TheChek News Flow

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.

The biggest raise this week came from across the pond.

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.

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 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.

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.

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.

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.

President Trump’s tariff shock is forcing a reassessment by countries on how to respond and pushing investors to revise assumptions about profit margins, investments, and inflation.

The scope, speed and magnitude of the Trump administration’s tariff blitz left investors with a lot of questions. But one point came through crystal clear: The post–World War II global world economic order is no longer.

That is forcing a reassessment by countries on how to respond and pushing investors to reassess long-held assumptions about profit margins, investments, and inflation.

President Donald Trump on Wednesday unveiled a sweeping set of tariffs on top of other tariff-related moves in recent weeks that created uncertainty for companies and investors. But the 10% tariffs, effective April 5, and another set of country-specific tariffs—as high as 49%—on countries that the administration singled out for trade deficits with the U.S. were far higher than expected.

Capital Economics estimates that the average tariff is set to jump from about 2% last year to just over 20%—drawing comparisons to the Smoot-Hawley tariffs that deepened a recession in the 1930s. The tailspin in stocks, with the S&P 500 index shaving $2.5 trillion in market value in one day, underscored the shock. Economists warned that the tariffs could push the U.S. into stagflation, hitting growth and pushing prices higher.

Trump’s latest tariff salvos aim to narrow the country’s $1.2 trillion trade deficit in goods, which he describes as a national emergency. He is wielding tariffs as a powerful tool against both friends and foes in hopes of raising billions in revenue and bringing manufacturing jobs and production of critical goods back to the U.S.

While the administration may intend to negotiate these tariffs down, Michael Medeiros, macro strategist at Wellington Management, said the magnitude and way these tariffs were created have eroded trust among U.S. allies.

“Though some countries might look to make concessions, the probability of successful negotiations has gone down versus Trump 1.0. Trust in U.S. institutions has been coming down, and those concerns have now been accelerated,” said Medeiros. He said it’s showing up in the market, with the dollar weakening despite the increase in tariffs—the largest in a century—which should have the opposite impact.

“Trump has taken the hatchet to trade with practically every major U.S. trading partner,” said Eswar Prasad, former head of China research at the International Monetary Fund and currently an economics professor at Cornell University and senior fellow at Brookings Institution. “Trump is setting off a new era of protectionism that will reverberate worldwide and signals the end of a period when barriers to cross-border trade were falling and boosting global trade integration.”

China responded Friday by announcing 34% tariffs on all U.S. imports, starting April 10, matching the level the U.S. hit it with in its latest move. Beijing also expanded export controls and added almost a dozen U.S. firms to its “unreliable entities list,” restricting sales, and initiated new anti-dumping probes on medical devices. In a statement, the Ministry of Finance described the U.S. move as a “typical unilateral bullying practice.”

Canadian Prime Minister Mark Carney vowed to match Trump’s 25% tariffs on autos. If more countries follow Canada, which has taken a more aggressive stance with a “buy Canadian” movement, the next phase of the trade battle could turn into rounds of retaliation.

It could also make countries more hospitable to working with one another—at a time China has been trying to repair relationships with Europe and increase sales to other parts of the world.

Investors were left scrambling. “It’s the unknown unknowns that can lead to severe confidence shocks,” BofA Securities’ Savita Subramanian told clients. She said that if stagflation is the concern, companies helped by inflation and higher nominal interest rates, with less global exposure, stable earnings, and dividends, may be the safer route within the S&P 500.

Uncertainty about the terms for trade negotiations, as well as wariness of the sustainability of any deal, could make officials less inclined to rush to Mar-a-Lago or Washington, D.C. While Trump has indicated he wants to meet with Chinese leader Xi Jinping, analysts say there hasn’t been the prerequisite meetings even of cabinet officials with their counterparts.

The retaliation from China came bigger and faster than some analysts expected. “They are going hard and strong, and daring Trump to up his tariffs as he said he would do if countries retaliated,” said Arthur Kroeber, head of research at Gavekal.

Trump posted his response on Truth Social Friday: “CHINA PLAYED IT WRONG, THEY PANICKED – THE ONE THING THEY CANNOT AFFORD TO DO!”

Europe, which got hit with 20% tariffs in this latest round, is

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already increasing military and infrastructure spending, and that could help offset a tariff hit. China’s higher tariffs could force Beijing to bolster its gradual fiscal support to stabilize its economy.

The calculus is different for others like Vietnam, which relies on exports for almost half of its gross domestic product and is facing 46% tariffs. Countries that rely on the U.S. for security, like Japan, South Korea, and Taiwan, might also be more willing to negotiate. Indeed, Trump highlighted vows from Japan’s SoftBank Group and Taiwan Semiconductor Manufacturing to invest billions in the U.S.

Indian officials have also been looking for a bilateral trade deal—and Kroeber sees India as likely to negotiate to lower its tariff rate. Success would make it more competitive with China and make it an even more attractive manufacturing alternative.

Over the medium to longer term, Trump’s tariff and trade policy will likely accelerate the move to diversify supply chains, emphasize regionalization over globalization, and invest in becoming more self-reliant. The trend began in Trump’s first term and was kicked into higher gear amid the supply-chain disruptions of Covid 19 and Russia’s attack on Ukraine.

But given the uncertainty and increasing costs of inputs, companies may rethink where they allocate long-term capital. “These tariffs plus associated uncertainties provide more incentives to build around the U.S., not in the U.S.,” says Mary Lovely, who focuses on U.S.-China relations at the Peterson Institute of International Economics.

Ironically, the uncertainties and “everything, everywhere” approach to tariffs could give China an edge, as countries where companies tried to diversify to—such as Vietnam and Thailand—face hefty tariffs. That could make these countries less desirable alternatives to China, with some companies possibly opting to stay put, given the uncertainty of where policy could head next.

“We will see a strengthening of Chinese trade with Europe, and China acting as the U.S. did post–World War II as the country with some money and ability likely to help the likes of Vietnam, Malaysia and Indonesia as we see a reordering of trade flows,” says Cheryl Smith, an economist at Trillium Asset Management.

But even for the companies that look to bring back some of their manufacturing, such change moves at a glacial pace, even if the administration is able to speed up permitting for U.S. factories.

“The economic disruption is going to be longstanding. If Covid taught us anything, supply chains are extremely complex and difficult to rearrange overnight,” Smith says. “It isn’t a supply chain for a bakery but for computers and chips, with billions of investments and sunk costs.”

This reordering of trade also means that a global structure based on uber-efficient supply chains may be a thing of the past. “The whole system efficiency goes down, and because it becomes a fragmented market, economies of scale will come down,” says Jerry Wu, a fund manager on Polar Capital’s Asia and emerging markets team.

President Trump’s ‘Liberation Day’ tariffs risk domino effect across the globe as Chinese goods look for new markets

President Trump’s jumbo tariffs on China threaten to create a new problem for a global economy already stressed over trade: a $400 billion deluge of Chinese goods looking for new markets.

U.S. consumers and businesses learned Wednesday that, from April 9, Chinese imports will face tariffs of around 70% on average, after Trump walloped China with stiff new duties as part of his “Liberation Day” trade broadside. The new tariffs will likely push up prices in the U.S. for products ranging from consumer electronics and toys to machinery and essential components for manufacturing.

That towering tariff wall also risks diverting some U.S.-bound Chinese exports into a global market already swimming in China-made goods, worsening a so-called China shock that is facing pushback from countries around the world, according to economists. Other major exporters, such as Vietnam, South Korea and Japan, could also see barriers to their exports proliferate as U.S. spending on imports falls and their exports get shunted to new destinations.

Economists note that such domino effects underscore how trade wars can quickly escalate, drawing in more countries as retaliatory measures fly and defensive barriers go up.

“The real fireworks are yet to come,” said Michael Pettis, a professor of finance at Peking University in Beijing who has written extensively about global trade.

President Trump on Wednesday announced plans to levy tariffs on a range of U.S. trading partners that he accuses of taking advantage of the U.S. by boosting exports while keeping their own barriers to imports high.

China, regarded by many in Trump’s orbit as the U.S.’s chief geopolitical foe, was hit especially hard. Chinese imports will be slapped with a 34% duty. That new tariff rate was stacked on top of a 10% tariff levied in February, another 10% added in March and a range of other tariffs imposed during Joe Biden’s presidency and Trump’s first term in office. That lifts the average rate on Chinese imports to around 70%, according to economists.

It will be hard for other countries to absorb Chinese exports that normally went to the huge U.S. market. The U.S. in 2024 imported around $440 billion of goods from China, according to Census Bureau data. China in 2023 was the source of a fifth of iron and steel products imported into the U.S., more than a quarter of its imported electronics, a third of its imported footwear and three-quarters of its imported toys, according to data from the International Trade Centre, an agency of the United Nations and the World Trade Organization. Ninety-one percent of U.S. umbrella imports came from China.

U.S. imports from China are unlikely to drop to zero overnight. Consumers might be able to find alternatives to some Chinese-made products, but not others, and manufacturers outsource big chunks of their production to Chinese factories. Even if they manufacture goods at home, they are often bringing in parts and basic materials from China that can be hard to find elsewhere.

Lower U.S. spending on Chinese imports means unsold goods have to go somewhere else. Yet surging Chinese exports are already jacking up tensions between China and the world’s big economies, and could rise further if exporters try to unload what had been U.S.-bound shipments to other countries.

Since Trump launched his trade war in 2018, China has been the subject of almost 500 antidumping rulings and investigations, according to Global Trade Alert, a Switzerland-based nonprofit that tracks global trade policy.

Chinese leader Xi Jinping has poured investment into manufacturing to support advanced technology and pump up growth amid an epic property crunch and tepid consumer spending. The result has been a surge in exports, as companies hunt for overseas buyers to soak up goods they can’t sell at home. China last year posted a trade surplus of $1 trillion. Countries have moved to shield domestic industries from cut-price Chinese competition in response.

Last year alone, Brazil opened antidumping probes into imports from China of hypodermic needles, optical fibers, nebulizers and polyester mesh; Mexico and Canada opened investigations into aluminum, steel and chemicals; the U.K.’s trade protection agency recommended excavators from China be hit with antidumping duties of up to 84% after a rush of imports; and the European Union raised tariffs on Chinese electric vehicles following an investigation that concluded Chinese carmakers received hefty subsidies.

With the U.S. raising tariffs, “there just aren’t other big markets that can easily absorb the immense scale of China’s manufacturing capacity,” said Brad Setser, a senior fellow at the Council on Foreign Relations and a former U.S. Treasury official.

One way to ease trade tensions would be for China to boost spending at home, economists say, which might help soak up its industrial production and suck in more imports from other countries.

Beijing has announced plans to borrow and spend more to shore up growth and pep up consumer spending. But given the unexpected scale of Trump’s tariff blitz, economists say it will probably need to do more, such as cut interest rates, lift government borrowing further and find ways to rekindle beaten-down consumer confidence, perhaps by drawing a line under its drawn-out real estate bust.

Yu Xiangrong, chief China economist at Citi, said that without more stimulus, the additional tariffs will shave between 0.5 and 1 percentage point off Chinese growth this year.

Beijing said on Thursday that it would deploy “resolute” countermeasures against the latest tariffs on Chinese goods, though it didn’t immediately say what those were. In response to Trump’s earlier tariffs, China retaliated with tariffs of 15% on imports of U.S. chicken, wheat, corn and cotton and 10% duties on soybeans and beef. It also added a string of U.S. companies to export control and corporate blacklists.

“History has proved that raising tariffs will not solve the problems of the U.S. itself, and will not only harm the interests of the U.S., but also jeopardize the development of the global economy,” China’s Ministry of Commerce said in a statement Thursday.

The European Union, Japan, South Korea, Vietnam and a host of other countries were also hit with hefty new U.S. levies Wednesday. Countries not singled out for “reciprocal” tariffs by Trump weren’t unscathed: A flat 10% tariff rate will be applied to imports from all countries on April 5, he said.