If the goal is to increase exports, then export curbs won’t help.
Another Lose-Lose Trade Story
The Wall Street Journal reports Nasdaq Slides 3% After U.S. Tightens Curbs on Nvidia’s China Exports
A tech-stock rout fueled by trade restrictions deepened Wednesday, with the Nasdaq down 3.1% and Nvidia sliding 6.9%.
The third-largest U.S. company by market value warned late Tuesday that it will take a $5.5 billion charge after the U.S. said it will need a license to export H20 processors to China and other countries.
These less-powerful AI chips had been designed to comply with American export controls. The U.S. government confirmed the restrictions, and said it had put similar curbs on rival AMD.
In tech, another industry linchpin also rattled investors. ASML, whose huge, costly machines are needed to make the most advanced chips, reported much weaker-than-expected orders and warned about tariff-related disruption. Shares fell 5.2%.
Trade turmoil also hit one of the country’s oldest industries: shipping. Shares of J.B. Hunt Transport Services lost 7.7% after the company reported on Tuesday an 8% drop in net earnings in the first quarter. The company blamed slower demand from retailers caused by uncertainty over tariffs.
Beijing named a new top trade negotiator, a former ambassador to the World Trade Organization. New data showed China was able to sustain its growth rate in the past quarter, helped by a surge of exports by U.S. importers in anticipation of new tariffs. Major indexes in Asia and Europe declined.
Another Lose-Lose Trade Story
OK, I understand export restrictions on advanced chips. But NVDIA just took $5.5 billion charge for no reason other than a trade war in which both sides lose.
The more interesting aspect of the story is from J.B. Hunt because it doesn’t match today’s retail sales report.
J.B. Hunt reported an 8% drop in net earnings and blamed slower demand from retailers caused by uncertainty over tariffs.
Retail Sales Surge in March Led by Tariff Front-Running of Autos
Earlier today, I reported Retail Sales Surge in March Led by Tariff Front-Running of Autos
Forecasters accurately predicted tariff front-running would accelerate durable goods sales.
On February 14, 2025 (for January), I commented Retail Sales Crash – Did the Consumer Finally Throw in the Towel?
The Census Department shows huge across-the-board declines in multiple categories, down 0.9 percent overall.
On March 17, 2025, I reported Retail Sales Barely Rise in February, They’re Negative Factoring in Revisions
Retail sales had another poor month in February. It’s very recession looking.
March is one month out of three. The next few retail sales reports will be interesting.
Part of the decline today, perhaps even most was a Fed speech by Jerome Powell.
For discussion, please see Fed Chair Powell Warns of Higher Inflation and Slower Growth Due to Tariffs