‘Workers are not going to be showing up to work': The economic impact of ICE raids take shape
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Washington Post
5 minutes ago
- Washington Post
A pause on higher tariffs for China is due to expire Tuesday. Here's what to know.
TAIPEI, Taiwan — A 90-day pause on imposing higher tariffs on China is due to expire on Tuesday and it is unclear if it will be extended. After the most recent round of China-U.S. trade talks, held late last month in Stockholm, Chinese and U.S. officials said they expected the deadline to be extended for another 90 days. The U.S. side said the decision was up to President Donald Trump. So far there has been no formal announcement about whether he will endorse an extension or push ahead with the higher tariffs.
Associated Press
34 minutes ago
- Associated Press
A pause on higher tariffs for China is due to expire Tuesday. Here's what to know.
TAIPEI, Taiwan (AP) — A 90-day pause on imposing higher tariffs on China is due to expire on Tuesday and it is unclear if it will be extended. After the most recent round of China-U.S. trade talks, held late last month in Stockholm, Chinese and U.S. officials said they expected the deadline to be extended for another 90 days. The U.S. side said the decision was up to President Donald Trump. So far there has been no formal announcement about whether he will endorse an extension or push ahead with the higher tariffs. The uncertainty has left businesses in limbo and a decision to raise the import duties could jolt world markets. SILENCE FROM WASHINGTON AND BEIJING Trump has repeatedly shifted deadlines and tariff rates, and neither side has indicated what it plans for Tuesday. Extending the Aug. 12 deadline for reaching a trade agreement with China would forestall earlier threats of tariffs of up to 245%. Treasury Secretary Scott Bessent said Trump was deciding about another 90-day delay to allow time to work out details of an agreement setting tariffs on most products at 50%, including extra import duties related to illicit trade in the powerful opiate fentanyl. Higher tariffs are aimed at offsetting the huge, chronic U.S. trade deficit with China, which hit a 21-year low in July as the threat of tariffs bit into Chinese exports. It's not unusual for the U.S. to give hints on where talks stand, but it's rare for China to make announcements until major decisions are set. CHINA RESISTED CUTTING AN EARLY BARGAIN Prohibitively high tariffs on Chinese exports to the United States would put huge pressure on Beijing at a time when the Chinese economy, the world's second largest, is still recovering from a prolonged downturn in its property market. Lingering effects of the COVID-19 pandemic have left around 200 million of its workers reliant on 'gig work,' crimping the job market. Higher import taxes on small parcels from China have also hurt smaller factories and layoffs have accelerated, But the U.S. relies heavily on imports from China for all sorts of products, from household goods and clothing to wind turbines, basic computer chips, electric vehicle batteries and the rare earths needed to make them. That gives Beijing some powerful leverage in the negotiations with Washington. Even with higher tariffs, China remains competitive for many products. And its leaders are aware that the U.S. economy is only just beginning to feel the effects of higher prices from Trump's broad tariff hikes. For now, imports from China are subject to a 10% baseline tariff and a 20% extra tariff related to the fentanyl issue. Some products are taxed at higher rates. U.S. exports to China are subject to tariffs of around 30%. Before the two sides called a truce, Trump had threatened to impose 245% import duties on Chinese goods. China retaliated by saying it would hike its tariff on U.S. products to 125%. MUCH IS AT STAKE A trade war between the world's two largest economies has ramifications across the global economy, affecting industrial supply chains, demand for commodities like copper and oil and geopolitical issues such as the war in Ukraine. After a phone call with Chinese leader Xi Jinping in June, Trump said he hoped to meet with Xi later this year. That's an incentive for striking a deal with Beijing. If the two sides fail to keep their truce, trade tensions could escalate and tariffs might rise to even higher levels, inflicting still more pain on both economies and rattling world markets. Businesses would refrain from making investment commitments and hiring, while inflation would surge higher. Companies are in an 'extended wait-and-see mode,' Oxford Economics said in a recent report.
Chicago Tribune
34 minutes ago
- Chicago Tribune
Jim Nowlan: Our politics focus on what to do ‘for' voters. That threatens the economy.
'Ask me how much I love my grandkids' begs a bumper sticker. Maybe not so much. Federal government debt, which the grandkids will have to support, now amounts to at least $275,000 per household, headed to a projected $380,000 in 10 years, according to the Congressional Budget Office. The problem lies in a powerful, fundamental principle of politics: Politicians like to do things for the voters (as in new spending), but not to them (as in new taxes to pay for the outlays). The tax package in the 'big beautiful bill' is a prime example. When government revenue lost by tax cuts is not equaled by reductions in government spending, the default action is simply to 'pay' for the difference with increased debt. In his magisterial 'The Rise and Fall of the Great Powers,' Yale University historian Paul Kennedy warned that runaway debt could threaten the stability of our nation's financial system. He cited a doubling of the U.S. debt between 1980 and 1985, from $900 billion to $1.8 trillion. In today's dollars, that latter figure would represent about $5.5 trillion. At present, the federal debt is $36 trillion, according to the Federal Reserve Bank of St. Louis. Oft-quoted economist Mark Zandi seems to reflect his profession in observing that the amount of debt American governments hold isn't so much the problem; however, paying the nearly $1 trillion in interest on the debt each year crowds out what could be equivalent spending today for people programs and defense. But, the economists add quickly, we should indeed worry about the lack of discipline by policymakers who keep larding on more debt. China and other foreign governments hold most of our debt. Having no love lost for Donald Trump, holders of our debt could decide to hold less of it, or to demand higher interest rates for the increased risk. Not good. Or, we could go the way of Argentina, where runaway inflation since World War II has prevented that resource-rich, well-educated nation from coming close to its potential. As we have read, the recent tax and spending bill is projected by the Congressional Budget Office to increase debt by $3 trillion. I project it will be much greater than that, because of two other principles, or tricks. Old Trick 1: Put the goodies up front and then sunset them long before the 10-year time frame used for projecting consequences of the bill. For example, 'big beautiful' grants some tax breaks this year that expire soon, to wit: The new deduction for seniors; the expanded deduction from federal tax liability for state and local taxes paid, and the tips, overtime and interest deductions all expire in three or four years. But, Trick 2: Once a tax break is granted, it is never (certainly, rarely) taken back, as that would be doing something to those affected. Congressional budget analysts must, however, make projections about future debt according to the bill as written, as if these costly goodies will actually expire on schedule. Sure, right. About the time of the worldwide depression of the 1930s, English economist John Maynard Keynes established a sensible principle: During good economic times, governments should run budget surpluses, which could later be applied to stimulate demand during bad times, smoothing out the peaks and valleys. The U.S. has a strong economy at present, yet we still run huge deficits, perverting the Keynes principle. What will we do when times turn tough? Runaway debt, maybe? If we keep overspending relative to tax revenue, that is, putting more dollars into the economy than are represented by increased goods and services, each dollar will ultimately be reduced in value. This is the definition of inflation. In the worst instance, this could lead to Argentine-like dysfunction and decline in wealth. The simple solution is political courage. Impose discipline and pain where necessary to stop the flight to debt. Courage is costly. The best governors of my Illinois have been one-term governors: Thomas Ford in the 1840s, who paid Eastern creditors for foolish state expenditures, rather than default on huge debts to them and ruin the state's credit rating; John Peter Altgeld in the 1890s, who pardoned radicals who had been unjustly imprisoned; and Richard Ogilvie (1969-72), who imposed an income tax on voters to meet a fiscal crisis. Most voters will never understand this matter of government debt. So, elected officials have to bear the burden of their decisions. How much do our politicians love their grandkids?
