China & USA – De-escalation at last
China and the US announced a de-escalation of the trade war suggesting that greater concessions could be made if talks continue to progress
- The agreement negotiated between a Chinese delegation and Scott Bessent in Geneva stated that both countries would lower duties in order to give them more time to negotiate
- USA will reduce levies on most Chinese imports from 145% to 30% with China dropping its duties from 125% to 10%
- President Trump maintained some sort of caution saying that tariffs could be re-instated if talks over the next 90 days failed to secure an acceptable trade deal – he added that tariffs will not return though to 145%
Trump vs. Pharma
President Trump announced he plans to reduce US prescription drug costs in order to bring them in line with other countries worldwide – this would mean a 30% to 80% cut in prices
- An executive order was signed by the president on Monday asking pharmaceutical companies to lower prices in the US voluntarily or risk facing regulatory measures
- Companies had expected such an action, however the order was weaker than initially expected
- Even if it is currently illegal to import pharmaceuticals, the administration may start looking to bring in drugs from other nations if the industry doesn’t begin negotiating soon
- Trump tried a similar tactic during his first term, but the plan ultimately collapsed under a series of legal challenges
US inflation: Softer than expected
US inflation rose by less than forecast in April – driven mainly by tame prices for clothing and new cars
- Core CPI (excluding food and energy) for April increased by 0.2% from March, below expectations of 0.3% – third straight month of a softer than forecasted reading
- Report highlighted how certain goods highly exposed to tariffs, such as cars and clothes, didn’t see price increases that economists expected – importers and retailers are probably absorbing some costs and many imported products arrived before tariffs kicked in
- Weakness reported in services like travel and recreation – this suggests consumers are cutting on leisure and discretionary spending
Harvard Hit by $450 Million Federal Cut
The US administration is terminating $450 million in grants to Harvard, citing the school’s failure to confront “race discrimination and antisemitic harassment”
- The government has criticized Harvard’s response to rising antisemitism on campus, including the awarding of a fellowship to a protester who faced criminal charges for assaulting a Jewish student
- Republican lawmakers unveiled legislation that would significantly increase taxes on endowments for the nation’s wealthiest universities, including Harvard
- Under the bill, Harvard and four other schools would pay a rate of 21% on their net investment income, compared with the current 1.4%
- Harvard is suing the Trump administration over demands made on its academic and disciplinary policies, with President Alan Garber warning of government “overreach” threatening key freedoms
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