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Krugman: Trump's Tariff "Fantasy" Collapsing

Nobel Prize-winning economist Paul Krugman has issued a sharp warning that President Donald Trump’s tariff policies are colliding with economic and political realities, with no major trade deals materializing despite grandiose claims.

In an article post to Substack, Krugman criticized Trump’s persistent narrative that tariffs will coerce countries into better terms, calling it “a fantasy of dominance” detached from actual outcomes.

“Most countries aren’t treating us unfairly, and trade negotiations are going badly if they’re happening at all,” Krugman observed, pointing to ongoing denials from China that talks are even underway and to Japan’s withdrawal from discussions over the administration’s erratic demands, including false allegations about vehicle safety tests.

You can read more on the matter here.

What’s going on?

• It’s Gonna Be Huge: Shein, Temu Roll Out Big US Price Hikes as Trump Tariffs Bite (theDeepDive)

• Catherine McKenna defends Mark Carney after details emerge about his Trump call (CBC)

• India Reports Fourth Night of Cross-Border Fire with Pakistan in Kashmir (theDeepDive)

• Russia declares 72-hour ceasefire in Ukraine for next week to mark Second World War Victory Day (Globe)

• Carney Turned Down Shopify President Role Before Joining Brookfield (theDeepDive)

• China says it can live without US farm and energy goods (FT)

• Canada Is Nearly Last In Growth Among OECD Countries (theDeepDive)

• Treasury Secretary Bessent says it’s up to China to de-escalate trade tensions (CNBC)

• Long Live the King? Canadians Would Rather Rejoin British Empire Than Become 51st US State (theDeepDive)

• Spain and Portugal hit by huge power outage (FT)

What’s the latest?

• Gold: Gold fell 1.6% and is now down about 6% from last week’s record high of over US$3,500 an ounce, amid easing trade war concerns. Hedge fund net-long positions in gold futures and options dropped to a 14-month low, according to CFTC data. Despite the recent selloff, gold remains up 25% for the year, fueled by Trump’s aggressive trade policies and global economic fears. Immediate delivery gold was trading at $3,277.05 as of late morning in London.

• Scotiabank: Scotiabank said its ownership stake in KeyCorp will contribute about $62 million to its second-quarter net income, or $71 million on an adjusted basis excluding amortization. The bank acquired a 14.9% stake in KeyCorp in December and will report its second-quarter results on May 27. KeyCorp operates in 15 U.S. states with around 1,000 branches.

• Gas & Oil: In Alberta, gas well licenses rose 26% to 308 in Q1 2025 — the highest in two years — while oil well licenses fell 24% to 293, amid falling crude prices and rising natural gas prices. WTI oil is down about 20% to US$63 per barrel since Trump’s inauguration, while Canadian natural gas climbed from $1.50 to $2 per gigajoule. Heavy Western Canadian Select crude trades at about a US$9.65 discount to WTI. Companies like Canadian Natural Resources (88 licenses) and ARC Resources (54 licenses) are increasingly focusing on gas and condensate production to meet rising demand.

• Wallstreet:  U.S. stocks were relatively steady Monday, with the S&P 500 up 0.1%, Dow Jones up 0.5%, and Nasdaq down 0.1%, ahead of key earnings and economic data releases. Economists expect U.S. GDP growth to slow to 0.8% in Q1, down from 2.4% in Q4 2024, and April jobs growth to fall to 125,000 from 228,000 in March. Treasury yields remained stable, with the 10-year yield at 4.27%, down slightly from 4.29%. Investors are closely watching Big Tech earnings and upcoming consumer confidence and jobs reports amid ongoing uncertainty from Trump's tariff policies.

• Tesla: Tesla raised Canadian prices after Canada's retaliatory tariffs on U.S.-made vehicles, with new Model 3 orders priced around $79,990, versus $69,000 for pre-tariff inventory. Some models like the Cybertruck saw price hikes of up to 22%. The move follows U.S. President Trump’s tariffs and growing Canadian backlash against Elon Musk’s political support for Trump. Tesla is encouraging buyers to secure lower-priced inventory before supplies run out.

Freeport Q1 Earnings

The stock market and stuff

• “Sharpest Decline In Earnings Outlook Since 2020” Signals Recession Ahead — Report (theDeepDive)

• Barrick Gold To Change Name To Barrick Mining, NYSE Symbol To Become “B” (theDeepDive)

• Musk ‘Super Fan’ Eyes Texas Shift for $110 Billion MercadoLibre (Bloomberg)

• Albertsons Tells Suppliers to Swallow Tariff Costs (theDeepDive)

In the juniors

• Osisko Development Increases Cariboo NPV To $943 Million Under Revised Feasibility Study (theDeepDive)

• 23andMe Bankruptcy Bid Deadline Extended as DNA Privacy Woes Linger (Bloomberg)

• Mandalay Resources To Be Acquired By Alkane To Create Gold & Antimony Focused Producer (theDeepDive)

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