US Tariffs Spark Global Economic Uncertainty

Auto workers in Windsor, Ontario, Canada, are bracing for the worst as US tariffs on Canadian-made vehicles and auto parts come into effect. The city, known as "Ford City," has a long history of automobile manufacturing, with Ford and Stellantis (formerly Chrysler) having major operations there. The tariffs, imposed by US President Donald Trump, have caused anxiety among the 24,000 people directly employed in the automotive industry and the estimated 120,000 others whose jobs depend on it. Workers fear losing their jobs and the impact on their families and community, with some describing the situation as "terrifying" and "a stab in the back." Canada's political parties have rolled out plans to help the auto sector ahead of the country's general election, but workers remain uncertain about the future.

European stock markets were set to rise on Monday as the U.S. temporarily exempted certain tech items, including smartphones and computers, from tariffs imposed on Chinese imports. The exemption provided some relief to tech companies, with Asian tech giants such as Hon Hai Precision Industry and LG Innotek seeing gains. However, uncertainty remains around U.S. President Donald Trump's tariff policy, with questions over how long the exemptions will last and how countries will respond. The start of first-quarter earnings season also drew investor attention, with companies such as LVMH and Goldman Sachs reporting. Meanwhile, oil prices fell on concerns over Trump's tariff rollout, with Goldman Sachs lowering its oil price forecast for 2025 and 2026.

Morgan Stanley warns investors to be prepared for ongoing uncertainty and potential surprises related to US tariffs, advising them to "hold their convictions loosely and keep their stops tight." The firm notes that the US administration's trade policy is difficult to predict and may change frequently, making it challenging for investors to navigate markets. Despite temporary reprieves, such as Trump's 90-day pause on certain tariff rates, the firm's strategists believe that the negative economic impact of tariffs may not be easily offset by fiscal and monetary easing.

A new CNBC Supply Chain survey found that most companies do not plan to move manufacturing back to the US due to high costs, with nearly half saying it would double their costs. Instead, 61% of respondents said they would relocate supply chains to lower-tariff countries. The survey also found that 81% of companies planning to reshore manufacturing would favor automation over human workers. The majority of respondents (63%) expect a recession in the US economy due to President Trump's tariffs policy, with 61% saying price hikes are coming and consumer demand will decline. Most respondents (89%) reported cancellation of orders due to the tariffs, and 75% expect a pullback in consumer spending.

UK retailers are warning that Chinese companies may flood the UK market with low-cost goods due to US tariffs imposed by President Donald Trump, and are calling on the UK government to end a tax loophole that allows imports worth up to £135 to enter duty-free. The British Retail Consortium and the British Independent Retailers Association have raised concerns that Chinese producers, particularly those selling via online marketplaces like Amazon, Shein, and Temu, may redirect goods meant for the US to Europe, putting pressure on UK retailers, especially discounters like Primark and B&M.

The trading volume of zero-day-to-expiration (0DTE) options tied to the S&P 500 surged to 8.5 million in April, a 23% jump since the beginning of the year. These options, which expire on the same day they are traded, have become popular among investors to make quick profits or hedge against sudden market moves. Many contend that the large volumes of 0DTEs can exacerbate price swings in the market as dealers and market makers buy and sell underlying assets to balance their positions, contributing to the unprecedented volatility on Wall Street amid tariff chaos and causing intraday gyrations in stocks. The S&P 500's intraday volatility almost doubled last week to 44%, exceeding 2020 highs and reaching levels last seen during the 2008 financial crisis.

The annual Global Sources Hong Kong trade fair has begun amidst uncertainty over the ongoing US-China tariff war, with exhibitors, mostly Chinese manufacturers, expressing concerns over the impact of the escalating trade dispute on their businesses. US President Donald Trump has imposed tariffs of up to 145% on Chinese imports, prompting China to retaliate with a 125% levy on American goods, causing a significant decline in sales for some companies. Exhibitors, such as Gaoxd Precision Industry and Sky Wing Communication Electronics, reported a drop in sales and are exploring new markets and cost-cutting measures to mitigate the effects, but are largely waiting for the situation to stabilize before making significant decisions.

A group of US small businesses has filed a lawsuit against the Trump administration, arguing that the president's authority to impose tariffs is illegal under the International Emergency Economic Powers Act (IEEPA). The businesses claim that the law requires an "unusual and extraordinary threat" to national security or the economy, which they say has not been met. They also argue that the Constitution gives Congress, not the president, the power to set tax rates, including tariffs. The White House has responded, saying that trade deficits constitute a "national emergency" and that Trump's tariffs are necessary to level the playing field for US businesses. This is not the first legal challenge to Trump's tariffs, with a similar lawsuit having been filed on April 3 by the New Civil Liberties Alliance.

US stock futures rose on Sunday after the Trump administration temporarily exempted electronic imports from China from reciprocal tariffs. Dow futures were up 0.5%, S&P 500 futures rose 0.75%, and Nasdaq Composite futures gained 1.26%. The exemption was described as "not permanent" by Commerce Secretary Howard Lutnick, and another slate of tariffs could be imposed after an investigation into semiconductor imports. The back-and-forth on tariffs has caused uncertainty among investors, with some criticizing the administration's approach as unpredictable.

President Trump's tariffs have left American importers without a safe harbor, as companies that had diversified their supply chains to avoid reliance on China are now facing high tariffs on imports from other countries, including Vietnam, Cambodia, and India. Jacob Rothman, owner of Velong Enterprises, had set up factories in multiple countries to limit his exposure to tariffs and other risks, but was still caught off guard by the broad tariffs imposed by the Trump administration. The tariffs have caused chaos and uncertainty, with many companies paralyzed and craving stability, and are expected to lead to rising consumer prices. Companies are now reconsidering their supply chain strategies, but building factories in the US is seen as a risky and expensive proposition due to the uncertainty of future trade policies and the high cost of setting up a factory in the US.

The dollar fell on Monday as investor confidence in the currency was shaken by US President Donald Trump's tariff pronouncements, with the currency nearing a 10-year low against the Swiss franc; other currencies such as sterling and the New Zealand dollar rose against the dollar.

Kerry Brown, a professor of Chinese studies at King's College, London and former British diplomat, believes China is prepared for the latest US tariffs and has diversified its markets and supplies. Brown thinks China is working to decouple from the US, having expanded its research and development expenditure by 10%. He criticizes the Trump administration's approach, saying that threatening Beijing and presenting "zero-sum" options is a "worse tactic" that will only make China more resolute. Brown suggests that China is likely to stand its ground in the face of US pressure.

The article summarizes 5 news stories from the weekend, including US-China trade war developments, a possible meeting between Xi, Kim, and Putin, and other regional news, highlighting key stories that readers may have missed.