We are Nearing Trump Tariffs Again
Fresh Off the Oven Newsletter
Meme Comic to Send You
Economics At Your Fingertips
The United States
Manufacturing Purchasing Manager Index
The Manufacturing PMI is up to 49.0 points in June 2025, but companies are still negative about the state of things.
- Why? Tariffs and conflict in the Middle East are making them worried.
- What to look out for? It’s been a while since the PMI is this close to 50 (above 50 means companies want to produce more). The coming months are important to see whether the U.S. companies regain their positive vibes back.
Nonfarm Payrolls
Non-farm payrolls, or ‘how many jobs are created for the month’, are at 147,000 for June 2025, higher than the market expectations of 110,000.
- Is this good? Yes, it means that the job market is still going strong.
- Why was it good? State and local governments (not federal) are stepping up hiring, as DOGE has led to fewer jobs at the Federal level.
- Something interesting? Healthcare job additions continue to be strong, while manufacturing faced a 7,000-job loss. This actually reinforces Trump’s policy of bringing back manufacturing jobs to the U.S.
- What to look out for? The Federal Reserve might not cut interest rates since the job market is still fine.
Unemployment Rate
The unemployment rate is down to 4.1% in June 2025 from 4.2% in May 2025.
- Something to rejoice about? The market expected it to increase to 4.3%, but it’s down instead.
- What to look out for? Same as non-farm payroll. This indicates the job market is still fine and the Fed might not cut interest rates in June 2025.
China
Purchasing Manager’s Index
Surprisingly, the manufacturing PMI for China went up to 49.7 points in June 2025 from 49.5 points in May 2025.
- Why are we surprised? We thought many countries had ordered before the tariffs kicked in, and China is in for a rough couple of months after that.
- Something to look forward to? With the U.S. and China close to finalising a tariff deal, this could mean that China’s manufacturing sector could rebound in the coming months.
Europe
Inflation
Inflation in Europe is up 2.0% in June 2025, from 1.9% in May 2025.
- What to look out for? Still no concern here, as inflation is still within 2.0% target.
Unemployment Rate
Europe’s unemployment rate up slightly to 6.3% in May 2025 from 6.2% in April 2025.
- Worry? No, the unemployment rate is at one of the lowest levels in 15 years.
Companies To Knock Your Socks Off
Home Depot (the U.S.)
What happened? Home Depot, one of America’s biggest home improvement sellers, is buying GMS, also a building products distributor, for US$4.3 billion. GMS services professional contractors and buyers more.
Why? In 2024, Home Depot also acquired SRS for a whopping US$18.3 billion to focus on selling to ‘professionals’ that provide building and construction services (like renovation and small projects). GMS will be parked under SRS.
Home Depot has three types of customers
- DIY (regular Tom, Dick and Harry)
- Professionals (contractors, renovators, etc)
- DIFM (regular Tom, Dick and Harry who wants to procure services from Home Depot)
Professionals spend more in stores to service more clients, and make up a higher percentage of Home Depot’s clientele.
Higher average spending and volume.
Impact on Home Depot? A higher penetration into the professional market, which should yield higher revenue per client, and total revenue.
Analyst Views? Trading View has Home Depot at a target price of US$422 with an upside of 13.5%.
CATL (China/Hong Kong)
What happened? CATL, China’s biggest electric battery maker, just broke ground on a US$6 billion Indonesian battery hub in West Java.
Why? Firstly, Indonesia makes up 50% of the world’s nickel production. Nickel enhances the properties of lithium-ion batteries, which is important for an EV.
Secondly, China and U.S. trade war is still raging. CATL, building a factory in Indonesia, might be able to escape the tariffs.
Thirdly, CATL supplies almost all its batteries to EV players in China with competition there being very tight now. Southeast Asia presents the next phase of expansion for CATL.
Impact on CATL? The battery hub will be completed by end 2026. No contribution to revenue until then. However, after 2026, CATL might be able to reduce its cost on nickel as transportation cost could be reduced with CATL processing nickel and building the batteries in Indonesia.
Analysts View? Target price of HKD374 with an upside of 5%.
Capital A (Malaysia)
What happened? Air Asia or Capital A is planning to buy 50 more Airbus planes for US$12.5 billion.
Why? It is currently under PN17 status, which Bursa Malaysia assigns for companies in trouble. This order is part of the plan for Capital A to get out of PN17 and get back to business as usual.
Furthermore, it wants to offer more lucrative long-range flights that is affordable for tourists in Europe and the U.S.
Impact on Capital A? Unsure. These 50 planes are on top of the 360 planes that Capital A has ordered from Airbus previously. On paper, it should boost revenue for the company, but the timing is very far into the future.
However, it should help the company exit its PN17 status, which should boost confidence in investors to go back into the company.
Analysts View? Target price of RM1.34 with an upside of 60%.
Story of the Week
And yet, here we are again.
Trump is sending ‘tariff letters’ to countries like he’s writing love letters. They will detail what kind of tariff rates these countries will get starting from 1 August 2025.
Not sure which countries he sent to, but he cited 10% to 20% and 60% to 70%.
Now, I have seen this misunderstanding about Trump tariffs very often in the media — that other countries pay for Trump’s tariffs.
This is half-correct.
Typically, it is the importer — U.S. companies — that pay the tariffs when they import the products from overseas.
However, there are certain arrangements that U.S. companies will have with other companies.
- It is not uncommon for companies in other countries to pay part of the import tariffs to have a ‘cost-sharing’ relationship.
While I may be beating a dead horse at this point, I have three objectives here.
- Identify the impact on U.S. consumers
- Identify the countries impacted
- Identify sectors impacted
Impact on consumers? Higher prices for sure.
U.S. companies that import products from overseas need to pay more in tariffs, and they could
- Absorb the costs and maintain pricing
- Pass on the costs and increase prices
When U.S. consumers see higher prices, they spend less. And that means a lot in the U.S., considering that close to 70% of the economy is based on consumers’ spending.
Countries Impacted? No details on the countries yet. But I am betting the 12 countries are in the previous list here
Vietnam has already brokered a deal, so they are out. China too.
The countries affected are probably: Mexico, Ireland, Japan, South Korea, Canada, India, Thailand, Malaysia, Indonesia, Germany, and Taiwan.
Which sectors are impacted? In the U.S., the most obvious are the consumer staples and consumer discretionary sectors.
What is the difference? Basic and daily necessities (like groceries) are in consumer staples, while luxury and non-essential spending are in consumer discretionary.
In the other countries, not so obvious. However, they are probably sectors that exports the most to the U.S. Let me give an example for five countries here.
- Japan: Cars, machinery
- South Korea: Cars, machinery, electrical components and products
- Taiwan: Machinery, electrical components and products
- Thailand: Machinery, electrical components and products
- Malaysia: Machinery, electrical components and products
I think it’s safe to say there are three sectors affected: Industrial equipment & machinery, electrical and electronics and the auto sectors.
Something Philosophical to Reflect On
Don’t let one thing consume and define the entirety of your life.
A quote that I have heard from one of the movies or dramas that I have watched in the past, but one I didn’t fully appreciate till I was older.
I was reading this article about Denmark’s number one secret to happiness here, and it was:
Hobbies.
It reminded me of Friedrich Nietzsche’s quote about the quote of “God is dead”, which I have heard many people quote but don’t know the meaning.
Here’s what I think: Christianity was on the decline during his time, and he thought that religion didn’t fill the meaning gaps in people’s lives anymore. What is a world without meaning then? Despair will take hold. Hence, he advocated turning to other things such as art, poetry and other artistic pursuits to take the place of religion if it fails for some people.
And when I think of the Danes’ way of finding happiness, I see big traces of Nietzsche here.
In today’s modern world, we have increasingly become more non-religious and have attempted to fill it with the doctrines of hustle culture, achievements, and material wealth.
Hobbies became ‘side hustles’.
And not a way to explore oneself and enjoy the imperfections of life.
Everything needs to be tied to a result. An end.
But it doesn’t have to be that way. Hobbies should be enjoyed for what it is — hobbies that give our lives meaning, enjoyment and fulfillment.
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