Chalmers says US tariffs ‘senseless and wrong’

Good morning. Here's what happened overnight and what you need to know today.

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1.

GDP hit: The Federal Treasury has estimated the direct hit to GDP as a result of US steel and aluminium tariffs on Australia to be worth less than 0.02% by 2030. In a pre-budget address to the Queensland Media Club on Tuesday, Treasurer Jim Chalmers will say that when indirect figures are added, the impact will rise to 0.1%. This includes the ramifications of a global trade war. But Chalmers is set to remain firm on refusing to retaliate, calling it a "race to the bottom." Chalmers will label the Trump administration’s decision not to exempt Australia from US tariffs on steel and aluminium as “disappointing, unnecessary, senseless and wrong.” Adding that Australia has not been “uniquely disadvantaged…but we deserve better as a long-term partner and ally.” Meanwhile, The Australian Financial Review reports Australia is facing tariffs of between 2% and 8% on the about $30 billion sold to the US, according to preliminary estimates, sources and officials. (Capital Brief)

2.

Slow growth: Donald Trump’s tariffs are taking a “significant toll” on the global economy, the OECD has warned, as it cut growth forecasts for a dozen G20 countries. Growth in Australia is projected to hold up but to be weaker than previously expected, it said. Global GDP growth is expected to slow from 3.2% in 2024 to 3.1% in 2025 and 3.0% in 2026. US growth is projected to decelerate from 2.8% last year to 2.2% this year and 1.6% in 2026. Canada’s forecast has been cut to 0.7% for both 2025 and 2026, while UK growth forecasts were lowered to 1.4% in 2025 and 1.2% in 2026. The OECD warned that further trade restrictions could reduce global GDP by 0.3% and cut US household disposable income by over USD1,600. It comes as Trump has confirmed that additional tariffs on steel, aluminium, autos and other products will take effect on 2 April. (OECD)(Capital Brief)

3.

Trump moves: Trump threatened military action against Iran over its support for the Houthi militia in Yemen, warning Iran will be held responsible for any further Houthi attack. The threat follows recent US airstrikes on Houthi targets and comes as Iran's government deliberates Trump’s recent offer for nuclear talks, an idea its supreme leader Ayatollah Ali Khamenei has already rejected. Meanwhile, Trump declared Biden’s last-minute pardons “void, vacant, and of no further force or effect,” arguing they were signed with an autopen. The pardons included members of Congress who investigated the 6 January attack, former Representative Liz Cheney, retired General Mark Milley, and Dr Anthony Fauci. Trump later said that the courts would determine their validity. Trump also said he will speak with Putin on Tuesday about a Ukraine ceasefire. The Kremlin confirmed the call but did not disclose its agenda. The Trump administration also defended recent deportation flights despite a federal judge’s order blocking removals and announced plans to expand housing developments on federal land. (NYT)(Bloomberg)

4.

Spending slowdown: US retail sales increased by less than forecast at 0.2% in February, the Commerce Department announced on Monday. Figures for January were also revised lower to 1.2%, the biggest drop since July 2021, underscoring concerns of a consumer spending pullback. Covering spending on goods, the retail sales report is considered particularly relevant at present, given President Donald Trump’s aggressive trade tariffs across large amounts of imports from the US’ key trade partners. Spending at restaurants and bars declined by the most in a year, while seven of the report's 13 categories reported decreases. The data suggests that consumer spending could be slowing as tariffs stoke inflationary pressure. Investors will be paying close attention to the US Federal Reserve’s meeting later this week, where policymakers are expected to hold rates steady. (US DoC)(Capital Brief)

5.

Late response: Intrigue abounds as Nine Entertainment has yet to meaningfully respond to CoStar's $2.7 billion bid for Domain almost a month after it landed. Nasdaq-listed CoStar tabled its $4.20 per share offer to the Domain board on 20 February after securing a 16.9% stake following an after-hours sharemarket raid. Nine, which owns 60% of Domain, is still working on its response to the offer, according to Capital Brief sources. But the slow response has surprised onlookers, especially since Nine's now permanent chief executive Matt Stanton met with CoStar founder and chief executive Andy Florance when he visited Sydney late last year. Sources confirmed that Nine chair Catherine West did not meet with Florance during his visit, which may be a factor in Nine's strategy and response. While it is common for a chair to leave early stage deal talks to their chief executive, West’s lack of involvement surprised some onlookers. (Capital Brief)

6.

Berkshire trading: Warren Buffett’s Berkshire Hathaway lifted its shareholdings in Japan’s five biggest trading houses after agreeing last month to “moderately relax” a 10% cap on its investments. According to filings with Japan’s securities regulator, Berkshire increased its stake in Mitsubishi Corporation from 8.31% to 9.67%, Mitsui from 8.09% to 9.82%, Marubeni from 8.3% to 9.3%, Sumitomo Corporation from 8.23% to 9.29%, and Itochu from 7.47% to 8.53%. Buffett, who first disclosed those investments in 2020, said in his annual shareholder letter last month that his “admiration for these companies has consistently grown” and outlined plans to hold the stakes for “many decades.” The trading houses are vital to Japan’s economy as importers of raw materials and supporters of key export sectors. While Berkshire has increased its holdings, it has also built up a record USD334.2 billion ($525.34 billion) cash pile. (FT)

7.

Taking the reins: Incoming Intel CEO Lip-Bu Tan is mulling plans to overhaul the company’s chip manufacturing and artificial intelligence strategies, according to sources cited by Reuters. At a company-wide town hall meeting last week following his appointment as CEO, Tan said that the company will need to make “tough decisions” which include staff cuts to remove what Tan has previously referred to as a slow-moving and bloated middle management. Tan will also prioritise improving Intel’s manufacturing operations, which are currently being repurposed to make semiconductors for clients including Nvidia. Tan reportedly plans to improve performance at its manufacturing arm, Intel Foundry, which makes chips for other design companies such as Microsoft and Amazon by aggressively courting new customers. Intel will also restart plans to produce chips that power AI servers and look to areas beyond servers in several areas such as software, robotics and AI foundation models. (Reuters)(Capital Brief)

8.

Gut deal: PepsiCo will buy prebiotic soda brand Poppi for USD1.95 billion ($3.1 billion), including USD300 million in anticipated cash tax benefits. The deal also includes potential additional payouts if Poppi meets performance targets. The Austin, Texas-based company, which blends prebiotics, fruit juice and apple cider vinegar, saw US retail sales jump 122% in the 12 weeks to 22 February, reaching about a 1% share of the carbonated soft drinks market. PepsiCo’s acquisition strengthens its foothold in the fast-growing functional soda category as consumers shift toward healthier beverages. It also comes as the industry faces scrutiny, with US Health and Human Services Secretary Robert F Kennedy Jr calling traditional soft drinks “poison” and some states pushing to restrict soda purchases with food aid benefits. (Capital Brief)(PepsiCo)(Reuters)