Member Briefing May 7, 2025
Trade Gap Widens to Record Amid Import Surge
The U.S. trade deficit reached a new record in March, according to fresh government data published Tuesday, as imports surged ahead of President Donald Trump's "liberation day" tariff rollout. The overall trade gap of the world's largest economy jumped 14.0% to $140.5 billion for the month, the Commerce Department said in a statement. This was the widest deficit for a month on record, dating back to 1992, and marked a $17.3 billion increase from a revised gap of $123.2 billion in February. The data covers the month before Trump introduced steep levies on China and lower "baseline" levies of 10% on goods from most other countries.
The trade gap was the result of a 4.4% rise in imports to $419.0 billion, as people rushed to buy goods ahead of the introduction of the widely trailed tariffs. By far the largest increase was seen in the import of consumer goods, which increased by $22.5 billion in March. Exports rose by a modest 0.2% to $278.5 billion. "April may bring a last ditch effort of firms front running tariffs, but after that net exports are set to reverse dramatically," the economists at Wells Fargo said.
U.S. and Chinese Officials to Meet Amid Trade War
Treasury Secretary Scott Bessent and U.S. Trade Representative Jamieson Greer are traveling to Switzerland on Thursday to meet Beijing’s lead economic representative, potentially paving the way for broader trade talks. China’s Foreign Ministry confirmed in a statement that He Lifeng, China’s vice premier and leader Xi Jinping’s economic czar, will visit Switzerland from May 9 to May 12 and during that time he will hold discussions with American officials. The scheduled meetings come as both Washington and Beijing are looking for an off-ramp from hostilities to start trade negotiations.
The Treasury Department confirmed Bessent’s travel plans to Switzerland to meet with the Chinese official in a Tuesday press release but didn’t provide further details. A separate release from the office of the U.S. Trade Representative said Greer would also be traveling to Switzerland to meet with his Chinese counterpart. Bessent said in a later interview on Fox News that the conversations with China in Switzerland will take place on Saturday and Sunday. He also stressed that these are just initial talks and it remains to be seen how the conversations will go.
Fed Confronts Lose-Lose Scenario Amid Haphazard Tariff Rollout
The haphazard rollout of President Trump’s tariff policy threatens to put the Federal Reserve in a lose-lose scenario: Navigate a recession or manage a period of stagflation. How the Fed negotiates tricky communications around these trade-offs will be front and center at officials’ two-day policy meeting this week. Fed Chair Jerome Powell and his colleagues are on track to extend their wait-and-see stance on cutting interest rates and strategize how to refine it. This calculated patience reflects officials’ determination to avoid prematurely abandoning their inflation fight.
The problem for the Fed amounts to a goalkeeper’s dilemma: Dive right to address inflation by keeping rates where they are, or dive left to counter weaker growth by cutting rates. “We’ll make what will no doubt be a very difficult judgment,” Powell said last month. Acting early to cushion the economy against a slowdown risks adding to short-term inflation pressures from tariffs or shortages.
Global Headlines
Middle East
- 'What's Left To Bomb?' Israel's Plan To Expand Campaign Strikes Fear Into Gazans – Reuters
- Israel Is Heading for a Full Occupation of Gaza—and All the Risks It Entails - WSJ
- Iran Unveils Its Latest Ballistic Missile As Netanyahu Warns Houthis’ ‘Patron’ – Breaking Defense
- Israel Says It Intercepted Missile Fired From Yemen; Houthis Claim Responsibility - Reuters
- Israel Attacks Main Airport In Yemen's Capital Sanaa - BBC
- The Coming Clash Over Syria – Foreign Affairs
- New Satellite Image Shows U.S. Aircraft Carrier at War with Houthis - Newsweek
- Map – Tracking Hamas’ Attack On Israel – Live Universal Awareness Map
Ukraine
- Kremlin Says Russia Still Plans To Cease Fire In Ukraine From May 8-10 But Will Respond If Attacked - Reuters
- Russia Accuses Ukraine Of Drone Attack On Moscow Days Before WW2 Parade - BBC
- EU To Propose Blanket Ban On Russian Gas - Politico
- NATO Ally Lithuania to Spend $900 Million on Mines Along Russia Border - Newsweek
- Allies Seek Deal On More Patriots For Kyiv Before NATO Summit, Source Says - Reuters
- Saudi Arabia Deals a Blow to Russian Economy - Newsweek
- Interactive Map: Assessed Control Of Terrain In Ukraine – Institute For The Study Of War
- Map – Tracking Russia’s Invasion Of Ukraine – Live Universal Awareness Map
Other Headlines
- India Launches Air Strikes On Pakistan And Pakistan-Administered Kashmir - BBC
- Romania In Chaos As Prime Minister Resigns – Politico
- Merz Elected German Chancellor After Initial Shock Defeat - Reuters
- Can Merz Restore Germany’s Leadership Role in Europe? - WSJ
- EU Announces €500 Million Package To Woo Scientists Away From Trump's America – France 24
- Global Debt Hits Record Of Over $324 Trillion, Banking Trade Group Says - Reuters
- Brussels Eyes Hitting €100B Of US Goods With Tariffs - Politico
- What Time Does The 2025 Conclave Start? See May 7 Schedule – USA Today
- How Bad Is China’s Economy? The Data Needed to Answer Is Vanishing – WSJ
Policy and Politics
State Includes $6.2 Billion in Budget to Pay Off Unemployment Insurance
The governor said on Monday that the state budget will now pay off all of the $6.2 billion in unemployment insurance debt that ballooned in New York during the COVID-19 pandemic. The funding for that will come from the state’s reserves, which Hochul at the beginning of her tenure as governor labeled the state’s rainy day fund. “I said we’d use them for a rainy day,” Hochul told reporters Tuesday. “Yes, it is raining,” she said when asked if Tuesday was that day.
After initially declaring the state would only pay off the interest on the unemployment insurance debt this year, Hochul said she met with business leaders in Long Island and Buffalo over the last few days and reasoned this payout would help businesses should an economic downturn take place. The burden of the debt since the outbreak of the pandemic has been carried by businesses through increased taxes and has led to unemployment payments being cut until the debt is paid off. New York is one of two states that still has COVID-related federal unemployment insurance debt after the state failed to use $25 billion in federal stimulus aid for unemployment tax relief.
Read more at NY State of Politics
Budget Deal Nears — For Real This Time
It’s been one week since Gov. Kathy Hochul announced a deal on the state budget — and there’s finally some hope that an actual deal might be imminent. Democrats in the Senate and Assembly held conference meetings this afternoon. The first budget bills will be sent to the printers soon, allowing for marathon voting sessions to start in the coming days. “We’re down to just dotting the i’s and crossing the t’s,” said Senate Deputy Leader Mike Gianaris.
“We’re 99.9 percent done,” Assembly Speaker Carl Heastie said. Bills will be printed “at the earliest Tuesday; at the latest Wednesday.” More details of the final agreement emerged throughout the day Tuesday. It will include an Assembly-backed plan to have the state pay of $7 billion of unemployment insurance debt for businesses, Hochul confirmed this morning. The budget is expected to have language to delay the start of an outside income ban on state legislators until 2027 as that subject continues to be litigated. It will also include Hochul’s push to change the way lieutenant governors are elected. But New Yorkers still haven’t seen actual details on subjects like these, days before they might become law. Republican Sen. Dean Murray pointed to Hochul’s claim that small businesses will have their burdens lessened by her plan to hike payroll taxes to fund the MTA.
‘I Don’t Know Where You Are’: the Race to Fix Air-Traffic Control
America’s air-traffic control system has been troubled for years, the culmination of years of anemic funding, archaic technology and staffing problems. A wake-up call sounded on Jan. 29 with a midair collision near the Ronald Reagan Washington National Airport that killed 67 people. President Trump and Transportation Secretary Sean Duffy have pledged to overhaul the system. Industry and government officials have studied data and suggested fixes to address close calls, but the ingredients for a catastrophe involving air-traffic control remained.
The Government Accountability Office said last year that about three-quarters of the FAA’s 138 air-traffic systems were either obsolete or potentially too difficult to reliably maintain. Duffy said he is preparing to unveil a plan this week to upgrade the FAA’s network of facilities, radars and other technology, which industry and government officials believe could cost $20 billion to $40 billion. Last September, the Biden administration asked Congress for $8 billion in additional funding over five years to make improvements, including replacing air-traffic control facilities and modernizing radar systems. Lawmakers didn’t act on the request—the latest chapter in a yearslong battle between aviation officials and politicians over how to improve air safety. A House spending bill this year has allocated $12.5 billion for upgrades.
Political Headlines
- Trump Approval Rating Tracker: Polling Numbers Stabilize After Weeks Of Decline - Forbes
- Trump Administration To Garnish Wages Of 5.3 Million Defaulted Student Loan Borrowers This Summer - CNBC
- Trump Administration Urges Court To Prevent Release Of Pro-Palestinian Students - Reuters
- Supreme Court Allows Trump Administration To Enforce Trans Military Ban – The Hill
- Trump Wants To Reopen Alcatraz As A Prison - Could It Happen? - BBC
- Trump Administration Bars Harvard From New Federal Research Funding - Politico
- Order By Hegseth To Cancel Ukraine Weapons Caught White House Off Guard - Reuters
- Universities Sue Over National Science Foundation Funding Cuts – The Hill
- Trump Tracker: Keep Tabs On The Latest Announcements And Executive Orders - WSJ
Health and Wellness
New Hormone-Free Hot Flash Treatments
This spotlight on menopause has helped spread a simple, but important message: You don’t have to suffer from symptoms in silence. There are options for relief. Several recent studies show hormone-free options offer relief from hot flashes and night sweats (called vasomotor symptoms by doctors) — a well-known side effect of some breast cancer treatments, such as chemotherapy and hormonal therapy. Veozah (chemical name: fezolinetant) is a daily pill approved by the U.S. Food and Drug Administration (FDA) for the treatment of hot flashes in 2023.
Veozah is a type of drug called a neurokinin 3 (NK3) receptor antagonist. It works by blocking some of the activity of cells in the brain that trigger hot flashes when estrogen levels are low. Compared with women taking placebo, women who took Veozah had less frequent and less severe hot flashes during the 24 weeks. Women taking Veozah experienced less frequent hot flashes within the first day of taking the medicine and throughout the 24-week study. Women taking Veozah didn’t have any serious side effects from the medicine.
Industry News
Trade War Updates
- Carney Told Trump That Canada Is Not For Sale. 'Never Say Never,' Trump Replied – NPR
- 5 Takeaways From Trump’s Meeting With Canada’s Mark Carney – The Hill
- Bessent Says US Could Announce Some Trade Deals As Soon As 'This Week' – Yahoo Finance
- Hershey Seeks Tariff Exemption For Cocoa From White House – Manufacturing Dive
- Trump Downplays Tariff Deals As U.S. Trade Talks Falter - CNBC
- India Worried About Chinese 'Dumping' As Trade Tensions With Trump Escalate - BBC
- UK And India Agree Trade Deal After Three Years Of Talks - BBC
- India Offers Zero-For-Zero Tariffs On Auto Parts, Steel From US - Yahoo
- Mattel CEO Says Toy Manufacturing Won’t Come To America, But Price Hikes Will - CNBC
- 'Asian Crisis In Reverse' As Currencies Soar On The Dollar – Nikkei Asia
Defense Supply Chain Strained By Tariff Costs
Tariffs are primed to make many of the components and raw materials that go into modern weapons more expensive. Defense companies are now wrestling with the potential impact and have, like other industries, lobbied the White House for exemptions. In the meantime, the Pentagon could end up footing much of the bill. A tariff-free environment “has been instrumental to the [aerospace and defense] industry maintaining one of the largest trade surpluses across American manufacturing industries for decades,” said Christopher Calio, chief executive of RTX, which makes the F-35’s sensors and engine.
“But like many companies in the industry, our supply chain and customer base are global, and we import raw materials, parts and modules from around the world,” Calio said on a recent earnings call. RTX expects to take a $850 million hit from tariffs this year, mainly at two divisions that have large commercial businesses. Tariffs could also make weapons the U.S. does buy overseas, such as Norwegian and Israeli missiles, more expensive while adding to public pressure on some buyers of American equipment to purchase less.
Machinists Union Strikes at Pratt & Whitney
Thousands of International Assn. of Machinists and Aerospace Workers initiated a strike against Pratt & Whitney at two aerospace engine plants in East Hartford and Middletown, Connecticut, following their contract expiration on May 4. About 77% of the estimated 3,000 members at two IAM locals endorsed the strike, which they had not done in more than 20 years. The IAM is the same union that conducted an extended strike at Boeing Corp. in September and October 2024.
Pratt & Whitney – the developer and manufacturer of jet engines for commercial and military aircraft – indicated it does not plan to revise its last offer, which includes an immediate 4% wage increase, a 3.5% increase in 2026, and a 3% increase in 2027. It also offer a $5,000 contract ratification bonus, and improved pension and 401k plan benefits. “Our message to union leaders throughout this thoughtful process has been simple,” according to a Pratt & Whitney statement: “higher pay, better retirement savings, more days off and more flexibility.
Read more at American Machinist
Trump Signs Order In Bid To Boost Pharma Manufacturing In The U.S
President Donald Trump on Monday signed an executive order to incentivize prescription drug manufacturing in the U.S., streamlining the path for pharmaceutical companies to build new production sites stateside as potential tariffs on imported medicines loom. The order directs the Food and Drug Administration to reduce the amount of time it takes to approve manufacturing plants in the U.S. by eliminating unnecessary requirements, streamlining reviews and working with domestic drugmakers to “provide early support before facilities come online,” according to a White House fact sheet.
It also directs the agency to raise inspection fees for foreign manufacturing plants, improve the enforcement of active-ingredient source reporting by overseas producers and consider publicly listing facilities that don’t comply. The White House estimates that it can currently take five to 10 years to build new manufacturing capacity for pharmaceuticals, which it called “unacceptable from a national-security standpoint.”
Bristol Myers To Invest $40 Billion In The US Over 5 Years
Bristol Myers Squibb said on Monday it will invest $40 billion in the U.S. over the next five years, as it seeks to expand its research and manufacturing presence in the country amid U.S. President Donald Trump's tariff threats. The announcement of new investment was first made by CEO Christopher Boerner in an opinion piece published in Stat News on Monday, and was later confirmed to Reuters by a company spokesperson.
In the Op-Ed, Boerner said the money will be spread across research and development, technology and domestic manufacturing, as U.S. drugmakers prepare to deal with Trump's tariffs. Several other drugmakers have also announced plans to ramp up spending in the U.S. in recent months as they prepare for possible tariffs on the sector. Boerner said bolstering U.S. manufacturing enables greater control over highly complex supply chains while bringing manufacturing closer to where the majority of R&D is taking place.
Ford Says Trump Tariffs To Cost $1.5 Billion As Q1 Net Income Dives 65%
Ford reported better-than-expected first quarter results but pulled its full-year guidance as President Trump's auto tariffs could have "significant impacts" on the bottom line. The Big Three automaker said that while its business is strong and "tracking within" its previous adjusted EBIT (earnings before interest and taxes) range of $7 billion to $8.5 billion pre-tariffs, auto import and parts tariffs will have a "net adverse" impact of $1.5 billion in adjusted EBIT for 2025. For the quarter, Ford reported revenue of $40.7 billion, topping estimates of $36.75 billion per Bloomberg consensus, but below the $42.8 billion reported a year ago.
Ford's adjusted earnings per share came in at $0.14, better than the $0.04 loss expected, with adjusted EBIT reaching $1 billion versus $308 million expected. Ford said planned downtime, unfavorable fleet pricing, volume decline, and adverse F/X pricing hit the bottom line. As part of its Ford+ plan, Ford divided its business into three units: Ford Blue, for the traditional gas-powered business; Ford Model e, for the electric vehicle division; and Ford Pro, for its commercial and super-duty truck business. Last quarter, Ford reported the following: Ford Blue: $21.0 billion in revenue, $96 million in EBIT. Model e: $1.2 billion in revenue, -$849 million in EBIT. Ford Pro: $15.2 billion in revenue, $1.31 billion in EBIT
AMD Beats On Earnings But Will Take $1.5 Billion Hit To Revenue From Chip Restrictions To China
Advanced Micro Devices reported first fiscal-quarter earnings on Tuesday that topped expectations, and provided a strong forecast for current-quarter revenue. Here’s how the chipmaker did versus LSEG expectations for the quarter that ended March 29: Earnings per share were 96 cents adjusted vs. 94 cents expected and revenue was $7.44 billion vs. $7.13 billion expected. For the current quarter, AMD expects about $7.4 billion in sales with a gross margin of 43%, versus Wall Street estimates for earnings of 86 cents adjusted on $7.25 billion in sales.
AMD CEO Lisa Su said that the company achieved its first-quarter results despite grappling regulations on advanced AI chip exports. The company’s forecast included $800 million in costs that the company said it would incur because the U.S. limited the export of some of the company’s artificial intelligence chips during the quarter. AMD also said that it expected about $700 million in lost revenue during the current quarter from export controls, and $1.5 billion in total through the end of AMD’s fiscal year.
Nvidia CEO Jensen Huang On AI: Every Job Will Be Affected, Some Will Be Lost
Nvidia founder and CEO Jensen Huang served up a blunt take on the job market as AI permeates society. "You will not lose your job to AI, but will lose it to someone who uses it," Huang said at the Milken Institute Conference on Tuesday. Added Huang, "I recommend 100% take advantage of AI, don't be that person." He suggested downloading software like Perplexity and OpenAI's ChatGPT to learn more about AI use cases.
Nvidia shares are down by 15% year to date, hit by the one-two punch of the Trump administration's crackdown on AI chip exports to China and fears of capacity overbuild in the US. The read-through to Nvidia has been that, while it will still likely have a big year financially, growth rates may not be at the stellar pace delivered in 2024. But the first quarter results from tech giants Microsoft (MSFT), Alphabet (GOOG), and Meta (META) poked a hole in that bearish narrative. The three hyperscalers struck an upbeat tone on AI services demand and said they would continue to spend aggressively on AI-related capital expenditures.
Mandatory AI Education For Every U.S. Student? 250-Plus CEOs Say Yes
More than 250 CEOs — from Fortune 500 companies to high-growth startups, financial management firms and educational organizations — have signed an open letter calling for mandatory computer science and AI education for K-12 students in U.S. schools. Without such training, they say, kids risk falling behind in a world driven by technology. Leaders signing the open letter include CEOs of such high-profile companies as Adobe, Accenture, AMD, American Airlines, Blue Origin, Cognizant, Dell, Dropbox, IBM, LinkedIn, Lyft, Microsoft, Salesforce, Uber, Yahoo and Zoom.
“In the age of AI, we must prepare our children for the future — to be AI creators, not just consumers,” the letter says. “Change is already underway,” it reads. “This movement has bipartisan support from leaders on both sides of the aisle. In the past 10 years, all 50 states have taken steps forward, and 100,000 teachers have started teaching computer science.” The letter cites research from the Brookings Institution showing that just one high-school computer science course can increase lifetime wages by 8% and employment odds by 3%. It says young women and low-income students see the biggest gains.