Trump’s tariff plan just doesn’t add up

I’m Jonathan Levin, and this is Bloomberg Opinion Today, a collection of writing from columnists you’d love to have a beer with. Sign up her [Bloomberg]( I’m Jonathan Levin, and this is Bloomberg Opinion Today, a collection of writing from columnists you’d love to have a beer with. Sign up [here](. Today’s Agenda - Bill Dudley on Trump’s [tariffs](. - Kamala Harris and the “[woman card]( - [Banks]( vs. Citadel and Jane Street. - How many [bankers]( you really need? - Air [freight](. - The disinversion of the [yield curve](. Presidential politics often revolve around vague slogans and character traits: Would you have a beer with this candidate? Do they make you hopeful for the future or wistful for the past? Politicians know that most people won’t do the math on their proposals. Luckily, we at Bloomberg Opinion have former Federal Reserve Bank of New York President Bill Dudley. As Bill [writes]( former President Donald Trump’s plan to boost US manufacturing by raising tariffs and weakening the dollar just doesn’t add up. Instead of boosting domestic industry, this bizarre pair of policies would lead to imbalances that could bring about a recession or another bout of inflation. “Trump’s promises may sound good to voters hoping that higher tariffs would foster a renaissance in US manufacturing,” Bill writes. “If only it were so easy. Unfortunately, the US would end up less well off.”  Speaking of the November election, Kara Alaimo [writes]( Trump has continued to level gendered insults at his opponent, Vice President Kamala Harris. As Kara notes, even as Harris has downplayed the fact that she’d make history as the first woman president, she continues to contend with widespread bias against female candidates. In fact, Kara offers research showing that female governors are “1.2 times more likely than their male counterparts to pass the legislation they proposed in their State of the State speeches in 2001 and 2006.” She also notes that female governors oversaw states with fewer excess deaths and lower unemployment during the Covid pandemic. “It’s on the media, political pundits, academics and community leaders to talk to the American people about what the data tells us and break down these misconceptions,” Kara writes. Banks and Bankers Back in the world of banking, Paul Davies has some mildly uplifting news for Wall Street banks that have been losing revenue share at the hands of electronic market makers Jane Street Group LLC and Citadel Securities: The bleeding can’t go on indefinitely. As Bloomberg News has reported, first-half revenue at the companies is up about 80% compared with the first six months of 2023. “That’s enough to make traditional Wall Street executives green with envy,” Paul [writes](. “But these upstarts aren’t going to completely devour the old guards’ lunch.” Banks such as Goldman Sachs Group Inc. and JPMorgan Chase & Co. have a hold on some profitable business lines, Paul writes, noting that investors still prefer traditional dealers for large and risky single-stock block trades. The big banks also have important businesses in bespoke structured trades carried out on behalf of hedge funds, as well as “prime broking” — essentially lending against stocks. “Jane Street and Citadel Securities won’t be going after this lending business without becoming a different kind of business,” Paul writes. Also on the topic of lenders’ challenges and opportunities, Marc Rubinstein [asks]( the perennial question: “How many employees does a financial firm need to operate efficiently?” As neobank Klarna Bank AB’s Chief Executive Officer Sebastian Siemiatkowski suggested in the Financial Times recently, the answer might be: not as many as you might think. The Buy Now Pay Later pioneer has apparently gotten ahead of its peers in the use of artificial intelligence, though its experience may not directly carry over to larger and more traditional banks with relationships tied to their staffs. But as Marc says, “Klarna may be in a sweet spot where it is small enough to benefit.” Telltale Charts The shipping giants A.P. Moller-Maersk A/S and CMA CGM SA are expanding into air freight, and Thomas Black has charted the state of this market. Truck transportation is in its second year of recession and true recovery remains elusive. But air freight “is rebounding nicely from last year’s drop,” Tom [writes]( and there’s “a good chance there will be a nice bump during the end-of-year peak season.” Meanwhile, John Authers has a chart of the 2-year and 10-year yield spread — the famous indicator that, when inverted, many market participants take as a predictor of a looming recession. The yield curve measured in this manner has finally disinverted after 26 long months (without any recession to date). “History suggests that this is a signal that a recession is now truly imminent,” John [writes](. Of course, past performance is not a promise of future results, and this economy has surprised markets before. Further Reading Hamas [tunnels]( a sign of where future wars may be fought. — James Stavridis How fast you [respond]( to emails is really just a status game. — F.D. Flam The “right to bear arms” doesn’t [guarantee]( the right to carry a firearm on a train. — Noah Feldman The UN’s upcoming “[summit of the future]( may instead show that multilateralism has none. — Andreas Kluth ICYMI Trump [pledged]( cut the corporate tax rate and slash regulations. A whistleblower said Bank of America Asia [bankers]( shared nonpublic info. Hedge fund billionaire John Paulson said the US should build a [sovereign wealth fund](. Kickers South Texas is on alert after a [tiger]( escaped in northern Mexico. McDonald’s is [introducing]( a mini version of the McFlurry. The band Green Day had to leave the stage mid-song because of an unauthorized [drone](. Notes: Please send feedback and beer recommendations to Jonathan Levin at jlevin20@bloomberg.net. Follow Us Stay updated by saving our new email address Our email address is changing, which means you’ll be receiving this newsletter from noreply@news.bloomberg.com. 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