Trump’s China Tactical Timeout, U.S. Loses Final AAA, Klarna’s Burrito Debt Problem

1.) Trump’s China Tactical Timeout

In Geneva, the U.S. and China called a 90-day ceasefire in their tariff skirmish, dialing back a combined 115 percentage points in duties—just enough to let retailers breathe and container ships hustle. Wall Street cheered, Walmart exhaled, and Trump declared a strategic win, even if the dollar took a beating and foreign investors started packing. Beijing, meanwhile, didn’t pop champagne—but the muted propaganda machine speaks volumes: they think they outlasted Washington without breaking a sweat.

Supply Chains, Showdowns, and Shadow Wins

While the Trump team touts “decoupling,” China’s already re-coupling—with Southeast Asia. Goods rerouted, margins preserved, and summer vacation saved from the wrath of empty shelves. But the fine print is damning: America’s achilles heel isn’t China—it’s inventory math and political short-termism. Beijing knows it, investors smell it, and the clock’s ticking. The trade war may be on pause, but the credibility gap? That’s still widening like a container backlog at the Port of LA.

2.) U.S. Loses Final AAA

America Just Got Kicked Out of the AAA Club

After more than a century of pristine credit, the U.S. has officially lost its final AAA rating. Moody’s, the last of the Big Three agencies still clinging to the fantasy, finally downgraded the U.S. to Aa1 late Friday. Why? Because Washington is basically running its finances like a startup with no revenue model—only this one burns $1.1 trillion a year just on interest. That’s more than the Pentagon gets to run the world’s largest military. Moody’s didn’t mince words: Congress and multiple presidents have failed to do the obvious—stop spending like TikTok influencers with a black card.

Markets Yawn, Washington Shrugs, the Debt Grows

Treasury Secretary Scott Bessent brushed off the downgrade like it was yesterday’s CPI print, calling Moody’s a “lagging indicator.” He’s not wrong—investors haven’t exactly run for the exits. In fact, since the U.S. first started losing its AAA sparkle back in 2011, foreigners have doubled down, adding $1.5 trillion in Treasuries since just 2023. But here’s the twist: as Trump pushes a $4.2 trillion “Big Beautiful Bill” of tax cuts and spending, even optimists are starting to ask if the dollar’s safe-haven status is built on vibes more than math.

3.) Buy Now, Panic Later

Klarna’s Q1 update has a familiar ring: consumers keep swiping, but the bill is getting ghosted. The Swedish BNPL giant saw credit losses spike 17% year-over-year to $136 million, as more Americans use installments not for flat-screens, but for flatbreads—yes, groceries. With 41% of BNPL users now missing payments, Klarna insists things are still under control. But when burritos become buy-now-pay-later liabilities, it’s a sign that economic stress is quietly going viral.

IPO Delayed, AI Reconsidered, and Humans Rehired

Even as Klarna inks deals with Walmart and DoorDash, it shelved its $15B+ IPO and quietly walked back its AI-first bravado—replacing some of those 700 chatbot jobs with real humans. Meanwhile, Trump-era deregulatory winds are blowing favorably across BNPL’s bow, unlike in the UK where regulators are saddling up. Klarna may be the category king, but as defaults tick up and debt loads swell, even royalty can sink if the boat’s full of unpaid burritos.