Tren de Aragua.

The dissenting opinion, which was joined by Justice Clarence Thomas, was posted on the court’s website early on April 20.

“In sum, literally in the middle of the night, the Court issued unprecedented and legally questionable relief without giving the lower courts a chance to rule, without hearing from the opposing party, within eight hours of receiving the application, with dubious factual support for its order, and without providing any explanation for its order,” Alito wrote.

“I refused to join the Court’s order because we had no good reason to think that, under the circumstances, issuing an order at midnight was necessary or appropriate.”

“Both the Executive and the Judiciary have an obligation to follow the law. The Executive must proceed under the terms of our order in Trump v. J.G.G., and this Court should follow established procedures,” Alito wrote.

The justices acted even though “it is not clear the Court had jurisdiction,” or authority to hear the case, he wrote.

“The papers before us, while alleging that the applicants were in imminent danger of removal, provided little concrete support for that allegation,” Alito wrote.

In Trump v. J.G.G., the Supreme Court on April 7 granted the president’s request to pause a federal district judge’s orders preventing his administration from using the Alien Enemies Act to deport suspected members of Tren de Aragua but determined that detainees must be given an opportunity to challenge their removal.

The unsigned one-page administrative stay issued early April 19 to which Alito referred directed the federal government “not to remove any member of the putative class of detainees from the United States until further order of this Court.”

An administrative stay gives the justices more time to consider the emergency request to block the deportations. That order did not provide an explanation of why the court acted.

The order was issued after the American Civil Liberties Union (ACLU) filed an emergency request on behalf of two Venezuelan nationals late on April 18, asking the Supreme Court to immediately block their deportation.

The emergency application in A.A.R.P. and W.M.M. v. Trump challenges President Donald Trump’s use of the Alien Enemies Act to deport illegal immigrants who are alleged or confirmed criminal gang members. A.A.R.P. and W.M.M. are the initials of two of the detained men.

The ACLU also sought a temporary restraining order from the U.S. District Court in the District of Columbia, as well as a stay of removal order from the Fifth Circuit, according to the application.

On March 14, Trump signed Proclamation 10903, in which he officially declared that Tren de Aragua, a designated foreign terrorist organization, “is perpetrating, attempting, and threatening an invasion or predatory incursion against the territory of the United States.”

The group is using mass illegal immigration to the United States to harm U.S. citizens, undermine public safety, and support the goal of the Venezuelan socialist regime with which it is associated to destabilize “democratic nations in the Americas, including the United States,” the proclamation said.

The president invoked the Alien Enemies Act to authorize the “immediate apprehension, detention, and removal” of members of the group who are Venezuelan citizens 14 years of age or older and who are not U.S. citizens or lawful permanent residents of the United States.

The application said the ACLU’s clients are challenging the Trump administration’s use of the federal statute to deport them. The clients “are in imminent and ongoing jeopardy of being removed from the United States without notice or an opportunity to be heard, in direct contravention of this Court’s order in Trump v. J.G.G.”

“Many individuals have already been loaded on to buses, presumably headed to the airport,” and are at risk of being sent to a prison in El Salvador, according to the April 18 application.

On March 15, the Trump administration used the Alien Enemies Act to deport at least 137 Venezuelans to El Salvador, where they are now incarcerated “possibly for the rest of their lives” at the Salvadoran Terrorism Confinement Center, which is “one of the most notorious prisons in the world,” the application said.

The application alleged that many of those deported since March 15 were not members of Tren de Aragua.

“Such false accusations are particularly devastating given the present Applicants’ strong claims for relief under our immigration laws,” the application said.

The application came one day after U.S. District Judge James Wesley Hendrix of the Northern District of Texas denied the ACLU clients’ request for a temporary restraining order halting removal efforts.

Hendrix rejected the ACLU’s claim that its clients were “at imminent risk of summary removal” because the government denied the allegation.

Late on April 19, Solicitor General D. John Sauer urged the Supreme Court to deny the application.

“At a minimum, if the Court keeps its administrative stay in place, the government respectfully requests that the Court clarify that it is administratively staying removals only under the [Alien Enemies Act], and that its order does not preclude removal pursuant to any other immigration authorities,” Sauer wrote.

It looks as though trade progress is being made with Japan, as concessions about automobiles were reported on this weekend, signaling that Trump administration could be heading towards a revised agreement with the key ally nation. 

Japan may loosen auto safety rules for U.S. imports to address President Trump’s concerns over the low number of American cars sold there, Nikkei reports. With differing safety standards between the two countries, Tokyo is eyeing crash test regulations as a possible trade concession, according to Nikkei.

During a White House meeting, Trump criticized Japan’s trade surplus and poor U.S. auto sales. Cabinet-level talks focused on non-tariff barriers, particularly in the auto and agriculture sectors.

Japan, a signatory to a 1958 U.N. pact on unified auto standards, maintains its own certification process, requiring separate approval for American imports—a process that can take months. While the U.S. participates in discussions under the U.N. framework, it uses its own safety rules and lets automakers self-test.

The Nikkei report says that the U.S. Trade Representative recently flagged Japan’s crash test requirements as a non-tariff barrier, citing them as overly burdensome and unfair to U.S. carmakers. These safety standards—especially for frontal and side collisions—have long been a sticking point in trade talks.

During past Trans-Pacific Partnership (TPP) negotiations, Japan agreed to ease some requirements for U.S. imports, such as skipping certain tests like fire retardancy. It also expanded exemptions for low-volume American car sales. However, those TPP concessions faded after Trump withdrew the U.S. from the pact in 2017.

Authored by Michael Snyder via The End of The American Dream blog,

Most people on the right have no idea just how crazed many people on the left have become.  Right now, a conspiracy theory which claims that President Trump is preparing to declare martial law in the United States is spreading like wildfire on social media. 

 According to that conspiracy theory, a report will be submitted to President Trump on April 20th which will recommend that he should invoke the Insurrection Act to help deal with the border crisis.  That would allow U.S. troops to help secure the border, but many leftists are convinced that President Trump will also use U.S. troops to round up political activists and send them to prisons in El Salvador.  I realize that this may sound really bizarre to many of you, but this is what many of them actually believe.

Early last month, an article that was published by the San Francisco Chronicle got the ball rolling by highlighting the fact that the Secretary of Defense and the Secretary of Homeland Security will soon submit a report to President Trump recommending whether or not to invoke the Insurrection Act…

The clock is ticking down on a crucial but little-noticed part of President Donald Trump’s first round of executive orders — the one tasking the secretaries of the Department of Defense and Department of Homeland Security to submit a joint report, within 90 days, recommending “whether to invoke the Insurrection Act.”

Many of us are now holding our collective breath, knowing that the report and what it contains could put us on the slippery slope toward unchecked presidential power under a man with an affinity for ironfisted dictators.

That is not exactly an honest characterization of what that executive order says.  I have reproduced the relevant portion of that particular executive order below…

Within 90 days of the date of this proclamation, the Secretary of Defense and the Secretary of Homeland Security shall submit a joint report to the President about the conditions at the southern border of the United States and any recommendations regarding additional actions that may be necessary to obtain complete operational control of the southern border, including whether to invoke the Insurrection Act of 1807.

The Trump administration wants to use U.S. troops to help secure the border, and that is probably what we are going to see.

But many leftists are absolutely convinced that we are also about to see martial law in this country.

An article that was authored by an anonymous leftist known as “Aletheisthenes” that was entitled “Part 1: On April 20th, 2025, the United States may Cross the Point of No Return” has created a firestorm of panic among far left radicals.  According to that article, once President Trump officially invokes the Insurrection Act it will set a “larger plan in motion”…

And as his two months in office has already shown, he won’t stop at just a legal opinion.

Expect an executive order even that same day or the next, officially declaring the Insurrection Act, restricting freedoms in the name of restoring control of the border and perhaps in blue-state cities, and setting the larger plan in motion.

Of course, this won’t be framed as an attack on democracy. It will be packaged as a necessary response to crisis — as authoritarian takeovers always are.

But once it happens, there’s no going back.

This will be the point of no return.

Aletheisthenes believes that the plan to implement martial law in this nation will unfold in eight stages…

1. “Resist!” Demonstrations Grow — Just As Planned

2. The False Flag Crisis: Turning Protest into “Terror”

3. Trump Declares Expanded Martial Law — And Calls for Militia to assist the police and Military

4. Mass Arrests of Opposition Leaders

5. Military & National Guard Take Over Major Cities

6. Press Censorship & Total Media Control

7. Borders Close & Dissidents Are Trapped Inside

8. Elections Are “Postponed” Indefinitely

Needless to say, this is not what Trump intends to do.

But I do believe that anti-Trump protests funded by very deep pockets on the left will continue to grow, and every time President Trump does something to try to keep those protests under control it will fuel their delusions even more.

Aletheisthenes followed up his original article with another very popular article in which he claimed that Trump’s ultimate goal is to “fully overthrow the United States government”…

On or slightly after April 20th, 2025, Trump will most likely sign an executive order invoking the Insurrection Act.

The excuse will be to secure the border and deport violent gang member illegal aliens, and possibly bring order to out-of-control cities, but it will actually be the first step to eventually fully declare martial law across the United States, and suspend civil liberties, and the US Constitution.

To most it will come without warning. The press might not even report on it until the last minute. When it happens, expect confusion, misinformation, and panic. Many will be caught off guard.

(But a few of us won’t be, at least not entirely — because we saw this coming.)

The ultimate purpose is to eventually fully overthrow the United States government, put Trump, his billionaire co-conspirators, and people who share the values of his very fuzzy reactionary political coalition fully and permanently in control.

This is nuts.

But this is what they actually believe, and they are going to act accordingly.

The narrative that President Trump is some sort of a dictator will motivate leftists to show up at protests, and when some of those protests inevitably turn violent and authorities are forced to respond it will cause even more easily fooled people to embrace that narrative.

You should see what leftists are already saying on social media.  Here is just one example…

“As a veteran, if martial law is declared in the U.S., it means the Constitution is suspended. Civilian government Gone. Freedom of speech, assembly, the press? Gone. Curfews. Checkpoints. Arrest without warrants. No due process. I believe the military would stand with the people & Constitution”

They are openly talking about civil conflict, and this has been going on for months.

But most people on the right have no idea this is happening.

The conspiracy theory that I have discussed in this article has gained so much traction that Snopes was even forced to address it…

One reader emailed Snopes, “I am seeing many posts on Facebook that on April 20, Trump will declare martial law.” Another person referenced an executive order issued on Jan. 20, the first day of Trump’s second term, and asked, “I have seen a variety of posts suggesting that an early executive order signed by the president has set the stage for the imposition of martial law, and that this will be triggered by a report on the state of the border that will be released on April 20. Any truth here?”

At this point, Snopes considers this conspiracy theory to be more of “a prediction than a provable claim”…

As of this writing on April 9, this rumor existed more as a prediction than a provable claim. Searches of the websites for the Department of Defense, Department of Homeland Security and the White House yielded no announcements, statements or demonstrable evidence that might help to shed light on the unproven matter.

I actually think that there are many on the left that would love to see President Trump declare martial law, because they are convinced that would give them justification for what they have been intending to do all along.

We have never been more divided as a society than we are right now.

Civil disorder on a scale that we have never seen before is coming, but even after all of the political violence that we have already witnessed in recent weeks a lot of people still don’t want to believe it.

But sticking our heads in the sand won’t make the threat go away.

Our society is reaching a boiling point, and it won’t be too long before events spiral completely out of control.

*  *  *

Michael’s new  book entitled “Why” is available in paperback and for the Kindle on Amazon.com, and you can subscribe to his Substack newsletter at michaeltsnyder.substack.com.

Northrop Grumman’s mission to design and build the world’s largest and most advanced solid rocket motors may have been derailed last week after an explosion rocked its Promontory, Utah, facility.

Local media Fox 13 reported that one of the aerospace and defense technology company’s buildings at the Promontory test facility was destroyed in an explosion last Wednesday morning. When emergency responders arrived at the incident area, they found one building destroyed. 

“Initial reports indicate that there are no injuries or fatalities at this time. However, as with all ongoing investigations, details may change. There is no further information available for release at this time.  We advise the public to avoid the area,” the Box Elder County Sheriff’s Office wrote on a Facebook post hours after the explosion. 

Northrop Grumman told Fox 13 that the building destroyed was used to “produce an ingredient in solid rocket motor propellant and is one of many in its production network,” adding that no solid rocket motors were destroyed or damaged in the blast.

Here’s more context on the explosion and its potential impact, via Space.com:

Northrop Grumman’s Utah facility manufactures and tests solid rocket engines, like those used to launch NASA’s Space Launch System (SLS) rocket for the Artemis Program. Their campus spans over 10 miles (16 kilometers) of Utah desert, northwest of Promontory, with two central hubs of facilities.

Wednesday’s explosion destroyed a building in the northwest portion of Northrop Grumman’s northernmost collection of site infrastructure, about 8.5 miles (13.5 kilometers) north of the company’s test stand for the SLS solid rocket boosters. 

Northrop Grumman did not provide insight into what caused the explosion at the solid rocket motor factory.

Authored by Zachary Stieber via The Epoch Times (emphasis ours),

The Food and Drug Administration (FDA) is removing pharmaceutical company representatives from advisory committees in a bid to limit industry influence.

Dr. Marty Makary, the FDA’s new commissioner, issued a directive that eliminates the role of pharmaceutical representative.

“Industry employees are welcome to attend FDA advisory committee meetings, along with the rest of the American public, but having industry employees serve as official members of FDA advisory committee members represents a cozy relationship that is concerning to many Americans,” Makary said in a statement on April 17. “In fact, the FDA has a history of being influenced unduly by corporate interests.”

The FDA has 32 different advisory committees, including panels that advise the agency on vaccines, food, and medical devices. Members are primarily a mix of federal employees and experts who do not work for industries.

But each FDA committee has an industry representative and an alternate industry representative. The Vaccine and Related Biological Products Advisory Committee, for instance, had a Pfizer officer and a Dynavax officer listed on the roster for its most recent meeting.

The industry representatives do not vote on what advice to convey to the FDA, but “offer perspective of a pharmaceutical company,” Kim Witczak, who has served on several FDA advisory committees, told The Epoch Times in an email.

“Sometimes they will say something that could influence or sway the discussion. I always wondered why they were on the committee,” she said.

The FDA did not release Makary’s directive but described it as limiting people employed at companies regulated by the FDA, such as pharmaceutical firms, from serving as members of FDA advisory committees.

“Today’s action will not preclude employees of regulated companies from attending or presenting their views at advisory committee meetings or serving as representative members of the committee when required by statute,” the agency stated. “Also, exceptions can be made in rare circumstances (i.e., when the scientific expertise in an area is only available from an employee of an FDA-regulated company) provided that the official strictly complies with the applicable ethics requirements.”

Makary said the directive was issued to make sure scientific evaluation of new products is independent.

“Public trust in the healthcare-industrial complex is at an all-time low. We need to restore impeccable integrity to the process and avoid potential conflicts of interest,” he said.

PhRMA, a trade group for the pharmaceutical industry, did not respond to a request for comment.

On Saturday the armed wing of Hamas, known as the Qassam Brigades, issued a ‘proof of life’ video showing Israeli hostage Elkana Buhbut speaking to his US national wife in a phone call, requesting that President Donald Trump release hostages from Gaza.

Elkana’s family released a statement alongside the video: “For 535 days Elkana has been trapped in an ongoing hell,” the family said. “The video reveals his dire condition – he has lost substantial weight from prolonged starvation, suffers from skin and respiratory problems in addition to his asthma, and has been deprived of daylight for nearly a year and a half.”

“This footage provides further evidence that Elkana must be returned home to his family, to his wife Rivka and son Re’em David immediately,” the statement read. 

“Elkana is desperately calling for help, begging not to be forgotten in these hellish tunnels. We urgently appeal to Prime Minister Benjamin Netanyahu and US President Donald Trump – please consider this as if he were your own son, the father of your grandchild, who is waiting to see daylight, hearing IDF bombs overhead while living in constant fear for his life.”

Trump has lately appeared to back Prime Minister Benjamin Netanyahu’s pledge to unleash “hell” in Gaza and pursue “complete victory” against Hamas.

But this plan has outraged families of the remaining captives, who are demanding that the broken ceasefire be renewed at least until they can get their loved ones back.

This isn’t the first time that Buhbut has been featured in a Hamas propaganda video. Some pundits accused Hamas of staging a fake phone call for the Buhbut hostage video…

With the family’s permission: Hamas released a propaganda video of hostage Elkana Bohbot, 36, for the third time.

They forced him to fake a phone call with his family—who he hasn’t spoken to in 550+ days. This is one of the most sick acts of psychological terrorism I’ve seen. We… pic.twitter.com/XZp0YngTDU

— Hen Mazzig (@HenMazzig) April 19, 2025

Earlier this month Hamas said it is ready to release all remaining hostages if a permanent ceasefire is reached. At the same time, Palestinian officials have asserted that the group will “never disarm” until a Palestinian state is created. Israel fears the terror group would just rise up again and resume rocket launches on its territory.

At this point there seems little hope for a renewed truce, as Israel has fully committed to a renewed air and ground campaign, and has kept Rafah and other cities surrounded and under military occupation.

By Peter Tchir of Academy Securities

Dealpalooza

It was a relatively quiet week on the tariff front. Last Friday night we had more tariff exemptions, followed by promises (or threats) of sectoral tariffs. But since then, the chatter has become all about the deals.

Ok, there is the talk about firing Fed Chair Powell, but away from that, on the economic front, we seemed to have switched from the tariff phase to the deal phase.

I do not think firing Powell would be a good thing over time. It would be a step towards reducing (or eliminating) the Fed’s independence. I don’t always agree with their policy. I do think it is weird that they feel the need to have less dissent than the politburo on their votes. But I think the appearance (and largely reality) of Fed independence helps the dollar and the Treasury market.

But markets are more likely to move on “deals” than anything else in the coming days and weeks (assuming some new, major topic doesn’t get introduced into the conversation).

Deal Messaging

The administration is touting deals. Progress. More deals. However, the administration seems to have backed off from stating that countries are begging for deals.

The U.S. messaging is clear (and less aggressive than before):

• Countries are calling. Countries are lined up.
• We will get deals. Good deals.

The messaging from the rest of the world is far from clear:

• Japan specifically met on trade and provided almost no detail. Neither side seems to have leaked any details.
• China has said very little, if anything, through official channels. Not too surprising as they are “public enemy number 1” but it doesn’t support the administration’s messaging that China is coming for a deal.
• I’ve spent hours looking for details on the deals, from the U.S. and abroad, and cannot find anything outside of the U.S. Even within the U.S. the messaging seems a bit mixed, though it is still leaning towards rectifying unfair situations and improving trade balances.

With little to no information, we have to guess which is an issue, but at least it can help us prepare a plan for how to react to the headlines.

What Are Tariffs Meant to Achieve?

The first problem in trying to evaluate our trade and tariff policy is trying to understand what tariffs are supposed to achieve.

• A bargaining position.
  • I’m not sure what we are bargaining for, but this would indicate that tariffs would be temporary.
• Increased sales of Made in the U.S.A.
  • Imported goods would rise in cost relative to domestic goods, which should increase domestic sales. That requires tariffs to stay in place.
  • If tariffs against the U.S. are reduced or eliminated, then American made goods would be less expensive to import. This would likely occur only if the tariffs were temporary.
• A revenue source. Tariffs would have to remain in place for them to generate money.

Some of the objectives that have been presented by senior people in the administration cannot co-exist. Deciphering which reasons are most important has been incredibly difficult.

One question that comes to mind is how big of an impact will tariffs have on the ability to increase sales of Made in America products?

• If tariffs stay in place, will the price increase on imports be enough to drive Made in America sales? Will it be enough to invest in factories, etc., to build more to sell?
• If other countries abandon tariffs, how much will Made in America sales increase? Very difficult to tell as non-tariff barriers can be as impactful or more impactful than tariffs. Also, it is unclear how much is a function of demand for American products, as opposed to tariffs.

With that part of the equation as clear as mud, let’s move on.

What is Missing in Trade Math

I think we can all safely agree that the administration is focused on trade deficits. We can all argue about a lot of things, but this much is clear. It is consistent with Trump 1.0 as well. Heck, it is consistent with things President Trump said long before he became president.

There are two things that I think are insane to be left out of the trade conversation, yet they are.

• The trade balance of services.
  • Why aren’t services included in our overall analysis of trade with other countries? The U.S. currently has service surpluses with most countries. Maybe it is more difficult to imagine “cloud computing” being manufactured, but it is the sort of thing that the U.S. is exporting – very effectively. Since we all know that the U.S. has become a service economy (for better or worse), it seems insane not to include this number as part of any overall trade analysis.
• Profitability of trade.
  • I assume some things are more profitable than others. If we export things with a higher profit margin than the profit margin made on what we import, basic trade balances overstate the issue. If I buy $200 of stuff from you, that you make 10% on, but sell to you $100 of stuff we make 20% on, are we more balanced than a 2:1 import vs. export ratio would indicate? I think somewhere in the conversation there should be a consideration about profitability, but nowhere does that seem to show up. Services that we export are likely very high profit margin.

A couple of other things “irk” me. Not insane, but curious at least, why they don’t come up more.

• Raw materials and intermediate goods, versus finished products. I haven’t spent much time on this, but it seems to be that knowing more details about this type of trade would help us make better decisions. Are all trade balances equally bad?
• What happens to goods manufactured for an American company that don’t come to America? I presume (for many global companies) that only a portion of the goods they make come back to the U.S. Some are probably sold in China. I assume, that for many, if you want to sell into Asia, you don’t bring them back to the U.S. to sell into Asia. So, an American company that builds something overseas and then doesn’t import it helps that American company. Though conversely, that also means that even more things could be made here because the trade deficit is even worse.

I’m not sure how we got to where we are on trade balances, but I suspect a more detailed discussion and analysis would reduce the perceived problem, rather than amplifying it. But that is not where we are.

The Tariff Rollout

Before thinking about what deals might occur, we do need to look at the tariff rollout.

• China, Canada, and Mexico. Initial wave of tariffs were given a “Fentanyl Reprieve” for Canada and Mexico. Despite what looked like some efforts on that front (especially from Mexico) the tariffs went ahead as the fentanyl reprieve was waived. Maybe the reprieve can come back again. The initial reprieve was positive regarding how the U.S. might address tariffs, but that went to the wayside and hinted at some level of confusion.
• Steel and Aluminum. Separate from other tariffs and were implemented globally. Demonstrated the administration was serious about tariffs.
• Backing off on USMCA Compliant Goods. First autos and then all USMCA compliant goods were exempted from the Canada/Mexico tariffs. Seems like this could have been anticipated, which likely affects how countries come to the negotiating table.
• The Liberation Day tariffs. Literally instant disbelief over the numbers presented. Reciprocal tariffs were anything but reciprocal. To the rest of the world, this looked like the U.S. had gone “off the deep end” on tariffs. (Even to many in the states).
• The Liberation Day tariffs went into effect. More confusion for markets.
• 90-Day Reprieve and “Reciprocal” Tariffs of “only” 10%. What an amazing rally in the stock market. Suddenly 90 days to negotiate (which seems like it would have made sense from day 1). Also, while 10% is at the high side of overall tariffs between countries, it was at least in the ballpark. China was not given a break. It seemed like maybe the administration was reading the T-Reports, and this had pulled us back to the “somewhat reasonable” zone and clearly indicated that China was the main priority.
• Some further exemptions on products, primarily tech. Another thing that made sense, though this looked like the U.S. was once again backing down on something they could have foreseen as an issue.
• Then statements about how National Security and sectoral tariffs would pick up the slack here. Though it has been quiet since then.
• Further restrictions on what chips can be sold to China. Hit some U.S. stocks, but further enforced the view that China is public enemy number 1.

How the tariffs have been rolled out and have evolved, I think is important.

The Foreign Mindset Coming Into Negotiations

As countries come to the negotiating table, I think this is a reasonable assessment of their state of mind.

• Some confusion over why they were targeted and the amount they were targeted with.
• Some trepidation about needing the U.S. market, but also about how much they can depend on any deal going forward.
• At least somewhat encouraged by what they may see as a series of miscalculations where the administration had to back down because of damage done to our markets or economy.
• The Art of the Deal is quite simple and easily understood. During Trump 1.0, few seemed to understand that. This time, many, particularly Xi, seem to understand that. Presumably, Trump knows that others know the art of the deal and they are adapting. Though, given how events have unfolded, I am not sure that the U.S. policy wasn’t dependent on getting the same reactions from world leaders as they received under Trump 1.0.

My view is that countries are coming in concerned about the economic impact on their country, but with the sense that mistakes have been made, and there is some lack of trust (i.e. deals are going to be viewed as a stopgap solution, giving them time to figure out longer-term solutions).

The Deals

Finally, we get to the main point. Are we going to get “rip your face off” rallies on the back of deals? Or will deals or the lack of deals drag markets (and the economy) lower?

• Face-saving deal. Let’s for a moment assume the administration has had a “rethink” on tariff and trade policy. That they are hearing from so many businesses that the tariff policy as enacted is not helpful. That bringing manufacturing jobs back to America will take years (and would be better accomplished by focusing on domestic policy first, to get the ball rolling). The administration has clearly backed off, so, what would a face-saving deal look like?
  • Reduced tariffs on both sides. I’m 98% convinced this could have been achieved without taking many of the steps that have hurt the administration. The other countries, at this stage, are far more likely to understand both the tariff and non-tariff barriers they have in place and where to cave and where not to cave to get the best deal for themselves.
  • Commitments to buy American made goods – with a focus on defense and agriculture. No real teeth to enforce compliance.
  • Some commitment to not allowing China to use them to change “country of origin” designations. It’s a bit tricky, but not a big deal.
• My estimate for this type of deal being offered by the U.S. to most countries has jumped from about 20% likely to 70% likely (given recent news flow and actions around tariffs).
• The administration can claim a win, and anyone trying to point out that these results could have been achieved without damaging the U.S. reputation, will be shouted down in social media. The end state will be a similar economy to what we had before. Tariffs were only a portion of the problem, and a minor one at that. Countries won’t increase their actual purchases of U.S. goods for long. They will take the lull to figure out ways to be less dependent on the U.S. So, markets may rally on the first deal headline or two, but fade as markets will establish that the U.S. economy and U.S. corporations are in a worse spot after these deals than before this whole thing started.
• Real Trade Balance Deals. If the side that has advocated for bringing production home wins, then the U.S. will need deals like this:
  • Commitment to buy American made goods, with hard figures and punishments for failing to comply. A real effort to ramp up sales of American made goods. Countries commit to buying from America and face punishment (presumably high tariffs) for failing to comply. This might be difficult for many countries to agree to.
  • Restrictions on business with China. At the very least, countries will be forced to acknowledge that China can not use them as a conduit to change country of origination. The U.S. may try to get other countries to tariff China (which would make U.S. imports look cheap relative to China). Some willingness to combat China’s worst offenses is likely palatable, but countries will be careful about being too aggressive against China, given China’s size, and in some cases, its proximity. Also, given the erratic nature of U.S. trade policy since the inauguration, countries have to be more hesitant to be perceived as anti-China than before the policies were launched.
  • Tariffs as a mix of revenue, punishment, and wins. Tariffs drop in importance if the true aim is to get trade balances in line.
  • It would be nice if the two things that I think are missing from the tariff math are incorporated into the administration’s view, as the starting point would be much closer than it is currently being viewed.

Let’s assume this approach is now only used 30% of the time. I think this approach has a very low success rate. Countries, for a variety of reasons, are likely to resist this. As time goes on, if we don’t get deals, the market will sense that the U.S. has over-reached and will have to price in more economic problems and lower corporate profits. If the U.S. gets deals of this nature, it would be a big and actual win.

The Path of Negotiations and Deals

My base case is that the U.S. likely started down the “Real Trade Balance Deals” path and that is why we are hearing so little from other countries. They are potentially left confused or even flabbergasted by U.S. demands and are not in a rush to sign that type of deal.

Maybe some countries cave and sign that type of deal, bringing more countries to that type of deal.

But if we go weeks without deals, or worse, leaks that countries are far apart, look for the negotiating strategy to shift to “Face Saving Deals” (if it hasn’t already).

I could be wrong on how I read the “cards” at the table, but that is my best estimate of who is holding what. I think the biggest risk for markets and the economy, is that one side thinks their cards are far better than they are (and from what I’ve seen so far, that risk seems to be more likely on the American side). That would mean the problems in the global economy would mount and the risk of a deep recession would grow.

Damage to the American Brand

If the entire world lets bygones be bygones, we can get back to roughly where we were before. 

I just don’t see that.

I think there will be an extended period where American stocks, bonds, and products suffer from the geopolitical and economic actions taken.

I would love to be wrong here, but I don’t think I am. Especially since even if deals are signed, the news flow, economically, geopolitically, and domestically will certainly highlight divisiveness that doesn’t help heal any wounds that have been created.

Bottom Line

I think the volatility and “beta” to any given headline has been reduced.

I think this is a path back to where we all thought we were headed – growth fueled by business-friendly strategies. Taking actions to spur the development of domestic industries, with an emphasis on issues linked to National Security. The extraction and PROCESSING of commodities, especially those that are energy-related, or crucial to future tech. Chips. A more domestic-focused policy can achieve the goals over time, and have a narrower range of outcomes (that are more predictable than trying to rebalance global trade relationships, that took years to form, in a matter of months).

A pivot is required, and we might get it.

I would be pleasantly surprised to see some very strong trade deals announced, but my base case is that we realize that this approach isn’t working, and we wind up getting some face-saving deals.

The economy is slowing, and I think that will become more evident in the coming weeks (unless I’m surprised on the “big trade deal” front).

The U.S., as an investment choice, a tourist destination, or a brand more broadly, is going to act to slow the economy and markets.

That should be good for rates, but all the hope about deficit reduction seems to be diminishing. Much of what I think would be required to make a pivot successful will involve spending.

I think that keeps bonds in a range (maybe a wide range of 4.1% to 4.5% on 10s) but a range, nonetheless. At the moment, the risk of breaking out of this range is to the higher yield side. I see more headline risk to bonds than optimism, especially on the deficit side of the equation.

Equities will suffer, in dribs and drabs, if the U.S. doesn’t back down on what we hope to achieve in trade negotiations.

To me, it comes down to undoing a lot on the trade front and pivoting sharply to doing what is in primarily U.S. control.
Good luck and hopefully the shelf life of this thought process is more than a few hours.

The rate at which announcements shaping the geopolitical environment, the economic environment, and the investing landscape is staggering.

Hope you have been able to use the long weekend to regroup and get ready for more! And hopefully it is Dealpalooza time – we could all use that!

Authored by Zachary Stieber via The Epoch Times (emphasis ours),

The Department of Health and Human Services (HHS) has stopped funding for a next-generation COVID-19 vaccine that received an award during the Biden administration, the company making the vaccine said on April 16.

Georgia-based Geovax said that the stop-work order from HHS went into effect on April 11 and affected an award of some $24.3 million from the Biomedical Advanced Research and Development Authority (BARDA), an HHS component that was placed in charge of the Biden administration’s Project NextGen.

“We had no prior indication that the notice was forthcoming. We were surprised by the notice as both ourselves and our external contractors and consultants were making good progress and had a seemingly productive working relationship with the technical team at BARDA,” David Dodd, Geovax’s president and CEO, said at a conference on Wednesday.

According to Dodd, the financial impact of the canceled funding on the company will be less than $750,000 annually for overhead and personnel costs.

The stop work order came about five months before the phase 2b portion of the clinical trial was scheduled to start enrolling participants, he said.

“We assume, from what we can determine, that the contract termination is resulting from the ongoing government efficiency efforts under the new administration,” Dodd said.

An official with HHS told The Epoch Times in an email, “The COVID-19 pandemic is over, and HHS will no longer waste billions of taxpayer dollars responding to a non-existent pandemic that Americans moved on from years ago when there are other emerging public health threats that we can better prioritize resources for.”

Under President Donald Trump and Health Secretary Robert F. Kennedy Jr., the department and other agencies have been cutting staffers and programs deemed wasteful.

U.S. officials in June 2024 announced the award to Geovax to conduct the phase 2b clinical trial for the vaccine, which BARDA described at the time as a novel candidate “that may provide broader, longer protection.”

Project NextGen was awarding $5 billion in funding for the next generation of COVID-19 vaccines, therapeutics, and tests.

GEO-CM04S1, GeoVax’s vaccine, will still be developed, the company said.

“We do not anticipate any significant changes to our ongoing operations resulting from the contract termination,” Dodd said, adding later that they “remain committed to GEO-CM04S1 as a critically needed next-generation COVID-19 vaccine providing [the] potential of a more robust immune response against emerging variants.”

HHS previously issued a stop-work order for another COVID-19 vaccine, made by Vaxart, that received funding through Project NextGen. An HHS spokesperson told The Epoch Times in February that the order was issued several days before 10,000 people were scheduled to start clinical trials for the shot.

“Four years of the Biden administration’s failed oversight have made it necessary to review agreements for vaccine production, including Vaxart’s,” Kennedy told Fox News at the time.

More recently, the Food and Drug Administration, another office inside HHS, did not decide whether to license Novavax’s COVID-19 vaccine, which is under emergency authorization, before a deadline.

Kennedy said that officials are looking at the vaccine while alleging that single-antigen vaccines have never worked for respiratory illnesses such as COVID-19.

Novavax has said the vaccine is effective.

Dr. Tracy Hoeg, a special assistant to Food and Drug Administration Commissioner Dr. Marty Makary, told a panel meeting this week that the administration will provide an update on the Novavax vaccine soon.