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Member Briefing March 5, 2025

March 5, 2025

Posted By: Harold King in Daily Briefing,

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Four Takeaways From Trump’s Address To Congress

President Trump delivered the first congressional address of his second term on Tuesday evening. It was a chance for the president to underscore the sweeping changes he has wrought in the six weeks since he returned to the White House – and to defend those moves from his many critics. Here are 5 takeaways.

A defense of big change, in a taunting tone. Trump set out his case from the speech’s opening moments, characterizing his first weeks back in office as being marked by “swift and unrelenting action.”
A slight softening on Ukraine. Trump took a less hostile tone toward Zelensky than he has during the past week. But it remains unclear exactly how the president sees the path forward.
Leaning into immigration. Trump contended that his “most sweeping border and immigration crackdown in American history” was helping to achieve “the great liberation of America.”
Defense of tariffs – “a little disturbance” – gets lukewarm reception. One of the most telling passages in the address came with Trump’s defense of his tariffs – and the notably tepid response it received even from Republicans. Republicans duly applauded but with notably less zest than when Trump was on safer ground, defending his immigration restrictions or weighing in on the culture wars.

Read more at The Hill

Uncertainty From Tariffs On Mexico And Canada Disrupts Manufacturers And Markets

The U.S. economy entered a new era at 12:01 a.m. Tuesday, as President Trump’s tariffs on imports from Mexico and Canada took effect. If the tariffs remain in place, they have the potential to profoundly reshape relations between the U.S. and two of its biggest trading partners, abruptly reversing America’s decadeslong project of expanding free trade with its allies. The three countries had been operating under a revised free-trade agreement Trump brokered during his first term.

Manufacturers are feeling the pinch. “Tariff threats and uncertainty are extremely disruptive,” noted one respondent to the Dallas Fed’s February manufacturing survey, released last week. “This is a time of uncertainty for manufacturers, very difficult to make business plans,” another respondent said in the Kansas City Fed’s February manufacturing survey, also released last week. Monday’s report on February manufacturing from the ISM included 20 mentions of tariffs in the press release, compared with four in January, Goldman Sachs noted. Among the comments included in that report: “Customers are pausing on new orders as a result of uncertainty regarding tariffs. There is no clear direction from the administration on how they will be implemented, so it’s harder to project how they will affect business.” The Institute’s purchasing managers index fell slightly in February, indicating a slowdown in manufacturing growth.

Read more at The WSJ

The Auto Industry, With 5-Year Product Cycles, Can't Pivot On A Dime To Adapt To Tariffs

The auto industry faces a predicament: Carmakers cannot simply pivot their business operations on a dime with each economic or political uncertainty, such as threatened tariffs or changes to emissions policies. To make big changes quickly is impossible in some cases and costly in most other scenarios. Yet the world has been nothing but uncertain since President Donald Trump took office Jan. 20. He almost immediately threatened broad tariffs against all countries. Trump campaigned on promises to change emissions and environmental policies as well.

While most businesses plan for some amount of economic uncertainty, it's not simple for the auto industry. Car manufacturers and parts suppliers make multibillion-dollar investments in plants, technology, equipment and new vehicles many years ahead of when the cars and trucks hit dealership lots. That's because a lot of designing, testing and factory retooling is required in the manufacturing of the complex machines that transport us. "An auto company launching a new vehicle isn't like a cereal company adding more marshmallows to a box of cornflakes," said Erik Gordon, University of Michigan Ross School of Business professor. "It takes three to six years to develop a new car, and it takes the design, testing and integration of assemblies from many companies. If government policy changes in the middle of the process, years of work and tens of millions of dollars can go out the window."

Read more at The Detroit Free Press

Trump’s Trade War Heats Up As Countries Retaliate Against Tariffs

China hit back at the U.S. with a slate of retaliatory measures in response to the Trump administration’s latest tariff increase, escalating a trade war between the world’s two largest economies. The coordinated action across government bodies—including a series of new tariffs on American products as well as controls on U.S. companies—was announced just as the White House’s additional 10% levy on all Chinese products came into effect. Canada will respond to the new duties by enacting retaliatory tariffs of 25% against $155 billion worth of U.S. goods, $30 billion of which would start today, according to Trudeau. The remaining $125 billion of products will be subject to tariffs in 21 days. Mexico on Sunday will announce its own countermeasures, including tariff and non-tariff actions, President Claudia Sheinbaum said in a press conference Tuesday.

China’s retaliatory agricultural tariffs put pressure on a major export market for U.S. farmers. China was the U.S.’s third-largest destination for agricultural exports last year, totaling about $24.7 It is by far the U.S.’s largest buyer of soybeans, purchasing about $12.8 billion in 2024. On Tuesday, China’s Commerce Ministry unveiled a range of actions, signaling to the Trump administration that it could retaliate in asymmetrical ways. The ministry added 15 American companies to an export control list, including Silicon Valley drone maker Skydio, as well as Andreessen Horowitz-backed artificial intelligence startup Shield AI, which makes AI-powered systems for drones. Inclusion on the list would prohibit Chinese export of dual-use items that can be used for both civilian and military applications to those companies. Beijing also added 10 American companies to China’s “unreliable entity” list. These firms are prohibited from exporting or importing in China or from making new investments in the country, according to the commerce authority.

Read more at The WSJ

Global Headlines

Middle East

Ukraine

Other Headlines

Policy and Politics

Treasury Will Only Enforce Corporate Transparency Act On Foreign Companies

U.S. businesses no longer have to comply with the beneficial ownership information (BOI) reporting filing requirements of the Corporate Transparency Act (CTA). In a March 3 posting on its website, the Treasury Department stated that not only will it not enforce any penalties or fines associated with the BOI reporting rule under the existing regulatory deadlines, but that it will not enforce any penalties or fines against U.S. citizens or domestic reporting companies or their beneficial owners “after the forthcoming rule changes take effect either.” Back and forth court rulings on the laws constitutionality had previously delayed its implementation.

According to the Treasury, the new rules it will be proposing will narrow the scope of required reporting to foreign companies only, though it’s not completely clear whether, in this context, it will apply to foreign companies registered in the U.S. or also to U.S. companies owned by foreign persons and entities. Before the announcement, reporting requirements applied to businesses created in the U.S. and foreign companies registered to do business in any U.S. state or Indian tribe. “This is a victory for common sense,” said U.S. Secretary of the Treasury Scott Bessent, about the announcement.

Read more at Forbes

Investors Now Expect More Interest Rate Cuts This Year—As Fears Rise Of A Tariff-Driven Economic Slowdown

Treasury Secretary Scott Bessent said Tuesday the White House is determined to bring down interest rates, and investors are listening, as the market’s expectations of rate cuts swell, but the root of what’s driving the recently renewed rate cut hopes is not so rosy as the prospect of a shrinking economy as President Donald Trump’s tariffs take hold. We’re set on bringing interest rates down,” Bessent told Fox News’ “Fox & Friends” program Tuesday morning.

To Bessent’s point, the market-implied odds of 2025 rate cuts have jumped since Trump took office. Investors now price in three 0.25-percentage-points cuts by year’s end as the most likely scenario, which would send the target federal funds rate down from 4.25% to 4.5% to 3.5% to 3.75%, according to CME Group’s FedWatch Tool, which tracks derivatives contracts betting on Federal Reserve policy. That’s up from the single, 0.25-percentage-point cut to 4% to 4.25% priced in at Trump’s inauguration.

Read more at NPR

Negotiations To Avert A Shutdown Sputter As Disputes Over DOGE Cuts Persist

Congress is careening toward a government shutdown in just 11 days as the discord between the two parties over funding talks grows, with no clear path to reach a deal. The government is set to run out of money at the end of next Friday, March 14. Republicans control the House and the Senate, but they need Democratic support to pass a funding bill as it is subject to the Senate’s 60-vote threshold. Hopes of a full funding deal have faded, so President Donald Trump and congressional leaders are falling back on a short-term bill to keep the government open on autopilot, most likely through the end of the fiscal year.

But even that is running into obstacles. Democrats have pushed to include constraints on Trump and billionaire adviser Elon Musk’s attempts to close down or slash agencies without congressional approval. But Republicans say that’s a nonstarter as they support the Department of Government Efficiency-led budget cuts, which they say are about rooting out waste. House Speaker Mike Johnson, R-La., called for a measure “to freeze funding at current levels, to make sure that the government can stay open while we begin to incorporate all these savings that we’re finding through the DOGE effort and these other sources of revenue that President Trump’s policies are bringing to the table.”

Read more at CNBC

Trump’s First 100 Days

Health and Wellness

RFK Jr.’s Health Department Heightens Scrutiny of Vaccines

Robert F. Kennedy Jr. is taking the first steps toward reshaping how the federal government oversees vaccines. In Kennedy’s first few weeks at the helm, the Health and Human Services Department scuttled meetings of infectious-disease experts and began scrutinizing vaccine contracts. More changes to the government’s stands on shots are in the works. Kennedy is collecting names of potential new members to put on a committee that recommends which vaccines Americans should get and when, according to people familiar with the matter.

He is also weighing a new conflict-of-interest policy for the committee that would disqualify some current members, another person familiar with his thinking said. The moves make clear that Kennedy, a longtime critic of shots, has government immunization practices, programs and personnel in his crosshairs now that he is in charge of U.S. health policy. Last week, the Food and Drug Administration abruptly canceled a meeting of vaccine experts who help the government and companies select strains to be targeted by next year’s flu shot. The FDA said it would consult with federal partners and recommend flu-shot strains to pharmaceutical companies in time for them to make shots for the next flu season.

Read more at The WSJ

Industry News

US Products That Could Get More Expensive After Trump's Tariffs

Both Canada and China have promised to retaliate against the Trump administration's new tariffs, while Mexico expressed hope until Monday that a deal could be reached to avert the new fees. The tariffs are widely expected to start tit-for-tat trade wars with some of the U.S. biggest trade partners, with American consumers being caught in the crosshairs. Here are some of the products likely to cost more in the coming months.

Cars: New cars and trucks are expected to become more expensive as a result of tariffs on Canada and Mexico, where part of the manufacturing process is made.
Beer: Mexican beer like Modelo and Corona, which are popular in the U.S., are likely to increase in price for American customers, unless firms decide to import less to avoid higher costs.
Houses: About a third of softwood lumber, a crucial material to build new houses, is imported from Canada to the U.S. every year. Several housing experts have warned that tariffs on the U.S. neighbor will inevitably drive up the cost of building new homes and discourage new construction, eventually exacerbating the current supply shortage and increasing housing costs.
Fuel: Fuel prices in the U.S. could increase as a result of a 10 percent tariff on Canada's energy imports. The country is America's largest foreign supplier of crude oil, with 61 percent of oil imported into the U.S. between January and November 2024 coming from Canada.
Avocados, maple syrup: Some food products popular in the U.S. but traditionally manufactured or grown in Canada and Mexico are also likely to see higher price tags as a result of tariffs. Nearly 90 percent of avocados in the U.S. market currently come from Mexico. Tomatoes, peppers, and tequila, mainly produced in Mexico, are also likely to become more expensive.
Personal electronics: Computers, TVs, smartphones and tablets are likely to become more expensive because they are mostly manufactured in China, or use components made there.

Read more at Newsweek

Due to Tariffs, Honda to Reshore New Civic

American Honda Motor Co. plans to locate assembly of a new Civic hybrid vehicle at its manufacturing operation in Greenville, Ind., rather than at Guanajuato, Mexico, according to a report by Reuters. Honda has not confirmed the news, which reportedly anticipates production of more than 200,000 vehicles annually, starting in 2028. The current Honda Civic Hybrid is a compact, front-wheel drive vehicle with a 200-hp hybrid powertrain.

The location shift would be an apparent change by the transplant automaker to avoid proposed tariffs on manufactured imports. President Trump has proposed 25% tariffs on goods imported from Canada and Mexico. The Indiana plant has been operating since 2008 and currently assembles the Civic and CR-V crossover vehicles there. The plant has about 2,700 workers employed there.

Read more at American Machinist

Brent Oil Dips Below $70 on Trade Wars, OPEC+ Production Hike

Global benchmark Brent crude dropped below $70 a barrel for the first time since October as US President Donald Trump’s tariffs kick off a series of trade wars and OPEC+ moves to revive production that has been halted for years. “The OPEC+ announcement from yesterday to increase output coupled with the US tariffs on Mexican, Canadian and Chinese imports raise the prospects of an oversupplied market where economic growth and oil demand also suffer,” brokerage PVM wrote in a report.

Technicals are also signaling a shift in longstanding market fundamentals, including a tighter market for US crude relative to Brent. WTI’s front-month spread — the difference in futures prices for immediate delivery and the next month — is trading at the biggest premium to the same gauge of Brent since mid-January, when the US ratched up sanctions against Russia. “Unless there’s a contraction of supply outside of OPEC, prices are going to fall even further,” said Gregory Brew, a geopolitical analyst at the Eurasia Group.

Read more at Yahoo Finance

Pentagon Eyes Faster Approval Of Hypersonic Test Sites

The Pentagon is weighing options to establish new flight corridors to test hypersonic weapons over the U.S. and Australia — and it’s eyeing the Trump administration’s urgent call for a homeland missile shield as a mechanism to speed up the approval process.

The Defense Department already leverages several over-sea test ranges to validate that the hypersonic vehicles it’s developing — which are designed to travel and maneuver at speeds above Mach 5 — can hit their targets. But as programs transition to later test phases, overland ranges are better suited to evaluate how a system performs under more stressing conditions, like a faulty navigation system or an enemy decoy, which an adversary may use to distract from a real target.

Read more at Defense News

Why Automakers Including Honda And Toyota Are Pouring Millions Into Rockets And Satellites

In January, Toyota said its mobility software subsidiary “Woven by Toyota” was investing $44 million into Japanese rocket maker Interstellar Technologies. Rival Honda has been developing a proprietary reusable rocket since 2019 to launch low-earth orbit satellites to space. Chinese automaker Geely Holding Group, a Tesla competitor, has invested $326 million to manufacture its own satellites.

Cars today use satellite connectivity for tracking and location, software updates and entertainment like satellite radio. But as cars become more and more connected, automakers need the infrastructure to make that possible. That’s where satellites, and the rockets needed to launch them, come into play. One recent report estimates that by 2030, connected vehicles could be a $742 billion annual revenue opportunity for automakers and suppliers.

Read More at CNBC

Steel Tonnage Apparently Up to Start the Year

Global steel production rose to 151.4 million metric tons during January, an increase of 4.6% from December 2024, and yet -4.4% less than the result for January 2024. It was the highest monthly output since October, and only the second month-over-month improvement since July. Whether the upturn from December represents a trend is difficult to assess as that month frequently reflects holiday downtimes. But the same is true for January results from China, such that producers there – who represent roughly half of the world’s raw-steel capacity – are sometimes slow to finalize their January results.

For January, the estimated for China’s raw-steel output is 81.9 million metric tons, once again more half of the steel produced worldwide during the month. That figure indicates a 7.2% improvement over the December total, but -5.6% less than the January 2024 output.
Indian steel production during January totaled 13.6 million metric tons, even with the December total and 6.8% more than January 2024 result.
Japanese steelmakers reported 6.8 million metric tons produced during January, -1.5% less than in December and -6.6% less than in January 2024.
The U.S. steel industry produces 6.6 million metric tons (0 million short tons) during January, a -1.5% decrease from December but a 1.2% improvement over the January 2024 tonnage.
Russian steelmakers’ January output was 6.0 million metric tons, 5.0% more than in December but slightly less (-0.6%) than the January 2024 total.

Read more at Yahoo Finance

Ransomware Attacks Increased in 2024

In 2024, the cybersecurity landscape became increasingly fractured as ransomware attacks increased, according to a new study, 2025 Cyber Incidents Insights Report, from S-RM. The barrier to entry for criminals lowered, which resulted in 53 different threat actors in 2024, an increased of 96% from 2023. To address this, law enforcement groups globally have stepped up action to combat threat actors. Looking at the incidents in 2024, the report found the following:

14% of ransomware cases resulted in payments to a threat actor, down from 28% in 2022.
58% of ransomware victims had viable backups in place, an increase of 26% since 2022.
72% of ransomware incidents involved threat actors gaining access by exploiting software vulnerabilities.
1% of ransomware victims in 2024 with an EDR in place did not have dedicated analyst teams reviewing audits.
68% of business email compromise (BEC) cases involved the use of adversary in the middle techniques.
42% of BEC victims did not have multi-factor authentication rolled out to all users.

Read more at Material Handling & Logistics

See Council Member Trout Software’s State of Ransomware Report

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