The Rundown - U.S. & China Agree to Temporary Tariff Cuts, Trump Signs Executive Order Aimed at Drug Prices

Episode Date: May 12, 2025

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Public.com presents the rundown. Your daily market update in under 10 minutes. My name is Zaid Admani, and today is Monday, May 12th. In today's episode, we'll tell you the deal between the U.S. and China that is bringing some tariff relief and has the market height. We also discuss President Trump's plans to lower drug prices that has big pharma calling up their lawyers. Then stick around to the end of the show to find out about Apple's plans for their first

major price increase in seven years and why it might upset the White House. We got a great show for you today. Let's go. Stocks are coming off a surprisingly down week despite some positive developments last week. The S&P 500 lost 0.5% while the NASDAQ was down 0.3% last week. But there was some optimism heading into the weekend. The vibes are much better these days. Because remember last week there was a trade deal announced with the UK and investors were

hoping this would lead to more deals. pretty soon. Well, on Sunday night, we got the big one. The White House said they reached a deal with China, kind of. Remember, Treasury Secretary Scott Bessent has been in Switzerland all weekend long talking with Chinese trade officials, and they've agreed to slash tariffs on each other for the next 90 days as they work out a bigger trade deal. Remember, tariffs on Chinese imports were at 145%. That's going down to 30% and China will drop their tariffs from 125% down to 10% on U.S. imports to China. So that was a major breakthrough in the trade war. Scott Bessett said he's likely going to meet with China again in the next few weeks to work on the bigger agreement. There was rumors about

tariffs being eased on Chinese imports last week, but I think even the most bullish investors might be surprised to learn that tariffs are being dropped all the way to 30%. Now, hopefully this does lead to a bigger long-term deal because we don't want to be back. in the same spot 90 days from now. I'll be honest, it's going to be hard to top this news all week, but we are getting the April CPI report on Tuesday morning, which will tell us that the tariffs last month led to higher inflation. And we're also getting some interesting earnings to look forward to like Walmart, Alibaba and Kava. They all report earnings on Thursday. So it's been an incredible start of the week. Probably okay to open up the public app and take a peek of your portfolio this

morning if you haven't in a while. And who knows, maybe we'll get a couple more trade deals this week. Let's run through some headlines. President Trump has big pharma sweating this morning after announcing plans to sign an executive order that will cut drug prices by 30 to 80% here in the U.S. Now, there aren't a lot of details in how this will be achieved, but Trump said he'd institute a most favored nation policy, which means that Americans would pay no more than people in countries that have the lowest prices on drugs. So, for example, if France gets a medication for $50, then Americans would pay that same amount instead of the inflated prices that we paid today. In a post on true social this morning, Trump said that prices would come down by 59 plus

percent. And this announcement is dragging down the shares of major U.S. drugmakers like Eli Lilly, Merck, and Pfizer. Even European companies like Novo Nordisk and AstraZeneca are slipping because they generate 40 to 60 percent of their sales from the U.S. Now, this isn't the first time that Trump has tried to go after drug companies. In his first term, he turned to, he'd tried to put a cap on Medicare drug prices, which accounts for 40% of drug sales in the U.S. That effort fell short, though, after the pharma industry sued and a federal court ended up striking that down. And I expect big pharma to fight back this time as well. But there's no denying that this is a problem that Americans have been dealing with for decades now.

Americans pay the most in the world for medicines, and that gap is becoming wider in recent years. Big reason for that is the cost of drugs are regulated almost everywhere else in the world. while farmer companies have free reign to set prices in the U.S. Now, Big Pharma says they need to do this. They need to maintain these profits to fund innovation and that lower prices in the U.S. would jeopardize the development of new drugs. Now, Joe Biden tried to make some progress here as well

with the Inflation Reduction Act back in 2022. That gave Medicare the power to negotiate prices for some higher-cost drugs. But Trump's plan would go even further, tying U.S. prices to the lowest ones globally. And if this holds up legally, it could be a massive shakeup for the industry. I got a feeling every big pharma law firm is about to ramp up those billable hours.

Speaking of lawyers, I got a feeling that Open AIs lawyers are pretty busy right now too because they're negotiating a new corporate structure with Microsoft that would open the door for a future IPO. There's a lot of drama regarding Open AIs corporate structure. Remember, they were originally set up as a non-profit, but last year they made the decision to transition to a for-profit company to make it easier to raise money and potentially IPO. Well, now they're abandoning that plan

and saying that the nonprofit parent company would retain control. The switch to being a for-profit company faced a lot of criticism from those who believe the move would drag it further away from Open AI's mission to benefit humanity. And Elon Musk really didn't want this to happen. In fact, he sued Open AI to stop them from doing it.

But they're still trying to restructure the company while maintaining the nonprofit controlling board and make it easier to raise money and potentially IPE. But another hurdle they're facing is coming to terms with Microsoft about how much equity they would receive in a restructured company. This is according to reporting from the Financial Times. Microsoft has invested $13 billion into Open AI so far with their first investment coming back in 2019 of $1 billion. Now, because of that investment, Microsoft has access to Open AI's intellectual property, such as all their models and products, as well as revenue share from product sales.

But this contract runs out in 2030. So now Microsoft is negotiating with OpenAI for access to Open AI's next-gen models down the road and maybe giving up some ownership in exchange for that access. But the relationship between the two companies is starting to get a little icier. But if Open AI ever wants to IPO, they're going to have to figure out this relationship with Microsoft. Let's talk about some stocks making moves today. No surprise here, but retail stocks are flying this morning after the U.S. and China announced they were lowering tariffs for the next 90 days.

Best Buy, Five Below are some of the names flying this morning? All these companies have exposure to China. They rely heavily on Chinese imports. So a tariff relief was huge news for them. Now, another stock that's making people's jaws drop is Kinley MD, which is a medical data company, and their shares are up more than 400% after they agreed to a merger with the Bitcoin investment company Nakamoto Holdings.

This deal will create a new publicly traded company with $710 million in fresh capital to buy and hold Bitcoin. So this is like another Bitcoin treasury play coming to the stock market. A lot of publicly traded companies are doing the micro-stratory cosplay these days. By the way, Nakamoto Holdings was founded by one of Trump's crypto advisors, David Bailey. Now, on the flip side, not a lot of rent on the board this morning besides big pharma stocks. I did want to point out that Netflix stock is down this morning and not participating in today's rally. I think many investors see Netflix as a recession-proof stock and thought that their business would be a beneficiary of an economic slowdown.

But now with trade tensions easing Netflix stock is taking a slowdown. light hit down around 3% this morning. Gold is also down around 3% this morning for similar reasons. Let's wrap the show with a fun fact. Apple hasn't raised prices on the iPhone in seven years, which was pretty surprising to me, but that might change this fall. According to the Wall Street Journal, Apple is looking to raise prices on the new iPhone 17 lineup this fall. But here's the thing, they don't want anyone to think it's because of Trump's tariffs. Now, despite both countries agreeing to lower tariffs on each other for the next 90 days, there's still going to be a 20% tariff on iPhones coming into the U.S. from China.

And that 20% tariff is a direct hit to Apple's profit margins, and it seems like Tim Cook's not about to eat that cost. So now Apple has to come up with some sort of excuse on why they're raising prices, because we've seen the White House get pretty upset when companies blame tariffs for price increases. So we'll have to see what Tim Cook and the Apple PR team cook up. I'm sure they're going to hype up some sort of fancy camera. feature or something related to AI that nobody's ever going to use to justify these price increases. Well, all right, guys, that's the rundown for today.

What an incredible start to the week. It's just crazy to see how fast the vibes have turned. It's great to see my portfolio in the green when I open up the public app. And hopefully this is a sign of more good things to come. By the way, if you guys enjoyed today's episode, consider giving us a five-star rating on Apple or Spotify. If you're listening on Spotify, don't forget to vote in today's Spotify poll. leave us a comment on Spotify. All that engagement really does help us out,

and it helps other people find the show. We did cross 5,000 5 star ratings on Spotify, and we did it on Saturday before this deal with China was announced. I was really hoping we were going to get to 5,000 before the China deal, and you guys made it happen. So thank you guys again for all the support. Thank you guys so much for listening. Shout out to Mike and Connor for all the help behind the scenes.

And we'll see you guys back here tomorrow.