The AI Market Debate Is Old
Polish-American economist Oskar Lange's utopian—or dystopian—idea was to have a big, futuristic computer replace market dynamics so that an economy could be centrally planned.
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New York Times
a few seconds ago
- New York Times
South Africa's Equity Laws, Reviled by Trump, Complicate Tariff Talks
As South African leaders press the United States to ease a newly imposed 30 percent tariff, some are worried that the Trump administration may try to demand rollbacks in measures aimed at redressing the legacy of apartheid. The Trump administration has made its animosity toward some of those laws clear, and it has not hesitated to use tariffs to punish other countries for their domestic policies. 'I've had a lot of problems with South Africa,' President Trump said last week. 'They have some very bad policies.' Some South African officials say they have no intention of backing down on efforts to address the economic disparities that remain three decades after the end of white minority rule. 'We need to be very clear that the transformation agenda of the country is nonnegotiable,' Khumbudzo Ntshavheni, a South African cabinet minister, said Thursday at a news conference. Mr. Trump has publicly criticized South Africa's racial equity laws multiple times this year, as has Secretary of State Marco Rubio. They have taken particular aim at a new measure that allows the government to take privately owned land without providing compensation when it is deemed to be in the public interest. In an executive order issued in February, Mr. Trump cut aid to South Africa, accusing the government of discriminating against the country's white minority by enacting 'policies designed to dismantle equal opportunity in employment, education and business.' A South African lawmaker who visited Washington in June said that administration officials had told him that to improve relations, South Africa needed to roll back the land law and exempt American companies from a measure requiring foreign-owned businesses to sell some ownership stakes to Black South Africans. The White House made a similar demand regarding the ownership law in a brief it circulated ahead of a meeting between Mr. Trump and South Africa's president, Cyril Ramaphosa, in May. Ms. Ntshavheni, the cabinet minister, said Thursday that the laws had been passed 'to make sure that we build an equal, united and prosperous South Africa.' So far, South African officials say, U.S. negotiators have not raised the racial equity laws at the trade talks. They say they remain hopeful that their engagement with the Trump administration will lead to a deal to reduce the 30 percent tariff, which is tied for the highest in Africa. Mr. Ramaphosa spoke to Mr. Trump by phone on Wednesday, and they agreed to forge ahead with negotiations, according to a statement released by the South African leader's office. South Africa's negotiating efforts are complicated by tensions within its coalition government. For the African National Congress, the largest party in the government, the equity laws are regarded as essential to undoing the wealth disparities created by an apartheid regime that largely locked the nation's Black majority out of the economy. The second-largest member of the coalition, the Democratic Alliance, has for years argued that the equity laws only enrich elites and has opposed race-based policies as a way to create a more just economy. Those differing philosophies have surfaced in the barbs the parties have publicly traded over the tariff impasse. The A.N.C. said in a statement that the country 'will not be coerced into reversing its progressive economic transformation agenda or compromising its sovereignty under the guise of opportunistic foreign pressures.' Ryan Smith, a member of Parliament from the Democratic Alliance, said that while South Africa had the sovereign right to make its own decisions, the land seizure and Black ownership laws were bad policies. He said the government should reach a trade deal with the United States that would make it less onerous for American companies to comply withBlack economic empowerment laws. The question of how to approach equity laws with the Trump administration presents a conundrum. Black South Africans continue to trail the white population in virtually every economic measure, and many policymakers say the country can't afford to drop measures meant to help bridge those gaps. Yet the country also relies on trade with the United States, its second-largest trading partner, to provide economic opportunities for the same Black South Africans who might benefit from equity laws. About a third of the working-age population in South Africa is unemployed, and government officials estimate that 30,000 jobs are at risk because of the new tariff rate. Kganki Matabane, the chief executive of the Black Business Council, a lobby organization, said that unlike in the United States, Black empowerment measures in South Africa are aimed at lifting up the majority population, making them essential. 'If you keep on delaying the empowerment of the majority, one day, they will revolt,' he said. 'If they revolt, you will lose everything.' South African officials have found themselves frustrated by not getting any clear indication of what the Trump administration wants. After the White House meeting in May, South African officials say, they submitted a trade proposal but were told to come back with something more ambitious. U.S. officials said they would provide the South Africans with a template for a trade deal, but South African officials said they never received one.
New York Times
a few seconds ago
- New York Times
India Bought Russian Oil. Now It's a Trade-War Weapon.
Three years ago, India ramped up its imports of Russia's oil. It was a move that benefited both countries — and, in a way, the global economy. Now President Trump is demanding that India reverse course and quit its cheap Russian oil habit or face debilitating tariffs. What would it take for India to do what Mr. Trump wants? India's leaders have already made clear that they will not obey the American president's demand. Its foreign ministry called the penalty 'unfair, unjustified and unreasonable,' and said that 'India will take all actions necessary to protect its national interests.' But legally and technologically, weaning itself from Russian oil is not out of the question. Before the war in Ukraine, India imported just 1 percent of its oil from Russia. When Europe stopped buying from Russia as punishment for its full-scale invasion, India, like China, seized the chance pick up its crude at a discount worth several dollars a barrel. ICRA, an Indian rating agency, estimated that play saved Indian companies $13 billion over two years. Quietly, this had pleased everybody. The Biden administration, which barred American companies from importing most Russian energy products, worried that too successful an embargo would upset global oil prices. Rerouting Russian crude kept the markets relatively stable; Europe was able to buy fuels refined in India; and Indian companies made a profit along the way. Now Mr. Trump has raised this workaround as a weapon of trade war. On Wednesday he signed an executive order imposing an additional 25 percent tax on imports of Indian goods, because, he posted on Truth Social, India profited from people 'being killed by the Russian War Machine.' When that penalty goes into effect, on Aug. 27, it will double an already steep tariff, demolishing the business plans of any company with a stake in trade between India and the United States. Legally speaking, it would not be difficult for India's national government, led by Prime Minister Narendra Modi, to dictate new terms to the private companies that buy the oil and refine it into products that are used in India or exported. Politically, it's another story. India is proudly sovereign, and democratic. Mr. Modi has cultivated an image as a hard man, but he still needs to win elections. He cannot afford to play patsy to Mr. Trump. Politics aside, it would not be easy to reconfigure the global seaborne traffic that sends tens of billions of dollars worth of oil through India's ports. But, with sufficient time, and lost profits, it would be possible. India went from importing less than 1 percent of its oil from Russia, when the war began in February 2022, to around two million barrels a day by May 2023, where it has held steady ever since, accounting for more than a third of its total inflow. It would probably take an equal amount of time to reverse that trade, returning India's refineries to their previous main suppliers, in Saudi Arabia and Iraq. That may or may not be fast enough to satisfy Mr. Trump. Some veterans of the refining industry have complained that it would be troublesome. The oil grade from Russia requires certain processes, and refiners would have to rejigger the facilities to ready them to take Middle Eastern grades again. But their complaint is outmoded, explained Duttatreya Das, an analyst at Ember, a global energy think tank, and a former official with India's national oil and gas company. 'We are at a technological stage where that is really not a constraint,' Mr. Das said. Newer refineries, like the ones run by Reliance Industries and Nayara Energy both in Mr. Modi's home state of Gujarat, 'are interoperable with different grades of crude,' Mr. Das said, and can switch intake almost on a dime. Reliance's is the biggest in the world and among the most sophisticated. More serious hurdles can also be overcome. Canceling the contracts, with shippers and Russian suppliers, is something Indian buyers could do by 'force majeure,' using Mr. Trump's trade war to justify backing out of deals. Securing new contracts would be trickier, given the scale of flow. India is a rapidly growing country and slurps up some 5 million barrels of oil a day, just behind China and the United States. Within about a year, though, buyers for Reliance and Nayara Energy — 49 percent of which is owned by Rosneft, the Russian state oil company — could probably line up enough non-Russian oil. They would, however, have to say farewell to their wartime profits. Most of the Russian crude oil India has imported since 2022 was consumed at home, the majority of it powering the motorcycles, cars, trucks and airplanes that Indians use with increasing intensity as their economy expands. Some goes into portable power generators, or asphalt and plastics. But Indian consumers have hardly felt the benefit. Prices at the pump, counted in rupees per liter, have been rising gradually since the Covid-19 pandemic. India's government controls prices carefully, adjusting fuel taxes and other fees mainly to smooth out fluctuations. It has been useful to the Indian state to have Indian companies spending less on Russia's oil than they would on other countries'. For one thing, it protects the value of the Indian currency. And it has done wonders for Reliance's bottom line. But the overall benefit to the country's $4 trillion economy has been relatively small. Mr. Trump's tariffs threaten to severely diminish that economic growth, shaving off even greater value almost overnight.
a few seconds ago
Michigan manufacturer warns Trump tariffs threaten small business survival
The impact of President Donald Trump's sweeping new tariffs became reality for American businesses on Thursday, as dozens of countries faced levies ranging from 15% to 41% on goods entering the United States. For Carrin Harris, CEO of Michigan-based manufacturing company Blitz Proto, the tariffs have already created significant challenges. Her company, which makes prototypes for products including toys, medical devices and car parts, has been grappling with rising costs since January. "A lot of our quotes are no longer good because the cost of components continues to go up, and it's volatile, and we can't even anticipate it," Harris told ABC News on Thursday. The new tariffs affected more than 90 trading partners, with some nations facing particularly steep increases. Brazil, for instance, received a 50% tariff on its coffee exports to the U.S. The Yale Budget Lab estimated these new trade policies could cost the average American household an additional $2,400 annually. Harris explained that the uncertainty forced her company to dramatically shorten their quote expiration times. "We've changed our quote expiration from one month to one week," she said. "The customers have to get a new quote every week, depending on what it is they're looking for." The impact hasn't just affected pricing. "Sometimes the customers don't even want to work with us because the costs are so high," Harris told ABC News. "The timelines of the projects are also impacted, so that will also turn customers away because they have deadlines." While Trump argued these tariffs would bring manufacturing back to the U.S., Harris expressed skepticism about this claim. "I don't know that I believe that, because infrastructure doesn't happen overnight," she said. "I do see that some of the American suppliers are trying to be more competitive, but it's more expensive in the United States, we don't have the same resources." The situation has become so challenging that Harris warned about her company's future. "We struggle with taxes in general, and another tax is devastating to our company," she said. "We can't remain viable unless we have predictability for our customers." The tariffs have impacted businesses of all sizes differently. Harris said that larger companies seemed to be handling the changes better "because they have more capital to work with," while many of her smaller business partners were struggling. Major corporations have already announced price increases in response to the tariffs. Ford estimated the tariffs would cost them $2 billion this year, while Procter & Gamble planned to raise prices on 25% of their products. The only exceptions to the new trade policies were Canada and Mexico, which remain in negotiations for their own trade deals. Meanwhile, China faced 30% tariffs under a separate trade truce, and India's total tariff rate rose to 50% due to its purchase of Russian oil and energy.
