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Good morning. Today we're talking about new US tariffs, OpenAI’s record fundraise and TikTok’s reprieve.

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Big Stories

Trump trade war

The announcement of President Trump's new tariff policy last week triggered a dramatic market sell-off and sparked fears of a global trade war. The news, which included a universal 10% tariff on all imports and significantly higher "reciprocal tariffs" on approximately 60 nations, sent shockwaves through financial markets and businesses. The most severe tariffs, including a 54% total on Chinese imports, a 24% tariff on Japan, and a 46% tariff on Vietnam, prompted immediate market reactions. The S&P 500 suffered its worst week since the beginning of the Covid pandemic in 2020 with US brands like Apple and Nike, who have significant Asian manufacturing operations, hit hard. Economists have warned of severe macroeconomic consequences, predicting inflation spikes, a drop in American household purchasing power and a potential economic downturn. The market's reaction was swift and brutal, with trillions of dollars in value erased. Concerns about retaliation from affected nations and increased geopolitical instability further fuelled market anxiety. China retaliated with a 34% tariff on American goods, escalating the trade war. Trump's administration, however, remained defiant, insisting that the tariffs would revitalise American industries and create jobs.

Open AI’s record raise

ChatGPT creator OpenAI has closed the largest venture capital raise in history, securing a record $40bn at a $300bn valuation. Led by Japan's SoftBank with a $30bn contribution, the funding round also includes investments from Microsoft. This injection of capital triples the previous record for a private technology company and positions OpenAI as one of the world's most valuable private entities, trailing only SpaceX. A significant portion of the funding, reportedly almost half, is earmarked for "Stargate," a joint venture announced earlier this year to bolster the United States' AI infrastructure. Notably, the completion of this massive funding round is contingent upon OpenAI restructuring into a for-profit company by the end of the current year, with a potential $10bn reduction in funding if this condition is not met, according to a Wall Street Journal report.

TikTok’s extra time

President Trump has granted ByteDance, the Chinese parent company of TikTok, a second 75-day extension to finalize the sale of the app's US operations, averting an imminent nationwide ban. This extension pushes the deadline beyond the previously set date of last weekend, allowing more time for ongoing negotiations. The decision reportedly followed President Trump's review of a proposal involving investors such as Oracle, Blackstone, and Andreessen Horowitz, who are vying to acquire TikTok's US assets. However, the administration cited the need for additional time to reach a definitive agreement, which would also require approval from the Chinese government. This extension marks the second such reprieve, following an initial 75-day extension granted earlier this year. TikTok, boasting over 170m users in the US, faces a mandated closure in the country under a law passed by Congress unless a suitable buyer is found. The possibility of tariff relief being linked to China's approval of the deal has also been suggested.

Elsewhere...

Leadership change: Primark boss Paul Marchant has resigned after an investigation into his behaviour by Primark’s parent company ABF.

Export pause: Jaguar Land Rover has said it will "pause" shipments to the US as the British car firm works to "address the new trading terms" of Donald Trump’s tariffs.

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3,028

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