Illinois lawmakers again fail to act on hemp, while a new study highlights growing health concerns
A new report on hemp-derived THC highlights growing concerns over its safety, legality and impact on health — even as Illinois lawmakers have failed again to keep the products away from children.
The report by the University of Illinois System Institute of Government and Public Affairs notes that the lack of regulation of hemp means there is no state oversight of ingredients, potency or marketing to kids.
The report cites studies showing many hemp products had different amounts of THC than labeled, while some were well above the package limits for licensed cannabis products, and contained toxic solvents left over from processing.
Some products also mimicked popular candy or snack packaging that could appeal to kids. Several incidents have occurred in the Chicago area of school-age children going to hospitals after ingesting hemp products.
But as in previous years, state lawmakers failed to take any significant action on hemp in its latest session, which ended Saturday.
Hemp is caught in a Catch-22 repeating cycle of inaction. The 2018 federal Farm Bill legalized hemp, defined as cannabis plants that have less than 0.3% by weight of Delta-9 THC, the primary component of the plant that gets users high. Although the Farm Bill allowed production of non-intoxicating hemp derivatives such as CBD, it also inadvertantly set off an explosion of intoxicating products now available across the nation at smoke shops and gas stations.
Hemp processors found ways to use chemical solvents or other methods to produce variants such as Delta-8, Delta-10, and THCO, which can get users high like marijuana. And with little enforcement, many hemp products contain Delta-9 THC anyway. The federal law also set no age restriction for hemp products.
While cannabis, which is the same plant but with high levels of Delta-9, remains federally illegal, it's legal for recreational use in Illinois and 23 other states. But getting a business license is extremely difficult and expensive, and regulations make it much more expensive to open and run a cannabis business than a hemp shop.
As a result, hemp shops have proliferated, while many who hold cannabis business licenses have failed to get up and running. Cannabis industry leaders want to shut down their competition, saying unlicensed hemp undercuts those who went through arduous cannabis licensing.
Hemp business owners say they want to be regulated instead. Proposed hemp legislation set guidelines that would have been similar to those on cannabis businesses: sales only to those 21 and over, and testing and labeling of products for potency and contaminants, but without the expensive licensing.
The chief proponent of allowing hemp businesses to operate with further regulations in Springfield, Rep. La Shawn Ford, said lawmakers could not reach agreement over whether to ban or regulate hemp. But since the spring legislative session ended, Ford has had joint meetings with cannabis and hemp operators in an attempt to reach some compromise.
With the lack of licensing and taxation for hemp, and continued problems for cannabis, the state is losing out on millions in potential tax revenue, Ford said. 'It's always been industry against industry, so now everyone has made a commitment to work together to regulate hemp and make some improvements to cannabis,' he said.
At least 14 states have made intoxicating hemp products illegal, and numerous municipalities in Illinois have done so.
Despite Gov. JB Pritzker calling last year for hemp restrictions, state lawmakers have been stuck between the two sides, unable to reach a consensus, and as a result have done nothing. Both cannabis and hemp businesses have made significant campaign contributions to legislators.
Rachel Berry, president of the Illinois Hemp Growers Association, said the lack of legislation allows business to continue as usual, but again misses an opportunity for 'common-sense' regulation.
'It seems like there's been a lack of leadership amongst lawmakers to get this issue taken care of,' she said. 'This is something that the community has been asking for for years.'
She also took issue with the hemp study's characterization of intoxicating hemp as a 'loophole' in the law. She noted that federal law explicitly allows for 'all derivatives, extracts, cannabinoids, isomers, acids, salts, and salts of isomers' from hemp, which opened the door to Delta-8 and other intoxicating products.
From the other side of the issue, the Cannabis Business Association of Illinois argues that intoxicating hemp products are flooding the market, undercutting licensed operators, evading health and safety regulations, and generating minimal state revenue because they aren't taxed at the high rate applied to licensed cannabis.
'Hemp and cannabis come from the same plant,' association Executive Director Tiffany Chappell Ingram said. 'Both products can get users high. It's time Illinois regulate intoxicating hemp in a manner similar to cannabis.'
The National Poison Center reported about 5,000 cases of Delta-8, Delta-10 or THC-O acetate accidental or abusive ingestion, representing an 89% increase from 2021 to 2022. A 2022 national survey found that 10% of Illinois youths age 12 to 17 had used a hemp product in the past year.
The University of Illinois hemp study concluded that producers would likely find new ways to get around a ban on intoxicating hemp products, which could merely drive customers online. Instead, requiring limits on hemp packaging amounts, and testing hemp products for potency, accuracy in labeling, and contaminants 'could best serve the public interest.'
Tomasz Gliszewski, founder of Chicago Cannabis Co., which sells hemp products, has grown to three stores on the city's North Side since 2018, said lawmakers should approve a 21 and older age limit for hemp, with a 3% sales tax. Responsible hemp store operators already restrict sales to adults, he said, and sell tested products.
His stores are described as 'Your neighborhood weed shop.' The company offers joints, vapes and edibles with THC or CBD, available by online ordering and same-day home delivery via DoorDash — something state-licensed cannabis companies can't do.
'It's been rough not having clarity,' Gliszewski said. 'Instead of trying to ban this stuff, they should pass common-sense legislation.'
More companies are moving into the hemp business. Even Edible Brands, the parent company that makes Edible Arrangements fruit bouquets, has entered the market, with hemp-derived THC-infused products at edibles.com.
Meanwhile, lawmakers took no major action to help struggling state-licensed cannabis businesses and their customers. A bill that would have expanded medical marijuana to all dispensaries, lowered licensing fees and allowed curbside pickup and drive-thru windows died again in Springfield this session.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Motor 1
an hour ago
- Motor 1
Ram Just Proved America Can't Quit the V-8
Ram CEO Tim Kuniskis said the brand "screwed up" by dropping the Hemi V-8 for the 1500 pickup, so now it's making a much-heralded return . It turns out that even as we head towards an electric—or at least an electrified future—eight cylinders, grouped in fours, and spaced 90 degrees apart, aren't going anywhere. It's not just Ram. Last week, General Motors announced an $888 million investment in its Tonawanda, New York, plant to prep for an upcoming sixth-generation small-block V-8. Mercedes is developing a new V-8 , too, which it plans to offer across its entire lineup. BMW's R&D boss recently said it's keeping V-8s for the foreseeable future , specifically because of the American and Middle East markets. Porsche has also committed to building V-8s into the 2030s. Especially here in America, we can't quit the V-8. Photo by: Ram Kuniskis's statements are illuminating. "Ram will continue to offer the more powerful and more efficient Hurricane Straight-Six Turbo, but we heard loud and clear from consumers: there is no replacement for the iconic Hemi V-8. At the end of each month, we count sales to customers, not statisticians or ideologues. Data be damned—we raise our flag and let the Hemi ring free again." It tracks with the image that marketers inside Ram and its cousin Dodge have meticulously crafted over the past few years: draped in the flag, and representing everything that is good and right about America, from apple pie to burnouts. In reality, this decision was made for the most American of reasons, the bottom line, at a time when Ram's sales have been tanking for a while now. 'We heard loud and clear from consumers: there is no replacement for the iconic Hemi V-8.' That, however, may have had less to do with the demise of the 5.7-liter Hemi for one model year and more to do with Ram prices skyrocketing for years . It is highly unclear whether the revival of the Hemi will drive prices down or boost sales even if prices stay high, but at least the narrative has shifted: the V-8 is back, as is America. The V-8 is not an exclusively American invention, but there is no engine configuration more closely linked to our car industry. Ford's flathead V-8 arrived in 1932, and after getting through some early teething troubles, it started the eight-cylinder revolution here in America . Eight-cylinder engines were once the exclusive domain of luxury and performance cars; the flathead made the V-8 almost a default engine layout here. A Ford flathead V-8 Photo by: Wikimedia Commons / Michael Barera There's a fundamental rightness that applies to the flathead, and all V-8s that followed to this day. A V-8 is no bigger in length than an inline-four, and shorter than an inline-six. With a 90-degree bank angle, a V-8 is not too much wider than most inline engines, either. But despite its compact dimensions, the V-8 is powerful, owing to its large cylinder count. And thanks to Cadillac's invention of the 180-degree, "cross-plane" crankshaft in the 1920s, the V-8 has perfectly balanced primary and secondary forces. So, compact, power dense, smooth running, and thanks to Ford's manufacturing dominance, cheap and plentiful. In America, where fuel economy and emissions only became heavily regulated and of bigger importance to consumers in the 1970s, it's no wonder that the V-8 was popular. Especially earlier, in the post-war boom time, when people had money, gas was cheap, and that brown haze hanging low over LA? Don't worry about it. The Clean Air Act and the 1973 fuel crisis definitely diminished the V-8's popularity, but it still had its place in large cars and trucks. Europe jumped on the bandwagon, too, with notable V-8s from Rover, Mercedes-Benz, and others for luxury cars, especially since the US was typically the largest export market for these cars. Japan only started making V-8s in big numbers in the 1980s and 1990s for luxury cars and trucks, though it is now retreating from this engine type; meanwhile, Korea has never been a big V-8 producer. (China skipped over this entirely to focus on groundbreaking electric power and fast-charging performance, but presumably, the minds at Stellantis have a plan to deal with this as well—we just have not seen it yet.) In the era of downsizing and electrification, a lot of automakers have tried to move away from V-8s to varying degrees, and to varying degrees of success. Ford was the first to make a big push with its EcoBoost twin-turbo V-6s, and while they've proven popular in the F-150, Ford has continued to offer a V-8 in the truck. GM brought out a 2.7-liter turbo-four as a base engine in the Silverado 1500, though its model mix leans heavily on V-8s and a diesel straight-six. Ram probably took the biggest step of all. For the 2025 1500 , it dropped the V-8 entirely in favor of a newly developed 3.0-liter twin-turbo straight-six. The "Hurricane" was (and is) offered in two power outputs as an upgrade to the base Pentastar V-6. If Kuniskis' statements are anything to go by, the I-6 didn't get the reception Ram was hoping for. Otherwise, it wouldn't have gone through the trouble of upping 5.7 V-8 production and adapting this old engine to work with the truck's new electronic architecture, which wasn't exactly the work of a moment. While the turbo inline-six is, as Ram points out, more powerful and more efficient, it's not necessarily the better truck engine. We haven't heard any horror stories about the Hurricane, but in a truck, where customers often put strain on the engine with towing and payload, they don't with regular cars, simplicity is a virtue. A turbo 'six might hit the numbers—and inherently, a turbo straight-six is a great thing, as BMW proves—but here with two turbochargers, the associated plumbing, and intercoolers, it is a more complex thing. Hell, compared to the Hemi V-8, the Hurricane I-6 has space-age complexities as multiple overhead camshafts. And while the standard-output Hurricane inline-six offers a 15-horsepower and 49-pound-feet bump over the Hemi V-8, the customer gets no great benefit in fuel economy for having two fewer cylinders. You get 21 MPG combined in the I-6 vs 20 MPG for the V-8. And somehow, their tailpipe emissions are almost identical, with 433 vs 443 grams of CO2 per mile, respectively. Photo by: Ram However, there is something very culture-war about all this. The 1500 Hemi gets a new badge with a Ram's head on the front of a V-8, which Ram calls the "Symbol of Protest Badge." A protest against… what exactly? Ram's press release leaves this to your imagination. But it's not like the current presidential administration is pushing for more fuel-efficient, lower-emission vehicles right now. In fact, it's doing very much the opposite. The Hemi may have its virtues, but its return is colored with corporate pandering to the aggrieved, which is as savvy as it is cringeworthy. Stellantis is hurting big time, and this is a very easy win for them, and a good hedge against electric pickups—which even ardent EV defenders will admit aren't fully up to the task yet . Ram has an electric pickup in the pipeline, but EV trucks from Ford and GM haven't exactly caught on. Maybe Ram's upcoming range-extender EV pickup, the Ramcharger, will do well; it seems like it could be a good mix of electrification and capability, but it's early, and the company keeps delaying the truck anyhow. Still, it's embarrassing to see a large, multinational corporation make it seem like buying an expensive V-8 pickup is an act of rebellion, of sticking it to the man. But who's the man right now? Near-powerless Democrats? California? EVs, like the ones Stellantis also makes? Joe Biden? It's a strange message from the company that also makes America's best-selling plug-in hybrid . Photo by: Ram Ram is more explicit in how it's targeting customers who respond to that message. But everyone else refocusing on V-8s knows they're appealing to those who resist change, or at least aren't so open to it. And hell, those people aren't wrong to love the V-8. It is a fundamentally excellent thing. Perhaps Ram's biggest issue is that the V-8 being revived dates back to 2003 and is not something new or innovative or groundbreaking in some way, as we'll see from those other companies. Stellantis can only fall back on its old standbys for so long. The company seems to understand this—it's why it developed the new inline-six, why it's developing electrified Ram 1500s, and why the Dodge Charger went electric. But it missed the mark. So far, these haven't been game-changing, do-everything vehicles, especially not at the high prices Stellantis charges. There's a happy middle ground. Other automakers continuing V-8 development are also heavily pushing hybrids and EVs, and BMW and GM especially are seeing big success as a result. Automakers need to walk and chew gum at the same time. If the last few years have proven anything, it's that emissions and fuel economy rules won't stay lenient forever. When that changes again, and it will, Stellantis had better get ready for what's next. More on the Hemi's Comeback The Hemi V-8 Is Back: 'We Screwed Up,' Says Ram CEO Ram's 'Symbol of Protest' Badge for Hemi V-8s Is Ridiculous and Genius Get the best news, reviews, columns, and more delivered straight to your inbox, daily. back Sign up For more information, read our Privacy Policy and Terms of Use . Share this Story Facebook X LinkedIn Flipboard Reddit WhatsApp E-Mail Got a tip for us? Email: tips@ Join the conversation ( )
Axios
2 hours ago
- Axios
Exclusive: Dems press Trump admin. for response to China-backed cyberattacks
A group of Democratic lawmakers are pressing the Trump administration to clarify who is leading the government's efforts to eradicate China-backed hackers from U.S. critical infrastructure and telecom networks. Why it matters: Roughly 1,000 people have already left the nation's top cyber agency this year through voluntary buyouts and other workforce cuts. Those cuts could create dangerous weaknesses in the nation's cyber defenses, the lawmakers argue in a letter exclusively shared with Axios. Zoom in: Rep. Ritchie Torres (D-N.Y.) sent a letter today to Homeland Security Secretary Kristi Noem and Director of National Intelligence Tulsi Gabbard demanding more clarity on who is leading the response against two major China-backed cyberattacks uncovered during the Biden administration. Democratic Reps. Raja Krishnamoorthi, Kathy Castor, Ro Khanna, Haley Stevens, Shontel Brown and Jill Tokuda joined Torres as signatories. The lawmakers are also requesting Noem and Gabbard provide an update on any ongoing investigations into both the Volt Typhoon attacks on U.S. critical infrastructure and the Salt Typhoon campaign to surveil high-profile individuals' cell phones. The group is also asking for an update on how proposed budget cuts and the recent workforce reductions at CISA will impact those investigations. What they're saying: "This is not a partisan issue. It is a matter of grave consequence for the security of America both at home and abroad," the lawmakers write. "We owe it to the American people to protect them from the specter of a cyber 9/11 at the hands of our most formidable foreign adversary." Threat level: For years, top American officials have been warning about increasing cyber threats from China. China-backed Volt Typhoon has been prepositioning in critical infrastructure — such as water utilities, power plants and railways — for at least five years, according to congressional testimony. Salt Typhoon, another Chinese government-backed group, was caught hacking into several high-profile politicians' phones last year, including President Trump's. "Somewhere, Xi Jinping is smiling at America's insistence on degrading its own cyber capabilities," the lawmakers write.
Yahoo
3 hours ago
- Yahoo
Trump tariffs live updates: Trump and China's Xi Jinping speak at last, agree to more talks
President Trump and Chinese leader Xi Jinping spoke on Thursday, and both countries pledged to restart tariff and trade talks in the coming days. Trump hailed the call as "positive" on Thursday, with both leaders inviting the other to visit their respective countries. Chinese state media said Xi urged Trump to remove 'negative' trade measures on his country. Trump said he would have a team led by Treasury Secretary Scott Bessent, Commerce Secretary Howard Lutnick, and US Trade Representative Jamieson Greer shepherd the talks. The call came after weeks of Trump publicly pushing for the talk, as US-China tensions have risen in the aftermath of the countries' trade truce reached in mid-May in Geneva. Both countries have accused the other of breaching that truce while ratcheting up pressure on other issues. On Wednesday, a US auto parts group urged immediate action on one of those bubbly issues: China's tighter controls on rare earth exports. The group warned the move could soon disrupt car production. China processes over 90% of these minerals, which are used in motors and cameras, among other things. Car giants, such as General Motors (GM), Ford (F), and Toyota (TM), joined the call for help. China's rare earth curbs are seen as part of the wider trade tensions with the US. "There should no longer be any questions respecting the complexity of Rare Earth products," Trump said Thursday. Read more: What Trump's tariffs mean for the economy and your wallet Trump's call with Xi came as the US is pushing countries to speed up trade talks. The White House confirmed that the US sent a letter to partners as a "friendly reminder" that Trump's self-imposed 90-day pause on sweeping "reciprocal" tariffs is set to expire in early July. White House advisers have for weeks promised trade deals in the "not-too-distant future," with the only announced agreement so far coming with the United Kingdom. Also this week, effective Wednesday, June 4, Trump doubled tariffs on steel and aluminum from 25% to 50% Meanwhile, Trump's most sweeping tariffs face legal uncertainty after a federal appeals court allowed the tariffs to temporarily stay in effect, a day after the US Court of International Trade blocked their implementation, deeming the method used to enact them "unlawful." Here are the latest updates as the policy reverberates around the world. A major US auto parts group warned on Wednesday that China's new export rules on rare earths could soon cause serious problems for car production. These rare earth materials are used in cars and cameras, and China controls over 90% of the world's supply. This follows news that China is using a tracking system to monitor and control who is buying and selling rare earths, Car giants like GM (GM), Ford (F), and Toyota (TM) are already feeling the pressure. Ford has paused production of its Explorer SUV because of rare earth shortages. Foreign car companies are also feeling the heat. Suzuki Motor's suspended production of one of its vehicles due to rare earth restrictions, and German carmaker Mercedes-Benz ( MBGAF) is looking into building rare earth stockpiles with one of its key suppliers. In a statement to Reuters, MEMA, the Vehicle Suppliers Association, said: "The situation remains unresolved and the level of concern remains very high. It added: "Immediate and decisive action is needed to prevent widespread disruption and economic fallout across the vehicle supplier sector." It was also reported on Thursday that Japan is planning to propose strengthening cooperation with the US on rare earth supply chains in upcoming tariff talks with the US, due to recent export restrictions by China. The US and Japan are not the only two nations affected by the rare earths restrictions. Europe has also sounded the alarm, with EU businesses lobbying Beijing to set up a fast-track system for approval of rare earth export licences for "reliable" companies. China's rare earth curbs are seen as part of the wider trade tensions with the US as the two nations seek to reach a trade deal and avoid tariffs. President Trump confirmed his call with Chinese leader Xi Jinping on Truth Social, saying the call lasted one and half hours and "resulted in a very positive conclusion for both Countries." "I just concluded a very good phone call with President Xi, of China, discussing some of the intricacies of our recently made, and agreed to, Trade Deal," President Trump said. Trump added that the call focused on trade, including rare earth minerals, and that the two leaders did not discuss the Russia-Ukraine war or Iran. Notably, Trump outlined that he and Xi agreed on next steps for trade talks, which will take place "shortly." Trump is sending Treasury Secretary Scott Bessent, Commerce Secretary Howard Lutnick, and US Trade Representative Jamieson Greer to meet with Chinese officials. Trump also said he and the first lady had been invited to visit China and that he extended the same invitation to President Xi. Read more here. The US trade deficit shrank in April as imports fell sharply, mainly due to President Trump's tariffs and companies who had previously raced to beat high import costs, no longer rushing in goods ahead of new levies. Reuters reports: Read more here. Chinese state media reported Thursday morning that President Trump and Chinese President Xi Jinping had a phone call at Trump's request. Anticipation had been building as to when the two leaders would speak, as trade tensions between the US and China reignited after Trump and Chinese officials each stated the other had broken their informal Geneva agreement. Trump had publicly pushed for a phone call, which press secretary Karoline Leavitt hinted would come this week. The call appears to mark the first talk between the two leaders during Trump's second term in office. Indian and US officials are holding high-level talks this week in New Delhi to hammer out a finalized trade deal that could be announced this month, two government sources told Reuters. Reuters reports: Read more here. The tit-for-tat game between the US and China continues. A Bloomberg report on Thursday said that the Trump administration plans to broaden restrictions on China's tech sector with new regulations to include subsidiaries of companies under US curbs. This follows China's curbs on rare earths which have led to the US, the EU, Japan and global car companies sounding the alarm on supply chain issues. The Geneva tariff talks between the US and China were meant to help prevent trade tensions between the two nations and put a stop to escalating tariffs. However, it seems both sides are unwilling to back down. Bloomberg News reports: Read more here. US business optimism has fallen sharply, reflecting a trend seen in the first quarter of the year and a reversal from the buoyant mood after President Trump was elected. Bloomberg News reports: Read more here. The world's largest consumer goods company, Procter & Gamble (PG), said on Thursday it will cut 7,000 jobs, approximately 6% of its total workforce, over the next two years as part of a new restructuring plan to combat falling consumer demand and higher costs due to tariffs. P&G said it also plans to exit some product categories and brands in certain markets. P&G, which makes popular brands such as Pampers and Tide detergent, said the restructuring plan comes when consumer spending is pressured. Like P&G, other consumer companies are also facing a drop in demand, such as Unilever. President Trump's tariffs on trading partners have deeply impacted global markets and led to recession fears in the US, which is the biggest market for P&G. A Reuters poll revealed that Trump's trade war has cost companies over $34B in lost sales and higher costs. My colleague Brian Sozzi highlights some of P&G's changes within his latest piece, stating that the consumer goods brand knows how to do a "few things very well." P&G was forced to raise prices on some products in April. Pricing and cost cuts were the main levers, CFO Andre Schulten said. On Thursday, Schulten and P&G's operations head Shailesh Jejurikar acknowledged that the geopolitical environment was "unpredictable" and that consumers were facing "greater uncertainty." Read more here. Instead of passing on tariff costs to consumers, tonic maker Fevertree Drinks (FQVTY) announced on Thursday it would equally split costs of the 10% tariff imposed on UK imports to the US with brewer Molson Coors (TAP). The British company, known for its premium cocktail mixers, counts the United States as its largest market, where it continues to deliver strong momentum bolstered by its partnership with the US beer maker Molson Coors. Read more here. Reuters reports: Read more here. British firms are brushing off President Trump's tariffs, according to a survey released on Thursday by the Bank of England. Reuters reports: Read more here. Reuters reports Read more here. Yahoo Finance's Ben Werschkul reports: Read more here. Apple (AAPL), which has become caught in the crossfire of President Trump's trade war several times this year, now faces delays to the launch of Apple Intelligence in China, the Financial Times reports. It's the latest instance in which the conflict between the US and China has spilled into areas other than tariffs, including aircraft bans, export controls, and student visas. From the Financial Times: Read more here (premium). Prime Minister Mark Carney said Canada will take "some time" to assemble a response to the doubled steel and aluminum tariffs President Trump imposed on Tuesday and that the US and Canada are currently involved in "intensive" trade talks. "We will take some time — not much, some time — because we are in intensive discussions right now with the Americans on our trading relationship," Carney said, as reported by the Canadian Press. Carney also stated that the 50% steel and aluminum tariffs are "unlawful and unjustified," and he predicted they will harm American workers as well as Canada. He noted that Canada is considering its response to Trump's escalation. Already the country has implemented countermeasures on $90 billion worth of US goods. Read more here. In a new letter approximating the budgetary impacts of President Trump's tariffs, the nonpartisan Congressional Budget Office (CBO) stated that tariffs would reduce deficits but reduce the US economy and raise inflation. CBO assessed that the collections from tariffs implemented between Jan. 6 and May 13 would reduce primary deficits by a net $2.8 trillion over the next decade when accounting for reduced outlays of interest payments as well as changes in the size of the economy. The preliminary analysis stated that the effects of retaliatory tariffs, plus reductions in investment and productivity due to tariffs, are expected to weigh on economic growth. The budget office pegged a $300 billion increase in the deficit to these economic changes, partially offsetting the $3 trillion deficit reduction from tariff revenue. CBO also estimated that inflation will increase by 0.4 percentage points on average in 2025 and 2026, thereby "reducing the purchasing power of households and businesses." The estimates reflect the duties imposed as of May 13, including 10% broad-based tariffs, 25% auto tariffs, and 25% steel and aluminum tariffs (the last of which doubled as of June 3). They do not reflect the US-UK trade pact announced on May 8. President Trump's tariffs are leading many American's, especially those with deeper pockets to flock to dollar stores. Chains such as Dollar General and Dollar Tree, whose core customer base was once (and still is) those with less money, are now seeing a rise in wealthier customers visiting their stores, as Trump's tariffs darken US consumer sentiment. The FT reports: Read more here. Activity in the services sector has fallen into contraction for the first time in a year. The Institute for Supply Management's Services PMI registered a reading of 49.9 in May, below the 51.6 seen in April and lower than the increase to 52 economists had expected. Readings above 50 for this index indicate an expansion in activity, while readings below 50 indicate contraction. May's data marked just the fourth time the services sector has fallen into contraction in the past five years. New orders tumbled to a reading of 46.4 in May, below the 52.3 seen the month prior. Meanwhile, the prices paid index increased to 68.7, up from 65.1 in April. This marked the highest prices paid reading since November 2022, when the Consumer Price Index had shown inflation at 7.1%. Steve Miller, the chair of ISM's Services Business Survey, said in the release that "tariff impacts are likely elevating prices paid." "May's PMI level is not indicative of a severe contraction, but rather uncertainty that is being expressed broadly among ISM Services Business Survey panelists," Miller said. Yahoo Finance's Josh Schafer reports: Read more here. The Bank of Canada noted that it's seeing softness in the Canadian economy due to tariffs as it held interest rates steady on Wednesday. 'With uncertainty about US tariffs still high, the Canadian economy softer but not sharply weaker, and some unexpected firmness in recent inflation data, Governing Council decided to hold the policy rate as we gain more information on US trade policy and its impacts,' the Bank said in a statement. 'We will continue to assess the timing and strength of both the downward pressures on inflation from a weaker economy and the upward pressures on inflation from higher costs.' Governor Tiff Macklem also noted that while it's too soon to see tariff-related inflation broadly in consumer prices, the US-Canada trade conflict is "the biggest headwind facing the Canadian economy." Read live updates about the Bank of Canada's policy meeting here. A major US auto parts group warned on Wednesday that China's new export rules on rare earths could soon cause serious problems for car production. These rare earth materials are used in cars and cameras, and China controls over 90% of the world's supply. This follows news that China is using a tracking system to monitor and control who is buying and selling rare earths, Car giants like GM (GM), Ford (F), and Toyota (TM) are already feeling the pressure. Ford has paused production of its Explorer SUV because of rare earth shortages. Foreign car companies are also feeling the heat. Suzuki Motor's suspended production of one of its vehicles due to rare earth restrictions, and German carmaker Mercedes-Benz ( MBGAF) is looking into building rare earth stockpiles with one of its key suppliers. In a statement to Reuters, MEMA, the Vehicle Suppliers Association, said: "The situation remains unresolved and the level of concern remains very high. It added: "Immediate and decisive action is needed to prevent widespread disruption and economic fallout across the vehicle supplier sector." It was also reported on Thursday that Japan is planning to propose strengthening cooperation with the US on rare earth supply chains in upcoming tariff talks with the US, due to recent export restrictions by China. The US and Japan are not the only two nations affected by the rare earths restrictions. Europe has also sounded the alarm, with EU businesses lobbying Beijing to set up a fast-track system for approval of rare earth export licences for "reliable" companies. China's rare earth curbs are seen as part of the wider trade tensions with the US as the two nations seek to reach a trade deal and avoid tariffs. President Trump confirmed his call with Chinese leader Xi Jinping on Truth Social, saying the call lasted one and half hours and "resulted in a very positive conclusion for both Countries." "I just concluded a very good phone call with President Xi, of China, discussing some of the intricacies of our recently made, and agreed to, Trade Deal," President Trump said. Trump added that the call focused on trade, including rare earth minerals, and that the two leaders did not discuss the Russia-Ukraine war or Iran. Notably, Trump outlined that he and Xi agreed on next steps for trade talks, which will take place "shortly." Trump is sending Treasury Secretary Scott Bessent, Commerce Secretary Howard Lutnick, and US Trade Representative Jamieson Greer to meet with Chinese officials. Trump also said he and the first lady had been invited to visit China and that he extended the same invitation to President Xi. Read more here. The US trade deficit shrank in April as imports fell sharply, mainly due to President Trump's tariffs and companies who had previously raced to beat high import costs, no longer rushing in goods ahead of new levies. Reuters reports: Read more here. Chinese state media reported Thursday morning that President Trump and Chinese President Xi Jinping had a phone call at Trump's request. Anticipation had been building as to when the two leaders would speak, as trade tensions between the US and China reignited after Trump and Chinese officials each stated the other had broken their informal Geneva agreement. Trump had publicly pushed for a phone call, which press secretary Karoline Leavitt hinted would come this week. The call appears to mark the first talk between the two leaders during Trump's second term in office. Indian and US officials are holding high-level talks this week in New Delhi to hammer out a finalized trade deal that could be announced this month, two government sources told Reuters. Reuters reports: Read more here. The tit-for-tat game between the US and China continues. A Bloomberg report on Thursday said that the Trump administration plans to broaden restrictions on China's tech sector with new regulations to include subsidiaries of companies under US curbs. This follows China's curbs on rare earths which have led to the US, the EU, Japan and global car companies sounding the alarm on supply chain issues. The Geneva tariff talks between the US and China were meant to help prevent trade tensions between the two nations and put a stop to escalating tariffs. However, it seems both sides are unwilling to back down. Bloomberg News reports: Read more here. US business optimism has fallen sharply, reflecting a trend seen in the first quarter of the year and a reversal from the buoyant mood after President Trump was elected. Bloomberg News reports: Read more here. The world's largest consumer goods company, Procter & Gamble (PG), said on Thursday it will cut 7,000 jobs, approximately 6% of its total workforce, over the next two years as part of a new restructuring plan to combat falling consumer demand and higher costs due to tariffs. P&G said it also plans to exit some product categories and brands in certain markets. P&G, which makes popular brands such as Pampers and Tide detergent, said the restructuring plan comes when consumer spending is pressured. Like P&G, other consumer companies are also facing a drop in demand, such as Unilever. President Trump's tariffs on trading partners have deeply impacted global markets and led to recession fears in the US, which is the biggest market for P&G. A Reuters poll revealed that Trump's trade war has cost companies over $34B in lost sales and higher costs. My colleague Brian Sozzi highlights some of P&G's changes within his latest piece, stating that the consumer goods brand knows how to do a "few things very well." P&G was forced to raise prices on some products in April. Pricing and cost cuts were the main levers, CFO Andre Schulten said. On Thursday, Schulten and P&G's operations head Shailesh Jejurikar acknowledged that the geopolitical environment was "unpredictable" and that consumers were facing "greater uncertainty." Read more here. Instead of passing on tariff costs to consumers, tonic maker Fevertree Drinks (FQVTY) announced on Thursday it would equally split costs of the 10% tariff imposed on UK imports to the US with brewer Molson Coors (TAP). The British company, known for its premium cocktail mixers, counts the United States as its largest market, where it continues to deliver strong momentum bolstered by its partnership with the US beer maker Molson Coors. Read more here. Reuters reports: Read more here. British firms are brushing off President Trump's tariffs, according to a survey released on Thursday by the Bank of England. Reuters reports: Read more here. Reuters reports Read more here. Yahoo Finance's Ben Werschkul reports: Read more here. Apple (AAPL), which has become caught in the crossfire of President Trump's trade war several times this year, now faces delays to the launch of Apple Intelligence in China, the Financial Times reports. It's the latest instance in which the conflict between the US and China has spilled into areas other than tariffs, including aircraft bans, export controls, and student visas. From the Financial Times: Read more here (premium). Prime Minister Mark Carney said Canada will take "some time" to assemble a response to the doubled steel and aluminum tariffs President Trump imposed on Tuesday and that the US and Canada are currently involved in "intensive" trade talks. "We will take some time — not much, some time — because we are in intensive discussions right now with the Americans on our trading relationship," Carney said, as reported by the Canadian Press. Carney also stated that the 50% steel and aluminum tariffs are "unlawful and unjustified," and he predicted they will harm American workers as well as Canada. He noted that Canada is considering its response to Trump's escalation. Already the country has implemented countermeasures on $90 billion worth of US goods. Read more here. In a new letter approximating the budgetary impacts of President Trump's tariffs, the nonpartisan Congressional Budget Office (CBO) stated that tariffs would reduce deficits but reduce the US economy and raise inflation. CBO assessed that the collections from tariffs implemented between Jan. 6 and May 13 would reduce primary deficits by a net $2.8 trillion over the next decade when accounting for reduced outlays of interest payments as well as changes in the size of the economy. The preliminary analysis stated that the effects of retaliatory tariffs, plus reductions in investment and productivity due to tariffs, are expected to weigh on economic growth. The budget office pegged a $300 billion increase in the deficit to these economic changes, partially offsetting the $3 trillion deficit reduction from tariff revenue. CBO also estimated that inflation will increase by 0.4 percentage points on average in 2025 and 2026, thereby "reducing the purchasing power of households and businesses." The estimates reflect the duties imposed as of May 13, including 10% broad-based tariffs, 25% auto tariffs, and 25% steel and aluminum tariffs (the last of which doubled as of June 3). They do not reflect the US-UK trade pact announced on May 8. President Trump's tariffs are leading many American's, especially those with deeper pockets to flock to dollar stores. Chains such as Dollar General and Dollar Tree, whose core customer base was once (and still is) those with less money, are now seeing a rise in wealthier customers visiting their stores, as Trump's tariffs darken US consumer sentiment. The FT reports: Read more here. Activity in the services sector has fallen into contraction for the first time in a year. The Institute for Supply Management's Services PMI registered a reading of 49.9 in May, below the 51.6 seen in April and lower than the increase to 52 economists had expected. Readings above 50 for this index indicate an expansion in activity, while readings below 50 indicate contraction. May's data marked just the fourth time the services sector has fallen into contraction in the past five years. New orders tumbled to a reading of 46.4 in May, below the 52.3 seen the month prior. Meanwhile, the prices paid index increased to 68.7, up from 65.1 in April. This marked the highest prices paid reading since November 2022, when the Consumer Price Index had shown inflation at 7.1%. Steve Miller, the chair of ISM's Services Business Survey, said in the release that "tariff impacts are likely elevating prices paid." "May's PMI level is not indicative of a severe contraction, but rather uncertainty that is being expressed broadly among ISM Services Business Survey panelists," Miller said. Yahoo Finance's Josh Schafer reports: Read more here. The Bank of Canada noted that it's seeing softness in the Canadian economy due to tariffs as it held interest rates steady on Wednesday. 'With uncertainty about US tariffs still high, the Canadian economy softer but not sharply weaker, and some unexpected firmness in recent inflation data, Governing Council decided to hold the policy rate as we gain more information on US trade policy and its impacts,' the Bank said in a statement. 'We will continue to assess the timing and strength of both the downward pressures on inflation from a weaker economy and the upward pressures on inflation from higher costs.' Governor Tiff Macklem also noted that while it's too soon to see tariff-related inflation broadly in consumer prices, the US-Canada trade conflict is "the biggest headwind facing the Canadian economy." Read live updates about the Bank of Canada's policy meeting here.
