Daily Commentary

MarketMinder’s View: This discusses some recent geopolitical happenings, so please note, our interest in the story is solely with the global economic and market implications (or lack thereof). As reported here, “US President Donald Trump on Monday announced a 25% tariff on any country that does business with Iran ‘effective immediately.’ ... Although it is unclear whether Trump’s new tariff would apply only to goods, include services like banking and shipping, target indirect business ties or set any minimum thresholds for ‘doing business’ with Iran, the new tariff could bring significant risks for China.” In a vacuum, we agree a sudden 25% levy sounds like a market negative—it could create uncertainty, imperil America’s trade truce with China and rekindle escalating tariff threats that hit global stocks in the immediate aftermath of last year’s Liberation Day. However, we suggest investors hold their horses. For one, despite presumably being “effective immediately,” the administration has yet to issue an official statement—nobody knows what “doing business” actually means, which countries are affected and the legal authority under which the tariff would operate. Beyond that, though, like the article notes, “As one of the US’s largest export markets, China retains considerable leverage in negotiations with Washington, especially for agriculture and manufacturing,” which it has already used to lower seemingly steep trade barriers with America. Then, too, how would this newly threatened levy be enforced? “China uses so-called teapot refineries—non-state-owned facilities—to process Iranian oil and buys via front companies based in third countries.” So, while we don’t dismiss the risk of renewed trade tensions, just like before, we suggest investors take a wait-and-see approach. Reacting to a headline fear that ends up being a nothingburger would be a mistake, in our view.

MarketMinder’s View: We don’t think trade surpluses—when a nation exports more than it imports—are very meaningful. While most view exports positively, the presumption is that imports are a negative. But we find that isn’t true—rising imports reflect growing domestic demand, which is a positive. Through that lens, China’s latest trade figures are a boon to the global economy: December exports rose 6.6% y/y and imports by 5.7%. That indicates global demand for Chinese products was strong and suggests domestic demand within the country remains resilient as well. But how could this be, with all the trade friction between China and America last year? Here is what the breakdown reveals: “Exports to the U.S. dropped 20% in 2025. Meanwhile, exports to a bloc of Southeast Asian countries jumped 13%, while those to the European Union rose 8.4%, to Latin America grew 7.4% and to Africa surged 26%.” Bilateral tariffs and other trade barriers ended up rerouting trade. Though China’s US exports dropped, much of that went to Southeast Asia and Latin America (perhaps some for reexport to the US). China also strengthened trade ties with the rest of the world, helping boost shipments more. Trade reality proved better than expected last year, and we expect that to continue in 2026. As the article notes, “Global demand should remain resilient, and Chinese manufacturers have proved their competitiveness despite tariffs. A trade truce between the U.S. and China has created tentative stability in tariff policy.” That last bit is worth watching for any changes, as tariffs can present obstacles to trade and stir uncertainty. But as 2025 showed, there are plenty of workarounds that can blunt, if not wholly offset, the worst outcomes.

MarketMinder’s View: This is all about a political proposal, so please keep in mind we favor no politician nor any political party, assessing talk and developments solely for their potential market effects. Last week, President Donald Trump proposed capping US credit card rates at 10% for one year, touted as a plan to soften the blow of high prices. It is, in our view, no coincidence this comes in a midterm election year and as Trump’s approval rating is low—this is exactly the kind of talk that tends to cause stocks to grind early in election years, even if the legislation to make this happen never emerges from committee. But if it did emerge, we doubt the effects would be good for many consumers. “Richard Hunt, executive chairman of the Electronic Payments Coalition (EPC), told reporters that EPC's analysis of a 10% credit card cap found that between 82% and 88% of credit card holders would see their card eliminated or their credit limit drastically reduced, with low to moderate income consumers most affected.” The study argues Americans with credit scores below 740 would see effects, which extend to curtailed rewards, too—especially if today’s talk of cutting the swipe fees businesses pay follows. Ultimately, the 10% limit is just a price control—interference with free markets. It also doesn’t account for the fact the interest received goes to fund banks’ reserves against loss, interest costs and overhead. A 10% limit could cut deeply into that. So you can choose to not believe the precise estimates here from an industry lobby—they are probably overstated. But don’t presume the effects won’t follow: Price controls routinely create shortages by limiting the markets’ ability to respond. Here those shortages would likely be credit card access for lower- to middle-income Americans or those with lower credit scores. Add the interchange limits to this and rewards cards could see big changes.