Here’s what you’ll find in today’s edition:

• Felix explores the potential economic impacts of Trump’s tariff plans.

• The IPO window optimism may be, well, out the window. 

• Bitcoin mining stocks slump as tariffs threaten supply chains.

Unpacking the largest tariffs in over a century

As I write this piece, I’m in shock. 

The tariffs that President Trump announced yesterday were significantly larger than even the most aggressive of estimates.

The basics have already been discussed to death, but let’s summarize them anyway just to set things straight: Trump issued a blanket tariff of 10%. For 60 or so countries, there’s a tariff of roughly half of the “total sum of all unfair trade practices,” as calculated by the Trump administration.

As seen in this chart from the Budget Lab (a Yale think tank), the total weighting of all these tariffs leads to an effective tariff rate at 22.5%, which would be the highest it’s been in a century:

Other estimates are as high as 26.5% to 30%.

Now, how exactly did the Trump team quantify these estimates of tariffs imposed on the US? It turns out that it was a crass estimation of the country’s trade deficit divided by its exports.

In chart form, you get this extremely simplistic linear extrapolation:

I walked through the mechanics of how the Trump team calculated these estimates because it's important to grasp how little thought was put into coming up with the numbers. They quite literally made this simplistic estimation, then decided the reciprocal tariff would be half of that made up number to seem forgiving. It’s not forgiving. 

Let’s now move into discerning the economic impact of these announcements, assuming they hold (and given what we’ve seen from the administration so far, who the hell knows if they will). 

The Budget Lab analyzed the impacts of the tariffs and came up with the following: 

Short-term: US real GDP growth in 2025 is expected to be 0.9% to 1.0% lower due to the tariffs.

Long-term: The US economy is projected to be permanently 0.3% to 0.6% smaller — equivalent to an annual loss of $90 billion to $180 billion in 2024 dollars. Global GDP also shrinks in the long run, though China’s GDP remains largely unaffected, per the estimates. 

Prices: The short-term price level on all goods rises by 2.1% to 2.6%, translating to a per-household consumer loss of $3,400 to $4,200 in 2024 dollars. Food prices specifically are projected to increase by 3.7%, nearly double the recent grocery inflation rate.

In chart form, the GDP hit looks something like this, and remember that this doesn’t even consider retaliation from other countries:

I liked the way Brad Setser, one of my favorite economists on trade, put it:

If you’re not familiar with the impact of oil shocks on the economy, the experience of seeing what follows (hint: a recession) is a sobering one. 

How likely is said recession? Well, Neil Dutta of Renaissance Macro has moved up his implied probability of recession to 89%. I listen when Neil warns about recession because he was one of the only economists who said a recession being imminent between 2022-2024 was nonsense whilst everyone else had their odds at 100%. 

Breathe in, breathe out. 

This is all under the assumption that these tariffs hold. I, as well as the market as a whole, seem to be in denial and think cooler heads will prevail. Let’s hope so. 

Buckle up, the uncertainty and volatility is only just getting started.

— Felix Jauvin

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As global markets react to President Trump’s sweeping reciprocal tariffs, the post-election optimism that the new administration would bust open the US IPO window is wavering. 

An international trade war isn’t exactly the most ideal backdrop for entering the public market, and Trump just upped the ante. 

Of course, any company can go public whenever it wants, it’s not like there’s an actual regulatory window, but it’s best to avoid entering the market during a major downturn. 

The wave of first-quarter IPO and M&A announcements were penned at the end of 2024, when the prospect of tax cuts and deregulation had bankers and VCs riding high. Now, tariffs, growing fears of a recession and slower growth have them taking a step back. 

We could also see funding slow. After all, venture firms invest in startups because they see a light at the end of the tunnel: a successful exit via acquisition or public market debut. A poor IPO market limits exit strategy options. The longer the trade war rages on, the worse things could get for US startup funding. 

Even so, the environment didn’t stop stablecoin issuer Circle from moving forward with its IPO plans this week. 

I’d say a company that generates most of its revenue from interest earned on US Treasurys and which sells an intangible product is fairly insulated from Trump’s trade policies, at least directly. It’s not like USDC is shipped from China. 

Still, though, we’re in a risk-off era, which doesn’t usually bode well for crypto equities.

— Casey Wagner

Speaking of companies insulated from tariff announcements, one sector of the crypto industry that is decidedly not safe is bitcoin mining. 

With much of the bitcoin mining supply chain based in Asia, US-based operations are going to face higher prices to get equipment onshore. 

Beijing-based Bitmain Technologies, the largest mining machine manufacturer with a 90% market share, moved a large part of its production line to Indonesia, Malaysia and Thailand years ago, according to a Bloomberg report.

Imports from these countries to the US now come with levies of 24% to 37%, per Trump’s Wednesday Liberation Day announcement. Bitmain announced late last year it would open a “US production line,” presumably to get ahead of tariffs.

The tariffs also come on the heels of widespread supply chain delays in the bitcoin mining space. Mining equipment has just started to move out of US ports after being stuck for months at points of entry into the US. 

Bitcoin mining stocks on Thursday took a hit. Marathon Digital Holdings was down more than 8% midway through today’s session. Riot Platforms and Core Scientific lost around 7% and 10%, respectively. 

President Trump, on the campaign trail, touted making the US a hub for bitcoin mining. 

“Made in America bitcoin,” though, now may be a tall order.

— Casey Wagner

• The VIX today spiked to 29, signaling significant volatility in US stocks. DataTrek Research’s Nicholas Colas says a real bear signal for equities will be if the VIX remains elevated, as opposed to peaking and retreating. 

• El Salvador President Nayib Bukele today said President Trump invited him to the White House for “an official working visit.” The meeting is scheduled for April 14, per Bukele. 

• Initial jobless claims last week came in at 219,000, a slowdown from the week prior and also lower than projections of 228,000.