Donald Trump keeps changing the tariff rules. The latest blip is that smartphones and some electronics will not be subject to tariffs. We wonder how much Apple had to pay Trump to get this ruling. Probably > $0. Trump will likely keep tweaking the rules as companies try to buy their way out of the tariffs, but does he have an end game? Maybe it is simply collecting money, as one company after another buys him off in one way or another.

We will deal with the long-term issues below, but for the moment, Trump is causing chaos. With the rules changing daily, if not hourly, companies are unwilling to make any investment decisions—certainly none that commit them to spending billions of dollars to build factories that may become instantly obsolete the next time Trump changes his mind on something. Too many of them are aware of Foxconn's planned $10 billion electronics factory in Wisconsin, announced during Trump v1.0 but which later fizzled out and was never built when the company realized that it made Trump happy but made no economic sense. Companies are also aware of the chaos in the tightly integrated San Diego/Tijuana area, where parts often go back and forth over the border multiple times before being shipped off somewhere else for assembly into a car or other product. Doing anything right now is simply too risky.

Right now, U.S. tariffs on imports from China (excepting some electronic products) are 145% and Chinese tariffs on imports from the U.S. are 125%. That will stop most trade. Then what? Each country is dependent on the other one in many ways. Having all trade halt for even a few months would be a disaster for both. In China, factories would be churning out products that can't be sold, with the factories not getting paid. Walmart stores would have no products to sell and many U.S. companies would not be getting parts they need and would have to shut down. Remember what happened when supply chains got wrecked by the pandemic? Well, think that, but worse.

Chinese President Xi Jinping would negotiate with Trump if he had to, but that is not his preferred style. He prefers lower-level diplomats engaging in grueling, detail-oriented discussions for weeks or months and then presenting him with a final deal to approve or reject. Trump thinks he and Xi can work everything out over a piece of chocolate cake. However, after the humiliation that Trump and J.D. Vance inflicted on Volodymyr Zelenskyy in the Oval Office a few weeks ago, it is very unlikely that Xi will show up and risk the same treatment.

A new idea just popped into Trump's head, but it is dead on arrival. He wants to get allies to work together to isolate China. But the "allies" no longer trust him and may see China as a better partner. China tends to drive a hard bargain, but once the deal is signed, the Chinese uphold their end of it. With the U.S., that is no longer true. After Trump's attempts to nationalize Canada and seize Greenland, any expectations that Canada and the E.U. will bail him out are probably a pipe dream. As a historical note, Barack Obama thought of the same thing. He called it the Trans-Pacific Partnership and got 11 Pacific Rim countries to sign up. Then when he became president, Trump killed it. Now he wants it back. Too late.

So what is Trump's end game here? A trade war would be disastrous for the U.S., leading to a combination of unavailability for many products, outrageously high prices for other products, and many companies shutting down and laying off workers for lack of parts. Also, farmers would be stuck with perishable crops they couldn't sell. There would be inflation and unemployment. So how does Trump get out of this?

His hope is that Xi gives in. But Xi doesn't have to worry about inflation or a recession costing him big time in elections next year. He, like other Chinese leaders, takes the long view: In a few years, he will be rid of Trump, as in "We can absorb the pain until that time comes." In the Chinese calendar, this is the year 4723. China has seen many opponents come and go. It can just wait. There is a (possibly apocryphal) story that Eleanor Roosevelt once asked Chairman Mao what he thought of the French Revolution. Mao is said to have replied: "It is too early to tell." Even if that did not literally happen, the story has legs because it captures the Chinese thought process very well.

If Xi won't budge, Trump will come under great pressure if the trade war causes inflation, unemployment, and shortages. He will probably blink first and make a deal with China agreeing to buy a few more soybeans. He will herald it as a great victory. Maybe his supporters will eat it up (the deal, not the soybeans), but the Democrats will pillory him for lying to his supporters when he said he would rejuvenate American manufacturing. We think Trump has dug himself into a hole he won't be able to get out of except by giving up all his goals and accepting the status quo ante, possibly with a few minor concessions thrown in. He simply does not have the backbone to win a real trade war by making it so painful that the other side waves the white flag. (V)

Several Democrats and others have noticed something odd about the stock market. On April 2, what Donald Trump called "Liberation Day," the Dow Jones index closed at 42,225. After trading hours, Trump announced his crazy tariffs, including on uninhabited islands populated only by penguins. On April 8, it closed at 37,646, a loss of 11%. The S&P index dropped even more (12%). Then on April 9, Trump announced a pause on the tariffs and the Dow jumped up 2,962 in one day. Here's the odd thing: A chart showing the volume of call options on the S&P 500 for April 9:

These options gave the buyer the right to buy an S&P 500 index ETF for $509, even though it opened at $496, and the option expired that day. Anyone who bought that option contract was betting on an unexpected sharp rise in the S&P 500 that one day, even though the general market outlook was very gloomy and expectations for a recession were high. Then, when Trump announced the pause in the tariffs, the Dow jumped 2,962 (8.1%) and the S&P 500 jumped 474 (8.7%). Anyone who bought a call on either one (for about $2 per contract, given the high strike price and short expiration date) would have made a real killing.

Given the large volume in very specific calls, that seemed like a stupid bet in the morning. Some people are wondering if the initial tariffs were intended to drive the market down in order for Trump and his cronies to buy call options just before he released an announcement that they knew would send it skyward. This would explain why the initial tariffs on penguins and others were crazy: They were designed to cause a panic to allow selected individuals to make a fortune when they were undone. This would be market manipulation on a historical scale. Any Democratic president who got caught doing this would be impeached by the House the next day and removed from office by the Senate the day after that.

What made this worse is that Trump admitted that two of his friends made out like bandits. One made $2½ billion and another made $900 million. Not bad for 5 minutes' work on a computer. The $3.4 billion question is: Did Trump tip them off? If so, it would probably be considered insider trading. And did Trump also buy calls? Note that buying calls was safer than buying stock outright since it was possible that the market would have continued downward despite the pause. With calls, the worst case was losing the $2 paid for each contract.

The long and the short of it is this: Did Trump intentionally drive the markets down, causing trillions in losses for ordinary people so his billionaire friends (and maybe he himself) could reap a fortune?

Just askin'. Mind you, we don't know if any of this is true. It's all circumstantial evidence right now. As we alluded to over the weekend, we'd ask William of Ockham, but he's been dead for over 600 years. But we guess he would have some thoughts on the matter.

Some Democratic senators, including Ruben Gallego (AZ), Mark Kelly (AZ), Adam Schiff (CA), Elizabeth Warren (MA), and Ron Wyden (OR) are requesting that Trump's hand-picked SEC Chairman Paul Atkins investigate whether Trump or those around him "engaged in insider trading, market manipulation, or other securities laws violations." They are barking up the wrong tree. Atkins will never conduct a serious investigation.

All those folks should have immediately gotten on the phone with New York AG Letitia James, whose jurisdiction most definitely includes crimes committed on Wall Street, such as market manipulation. She has a long history of going after insider trading and similar crimes. For example, in 2022, she made CBSpay $31 million as a fine for covering up a budding scandal that eventually sent the stock down. James has the inclination, the authority, and the resources to issue subpoenas to find out who bought SPY call option contracts on April 9, at what time, and how many. Of course, James knows exactly what her job is and may not need any prodding from a bunch of misguided senators. She generally plays her cards close to the vest and tends not to talk about what she is doing until she has something to announce.

We doubt James would indict a sitting president and put him on trial now, but she could certainly indict any of Trump's billionaire friends who violated NYS laws and turn the screws on them, getting testimony on tape for later use in return for a lighter charge and a promise of a fine rather than prison time. (V)

They are dropping like flies, as one giant law firm after another capitulates to Donald Trump's bullying. One would think that when a huge law firm with hundreds of top-flight lawyers is threatened, its first reaction would be to sue. Nope. When Donald Trump does the threatening, unconditional surrender is the plan of action.

On Friday, the two biggest law firms in the country by some metrics, Kirkland & Ellis and Latham & Watkins, conceded defeat without firing a shot. Trump simply wrote out XOs banning them from public buildings (such as courthouses), something he has no authority to do, and they responded: "Yes, Mr. President. Of course. How much is this going to cost us?" These two and three smaller firms, A&O Shearman, Simpson Thacher & Bartlett, and Cadwalader, Wickersham & Taft, agreed to provide a total of $600 million in free work for causes he supports. The price keeps going up. Trump has now gotten promises of $940 million worth of free legal work since he was inaugurated. Of course, one has to wonder who will actually do the work and what the quality will be, but that is for later. Trump doesn't actually care if they follow through. What he wants is for them to grovel in the dirt at his feet now, and in public.

However, in four of the cases (all except Cadwalader), the quid pro quo was explicit. As part of the deal, the government would drop investigations into their DEI practices. They will also not deny legal services to "politically disenfranchised" groups, undoubtedly conservative groups.

One wonders if Trump will stop with extorting law firms. Why not demand that Boeing provide free aircraft, Microsoft provide free software, JP Morgan Chase provide free money, and McDonalds provide unlimited free Big Macs to all conservative groups requesting them? (V)

It took a long time, but a group of Harvard Law School professors have finally sued Donald Trump. If there is a group of lawyers more conscious of their legal rights than the Harvard Law School faculty, we don't know where that group might be (maybe Disney?). Trump has claimed he is investigating pulling $9 billion in funds from Harvard because, well, he is president and they are not. He has no basis in law for that and they know it. So the American Association of University Professors and the Harvard chapter of the AAUP have sued Trump in the federal district court in Massachusetts in an attempt to get the court to order him to cease threatening them. Their counsel, law professor Andrew Crespo, said Trump's threats were just a pretext to chill universities from engaging in speech that is protected by the First Amendment and from engaging in teaching and research that he doesn't like. It would appear that some university-level organizations have more spine than all the big law firms combined.

There is one thing the elite universities could do to protect higher education from a big bully, but they currently don't have the nerve to do it. Harvard has an endowment of $52 billion. Yale has $41 billion. Stanford has $38 billion, Princeton has $34 billion, and MIT has $25 billion. The next five private schools have $82 billion combined. Some public schools have large endowments, too, like the University of Texas at $47 billion, but their legal situation is ambiguous.

The private universities could each donate, say, 2% of their endowment to a fund to protect higher education. That would create a fund with $5 billion in it, just from the top 10 schools. The next 10 schools could up that to $7 billion. Then when a university was threatened, it could borrow what it needed to keep the lights on from the fund and sue Trump. They would ultimately win since what Trump is doing is illegal. Then they could sue for damages later. The almost certain result is that the courts would rule that Trump cannot single-handedly breach contracts—and certainly not without due process with hearings and evidence that the universities had violated their research contracts—which they have not. Trump's alleged excuse is that they have not combated antisemitism enough, but even if that were true, it would not be grounds to break existing research contracts for trying to cure cancer, study climate change, and a lot of other things.

But each university—like each law firm (see above)—is entirely focused on what is best for itself rather than looking at the big picture of what is best for their "industry." Maybe they need to add to their legal team a couple of professors of history whose specialty is the union movement, to point out that there is strength in numbers. (V)

The first law of Trumpism is that anybody who upstages Donald Trump gets pushed out of the picture. The second law of Trumpism is that anyone who criticizes Trump gets exiled permanently. Yet one person, Elon Musk, seems to be able to defy all the laws of Trumpism, sort of like defying the law of gravity. And Musk is increasingly cocksure of himself and defiant of these basic laws. So far it has worked but, as they say in the financial world, past performance is no guarantee of what will happen in the future.

Here are several specific examples of where Musk has gone far beyond where any mere mortal could go. He has taken positions in opposition to what Trump wants—and lived to tell the tale. Could it be that Musk has now accumulated so much power that Trump is genuinely afraid of him?

Tariffs: Trump's biggest hobby horse at the moment is tariffs, and the number one point man on that is trade counselor Peter Navarro. Navarro has never seen a tariff he didn't like—unless it was too small. Musk doesn't like tariffs, possibly due to the fact that Tesla, SpaceX, and his other companies import many parts from China, and they will now be subject to a 145% tariff. This will cost Musk big time. He even said he hopes the U.S. and E.U. will get to a zero-tariff situation, something not the case now due to Trump's arbitrary imposition of a 10% tariff on all imports from the E.U. Musk has lashed out at Navarro personally, saying he is "truly a moron." No one else could say that about a close Trump adviser and get away with it.

NASA: Trump wants to cut the NASA science budget by half. His interest in real estate goes only so far up. It does not reach the moon and he is certainly not interested in Trump Tower Mars. Musk's SpaceX company is NASA's biggest contractor and he reaps billions from it. He has little interest in seeing these contracts disappear into the thin Martian air. When Trump's cuts were announced, Musk tweeted that they were "troubling," at least to his bottom line. Oh, and by the way, Musk has long had a chummy relationship with Trump's pick to run NASA, Jared Isaacman, who just happens to be a big investor in SpaceX. Odd.

The Cabinet: Musk is often the star at cabinet meetings, even though he is not even a government employee, let alone a cabinet member. He also likes to give the actual members marching orders. In particular, he has told Secretary of State Marco Rubio where to cut at the State Department. Before the cabinet was set, Musk pushed for Howard Lutnick as SoS, but Trump vetoed that. Lutnick got commerce though, as a consolation prize. It is rumored, however, that his cabinet days are numbered.

The Senate: Back in November, Senate Republicans had to choose a new leader to replace Mitch McConnell, who decided not to run for another term as leader of the conference. Musk actively supported Sen. Rick Scott (R-FL). Trump, however, probably realized that Scott would lose the race so he carefully avoided endorsing anyone in the race. In the end, that was a good call, since Sen. John Thune (R-SD) won the job with ease.

Foreign Affairs: Generally, U.S. politicians avoid taking stands during foreign elections, but Musk is not actually a politician. So he actively supported the neo-Nazi-friendly AfD Party in the German elections. That did not sit well with the Germans, to put it mildly. Trump was much more careful and stayed out of the German elections entirely. In the U.K., Musk is now supporting the far-right Brexiteer Nigel Farage, even though Trump has become a fan of Prime Minister Keir Starmer.

Trump has said that eventually Musk should go back to making cars, but so far hasn't sent him packing. But as Musk gets bolder and bolder about criticizing Trump's policies or personnel or sticking his nose in places where it is not welcome, that day could come, possibly sooner rather than later. (V)

Social Security is under fire from all directions. Republicans have long wanted to replace it with private saving accounts. Elon Musk thinks it is a big Ponzi scheme and is taking action by firing employees and closing offices. But he is also using it in an unexpected, and especially malicious, way.

The Social Security Administration maintains a database called the Social Security Death Index. It keeps a list of dead people who had Social Security numbers. The nominal reason is that in order to avoid making or continuing to make payments to people who are dead, it needs a database of who is dead. Over time, the database has acquired other uses. For example, the genealogy website ancestry.com has it online. Entering the name of a dead ancestor turns up his or her birth date, death date, and the date and location the number was issued, providing clues for subsequent searches for birth certificates, death certificates, and other useful documents.

But Elon Musk has found an entirely new use for it: punishing immigrants. Musk is now sending information about immigrants to the SSA, claiming they are dead when they are in fact very much alive. Not only does it prevent them from receiving any benefits to which they might be otherwise entitled, but it has other (often disastrous) effects. For example, if an immigrant, legal or otherwise, shows up at a bank with a valid Social Security number and wants to open a bank account, the bank might check the death index, discover that the owner of the number was "dead," and thus the person standing there must be using a stolen number. Good idea to call the cops, no? Employers might also check. Signing up for Medicaid would probably also not work.

In short, being officially dead might make life so difficult for even legal immigrants that they have to self deport because "living" in the U.S. when you are officially dead is so difficult as to be nearly impossible. (V)

Donald Trump's favorite president used to be Andrew Jackson because Old Hickory pioneered the spoils system, where he used government jobs and other resources to reward his friends and punish his enemies. More recently, Trump switched allegiances to William McKinley, famous for imposing tariffs. Still, Trump's fondness for the spoils system remains. Only he has upped the ante. Instead of giving out jobs to supporters, he is going to give away entire government departments to red states. Today is the deadline for states to submit bids for agencies they would like. In particular, Florida, Ohio, and Texas have been aggressively lobbying to get key agencies and all the jobs they will bring to the state.

Some of the fiercest lobbying has been for NASA which, like the other agencies, is in D.C. Ohio wants it to move to Cleveland, near the Glenn Research Center. However, both Florida senators are lobbying hard to move it to the "Space Coast" in Brevard County, FL. But not so fast. Texas already has the Johnson Space Center, and would love to have the rest of NASA as well. If Sen. John Cornyn (R-TX) can pull this off, it will greatly help him in the upcoming primary with Ken Paxton. Then Cornyn could argue that his seniority and clout in the Senate have great value for Texas. But Trump might well decide to endorse the very-Trumpy Paxton rather than the not-so-Trumpy Cornyn, so that could kill Texas' bid. On the other hand, Trump detests Gov. Ron DeSantis (R-FL), so there goes Florida. And Gov. Mike DeWine (R-OH) isn't very Trumpy either. Maybe Alabama, near the Marshall Space Flight Center in Huntsville, then? Sen. Tommy Tuberville (R-AL) drank all the Kool-Aid and then some, but Sen. Katie Britt (R-AL) is only play-acting Trumpism. Maybe Trump will pick some place not on anyone's radar, like North Carolina, to help Sen. Thom Tillis (R-NC) next year, or a real longshot: the moon. Who knows?

HUD Secretary Scott Turner hates his building and would like to move. He is considering Houston, Kansas City, and Akron. Secretary of Agriculture Brooke Rollins wants to break up her department altogether and spread the pieces around the country, like ashes after a cremation.

One thing to consider, for better or worse, is that if a department moves far away from the D.C.-Maryland-Virginia area, many workers may quit rather than move. When the Bureau of Land Management relocated to Grand Junction, CO, 87% of the employees quit rather than relocate. Of course, for Trump, having almost everyone leave might be a plus, since it de facto shuts down the department without his having to ask Congress to do so. It also destroys all institutional knowledge of how the department works. In addition, moving departments out of the D.C. area hurts the blue states of Maryland and Virginia as well as the federal government, so from Trump's point of view, that alone may be worth the price of admission.

If the government is spread over a dozen states far apart, the departments are going to operate independently and will likely duplicate many services that were once shared. That will lead to a lot of waste, but who cares about waste in government? No one in the Trump administration, apparently. (V)

Democrat Allison Riggs was elected to the North Carolina Supreme Court last November by 734 votes. Loser Republican Jefferson Griffin didn't like that, so he is trying to get the seat the old fashioned way: having the courts hand it to him after the election. He sued, claiming that 60,000 voters should not have been allowed to vote because they didn't show a driver's license or provide a partial Social Security number when registering, as required by state law. However, the registrars didn't ask for them, so the voters can't actually be blamed.

On Friday, the state Supreme Court ruled that those 60,000 voters cannot be disenfranchised due to sloppy work on the part of the State Board of Elections and county officials. Those votes will thus not be uncounted.

However, Riggs is not home-free yet. The justices did rule that military and overseas voters who never provided ID when registering now have 30 days to cure their ballots or risk having them removed from the totals. The court did note that the Board of Elections never required this, so it is not exactly the voters' fault. There are enough of these ballots that it could overturn the election results. Given that the international mail often takes 2-3 weeks (each way), sending overseas voters a letter instructing them to mail back a copy of their passport may result in very few ballots being cured on time.

Finally, the Court also said that voters who never lived in North Carolina personally cannot vote in state elections. The confusion here is that the adult children of former North Carolina residents are allowed to vote in federal elections (by law), even if the adult children never lived in the U.S. themselves. This often applies to the children of military personnel stationed overseas. That law does not explicitly deal with state elections. Only a few hundred voters are in this category.

Associate Justice Anita Earls (D) wrote a blistering 40-page dissent arguing that courts should not rerun elections long after they are settled. Associate Justice Richard Dietz (R) also wrote an opinion stating that Griffin's claims "are not justiciable in a backward looking challenge to a past election."

Gov. Josh Stein (D-NC) was critical of the ruling. He tweeted: "The North Carolina Supreme Court ruled that certain active duty military voters serving our nation must jump through hoops that other voters don't. All voters have a constitutional right to be treated equally under the law—it is foundational to our democracy. It's unconscionable, and this decision cannot stand." (V)