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Stocks Sink as Trump’s Tariff Threats Weigh on Confidence

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Stocks Sink as Trump’s Tariff Threats Weigh on Confidence

Stocks in Asia tumbled Monday as investors braced for a week of market tumult caused by an expected announcement of more tariffs by President Trump on America’s biggest trading partners.

Japan’s Nikkei 225 and Taiwan’s Taiex indexes each fell nearly 4 percent. Stocks in South Korea were down nearly 3 percent.

Stocks in Hong Kong and mainland China were down about 1 percent. A report on Monday signaled that China’s export-led industrial sector continues to expand despite Mr. Trump’s initial tariffs.

Futures on the S&P 500, which allow investors to trade the benchmark index before exchanges reopen in New York in the morning, slumped on Sunday evening. On Friday, the S&P 500 dropped 2 percent on concerns about inflation and weak consumer sentiment.

Since taking office a little over two months ago, Mr. Trump has kept investors and companies guessing with his haphazard rollout of what he calls an “America First” trade policy.

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In some cases, Mr. Trump has imposed tariffs to make imports more expensive in industries like automobiles, arguing that the trade barriers will spur investment and innovation in the United States. He has also used tariffs, and their threat, to try to extract geopolitical concessions from countries. He has further unnerved investors by saying he does not care about the fallout of his actions on markets or American consumers, who will have to pay more for many goods if import prices rise.

Over the weekend, Mr. Trump ramped up the pressure, threatening so-called secondary sanctions on Russia if it does not engage in talks to bring about a cessation of fighting in Ukraine. The tactic echoes similar sanctions concerning Venezuela. He said last week that any country buying Venezuelan oil could face another 25 percent tariff on its imports to the United States.

The threats over the weekend add to tariffs of 25 percent on imported cars and some car parts set to be implemented this week, barring any last minute reprieve. That’s in addition to previously delayed tariffs on Mexico and Canada, as well as the potential for further retaliatory tariffs on other countries.

Adding to investors’ angst is the scheduled release on Friday of the monthly report on the health of the U.S. jobs market. It could provide another reading of how the Trump administration’s policy pursuits are weighing on the economy.

Keith Bradsher contributed reporting.

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Tariff Misery in Japan: Honda and Nissan Forecast Plunges in Profit

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Tariff Misery in Japan: Honda and Nissan Forecast Plunges in Profit

President Trump’s decision to negotiate a break for China on tariffs is galling for Japan, which is reeling from auto sector levies that the White House has shown no sign of willingness to lift.

Japan, a top U.S. ally in Asia, was eager to advance trade negotiations with Washington, even as Mr. Trump imposed tariffs on automobiles, and threatened an across-the-board 24 percent tariff on Japanese goods.

While Beijing and others assembled plans for retaliatory tariffs, Japan rushed to Washington for trade negotiations, armed instead with commitments to buy more American goods and boost investments in the United States to $1 trillion.

Now in Tokyo, the sting is palpable.

On Tuesday — one day after the Trump administration agreed to temporarily nix most of its tariffs on China — two of Japan’s top automakers issued dire profit forecasts, weighed down by the effects of U.S. car tariffs.

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Honda Motor said that its operating profit would fall nearly 60 percent for the fiscal year that began in April. It attributed the downgrade to a whopping $4.4 billion hit from tariffs.

Nissan Motor suspended its profit forecast for the current year, and said that it would likely swing to an operating loss in the first quarter. The automaker, which was already restructuring its global operations before the U.S. tariffs, said it would slash an additional 11,000 jobs on top of the 9,000 cuts it announced in November.

In Japan there is a sense of disbelief and indignation among business leaders and government officials that the Trump administration backed down on China tariffs, while maintaining punishing levies on allies like Japan with significantly smaller trade imbalances.

The fact that the U.S. prioritized China over many other trade partners in reaching a tariff agreement showed that “at this stage, allies like Japan are at a disadvantage,” said Kazuhiro Maeshima, a professor of American politics and diplomacy at Sophia University in Tokyo. “This can only be seen as disregard,” he said.

Earlier this month, a 25 percent U.S. tariff on vehicle imports was extended to cover auto parts as well. Those two levies are particularly painful for Japan because automobiles and car parts are by far its biggest export to the United States.

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Economists estimate that the higher auto tariffs alone could put a big dent in economic growth in Japan this year. Factoring in broader disruptions from U.S. tariff policy, officials have predicted that growth could be more than halved.

That is because the auto sector is the backbone of Japanese industry. Nissan has already planned to shift some manufacturing to the United States to skirt tariffs, and if such moves are replicated by others, it could spark a broader hollowing out of industrial production in Japan.

Japan’s biggest automaker, Toyota Motor, said last week that while it aimed to protect production and jobs in Japan, U.S. tariffs would likely cost it more than $1 billion in April and May alone.

Honda’s chief executive, Toshihiro Mibe, said on Tuesday that the company plans to expand manufacturing in the United States to try to recover some of the billions of dollars of tariff losses it forecast. That includes moving some domestic production of its hybrid Civic to a factory it operates in Indiana, he said.

Japan is also negotiating with the United States regarding the proposed 24 percent “reciprocal” tariff, which the Trump administration announced last month and then delayed until early July. The next round of trade talks is expected later this month, but progress has stalled.

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Japan has said lower tariffs on cars are a necessary condition of any trade deal, a position that Prime Minister Shigeru Ishiba reiterated in parliament on Monday.

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Jon Voight, Sylvester Stallone and entertainment groups lobby Trump for tax provisions

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Jon Voight, Sylvester Stallone and entertainment groups lobby Trump for tax provisions

So-called Hollywood ambassadors Jon Voight and Sylvester Stallone joined with a coalition of entertainment industry groups for a letter delivered this week to President Trump urging him to support tax measures and a federal tax incentive that would help bring film and TV production back to the U.S.

The letter is signed by Voight, Stallone, all the major Hollywood unions and trade groups such as the Motion Picture Assn., the Producers Guild of America and the Independent Film & Television Alliance, indicating widespread support from the entertainment industry.

“Returning more production to the United States will require a national approach and broad-based policy solutions … as well as longer term initiatives such as implementing a federal film and television tax incentive,” the letter states.

In the letter, which was obtained by The Times, the groups say they support Trump’s proposal to create a new 15% corporate tax rate for domestic manufacturing activities that would use a provision from the old Section 199 of the federal tax code as a model.

Under the previous Section 199, which expired in 2017, film and TV productions that were made in the U.S. qualified as domestic manufacturing and were eligible for that tax deduction, the letter states.

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The letter also asks Trump to extend Section 181 of the federal tax code and increase the caps on tax-deductible qualified film and TV production expenditures, as well as reinstating the ability to carry back losses, which the groups say would give production companies more financial stability.

The tax measures — particularly Sections 199 and 181 — are issues the entertainment industry has long advocated for, according to two people familiar with the matter who were not authorized to comment publicly. The letter itself came together over the weekend, they said. It was intended to present different measures that shared the same goal of increasing domestic production, one person said.

For the record:

3:09 p.m. May 12, 2025A previous version of this story stated Susan Sprung’s title as executive director. She is chief executive of the Producers Guild of America.

“Everything we can do to help producers mange their budgets is important,” said Susan Sprung, chief executive of the Producers Guild of America. “In an ideal world, we’d want a federal tax incentive, in addition to these tax provisions, but we want to advocate to make it as easy as possible to produce in the United States and make it as cost-effective as possible.”

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Last week, Trump threw the entertainment industry into chaos after initially suggesting a 100% tariff on films made in other countries. Then, California Gov. Gavin Newsom jumped into the mix, calling for a $7.5-billion federal tax incentive to keep more productions in the U.S.

The proposals on the federal level come as states are upping their own film and TV tax credits to better compete against each other and other countries. Late last week, New York Gov. Kathy Hochul signed the state’s budget, which increased the cap for its film tax credit to $800 million a year, up from $700 million.

The expanded tax incentive program allocates $100 million for independent studios and gives additional incentives to companies that produce two or more projects in New York and commit to at least $100 million in qualified spending.

The program was also extended through 2036, which could help attract TV producers, who often want to know that their filming location is committed if they’re embarking on a series.

Production in New York has been slow, and the state needed this boost, said Michael Hackman, chief executive of Hackman Capital Partners, which owns two film and TV studio properties in the state, as well as several facilities in California. The increase from New York could also push California to increase its own film and TV tax credit program.

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Last year, Newsom called to increase the annual amount allocated to California‘s film and TV tax credit program from $330 million to $750 million.

Two bills are currently going through the state legislature that would expand California’s incentive, including increasing the tax credit to cover up to 35% of qualified expenditures (or 40% in areas outside the Greater Los Angeles region), as well as expanding the types of productions that would be eligible for an incentive.

“We have the best infrastructure, the best talent, we have everything going for us,” Hackman said. “So if our state legislature can get more competitive with our tax credits, I think more productions will stay. But if they don’t, this will result in more productions continuing to leave the state and going to New York and to other locations.”

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Avelo Airlines Faces Backlash for Aiding Trump’s Deportation Campaign

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Avelo Airlines Faces Backlash for Aiding Trump’s Deportation Campaign

In the four years since its first flight, Avelo Airlines has gained loyal customers by serving smaller cities like New Haven, Conn., and Burbank, Calif.

Now, it has a new, very different line of business. It is running deportation flights for the Trump administration.

Despite weeks of protests from customers and elected officials, Avelo’s first flight for Immigrations and Customs Enforcement appears to have departed on Monday morning from Mesa, Ariz., according to data from the flight-tracking services FlightAware and Flightradar24.

According to FlightAware, the plane is expected to arrive in the early afternoon at Alexandria International Airport in Louisiana, one of five locations where ICE conducts regular flights. Avelo declined to comment on the flight and ICE did not respond to multiple requests for comment.

The airline’s decision to support President Trump’s effort to accelerate deportations of immigrants is unusual and risky. ICE outsources many flights, but they are usually operated by little-known charter airlines. Commercial carriers typically avoid this kind of work so as not to wade into politics and upset customers or employees.

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The risks for Avelo are perhaps even greater because a large proportion of its flights either land or take off from cities where most people are progressives or centrists who are much less likely to support Mr. Trump’s hard-line immigration policies. More than 90 percent of the airline’s flights arrived or departed from coastal states last year, according to Cirium, an aviation data firm. Nearly one in four flew to or from New Haven.

“This is really fraught, really risky,” said Alison Taylor, a professor at the New York University Stern School of Business who focuses on corporate ethics and responsibility. “The headlines and the general human aspect of this is not playing very well.”

But Avelo, which is backed by private investors and run by executives who came from larger airlines, is struggling financially.

The money the company stands to make from ICE flights is too good to pass up, the airline’s founder and chief executive, Andrew Levy, said last month in an internal email, a copy of which was reviewed by The New York Times. The flights, he said, would help to stabilize Avelo’s finances as the airline faced more competition, particularly in and near New Haven, which is home to Yale and where the airline operates more than a dozen flights a day.

“After extensive deliberations with our board of directors and our senior leaders, we concluded this new opportunity was too valuable not to pursue,” Mr. Levy wrote in the email on April 3, a day after Avelo signed the agreement with ICE.

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While the military carries out some deportation flights, ICE relies heavily on private airlines. There is little public information about those flights, which ICE primarily arranges through a broker, CSI Aviation, said Tom Cartwright, a retired banking executive who has tracked the flights for years as a volunteer with Witness at the Border, an immigrants rights group. Most are operated by two small charter airlines, GlobalX Air and Eastern Air Express, he said.

GlobalX started operations in 2021 and conducts flights for the federal government, college basketball teams, casinos, tour operators and others. It has grown rapidly and brought in $220 million in revenue last year but is not yet profitable. This year, it has operated deportation flights to Brazil and El Salvador. Eastern Air Express is part of Eastern Airlines, a privately held company.

GlobalX and Eastern Airlines did not respond to requests for comment.

Contracts for such flights provide airlines consistent revenue, and the business is much less vulnerable to changes in economic conditions than conventional passenger flights. By Mr. Cartwright’s count, which is based on a variety of sources, ICE operated nearly 8,000 flights over the year that ended in April, most of them within the United States. CSI Aviation alone was awarded hundreds of millions of dollars in ICE contracts in recent years, according to federal data.

Avelo’s decision last month to join in on those flights was met with a swift backlash.

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Within days of Mr. Levy’s internal announcement, the New Haven Immigrants Coalition, a collection of groups that support immigrants’ rights, started a campaign to pressure Avelo to drop the flights. An online petition started by the coalition has gained more than 37,000 signatures. Protests also sprouted up near airports in Connecticut, Delaware, California and Florida served by Avelo.

The Democratic governors of Connecticut and Delaware denounced Avelo, while lawmakers in Connecticut and New York released proposals to withdraw state support, including a tax break on jet fuel purchases, from companies that work with ICE.

William Tong, the Democratic attorney general of Connecticut, demanded answers of Mr. Levy, who deferred to the federal government. In a statement last month, Mr. Tong called Mr. Levy’s response “insulting and condescending.”

The Association of Flight Attendants-CWA, a union that represents flight attendants at 20 airlines, including Avelo, raised concerns. The union noted that immigrants being deported by the Trump administration had been placed in restraints, which can make flight attendants’ jobs much more difficult.

“Having an entire flight of people handcuffed and shackled would hinder any evacuation and risk injury or death,” the union said in a statement. “It also impedes our ability to respond to a medical emergency, fire on board, decompression, etc. We cannot do our jobs in these conditions.”

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Avelo said that under its deal with ICE, it would operate flights within the United States and abroad, using three Boeing 737-800 jets. To handle those flights, the airline opened a base at Mesa Gateway Airport and started hiring pilots, flight attendants and other staff.

In a statement, Mr. Levy, a former top executive at United Airlines and Allegiant Air, said the airline had not entered into the contract lightly.

“We realize this is a sensitive and complicated topic,” he said. “After significant deliberations, we determined this charter flying will provide us with the stability to continue expanding our core scheduled passenger service and keep our more than 1,100 crew members employed for years to come.”

The airline, which is based in Houston, said it had operated similar flights for the Biden administration. “When our country calls, our practice is to say yes,” it said in a separate statement.

In the email last month, Mr. Levy celebrated the fact that Avelo had nearly broken even in 2024, losing just $500,000 on $310 million in revenue. But the airline needs to raise more money from investors, he said. Performance this year has suffered as national consumer confidence has waned, and the airline is facing rising competition.

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Avelo was seeking revenue that would be “immune from these issues,” Mr. Levy said in the email, and pursued charter flights, including for the federal government. To accommodate the ICE flights, the airline also scaled back its presence at an airport in Santa Rosa, Calif.

Avelo has raised more than $190 million, most of it in 2020 and 2022, according to PitchBook. Mr. Levy’s email said the airline hoped to secure new funding this summer.

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