President Trump has promised to impose 25 percent tariffs on products from Canada and Mexico starting on Saturday, a vow that’s roiling the foreign exchange market. The Times’s Peter S. Goodman, who travels the world reporting on the intersection of economics and geopolitics, breaks down where Trump’s unconventional tariff strategy has left companies scrambling to secure their supply chains.
Also, DealBook has two exclusives: Michael de la Merced reports on one of the highfliers of the online predictions market, Kalshi; and Michael Kives’s venture capital firm has reached a big settlement with FTX.
When tariffs can hit anywhere
Earlier this month, I was in Colombia traveling with executives from an American medical equipment company that had set up a factory there. The company, MedSource Labs, based in Minnesota, has traditionally depended heavily on factories in China to make its goods. That no longer seemed a safe bet — not with tariffs on Chinese imports imposed by President Trump during his first term and extended during the Biden administration. Not after the chaos in international shipping during the pandemic, or disruptions to the Suez and Panama canals in recent years.
Some companies seeking alternatives to China have shifted production to Mexico, but Trump has been threatening to put tariffs on imports from that country. New duties could land as soon as Saturday.
By contrast, Colombia seemed removed from the volatility of Trump’s promised trade war. When we dropped in on a Colombian trade official in Bogotá, she was confident that her country would benefit from the Trump administration’s focus on China and Mexico, and would emerge as a more appealing place to make goods destined for the United States. “We think we are off the radar,” she said.
So much for all that.
Less than two weeks later, Mr. Trump — angered by the refusal of the Colombian government to accept American military flights loaded with deported immigrants — threatened steep tariffs on Colombia’s exports. Within hours, the Colombian government appeared to cave. The White House declared victory. The status quo held, absent new tariffs.
Still, the episode underscored how, in the Trump era, no place is truly off the radar. No country is entirely free from the prospect that tariffs may be used to gain leverage in areas outside questions of trade.
For companies that make goods for the American market, this presents a bewildering and potentially expensive problem. Major retailers like Walmart have responded to Washington’s antagonism with Beijing by shifting production to Mexico, India and other countries. About a year ago, I traveled with executives from Columbia Sportswear as they scouted factories in Central America.
How are these businesses supposed to make long-term plans while contending with the unrelenting and unpredictable prospect of tariffs almost anywhere?
Perhaps this is the intention of the Trump policy. Trump has said repeatedly that he is trying to pressure companies to make their goods in the United States. This is the most reliable way to avoid the pitfalls of tariffs.
But even American companies operating factories at home and employing American workers depend on a global supply chain to deliver parts and raw materials.
Earlier this week, I was in Louisville, a Kentucky city positioned to reap the gains of a renewed focus on domestic production. I visited with multigenerational, family-owned manufacturers that have for decades resisted the temptation to venture overseas to exploit cheaper wages.
Tariffs might protect them from lower-cost overseas competitors, but tariffs will also increase the costs of components they import — electronics from Asia, parts from Latin America, machinery from Europe. And tariffs are likely to lift the value of the dollar, which makes their goods more expensive on global markets compared to competitors from other countries.
The only certainty in all this is greater uncertainty. The Trump administration is selling a trade war as the way to bring jobs back to the United States. But it could wind up threatening jobs that are already here. — Peter S. Goodman
HERE’S WHAT’S HAPPENING
More questions emerge about the deadly Washington in-air collision. Investigators are looking into abnormally light staffing at the control tower for Ronald Reagan National Airport, and whether the Army helicopter involved had deviated from its approved flight path. (Meanwhile, President Trump faced blowback for claiming, without evidence, that diversity hiring initiatives played a role in the incident.) Bigger issues include whether an increase in traffic at Reagan and other similarly busy airports is putting safety at risk.
The Trump administration moves to block its first merger. The Justice Department sued to stop Hewlett Packard Enterprise’s $14 billion takeover of Juniper Networks, which would combine two of the biggest networking service providers in the United States. The department had already raised concerns about the deal under President Joe Biden, suggesting there may be some continuity on antitrust policy between the two administrations.
Paramount moves to settle Trump’s “60 Minutes” lawsuit. The talks could help clear a path for Paramount’s planned sale to a group led by Skydance, making it less likely that the Trump administration would seek to block or delay the transaction, DealBook’s Lauren Hirsch and The Times’s James Stewart and Michael Grynbaum report. It’s the latest effort by media and tech companies to quickly resolve fights with Trump, even if legal experts say the law isn’t necessarily on the president’s side.
Amazon is the latest U.S. tech company to embrace DeepSeek. The tech giant is now offering DeepSeek’s R1 artificial intelligence model to customers of its cloud computing service, following Microsoft. The moves underscore a growing divide within the U.S. tech community, with some companies willing to adopt the Chinese A.I. start-up and others warning that it represents a threat. Separately, U.S. officials are investigating whether DeepSeek circumvented trade restrictions by securing high-end Nvidia chips from a supplier in Singapore, according to Bloomberg.
Kalshi opens up its bets
Prediction markets found their moment last year when they appeared to reflect, before opinion polls did, the likelihood of Donald Trump winning.
That led to an increase in popularity for these online betting platforms — and now one of the biggest, Kalshi, is seeking to capitalize by making it easier for people to buy in, DealBook’s Michael de la Merced is first to report.
Kalshi will announce on Friday that users will be able to bet on its contracts directly from brokerages, just as they can on stocks or cryptocurrencies. It’s intended to expand its pool of bettors, which has grown significantly since a federal court allowed Kalshi to offer election betting in the fall: The company now has 908 active contracts to wager on, up from 290 in October.
“Kalshi is committed to growing prediction markets into a trillion-dollar asset class,” Tarek Mansour, Kalshi’s co-founder and C.E.O., told DealBook in a statement.
It’s the latest evolution of prediction markets, in which bettors can wager on the outcome of real-world events. Though such markets had been around for years, they became increasingly popular last year as a way to forecast the presidential election. Proponents see them as faster and more accurate because they can factor in news developments more quickly and benefit from the wisdom of crowds.
They have become big business: Kalshi has seen about $2 billion in betting volume since October, and its app has been downloaded two million times. Polymarket, another major market, raised $70 million last year.
The sector is preparing for more favorable political winds. Kalshi has hired Donald Trump Jr., President Trump’s eldest son, as a strategic adviser. And the acting commissioner of the Commodity Futures Trading Commission, Caroline Pham, is expected to drop ongoing litigation against the company and instead work on creating rules allowing prediction markets to expand.
FTX settles with Hollywood investor Michael Kives
For the past few years, Hollywood and Silicon Valley have buzzed about the fate of K5 Global, a venture capital firm whose biggest investor was the now-bankrupt crypto exchange, FTX.
K5 Global was co-founded by Michael Kives, a former Hollywood agent. He became a super-connected investor with close ties to names like Elon Musk and Katie Perry. Sam Bankman-Fried, the disgraced crypto entrepreneur and FTX founder, invested $700 million of FTX’s money into Kives’s fledgling firm in 2022.
Its future appears brighter on Friday: FTX reached a settlement with K5 Global, dropping its lawsuit against the firm.
A recap: After John Ray, who managed the bankruptcy of Enron, took over FTX following Bankman-Fried’s arrest, he sued K5 Global, seeking to “claw back” the money FTX had invested.
The lawsuit became beach reading with details about how Bankman-Fried befriended Kives, and how Kives had persuaded Bankman-Fried to make a big bet on him. Speculation swirled that the suit, which described Bankman-Fried as Kives’s “profligate patron,” could end up puncturing K5 Global.
An about-face: The settlement appears to be a 180 from FTX with a statement from both sides saying they would “work together to maximize recoveries for FTX shareholders.” The terms were not made public.
“Having spent extensive time with Michael Kives and Bryan Baum, co-founders of K5, it is clear that K5 is a bright spot in the FTX portfolio,” Ray said in a statement, “and the expected strong performance of their investments will be a key driver in the recovery efforts for our stakeholders.”
What led to the deal? Close watchers of the case suggest that K5 Global’s initial investment in Musk’s SpaceX — close to $200 million of FTX’s money — has close to tripled in value, making it more advantageous for FTX to settle the case now.
“Wrong Yard, Shaky Fence.”
— Stephen Roach. In his latest missive (with a cheeky title), the economist argued that Washington’s “small yard, high fence” approach to containing China by increasingly tightening export controls was an “abject failure,” given the startling success of DeepSeek.
What you told us about Trump’s offer to federal employees
On Wednesday, we asked readers to share their thoughts on the Trump administration’s offer to federal employees: resign now with paychecks for eight months (and the possibility of being called into work), or come to the office five days a week and risk potential termination. Is the deal a good tool for reducing head count?
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Buyouts have long been used in the private sector for employees. I can’t understand why federal employees should not also experience this action. It is unsettling, yet it is often an opportunity to find a new path. — Judy Keenan
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Isn’t it obvious that the best employees will leave, as it will be easier for them to find new jobs? Many of them will wind up working for consulting firms, contracting out to the same departments that they left, but at two to three-times the cost to the government. — Retired C.F.O.
THE SPEED READ
Deals
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McKinsey & Company is said to be weighing the sale of its in-house asset management arm, which has drawn scrutiny on potential conflicts of interest with the firm’s core consulting business. (FT)
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Rothschild & Company reportedly plans to hire Jonathan Kaye, the banker who left Moelis & Company after being filmed punching a woman in Brooklyn last year. (Bloomberg)
Politics and policy
Best of the rest
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Amazon is reportedly increasing its advertising on X, after pulling most of its spending from Elon Musk’s social media platform amid a wider advertiser exodus. (WSJ)
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Apple shares were up in premarket trading on Friday: While the tech giant reported a drop in iPhone sales last quarter, strong apps sales and a resurgence of the Apple TV+ and Apple Music businesses lifted profit above analyst expectations. (NYT)
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