After the storm comes the calm. Markets will welcome a pause in the stream of tariff announcements but investors should still pay attention to earnings for signs of how levies will drag on the economy.

This might be premature, but peak fear seems to have passed after President Donald Trump signaled potential exemptions on tariffs for auto makers, following exceptions for smartphones and other electronics. There are some positive signs -- volatility is down, bond prices have stopped sliding, and the stocks drop looks more like a correction than a bear market.

So, it's time to forget the trade war? Not so fast. The figures contained in first-quarter trading reports won't reflect the impact of recent tariffs, but CEOs are concerned -- listen to Goldman Sachs Chief Executive David Solomon who warned Monday that corporate bosses are frozen by uncertainty and the chances of a U.S. recession are growing.

The risk is tariffs act more like a slow puncture for the market than a pin bursting a bubble. Analysts are predicting S&P 500 earnings growth of 10.6% in 2025, according to FactSet, but only 7.3% for the first quarter. Hopes of accelerating growth are hard to reconcile with escalating tensions between the U.S. and China, the world's two largest economies.

The full-year S&P 500 forecast suggests confidence that a grand U.S.-China bargain will be secured or that the Federal Reserve will swoop in and save the day with interest-rate cuts, even in the face of inflationary pressures from levies on imported goods. It's an assumption that will be tested, with tariff investigations for pharmaceuticals and chips having just started.

It's fine to take some time to enjoy the lull, but don't be fooled, the headwinds have far from disappeared.

-- Adam Clark

***

President's Broad Levies Draw Lawsuit From Businesses

Businesses have sued to block the White House's broad tariffs, saying President Donald Trump's use of emergency powers to impose his so-called reciprocal levies was improper and amounted to an illegal power grab by the administration. Still, Trump continues to announce tariffs, with chips and pharmaceuticals expected next.

   -- The International Emergency Economic Powers Act gives a president 
      sweeping economic powers during a declared emergency to address 
      extraordinary threats to national security or the U.S. economy. Trump 
      invoked it to address the U.S. trade deficits with other countries as his 
      justification. 
 
   -- Liberty Justice Center, which filed the lawsuit, said trade deficits 
      weren't a national emergency and have persisted for decades without 
      causing harm. The lawsuit was filed at the Court of International Trade 
      on behalf of five companies, including a wine importer and a cycling 
      apparel maker. 
 
   -- Trump may cut deals for auto makers to help them manage the impact of 
      tariffs, telling reporters in the Oval Office that the companies need 
      more time as they shift parts suppliers. Currently, 25% levies apply to 
      car imports, with similar levies for car parts expected in early May. 
 
   -- Among the multiple tariffs Trump has introduced since taking office are 
      levies on imported cars, steel, and aluminum, 10% across the board 
      tariffs on imports from around the world, and tariffs on some goods from 
      China, Canada, and Mexico. They are adding up to $3 billion a day for the 
      U.S., Trump said. 

What's Next: Tariffs on iPhones and computer tablets will be announced "very soon," Trump told reporters but added that his administration would talk to companies and that it would maintain a certain amount of flexibility. Asked if that meant flexibility for some products, Trump said "for some products" but didn't specify which ones.

-- Anita Hamilton and Matt Bemer

***

Nvidia Commits $500 Billion to Expand U.S. AI Manufacturing

Nvidia plans to build artificial intelligence supercomputers in the U.S. for the first time, aiming to spend $500 billion on its AI infrastructure with its chip-making suppliers Foxconn and Wistron over the next four years. Its Blackwell AI processors are already in production inside TSMC chip factories in Arizona.

   -- CEO Jensen Huang said a U.S. manufacturing base will help it meet the 
      growing demand for AI chips and supercomputers, strengthen its supply 
      chain, and boost resiliency. Foxconn and Wistron are building AI 
      factories in Houston and Dallas, respectively, where Nvidia has 
      commissioned one million square feet of space. 
 
   -- Mass production at the Texas plants is expected to ramp over the next 12 
      to 15 months. Nvidia said it would use AI and robots to automate its 
      manufacturing operations in the U.S. It is also using Amkor and SPIL for 
      advanced chip packaging and testing operations in Arizona. 
 
   -- The moves come as the Trump administration is expected to impose tariffs 
      on imported chips and products containing chips. Huang has said he wasn't 
      expecting a significant hit on the company's outlook from tariffs and 
      that Nvidia would bring more manufacturing onshore over time. 
 
   -- But it is also another sign that companies are shifting to cut their 
      exposure to the escalating trade war, especially between China and the 
      U.S. China has restricted exports of the rare-earth metals critical to 
      make electric vehicles, smartphones, and other technologies. 

What's Next: China's exports surged 12.4% in March as companies front-loaded shipments ahead of tariffs, The Wall Street Journal reported. That number is expected to slow now that tariffs are in place, and Capital Economics said in a report that it could take years before exports return to current levels.

-- Tae Kim and Janet H. Cho

***

Zuckerberg Testifies as Meta's Antitrust Trial Begins

Meta Platforms headed to federal court on Monday as government lawyers question its acquisitions of WhatsApp and Instagram in a case that could force the social media company to sell off chunks of itself. It's the first antitrust case to get its day in court during the second Trump administration.

   -- The Federal Trade Commission filed the amended case in 2021, calling Meta 
      a monopolist that bought potential rivals such as Instagram to kill off 
      the competition in the mobile app space. The FTC calls this a "buy or 
      bury" scheme. Meta, which also owns Facebook, disputes it is a monopoly. 
 
   -- Even before the trial started, Meta executives were defending the 
      company. Its Chief Legal Officer Jennifer Newstead said in a blog post 
      over the weekend that people spend more time on TikTok and Alphabet-owned 
      YouTube than either Facebook or Instagram, adding that Meta has less than 
      30% market share. 
 
   -- Meta CEO Mark Zuckerberg was the first witness, and focused on how his 
      company missed evolutionary signs in social media. Zuckerberg said now 
      about 20% of Facebook content and 10% of Instagram content is generated 
      by users' friends rather than the people they follow based on interests, 
      Reuters reported. 
 
   -- A recent poll by Forrester Research found that 54% of adults believed 
      Meta has a monopoly in social media, while 19% disagreed, and 27% were 
      neutral, MarketWatch said. The FTC amended its case after a judge 
      questioned Meta's monopoly power. 

What's Next: Zuckerberg has been pressing the government to settle. He has also made a number of moves that appear conciliatory toward the second Trump administration, The Wall Street Journal reported, including a deal to pay $25 million to settle a lawsuit that Meta suspended Trump's social media accounts.

-- Liz Moyer and MarketWatch

***

A Wall Street-Backed Crypto Bank Draws Federal Scrutiny

A Department of Homeland Security task force that fights transnational money laundering and other financial schemes is investigating Anchorage Digital Bank, a Wall Street-backed cryptocurrency start-up that has strongly supported President Donald Trump's goal to make the U.S. the world's crypto capital.

   -- Homeland Security's El Dorado Task Force, which conducts "aggressive 
      proactive investigations," recently contacted former Anchorage Digital 
      employees about the crypto company's practices, people familiar with the 
      inquiry told Barron's. An Anchorage spokesperson declined to comment. 
      Homeland Security representatives didn't comment. 
 
   -- Anchorage is the only federally chartered crypto bank, offering asset 
      safeguarding and trading to financial institutions and governments but 
      best known for its custody services. BlackRock named Anchorage a 
      custodian for its crypto exchange-traded products. Anchorage has said it 
      strengthened client due diligence practices after a 2022 regulatory 
      order. 
 
   -- Anchorage's backers include Goldman Sachs, Andreessen Horowitz, KKR, and 
      Wellington Management. Its board includes Connie Shoemaker, formerly of 
      Goldman, and Julie Williams, the Office of the Comptroller's chief legal 
      advisor during the 2008 financial crisis. TuongVy Le, a former Securities 
      and Exchange Commission crypto investigator, is an advisor. 
 
   -- The bank has been highlighting its status as a regulated bank inside the 
      Washington Beltway, co-sponsoring the black tie Crypto Ball during 
      Trump's inauguration weekend. Anchorage CEO Nathan McCauley attended the 
      White House's Digital Asset Summit last month and has testified on 
      Capitol Hill. 

What's Next: The nature of the investigation was unclear. Anchorage has said it would continue to bolster its policies and procedures and reinforce a "new, digital asset standard" for money-laundering prevention controls. Anchorage remains under an Office of the Comptroller of the Currency consent order.

-- Rebecca Ungarino and Janet H. Cho

***

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April 15, 2025 06:54 ET (10:54 GMT)

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