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Trump's Tariff Fight Isn't Over

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In today's newsletter, Mexico and Canada secured deals just under the wire to delay the implementation of President Trump's aggressive trade plans. China, on the other hand, retaliated.

What's on deck

Markets: Hedge funds' January report cards are in.

Tech: A leaked Meta memo shows executives view this being the metaverse's make-or-break year.

Business: The unexpected shutdown of USAID's headquarters.

But first, the tariff fight isn't over.

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The big story

Retaliation and relief

Getty Images; Chelsea Jia Feng/BI

Mexico and Canada get reprieves but tariffs on China go ahead, prompting retaliation.

Mexico and Canada negotiated with the US to delay President Donald Trump's tariffs for at least a month. In separate announcements on X, both country's leaders announced plans to fortify their borders with the US.

China, however, did not reach an agreement with the US. At midnight last night, an additional 10% tariff went into effect.

China responded by imposing retaliatory tariffs on US goods. These include a 15% tariff on coal and liquefied natural gas and a 10% tariff on crude oil, agricultural machinery, and some vehicles.

Meanwhile, by agreeing to a deal, Canada and Mexico may have given Trump exactly what he wanted, write BI's Katherine Li and Huileng Tan.

Mexican President Claudia Sheinbaum said her country would add 10,000 members of its National Guard to prevent drug trafficking into the US.

Canadian Prime Minister Justin Trudeau said it was "reinforcing the border with new choppers, technology, and personnel" as part of its $1.3 billion plan.

Both leaders specifically referenced stopping the drug fentanyl, which Trump previously highlighted as part of his motivation behind implementing the tariffs.

Jeff Swensen/Getty Images; BI

But experts warned the deals might not be worth the tradeoff: creating uncertainty in the international trade order and bad blood between the US and its trading partners.

Despite the last-second theatrics, the delay of tariffs on Mexico and Canada validates the long-held belief the trade plans were merely a negotiation tactic. Many on Wall Street view the tariffs as Trump's way of getting better trade terms.

That's not to say it didn't give the markets a good scare. There was significant price movement across a number of assets yesterday, including stocks, the US dollar, and oil. Goldman has also predicted tariffs would lead to a 5% drop in the S&P 500 over the next few months. Mexico, China, and Canada are the US' biggest trade partners, specifically for oil, electronics, and vehicles.

While the delay buys Canada and Mexico some time, the threat still looms for all involved. US consumers are largely expected to feel the brunt of the tariffs. Companies impacted by the taxes will likely pass the cost down to their customers by raising prices.

(There's an argument that this will force companies to do more production in the US, creating more jobs here. However, those types of changes don't happen overnight, and the cost of labor in the US compared to foreign countries could still impact pricing.)

Trump even acknowledged his trade plans wouldn't come without hiccups, saying it would cause "some pain" but would be "worth the price."

The automotive industry is one area that could see volatility, with Jefferies analysts saying average new car prices could rise as much as $2,700. And even carmakers emphasizing US production, like Tesla and Rivian, will feel the effects of the tariffs.

News brief

Top headlines

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Elon Musk is officially an employee of the US government — but he's not getting a paycheck.
MDMA at night, Cheerios in the morning: The trippy rise of parenting while high.
The House DOGE committee is setting its sights on NPR and PBS.

3 things in markets

Getty Images; Jenny Chang-Rodriguez/BI

1. Crypto felt the sting of Trump's tariff announcements. When Trump announced steep tariffs on China, Canada, and Mexico, digital currencies faced greater losses than the rest of the market. Experts told BI why Ethereum fared the worst and what the sell-off could mean for crypto's future.

2. Walleye and Balyasny are hot out the gate among top hedge funds. January was full of shocks, but hedge funds still made money. Walleye and Balyasny topped the leaderboard of multistrategy funds, which largely shrugged off the DeepSeek-instigated tech sell-off.

3. Higher inflation could be a good thing for investors. Some of President Trump's policies, like immigration control and onshoring, could keep inflation elevated. But you might not need to worry if you're an investor. Higher inflation could actually boost your portfolio, according to BNY Wealth.

3 things in tech

Meta Quest visuals

3 things in business

Javier Muñoz for BI

1. Can The Daily Beast be saved? In its 16 years of existence, the Beast has been known for its ambitious scoops and scrappy reporting. But turning a profit proved tricky. When longtime media executives Joanna Coles and Ben Sherwood took over as co-owners in 2024, Sherwood told staff the outlet was on track to lose $9 million that year. Now the media company is profitable for the first time, but it has come with a noticeable change to its story coverage.

2. USAID's future thrown in doubt. Hours after Elon Musk tweeted about the agency closing, DC employees of the government's foreign aid agency were told to stay home after its headquarters went dark. Secretary of State Marco Rubio later declared himself USAID's acting leader, boosting reports that Trump planned to house it within the State Department.

3. YouTubers cash in on podcasts. Video creators are turning their podcasts into new-age talk shows. The podcasts are helping them rebrand, build new communities, and find new revenue streams like going on tour. YouTube itself is also leaning in, allowing fans to watch live and leave real-time comments.

In other news

Trump's decision to rename the Gulf of Mexico is causing a stir, and the international implications are more political than legal, experts say.
Netflix's chief content officer Bela Bajaria said 'nobody knows' what prestige TV is as she rejected criticism of the platform.
Amazon's robots could help it save $10 billion in a year by 2030, Morgan Stanley analyst says.
A Fidelity fund is now valuing its stake in SpaceX at more than $2.7 billion.
The era of the mega-bundle in streaming is coming, TD Cowen analysts say. Here's how it could shake out.
When 'unretiring' isn't worth it: Some low-income retirees say higher paychecks would cut their benefits.

What's happening today

Alphabet, Pepsico, Fox Corp, Pfizer, and Spotify report earnings.

The Insider Today team: Dan DeFrancesco, deputy editor and anchor, in New York. Grace Lett, editor, in Chicago. Ella Hopkins, associate editor, in London. Hallam Bullock, senior editor, in London. Amanda Yen, associate editor, in New York. Elizabeth Casolo, fellow, in Chicago.

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