March 18, 2025
Tariffs and inflation
President Donald Trump backed away from a proposed 50% tariff on Canadian steel and aluminum after Ontario paused a 25% surcharge on electricity exports to Michigan, Minnesota, and New York. The original 25% tariff on steel and aluminum imports, including from Canada, was still set to take effect.
Canada supplies 41% of U.S. aluminum imports and nearly a quarter of steel imports, so the policy risk quickly became an operating issue for builders, manufacturers, automakers, and appliance companies. The Dow fell 478 points at one stage, and the S&P 500 moved near correction territory before losses eased. Some contractors were already stockpiling lumber, windows, cabinetry, and steel, which can raise working capital needs and make margins harder to forecast.
February CPI rose 0.2% after a 0.4% increase in January, and annual inflation cooled to 2.8% from 3.0%. Core CPI rose 0.2% for the month and 3.1% year over year. PPI was flat after rising 0.6% in January, while egg prices rose 53.6% in the producer data. For recruiting, this is a clean margin story: inflation is cooling, but tariffs can bring cost pressure back through the supply chain.
Jobs and demand
The economy added 151,000 jobs in February, below expectations of 170,000 but above January's 125,000. Unemployment rose to 4.1% from 4.0%. Healthcare added 52,000 jobs, transportation and warehousing added 18,000, retailers lost 6,000, and food services and drinking places lost 27,500.
Delta cut guidance for the quarter ending March 31. Revenue growth is now expected at 3% to 4%, down from 7% to 9%. Operating margin guidance fell to 4% to 5% from 6% to 8%, and EPS guidance dropped to $0.30 to $0.50 from $0.70 to $1.00. Delta fell more than 10% premarket before ending down 7.5%, while American and United also sold off.
Kohl's beat fourth-quarter expectations but fell more than 24% after weak guidance. Revenue is expected to decline 5% to 7%, comparable sales 4% to 6%, and EPS guidance of $0.10 to $0.60 missed the $1.23 analyst projection. The company is cutting 10% of corporate staff and closing 27 stores by April.
Global and growth notes
China's consumer prices fell 0.7% in February, the first contraction since January 2024, while PPI fell 2.2% and continued a 29-month decline. Germany's industrial output rose 2% in January, with automotive production up 6.4%, but exports fell 2.5%.
Wind and solar produced more U.S. electricity than coal for the first time, accounting for 17% of the power mix versus coal at 15%. Waymo also expanded robotaxi coverage by 27 square miles in Silicon Valley and already had 200,000 paid rides per week across San Francisco, Los Angeles, and Phoenix. My read is that the market is punishing unclear demand stories while still rewarding platforms with visible scale.