Dissent on the trade war

While some industries may ultimately gain from tariffs, the short-term disruption is difficult to navigate. My colleague Shawn Tully has taken a closer look at the impact that trade wars could have on the U.S. economy. First, he examined President Trump’s focus on the trade deficit and spoke with several noted economists, such as Stanford’s John Cochrane, who argues that “it’s not clear why a trade deficit’s a problem in the first place, because nations are reinvesting the dollars we send them right back in the U.S.”

Second, Tully points to some fundamental truths about tariffs. They are a tax borne mainly by U.S. consumers, they are likely to hurt growth and increase unemployment, they will not reduce the trade deficit or the federal budget deficit, and most important, in my view—he debunks the narrative that we’re getting fleeced by conniving, protectionist trading partners.

I’m excited to speak tomorrow with Canada’s Minister of Transport and Internal Trade Chrystia Freeland, who also recently served as deputy prime minister and finance minister. She will be joining us at Fortune’s CEO dinner in New York, where we will also chat with former Transportation Secretary Elaine Chao and former Commerce Secretary Wilbur Ross. It’s sure to be a lively discussion, with tariffs and trade certain to be on the menu.

More news below.

Contact CEO Daily via Diane Brady at diane.brady@fortune.com

Top news

Wall Street eyes a recession. Investors are raising the probability that the US economy will slip into a recession, with some economists seeing odds of 50-50. Meanwhile, President Donald Trump shows no signs of backing down on his aggressive tariff plans, including reciprocal duties set to take effect in a few weeks.

Consumer sentiment is deteriorating, according to the March survey by the University of Michigan. “Consumer worries about losing their jobs are at levels normally seen during recessions,” according to Apollo’s Torsten Sløk.

Treasury Secretary Scott Bessent said he is trying to head off a financial crisis and there are “no guarantees” there won’t be a recession.

Trump v. the judges. The White House defied two federal court rulings on deportations. In one, an immigrant doctor with a visa was deported despite a federal court ruling. In the other, the White House refused to obey a court order to turn around two planeloads of Venezuelan gang members who were being deported. The administration expects to eventually litigate the issue before the U.S. Supreme Court.

Trump will talk to Putin about Ukraine on Tuesday. The president says, “We will be talking about land. We will be talking about power plants.” He also said. “I think we have a lot of it already discussed very much by both sides, Ukraine and Russia. We are already talking about that, dividing up certain assets.”

Goldman Sachs: AI impact by 2027. A new report from Goldman Sachs argues that AI hasn’t had any significant effects on the labor market yet, though that should change “over the next several years.” The bank predicts AI will boost labor productivity and GDP from 2027 through the late 2030s.

UBS cracks down on remote work. UBS employees are now required to return to office three days a week and cannot work remotely on both a Friday and consecutive Monday, per a company memo. The bank joins Deutsche Bank, which instituted a similar policy last year.

The markets

• The S&P 500 picked up 2% to end at 5,638.94 on Friday, shaving previous losses. It had been down by 10% (an official “correction”) the day before. MicroStrategy (now called Strategy), the bitcoin treasury company, was up 13%. The VIX has declined more than 14% over the last five days, indicating lower volatility. The Japanese and European markets were broadly up this morning. Futures contracts for the S&P 500 were down 0.5% this morning.

From the analysts 

• Goldman Sachs on the Fed: “Several participants were attentive to recent elevated uncertainty and the potential impact on consumers’ and businesses’ consumption and investment decisions. Governor Waller and Presidents Williams, Musalem, and Schmid suggested that heightened uncertainty might weigh on growth through lower consumer and business confidence, softer consumer spending, or slower business investment. Some participants echoed Chair Powell’s view that moving gradually in the face of uncertainty ‘is the right benchmark right now,’” per Jan Hatzius et al.
• Convera on the Fed: “...concerns over slowing wage growth and consumer spending are creeping into the broader outlook. Market pricing now suggests the Federal Reserve will stay put until June,” per Boris Kovacevic.
• EY on the Fed: “The Federal Reserve will hold the federal funds rate unchanged at 4.25-4.50% at next week’s Federal Open Market Committee (FOMC) meeting. Recent Fed commentary has reinforced a wait-and-see approach, with officials signaling little urgency to adjust policy,” per Gregory Daco.
• Wedbush on Apple: “This is not the time to sell this tech stalwart as in our view the next stage of product and AI driven services growth is still ahead and speaks to our view Apple will make new time highs in 2025 despite the brutal sell-off to start the year,” per Daniel Ives et al.

Around the watercooler