Good morning. The US Agency for International Development, or USAID, will place nearly all of its direct-hire workforce on administrative leave starting Friday at midnight, according to an email sent to staff on Tuesday evening and posted on the agency’s website.
Meanwhile, in today’s big story, we’re breaking down how the China tariffs will impact what you pay for things.
What’s on deck
Markets: What Trump’s plan for a US sovereign wealth fund could look like.
Tech: An Amazon VP reiterated the company’s commitment to DEI initiatives in an internal meeting.
Business: The White House says more than 20,000 federal workers have taken buyouts, and more will come.
But first, the tariff fight isn’t over.
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The big story
The cost of a trade war
The trade war between Washington and Beijing is set to take place in US consumers’ wallets.
From new phones to kitchen appliances and clothes, President Donald Trump’s additional 10% tax on Chinese imports could result in a slew of higher prices, write Theron Mohamed and Ayelet Sheffey.
With China sending $427 billion in goods to the US in 2023 (the most recent year of full data), there are no shortages of things that will be affected by the tariffs.
It’s not just expensive tech like computers and cellphones that’s at risk. The closure of a loophole allowing importers to avoid taxes on shipments valued less than $800 when sent directly to consumers has left brands like Shein and Temu scrambling.
Concerns about logistics continued yesterday when the US Postal Service said that it is suspending inbound parcels from China and Hong Kong until further notice, effective immediately. While only parcels are impacted, the suspension may cause exporters to use alternative logistics companies like DHL, UPS, and FedEx. That might cause a demand surge that could increase freight costs, an expert told BI.
PDD Holdings, Temu’s parent company, was down 6% in premarket trading this morning following the USPS announcement.
Companies haven’t been shy about saying they’ll need to raise prices due to tariffs, and the taxes also provide cover to juice their costs regardless of the tariffs’ real impact.
Even trade plans that might never come to fruition — Mexico and Canada — could still cause enough uncertainty that they disrupt supply chains, leading to higher prices.
With so many unknowns, some investors are hedging their bets using outcome ETFs and monitoring 21-day realized volatility to reduce downside risk while not completely cannibalizing their returns.
If that all sounds like a foreign language to you, there’s always the prediction markets. Over there, you can wager on where some of President Trump’s next tariffs might land.
Another corner of the economy is leaving US consumers feeling pretty beat.
Rising egg prices are so severe that Waffle House is charging a 50-cent fee for each egg it sells. The restaurant chain said it opted for a surcharge over a blanket price increase across its menu.
The eggs-tra fee is only supposed to be temporary, but this won’t be over easy. Data from the US Department of Agriculture projects the average price for a dozen eggs won’t drop from $4.80 to $2.50 until the second quarter.
That’s not egg-celent news, but it’s tough to blame anyone. As BI’s Emily Stewart previously covered, a combination of bird flu and increased demand has scrambled the egg market.
News brief
Top headlines
- What the media missed about teens and phones.
- OpenAI-backer Fidelity marked up its stake in Anthropic by 25% after acquiring shares in FTX bankruptcy.
- CHART: Here’s how much Amazon could be hit by China tariffs.
- Fox is launching a new streaming service in a very crowded market. Here’s why analysts say it’s a smart bet.
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Shares of Chinese companies linked to DeepSeek surged on the first post-holiday trading day.
3 things in markets
1. How exactly would a US sovereign wealth fund work? President Trump asked the Treasury and Commerce departments to come up with a plan for creating a fund to invest on behalf of the country. The strategy, however, is typically used to manage a country’s surplus. The US is running on a deficit. Here’s how it could still work.
2. Learning from the investing wizards. Author Jack Schwager is adding a sixth book to his popular “Market Wizards” series, and he’s co-writing it with financial writer and researcher George Coyle. It will focus on the early days of top traders’ careers and feature interviews from a mix of well-known names and those who are unknown but “have done spectacularly well,” Schwager said.
3. Apollo is exploring “modest M&A.” The firm is changing tack from its former focus on execution and looking to grow through new M&A, CEO Marc Rowan said on the firm’s final 2024 earnings call. Apollo’s looking for companies that can help expand its lending capabilities, Rowan said, and he pointed to a recent acquisition as an example.
3 things in tech
1. Google’s AI bets and cloud sales slump. Parent company Alphabet plans for $75 billion in capex this year. Some investors are wary of big AI spending — and want earnings to match. Despite consolidated revenue growth, Google Cloud sales didn’t meet expectations. Executives did mention a potential bright spot, though: YouTube podcasts.
2. An Amazon exec reaffirms company’s DEI commitment. When Amazon changed some of its websites about DEI and halted some programs, some employees wondered whether the company might do away with it like Meta. That’s not the case, according to AWS VP of technology Mai-Lan Tomsen Bukovec. In a late January meeting, Tomsen Bukovec told employees there is “no change” to the company’s DEI commitment and that the edits employees noticed were alterations of language, not principle.
3. Connecting the dots between Apple, a porn app, and Trump’s possible trade war. The three make unlikely bedfellows, but they set the stage for a tiff between Big Tech and the EU. The key word: regulation. Apple and the other tech giants have beef with the EU over its app store rules, and they’re hoping Trump — and the threat of tariffs — might join the fight.
3 things in business
1. Federal workers say some DOGE members aren’t sharing their full names in meetings. One federal employee told BI they’ve never seen anything like it. These meetings, which include questions from DOGE reps about responsibilities and areas of improvement, appear to be part of its push to revamp the federal workforce. Thomas Shedd, a former Tesla employee who recently joined the GSA, told staff he was trying to protect DOGE members from media attention. However, the interactions come as DOGE promises to promote transparency.
2. The rise of the reluctant landlord. As workers face an uptick in RTO mandates, some homeowners may have to ditch the homes they purchased during peak remote work. But it’s not an ideal time to sell a home right now, thanks to high mortgage rates and weakening demands. Many would-be sellers are turning to the rental market instead — but being a landlord isn’t all it’s cracked up to be either.
3. The White House says more than 20,000 federal workers have taken buyouts. The figure is still well below the White House’s goal of 5 – 10% of federal workers taking the deal. However, a spokesperson for the Office of Personnel Management (OPM) told BI the 20,000 number “isn’t current,” and they’re expecting a “spike” ahead of the February 6 deadline.
In other news
New York magazine is finding big success in small newsletters.
- Why a cargo airline is eyeing a radical new aircraft design for its future planes.
- The Trump hedge: Four ways investors are seeking downside protection amid Washington’s tariff noise.
- OpenAI files a trademark application for humanoid robots and VR headsets as Sam Altman teases big hardware ambitions.
- The AI dream is alive and well for Palantir.
- The new ‘Fantastic Four’ finally has a trailer. Here’s everything we know about the reboot.
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John Malkovich plays an eccentric, hip-thrusting pop star in ‘Opus.’ He’s not sure why he was the director’s first choice for the role.
What’s happening today
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Disney, News Corp, Ford, and Uber report earnings.
The Insider Today team: Dan DeFrancesco, deputy editor and anchor, in New York. Grace Lett, editor, in Chicago. Ella Hopkins, associate editor, in London. Hallam Bullock, senior editor, in London. Amanda Yen, associate editor, in New York. Elizabeth Casolo, fellow, in Chicago.
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