NYT : I Just Saw the Future. It Was Not in America.
I had a choice the other day in Shanghai: Which Tomorrowland to visit? Should I check out the fake, American-designed Tomorrowland at Shanghai Disneyland, or should I visit the real Tomorrowland — the massive new research center, roughly the size of 225 football fields, built by the Chinese technology giant Huawei? I went to Huawei’s.
It was fascinating and impressive but ultimately deeply disturbing, a vivid confirmation of what a U.S. businessman who has worked in China for several decades told me in Beijing. “There was a time when people came to America to see the future,” he said. “Now they come here.”
I’d never seen anything like this Huawei campus. Built in just over three years, it consists of 104 individually designed buildings, with manicured lawns, connected by a Disney-like monorail, housing labs for up to 35,000 scientists, engineers and other workers, offering 100 cafes, plus fitness centers and other perks designed to attract the best Chinese and foreign technologists.
The Lianqiu Lake R. & D. campus is basically Huawei’s response to the U.S. attempt to choke it to death beginning in 2019 by restricting the export of U.S. technology, including semiconductors, to Huawei amid national security concerns. The ban inflicted huge losses on Huawei, but with the Chinese government’s help, the company sought to innovate its way around us. As South Korea’s Maeil Business Newspaper reported last year, it’s been doing just that: “Huawei surprised the world by introducing the ‘Mate 60’ series, a smartphone equipped with advanced semiconductors, last year despite U.S. sanctions.” Huawei followed with the world’s first triple-folding smartphone and unveiled its own mobile operating system, Hongmeng (Harmony), to compete with Apple’s and Google’s.
The company also went into the business of creating the A.I. technology for everything from electric vehicles, self-driving cars and even autonomous mining equipment that can replace human miners. Huawei officials said in 2024 alone it installed 100,000 fast chargers across China for its electric vehicles; by contrast, in 2021 the U.S. Congress allocated $7.5 billion toward a network of charging stations, but as of November this network had only 214 operational chargers across 12 states.
It’s downright scary to watch this close up. President Trump is focused on what teams American transgender athletes can race on, and China is focused on transforming its factories with A.I. so it can outrace all our factories. Trump’s “Liberation Day” strategy is to double down on tariffs while gutting our national scientific institutions and work force that spur U.S. innovation. China’s liberation strategy is to open more research campuses and double down on A.I.-driven innovation to be permanently liberated from Trump’s tariffs.
Beijing’s message to America: We’re not afraid of you. You aren’t who you think you are — and we aren’t who you think we are.
What do I mean? Exhibit A: In 2024, The Wall Street Journal reported that Huawei’s “net profit more than doubled last year, marking a stunning comeback” spurred by new hardware “running on its homegrown chips.” Exhibit B: The Journal recently quoted the Republican senator Josh Hawley as saying of China, “I don’t think that they can do much innovation on their own, but they will if we keep sharing all this tech with them.”
Some of our senators need to get out more. If you’re a U.S. lawmaker and want to bash China, be my guest — I may even join you for a round — but at least do your homework. There is too little of that in both parties today and too much consensus that the politically safe space is to hammer Beijing, chant a few rounds of “U.S.A., U.S.A., U.S.A.,” issue some platitudes that democracies will always out-innovate autocracies and call it a day.
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I prefer to express my patriotism by being brutally honest about our weaknesses and strengths, China’s weaknesses and strengths and why I believe the best future for both of us — on the eve of the A.I. revolution — is a strategy called: Made in America by American Workers in Partnership With Chinese Capital and Technology.
Let me explain.
Trump’s magical thinking
I agreed with Trump regarding his tariffs on China in his first term. China was keeping out certain U.S. products and services, and we needed to treat Beijing’s tariffs reciprocally. For instance, China dragged its feet for years on letting U.S. credit cards be used in China, waiting until its own payment platforms completely dominated the market and made it a cashless society, where virtually everyone pays for everything with payment apps on phones. When I went to use my Visa card at a shop in a Beijing rail station last week, I was told it had to be linked through one of those apps, like China’s Alipay or WeChat Pay, which, combined, have a more than 90 percent market share.
I even agree with Trump that additional — targeted — tariffs on China’s back doors into America via Mexico and Vietnam could be useful, but only as part of a larger strategy.
My problem is with Trump’s magical thinking that you just put up walls of protection around an industry (or our whole economy) and — presto! — in short order, U.S. factories will blossom and make those products in America at the same cost with no burden for U.S. consumers.
For starters, that view completely misses the fact that virtually every complex product today — from cars to iPhones to mRNA vaccines — is manufactured by giant, complex, global manufacturing ecosystems. That is why those products get steadily better and cheaper. Sure, if you are protecting the steel industry, a commodity, our tariffs might quickly help. But if you are protecting the auto industry and you think just putting up a tariff wall will do it, you don’t know anything about how cars are made. It would take years for American car companies to replace the global supply chains they depend on and make everything in America. Even Tesla has to import some parts.
But you’re also wrong if you think that China only cheated its way to global manufacturing dominance. It did cheat, copy and force technology transfers. But what makes China’s manufacturing juggernaut so powerful today is not that it just makes things cheaper; it makes them cheaper, faster, better, smarter and increasingly infused with A.I.
Inside the China fitness club
How? Jörg Wuttke, a former longtime president of the E.U. Chamber of Commerce in China, calls it “the China fitness club,” and it works like this:
China starts with an emphasis on STEM education — science, technology, engineering and math. Each year, the country produces some 3.5 million STEM graduates, about equal the number of graduates from associate, bachelor’s, master’s and Ph.D. programs in all disciplines in the United States.
When you have that many STEM graduates, you can throw more talent at any problem than anyone else. As the Times Beijing bureau chief, Keith Bradsher, reported last year: “China has 39 universities with programs to train engineers and researchers for the rare earths industry. Universities in the United States and Europe have mostly offered only occasional courses.”
And while many Chinese engineers may not graduate with M.I.T.-level skills, the best are world class, and there are a lot of them. There are 1.4 billion people there. That means that in China, when you are a one-in-a-million talent, there are 1,400 other people just like you.
As important, Chinese vocational schools graduate tens of thousands of electricians, welders, carpenters, mechanics and plumbers every year, so when someone has an idea for a new product and wants to throw up a factory, it can get built really fast. You need a pink polka dot button that can sing the Chinese national anthem backward? Someone here will have it for you by tomorrow. It will also get delivered fast. Over 550 Chinese cities are connected by high-speed rail that makes our Amtrak Acela look like the Pony Express.
And when you relentlessly digitize and connect everything to everything, you can get in and out of your hotel room fast with just facial recognition. Tech-savvy beggars who carry printouts of QR codes can accept donations fast by the scan of a cellphone. The whole system is set up for speed — including if you challenge the rule of the Communist Party, in which case, you will be arrested fast, given the security cameras everywhere, and disappear fast.
If we don’t build a similar fitness club behind any tariff wall, we’ll get just inflation and stagnation. You cannot tariff your way to prosperity, especially at the dawn of A.I.
I was also in China four months ago. Between then and now, China’s A.I. innovators demonstrated their ability to grow their own open-source A.I. engine, DeepSeek, with far fewer specialized U.S. chips. I could feel the mojo in the tech community. It was palpable. Last month Premier Li Qiang said at the opening ceremony of the National People’s Congress that the Chinese government is supporting “the extensive application of large-scale A.I. models.”
A young Chinese auto engineer who once worked for Tesla here told me: “Now everyone is competing over how much A.I. is being inserted. Now you brag about how much A.I. you insert. Everyone is committed. ‘I will use A.I., even if I don’t know how right now.’ You are preparing for that, even if you are on a simple production line for manufacturing refrigerators. ‘I have to use A.I., because my boss told me to.’”
Attention, Kmart shoppers: When you already have a manufacturing engine as powerful and digitally connected as China’s and then you infuse it with A.I. at every level, it’s like injecting a stimulant that can optimize and accelerate every aspect of manufacturing, from design to testing to production.
Not a good time for U.S. lawmakers to be shunning visits to China for fear of being called panda huggers.
As Han Shen Lin, an American who works as the China country director for the Asia Group, put it to me over breakfast at Shanghai’s Peace Hotel, “DeepSeek should not have been a surprise.” But, he continued, with all the new U.S. “overseas investment restrictions and disincentives to collaborate, we are now blind to China tech developments. China is defining the tech standards of the future without U.S. input. This will put us at a serious competitive disadvantage in the future.”
Beijing does not want a trade war
For all of China’s strengths, though, it does not want a trade war with the U.S. A lot of middle-class people in China are unhappy right now. For more than a decade, many Chinese put their money into buying apartments instead of putting their savings in banks that paid virtually no interest. This created a huge housing bubble. Many people rode it up and then rode it down when the government tightened real estate lending in 2020.
So they are hoarding their cash because their real estate profits are gone but the government pension and health care payments are meager. Everyone has to save for a rainy day.
As my colleague Keith Bradsher just reported, the economic slowdown is depriving the Beijing government of the very tax revenues it needs to stimulate the economy and subsidize “the export industries that are driving economic growth but could be hurt by tariffs.”
In short, China’s fitness club is awesome, but Beijing still needs a trade deal with Trump that protects its export engine.
We do, too. Trump, though, has become such an unpredictable actor, changing policies by the hour, that Chinese officials seriously wonder if they can get any deal with him that he will stick by.
Michele Gelfand, a Stanford University expert on negotiating, said: “Trump’s defenders argue that his unpredictability keeps opponents off balance. But great negotiators know that trust, not chaos, is what gets lasting results. Trump’s win-lose approach to deal making is a dangerous game.” She added, “If he continues to recklessly treat allies as adversaries and negotiations as battlegrounds, America risks not just bad deals but a world where we have no one left to deal with.”
To my mind, the only win-win deal is one that I’d call: Made in America, by American Workers, in Partnership With Chinese Capital, Technology and Experts. That is, we just reverse the strategy China used to get wealthy in the 1990s, which was: Made in China, by Chinese Workers, With American, European, Korean and Japanese Capital, Technology and Partners.
Here is how Jim McGregor, a business consultant who lived in China for 30 years, explained it to me: Big U.S. multinationals used to go to China and do a joint venture with a Chinese company to get into the Chinese market. Now foreign companies are coming to China and saying to Chinese multinationals: If you want to get into Europe, do a joint venture with me and bring your technology.
We should be combining any tariffs on China with a welcome mat for Chinese companies to enter the U.S. market by licensing their best manufacturing innovations to U.S. firms or by partnering with them and creating advanced manufacturing factories in 50-50 ventures. Chinese joint ventures in the U.S., though, would have to be required to steadily increase the share of parts they source locally, instead of just importing them indefinitely.
This, of course, would require a huge effort to rebuild trust, which is now almost entirely missing in the relationship. It’s the only way to get to reasonably win-win trade. Without it, we’re heading for lose-lose. For instance, on March 19, the Texas Senate gave initial passage to a bill that would bar residents of and organizations based in China, Iran, North Korea and Russia from owning property in Texas. Putting China on that list is just stupid: Hey, let’s ban some of the greatest brainpower in the world instead of laying out incentives and conditions for them to invest in Texas.
When did we get so frightened? And when did we so lose sight of the world in which we’re living? You can denounce globalism all you want, but it won’t change the fact that telecommunications, trade, migration and climate change have fused us, and our fates, together.
I like the way Dov Seidman, the author of the book “How: Why How We Do Anything Means Everything,” describes it. He told me that when it comes to the U.S. and China — and the world at large — “interdependence is no longer our choice. It’s our condition. Our only choice is whether we forge healthy interdependencies, and rise together, or maintain unhealthy interdependencies and fall together.”
But whichever it is, we’re doing it together.
Leaders of both countries used to know that. Eventually, they will relearn it. The only question in my mind is: By the time they do, what will be left of the once unified global economy that produced so much wealth for both nations?
President Donald Trump said Friday that Vietnam had shown willingness to eliminate its own tariffs to avoid new U.S. levies, which sent shares of some apparel firms surging.
In a social media post, Trump said Vietnamese leader To Lam told him that Vietnam “wants to cut their Tariffs down to ZERO if they are able to make an agreement with the U.S.” and that the two leaders would meet in the “near future.” The post followed Trump’s announcement on Wednesday of steep tariffs against many of the U.S.’s largest trading partners, including a 46% tariff on Vietnam. The announcement has prompted a deep selloff in the stock market and retaliation from China, which announced its own 34% tariff on U.S. goods on Friday.
Many companies, especially in apparel and footwear, have shifted production to Vietnam over the past several years as a hedge against a trade war between the U.S. and China. Following Trump’s post, shares of Nike, Skechers and Lululemon spiked and were each trading up 4% on Friday afternoon. Tech firms including Apple and Meta Platforms have also shifted some of their hardware production to Vietnam, but remain much more exposed to China than apparel and footwear makers. Apple shares were down 6% on Friday.
Tether Eyes Issuing New Stablecoin for U.S. Market
The Takeaway
Crypto giant plans U.S. entity as it faces the risk of being blocked if stablecoin legislation moving through Congress is approved
The Takeaway
• Tether plans to set up U.S. entity if stablecoin legislation passes
• Sees domestic stablecoin used by banks, payment firms
• CEO meets with lawmakers and business partners in U.S.
Tether, by far the world’s largest stablecoin issuer, says it plans to create a new stablecoin for the U.S. market this year if Congress passes crypto legislation.
In an interview with The Information, Tether CEO Paolo Ardoino said the company “will move fast” to create a new token once the expected stablecoin legislation passes.
The new stablecoin “is something that can fit the requirements of banks and institutions and the payment processors,” Ardoino said in an interview Friday from the Midtown Manhattan office of Cantor Fitzgerald, which manages Tether’s reserve assets such as U.S. Treasurys.
He said Tether plans to set up a U.S. domestic entity, potentially named Tether USA, this year once the U.S. passes legislation. Tether recently moved its headquarters to El Salvador. He expects the new entity to be regulated at the federal level, depending on legislation. “Given the legislation should pass around August, or like before August [as] we expect, if that’s maintained, then we will move fast,” he said.
“We are in active discussions with regulators to explain the importance of what we do outside of the U.S. and what we could build inside the U.S.,” he said.
The stablecoin legislation moving rapidly through Congress could potentially ban Tether from the U.S. market because the company is not registered in the U.S. Tether has $144 billion in market circulation, more than $80 billion more than the No. 2 stablecoin, run by Circle.
Unlike other more volatile cryptocurrencies, stablecoins are pegged to the dollar and are backed by Treasurys and other safe assets to protect that value. Stablecoins are easy ways to move money abroad and to trade in and out of cryptocurrencies. Tether has come under criticism because drug dealers and terrorist organizations have used its stablecoin, known as tether or USDT. Tether has said it works with law enforcement to freeze assets used by criminals.
Tether hired Cantor Fitzgerald to manage the assets backing its stable coin. The firm was run by Howard Lutnick until he took office as U.S. Commerce Secretary, and the firm continues to manage those assets.
The new stablecoin could be used for payments, digital economy and interbank settlement, Ardoino said. Tether has been investing in its own distribution network—a portfolio of companies that could push for adoption of its stablecoins, such as Rumble, a publicly listed video platform Tether invested $775 million in.
The race to influence stablecoin legislation is heating up as Congress moves quickly to pass a law. On Wednesday, the House Financial Services Committee approved the stablecoin bill, sending it to the House floor. The Senate Finance Committee passed a similar bill last month, and President Donald Trump has said he aims to sign stablecoin legislation by August.
Tether is also exploring pathways for USDT to remain listed on U.S. platforms after legislation is passed. Ardoino said he’s in talks with lawmakers to explain how Tether works and is hopeful that USDT will stay in the secondary markets in the U.S., meaning it will remain listed by U.S. crypto exchanges but will focus on the international market.
To boost liquidity for its new stablecoin, he expects market makers that have access to both stablecoins will be able to help convert one to one between the U.S. stablecoin and USDT.
Tether has no plan to go public and will not need to raise funding for the planned new entity in the U.S., Ardoino said. Circle has filed for an initial public offering.
Ardoino said he can’t meet with Lutnick because of potential conflict of interest, but calls him a “personal friend” and a “great person.”
His current main contact at Cantor is Brandon Lutnick, son of Howard Lutnick. “Great guy, very intelligent. Very grateful that he’s taking the reins of Cantor,” he said.
The Week’s Biggest Funding Rounds: OpenAI Easily Tops Massive Week
This was a week right out of the free-spending days of 2021. Huge rounds were abundant — led by the biggest of them all as OpenAI’s massive $40 billion investment was finally announced.
1. OpenAI, $40B, artificial intelligence: Of course the big news of the week was the $40 billion investment for OpenAI led by SoftBank. The deal is the biggest venture investment ever. Per details of the deal, SoftBank will build a syndicate of co-investors to provide $10 billion of the total, while it expects to fund the other $30 billion, with $10 billion of that through debt. The deal also is partially contingent upon conditions of OpenAI’s restructuring of its for-profit subsidiary. If that occurs, OpenAI will have a post-money valuation of $300 billion.
2. Plaid, $575M, fintech: Plaid raised a massive $575 million round led by Franklin Templeton at a $6.1 billion valuation. The San Francisco-based company plans to use the cash to pay employee tax withholding obligations related to share conversion and to offer some liquidity to employees via a tender offer. Plaid, which connects user bank accounts to fintech apps, had a planned $5.3 billion sale to Visa scrapped back in 2021 following regulatory issues.
3. Silicon Ranch, $500M, energy: Nashville, Tennessee-based Silicon Ranch raised $500 million from European infrastructure investor AIP Management. The big investment is likely a bet on the U.S.’ increasing electricity demands. Silicon Ranch — which operates solar and battery projects — has been on this list before. Back in 2022, the company raised $775 million in equity capital led by Manulife Investment Management. Founded in 2011, the energy company has raised more than $2 billion, according to Crunchbase data.
4. Runway, $308M, artificial intelligence: New York-based Runway raised $308 million in a new round at about double its valuation from less than two years ago. The new round — led by General Atlantic — values the AI video startup at more than $3 billion, per reports. In June 2023, the company raised a $141 million extension to its December 2022 $50 million Series C. Runway makes software that lets users create videos using text prompts or images. Earlier in the week, Runway unveiled its new AI model, Gen-4, that allows users to create videos with consistent characters and backgrounds. Last fall, the company signed a deal with production company LionsGate to create a customized video-generation model. The startup plans to use the fresh cash to develop AI focusing on its film and animation studio. Founded in 2018, it has raised more than $540 million, per Crunchbase.
5. AIRNA, $155M, biotech: Cambridge, Massachusetts-based AIRNA, a biotech startup developing RNA editing therapeutics to help with both rare and common conditions, closed a $155 million Series B led by Forbion Capital Partners and Venrock Healthcare Capital Partners. The new cash will go toward launching a phase trial for AIRNA’s drug candidate for alpha-1 antitrypsin deficiency and help it develop its pipeline of RNA editing therapeutics. Founded in 2021, the company has raised $245 million, per Crunchbase.
6. (tied) Atsena Therapeutics, $150M, biotech: Atsena Therapeutics, a gene therapy company focused on reversing or preventing blindness, closed a $150 million Series C led by Bain Capital’s Life Sciences arm. The money from the financing will be used to advance the Durham, North Carolina-based company’s treatment of X-linked retinoschisis, a genetic condition that is typically diagnosed in childhood and leads to blindness later in life. The proceeds will also support Atsena’s preclinical pipeline. Founded in 2019, the company has raised nearly $238 million, per Crunchbase.
6. (tied) SandboxAQ, $150M, quantum computing: Alphabet spinoff SandboxAQ — an AI and quantum computing startup — added another $150 million to its Series E from the likes Google and Nvidia. The add-on comes less than four months after the company announced it had raised a $300 million round at a $5.6 billion valuation. SandboxAQ is looking at the related effects of both AI and quantum — which is where the company gets “AQ” — to develop commercial products for telecom, financial services, health care, security and other computationally intensive sectors. The company already is working with a handful of customers on enterprise software and cybersecurity tools related to quantum computing. In March 2022, Alphabet officially spun off its 6-year-old quantum tech group — SandboxAQ — which emerged as its own company after closing a $500 million financing round and naming former Google CEO Eric Schmidt chairman. SandboxAQ has raised over $950 million, per the company.
8. Temporal Technologies, $146M, software: Seattle-based Temporal Technologies locked up a big $146 million Series C at a $1.7 billion valuation led by Tiger Global Management. The company helps other companies manage complex software applications and will use the new cash to develop cloud products and invest in research and development for artificial intelligence use. The company raised a $103 million Series B in February 2022 at a valuation of a little more than $1.5 billion, followed by $75 million in a Series “B-Prime.” Founded in 2019, Temporal has raised $350 million, per the company.
9. RayThera, $110M, biotech: San Diego-based RayThera, a biotechnology company currently focused on developing small molecule therapies in immunology, completed a $110 million Series A financing co-led by Foresite Capital and OrbiMed. This is the company’s first raise, per Crunchbase.
10. Neurona Therapeutics, $102M, biotech: Neurona Therapeutics, a South San Francisco-based clinical-stage biotech company developing regenerative cell therapies for disorders of the nervous system, raised a $102 million financing round. Investors included Fidelity Management & Research Co. Founded in 2008, the company has raised $426 million, per Crunchbase.
Big global deals
The biggest raise this week came from across the pond.
Google spinoff Isomorphic Labs raised $600 million in its first external funding round as the company looks to apply artificial intelligence to the drug development process. The new round was led by Thrive Capital with participation from Google Ventures. The London-based AI company will receive follow-on capital from existing investor Alphabet.
In charts: winners and losers from Trump’s new tariffs
Low rates on Ireland, high levies on Slovakia, Asian misery and the strange tale of St Pierre and Miquelon
The Donald Trump administration’s latest round of tariffs create a fresh labyrinth of rules for traders and countries.
Here are some striking and unexpected outcomes from the US’s leap back towards protectionism.
Asian countries take a double hit
Many of the highest tariff rates announced by Trump on Wednesday apply to Asian countries, with Cambodia facing tariffs of 49 per cent, Vietnam 46 per cent, Thailand 37 per cent, Taiwan 32 per cent and Indonesia 32 per cent, all well above the blanket 20 per cent rate imposed on US imports from the EU, for example.
Compounding the misery for those nations, the vast majority of the region’s exports to the US will not be covered by the limited list of exempted goods announced by the White House on Wednesday.
Even if these exemptions — which include pharmaceuticals, semiconductors, lumber and certain minerals — prove to be temporary, it sends a clear message to Asian countries that their staple exports to the US are potential early casualties of a new trade war.
The EU’s flat rate
The 20 per cent flat rate applied to all the EU has created a curious pattern of winners and losers, depending on each member state’s individual trade with the US.
In 2024, the US reported that its biggest trade surplus in goods was with the Netherlands ($55bn), which receives the same tariff rate as Ireland — with which the US ran a goods deficit of $87bn over the same period.
Nations like France, Spain and Belgium, with which the US runs surpluses or small deficits, may grumble at the blanket rate, but 15 countries in the bloc would have received a higher tariff if the rules had been applied at individual member level.
Even this only tells half the story, as temporary exemptions on various products create a wide range of effective rates for EU nations.
Ireland’s focus on pharmaceuticals, which have been temporarily exempted from tariffs, will keep its effective tariff rate below 5 per cent for now.
For Slovakia, though, additional tariffs such as those Trump has introduced on autos and car parts mean its manufacturing-heavy economy faces an effective rate well above the 20 per cent headline.
Friendly fire — US trade surpluses attract tariffs too
Although Trump’s tariffs aim to target countries with which the US has large trade deficits, the global minimum 10 per cent tariff predominantly hits countries with which it has trade surpluses.
According to its own trade figures, the US has a trade deficit with only 14 of the 122 countries being handed the 10 per cent tariff.
The UAE, with which the US has a $19.5bn surplus, Australia, with $17.9bn, and the UK, with $11.9bn, are the most heavily hit by the “friendly fire” among this cohort, in relation to their trade balances.
Annual trade patterns may not repeat every year
The so-called “reciprocal” element of the tariffs was calculated using trade data from 2024. But import and export trends constantly shift, leaving a slew of countries facing tariff punishment after one good year — and vice versa.
In 2024, the US reported a deficit with 15 countries with which it had a surplus the year before. Conversely, the US reported a trade surplus with 18 nations that ran a deficit the previous year, leaving Kenya, for example, with just the baseline 10 per cent.
For some countries, 2024 deviated heavily from longer-term trends. Namibia received a tariff rate of 21 per cent after recording its highest surplus in more than a decade in 2024, despite a deficit in three of the previous four years.
And spare a thought for the 5,819 inhabitants of St Pierre and Miquelon, who were briefly set to be hit with a 50 per cent tariff, according to initial figures released by the White House. That rate was based on a highly unusual 2024 for the semi-autonomous French overseas territory, which earned a trade surplus by returning a single $3.4mn aircraft part to the US.
That high tariff rate had disappeared, however, by the time the White House issued its official executive order.
Korea’s Market Is Much More Than Cars. 4 Chip and Defense Stocks for Right Now.
South Korean stocks, as you would expect, sold off in response to President Donald Trump’s “Liberation Day” for import tariffs.
The iShares MSCI South Korea exchange-traded fund is down 5.5% since March 26, when the U.S. president unveiled a 25% duty on all imported automobiles. He followed on April 2 with a 25% levy on all imports from South Korea.
That dip could be worth buying on, once a little smoke clears.
Korea is certainly vulnerable. Exports to the U.S. have soared since the pandemic to more than 10% of gross domestic product, compared with 3% for China. But the most exposed companies, auto giants Hyundai Motor and Kia, account for less than 5% of the Kospi stock index between them.
Microchips power Samsung Electronics and SK Hynix, whose products are less replaceable elsewhere, make up one-third.
SK Hynix has been a hot stock, up 14% this year on projected demand for its high bandwidth memory chips for artificial intelligence. “Hynix has the best-in-class HBM chips,” says Kai Wang, a senior equity analyst at Morningstar.
Samsung, which sells everything from chips to televisions, has risen 10% this year. It still looks cheap after cratering in 2024, says James Lim, a partner at Dalton Investments. Shares could get another jolt if AI champion Nvidia “qualifies” Samsung’s HBM3E memory chip as a component later this year.
Less known to markets are Korean defense stocks, which have been soaring on anticipated demand from a rearming Europe, Lim adds.
Shares in diversified munitions maker Hanwha Aerospace have doubled this year. LIG NEX1, which produces missile guidance systems, has jumped by half from a trough in December.
Improvements in South Korea’s domestic backdrop could help cushion the blows from Washington, says Malcolm Dorson, head of emerging markets strategy at Global X ETFs.
The drama around President Yoon Suk Yeol’s impeachment, launched after his abortive martial law decree in December, is coming to a close. The Constitutional Court unanimously removed Yoon from office April 4, setting up new elections which the opposition Democratic Party is favored to win.
Any incoming government will have to push corporate governance improvements that could alleviate the longstanding “Korea discount” in stocks, Dorson argues. “Nearly half the voting population are retail investors now,” he says. “Either party will respond to that.”
Korean stocks trade at an average price/earnings ratio around seven, compared with 18.5 for the S&P 500, Dorson reports.
Washington’s Korea-bashing could in time be tempered by its need for Seoul’s help in containing China militarily and technologically.
Korean tech is essential for U.S. strategic priorities like autonomous vehicles or ships that move liquefied natural gas, says Troy Stangarone, director of the Center for Korean History and Public Policy at the Wilson Center.
Korea also has carrots it can offer, like Hyundai’s just-revealed $21 billion plan to expand U.S. auto and steel manufacturing by 2028. “It does look like Korea will maintain access to the U.S. market,” Stangarone concludes.
Longer term, South Korea faces daunting challenges. Its working age population will shrink by a quarter over the next two decades unless rock-bottom fertility rates rise. Chinese investment and entrepreneurialism threaten its position across cutting-edge industries.
“A lot of Korean companies are at a critical juncture,” Dalton’s Lim says. “They need to jump forward from here or fall off and become commoditized.”
For now, they may be oversold, though.
11 Stocks to Buy After the Biotech Bloodbath
The group had a bad week after turmoil at the FDA, continuing a long period of underperformance following the pandemic.
Biotechnology may be the stuff that dreams are made of, but more recently, the sector has been a nightmare for investors.
Biotech is coming off one of its worst weeks in several years after the SPDR S&P Biotech exchange-traded fund fell about 7% following the resignation of a key Food and Drug Administration regulator, Peter Marks, who oversaw approval processes for vaccines and novel biotech therapies. There were also fresh budget cuts at the agency and the departure of other drug regulators. It didn’t help that the Trump administration’s top health official, Robert F. Kennedy Jr, is a vaccine skeptic and lukewarm on traditional medicine.
The damage has been even worse than it looked, since shares of some of the largest biotechs, such as Amgen, Vertex Pharmaceuticals, and Gilead Sciences, had rallied higher this year as investors pivoted to the defensive healthcare sector amid the tech-stock selloff. But many stocks are down 30% to 50% this year alone, while the broadest ETF, the SPDR S&P Biotech, is off 13% in 2025 and more than 50% from its 2021 peak.
Shares of small companies in formerly hot areas such as gene therapy are down by as much as 99% from their peaks.
The broad and deep selloff creates an unusual opportunity. Biotechs can generate huge returns if they get drug approvals or are bought by larger competitors. These small to midsize companies—hundreds of them—have rarely been cheaper, and well over 100 trade for less than the cash on their balance sheets, according to Chardan Capital Markets data. This offers a security blanket to investors, even as the industry burns through more than $50 billion annually to pursue drug approvals. It’s almost as if investors are pricing in little chance for success, rather than seeing these stocks as opportunities.
“Our investor sentiment surveys are among the worst we have ever seen dating back to 2000,” says TD Cowen biotech analyst Yaron Werber, who sees a bounceback in the sector later this year.
Biotech investing is dicey in any environment because only a fraction of the hundreds of public companies will develop a commercially successful product. Just one in 10 drugs that enter clinical trials ends up getting regulatory approval and fewer still are commercial successes. The current environment is particularly tough: BMO Capital Markets analyst Evan Seigerman called the recent resignation of Marks a “significant negative.” He cited threats to the FDA’s independence and historical focus on “scientific rigor.”
The big concerns are greater FDA skepticism on drug approvals and longer approval times. The markets, however, may have overreacted to the Marks news. The new head of the FDA, Dr. Mark Makary, is generally viewed favorably on Wall Street and in the scientific community.
Even though they continue to lead the world in innovation, American companies face a growing threat from Chinese biotechs that have strong government support. In December, Merck surprised Wall Street by partnering with a little-known Chinese biotech on a weight-loss drug that uses the same GLP-1 approach as industry leaders Eli Lilly and Novo Nordisk.
This gloomy sentiment is far removed from 2021, when biotechs such as Moderna and BioNTech developed Covid vaccines that led the world out of the pandemic, and investors enthused over new technologies like gene editing that had the potential for curing genetic diseases such as hemophilia, muscular dystrophy, and sickle cell anemia. The stocks have been hammered since then, with Moderna, down more than 90% from its pandemic peak, now trading at a small premium to its cash. Genomic darlings Editas Medicine and Ginkgo Bioworks Holdings are down close to 99% from their 2021 highs, despite sizable cash cushions and real businesses.
The odds can be tough for investors since biotech stocks often amount to lottery tickets. Biotech is probably the largest sector in the stock market—and relatively few succeed. There were over 150 initial public offerings in 2020 and 2021, TD Cowen data show. The 2020-21 IPO crop is down an average of more than 30%.
The key to biotech is finding companies with lots of cash and promising drug pipelines. Jefferies analyst Michael Yee recently analyzed over 360 publicly traded small- and mid-cap biotech companies and found they were trading at an average of just a 20% premium to the cash on their balance sheets, indicating that investors effectively were putting little value on their drug pipelines. A year ago, the group traded at twice cash levels, and the average over the past 23 years has been three to four times.
Yee attributed some of the weakness to selling by institutions in a risk-off market. “Many low-liquidity names are down big on no news, and even stocks with positive catalysts have sometimes had trouble sustaining gains,” he wrote. Most of the cash-rich companies have market values of under $300 million.
Trying to spot the winning ticket isn’t easy, and investors might decide they’re better off letting the pros do the digging. The equal-weighted SPDR S&P Biotech, which holds 125 stocks, has more exposure to smaller names then the other big biotech ETF, iShares Biotechnology, which is weighted toward larger companies and is down 6% this year. There also are mutual funds like the Fidelity Select Biotechnology Portfolio fund or the Janus Henderson Global Life Sciences fund.
None of the funds offers significant exposure to hard-hit small- to mid-cap biotechs. Instead, Barron’s spoke to analysts and investors about their favorites.
Start with Moderna, whose shares are down 38% this year, to $26—back where they traded before the company won approval for its Covid vaccine. It now has a market value of $9.9 billion, little more than its $9.5 billion in cash and investments at year-end 2024. CEO Stephane Bancel feels the shares are too cheap. He bought $6 million in stock at around $30 a share in March.
Moderna is burning a lot of cash, which could fall to $6 billion by the end of 2025. But the company has a promising pipeline of vaccine and cancer therapies, and could become an activist or takeover target. One target for an activist could be its $4 billion annual budget for research and development, which is larger than Vertex’s, despite Moderna having a fraction of its revenue.
BioNTech, which partnered with Pfizer on the leading Covid vaccine, is also cheap. The German biotech, whose shares trade for about $92, sits on $19 billion of cash and equivalents, against a market value of $22 billion, and is using its Covid windfall to develop a group of cancer drugs. BioNTech’s cash burn is more moderate than Moderna’s.
Structure Therapeutics is a favorite of Agustin Mohedas, a portfolio manager in Janus Henderson’s healthcare group. Structure is pursuing a potentially huge opportunity—a diet pill using GLP-1 technology.
That’s a big change from existing GLP-1 diet drugs, including Novo Nordisk’s Ozempic and Lilly’s Zepbound, which need to be injected. Structure’s oral GLP-1 is now in clinical trials, and Mohedas thinks it could be competitive with an oral drug from Eli Lilly currently in development. An oral GLP-1 could generate huge sales, and Structure stock now trades for $16, down 71% from its 52-week high. The company is valued at $900 million, about equal to the cash on its balance sheet.
J.P. Morgan analyst Hardik Parikh sees Structure as a pure-play option on oral GLP-1s. “We estimate even a small share would result in meaningful revenue for the company of $1 billion-plus, and support substantial upside to the stock,” Parikh wrote recently. He has an Overweight rating and a price target of $65, up more than 300% from its recent close.
Janus Henderson’s Mohedas also sees an opportunity in Vaxcyte, which
is developing a pneumonia vaccine, or PCV, for infants and older adults in a large market that Pfizer leads. The stock fell more than 50%, to $31, this past week, after mildly disappointing results from a Phase 2 clinical trial in infants, continuing a slide that started in late 2024, when shares traded as high as $115. Mohedas says the market overreacted. “Vaxcyte remains in pole position to eventually dominate the $8 billion (annual revenue) PCV market with its VAX-31 in adults and infants,” he tells Barron’s. The company ended 2024 with $3.1 billion of cash, nearly equal to its current market value of about $3.9 billion.
TD Cowen biotech analyst Werber likes three companies developing cancer treatments that now trade at or below the cash on their balance sheet. They are Nuvation Bio and Foghorn Therapeutics, which are targeting lung cancer, and Relay Therapeutics, which is developing a treatment for breast cancer. He says the Relay drug, which has had positive Phase 2 results, could successfully go head-to-head with a similar drug from AstraZeneca that is also in clinical trials.
Rezolute is developing a drug for low blood sugar, or hypoglycemia, caused by the rare inherited disease congenital hyperinsulinism. The stock trades around $3, and Rezolute has a market value under $200 million—compared with about $100 million of cash. Jefferies analyst Maury Raycroft favors the stock with a $16 price target, citing the potential of the company’s lead drug, which has had success in treating hypoglycemia caused by cancer-driven hyperinsulism.
Fate Therapeutics is developing several drugs, including one for lupus, and trades under $1 even though it sits on $307 million of cash, roughly triple its market value. Jefferies analyst Yee favors it, citing its CAR-T immunotherapy platform. He has a Buy rating and $8 price target on the stock. One reason for the depressed price is that CAR-T is currently out of favor with investors.
So is gene therapy, which can elegantly cure genetic diseases by fixing faulty DNA. Shares of Editas Medicine, a leader in the formerly hot, gene-editing Crispr technology, have fallen to $1 from a 2021 peak of $100. It’s now valued at about $100 million, less than the $269 million of cash on its balance sheet at the end of 2024.
Another, Ginkgo Bioworks, is also down 99% from its peak to about $5. The company is a pioneer in “synthetic” biology, which involves the programming of cells for therapeutic and commercial purposes. It’s now valued at $331 million, less than 60% of its cash position, and has invested over $1 billion in its technology.
These stocks might not all pan out, but at these fire-sale prices, they don’t need to.
Closing Stock Market Summary
The major equity indices registered significant declines for the second consecutive session on above-average volume. The Nasdaq Composite (-5.8%) entered a bear market after dropping more than 20% below its peak. The S&P 500 fell 6.0% and the Dow Jones Industrial Average dropped more than 2,000 points.
China retaliated against U.S. tariffs with its own 34% duty on imports, heightening the trade war and tempering hopes that tensions may ease soon. Global slowdown worries are also intensifying as a results, leading to a risk-off bias in today's broad retreat.
Oil prices sank (-7.5% to $62.02/bbl), Treasury yields dropped (2-yr note yield -5 bps to 3.67%, 10-yr note yield -7 bps to 3.99%), and the CBOE Volatility Index (VIX) surged above 45.0.
The trade war and slowdown fear overshadowed today's economic data even though nonfarm payroll growth accelerated to 228,000 (Briefing.com consensus 130,000) in March. To be fair, downward revisions to growth figures from January and February removed some of that report's shine.
The market was not placated by commentary from Fed Chair Powell indicating that did not seem too concerned with the recent volatility in markets. He acknowledged that tariff increases are larger than expected, which will provide a stronger headwind to growth, but he also said that the FOMC will patiently wait for greater clarity before making any adjustments to policy.
All 11 S&P 500 sectors declined more than 2.5% with energy at the bottom of the lineup, dropping 8.7% from yesterday. The heavily-weighted financial (-7.4%) and technology (-6.3%) sectors were the next worst performers.
- Dow Jones Industrial Average: -9.9% YTD
- S&P 500: -13.7% YTD
- S&P Midcap 400: -15.1% YTD
- Russell 2000: -18.1% YTD
- Nasdaq Composite: -19.3% YTD
Reviewing today's economic data:
- March Nonfarm Payrolls 228K (consensus 130K); Prior was revised to 117K from 151K, March Nonfarm Private Payrolls 209K (consensus 120K); Prior was revised to 116K from 140K, March Avg. Hourly Earnings 0.3% (consensus 0.3%); Prior was revised to 0.2% from 0.3%, March Unemployment Rate 4.2% ( consensus 4.1%); Prior 4.1%, March Average Workweek 34.2 (consensus 34.2); Prior was revised to 34.2 from 34.1
- The key takeaway from the report is that positive results for March are being somewhat offset by downward revisions to figures from January and February, so on balance, the report is unlikely to alter the Fed's view of the current state of the labor market.
Looking ahead to next week, market participants receive the February Consumer Credit (consensus $15.1 bln; prior $18.1 bln) at 15:00 ET on Monday.