Macro Mondays – "The Tariff Battle Heats Up"

Host: Milo Rosenhol
Guest: Andreas Steno Larsen
Date: October 27, 2025

Overview

In this episode of Macro Mondays, Milo Rosenhol and Andreas Steno Larsen provide an in-depth, timely analysis of the latest developments in global trade tensions, focusing on the ongoing US-China tariff battle and its wider macroeconomic implications. The conversation centers around rare earth supply chains, the politics of tariffs, market reactions, and the far-reaching effects for investors navigating global volatility. They also address inflation, market liquidity, and field key audience questions on actionable trade ideas.

Main Discussion Points & Key Insights

1. Market Relief & the Prospect of a Trade Truce

• Market Reaction:

  • Big relief rally with the Nasdaq up 350+ points, attributed to Scott Besson’s comments hinting at a potential US-China trade truce.
  • Key event: Anticipation around the upcoming Trump-Xi meeting in South Korea.

    "Big relief rally on the back of Scott Besson's comments yesterday that we have some sort of trade truce with China on the cards."
    — Andreas (01:59)

• Rare Earths Remain Center Stage:

  • Rare earth magnets (crucial for advanced tech and defense) are a bargaining chip in US-China tensions.
  • Latest deal framework "kicks the can down the road" but doesn't resolve core vulnerabilities.

    "We’ve bought ourselves some very, very valuable time on this whole question on trade, not least related to Rare earths."
    — Andreas (02:30)

2. Strategic Leverage: China’s Rare Earth Domination

• Short-term Leverage, Long-term Response:

  • West is forced to concede significant advantages to China in exchange for rare earth access; dynamic unlikely to shift in under 12 months.
  • China’s bargaining power is significant, especially in sectors from defense to semiconductors.

    "China knows that they've built this upper hand, this advantage, and they're going to play it over the coming... the geopolitical chessboard might change entirely over the next 12 months. But the rare earth dynamic is going to be mostly the same."
    — Milo (06:13)

• Western Supply Chain Reactions:

  • EU passing the Rare Earth Minerals Act, US (under Trump) ramping up federal efforts to secure non-Chinese sourcing.

3. Geopolitical Context: Is This a Lasting Shift?

• Military Implications:
  • Open questions remain about whether China will uphold their ban on supplying rare earth magnets for US military technology.

    "Is this the actual reason why Trump is holding back on the Tomahawks to Ukraine? Is it out of fear that the US is simply running out of ammunition, so to speak?"
    — Andreas (07:53)

• Western Response:
  • Action is coming, but breaking dependency on China is years—if not decades—away.

4. Market Sentiment & Volatility

• Political Risk Now a Constant:
  • Political standoffs keep driving markets in whiplash cycles of risk-on/risk-off.

    "I can't recall a year where political standoffs have had such an importance for markets... back and forth, back and forth."
    — Andreas (09:50)

• Long-Term Decoupling:
  • Despite ongoing trade, the US and China are on an inevitable path to economic decoupling, especially in critical sectors.

5. Inflation & Macro Backdrop

• Latest CPI Print:

  • Inflation is lower and less sticky than predicted, due in part to falling freight prices and slowly distributed tariffs impact.

• Freight Rates & Supply Chain Decoupling:

  • Shipping rates from China to the West are benign; another sign of the slow decoupling and adaptations in global logistics.

    "We're seeing very, very benign freight rates, which obviously also aids the CPI picture... also testament to the slowly building decoupling of these economies."
    — Milo (16:45)

• Tariffs and Consumer Prices:

  • Tariffs’ impact is muted and distributed globally—not simply a direct tax on US consumers.

    "A tariff is the only tax where you can actually feasibly claim that a part of the bill is paid by foreigners."
    — Andreas (18:36)

6. Audience Q&A Highlights

• S&P Correction Risk ([19:09]):

  • Andreas believes the worst is past for the S&P on the China story; minor near-term data weakness won’t likely derail the broader positive trend.

    "I don't think you should care too much about a small setback ... the overall trend still looks benign."
    — Andreas (19:46)

• Silver Outlook ([21:00]):

  • Silver remains technically bullish; driven by a weak dollar, uptick in manufacturing, the gold rush in the global south, and the solar industry.

    "Silver looks incredibly bullish technically still, at least if you zoom out a little bit."
    — Andreas (21:14)

• Liquidity Triggers ([22:55]):

  • Reserve scarcity is emerging; the Federal Reserve may have to add liquidity soon to control money market rates—decision expected before year-end.

    "Now they need to add liquidity if they want to control short term money market rates... we'll get some early clues already this week."
    — Andreas (22:55)

Notable Quotes & Memorable Moments

• On Political Fatigue & Market Cycles:

  "A decade back, a US government shutdown would have been a huge market crisis. We're not even talking about. Doesn't even matter almost to markets..."
  — Milo (10:43)

• On Repeatedly “Kicking the Can Down the Road”:

  "They’ve shown their willingness to use this against the West... we're past the point where the west can just lean back and accept to be this reliant on China in such an important supply chain."
  — Andreas (11:22)

• On Humorous Office Setups:

  "I've worked at several trading flows and they all look like this, right? It's actually a struggle to concentrate and get stuff done in an environment like this."
  — Andreas on trading floor culture (27:25)

Timestamps of Key Segments

• Market reaction to potential truce [01:59 – 04:12]
• Rare earths: bargaining chip & future risks [04:12 – 06:13]
• Europe & US policy responses [06:13 – 07:53]
• Military implications & supply chain vulnerabilities [07:53 – 09:50]
• Macro environment: inflation, decoupling [14:55 – 17:39]
• Audience Q&A: S&P, Silver, Liquidity [19:09 – 24:29]
• Outlook for coming months & macro/AI/rare earth trades [24:55 – 26:39]
• Humor: trading floor culture and fitness in finance [27:25 – 28:20]

Tone & Style

The episode maintains a casual yet incisive tone, punctuated by banter, inside jokes about office culture, and sharp, actionable macroeconomic commentary. Both hosts balance technical depth with approachability, consistently emphasizing the need for vigilance—and a sense of humor—in facing market volatility and geopolitical unknowns.

Key Takeaways for Investors

• A trade truce offers markets temporary relief, but rare earths will be an ongoing strategic battleground; expect further volatility.
• China maintains significant leverage, but Western efforts to decouple and onshore supply chains will be a major theme for years.
• Inflation fears have been overblown—so far. Shipping costs and global supply adjustments are helping.
• Watch for potential Fed liquidity moves as reserve scarcity increases into year-end.
• Silver and select commodity plays remain interesting on global fundamentals, but portfolio position size matters.
• Expect more cyclical and sentiment-driven volatility as we move late into this investment cycle.

For more actionable ideas and trade recommendations, listen to the Macro Meets Micro show or explore offerings at Real Vision Pro and Steno Research.