🤝 The US-China deal

What’s going on here?

The US and China came together and agreed to drastically reduce tariffs for three months, but there’s no guarantee their honeymoon period will become lasting domestic bliss.

What does this mean?

American tariffs on Chinese goods will fall from 145% to 30%, while China’s duties on US imports will drop from 125% to 10%. That’s the first major breakthrough in this year’s US-China trade war. And with any luck, it won’t be the last: the two countries have pledged to resume formal talks and set up a system for managing future trade disputes. Investors sent the S&P 500 nearly 3% higher after the news broke, with tech stocks like Apple and Amazon flying ahead. Meanwhile, safe-haven assets like gold and the Japanese yen fell back.

Why should I care?

Zooming in: It’s not over yet…

Even with the reduced rates, tariffs are still at historical highs. Plus, the 90-day period may not be long enough for successful negotiations, meaning businesses could face yet more whiplash in just three months. It’ll be hard to gauge how companies and consumers respond to the news, too: it could take weeks for the impact of lower tariffs to show up in shipping volumes, earnings reports, and inflation data. But it’s likely that shipping companies will see overwhelming demand as businesses race to move stock around while levies are lower.

Zooming out: Tariffs aren’t the only fees on the negotiation table.

The US president wants American drug prices to match the world’s cheapest, so he plans to sign an executive order slashing them by as much as 80%. Pharmaceutical stocks, including Pfizer and Novo Nordisk, dropped on Monday, as investors braced for the disruption that’d come with. The president’s clearly sticking to his playbook: align global prices, recalibrate old systems, and challenge “business as usual”.

What’s going on here?

Chinese firm CATL looks set to host the world’s biggest initial public offering (IPO) this year – but not everyone’s invited to celebrate the occasion.

What does this mean?

CATL – the world’s biggest EV battery maker – wants to raise between $4 billion and $5.3 billion by listing on the Hong Kong stock market this year. That higher figure includes the use of a “greenshoe”: a common IPO mechanism that lets underwriters sell more shares than planned if demand is strong. And that could well happen. See, “cornerstone” investors – those who commit to holding shares for at least six months – have already pledged $2.6 billion. Whatever the figure, CATL will put the proceeds toward its ongoing international expansion (including a major new factory in Hungary), in a bid to further grow its already impressive 38% share of the global EV battery market.

Why should I care?

For markets: World domination – just hold America.

The way the listing is structured will mean that shares are off-limits to US-based retail investors and some American investment funds. That’ll let CATL avoid the attention of stateside regulators, who have burned it before. The company was recently included on a US Department of Defense blacklist over alleged military ties – a claim it denies.

Many Chinese firms have chosen to raise money closer to home lately, wary of rising scrutiny from US regulators and politicians. And while CATL isn’t the first company to choose Hong Kong’s market this year, it will be the biggest. In fact, if investors buy all the shares on offer, this IPO could double the money raised there this year.

Zooming out: There’s power in acronyms, apparently.

Battery life (or lack thereof) has been a common complaint from would-be EV drivers – one that’s kept them steering trusty gas-guzzlers instead. But Chinese firms CATL and BYD, the world’s biggest EV manufacturer, are solving that problem. CATL has produced batteries capable of powering a car for 500 miles, while BYD’s latest vehicles can cover 250 miles with just a five-minute charge.