Happy Monday from a sunny Copenhagen!

We have been banging the drum on the similarities between the tariffs-cycle and the Covid-cycle over the past month, and we are increasingly confident that the playbook holds true. 

The kind of stop/go dynamics look clearly similar as a policy shock nukes the cycle, while the “solution” is to roll back the shock gradually. A lockdown before a reopening essentially.

Over the weekend, we noticed an interesting reporting development that will closely resemble the lockdown/reopening patterns from the spring of 2020.

If the below report is correct (we will have to see the shipping data in the coming days), then Trump and the administration have likely given these companies a clear hint that tariffs are MUCH lower by the time ships arrive in the US.

“REPORT: Walmart and Other U.S. Retailers Reportedly Notify Chinese Suppliers to Resume Shipments But Tariffs Cost Will be on U.S. Firms.

Several Chinese exporters said that major U.S. retailers, including Walmart, have informed some Chinese suppliers to resume shipments after communicating with the U.S. government, with the tariffs to be borne by the American buyers.

According to Hong Kong’s Ming Pao, at the ongoing China Import and Export Fair (Canton Fair), multiple exporters mentioned that U.S. retail companies — including Walmart, home improvement retailer Home Depot, and Target — have notified Chinese suppliers to resume shipments that had been suspended due to the tariff battle that began earlier this month.

The report said these U.S. retailers informed Chinese suppliers of the decision after meeting with President Trump at the White House on Monday”
From Ray Wan on Twitter/X. 

If we are right that the “shock” will be dialed back in a measured and gradual way from here, we may get dynamics in both inflation, rates and risk assets that clearly resemble the 2020 playbook. And a few of the conclusions are incredibly counterintuitive, but interesting.

Chart of the week: A big policy shock to global shipping supply chains