Note: I am travelling until mid-May. Postings will be irregular.

Wall Street Is Watching This Shipping Data to Gauge Tariff Impact Ships, trucks and railroads are helping measure the economic blow from tariffs

(…) U.S. retailers and manufacturers have been stocking up on furniture, clothing, electronics and everything else that comes into the country by containership. That has caused a wave of containers to wash over the neighboring ports of Los Angeles and Long Beach, the main gateway for imports from China.

The pull-forward indicates that some U.S. businesses have enough inventory to last weeks or longer before having to refresh orders. Southern California port officials expect imports to fall steeply in May.

(…) China-to-U.S. bookings have declined 60% since April 9. (…)

And ocean carriers have been canceling sailings across the Pacific Ocean to the U.S. Almost 30% of such journeys were canceled for the week ended May 4, according to Flexport. At the Port of Los Angeles, imports are expected to fall 35% this week compared with a year ago. (…)

Net orders for heavy-duty trucks in North America tumbled to 16,500 vehicles in March, down 5.9% from the same month in 2024, with the highest order-cancellation rate in almost two years, according to ACT Research. (…)

ACT Research President Ken Vieth said dealer inventory levels in March hit a record 91,600 vehicles as truckers were “flirting with global financial-crisis profitability levels.” (…)

In the real world:

The Bubble Blasters and Other Chinese Goods That Are Paralyzed by Trade Chaos American importers cancel orders and scramble for alternatives, while Chinese factories cut staff and offload goods

(…) China is the source of 74% of the U.S.’s imported toys and games, 87% of its Christmas decorations, excluding candles, electric lighting and natural Christmas trees, and 97% of its fireworks, according to 2024 data from the International Trade Centre, an agency of the United Nations and the World Trade Organization.

Americans imported a total of $439 billion of goods from China last year, according to Census Bureau data. (…)

For Robert Bohrer, a California-based importer of drill press vises, calipers and other industrial metalworking products from China, the chaos started soon after Trump’s “Liberation Day” on April 2, when the president put his tariff campaign into overdrive. (…)

As his inventory dwindles, Bohrer is seeing shortages and price increases. While he and his partner used to import about one container a week, with around $100,000 worth of merchandise per container, he doesn’t have any shipments from China on the water now. On May 1, he finally had to send the email to his customers he had been hoping to avoid, telling them prices would be going up effective May 19. (…)

He has spent the past few weeks calling up contacts and trying to order goods from places such as India and Taiwan. But many products that he imports are exclusively available in China, or are significantly more expensive elsewhere, he said. (…)

“Everybody’s pretty much trying to move out of China ASAP,” said Jim Kennemer, who runs a sourcing company, Cosmo Sourcing, in Madison, Wis., that helps American companies find producers in Asia. (…)

But many are finding that non-Chinese factories are overwhelmed, or otherwise unable to handle their orders. (…)

Some products are best and most cheaply sourced from China, where many counties and cities specialize in particular categories—such as fireworks—and authorities have supported the development of exporters with policies and infrastructure. (…)

“In China, you have an entire ecosystem, from the factories, the suppliers of raw materials, the employees, infrastructure such as trains and ports all within that same region,” said Alex Armas, a Puerto Rico-based importer and manufacturer’s representative who sources seasonal decorations for U.S. and Latin American clients. He said he had seven containers-worth of orders canceled by U.S. buyers in a single day.

“People say, look for other places. I have been looking for other alternatives too for several years,” he said. Shifting to other countries takes time, and finding alternatives for some products is difficult.

George Balanchi knows all of that well. As a college student in the early 2000s, he helped his father develop a magnetic construction toy. On Yahoo, he found a Chinese factory that was able to produce the toys for a quarter the price that it cost to make them in the U.S. He started a company called Mindscope Products, and soon was also selling remote-control stunt cars and other toys to QVC. (…)

But once Trump’s China tariffs reached 54%, Balanchi had to freeze everything, not just with Chau, but also with other Chinese suppliers. He estimated that he has lost about $1 million worth of new business as customers such as QVC stop placing orders. He figured he’ll also likely lose much of the roughly $500,000 in deposits he has paid to his Chinese suppliers, including Chau. (…)

He said he would love to make his products elsewhere and even looked into moving production to Mexico a couple of years ago. But the quoted price was four times the cost of producing in China.

“My world, and everyone in my industry, whoever’s moving product, everyone’s world has been just halted,” Balanchi said. (…)

• The total US trade deficit reached a record $140.5 billion in March, driven by tariff frontrunning and weaker service exports. (The Daily Shot)

Source: @TheTerminal, Bloomberg Finance L.P.

• Travelers are shunning the United States

The March international trade data released this morning in the United States certainly attracted attention, if only because the deficit reached a record high of $140.5 billion in the month.

The deterioration was driven by a sharp rise in goods imports (+5.4%), which was linked to businesses bringing forward orders to avoid the imposition of tariffs.

But another element of the report caught our attention: the sharp decline in travel services exports, which include accommodations, meals, and travel agency and education fees paid by foreign visitors to the United States. As today’s Hot Chart shows, these fell by no less than 7.1% over the month, the worst decline in nearly a quarter of a century, with the exception of the months of pandemic lockdown.

Over the last three months, the decline has been a whopping 10%. These figures confirm what airline ticket sales data had already suggested in recent weeks, namely that some travelers are now shunning the United States.

We expect this new reality to have a negative impact on production and employment in tourism-related sectors, as well as on the financial results of companies that depend on foreign visitors.

• S&P 500 Exposure to China

(…) Calculations from FactSet’s Geographic Revenue Exposure Database show that China makes up about 7% of total annual revenue in S&P 500 companies. Comparing the magnitude of the trade deficit with the revenue generated by S&P 500 companies in China shows that US companies made $1.2 trillion in revenue selling to Chinese consumers—about four times more than the size of the trade deficit in goods between China and the US, see chart below.

The bottom line is that if the US has to decouple completely from China, it would result in a significant decline in earnings for S&P 500 companies no longer selling products to Chinese consumers.

• Both business optimism and capital spending expectations have plunged, marking one of the steepest two-month declines since the pandemic. (The Daily Shot)

Source: Goldman Sachs; @GunjanJS

Trump Downplays Trade Negotiations, Says He’ll Dictate Terms

US President Donald Trump said he would prescribe tariff levels and trade concessions for partners looking to avoid higher duties, appearing to move away from the idea that he would engage in back-and-forth negotiations.

“We’re going to put very fair numbers down, and we’re going to say, here’s — what this country, what we want. And congratulations, we have a deal. And they’ll either say ‘great,’ and they’ll start shopping, or they’ll say, ‘not good,’” Trump said Tuesday at the White House as he met with Canadian Prime Minister Mark Carney.

“It’s going to be a very fair number, it’ll be a low number. We’re not looking to hurt countries,” he added. (…)

Wage Growth Tracker Was 4.3 Percent in April

The Atlanta Fed’s Wage Growth Tracker held steady in April at 4.3 percent.  For people who changed jobs the tracker increased to 4.3 percent, up slightly from 4.2 percent in March.  For those not changing jobs, the Tracker held steady at 4.4 percent.

Ford Increases Prices for Certain Vehicles Amid Tariff Uncertainty Higher prices will apply to 2025 models of the Maverick, Bronco Sport and Mach-E built after May 2

(…) The carmaker said the manufacturer’s suggested retail price, which is commonly known as the sticker price, would increase between $600 and $2,000 a vehicle, depending on features, according to the memo.

Ford isn’t changing the price of any of its existing inventory or vehicles currently in transit, the memo said. (…)

Fed Warns of Rising Economic Risks as It Leaves Rates Steady Officials are puzzling over whether to focus on the risks of higher prices or weaker hiring

(…) Expectations of a rate cut at the Fed’s next meeting in mid-June declined Wednesday. Powell said officials felt like the costs of waiting to learn more about the economy were “fairly low.” He used the term “wait and see” 11 times on Wednesday.

“We don’t feel like we need to be in a hurry. We feel like it’s appropriate to be patient,” he said. “And when things develop, of course, we have a record of—we can move quickly when that’s appropriate.”

Investors broadly expect the Fed to cut interest rates by the second half of the year. (…)

“It’s not a situation where we can be pre-emptive because we actually don’t know what the right response to the data will be until we see more data,” he said. (…)

Powell repeatedly described the economy as solid. But he also offered a candid assessment when he said last year’s rate cuts were “a little late.” (…)

Eurozone Shoppers Spend Less as Tariffs Weigh on Mood March’s backslide in retail consumption came amid worsening consumer confidence across Europe

Retail trade slipped by 0.1% across the 20 nations that share the euro, defying economists’ expectations for an increase that would have built on February’s growth in sales, figures from the European Union statistics agency showed Wednesday. February remains the only month in the last six in which trade has increased.

March’s backslide in retail consumption came amid worsening consumer confidence across Europe, a result of looming U.S. trade tariffs that have spread uncertainty and pessimism across households and businesses alike. President Trump at the start of April set out a sweeping package of tariffs that included a 20% duty on all EU goods. The president later paused those levies on the EU, which he claims are reciprocal, though a 10% baseline tariff remains in place, as do sector-specific import duties on cars and some metals. Eurozone consumers’ mood fell in April to its lowest point since the end of 2023, according to an EU gauge compiled following the tariff announcement.

Weakening sales at eurozone retailers come despite lower inflation and a robust jobs market that have boosted real incomes in recent months. Annual price inflation eased to 2.2% in March and held steady in April, keeping close to the European Central Bank’s 2% target.

Sales were up 1.5% YoY.

Trump plans nuclear power push

The White House is planning executive action soon to try to speed nuclear reactors’ deployment, Daniel Moore scoops in Axios Pro: Energy Policy ($). One or more orders will likely lean heavily on the Defense and Energy Departments as a way to meet soaring energy demand.

The administration views the Pentagon — with its deep pockets, massive energy demand, and ability to absorb risks in ways the private sector can’t — as a “key enabler” for nuclear.

The plans have been in the works for weeks and could drop any day, sources said.

FYI:

• The S&P 500’s recent trajectory has converged with the historical median for 10% corrections, but the path forward increasingly hinges on recession risk. Historically, markets recover sharply in the absence of a downturn, while recession-linked corrections tend to deepen and persist. (The Daily Shot)

Source: Goldman Sachs; @WallStJesus

• GS: On the Precipice

Despite some tariff relief, resilient hard data, and easier financial conditions, our 12-month US recession risk estimate remains 45%, in part because of a big weakening in the soft data.

Our baseline is three consecutive 25bp Fed cuts, now starting in July. We are dovish on the ECB and especially the BoE, and have pushed back the next BoJ hike to January.

We have softened our assumptions on China policy stimulus, in part because growth has held up better than expected under the tariff onslaught so far.

Note: I am travelling until mid-May. Postings will be irregular.

A Reprieve in ISM Services, Will It Last?

Service sector activity quickened slightly in April with the ISM Services Index coming in at 51.6, up from 50.8 in March. The business activity index at 53.7 is still expanding, but at a slower pace than March when it registered a reading of 55.9. The other components that feed into the headline came in slightly higher than they did last month.

New orders rose slightly to 52.3. Employment was still in contraction, but is now contracting at a more modest pace, and Supplier Deliveries came in at 51.3, up from 50.6 last month. (…)

Source: Institute for Supply Management and Wells Fargo Economics

In terms of industry performance, 11 service-sector industries still report growth in April, but six industries are reporting a contraction with farming at the top of the list of those reporting decline and a respondent from that sector placing blame squarely on tariffs.

In a somewhat counterintuitive development, transportation and warehousing is still seeing expansion in activity. We suspect this may reflect a last-ditch effort to move supplies and products ahead of the tariffs. On that basis, the expansion in this sector may be short-lived.

While the Services ISM signals current activity is holding up, the tariff impact was evident in growing wait times and higher costs. The prices paid index hit its highest reading since early 2023 in April with 17 of the 18 industries included in the survey reporting higher prices paid during the month. At 65.1 the prices-paid component is near the top-end of the prior expansions range.

Service-providers are by no means immune to tariffs, even if the impact is less direct than for manufacturers. That said, tariffs are not the only source of concern. The administration’s policies on grants, funding and public-health policy were also mentioned by purchasing managers. This is leading some to halt hiring, with the release noting “hiring freeze due to uncertainty of government grants.” (…)

The employment component rose 2.8 points to 49.0. While that is still consistent with net layoffs in the services sector, it’s an improvement from the month prior. Last week we learned total employment expanded at a decent clip in April. The labor market is holding up, but for how long remains a key question for growth this year.

• S&P Global: Slowest growth for 17 months amid subdued demand and slump in business confidence

In April, US service sector business activity growth was the slowest in nearly a year-and-a-half, according to the latest PMI® data from S&P Global.

Uncertainty over federal policies, especially trade, was reported to have limited demand growth and weighed on business expectations, which slumped to its lowest level for two-and-a-half years.

Meanwhile, tariffs were reported by firms to have been a key driver of higher operating expenses through a rise in supplier charges. Service providers increased their own selling prices in response, with inflation the strongest since January.

The S&P Global US Services PMI® Business Activity Index remained above the critical 50.0 no-change mark in April to signal an increase in service sector activity. However, with the index dropping to 50.8, the lowest reading since November 2023 and down from 54.4, growth was marginal and much slower than March’s three-month high.

Slower activity growth was linked to similarly weaker gains in new work during April. While firms reported some sales success from the start of new projects, demand growth was somewhat limited by economic uncertainty arising from federal policies, most notably in relation to trade. This led to hesitancy in spending amongst clients, according to panelists. The uncertain trading environment had an especially notable impact on foreign demand, with new business from abroad slumping in April to the greatest degree since November 2022.

Uncertainty around trade policy also hit the confidence of service providers in April. Overall, sentiment was at its lowest level for two-and-a-half years and amongst the weakest since the height of the pandemic in 2020.

The uncertain business outlook tended to weigh on hiring activity. Although growth in staffing levels was registered for a fourth time in the past five months, the rate of expansion was marginal and well below the survey’s historical trend. Where higher employment was noted, this was attributed in some instances to mild capacity pressures as highlighted by a rise in backlogs of work for a second successive month. Reflective again of the increasingly challenging trading environment, the rise in work outstanding was however only marginal.

Input costs continued to rise at an elevated pace during April, although the rate of inflation eased considerably from March’s one-and-a-half year high to its weakest of 2025 so far. Suppliers were widely reported by panelists to have pushed up their prices in response to tariffs, while an upturn in wage expenses also added to an increase in overall operating expenses.

Despite evidence of slowing demand growth, service providers chose to increase their own selling prices to a stronger degree in April. Efforts to pass on increased costs to clients was the principal reason reported by panelists for the uptick in output price inflation to a three-month high.

Higher prices paid for imports due to tariffs are also driving up service sector firms’ costs, feeding though to higher prices, notably in consumer-facing industries such as restaurants and hotels.

The resulting bottom line from the services sector is a heightened risk of stalling growth and rising inflation, or stagflation.

Ed Yardeni’s chart on services employment:

China Services Activity Slips, Adding Risk of Rapid Slowdown

The Caixin China services purchasing managers’ index fell to 50.7, the lowest level in seven months, according to a statement from Caixin and S&P Global on Tuesday. (…)

A sub-index measuring expectations for future activity fell to the second-lowest level since data began in 2005. It was only weaker in February 2020, when the Covid outbreak erupted, according to the statement.

Apart from the hit to sentiment, tariffs have also led to the slowest rise in new business orders since December 2022. And in a sign that demand for labor is slipping, services firms reduced their staff size for a second straight month in April due to concerns over costs, according to an employment subindex. (…)

Goldman Sachs Group Inc. estimates 16 million people — or more than 2% of the labor force — may be exposed to US-bound exports. (…)

Speaking of services:

Hollywood has been pleading with politicians for years to help stem the exodus of film and TV production to other countries. This weekend actor Jon Voight met with President Trump to make the case.

The president’s call for 100% tariffs on imported movies—which he issued in a social-media post Sunday—isn’t what Hollywood had in mind.

Entertainment-industry executives expressed confusion over how a levy could be applied to intellectual property with no specific monetary value. They said they feared retaliatory tariffs could damage their business overseas, where big-budget movies often earn most of their box-office receipts. Shares in Disney, Netflix and other media companies and movie-theater chains fell Monday.

More moves out of Washington could be coming. Voight said in an interview Monday that the tariff announcement was “the beginning, perhaps, of changes that will be effective” and indicated there might be more to Trump’s plan. 

Voight discussed with Trump crafting a federal policy that would give film-production companies tax incentives to conduct more of their business in the U.S., according to people familiar with the matter. 

Voight, Paul and Karol met with the Motion Picture Association of America, the trade group that represents studios and streaming companies, as well as Hollywood unions before going to Mar-a-Lago last weekend, Karol said.

The trio proposed to Trump that he bring productions back to Hollywood through policies including federal tax incentives and infrastructure subsidies. They said tariffs should only be used “in certain, limited circumstances,” according to a statement they released Monday.
(WSJ)

• Can Trump really put tariffs on films produced abroad? The law says no.

That’s because Congress nearly 40 years ago passed a law explicitly barring the president from regulating in any way the import or export of things like movies, books and music.

The Berman Amendment limited the powers granted the president, stating they “do not include the authority to regulate or prohibit, directly or indirectly, the importation from any country, or the exportation to any country, whether commercial or otherwise, of publications, films, posters, phonograph records, photographs, microfilms, microfiche, tapes, or other informational materials.”

Congress doubled down in 1994, strengthening and broadening the already clear language of the 1988 amendment. 

The issues raised by the Berman Amendment are not new for Trump. The prohibition came up during Trump’s first term, when he tried to ban the Chinese-owned social-media platform TikTok through an executive order.

Both TikTok’s parent company, ByteDance Ltd., and a group of TikTok users sued to block the order on the basis of the prohibitions stated under the Berman Amendment. Judges in both suits ruled against the president, stating that the law made it clear he didn’t have the authority to institute such a ban.

The matter later was taken up by Congress, which drafted its own ban and included specific language very narrowly crafted for TikTok’s situation that allowed lawmakers to sidestep the Berman Amendment. The law passed with bipartisan support last year, but Trump has since made a 180-degree turn on the issue and moved to prevent the ban from taking effect.

On Monday, the White House appeared to backtrack on the issue of a tariff on films.

“Although no final decisions on foreign film tariffs have been made, the administration is exploring all options to deliver on President Trump’s directive to safeguard our country’s national and economic security while Making Hollywood Great Again,” said White House spokesman Kush Desai.

Other than that:

Nucor loves the tariffs that President Trump has imposed on its competition from imported steel. But the company also warned about the ways that Mr. Trump’s global tariffs will increase its costs for both equipment and raw materials, specifically pig iron and direct-reduced iron, or DRI.

Pig iron imports last year were 4.7 million metric tons, much of it from Brazil, according to S&P Global Commodity Insights. DRI imports were 1.5 million tons, almost all from Trinidad, where it’s produced by a Nucor subsidiary.

Nucor’s expansion plans involve buying equipment from Europe, so that’s another tariff dent. (WSJ)

• Ford Pulls Outlook, Sees $1.5 Billion Hit From Trump Tariffs

The company’s total tariff impact is about $2.5 billion, $1 billion of which the company expects to offset through actions such as using so-called bonded transportation to shield parts from levies as they cross international borders, Chief Financial Officer Sherry House told reporters.

Ford’s tariff exposure is less than its Detroit competitors because the Dearborn, Michigan-based automaker domestically produces 80% of the cars it sells in the US. General Motors Co. last week slashed its profit outlook for the year and said its tariff exposure was as much as $5 billion. (BB)

• Another Ackman suggestion: “For the moment, Ackman said, Trump should put tariffs on China on hold for 180 days.”

Meanwhile:

DeepSeek. Temu. TikTok. China Tech Is Starting to Pull Ahead.

By Eric Schmidt, a former chief executive and chairman of Google,and Selina Xu who leads China and A.I. research in the Office of Eric Schmidt. (My emphasis)

(…) China is at parity or pulling ahead of the United States in a variety of technologies, notably at the A.I. frontier. And it has developed a real edge in how it disseminates, commercializes and manufactures tech. History has shown us that those who adopt and diffuse a technology the fastest wins. (…)

To win the race for the future of technology, and in turn the war for global leadership, we must discard the belief that America is always ahead. (…)

Silicon Valley failed to anticipate that China would find a way to swiftly develop a cheap yet state-of-the-art competitor. Today’s Chinese models are very close behind U.S. versions. In fact, DeepSeek’s March update to its V3 large language model is, by some benchmarks, the best non-reasoning model.

The stakes of this contest are high. Leading American companies have largely been developing proprietary A.I. models and charging for access, in part because their models cost hundreds of millions of dollars to train. Chinese A.I. firms have expanded their influence by freely distributing their models for the public to use, download and modify, which makes them more accessible to researchers and developers around the world.

Apps for the Chinese online retailers Shein and Temu and the social media platforms RedNote and TikTok are already among the most downloaded globally. Combine this with the continuing popularity of China’s free open-source A.I. models, and it’s not hard to imagine teenagers worldwide hooked on Chinese apps and A.I. companions, with autonomous Chinese-made agents organizing our lives, and businesses with services and products powered by Chinese models.

In the internet revolution, Western dominance of the market helped America’s digital economy swell to $2.6 trillion by 2022. That’s bigger than Canada’s entire G.D.P. For the United States to reap the benefits of the coming A.I. revolution, which is expected to have a larger impact than advent of the internet, the world needs to choose America’s computing stack — algorithms, apps, hardware — not China’s.

In a dozen years, China has gone from a “copycat nation” to a juggernaut with world-class products that have at times leapfrogged those in the West. Xiaomi — once best known as a maker of iPhone knockoffs — delivered 135,000 electric cars last year, while Apple gave up on its effort to produce an E.V. after burning $10 billion over a decade.

China is now racing to deploy robots at scale, outlining plans for mass production of humanoids; in 2023, the country installed more industrial robots than all other nations combined. Along the way, the country also cultivated an abundance of STEM talent, robust supply chains, incredible manufacturing heft and a domestic ecosystem so brutally competitive that the only way to survive is to never stop iterating.

This China-dominated future is already arriving — unless we get our act together.

We should learn from what China has done well. The United States needs to openly share more of its A.I. technologies and research, innovate even faster and double down on diffusing A.I. throughout the economy.

Despite recent cuts in research funding, the United States continues to have remarkable strengths in university and private-sector innovation. Meanwhile, China is still playing catch-up on semiconductors. Additionally, the country faces significant headwinds of its own including a real estate crisis, mounting debt and weak consumer spending. That said, we wouldn’t underestimate the Chinese government’s resolve in tolerating near-term economic pain in pursuit of technological supremacy.

The United States imposed export controls on cutting-edge chips in order to stifle China’s A.I. progress. The country’s recent breakthroughs, however, illustrate that such sanctions instead fueled efforts by Chinese entrepreneurs to keep training and commercializing A.I.

At lunch during Selina’s trip to China, when U.S. export controls were brought up, someone joked, “America should sanction our men’s soccer team too so they will do better.” So that they will do better. It’s a hard truth to swallow, but Chinese tech has become better despite constraints, as Chinese entrepreneurs have found creative ways to do more with less. So it should be no surprise that the online response in China to American tariffs has been nationalistic and surprisingly optimistic: The public is hunkering down for a battle and think time is on Beijing’s side.

We’re no longer in the era when China is far behind us. If China’s capacity to innovate endures, if its A.I. companies continue to embrace openness, and if China stays on track to take over 45 percent of all global manufacturing by 2030, then the next chapter of the A.I. race will be an all-out dogfight on every axis possible. America will need every advantage it has.

• Trump Blocks Harvard From New Research Funding in Latest Blow

The Trump administration is declaring Harvard University ineligible for new research grants from the federal government in the latest escalation between the White House and the Ivy League school. (…)

The administration has already frozen billions of dollars in funding that supported projects including ALS and tuberculosis research, and Harvard sued several US agencies and top officials in response. (…)

• MIT Joins Deluge of Colleges Selling Bonds Amid Funding Threats

The Massachusetts Institute of Technology is the latest elite college to borrow money from the bond market as universities contend with threats to federal funding under President Donald Trump’s administration.

MIT is joining Harvard, Stanford and Princeton in selling taxable bonds in a deal that’s set to price Tuesday, according to a roadshow for investors. (…)

The flurry of debt sales come as the Trump administration has frozen federal funding for universities including Harvard, Northwestern and Cornell. Trump has hammered colleges for their handling of antisemitism after student protests roiled campuses following the Oct. 7, 2023, attack by Hamas on Israel and the Jewish state’s retaliatory response in Gaza.

The National Institutes of Health also proposed a cut to research funding for universities, which is being challenged in court. (…)

• Northwestern CIO Warns of ‘Destructive’ Tax on University Funds

Northwestern University is preparing for a potential tax increase on endowments, a move its chief investment officer labeled as “destructive” for higher education institutions in the US. (…)

An increase to the tax would starve Northwestern off much needed cash at a time the federal government has cut funds to a number of institutions across the country. (…)

Europe pledges half a billion euros to lure scientists as Trump battles universities

The European Union and France on Monday announced half a billion euros worth of incentives to lure scientists to the continent, seeking to profit from U.S. President Donald Trump‘s federal funding cuts and clashes with top U.S. universities.

“We call on researchers worldwide to unite and join us … If you love freedom, come and help us stay free,” French President Emmanuel Macron said at Paris’ Sorbonne University alongside European Commission President Ursula von der Leyen.

The money would fund research projects and help universities cover the cost of bringing foreign scientists over to help run them, officials said.

Von der Leyen announced the 500 million euros ($566.6 million) incentive package and said she also wanted EU member states to invest 3% of gross domestic product in research and development by 2030.

Macron pledged 100 million from France, though it was not immediately clear if this came on top of the EU pledge.

Trump has targeted U.S. universities since taking office in January by freezing federal funding, launching investigations, revoking international students’ visas and making other demands.

Trump, a Republican, has said higher education has been gripped by what he calls antisemitic, anti-American, Marxist and radical left ideologies. (…)

Robert N. Proctor, a historian at Stanford University, told Reuters that Trump was leading “a libertarian right-wing assault on the scientific enterprise” that had been years in the making.

“We could well see a reverse brain drain,” he said. “It’s not just to Europe, but scholars are moving to Canada and Asia as well.”

Meredith Whittaker, the president of encrypted messaging app Signal, declined to comment on geopolitical disputes. But she told Reuters it was inevitable top talent would gravitate to welcoming jurisdictions.

How about a tax on that too?