Cover:
-Crypto firms, including Coinbase Global, Kraken, and Ripple Labs, have been urged to embed crypto into American daily lives by President Donald Trump's cabinet and leadership team. During President Joe Biden's administration, many of these companies had been sued by securities regulators or under investigation. The Trump administration's approach has led mainstream financial institutions to embrace crypto, encouraging banks that were almost prohibited from doing business with digital-asset firms to dive in. Companies that were sued by securities regulators are now being courted to implant themselves into American systems. The last major crypto crash, FTX's failure in 2022, had virtually no effect on the economy or wider financial system. However, Lee Reiners warns that a major downturn is imminent, with the pain likely to be acute.
Interview:
-no update
Tech Trader:
-The long-awaited tech tariffs arrived this week, and the market rallied despite uncertainty. President Donald Trump announced a new tariff of approximately 100% on chips and semiconductors, with no charge for those building in the US or committed to build there. Apple will be one of the recipients, and the stock rallied 3.2% on Thursday. The Philadelphia Semiconductor index (SOX) was up 1.5% that day as investors tried to sort through the president's meaning. The term "chips and semiconductors" has had an elastic definition since April, with the SOX beginning the year down 28%. The International Emergency Economic Powers Act (IEEPA) tariffs have been modified twice by the administration, most recently with tariffs ranging from 10% on imports from the UK to 41% for Syria.
The Trader:
-Stocks have risen to near all-time highs, despite concerns about President Trump's tariffs and a weakening labor market. The Dow Jones Industrial Average has increased over 1% this week, while the S&P 500 and NASDAQ Composite have gained 2.3% and 3.8%, respectively. Corporate earnings have been strong, with stocks like Shopify and Arista Networks soaring on big beats. Investors are hoping that bad job news will prompt the Federal Reserve to cut interest rates next month, with traders now pricing in a nearly 90% probability of a quarter-point ease at the Sept. 17 meeting. However, the Cboe Volatility Index (VIX) was on track to end the week trading around 16, indicating the absence of fear in the stock market. Frank McKiernan, managing partner and co-founder of Third View Private Wealth, believes the S&P 500 can hit 6900 by year's end, 8% higher than current levels.
-Healthcare stocks have been the worst performing sector in the S&P 500 this year, with the Health Care Select Sector SPDR ETF falling 3.7% this year. The ETF, which includes insurers, pharma companies, and medical-device makers, has been hit hard by reimbursement costs, Trump administration efforts to lower drug prices, remaking the Food and Drug Administration, and potential tariffs. Eli Lilly, an obesity-drug maker, has also experienced losses due to competition concerns. However, the healthcare ETF has stabilized, finding support near $130, the level that has attracted buyers since the S&P 500's early April selloff. The fund has remained in a long-term uptrend since early 2009, suggesting a potential recovery.
Features:
-Experts predict that quantum computers could eventually crack the security codes of blockchain, the underlying technology for Bitcoin, which could severely damage investors' trust in the $2T-plus market. Around a quarter of all Bitcoins are protected with algorithms that could be cracked by quantum computers in five or 10 years. As quantum computing advances, the damage could spread to newer wallets and the market's structure. The crypto industry is aware of these risks and is quietly preparing to defend itself. Some firms are already working on quantum computing, but the big question is how quickly quantum develops, and whether the security features of blockchain will match those of quantum. Blockchain, the easier to understand technology, is the beating heart of the Bitcoin market.
Europe:
-European defense stocks have plateaued for the past two months, following a two-thirds surge from January to June. Germany's Rheinmetall now has a trailing price/earnings ratio around 95, compared to 57 for Nvidia. European weapon makers trade at a one-third premium to US peers, and the majority of European spending increases has been anticipated in market forecasts. However, questions still linger over the anticipated Old World arms bonanza, as the industry needs to believe that the interest is neither transitory nor likely to be spent outside Europe. Northern Europe, led by Germany and the Nordics, should march steadily toward the North Atlantic Treaty Organization's new goal of spending 3.5% of gross domestic product on defense. Buying European could prove challenging in some of the sexier and more expensive weapons systems, as US-made F-35 fighter jets and Patriot air defense systems are best in their class globally. However, Europe holds its own on the ground and at sea, with Germany signaling big spending on Euro-made Boxer and Patria armored vehicles, along with Leopard tanks. Six European companies are "tier one" contractors on the F-35, including BAE Systems, Italy's Leonardo, and a vertical takeoff mechanism from Rolls-Royce Holdings.
Emerging Markets:
-no update
Commodities:
-Rare-earth miner and refiner MP Materials reported better-than-expected second-quarter numbers, causing shares to rise again. The company reported earnings before interest, taxes, depreciation, and amortization (Ebitda) of negative $12.5M from sales of $57.4M, which was below Wall Street's expected $20M. In the second quarter of 2024, MP reported an Ebitda loss of about $27M on sales of about $31M. Shares added 4.6% on Friday, closing at $74.32, a new 52-week and all-time high. Despite the positive results, investors are focused on the future with MP Materials stock and remain optimistic about that future. MP stock has been up roughly 200% over the past three months, with an average Wall Street price target of about $60. A transformational deal with the Department of Defense in July led to the gains, with the Pentagon agreeing to a $400M equity investment, a commitment for up to $350M in additional funding, and a $150M loan. The money will fund the construction of a new domestic rare-earth magnet-manufacturing facility and the expansion of MP Materials' current mining and processing capabilities.
Streetwise:
-Yeti Holdings, a company that started making rugged coolers for anglers and other outdoorsy types, has experienced a drop in its shares, with net sales falling 4%. The company, which will turn 20 next year, now makes more than half of its business in drinkware. Jefferies analyst Randal Konik, one of Yeti's biggest boosters on Wall Street, points out that management trimmed its sales guidance for the year but raised its profit guidance, indicating that the company is navigating the drinkware spill well. Inventory fell, suggesting that sell-through at stores has been stronger than wholesale orders. Yeti is launching 30 new products this year, including tote bags, camp chairs, dog beds, skillets, flasks, and more. Free cash flow is healthy, management is buying back stock, and the valuation is down to 12 times next year's projected earnings.
OpenAI priced GPT-5 so low, it may spark a price war
OpenAI astounded the tech industry for the second time this week by launching its newest flagship model, GPT-5, just days after releasing two new freely available models under an open source license.
OpenAI CEO Sam Altman went so far as to call GPT-5 “the best model in the world.” That may be pride or hyperbole, as TechCrunch’s Maxwell Zeff reports that GPT-5 only slightly outperforms other leading AI models from Anthropic, Google DeepMind, and xAI on some key benchmarks, and slightly lags on others.
Still, it’s a model that performs well for a wide variety of uses, particularly coding. And, as Altman pointed out, one area where it is undoubtedly competing well is price. “Very happy with the pricing we are able to deliver!” he tweeted.
The top-level GPT-5 API costs $1.25 per 1 million tokens of input, and $10 per 1 million tokens for output (plus $0.125 per 1 million tokens for cached input). This pricing mirrors Google’s Gemini 2.5 Pro basic subscription, which is also popular for coding-related tasks. Google, however, charges more if inputs/outputs cross a heavy threshold of 200,000 prompts, meaning its most consumption-heavy customers end up paying more.
But OpenAI is really undercutting Anthropic’s Claude Opus 4.1, which starts at $15 per 1 million input tokens and $75 per 1 million output tokens. (Anthropic does, however, offer big discounts for prompt caching and batch processing — storing/reusing prompts and processing multiple requests together.)
Anthropic’s model has been extremely popular among programmers, both as a choice within popular coding assistant Cursor and for powering its own such assistant, Claude Code. (Note that Cursor offered GPT-5 as an option minutes after it was announced.)
Developers who have had early access to GPT-5 are touting the pricing. Simon Willison, one of the developers featured in OpenAI’s launch video, writes in his review: “The pricing is aggressively competitive with other providers.”
But GPT-5 is also priced competitively with GPT-4o. OthersideAI’s co-founder and CEO, Matt Shumer (maker of HyperWrite), writes that GPT-5 “is cheaper than GPT-4o, which is fantastic. Intelligence per dollar continues to increase.”
Some on X called OpenAI’s fees for the model “a pricing killer,” while others on Hacker News are offering similar praise.
Will competitors like Anthropic follow? Will Google — who undercut OpenAI on pricing before — get even more affordable? If so, we could be witnessing the start of a much-awaited LLM price war.
There’s no doubt a price war would be welcome. The underlying economics of vibe-coding tool providers, for instance, is pretty shaky because of the high and unpredictable fees they have to pay model makers, as TechCrunch’s Marina Temkin reports. And there are countless startups building on top of AI models as well.
Silicon Valley has been hoping that the LLM price-to-performance ratio will eventually improve, along with inference costs. But it seemed like such an equalization could be years away as the tech industry invests hundreds of billions to build data centers and infrastructure to support growing AI demand.
OpenAI itself has a $30 billion-per-year contract with Oracle for capacity, when it only recently hit annual recurring revenue of $10 billion. Meanwhile, Meta plans to spend up to $72 billion on AI infrastructure in 2025, and Alphabet has set aside $85 billion for capital expenditures in 2025, driven by AI needs. In the face of such enormous expenses, costs typically go one way: up.
Given such investments, it may be too soon for startups looking at their rising model API bills to rejoice from OpenAI’s lone move to lower pricing.
Yet this week, OpenAI threw down the gauntlet to put pressure on prices not just once but twice. We’ll see if others follow.
Nvidia’s Quiet Rising Stars? The Son and Daughter of Billionaire Founder Jensen Huang
After early careers far from Nvidia, Madison and Spencer Huang are growing forces within the world’s most valuable company.
The Takeaway
• Madison and Spencer Huang have risen steadily within Nvidia in the last several years—largely without notice to outside observers.
• Their arrival at Nvidia comes as their father, CEO Jensen Huang, has guided the publicly traded firm to become the world’s most valuable company.
• Madison has become part of a small group of Nvidia execs nicknamed “The Band” who travel with Jensen.
At an all-hands meeting earlier this year, Nvidia CEO Jensen Huang received a question that prompted him to talk about a personal topic: nepotism at Nvidia.
In response, Huang acknowledged that Nvidia had indeed hired the children of many employees and insisted it didn’t bother him. He said he believed those parents wouldn’t have vouched for their kids unless they felt certain their children wouldn’t embarrass them. Besides, many second-generation Nvidia employees often outperformed their parents, Huang added with a laugh.
Of course, there’s a pair of second-generation Nvidians who have not yet eclipsed their parent: Huang’s own children.
Many employees in the audience saw the whole exchange as a reflection of growing intrigue within Nvidia about Madison Huang, 34, a senior director who joined the company in 2020, and Spencer Huang, 35, a product line manager who followed his sister to Nvidia two years later. (None of the Huangs would comment for this story, which is based on interviews with 30 people who know Madison and Spencer.)
Both Spencer and Madison have been steadily promoted. And while soft-spoken Spencer has kept a relatively low profile, Madison has not. In a sign of growing influence, Madison has joined a group of a dozen or so executives who travel with Jensen to his major speaking events. Known informally as “The Band,” these executives review presentation slides with him in hotel rooms, then go to event venues to scrutinize the details, like how the venue will light Jensen’s face on stage. It’s known as thankless, behind-the-scenes work that sometimes keeps executives up until the early hours of the morning on the eve of a major event, such as GTC, Nvidia’s annual developers’ conference, but puts them in Jensen’s innermost orbit.
Neither Madison nor Spencer works in Nvidia’s core business: making and selling the computer chips that have turned publicly traded Nvidia into one of the foremost players in the AI era during recent years. Rather, they work in divisions their father seems to value as areas of additional growth beyond chips—Madison in simulation software for industries such as manufacturing, and Spencer in robotics.
Their relationship to their father looms large over them at Nvidia. “I think it’s human nature that nobody is going to be in a meeting with either one of them and not have it on their minds,” said Greg Estes, a former Nvidia vice president who retired in May after 15 years at the company and who knows all three Huangs well. “The thing is, though, both of them work really hard, are good at their craft and care deeply about the company.”
For a long time, it wasn’t obvious that Madison or Spencer would end up at Nvidia, and neither followed a conventional path to Silicon Valley. Madison went to culinary school, later studying pastries and wine, while Spencer opened a cocktail bar in Taipei. (“I was happy to see that they wandered off at first chance,” said Jens Horstmann, a tech investor and longtime family friend. “I think they wanted to break out and see something different.”)
They have returned to the Bay Area as rarities in the tech world, at least to some degree. Corporate dynasties have long existed in more traditional industries, like media and finance. But since many of the largest businesses in Silicon Valley have scarcely existed for more than a couple decades, few have been around long enough to see a founder or CEO groom their children as possible successors.
Nvidia’s Jensen Huang, who appears here at a White House press conference, has seen his company vault onto the world stage amid the AI boom. (Getty Images)
By and large, the children of the generation of tech founders who established their fortunes in the 1980s and 1990s seem to have deliberately tacked away from following in their parents’ footsteps. Bill Gates’ kids, for instance, have never held any roles at Microsoft, nor have Steve Jobs’ children at Apple.
The Huangs are certainly not the only examples of families with extended ties at Nvidia. The son of Nvidia co-founder Chris Malachowsky works at the company, too, and so does the son of board member Aarti Shah. Many executives’ kids have interned there, and some parents have multiple children who work at the company, public filings and conversations with more than half a dozen current and former employees show.
Since Madison and Spencer have only recently arrived at Nvidia, it’s impossible to know exactly where they’ll end up within the company and precisely how much sway they’ll amass. But with Nvidia newly the world’s most valuable company, it’s hard to imagine the Huang family story playing out on a bigger stage with more dramatic stakes.
At the time Jensen founded Nvidia in 1993, he was a father of two young children: Madison was just a year old, with Spencer only a year older. Jensen and his wife, Lori, raised them in their San Jose home until 2003, when they moved into a six-bedroom home in the affluent neighborhood of Los Altos Hills a few years after Nvidia went public in 1999.
Spencer didn’t go to a traditional high school his senior year, attending instead the Freestyle Academy of Communication Arts and Technology, a new alternative school for students who wanted to pursue creative careers. There, students could access high-end equipment like professional-grade cameras and editing software to work on photography, design and film, which is what interested Spencer, according to one of his teachers.
Before Spencer’s graduation from the Freestyle Academy, Jensen encouraged Spencer and his classmates to exhibit and present their final projects at Nvidia’s headquarters, according to someone with direct knowledge. He arranged the room so the students could easily play their videos on a screen or hang up their artwork, and he paid for catering, hiring waiters to serve hors d’oeuvres.
The Huangs in 2007 (from left): Madison, Lori, Jensen and Spencer. (Getty Images)
Jensen’s kids became familiar faces at Nvidia. Spencer regularly participated in Nvidia’s annual volunteer day, where employees contributed to a philanthropic project, according to his LinkedIn. Employees said both Spencer and Madison were known to attend GTC alongside their parents long before they started working at the company.
Spencer attended Columbia College Chicago, double-majoring in international marketing and cultural studies. When Madison graduated from Los Altos’ public high school and left for the Culinary Institute of America in 2009, Jensen admitted to feeling bereft. “I’m devastated. We’re empty nesters. I just don’t know how to deal with it,” he told The Mercury News in 2009.
At cooking school, Madison completed a program that prepares students to manage restaurants and other parts of the hospitality industry. She worked as a chef in New York and San Francisco and studied pastries and wine at Le Cordon Bleu, a culinary school in Paris. She also spent nearly four years working at LVMH, the French luxury conglomerate.
Across the world in Jensen Huang’s native Taiwan, Spencer studied Mandarin at the National Taiwan University after graduating from Columbia College. Around 2014, Spencer and a friend persuaded one of Huang’s language professors to help them open a bar in Taipei, R&D Cocktail Lab.
Even as a much smaller company a decade ago, Nvidia had a major presence in Taiwan—its chips are manufactured there—and sometimes Nvidia employees would stop by the bar and good-naturedly ask the bartenders about their CEO’s son. At the bar, Spencer didn’t much discuss Nvidia or his father, who was not yet a celebrity and source of national pride in Taiwan, as he is today. However, Spencer did sometimes talk about his upbringing. “Spencer once told me he has known how to buy stocks since he was eight,” one former employee said.
In at least one way, Spencer tried to emulate his father while running the establishment: Each week, he led a managers’ meeting where employees shared their “top five things,” a list of current priorities, according to a former bartender. That’s seemingly a direct lift from his father’s playbook: For years, Nvidia employees have sent the CEO weekly emails outlining their own “top five things.”
In 2019, both Madison and Spencer started onto a path toward joining their father at Nvidia, enrolling in a six-week, online program at the Massachusetts Institute of Technology, with a focus on artificial intelligence.
The same year, Madison began an MBA program at London Business School, a top-tier school known for a large number of international students. Spencer ran the bar through the pandemic until 2021, when he closed its doors after seven years. Later that year, he started his MBA at New York University.
When Madison started business school, it only took a few weeks before many of her classmates began gossiping about her high-profile father. Several of them remember hearing that she flew on a private jet to a group ski trip in France.
But Madison didn’t talk about her father or about a potential future at Nvidia with friends, according to six people in her class. And they also tended not to ask her about it because they felt it would likely make her uncomfortable.
Back in New York, Spencer’s classmates were a bit more oblivious. On orientation day, faculty introduced Spencer as someone who had run a bar in Taipei, and interest in his background as a cocktail bar owner made him a popular figure, according to three classmates.
The Nvidia connection didn’t click for some until a group project led some to Jensen Huang’s Wikipedia page, and people realized the Spencer Haung in their class was a relative. (Two classmates didn’t learn Spencer was Jensen’s son until contacted by The Information.)
In the summer of 2020, while at London Business School, Madison interned at Nvidia in the marketing department and was then offered a full-time role in the marketing department. Several months later, she moved into Nvidia’s Omniverse business unit, which is responsible for Nvidia’s 3D design and simulation software products, as a product marketing manager.
Omniverse is a much smaller business than Nvidia’s chip and data center business, which makes up the majority of its revenue. Still, it is a key strategic bet for Jensen.
A key part of Omniverse involves digital twins—software that lets businesses simulate the design of a factory before actually putting any shovels in the ground. This business is important to Jensen because he believes simulations of the physical world will be immensely powerful, helping to usher in a new wave of AI for robotics, manufacturing and cars. (Such a boom would also increase demand for Nvidia products by new customers.)
From the outside, one might view putting Madison in Omniverse as a way to keep her out of the spotlight, but employees say it was a sign her father trusted her. He has long been deeply focused on growing Nvidia beyond its core business of selling graphics processing units, and he believed Madison could handle it.
Since Spencer came to Nvidia in 2022, he too has worked in another area of emerging interest for Jensen: robotics simulation. As a product line manager, Spencer oversees groups working on developing AI models for robots, as well as simulation software that aims to help robots better understand the world.
CEO Jensen Huang shows off Nvidia’s robotics work at a Paris conference in June. (Getty Images)
Employees say Madison is the more visible and influential of the two siblings at Nvidia. Her role has broadened over the past few years, and she gets involved in a number of different aspects of the business.
Her pay, too, has grown substantially—from around $160,000 annually in 2021 to more than $1 million in total compensation last year, according to Nvidia’s latest proxy filings with the SEC, which requires Nvidia to disclose this information because they are close family members of the CEO.
In March, Madison was promoted to senior director—one step below vice president—and reports to Rev Lebaredian, who reports to Jensen. She’s known by colleagues as someone who works long hours and will reply to emails within minutes. (“She wants to never be perceived as not earning what she’s achieved,” said Dessi Vatcheva, Madison’s close friend and former business school classmate.)
Madison has displayed an expansive interest in the business. A former employee who worked closely with her said that even though she wasn’t responsible for Omniverse’s sales goals, Madison sometimes checked in with salespeople and asked them about their progress.
She isn’t afraid to tell people they are not meeting her expectations or they are disappointing her, half a dozen former employees said. (Her father is known for doing the same.) Madison has sometimes abruptly logged off virtual meetings, which left co-workers feeling like she was frustrated with them, according to two people who have been in these meetings.
Madison’s big personality has made Spencer look more unassuming, according to several people who have worked with him. Colleagues said they couldn’t imagine Spencer getting upset with them or being as intense, for instance.
Madison and Spencer are not household names in the U.S. But in Taiwan, their presence at the family firm hasn’t gone unnoticed. Earlier this year, Madison traveled to Taipei to attend the Computex conference, a major event that draws tens of thousands of attendees.
Wearing a baby-blue pantsuit and crisp white sneakers, she walked the expo floor, greeting companies and stopping for pictures. (Also in attendance: Madison’s boyfriend, Nico Caprez, a London Business School classmate who joined Nvidia as a corporate development manager in February 2024.)
“She is a rock star,” said one attendee. “We all know she is Jensen’s daughter.”
The Week’s 10 Biggest Funding Rounds: Public Safety Leads, While Healthcare And Fintech Also See Big Deals
The pace of giant funding rounds slowed a bit this week. However, we still did see some jumbo-sized deals in the mix, topped by a $355 million growth round for First Due, a software provider for emergency responders. Healthcare and AI were also significant sectors for funding, as illustrated below.
1. First Due, $355M, public safety: First Due, a Garden City, New York-based provider of software for emergency first responders, announced that it secured a $355 million strategic minority growth investment led by JMI Equity. Founded in 2016, First Due’s technology currently helps power operations for over 3,000 local, state and federal agencies in the United States and Canada.
2. Strand Therapeutics, $153M, biotechnology: Boston-based Strand Therapeutics, a developer of mRNA-based therapeutics, raised $153 million in a Series B funding led by Kinnevik. The fundraise follows the company’s announcement of promising initial clinical data for its treatment for patients with advanced solid tumors.
3. Apreo Health, $130M, healthcare: Menlo Park, California-based Apreo Health, a clinical-stage medical device company developing a treatment for severe emphysema, landed $130 million in Series B funding. Bain Capital Life Sciences and Norwest Venture Partners led the financing, which will fund its next trials and early commercialization efforts.
4. BeatBread, $124M, financial services: BeatBread, a platform for independent musicians to make money from their work, raised $124 million in debt and equity funding. Citi Sprint led the financing for the 5-year-old company.
5. Decart, $100M, artificial intelligence: San Francisco-headquartered Decart, developer of an AI model focused on interactive experiences, reportedly closed on $100 million in a Series B funding round at a $3.1 billion valuation. Investors in the round included Sequoia Capital, Benchmark, Zeev Ventures and Aleph.
6. (tied) Rillet, $70M, fintech: Fintech startup Rillet picked up $70 million in a Series B funding round co-led by Andreessen Horowitz and Iconiq Capital. The Palo Alto, California-based company describes itself as an AI-native ERP, or Enterprise Resource Planning software, built for CFOs and accounting teams at high-growth companies.
6. (tied) Chai Discovery, $70M, healthcare AI: Chai Discovery, a startup using AI to predict and reprogram the interactions between biochemical molecules for drug research and development, secured $70 million in Series A funding. Menlo Ventures led the financing for the San Francisco-based company.
8. Stavtar Solutions, $55M, enterprise software: New York-based Stavtar Solutions, a provider of business spend management and expense allocation tools, raised $55 million in a Series A investment backed by Elephant.
9. Positive Development, $51.5M, healthcare: Positive Development, a provider of developmental therapy for autistic children and their families, closed on $51.5 million in Series C funding. B Capital, aMoon Fund and Flare Capital Partners led the financing for the McLean, Virginia-based company.
10. Human Interest, $50M, financial services: San Francisco-based Human Interest, a 401k retirement plan provider focused on smaller businesses, announced that Morgan Stanley Tactical Value has agreed to invest up to $50 million. The financing, revealed this week, is part of a previously announced Series E round.
White House to issue order ‘clarifying’ tariff on gold bars
Move follows surge in precious metal’s price after FT revealed US levy on imports
Donald Trump will issue an executive order “clarifying” the US’s stance on gold bar tariffs, after a ruling that a widely-traded form of the precious metal is subject to levies sent shockwaves through the bullion market.
“The White House intends to issue an executive order in the near future clarifying misinformation about the tariffing of gold bars and other speciality products,” a White House official said on Friday.
On Thursday, the Customs and Border Protection agency had published a ruling, which was first reported by the Financial Times, saying one-kilo and 100-ounce gold bars should be classified with a customs code that is subject to tariffs. Its decision stood in sharp contrast to a previous White House statement in April that bullion would be exempt from Trump’s levies.
Gold for December delivery dropped by 1 per cent to $3,460 per troy ounce on Friday after the FT reported on the White House’s plan to clarify its tariff. The precious metal had jumped to a record high earlier after the US blindsided the global bullion market by imposing tariffs on imports of one-kilo and 100-ounce bars — a staple in the global precious metals market.
The London Bullion Market Association, which represents large institutional gold traders and banks, said on Friday evening that it was “seeking clarification” from US authorities.
The US Comex is the world’s largest financial market for bullion, but to function efficiently the market relies on having unfettered access to the physical gold market centred on London — which would be threatened by any levies, according to market participants.
Many in the gold industry have questioned whether the CBP ruling, which was written in response to an inquiry from a Swiss refiner, could have been a bureaucratic mistake.
“The US has to decide if the White House was wrong in April, or if the CBP is wrong now,” said one executive.
Switzerland was dealt a particularly heavy blow as a result of the US’s tariffs decision, since the country is the world’s largest refining hub.
The tariff ruling would “negatively impact” the flow of physical gold around the world, noted the Swiss Association of Manufacturers and Traders in Precious Metals Association in a statement on Friday.
Trump reignited his global trade war earlier this week by reimposing his reciprocal tariffs on almost every US trading partner, pushing American import duties to their highest level in decades.
But the US president has also offered a host of exemptions to the levies, including to products such as pharmaceuticals or chips, that the US may apply separate tariffs to in future.
In April, the US issued further exemptions to a range of consumer electronics such as laptops, smartphones and earphones.
Trump has also signalled he may be willing to offer carve-outs for companies such as Apple that promise to make big investments in the US.
But the high volume of executive orders on trade issued by the White House in a short space of time has left many businesses seeking clarification over which products are hit and which are not.
Swiss watches keep ticking despite tariff challenges
The country’s makers of high-end timepieces should avoid the ‘horror scenario’ facing their fellow exporters
If there must be tariffs, luxury watches couldn’t be a better place to put them. Slapping hefty tariffs on Switzerland, therefore, home to elite brands such as Rolex and Patek Philippe and the source of $5.4bn of horological exports to the US last year, could be a masterstroke by President Donald Trump.
Swiss watches are well insulated from one of the main risks of tariffs: namely that as costs rise, demand falls, hurting both the companies themselves and the governments attempting to raise cash through the tax. With price tags that can run into tens of millions of dollars, high-end timepieces are a Veblen good. The more expensive they become, the more alluring. As the industry likes to say, those that can buy one, buy six.
For evidence of that axiom look no further than the wrist of Mark Zuckerberg. When he cast aside hoodies and nerdiness to reinvent himself as a man’s man, the founder of Facebook owner Meta did so by embracing jiu-jitsu and luxury watches. When he announced the end of Meta’s third-party fact-checking programme in January, he did so while flossing a $900,000 Greubel Forsey Hand Made 1 watch.
A secondary benefit, albeit possibly an accidental one, is that tariffs on the most expensive accessories burnish the image of a president ostensibly focused on the everyman. Unlike, say, tariffs on Bangladesh — the origin of T-shirts that wind up in racks of affordable retailers — this is a tax that falls on those with means.
Watchmakers may thus be saved from the “horror scenario” — in the words of trade association Swissmem — faced by their fellow Swiss exporters. While carmakers and chipmakers rush to reshore to the US, the horologists can stay put, and not worry too much about reordering supply chains. That’s lucky: the artisanal industry has been solidly Swiss for nearly five centuries.
Swiss horologists are not entirely immune to the waxing ways of the world. The quartz crisis of the 1970s thrashed the industry. More recent challenges include a strong Swiss franc, rampant gold prices and a more general wilting across the luxury sector.
Sales have yet to return to the peaks of the pandemic era, when holidays were cancelled, entertainment curtailed, and savings decanted into bling. Plenty of luxury watches are worth less than they were a year ago, according to industry tracker ChronoPulse, which tracks second-hand transactions.
But no one buys these for the short-term. Audemars Piguet debuted its inaugural Royal Oak watch at £2,850 in 1972, well above the average salary at the time; a new model released in 2021 retails at more than 50 times that. As investments go, that is streets ahead of inflation and even pips London property prices. Tariffs come and go, but prestige is timeless.
