This next story is a natural outcome in the flow of goods. Remember, the Bureau of Economic Analysis (BEA) of the first quarter is a hindsight review. Meaning the information released today was based on activity in January, February and March 2025.

U.S. companies surged the purchasing of import goods, mostly from China, by more than 50% in the first quarter. They were/are building inventory. So, what happens in China starting in April?

Hong Kong, CNN – China’s factory activity contracted at its fastest pace in 16 months in April, as steep US tariffs took a heavy toll on the manufacturing sector, adding urgency to Beijing’s efforts to roll out fresh economic stimulus.

The manufacturing Purchasing Managers’ Index (PMI) fell to 49.0 in April, the weakest reading since December 2023, according to data released by the National Bureau of Statistics (NBS) on Wednesday. A reading below 50 signals a contraction.

Zhao Qinghe, a senior statistician at the NBS, said in a statement that the contraction in factory activity was due to “sharp changes in the external environment and other factors.” (read more)

The U.S. has front-loaded the inventory. So, orders to China drop now. It’s a natural outcome.

We have purchased goods in advance. So, orders to China drop. As a result, the cargo shipments from China to the USA drop in April, May and June.

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The absolute key to the first quarter GDP result is to remember that ‘imports‘ are a deduction in the economic equation of Gross Domestic Product.  The GDP is the valuation of all goods and services produced in the USA *minus* the value of imports.

The Bureau of Economic Analysis (BEA) releases the results of the first quarter GDP.  The overall economic growth seems low at –0.3% until you look at how U.S. companies responded in February and March to the tariff announcement.

Companies proactively purchased massive amounts of products in advance of the tariffs leading to an overall increase in imports of 41.3%.  Which results in a 5.3% deduction to GDP.  Every dollar of those imports is a deduction to the GDP equation, giving the false appearance of lower domestic production.

There was a massive surge in import goods purchases of 50.9% versus the prior period [Table 1, line 20].  That’s the largest periodic increase in import purchases I have ever seen.  Simultaneously, fixed asset investment in equipment for domestic production surged 22.5% [Table 1, line 11].

Put both of these metrics together and what you see are U.S. companies building consumer inventory from overseas (imports) while simultaneously preparing themselves to shift production into the USA.  The massive import purchases are a bridge to cover the time needed to shift the manufacturing from overseas to the USA.  This is exactly what we want to see.

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As we saw previously in Term-1, President Trump has again divided and assigned trade negotiation responsibility to key cabinet members.  In this interview with CNN National Economic Council Director Kevin Hassett smiles and walks effortlessly through the narrative engineering attempt by CNN pundit Kassie Hunt.

This is a must watch interview if you are following the details of the current global trade renegotiation.

Hassett outlines the current status of trade negotiations with some of the biggest trade partners in the world.  India and Southeast Asia are being handled by Treasury Secretary Scott Bessent.  Commerce Secretary Howard Lutnick is in control of the section 232 (national security) tariffs, and USTR Jamison Greer has 19 current Free Trade Agreements outlined with various partners all willing to accept the reciprocity agreement.  WATCH:

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Last week CTH noted, “interested political followers in the USA should pay close attention to how the International Longshore and Warehouse Union (ILWA) respond to the corporate media narrative. …  Will the International Longshoremen’s Association stand with Trump, or will they drop support as the global trade reset emphasizes domestically manufactured jobs?  That will be an interesting aspect to watch because the dockworker union leadership will face massive pressure to comply with the anti-tariff narrative.”  (full article)

Yesterday, we got the answer: “The International Longshore and Warehouse Union (ILWU) unequivocally condemns the recent tariffs that the Trump administration has imposed.”

[SOURCE]

All these moves are so transparently political, it almost makes you laugh.  However, that said, we are now in a better position to understand exactly how the Democrats and Deep State operatives will weaponize the supply chain along with their union orcs.

In the next phase of the anti-Trump tariff agenda, approximately 3 months from now it will begin, we will see/hear a constant drumbeat of empty shelves, missing parts and missing products.  Whether factually true, or whether the shortages are an outcome of a strategy by the ILWA to assist the shortage narrative, the overall objective will be to blame President Trump for everything from shortages of medicine to shortages of parts to fix, repair or maintain consumer products.

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DAY 100

Press Briefing by the White House Press Secretary Karoline Leavitt and Treasury Secretary Scott Bessent on Unleashing Economic Greatness.

Inbound Investments So Far:

Project Stargate, led by Japan-based Softbank and U.S.-based OpenAI and Oracle, announced a $500 billion private investment in U.S.-based artificial intelligence infrastructure.

Apple announced a $500 billion investment in U.S. manufacturing and training.

NVIDIA, a global chipmaking giant, announced it will invest $500 billion in U.S.-based AI infrastructure over the next four years amid its pledge to manufacture AI supercomputers entirely in the U.S. for the first time.

IBM announced a $150 billion investment over the next five years in its U.S.-based growth and manufacturing operations.

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After spending three months riding his bicycle in slow circles at the bottom of the White House driveway while staring in the windows, it was reported this morning that a frustrated Jeff Bezos would announce his Amazon company would start to label the tariff impact on all products sold by the company.

However, in the angered reaction to President Trump’s tariffs against the majority of his suppliers, what Jeff Bezos likely didn’t realize is the tariff label acts as a “Country of Origin Label” (COOL).

All of the products sold on Amazon that would have tariff cost labeling, are not made in the USA. All of the products without tariff labels would be made in the USA.

Given the nature of American preference toward higher quality products, the “Tariff Label” becomes a DeFacto blacklist. Purchase reviews would proceed accordingly.

WASHINGTON – [T]he e-commerce giant will soon show how much Trump’s tariffs are adding to the price of each product, according to a person familiar with the plan. The shopping site will display how much of an item’s cost is derived from tariffs – right next to the product’s total listed price. (source)

How Amazon could possibly calculate this ‘cost’ given the complex nature and changing dynamics of total cost of production, currency evaluations, subsidies, and countervailing duty offsets, was an unknown.  However, as would be predicted, shares of Amazon stock started to plummet, which led to Amazon quickly denying the report.

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Hat Tip very dear friend of the Treehouse, Zurich Mike.

Switzerland is in a conundrum. More specifically, the Swiss National Bank is stuck betwixt two points that are also playing out in other stable western countries.  Exports to the USA account for over ten percent of the Swiss manufacturing base.

The Trump tariffs are putting pressure on Switzerland to drop the value of their currency as an offset to retain competitive pricing.  However, simultaneous to the tariffs, the Swiss Franc is being purchased by global investment groups and sovereign foreign countries as a safe harbor due to the stability of the currency, which is driving up the value of the franc.

The Swiss Franc is now at the highest point against the U.S dollar in decades. One franc is worth 1.21 dollars.  This makes their exports cost even more.  The Swiss government desperately needs to lower the value of their currency.  The Swiss central bank has already dropped interest rates to 0.25% and is now contemplating negative interest rates as a result.

SWITZERLAND – […] That is why many are speculating on a reaction from the Swiss National Bank (SNB). SNB Director Martin Schlegel could weaken the currency by selling the Swiss franc against the dollar and euro in order to support the export-oriented economy.

But this could provoke a backlash from Trump if he perceives the SNB’s intervention as currency manipulation. Even during Trump’s first term in office, Switzerland was on the US list of suspected currency manipulators.

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If you never followed how President Obama constructed and influenced the rise of Justin Trudeau in Canada, then it might seem perplexing when President Donald Trump stands generally ambivalent to the outcome of today’s election in Canada.

When asked about the election in Canada President Trump previously said, “I don’t care. I think it’s easier to deal, actually, with a liberal and maybe they’re going to win, but I don’t really care.”  The core of President Trump’s position stems from the economic issues that have been present for decades.  Leading candidate Mark Carney, who had not lived in Canada for the past 10-years until his installation, has said he is prepared to guide Canada into an alignment with the European Union.

As Secretary of State Marco Rubio outlined, previous Prime Minister Justin Trudeau traveled to Mar-a-Lago and said if President Trump was to make the Canadian government pay reciprocal tariffs, open the USMCA trade agreements to force reciprocity, and/or balance economic relations on non-tariff issues, then Canada would collapse upon itself economically and cease to exist.

In essence, Canada cannot survive as a free and independent north American nation, without receiving all the one-way benefits from the U.S. economy. To wit, President Trump then said, if Canada cannot survive in a balanced rules environment, including putting together their own military and defenses (which it cannot), then Canada should become the 51st U.S state.

The Canadian Mitt Romney “conservative”, Mark Carney’s closest competitor, Pierre Poilievre, is also very upset at President Trump.

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President Trump holds an impromptu press conference traveling back to the White House from Morristown, New Jersey.

President Trump departed Marine One with Philadelphia Eagles Super Bowl Champion Saquon Barkley, then takes questions. The topics covered his message to President Putin, the Zelensky meeting, Iran – no bombs needed, Zelensky meeting #2, what Zelensky said, Crimea, opinion on Russian President Putin, actions vs Russia, taxes and tariffs, the Russia deadline, relationship with Zelensky, the Crimea factor, Virginia Giuffre, Tariffs Talks with China, Melania’s birthday dinner, and the Wisconsin Judge arrest.  WATCH:

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Secretary of State Marco Rubio appears on NBC Meet the Press to discuss the ongoing negotiations to bring a ceasefire to the conflict between Ukraine and Russia.

Secretary Rubio notes the ongoing discussions have positive indications but also concerning elements where there are demands that are challenging to fulfill.  Ultimately, the goal is to stop killing people and achieve peace.  At the end of the day the USA has funneled billions of dollars into what appears to be a never-ending conflict, and our willingness to maintain support is close to an end. WATCH:

[Transcript] QUESTION: And joining me now is Secretary of State Marco Rubio. Secretary Rubio, welcome back to Meet the Press.

SECRETARY RUBIO: Good morning. Thanks.

QUESTION: Well, good morning to you. Thank you so much for being here. President Trump is about to mark his 100th day in office. It comes as a key campaign promise is to end the war in Ukraine and against the backdrop of that extraordinary meeting between President Trump and President Zelenskyy. Mr. Secretary, is Russia and Ukraine now closer to a deal in the wake of that meeting?

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