Plus: Do it Scandi style
IN TODAY’S EDITION
1️⃣ Did Trump blink? |
2️⃣ China’s Nintendo delay |
3️⃣ Embassy of the day |
Hi Intriguer. I’ve been riding the recent geopolitical moment through memes and reels, including:
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‘Inside the beltway’ memes that use tariffs as an excuse for flaking out on your friends / dates / work meetings. “Girl, it’s the tariffs” is doing the rounds, as well as many linking White Lotus scenes to Wall Street reactions.
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Other content has had me in stitches from creators based in Asia and Europe, who’ve made reels based on how countries in their region are hypothetically reacting to the latest US barrage of tariffs.
I wonder if any of this content is serving as inspiration for world leaders as they recalibrate their responses to the ongoing US tariff twists, our top briefing today.
PS – Don’t miss our candid chat with Taiwan’s superstar ambassador-at-large for cyber affairs, Audrey Tang! It’s online at 8pm EST next Wed 16 April. Register here!
Korea’s opposition leader throws hat in ring.
Lee Jae-myung has stepped down as leader of South Korea’s centre/left opposition to announce his bid for the presidency. The current front-runner, he’s pledging more investment, less inequality, and a pragmatic foreign policy. South Korea will hold elections on 3 June, after the top court confirmed former president Yoon’s impeachment.
Germany’s Merz seals coalition deal.
Friedrich Merz has announced Germany is “back on track” after his conservative party sealed a coalition deal with Germany’s Social Democrats, promising “a strong government capable of action”. He’ll now formally take up the chancellor role once the new parliament convenes in early May.
Turkey and Israel hold deconfliction talks.
After months of recriminations and encroachments onto Syrian turf, Turkey and Israel are now in talks to set a deconfliction line in Syria to avoid any military incidents.
Did Meta give Facebook data to China?
Former executive Sarah Wynn-Williams has told the Senate Judiciary Committee that Meta was ready to “betray its American values” and share user data with the Chinese Communist Party to help build its business there. The company rejects the claims.
Santo Domingo nightclub toll rises.
At least 184 people are now confirmed dead after a nightclub roof collapsed during a concert in the Dominican Republic. Mexican and Israeli personnel are helping local authorities comb through the rubble.
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TOP STORY
Did Trump just blink?
Just after our last edition hit your inbox, Donald Trump decided to:
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a) Cap US tariffs on most countries back down to his 10% baseline for 90 days, but
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b) Raise tariffs on China to 125%, after Xi Jinping upped his own levies to 84%.
Of course, markets breathed a semi-sigh of relief.
But… did Trump blink?
Here are the three main arguments you need to know:
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The art of the deal…
Treasury Secretary Bessent argues this was all part of Trump’s successful strategy, with 75 countries now reportedly lining up to negotiate during this next 90-day pause.
But it’s hard to assess any artistry until there’s an actual deal. In the meantime, recall that three quarters of America’s trade is with just 15 partners, who are mostly also the world’s largest economies. So any new deals outside that list won’t really matter — Cambodia (for example) isn’t gonna buy enough Teslas to balance out the EU. So who does matter?
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The art of the trap…
Almost two-thirds of America’s trade is with just four partners: the EU, Mexico, Canada, and China. And as for the top three partners, the EU now goes back down to Trump’s 10% baseline, while Canada and Mexico dodge it entirely (though not their earlier tariffs).
So that leaves China, which Bessent is highlighting as the key target all along: “You might even say that [Trump] goaded China into a bad position.”
What’s the theory here? At this point, the world’s two largest economies have effectively just imposed a trade embargo on one another, ending half a trillion dollars in trade.
And as we explored yesterday, this all inflicts pain on the US itself, but the argument is China’s export-dependence means it’ll have to blink first. Yet so far, Beijing has instead:
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Pushed Mao’s infamously defiant quote (“we will never yield”)
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Let its yuan depreciate to levels not seen since 2007, and
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Held emergency meetings to cook up some stimulus for Politburo approval.
Xi already seems worried about China’s ~290% debt-to-GDP ratio, so he’ll feel limits on how hard his stimulus can go. Plus he’s treading carefully on the currency front, weakening his yuan slowly both to avoid further antagonising the US (which lists currency manipulation among China’s sins) and spooking investors away from Chinese assets.
But directionally, it seems Xi wants to use his currency to cushion the US tariff blow not so much to remain competitive within the US (that ship has not sailed, but sunk). Rather, he wants to funnel his exports (still his economy’s foundation) into other markets. But that’ll push more capitals to raise their own tariff walls to avoid cheap imports wiping local jobs.
So Xi might find himself not only isolated as the only target of Trump’s 125% tariffs, but also the target of a broader chain reaction of market doors getting slammed in his face, something Bessent just flagged as his goal (with the US leading a group approach).
But speaking of slamming doors…
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The art of the bond…
You’ll recall Trump had hinted this was all just a ploy to push US bond yields down and refinance US debt, but the market didn’t play ball — weirdly, yields went up, suggesting:
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a) Hedge funds were selling out of their basis trade (a bet on the price gap between US Treasuries and futures)
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b) The US was losing its safe-haven appeal, and/or
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c) Markets were fearing stagflation ahead (slow growth, high inflation).
There’s now evidence behind all of these drivers: a key basis trade metric hit a new record yesterday, suggesting multiple hedge funds were indeed in distress and had to sell.
But US yields are still elevated, suggesting something else is up: America’s long-cherished safe-haven status might’ve taken a hit, and/or US stagflation might still be lurking ahead.
INTRIGUE’S TAKE
In the absence of any deal, and considering Trump’s own words, this was clearly the art of the bond, rationalised as the art of the trap. Or if you want to stick with an ocular theme, Trump blinked with one eye at the bond markets, but opened the other even wider at China. And yet while markets breathed a sigh of relief, they’re still worse off than last week, and are still pointing to slower growth and higher prices ahead.
So it’s hard to call that a win, though some are at least cheering that Trump is moving away from his global sledgehammer that whacked random allies, and focusing more on what he sees as the core issue here: America’s vast economic imbalance with China.
But zooming out a little, what can we now learn?
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First, the US will still find it hard to replace China’s production
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Second, China will still learn it’s even tougher to replace US consumption
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Third, investors will still know their portfolios are tied to one man’s whims, and
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Fourth, board and cabinet rooms everywhere will still have learned that maybe the best strategy is to just do nothing: don’t invest in that Ohio factory, or retaliate with tariffs, because today’s tariffs might be gone tomorrow without you lifting a finger (leave that to the Panicans in the bond market).
Anyway, while we're big fans of 'the art of doing nothing', it’s not exactly what Trump's stated strategy is hoping to achieve.
Also worth noting:
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Trump also hinted he might grant tariff exemptions to US firms. When asked how he’d decide who gets what, he indicated it’d be instinct.
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Some huge single-day market bets just before Trump’s announcement have left Wall Street crying foul given the presumed insider trading. To give a sense of scale, these nicely timed bets turned $100k into ~$20M in just a few minutes.
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Another big question we’re tracking is what China might do with its $760B in US Treasuries, though offloading them would self-inflict plenty of pain as well.
MEANWHILE, ELSEWHERE…
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🇰🇷 South Korea: The biggest US naval shipbuilder (Huntington) has signed a deal with South Korea’s Hyundai Heavy Industries, which operates the world’s biggest shipyard. The hope is to revive America’s faded shipbuilding capacity.
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🇮🇹 Italy: Prime Minister Giorgia Meloni is scheduled to travel to Washington next week, hoping to leverage her Trump ties to negotiate lighter tariffs. Others in Europe worry she could instead undermine a united European response.
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🇮🇳 India: New Delhi has approved the $7.4B purchase of 26 Rafale fighter jets from France’s Dassault Aviation. France is keen to step into the void left by Russia’s arms delays, caused by sanctions and Russia’s losses in Ukraine.
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🇦🇷 Argentina: The International Monetary Fund has reached a preliminary deal for another $20B bailout for Argentina. The fear was without this injection, President Milei’s progress in stabilising the economy could be undone.
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🇮🇶 Iraq: Iran-backed militias in Iraq are reportedly open to negotiating their disarmament, after repeated private US warnings of airstrikes. Iran reportedly told the militias, numbering ~50,000, to avoid getting drawn into a US conflict.
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EXTRA INTRIGUE
Meanwhile in other worlds
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Tech: Instagram is reportedly trialling reels that can be unlocked by a secret code or hint, as a way to create exclusive communities on the app.
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Music: Former Beatles drummer Pete Best (replaced by Ringo Starr) has announced he’s retiring from his music career.
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Gaming: Nintendo has decided to push back its release of the Nintendo Switch 2 in China, in response to a regulatory crackdown on the gaming industry.
EMBASSY OF THE DAY
Credits: Kristin Jarmund – Arkitekter.
We’re big fans of the Scandi aesthetic here at Intrigue, so it’s no surprise we were drawn to the essential lines of the Norwegian Embassy in Kathmandu, Nepal. The building features an extensive use of local stone, and an interesting use of plateaus and terraces that carry that sweet sweet echo of Nepalese pagodas.
But the building’s most striking feature is an angular panoramic window meant to honour the very same Himalayan mountains it overlooks.
DAILY POLL
What do you think just happened with the tariffs? |
Yesterday’s poll: Who do you think will blink first?
🟨🟨🟨⬜️⬜️⬜️ 🇨🇳 Xi Jinping (21%)
🟩🟩🟩🟩🟩🟩 🇺🇸 Donald Trump (41%)
🟨🟨🟨🟨🟨⬜️ ❌ Neither (36%)
⬜️⬜️⬜️⬜️⬜️⬜️ ✍️ Other (write in!) (2%)
Your two cents:
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🇺🇸 J.L: “He seems to react to the stock market daily.”
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🇨🇳 R.J: “The CCP has built its economy on the quick sand of selling cheap goods while moderately improving the lives of its citizens. Now companies are looking elsewhere for cheap labor and Chinese citizens still expect growing quality of life.”
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❌ H.J.B: “Both have too much at stake domestically and internationally to crack under the threats from the other. Two strong men playing chicken makes for a pretty dramatic spectator sport!”
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Disclosures
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