Misplaced maths?

In the early 20th century, before America introduced an income tax, tariffs paid many of the government’s bills. President Donald Trump wants to revive that approach. He has repeatedly floated the idea of an “External Revenue Service”, under which Uncle Sam would scrap income taxes and instead rely on levies at the border, with foreigners, at least in theory, funding the American government. “It will be a BONANZA,” Mr Trump posted recently on his social-media site, claiming that tariffs could all but eliminate income taxes for people earning less than $200,000 a year. But he ignores basic economic dynamics. Tariffs were able to sustain the federal government 100 years ago because its spending came to just 2pc of GDP. Today that figure is ten times higher. Meanwhile, revenues from border levies will be lower than the president expects.

(Adapted from “Trump Faces A Trillion-Dollar Tariff Disappointment,” by The Economist, published on May 18, 2025, by The Economist)

OpenAI’s $6.4bn bet

Sam Altman’s $6.4 billion bet on Jony Ive is a callback to strategy employed by another Silicon Valley tech billionaire: Meta CEO Mark Zuckerberg. OpenAI has said it’s buying Ive’s nascent devices startup io in what is by far the largest acquisition in the artificial intelligence company’s 10-year history. It’s a decidedly big bet on a secretive hardware company co-founded by Ive, who famously designed Apple’siPhone, iPod and iPad. In a post on X alongside a nine-minute video with Ive, Mr Altman called his new colleague “the greatest designer in the world.” The all-stock deal represents a staggering sum, particularly at a time when venture firms have been thirsty for exits due to a yearslong dearth of IPOs and big acquisitions. For OpenAI, the purchase represents just over 2pc of its paper worth after the company was valued at $300 billion in a SoftBank-led round in March.

(Adapted from “Sam Altman’s $6.4 billion bet on Jony Ive has Zuckerberg-like qualities,” by Ashley Capoot, published on May 22, 2025, by CNBC)

Tariffs and weddings

Brides in the US are buckling under the uncertainty over tariffs, which are threatening to push costs to new heights as wedding season kicks off. They are panic-buying candles and speed-ordering wedding dresses. They are downgrading from roses to carnations, cutting back on party favors and ditching the professional videographer for a guy with a smartphone. Though a 90-day pause on many of the planned tariffs has blunted the impact, brides say vendors have raised prices on everything from linens to dresses in response to new and anticipated levies. Brides are taking to social media to share tales of woe. For example, in one Reddit wedding forum, a woman shared that the custom-made gown she ordered over a year ago was suddenly $1,500 more expensive, after her designer cited tariff-related production charges.

(Adapted from “Brides Settle For Costco Flowers And American Wine As Tariffs Rain On Wedding Season,” by Chavie Lieber, published on May 5, 2025, by the Wall Street Journal)

China’s chip leap

Nvidia CEO Jensen Huang has said that US chip export controls are a “failure” and warned that the restrictions are doing more damage to American business than to China. Mr Huang said in a news conference at Computex, an artificial intelligence trade show in Taiwan, that the policies have cut the AI chip leader’s China market share from 95pc to 50pc and motivated Beijing to make its own chips faster. Huang’s comments came as the truce between the US and China over tariffs and semiconductors continues to be delicate. The White House recently scrapped the tiered “AI Diffusion Rule” rolled out by former President Joe Biden in January and promised to fully replace it in the future. Nvidia is stuck in the middle, with Mr Huang maintaining relationships with both sides in a deepening tech cold war.

(Adapted from “Jensen Huang Says US Chip Restrictions Have Cut Nvidia’s China Market Share Nearly In Half,” by Kristina Partsinevelos and Chris Eudaily, published on May 21, 2025, by CNBC)

Published in Dawn, The Business and Finance Weekly, May 26th, 2025