President Trump’s overnight decree—slapping a 25 % tariff on every nation that trades with Iran—weaponises U.S. market access on a scale unseen since the 1930 Smoot-Hawley Act. China, which bought $22 bn of Iranian goods in 2022, and India, whose exports range from rice to pharmaceuticals, now face a stark choice between cheap oil and access to a $25 tn U.S. economy. (reuters.com)

The move collapses the distinction between secondary sanctions and overt trade war. Past extraterritorial measures targeted banks; this one targets whole countries, risking retaliation that could fracture already-fragile supply chains and add the current $3–4/bbl Iran risk premium to oil permanently. (reuters.com)

History suggests tariff cascades rarely stay economic. Smoot-Hawley shrank global trade by a third and deepened the Great Depression; today’s hyper-connected world could transmit shock faster. As scholar Branko Milanović warns, “Globalisation’s arteries can clot with surprising speed.”*

The Gist AI Editor

*Quote from Branko Milanović, Global Inequality (2016).

White House Signals Support for Iranian Uprising

President Trump escalated his rhetoric against the Iranian government, telling protesters via social media to “KEEP PROTESTING – TAKE OVER YOUR INSTITUTIONS!!!” and promising that “HELP IS ON ITS WAY.” This direct encouragement follows his cancellation of all meetings with Iranian officials until the “senseless killing of protesters STOPS” (WSJ). The open support for regime change marks a significant pivot, moving US policy into a more confrontational stance. While diplomatic solutions are officially preferred, some reports suggest covert military options are also being considered (WSJ).

Yen’s Dive Sparks Nikkei Rally

In Tokyo, mounting speculation of a snap general election sent the Japanese yen tumbling to its lowest level against the US dollar since July 2024, nearing the 159 yen mark (FT, Reuters). This currency weakness makes Japanese exports like cars and electronics cheaper on the global market, boosting corporate profits. Consequently, Japan’s Nikkei 225 stock index soared over 3.1% to a record high above 53,000. Investors are betting that an election could strengthen Prime Minister Sanae Takaichi’s hand to pursue fiscally expansive policies, a dynamic dubbed the “Takaichi trade.”

Tech Giants Confront External Costs

The tech sector is facing a public reckoning over its expanding footprint. Microsoft pledged to pay the full infrastructure and electricity costs for its power-intensive data centers, ensuring that the surging energy demand from the AI boom does not raise utility bills for residential customers (Bloomberg). This move to internalize costs follows pressure from the White House. Meanwhile, in a sign of fierce competition for talent, data analytics firm Palantir is suing AI startup Percepta, founded by former employees, alleging theft of trade secrets to build a “copycat” company (WSJ).

Stay tuned for the next Gist—your edge in a shifting world.

Trump Tells Iranian Protesters ‘Help Is On Its Way’
— Wall Street Journal

Basic Materials Roundup: Market Talk
— Wall Street Journal

Everything You Need to Know About Importing a Chinese Smartphone
— Wired

AI Startup Sued by Palantir Says Company Wants to ‘Scare Others’ From Leaving
— Wall Street Journal

New Zealand Home-Building Costs Picked up in Fourth Quarter
— Bloomberg

Microsoft Vows Its Data Centers Won’t Boost Consumer Power Costs
— Bloomberg

Le Pen’s Risky Gambit

Marine Le Pen has shifted legal strategy in a high-stakes appeal that will determine her eligibility for France’s 2027 presidential election. In a surprise move, Le Pen conceded she may have “unwittingly broken the law” regarding the alleged misuse of EU funds (Politico). This pivot from outright denial to acknowledging a potential misstep is a calculated risk, aimed at securing a more lenient judgment from the Paris court. At stake is a five-year ban from holding public office handed down in March 2025. Should the ban be upheld, it would fundamentally reshape French politics ahead of an election where President Macron cannot seek a third term. The trial’s outcome has significant ripple effects for the entire EU bloc, given Le Pen’s long-standing euroskepticism. (Politico)

Kyiv’s Cabinet Disarray

Internal political cohesion in Ukraine is showing signs of strain. President Zelenskyy’s government reshuffle faltered on Tuesday after parliament failed to muster enough votes to appoint a new defense minister, Mykhajlo Fedorow. The motion fell short, gathering only 206 of the 226 votes needed (ZDF, LIGA.net). Lawmakers also failed to approve former Defense Minister Denys Shmyhal’s appointment to head the critical energy ministry, a post that has been vacant for months amidst a severe energy crisis. This legislative impasse reveals deepening fractures within the governing coalition at a pivotal moment in the war, potentially complicating military and energy policy when stability is paramount. (ZDF)

Catch the next Gist for the continent’s moving pieces.

Schriftlich Dividieren: Was müssen Schüler lernen?
— ZDF

Salvini, è un errore tagliare ora ‘Strade sicure’
— Ansa

Alcohol too cheap in Europe as health impact mounts, WHO warns
— Politico Europe

Aktuelles zum Krieg in der Ukraine
— ZDF

Wo die 25- bis 34-Jährigen streamen
— ZDF

Future sul gas in rialzo sopra i 31 euro al megawattora
— Ansa