Yale University report: US tariff rate highest in 92 years
The Budget Lab, a policy research center, calculated the effects of all the tariffs implemented this year through Wednesday. That's before Trump signed the executive orders the following day.
It says US consumers are paying an overall average effective tariff rate of 18.4 percent -- up sharply from 2.4 percent before President Trump's inauguration for his second term in January.
The lab says the short-term inflation rate has risen by 1.8 percent due to the tariff measures. That's equivalent to an average income loss of about 2,400 dollars per household this year.
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Japan Times
2 hours ago
- Japan Times
The AI race has Big Tech spending $344 billion this year
If there's any lesson to take from the spending plans issued by the world's largest technology companies over the past two weeks, it's to never underestimate the fear of missing out. Microsoft, which set a $24.2 billion capital spending record last quarter, plans to drop upward of $30 billion in the current period. similarly spent $31.4 billion last quarter, almost double what it dropped a year ago, and is maintaining that level of investment. Google owner Alphabet raised its capital expenditures guidance this year to $85 billion. Then there's Meta Platforms: The social networking giant lifted the low end of its forecast for 2025 capital expenditures and projected that costs will continue to grow at an even faster pace next year. Altogether, the four companies are expected to spend more than $344 billion for the year, with much of it going to the data centers necessary to run AI models. "We've basically tripled capex investment in cloud due to AI,' Bloomberg Intelligence analyst Mandeep Singh said. The emphasis from virtually every company executive during this earnings season was on investing as quickly as possible to get ahead. "We need the teams to execute at their very best to get the capacity in place as quickly and effectively as they can,' Microsoft Chief Financial Officer Amy Hood told analysts in a call Wednesday. Susan Li, Meta's CFO, said the goal of its own spending is to secure the advantage "in developing the best AI models.' Wall Street's response has been mixed. Meta was rewarded — in large part because the company posted a strong second-quarter sales beat and issued a rosy revenue forecast, signaling that the billions it's spending on AI are paying off. "On advertising, the strong performance this quarter is largely thanks to AI unlocking greater efficiency and gains across our ad system,' Chief Executive Officer Mark Zuckerberg said on an analyst call. Zuckerberg has plans to build several massive data centers and has been luring top AI researchers with compensation packages valued at hundreds of millions of dollars. The company recently restructured its internal AI division, now referred to as Meta Superintelligence Labs, in an effort to build human-level AI capabilities and apply that technology across its products. Shares of the company have gained more than 8% since it reported earnings on Wednesday. Amazon, on the other hand, failed to convince investors that its lavish spending has been worth it. The stock was down as much as 8.1% on Friday after the company reported tepid sales from its cloud division. The results were "especially disappointing' given the strong performance from Google's and Microsoft's own cloud services, according to Bloomberg Intelligence. Meta CEO Mark Zuckerberg speaks during an event at the company's headquarters in Menlo Park, California, in September 2023. | Reuters And the ongoing capital costs won't help. The operating margin for Amazon's cloud unit will continue to face pressure "through 2026 as capital spending ramps up,' BI analysts Poonam Goyal and Anurag Rana said. Alphabet's shares are essentially unchanged from last week when it reported earnings and issued guidance. The company raised its capital expenditures outlook by $10 billion and expects to ramp up spending even more in 2026. Chief Executive Officer Sundar Pichai explained that the investments are necessary to keep up with customer demand. "Obviously, we are seeing strong momentum across our portfolio, and especially in cloud,' Pichai told analysts in a call on July 23. "It's a tight supply environment, and we are investing more to expand.' Nikhil Lai, an analyst at Forrester, put it another way: If Google wants to keep up with rivals, he said, it has little choice but to follow suit: "Google's hand is forced by OpenAI to spend tremendously on AI's infrastructure and applications.' Microsoft tied its AI investments directly to a 39% jump in sales for its Azure cloud-computing division, which came in ahead of analysts' estimates. "We continue to lead the AI infrastructure wave and took share every quarter this year,' Chief Executive Officer Satya Nadella said in a call with analysts on Wednesday. "In Microsoft's case, the returns are good,' Gil Luria, an analyst with DA Davidson & Co., said in an interview. The only question now is whether Microsoft's customers are in turn seeing a decent return on investment, he said. "That's where the test will be,' he said. "If they don't, they're not going to increase that spend next year.' Apple's capital plans pale in comparison to its Big Tech peers. But the iPhone-maker did raise its spending estimates, tying much of the increase to AI efforts. Apple's property, plant and equipment investments totaled $9.47 billion in the nine months ended June 28, up nearly 45% from a year ago. "You are going to continue to see our capex grow,' Chief Financial Officer Kevan Parekh told analysts on Thursday. "It's not going to be exponential growth, but it is going to grow, substantially. And a lot of that's a function of the investments we're making in AI.'
The Mainichi
3 hours ago
- The Mainichi
Trump injects a new dose of uncertainty in tariffs as he pushes start date back to Aug. 7
WASHINGTON (AP) -- For weeks, President Donald Trump was promising the world economy would change on Friday with his new tariffs in place. It was an ironclad deadline, administration officials assured the public. But when Trump signed the order Thursday night imposing new tariffs, the start date of the punishing import taxes was pushed back seven days so the tariff schedule could be updated. The change in tariffs on 66 countries, the European Union, Taiwan and the Falkland Islands was potentially welcome news to countries that had not yet reached a deal with the U.S. It also injected a new dose of uncertainty for consumers and businesses still wondering what's going to happen and when. Trump told NBC News in a Thursday night interview the tariffs process was going "very well, very smooth." But even as the Republican president insisted these new rates would stay in place, he added: "It doesn't mean that somebody doesn't come along in four weeks and say we can make some kind of a deal." Trump has promised that his tax increases on the nearly $3 trillion in goods imported to the United States will usher in newfound wealth, launch a cavalcade of new factory jobs, reduce the budget deficits and, simply, get other countries to treat America with more respect. The vast tariffs risk jeopardizing America's global standing as allies feel forced into unfriendly deals. As taxes on the raw materials used by U.S. factories and basic goods, the tariffs also threaten to create new inflationary pressures and hamper economic growth -- concerns the Trump White House has dismissed. Questions swirl around the tariffs despite Trump's eagerness As the clock ticked toward Trump's self-imposed deadline, few things seemed to be settled other than the president's determination to levy the taxes he has talked about for decades. The very legality of the tariffs remains an open question as a U.S. appeals court on Thursday heard arguments on whether Trump had exceeded his authority by declaring an "emergency" under a 1977 law to charge the tariffs, allowing him to avoid congressional approval. Trump was ebullient as much of the world awaited what he would do. "Tariffs are making America GREAT & RICH Again," he said Thursday morning on Truth Social. Others saw a policy carelessly constructed by the U.S. president, one that could impose harms gradually over time that would erode America's power and prosperity. "The only things we'll know for sure on Friday morning are that growth-sapping U.S. import taxes will be historically high and complex, and that, because these deals are so vague and unfinished, policy uncertainty will remain very elevated," said Scott Lincicome, a vice president of economics at the Cato Institute. "The rest is very much TBD." The new tariffs build off ones announced in the spring Trump initially imposed the Friday deadline after his previous "Liberation Day" tariffs in April resulted in a stock market panic. His unusually high tariff rates announced then led to recession fears, prompting Trump to impose a 90-day negotiating period. When he was unable to create enough trade deals with other countries, he extended the timeline and sent out letters to world leaders that simply listed rates, prompting a slew of hasty agreements. Swiss imports will now be taxed at a higher rate, 39%, than the 31% Trump threatened in April, while Liechtenstein saw its rate slashed from 37% to 15%. Countries not listed in the Thursday night order would be charged a baseline 10% tariff. Trump negotiated trade frameworks over the past few weeks with the EU, Japan, South Korea, Indonesia and the Philippines -- allowing the president to claim victories as other nations sought to limit his threat of charging even higher tariff rates. He said Thursday there were agreements with other countries, but he declined to name them. Asked on Friday if countries were happy with the rates set by Trump, U.S. Trade Representative Jamieson Greer said: "A lot of them are." Thursday began with a palpable sense of tension The EU was awaiting a written agreement on its 15% tariff deal. Switzerland and Norway were among the dozens of countries that did not know what their tariff rate would be, while Trump agreed after a Thursday morning phone call to keep Mexico's tariffs at 25% for a 90-day negotiating period. The president separately on Thursday amended an order to raise certain tariffs on Canada to 35%. European leaders face blowback for seeming to cave to Trump, even as they insist that this is merely the start of talks and stress the importance of maintaining America's support of Ukraine's fight against Russia. Canadian Prime Minister Mark Carney has already indicated that his country can no longer rely on the U.S. as an ally, and Trump declined to talk to him on Thursday. India, with its 25% tariff announced Wednesday by Trump, may no longer benefit as much from efforts to pivot manufacturing out of China. While the Trump administration has sought to challenge China's manufacturing dominance, it is separately in extended trade talks with that country, which faces a 30% tariff and is charging a 10% retaliatory rate on the U.S. Major companies came into the week warning that tariffs would begin to squeeze them financially. Ford Motor Co. said it anticipated a net $2 billion hit to earnings this year from tariffs. French skincare company Yon-Ka is warning of job freezes, scaled-back investment and rising prices. It's unclear whether Trump's new tariffs will survive a legal challenge Federal judges sounded skeptical Thursday about Trump's use of a 1977 law to declare the long-standing U.S. trade deficit a national emergency that justifies tariffs on almost every country. "You're asking for an unbounded authority," Judge Todd Hughes of the U.S. Court of Appeals for the Federal Circuit told a Justice Department lawyer representing the administration. The judges didn't immediately rule, and the case is expected to reach the Supreme Court eventually. The Trump White House has pointed to the increase in federal revenues as a sign that the tariffs will reduce the budget deficit, with $127 billion in customs and duties collected so far this year -- about $70 billion more than last year. New tariffs threaten to raise inflation rates There are not yet signs that tariffs will lead to more domestic manufacturing jobs, and Friday's employment report showed the U.S. economy now has 37,000 fewer manufacturing jobs than it did in April. On Thursday, one crucial measure of inflation, known as the Personal Consumption Expenditures index, showed that prices have climbed 2.6% over the 12 months that ended in June, a sign that inflation may be accelerating as the tariffs flow through the economy. The prospect of higher inflation from the tariffs has caused the Federal Reserve to hold off on additional cuts to its benchmark rates, a point of frustration for Trump, who on Truth Social, called Fed Chair Jerome Powell a "TOTAL LOSER." But before Trump's tariffs, Powell seemed to suggest that the tariffs had put the U.S. economy and much of the world into a state of unknowns. "There are many uncertainties left to resolve," Powell told reporters Wednesday. "So, yes, we are learning more and more. It doesn't feel like we're very close to the end of that process. And that's not for us to judge, but it does -- it feels like there's much more to come."
Japan Times
4 hours ago
- Japan Times
Europe is breaking its reliance on American science
European governments are taking steps to break their dependence on critical scientific data the United States historically made freely available to the world, and are ramping up their own data collection systems to monitor climate change and weather extremes. The effort marks the most concrete response from the European Union and other European governments so far to the U.S. government's retreat from scientific research under the administration of President Donald Trump. Since his return to the White House, Trump has initiated sweeping budget cuts to the National Oceanic Atmospheric Administration, the National Institutes of Health, the Environmental Protection Agency, the Centers for Disease Control and other agencies, dismantling programs conducting climate, weather, geospatial and health research, and taking some public databases offline. As those cuts take effect, European officials have expressed increasing alarm that — without continued access to U.S.-supported weather and climate data — governments and businesses will face challenges in planning for extreme weather events and long-term infrastructure investment. In March, more than a dozen European countries urged the European Commission to move fast to recruit American scientists who lose their jobs to those cuts. Asked for comment on NOAA cuts and the EU's moves to expand its own collection of scientific data, the White House Office of Management and Budget (OMB) said Trump's proposed cuts to the agency's 2026 budget were aimed at programs that spread "fake Green New Scam 'science,'" a reference to climate change research and policy. "Under President Trump's leadership, the U.S. is funding real science again,' Rachel Cauley, an OMB spokesperson, said via email. European officials said that — beyond the risk of losing access to data that is bedrock to the world's understanding of climate change and marine systems — they were concerned by the general U.S. pullback from research. "The current situation is much worse than we could have expected," said Sweden's State Secretary for Education and Research Maria Nilsson. "My reaction is, quite frankly, shock." The Danish Meteorological Institute described the U.S. government data as "absolutely vital" — and said it relied on several data sets to measure including sea ice in the Arctic and sea surface temperatures. "This isn't just a technical issue, reliable data underpins extreme weather warnings, climate projections, protecting communities and ultimately saves lives," said Adrian Lema, director of the DMI's National Center for Climate Research. Officials from eight European countries, who said their governments were undertaking reviews of their reliance on U.S. marine, climate and weather data, were interviewed. Officials from seven countries — Denmark, Finland, Germany, Netherlands, Norway, Spain and Sweden — described joint efforts now in the early stages to safeguard key health and climate data and research programs. Leaning on the U.S. As a priority, the EU is expanding its access to ocean observation data, a senior European Commission official said. Those data sets are seen as critical to the shipping and energy industries as well as early storm warning systems. Over the next two years, the senior official said, the EU plans to expand its own European Marine Observation and Data Network which collects and hosts data on shipping routes, seabed habitats, marine litter and other concerns. The initiative was aimed at "mirroring and possibly replacing U.S.-based services," the senior European Commission official said. Europe is particularly concerned about its vulnerability to U.S. funding cuts to NOAA's research arm that would affect the Global Ocean Observing System, a network of ocean observation programs that supports navigation services, shipping routes and storm forecasting, a second EU official said. The National Oceanic and Atmospheric Administration's National Hurricane Center in Miami earlier this year. About 800 of NOAA's 12,000-strong workers have been terminated or taken financial incentives to resign as part of Trump's Department of Government Efficiency cuts. | Reuters The insurance industry relies on the Global Ocean Observing System's disaster records for risk modelling. Coastal planners use shoreline, sea-level, and hazard data to guide infrastructure investments. The energy industry uses oceanic and seismic datasets to assess offshore drilling or wind farm viability. In addition, the senior EU Commission official said, the EU is considering increasing its funding of the Argo program, a part of the Global Ocean Observing System which operates a global system of floats to monitor the world's oceans and track global warming, extreme weather events and sea-level rise. NOAA last year described the program, in operation for over 25 years, as the "crown jewel" of ocean science. It makes its data freely available to the oil and gas industry, marine tourism and other industries. The United States funds 57% of Argo's $40 million annual operating expenses, while the EU funds 23%. The White House and NOAA did not respond to questions about future support for that program. The European moves to establish independent data collection and play a bigger role in Argo represent a historic break with decades of U.S. leadership in ocean science, said Craig McLean, who retired in 2022 after four decades at the agency. He said U.S. leadership of weather, climate and marine data collection was unmatched, and that through NOAA, the U.S. has paid for more than half of the world's ocean measurements. European scientists acknowledge the outsize role the U.S. government has played in global scientific research and data collection — and that European countries have grown overly dependent on that work. "It's a bit like defense: we rely heavily on the U.S. in that area, too. They're trailblazers and role models — but that also makes us dependent on them," said Katrin Boehning-Gaese, scientific director of Germany's Helmholtz Centre for Environmental Research. 'Guerilla Archivists' A number of European governments are now taking measures to reduce that dependence. Nordic countries met to coordinate data storage efforts in the spring, said Norwegian Minister of Research and Higher Education Sigrun Aasland. European science ministers also discussed the U.S. science budget cuts at a meeting in Paris in May. Aasland said Norway was setting aside $2 million to back up and store U.S. data to ensure stable access. The Danish Meteorological Institute in February started downloading historical U.S. climate data in case it is deleted by the U.S. It is also preparing to switch from American observations to alternatives, Christina Egelund, minister of higher education and science of Denmark, said in an interview. "The potentially critical issue is when new observations data stop coming in," the Institute's Lema said. While weather models could continue to operate without U.S. data, he said the quality would suffer. Meanwhile, the German government has commissioned scientific organizations, including the center, to review its reliance on U.S. databases. Since Trump returned to the White House, scientists and citizens worldwide have been downloading U.S. databases related to climate, public health or the environment that are slated for decommissioning — calling it "guerrilla archiving." "We actually received requests — or let's say emergency calls — from our colleagues in the U.S., who said, 'We have a problem here... and we will have to abandon some datasets,' said Frank Oliver Gloeckner, head of the digital archive Pangaea, which is operated by publicly funded German research institutions. About 800 of NOAA's 12,000-strong workers have been terminated or taken financial incentives to resign as part of Trump's Department of Government Efficiency cuts. The White House 2026 budget plan seeks to shrink NOAA even further, proposing a $1.8 billion cut, or 27% of the agency's budget, and a near-20% reduction in staffing, bringing down the NOAA workforce to 10,000. The budget proposal would eliminate the Office of Oceanic and Atmospheric Research, NOAA's main research arm, which is responsible for ocean observatory systems including Argo, coastal observing networks, satellite sensors and climate model labs. It is also reducing its data products. Between April and June, NOAA announced on its website the decommissioning of 20 datasets or products related to earthquakes and marine science. NOAA did not respond to requests for comment. Gloeckner said there were no legal hurdles to storing the U.S. government data as it was already in the public domain. But without significant funds and infrastructure, there are limits to what private scientists can save, said Denice Ross, a senior fellow at the Federation of American Scientists, a nonprofit science policy group and the U.S. government's chief data officer during the administration of President Joe Biden. Databases need regular updating — which requires the funding and infrastructure that only governments can provide, Ross said. Over the last few months, the federation and EU officials have held a series of talks with European researchers, U.S. philanthropies and health and environment advocacy groups to discuss how to prioritize what data to save. "There is an opportunity for other nations and institutions and philanthropies to fill in the gaps if U.S. quality starts to falter," she said.
