Good morning, ¡Buenos!, Bonjour, and 早上好 (zǎo shàng hǎo). Today, those sunrise greetings come with a rude awakening.

President Donald Trump said yesterday that he will level tariffs on imports from Canada and Mexico as of today, and increase existing levies on goods from China. The latest data suggests markets and manufacturers aren’t taking it especially well.

‘The Largest Tax Increase in at Least a Generation’

For those who live under a rock: Last month, President Trump delayed his order to impose 25% tariffs on goods from Canada and Mexico — except for Canadian energy, which will be taxed at 10% — by 30 days. He also said he plans to double a 10% tariff on China. Combined, those measures would impact nearly $1.5 trillion in imports. The Peterson Institute, a DC-based economics think tank, estimated last month that this will cost the average US household $1,200 per year in what it called the “largest tax increase in at least a generation.”

On top of the impact on consumers, Canada laid out a list of ready-to-deploy retaliatory measures last month, Mexico said it would respond with measures when appropriate, and China hit back with reciprocal tariffs — all of which will impact the $1 trillion in goods those countries buy from US companies, potentially impacting their bottom line. Goldman Sachs analysts warned in a note that tariff increases and retaliatory measures could both “hurt domestic production.” The coming tariff tsunami combined with less than upbeat economic data resulted in a blue Monday on Wall Street:

• Fresh off a down month in February, stocks kept sliding Monday in their March debut. The Dow Jones Industrial Average fell 1.5%, the S&P 500 1.7% and the tech-heavy Nasdaq dropped 2.6% — UBS Global Wealth Management analysts said in a note that stocks are “likely to be volatile.”
• Just as the stock market has had a rough start to 2025, so has economic data: The Institute of Supply Management (ISM) released its latest Manufacturing Purchasing Managers Index (PMI) report on Monday, showing a dip in the manufacturing sector. The important economic indicator remained above the crucial 50 point — anything below indicates contraction in the sector — but still fell to 50.3 from 50.9, a lower level than the 50.7 analysts expected. ING noted “huge drops in new orders and employment within the ISM report.”

ING economist James Knightley wrote that “the stop-start/will he-won’t he nature of tariffs is creating uncertainty with manufacturers seemingly concerned about the trading environment they will find themselves in.”

Taking Advantage: Economic research has shown companies will raise prices simply because they can, not just if they need to. For example, Harvard Business School and Georgetown researchers found US companies raised prices between 2006 and 2019 even when costs fell. Economists have argued for and against the idea that companies helped inflame inflation during recent record profit years. The Peterson Institute said US domestic producers could “increase their prices in line with import price increases,” which they said would add “insult to injury for US consumers” already paying more.

“I also love Bitcoin and Ethereum!”

POTUS Donald Trump shouted his crypto love from the rooftops — aka his Truth Social platform — on Sunday after specifying the five cryptocurrencies he plans to include in the nation’s new strategic crypto reserve.

Trump said XRP, Solana, and Cardano will be stored in a national reserve, while bitcoin and ether, the top two cryptos by market cap, will make up “the heart” of the fund.

The crypto industry has been at the edge of its seat for months waiting for an announcement like this, after Trump promised a national crypto stockpile on the campaign trail as part of his plan to make the US “the crypto capital of the planet.”

The price of all five coins popped following Trump’s post, with bitcoin mostly recovering from its slump last week to top $94K. But with uncertainty around how Trump’s reserve will be put into action, crypto prices cooled off yesterday.

Saying the Magic Word

Trump’s post is the first time he’s said he would create a “reserve,” rather than a “stockpile.” The key difference: Governments are expected to buy assets to regularly bulk up reserves while they simply set aside and save assets they already own in stockpiles.

Trump said at a crypto conference this summer that he’ll start a national bitcoin stockpile using the more than 200,000 bitcoins the US government already owns. FYI: The US has more bitcoin, which it obtained through confiscation from cybercriminals, than any other country, and it periodically sells off its hoard.

Saving Uncle Sam’s stash is one thing, but actively buying crypto for a reserve is another:

• If and when the US buys crypto, it’s likely to boost the prices of the coins it buys and the wider crypto market.
• Critics are concerned this halo effect will enrich President Trump, who launched memecoins for himself and Melania Trump last month, and his political squad — like Commerce Secretary Howard Lutnick, who has ties to Tether, and Department of Government Efficiency mastermind Elon Musk, whose company Tesla owns nearly 12,000 bitcoin.

Divided We Stand: The crypto community is of two minds, with supporters hoping a reserve will solidify crypto’s global importance while boosting the US’s bottom line and critics saying that a national reserve will put too much crypto in government hands. Cryptocurrencies’ whole shtick is that they’re “decentralized,” so concentrating too much of them into a centralized government’s coffers could conflict with their original goals. Investors are hoping for more details Friday, when the White House will host its first-ever crypto summit.

The biggest restaurant chain in the world just completed a splashy IPO — and you’ve likely never heard of it.

That’d be Mixue, a bubble tea-coffee-ice cream chain founded in Zhengzhou, China, which has more locations than any other restaurant chain on earth. On Monday, shares of the company popped as much as 43% after debuting in Hong Kong, marking Mixue as a headliner in what looks to be a major revival year for IPOs for the stock exchange.

Spill the Tea

With more than 45,000 locations — mostly across China and Southeast Asia — Mixue has a bigger footprint than both McDonald’s and Starbucks. And its rise has been meteoric: In the past five years, Mixue has added 38,000 locations, after being founded way back in 1997. (That mirrors another Chinese coffee chain, Luckin Coffee, which has also rapidly expanded its store count in recent years.) The chain has done particularly well breaking into lower-income metropolitan markets, thanks to a menu featuring many drinks priced at less than $1 (USD).

In its IPO prospectus, the company said it garnered around $2.6 billion in revenue in the first nine months of 2024, up 21%, driving net profit of $479 million, up 43%. The overall global bubble tea market could balloon to $71 billion by 2028, according to Bloomberg data.

In all, it proved enough to catch a wave of regional excitement over new IPOs:

• After a $444 million raise, shares were last seen trading around $37, up 43% from its debut price, according to CNBC. Demand was so hot that shares of the Hong Kong offering were 5,200 times oversubscribed, while the international offering was 100 times oversubscribed.
• That gives Mixue the largest float of the year so far in Hong Kong. According to Bloomberg Intelligence, proceeds from listings on the exchange this year are expected to double to $25 billion.

Franchise Player: Mixue has mixed and matched a business model that US chains can learn from. According to its prospectus, 99% of Mixue locations are franchises (compared with around 93% for McDonalds; Starbucks doesn’t offer traditional franchises, though it does license the brand to non-traditional locations, like hotel lobbies). But while companies employing a franchise model in the US typically rely on franchise fees and revenue from real estate, Mixue has found a different formula. Such fees account for only around 2% of the company’s revenue, and instead, Mixue’s business is centered almost entirely around producing most of the ingredients and equipment found in its stores in house, and then selling them to franchisees. Meanwhile, McDonald’s may already be leaning into the drinks-heavy menu offered by chains like Mixue. Since late 2023, the Golden Arches has been experimenting with a new spin-off chain, CosMc’s, focused on cold and hot beverages and ice cream.