The Pulse: Trump-Musk Bromance Shatters, Tariff Uncertainty And Global Trade Shrinkng

The fallout between Donald Trump and Elon Musk has sent Tesla shares tumbling, while global trade tensions escalate with doubled tariffs on steel and aluminum imports.

• Trump-Musk relationship deteriorates after disagreement over budget bill
• Tesla shares down 14% this week, 37% since December
• Trump doubles steel and aluminum tariffs to 50%
• Eurozone inflation falls below 2% target for first time in three years
• China possibly ordering hundreds of Airbus planes as snub to Boeing
• Future conflicts likely to be fought through technology rather than traditional battlefields
• Rare earth metal exports from China experiencing slowdowns to US and EU
• Norwegian companies repurposing old ships for construction materials
• Technology implementation becoming top priority for 51% of senior supply chain executives

Read more about tariff impacts throughout 2025 in our latest blog post and explore The Economist's interactive tariff impact tool to understand effects by product category.

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Chapters

• 0:00 Trump-Musk Bromance Falls Apart
• 2:37 Trump Doubles Tariffs on Steel Imports
• 4:52 Economic Indicators and Corporate News
• 6:13 Future Wars Through Technology
• 7:27 Tariff Impact Analysis Resources
• 10:43 Rare Earth Metals Export Tensions
• 16:26 Supply Chain Technology Developments
• 20:50 Episode Conclusion

Transcript

Tony Hines: 0:18

Thank you and it'd be great to have you along. Well, everybody says the bromance is over between Donald J Trump, the President of the United States, and Elon Musk, ceo of Tesla. Big fallout this week Slanging match going on, names being called, denials and call-outs Incredible, isn't it? Only last week Donald Trump gave him the key to the White House, said he'd be welcome back at any time. But of course Elon Musk has been quite vocal about this bill, the big beautiful bill, that one, and so, yeah, looks like it's over for now anyway. And of course, threats on both sides. Elon Musk said he'd pull SpaceX out of the deal to get people to the space station and Trump said he'd pull out of the billions of dollars going into Tesla. So a long time from when Elon Musk was hailed as the new hero of the Republican Party in the US. So where's it all going to end? It just gets more bizarre every week. Elon Musk said the big beautiful budget bill is a disgusting abomination. The congressional budget office has said that the sweeping packages would increase the federal budget deficit by 2.4 trillion dollars over the next decade. It will have a tough ride when it comes under scrutiny by the house of representatives. Tesla shares lost 14% of their value on the Standard and Poor's this week with the spat between Donald J Trump and Elon Musk. And since December, of course, tesla shares have fallen by about 37%. So it's quite damaging for Tesla.

Tony Hines: 2:37

Donald Trump has doubled the tariffs on the imports of steel and aluminium. Aluminium, it's taken them now back to 50%. He announced this at a rally to steel workers in Pennsylvania. Nobody's going to be able to steal your industry, he told the audience Previously. The 25% levy remains in place for steel imports from the United Kingdom, which is because of the trade agreement signed with America last month. Stock markets didn't seem to react very much to this announcement. He's given a name at the moment, trump, calling him Taco. It was a name first mooted, I think, in the Financial Times, but Taco means Trump always chickens out. So they expect him to backtrack on some of these arrangements.

Tony Hines: 3:26

Opec, the organisation of the petroleum exporting countries, agreed to higher production of 411,000 barrels a day in July. It's the third increase in as many months. Opec, of course, is a cartel. They control the prices in the oil industry. The oil price is down 13 percent since the start of this year. Inflation in the eurozone fell to 1.9 percent in may and that's down from 2.2 percent in april. It's the first time it's fallen below the european central bank's two percent target since september 2024. It's been over 2% for about three years now.

Tony Hines: 4:06

Elon Musk is trying to raise funds for his artificial intelligence company, xai. He likes X, doesn't he? He likes that term X Lots of his companies SpaceX, x the former Twitter company and XAI. They plan to sell $300 million worth of shares and it would value XAI at about $113 billion. Musk said he's super-focused on this company after leaving the president's administration.

Tony Hines: 4:39

Shares Nervous, europe's biggest aerospace producer, rose by 3% this week on reports that China is about to order hundreds of the company's planes and the deal would be a big snub to Boeing. The American plane maker is just about to resume deliveries to China, but of course, I suppose the Chinese are frustrated and they're fed up with what's happening with the Trump administration, so this will be a real snub. Rami Quantau has lowered its sales target for 2030. It cited issues between Europe, china and America over tariffs. Remy, of course, makes cognac, and Cointreau is the other big seller for them. These trade barriers that are being erected, they said, could could cost about $114 million, which is nearly half of the operating profits in 2024-25, during the next financial year. It's not only America that's concerned over China's restrictions on exports of rare earth metals, but it's the European Union too. They said it's creating a difficult situation an alarming situation, I think, were the words they used for European industry. The European Association of Automotive Suppliers said only a quarter of the requests for export licenses had been granted by China since they tightened their controls in April.

Tony Hines: 6:13

I suppose if you wanted to make money right now, you'd probably be setting up some kind of arms industry. I know some of you won't like that, but if you want to make money, there's probably money going into arms, because this week all the politicians, whether they be in europe or in the united states or russia, are talking about how the new wars are going to be fought, and they're going to be fought not on traditional battlefields, but we've known that for a long time. I think they're going to be fought through technology. So we've got drones and we've got crewless ships and crewless submarines, and I think probably some nations will be quite spooked by this, but it means that those with the most money are going to be the ones that can create the technology, at least presently so. Technology, innovation and that military industrial complex is often driven by bad times, and bad times is probably where we are right now, but not as bad as they could be.

Tony Hines: 7:27

Now, if you want to know more about the tariffs and how they're impacting, or likely to impact your business, then you might want to look at the history of these tariffs throughout 2025, and this week I wrote a new article on this topic, which is is published on my blog and I'll put a link to that in the notes and you may want to go and read that just to get an idea of what's been happening if you haven't kept up to date with all the changes and there have been lots of them and you can see in stark terms some of the impact of those changes in tariffs. And, of course, I've had several episodes of Chain Reaction discussing the changes in the tariffs, and you might want to catch up on those if you haven't heard them already. Also, this week I came across an interesting article in the Economist which was tracking the cost of Donald Trump's tariffs, and that's in the digital edition. And it's great in the digital edition because if you look at the tariff impacts, there's a little chart there. And when you click on the chart it says explore tariffs by type of product. And so you can go to goods and they've told you how they've calculated all these impacts according to a particular methodology. So that's its claim to legitimacy here. And when you click on, it's a methodology actually laid out in a paper by omar barbaria and hillary stein of the boston fed. And they say the first step is grouping each of the 18 000 harmonized tariff schedules codes for individual products, some as specific as aluminum wheels and diameters 57 to 63 centimeters, into 402, a broader commodity categories published by the bureau of economic analysis, such as other motor vehicle parts for manufacturing. And then when you look at it in detail, as I said, you can click on goods and it says new domestic autos and it shows the impact of that. But a little box opens and then you can go down. You can look at furniture, clocks, lamps, lighting fixtures, household goods, carpets, floor coverings, window coverings, small electrical household appliances, dishes and flatware and so on and so forth. It's got a whole list of where these tariffs are applied and then you click on one, for example, audio equipment, let's click on that and then that opens up and it says where they're coming from and there's a big red box that indicates that the tariffs on those goods were placed mainly on china. There's a big red blob on the screen in april, so china and mexico, and the other is quite small, but, uh, it gives you the impact and then it gives a percentage for the impact of what's happening in the category. So if you've got access to that, go and take a look at. It's really really good. I like it. So big shout out to the economist. Thanks for that really interesting.

Tony Hines: 10:43

President trump is urging jerome powell, who's the chairman of the US Federal Reserve, to lower interest rates after employment figures this week showed that hiring has slowed in America. Trump did this, of course, in the usual way. He posts everything, doesn't he on Truth Social, and he called for a one-point rate cut and he used his nickname for Powell Very helpful. He wrote Too late at. The Fed is a disaster. Europe's had ten rate cuts. We've had none. Despite him. Our country's doing great. Go for a full point rocket fuel. So it's the usual insulting way that Donald J Trump deals with everybody.

Tony Hines: 11:34

The Institute for Supply Management published a brief report which shows that manufacturing PMI is down for May. New orders, contracting, production contracting, employment contracting, supplier deliveries slowing, inventories contracting, imports contracting and customer inventories too low. Well, that's what they say. I'm quite surprised that the inventories are contracting, because I know that lots of retailers and other businesses have pushed ahead to get goods in ahead of the tariffs that are coming down the track, so I would have expected inventories to not be contracting. The Purchasing Managers Index, of course, is a very good indicator of what's happening in the economy, and if things aren't looking good, are we really surprised? With scarce resources and increased tariffs, will that have a beneficial effect on the circular economy?

Tony Hines: 12:51

Now, that's a question that's been crossing my mind this week, and I was thinking when I read about a Norwegian shipping company that's repurposing old ships, ships that have reached the end of their useful life. They usually sailed off to some distant shipyard and scrapped. And the scrapped metal? Well, what happens to it? Is it repurposed, recycled, reused? It could be, couldn't it? And this Norwegian company that I came across this week was doing just that. They were deciding to reclaim the metal on the ship to use in building construction. So could more companies be doing that sort of thing, and will Donald Trump's tariffs actually be positive for the sustainable economy. There were two Norwegian companies that were involved in this project where end-of-life ships are going to be reused in construction projects in Norway. One was Hoag Autoliners, a Norwegian car carrier, and Bergen-based Nordic Circles. They teamed up on this circular economy project and that was reported in Shipping Watch Weekly, something I often look at because they have some interesting articles.

Tony Hines: 14:18

Now there's been a slowdown in rare earths being exported out of China, and that's both to the United States and to the European Union. This week China said it's willing to increase the examination rate and approval of rare earth exports to European Union farms and will also deliver a verdict on a trade investigation it's currently conducting into European Union brandy imports by July 5th. That came from the Commerce Ministry in China. There's also a discussion going on about prices on Chinese-made EVs exported to the EU, but there's no conclusion as yet. Wang Wenzhou from the Chinese Commerce Ministry and EU Trade Commissioner Maros Sefcovic met in Paris on Tuesday. President Trump also announced that he'd had a conversation with Xi Jinping this week about rare earth metals and there was an agreement reached that those rare earths would find their way to the United States along with magnets. So there's a commitment from China, is what Trump said.

Tony Hines: 15:36

He was asked a question by a reporter on Air Force One. He said he'd had a very positive call with Z and there should no longer be any questions respecting the complexity of rare earth products. It's a sign of easing tension over the issue. So perhaps that's a good sign and of course, the American tech companies and the EV makers will all be very happy about that If those rare earths, magnets and everything else that they need from China find their way to the United States. And of course, they'd be even happier if the tariffs were lowered.

Tony Hines: 16:23

Well, next week in the United Kingdom we'll see Rachel Reeves on her feet again with the summer statement about the economy, and there's been a lot of posturing and argument about which departments will win and which will lose and what it's all going to cost in terms of taxes and how it's going to be funded. So all those discussions will be in store in the United Kingdom next week. But the one thing is certain Money on defence will have to remain at the commitment towards 3% and it's likely that those other departments without a great deal of muscle will be the ones to lose out. But the Chancellor is under great pressure to deliver because people haven't been too impressed with the previous announcements coming out of the Labour government's policies for things like winter fuel allowances and expenditure on all kinds of other projects. So we're likely to see major cuts in some departments and there aren't really going to be winners. There are going to be people that are just going to hold on to budgets Small increases, if any, apart from defence.

Tony Hines: 17:46

We sometimes forget, don't we, about what's happening in supply chains as a result of Trump's tariffs and these global trade wars that are taking place at the moment. But one stark reality came home this week and it was to do with Rio Tinto Zinc in Australia. And of course they're a mining company and they have a facility producing aluminium in New South Wales, in Tamargo, and aluminium smelting is quite a dirty difficult business to be in. But companies like Rio Tinto, obviously, are engaged in these activities and it's big business. In Australia they're in talks about their electricity contract, because energy, of course, is a big part of their supply chain and it's costly. So they're trying to fix prices for the period 2026 to 2029 and they want federal production tax credits too. So they're looking for help from the government in australia.

Tony Hines: 18:52

Other big supply chain stories this week from around the globe, tech investments have surged. A new report from blue yonder revealed that 51 percent of senior supply chain executives in North America and Europe have made technology implementation their top priority for the next three years. Ai and visibility tools are driving resilience and efficiency. The tariff uncertainty in the United States was briefly blocked by a trade court in Manhattan, but a federal appeal court quickly reinstated them. This back and forth is causing uncertainty for retailers' ports and it's potentially leading to consumer prices rising. So inflation is back.

Tony Hines: 19:41

China's AI-powered supply chains are being developed in an action plan that's come out of Beijing to digitize supply chains by 2030, integrating AI and blockchain into manufacturing and agriculture. Chinese factories are increasingly using AI for cost cutting and quality control, and that will make them even more difficult to compete with. So I don't think reshoring and those sort of arguments to protect economies with tariffs are really going to win the day because technology will change the game again. Day because technology will change the game again. The average price of diesel in the United States has fallen for the seventh consecutive week. It's now $3.48 per gallon. Oil prices around the globe, of course, fairly constant at the moment, with OPEX action and about $66 a barrel. Well, that's it for this week.

Tony Hines: 20:50

I hope you've enjoyed the episode. I hope you've learned something you didn't know. I hope it's helped you with your understanding of what's going on and I hope it's been a useful insight into things that you need to think about, perhaps for your business to compete in this global world. I'm Tony Hines. I'm signing off. I'll see you next time in chain reaction podcast. Written, presented and produced by Tony Hines.