Markets reel amid Trump’s ‘Liberation Day’ tariffs

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

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1.

Liberation Day: Markets reeled as Donald Trump prepared to announce sweeping new tariffs on a vast number of countries with duties to take effect “immediately” following a Rose Garden announcement. US stocks seesawed, with the S&P 500 rising 0.3% after earlier losses, as investors braced for Trump’s tariff announcement. The so-called “reciprocal” tariffs are designed to match levies and trade barriers imposed on US goods by other nations. Reuters noted the White House had not yet published the official notice required before the tariffs can take effect. The structure remains unknown, though financial media report the administration is considering double-digit rates for many countries, with possible exemptions through deals. These come on top of a previously announced 25% tariff on auto imports, set to begin Thursday (Friday AEDT). Meanwhile, the European Union is preparing emergency support for affected sectors but won’t retaliate immediately, instead planning a negotiating “term sheet” with the US, Bloomberg reported. Goldman Sachs said Australia should expect “very modest” trade impacts, citing limited US tariff exposure and resilient China demand. (Bloomberg)(Reuters)(WSJ)

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Trade tensions: China’s top economic planning agency is restricting local companies from investing in the US as trade tensions between the two nations spiral. Bloomberg reports that several branches of the National Development and Reform Commission have been told to pause registration and approvals for Chinese firms hoping to invest in the US. The move could be a strategy to increase Beijing’s leverage during trade negotiations with the US. Existing US investments by Chinese corporations and financial products (like US treasuries) do not seem to be included in the suspension, and sources didn’t specify how long the pause is set to last. The report comes just hours before the Trump administration is set to unveil its ‘Liberation Day’ tariffs, which are expected to see the US impose sweeping tariffs on trade partners including China. (Bloomberg)(Capital Brief)

3.

Musk exit: Donald Trump has told his inner circle, including Cabinet members, that Elon Musk will step back from his government role in the coming weeks, Politico reported, citing three Trump insiders. The shift comes as Musk’s 130-day status as a special government employee — temporarily exempting him from some ethics rules — is set to expire in late May or early June. Musk has led the Department of Government Efficiency, aiming to cut USD1 trillion in federal spending. Though the US president remains pleased with his role, insiders and allies have grown frustrated with Musk’s unpredictability and now see him as a political liability. That view sharpened after a conservative judge he backed — including with a USD20 million investment — lost a Wisconsin Supreme Court race by 10 points. White House press secretary Karoline Leavitt said the report was “garbage”. Politico also reported Commerce Secretary Howard Lutnick is facing internal backlash over his aggressive tariff push. (Capital Brief)(Politico)

4.

Debate dates: Anthony Albanese and Peter Dutton are set to square off in the first election debate hosted by the ABC in two election cycles. The parties will participate in up to four official leaders’ debates in the lead up to polling day. In a letter to Coalition Campaign Director Andrew Hirst, seen by Capital Brief, Labor’s national secretary Paul Erickson confirmed the party agreed to grant hosting rights to the ABC for one of “at least three” debates between Albanese and Dutton. Should the ABC debate go ahead as agreed, it would be the second debate announced by the parties, after Sky News confirmed it would host a People’s Forum next week. Erickson also proposed that one of the debates be hosted by the National Press Club, where Peter Dutton has yet to make an appearance in his time as Liberal Party leader. (Capital Brief)

5.

TikTok tussle: Amazon made a last-minute bid to buy TikTok, days before a Saturday deadline for the app to separate from its Chinese owner or be banned in the US, The New York Times reported, citing unnamed sources. The offer was delivered via letter to Vice President JD Vance and Commerce Secretary Howard Lutnick. Sources told the paper the bid is not being taken seriously. President Trump, who delayed enforcement of the law mandating TikTok’s sale despite its unanimous backing by the Supreme Court, is expected to discuss the sale with top White House officials on Wednesday (Thursday AEDT). He previously said four separate groups were vying for the US operations. An alternative deal would sidestep a formal sale by bringing in US investors like Oracle and Blackstone, though it’s unclear if that would meet legal requirements. TikTok has 170 million US users and links to Amazon, with valuation estimates ranging from USD20 billion to over USD300 billion. (Capital Brief)

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Sales fail: Tesla has suffered its worst quarter since 2022, with delivery orders plummeting 13% amid anti-Trump backlash and model update disruptions. Elon Musk’s Tesla sold 336,681 cars in the first quarter, far below the 390,000 forecast by analysts and 387,000 in Q1 2024. Delays to the upgrade of its Model Y in China impacted sales, but its Musk’s image problem that could be causing sales to grind to a halt. As a key Trump adviser, Musk is copping widespread pushback against his support of far-right candidates and causes, with Tesla showrooms seeing acts of vandalism and arson around the globe. The figures are well behind those of rival BYD, which clocked 416,488 EV sales in the same period. Despite falling as much as 6.4% shortly after market open on Wednesday, Tesla stock rebounded in the afternoon on reports Musk could soon exit his post as DOGE chief. Elsewhere Trump Media shares plunged after the US president moved to sell his entire USD2.3 billion stake, ditching his earlier hold pledge. (Bloomberg)(CNBC)(Tesla)

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DOGE hacker: A former X and SpaceX employee, who is now a senior adviser in the US Department of Justice (DoJ) bragged about hacking and distributing pirated software, according to Reuters. The 33-year-old engineer, Christopher Stanley, was assigned to the Deputy Attorney General’s office while working for Musk’s DOGE. Some US national security professionals hold serious concerns about giving Stanley access to classified DoJ files, particularly given he had previously acquired data illegally. While Stanley’s exact responsibilities at the DoJ are unclear, the office he works in oversees all US Attorney’s offices, and manages criminal investigations offenses including hacking and other malicious cyber activity. There has been little to no public information made available on the responsibilities and background of DOGE staff. Stanley holds active security clearance and the DoJ has expressed confidence in his abilities. (Reuters)

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Private payrolls: Hiring at US firms surged ahead of expectations in March, at odds with broad-based concerns of a slowing labour market as uncertainty around the Trump administration’s aggressive tariffs could prevent firms from growing headcount. Figures released by ADP research saw private-sector employment increase by 155,000 jobs in March, and annual pay increased 4.6% year-on-year. The job figures show a sharp increase from the upwardly revised 84,000 in February, and better than the Dow Jones consensus forecast for 120,000. The gains were driven by professional and business services, financial activities and manufacturing. The trade, transportation and utilities, and resources and mining sectors dropped off by a combined 9,000 roles. The ADP data comes ahead of the closely watched Bureau of Labor Statistics’ non-farm payrolls. (ADP)(CNBC)(Capital Brief)