The Latest: Trump will reveal ‘AI Action Plan' shaped by his Silicon Valley supporters
The plan and related executive orders are expected to include some familiar tech lobby pitches: accelerating the sale of AI technology abroad and making it easier to construct the energy-hungry data center buildings that are needed to form and run AI products, according to a person briefed on Wednesday's event who was not authorized to speak publicly and spoke on condition of anonymity. It might also include some of the AI culture war preoccupations of the circle of venture capitalists who endorsed Trump last year.
Global markets rally on Trump's Asian trade deals
Global shares rallied on Wednesday, with Tokyo's benchmark Nikkei 225 index gaining 3.5% after Japan and the U.S. announced a deal on Trump's tariffs.
The tariff agreement as announced calls for a 15% U.S. import duty on goods from Japan, apart from certain products such as steel and aluminum that are subject to much higher tariffs. That's down from the 25% Trump had said would kick in on Aug. 1 if a deal was not reached.
'This Deal will create Hundreds of Thousands of Jobs — There has never been anything like it,' Trump posted on Truth Social, noting that Japan was also investing 'at my direction' $550 billion into the U.S. He said Japan would 'open' its economy to American autos and rice.
Trump announced the U.S. will place a 19% tax on goods from Indonesia and the Philippines. A senior Trump official said Indonesia will charge no tariffs on 99% of its trade with the United States and drop its nontariff barriers on U.S. goods. Trump said the U.S. won't pay any tariffs in the Philippines, but they will pay 19%.
'President Trump has signed two trade deals this week with the Philippines and Japan which is likely to keep market sentiment propped up despite deals with the likes of the EU and South Korea remaining elusive, for now at least,' Tim Waterer, chief market analyst at Kohle Capital Markets, said in a report.
The Epstein files — delayed, but far from forgotten
House Speaker Mike Johnson rebuffed pressure to act on the investigation into Jeffrey Epstein, instead sending members home early on Wednesday for a month-long break from Washington after the week's legislative agenda was upended by Republican members who are clamoring for a vote.
'There's no purpose for the Congress to push an administration to do something they're already doing,' Johnson said at his last weekly news conference.
The speaker's stance did little to alleviate the intra-party turmoil unfolding on Capitol Hill as many of Trump's supporters demand that the administration meet its promises to publicly release a full accounting of the sex trafficking investigation into Epstein, who killed himself in his New York jail cell in 2019 while awaiting trial. Under pressure from right-wing online influencers, as well as voters back home, rank-and-file Republicans are demanding House intervention.
'The public's not going to let this die, and rightfully so,' said Rep. Ralph Norman, a South Carolina Republican.
The president told congressional Republicans at a Tuesday night dinner that European Union officials will be in town Wednesday for the talks.
'We have Europe coming in tomorrow, the next day,' Trump said after announcing a trade framework with Japan.
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CNBC
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- CNBC
The Fed keeps borrowing costs high, despite Trump's push for cuts—here's why
As was widely expected, the Federal Reserve is holding interest rates steady, despite pressure from President Donald Trump to cut them. Following a Federal Open Market Committee meeting Wednesday, the central bank announced that its benchmark interest rate will remain at a range of 4.25% to 4.5%. That means borrowing costs for credit cards, loans and auto financing will likely stay elevated until at least mid-September, when the FOMC meets again. The Fed has kept interest rates near their highest levels in more than two decades over the past two years to curb inflation. Higher rates are meant to rein in spending and help bring inflation under control. But with inflation creeping up last month to a year-over-year rate of 2.7% — above the Fed's 2% target — the central bank is holding rates steady, in line with Chair Jerome Powell's June pledge to "wait and learn more" about the impact of tariffs before making any policy changes. In a challenge to the Fed's independence, Trump has spent months pressuring the central bank to lower rates. In July, he called for a cut of at least three percentage points, arguing that high borrowing costs are squeezing households and driving up the government's interest expenses. Although the president has backed off his threat to fire Powell, he continues to criticize the central bank's stance. Trump posted on Truth Social Wednesday morning, saying, "MUST NOW LOWER THE RATE. No Inflation!" White House officials have also taken aim at the Fed's $2.5 billion headquarters renovation project, citing it as a sign of fiscal mismanagement. Powell previously said that he had no intention of resigning and would not if asked. A Fed spokesperson recently told Reuters that Powell intends to serve out his full term through May 2026. While inflation remains a concern, the economy has continued to show strength, giving the Fed reason to keep rates steady, according to economists. U.S. gross domestic product — the broadest measure of economic output — expanded at a 3% annualized pace in the second quarter, according to the latest estimate from the Bureau of Economic Analysis released Wednesday. The labor market remains solid despite some signs of weakening, with the unemployment rate still near historic lows, per Federal Reserve data. Consumer spending is also holding up, a sign that demand remains resilient despite elevated borrowing costs, according to Commerce Department retail data. "Simply put, this Fed is very data dependent and the data simply doesn't warrant a rate cut," says Robert Johnson, professor of finance at Creighton University's Heider College of Business. "Trump has said the economy is doing well — and I agree — but that is not a compelling argument for a rate cut. Rate cuts are generally appropriate when an economy is languishing and needs jumpstarting," he says. "The Fed is concerned that a rate cut could serve to accelerate inflation." While a rate cut might not be needed now, investors still expect one later this year, with markets pricing in a roughly 60% chance of a 25-basis-point cut in September, as of Wednesday morning, according to CME's FedWatch tool. That expectation hinges in part on economic uncertainty tied to tariffs, which could push prices higher, curb consumer spending and ultimately slow growth enough to justify a cut. "The idea of a September rate cut is very much on the table," says Greg McBride, chief financial analyst at Bankrate. "But if the labor market hangs tough and we see evidence of tariffs influencing inflation, then September is going to come off the board."
San Francisco Chronicle
a few seconds ago
- San Francisco Chronicle
Senate committee advances Trump nominee to lead cybersecurity agency that protects election systems
NEW YORK (AP) — A U.S. Senate committee voted Wednesday to advance President Donald Trump's pick to lead the agency that secures the nation's critical infrastructure, including election systems. Members of the Senate Homeland Security and Governmental Affairs Committee voted 9-6 to recommend Sean Plankey 's nomination for director of the Cybersecurity and Infrastructure Security Agency, known as CISA, which sits under the Department of Homeland Security. The agency has been dealing with workforce and funding cuts, as well as criticism from Republicans over some of its election-related activities. Plankey, who retired from the U.S. Coast Guard in 2023, worked in the first Trump administration as a director for cyber policy at the National Security Council and then as a principal deputy assistant secretary at the U.S. Department of Energy. If confirmed by the Republican-controlled Senate, he will inherit an agency that has been mired in partisan tensions over the role it should play in combating false claims about voting or election fraud. Those claims have led to a lack of trust among Republicans in election workers and voting machines since Trump started lying about widespread fraud leading to his loss in the 2020 election. A majority of Republicans still believe that Democrat Joe Biden was not legitimately elected president in 2020. CISA is tasked with protecting the nation's critical infrastructure, from dams and power plants to banks and voting systems. It has received praise from state election officials of both parties for its work protecting those systems. But it also has been sharply criticized by Republicans who claim its efforts to counter misinformation about elections and the COVID-19 pandemic veered into censorship. During her Senate hearing in January to be homeland security secretary, Kristi Noem said the agency had strayed 'far off mission.' CISA officials have said they were never engaged in censorship and only worked with states in 2020 to help them notify social media companies about misinformation spreading on their platforms. They said the agency did not instruct or try to coerce those companies to act. CISA worked with other federal agencies in 2024 to alert the public to various foreign misinformation campaigns related to the election. During his July 24 confirmation hearing, Plankey faced some pointed questions about election security. When Sen. Richard Blumenthal, D-Conn., asked him if the 2020 election was rigged and stolen, Plankey did not answer directly. Instead, he said he had not reviewed that election's cybersecurity and that his personal opinions were not relevant. He acknowledged that Biden's victory was confirmed by the Electoral College and that he was sworn in. Blumenthal then pressed Plankey on what he would do if Trump later pushed him to falsely claim the 2026 or 2028 elections were rigged. 'Senator, as a cybersecurity professional, these are state-run elections,' Plankey answered. 'I have not reviewed the cybersecurity posture of all 50 states. That's like a doctor who's diagnosing somebody over the television because they saw him on the news.' 'No," Blumenthal replied. "It's like a doctor who has a patient come to him and is responsible for doing the diagnosis.' The senator called Plankey's answers 'unsatisfactory' and accused him of 'undermining the confidence of the nation in the election apparatus.' Plankey also will face a challenge leading an agency that is undergoing structural changes during Trump's second term. That includes funding and workforce cuts and the pausing of election security work pending a Homeland Security review. Sen. Gary Peters, D-Mich., asked Plankey how he would ensure the agency's statutory requirements are met, given the expected multimillion-dollar budget cuts and personnel leaving the agency. The nominee said he had learned through his leadership experience to 'allow the operators to operate' and praised the cybersecurity capabilities of the agency's staff. He said he would reorganize CISA or ask for more money if needed. Plankey's advancement comes as the ranking Democrats on the House and Senate committees overseeing elections have sent multiple letters to CISA leadership requesting information about its workforce cuts and the status of its efforts to support election infrastructure. They have not received a response. Trump signed an executive order earlier this year directing the U.S. Justice Department to investigate former CISA head Chris Krebs and strip his security clearances. Krebs became a target of Trump's ire after he insisted the 2020 election was secure and that ballot counts were accurate.
San Francisco Chronicle
a few seconds ago
- San Francisco Chronicle
Federal Reserve leaves interest rates unchanged even as Trump demands cuts
WASHINGTON (AP) — The Federal Reserve left its key short-term interest rate unchanged for the fifth time this year, brushing off repeated calls from President Donald Trump for a cut. The Fed's decision Wednesday leaves its key short-term rate at about 4.3%, where it has stood after the central bank reduced it three times last year. Chair Jerome Powell has said the Fed would likely have cut rates already if not for Trump's sweeping tariffs. Powell and other Fed officials say they want to see how Trump's duties on imports will impact inflation and the broader economy. So far the duties have lifted costs of some goods, such as appliances, furniture, and toys, and overall inflation has risen a bit, though less than many economists had expected. There were some signs of splits in the Fed's ranks: Governors Christopher Waller and Michelle Bowman voted to reduce borrowing costs, while 9 officials, including Powell, favored standing pat. It is the first time in more than three decades that two of the seven Washington-based governors have dissented. One official, Governor Adriana Kugler, was absent and didn't vote. The choice to hold off on a rate cut will almost certainly result in further conflict between the Fed and White House, as Trump has repeatedly demanded that the central bank reduce borrowing costs as part of his effort to assert control over one of the few remaining independent federal agencies. THIS IS A BREAKING NEWS UPDATE. AP's earlier story follows below. WASHINGTON (AP) — Two top Federal Reserve officials could dissent from the central bank's likely decision Wednesday to hold its key interest rate steady, a sign of division at the Fed that reflects the economy's muddy outlook and possibly the jockeying to replace Chair Jerome Powell when his term ends in May 2026. Based on their public comments in the past two months, it's possible that governors Christopher Waller and Michelle Bowman could vote against leaving the short-term rate at about 4.3%. If so, it would be the first time two of the seven governors at the Fed have dissented in over three decades. The division could be a preview of what might happen after Powell steps down, if President Donald Trump appoints a replacement who pushes for the much lower interest rates the White House desires. Other Fed officials could push back if a future chair sought to cut rates by more than economic conditions would otherwise support. On Wednesday, Trump seized on a report showing the economy expanded at a 3% annual rate in the second quarter as evidence that growth is accelerating and called on Powell to cut rates. Yet the Fed typically reduces borrowing costs when the economy is faltering and threatening to send unemployment higher. The economy isn't necessarily doing as well as the 3% figure suggests. It follows a negative reading in the first three months of the year, when the economy shrank at a 0.5% annual rate. Most economists are averaging the two figures to get a growth rate of about 1.25% for the first half of the year. If that sluggishness continues, the Fed could cut rates as early as September. For now, any dissent also would likely reflect that there are at least two different ways to see the U.S. economy, which is clearly in flux. The first is the way that most Fed officials have described it: Unemployment is at a low 4.1%, while the economy is growing, albeit modestly, and inflation did tick up in June, largely because of tariffs. So, the thinking goes, why not stand pat on rates and see what happens next? If inflation continues to heat up, a rate cut could make things worse — the Fed typically raises borrowing costs to combat inflation. And as long as the economy is doing well, there is no need to cut to support growth. The other view is more worrisome: There are signs the economy is weakening, such as sluggish hiring, slower consumer spending, and pretty modest overall growth. The economy, in the first six months of the year, probably expanded at an annual rate of about 1.5%. At the same time, tariffs have lifted inflation by less than many economists had feared, so far. This is the view of the economy that Waller sketched out in a speech earlier this month. 'Private-sector payroll growth is near stall speed,' Waller said. 'We should not wait until the labor market deteriorates before we cut the policy rate.' When the Fed cuts its rate, it often — but not always — results in lower borrowing costs for mortgages, auto loans and credit cards. Some economists agree with Waller's concerns about the job market. Excluding government hiring, the economy added just 74,000 jobs in June, with most of those gains occurring in health care. 'We are in a much slower job hiring backdrop than most people appreciate,' said Tom Porcelli, chief U.S. economist at PGIM Fixed Income. Waller was appointed to the Fed's seven-member governing board by Trump during the president's first term. He has often been mentioned as a potential replacement for Powell. Waller has underscored in several speeches that he does not think Trump's tariffs will lead to persistently higher inflation. Bowman, the vice chair for regulation, was also appointed during Trump's first term. She suggested in June that the Fed should soon reduce borrowing costs. Bowman is also a possible Powell replacement, though more of a long shot. Michael Feroli, an economist at JPMorgan Chase, said in a note to clients this week if the pair were to dissent, 'it would say more about auditioning for the Fed chair appointment than about economic conditions.' The Fed's two-day meeting comes after a week of extraordinary interactions with the Trump White House, which has accused Powell of mismanaging an extensive, $2.5 billion renovation of two office buildings. Trump suggested two weeks ago that the rising cost for the project could be a 'firing offense' but has since backed off that characterization.
