Waffles for the Win

Workarounds are the thing to avoid onerous tariffs

Investors starting to think that bark is worse than the bite

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 Warm-Up
- Waffles for the Win
- Workarounds are the thing
- Learning about the First Sale Rule

Markets
- 42 Days? And counting
- Investors starting to think that bark is worse than the bite
- US Steel Deal - WOW!
- Fresh steam for speculation - lots of movement

Waffling
- What are your favorite way to eat waffles?
- Friday - 50% on Europe - Blah Blah
- 25% on Apple and every smartphone maker that brings in product to USA
- Sunday - Delay the Europe tariffs until July 9th
- Not sure where we are on

Results
- Markets swoon on the initial Europe Tariff announcement
- Markets (Overnight Futures) Popped higher on the Waffle
- Apple will look to eat and see a cut to margins -
---- Surely Apple will promise to build plants in the US and slow role it to get some relief
--- Apple recently announced a 250,000-square-foot advanced manufacturing facility in Houston that is expected to begin operations in 2026, indicating a timeline of roughly 1.5 to 2 years from announcement to production start (managed by Foxconn - manufacturing AI Driver Servers

China - Not bad
- China’s industrial profits rose for a second straight month in April, with their growth improving despite U.S. tariffs and persistent deflationary pressures, thanks to Beijing’s measures aimed at supporting businesses.
- Cumulative profits at major industrial firms climbed 3% last month compared to a year earlier, official data showed Tuesday, accelerating from a 2.6% growth in March.
- In the first four months this year, industrial profits rose 1.4%, year on year, according to the National Bureau of Statistics, bolstered by stronger earnings in the equipment and high-tech manufacturing sectors.

Facts though first:
- Foxconn’s Zhengzhou campus in China, often called “iPhone City,” spans over 1.4 million square meters (15 million square feet) and employs hundreds of thousands of workers. Approx 80% of Apple's annual iPhone production)
-- To replicate this in the U.S., Apple would likely need multiple facilities totaling 10–15 million square feet or more, depending on automation levels and vertical integration.

First Sale Rule
- Love this!-
- The first sale rule has been around since 1988
--- This is why markets/stocks/companies will always win
- The “first sale rule” is a concept in U.S. customs law that allows importers to use the lowest cost of a good to calculate duties.
- Under U.S. customs law, the first sale rule allows importers to base customs duties on the price of the initial transaction in a multi-tiered supply chain.

 	Example scenario:

 	A Chinese manufacturer sells a t-shirt to a Hong Kong vendor for $5.
 	The Hong Kong vendor resells it to a U.S. retailer for $10.
 	The U.S. retailer sells it to consumers for $40.



- Using the first sale rule, the U.S. retailer can declare the $5 price for customs purposes, rather than the $10 resale price.
- This approach reduces the duty owed by excluding the middleman’s markup.

Asked AI to make easier to understand in an infographic
 AI Info-graphic
Boeing Update
- The U.S. Justice Department said Friday that it has reached a deal with Boeing
- That will allow the aircraft maker to avoid prosecution over two crashes of its 737 Max planes that killed 346 people.
- The non-prosecution agreement would allow Boeing, a major military contractor and top U.S. exporter, to avoid being labeled a felon.
- The decision means Boeing won’t face trial as scheduled next month,

DHUnplugged #754: Waffling Tactics