Key Takeaways
- Former President Donald Trump announced a series of significant new tariffs, including a 100% levy on branded pharmaceuticals, 25% on heavy trucks, 50% on kitchen cabinets and bathroom vanities, and 30% on upholstered furniture, all effective October 1, 2025.
- Microsoft (MSFT) has reportedly curtailed cloud and AI services to an Israel defense unit, Unit 8200, following an internal review that found preliminary evidence supporting reports of a surveillance system in Gaza and the West Bank.
- Trump also signed an executive order to advance a deal spinning off TikTok's U.S. operations into a new American-owned venture, valued at approximately $14 billion, with Oracle (ORCL) playing a key role in securing U.S. user data.
- Japan's September Tokyo CPI data indicated a cooling of inflationary pressures, with the headline figure at 2.5% year-over-year, while foreign investors significantly reduced their buying of Japanese stocks.
Trump's Reshaping of U.S. Economic and Political Landscape
Former President Donald Trump has unveiled a sweeping set of new tariffs targeting various imported goods, signaling a continued focus on protectionist trade policies. Starting October 1, 2025, a 100% tariff will be imposed on branded or patented pharmaceutical products unless companies are actively building manufacturing plants in the U.S. This initiative aims to incentivize domestic drug production, with exemptions for firms that have already broken ground or have plants under construction.
Beyond pharmaceuticals, Trump announced a 25% tariff on all heavy trucks made outside the U.S., effective the same date, to protect domestic manufacturers. Additionally, kitchen cabinets and bathroom vanities will face a 50% tariff, and upholstered furniture a 30% tariff, measures intended to counter the "flooding" of these products into the American market by foreign countries. These tariffs risk intensifying inflation and slowing economic growth, according to some experts.
In a major development for the tech sector, Trump signed an executive order to advance a deal that would spin off TikTok's U.S. operations into a new, American-owned venture. The plan values the new entity at approximately $14 billion and reduces ByteDance's stake to under 20%, placing Oracle (ORCL) in charge of securing U.S. user data and reviewing the app's source code.
On the political front, Trump reiterated his criticism of Federal Reserve Chair Jerome Powell, stating that U.S. interest rates remain "too high" and blaming Powell for slowing progress on inflation. He argued that inflation would already be back at 2% if not for Powell's policies. Separately, former FBI Director James Comey has been indicted by a grand jury on two felony counts, including making false statements and obstruction of justice, a move Trump hailed as the start of accountability. Attorney General Pam Bondi emphasized the Department of Justice's commitment to holding those who abuse positions of power accountable.
Microsoft's Geopolitical Stance
Microsoft (MSFT) has reportedly cut cloud and AI services to an Israel defense unit, Unit 8200, after an internal review found preliminary evidence supporting media reports of a surveillance system in Gaza and the West Bank. Brad Smith, Microsoft's president, stated that the company does not provide technology to facilitate mass surveillance of civilians. This decision marks the first known instance of a U.S. tech giant halting services to the Israeli military since the conflict in Gaza began.
Asia Markets and Economic Indicators
In Japan, September's Tokyo Consumer Price Index (CPI) data showed a moderation in inflation. The headline CPI rose 2.5% year-over-year, below the estimated 2.8% and slightly down from August's 2.6%. Core CPI, excluding fresh food, also eased to 2.0% from 2.5%, while CPI excluding fresh food and energy dropped to 2.5% from 3.0%. This cooling inflation could complicate the Bank of Japan's (BOJ) stance on further interest rate hikes.
Meanwhile, Japan's order flows for the week without September 19 revealed significant shifts in investment. Foreign investors were net sellers of Japanese stocks, with a ¥-1747.5 billion outflow, a decrease from the previous week's ¥-2034.0 billion outflow. Japanese investors, however, continued buying foreign bonds, though at a reduced pace of ¥817.2 billion compared to ¥1478.5 billion previously.
Demand for U.S. technology stocks from Asia's retail investors remains strong, prompting asset managers from New York to Seoul to scramble to launch new products. This seemingly insatiable demand highlights a continued bullish sentiment towards the U.S. tech sector among Asian retail investors.
Commodity Watch
Gold prices edged lower on possible position adjustments ahead of new U.S. economic data releases. Despite some selling pressure, gold continues to hold above $3,700 an ounce, even as U.S. Q2 GDP growth was revised significantly higher to 3.8%. Investors are closely watching upcoming inflation data, particularly the Personal Consumption Expenditures (PCE) Price Index report, for further clues on Federal Reserve policy.
Ed Liston is a senior contributing editor at TheStockMarketWatch.com. An active market watcher and investor, Ed guides an independent team of experienced analysts and writes for multiple stock trader publications.