CTV National News: Are tariffs an unavoidable reality for Canada?
U.S. President Trump says he has not been focused on reaching a final trade deal with Canada. Abigail Bimman on what that might mean for the economy.
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Canada News.Net
19 minutes ago
- Canada News.Net
White House pressure mounts as Trump clashes with Fed chair
WASHINGTON, D.C.: On August 1, President Donald Trump escalated his feud with Federal Reserve Chair Jerome Powell, urging the central bank's board of governors to seize control from Powell if he refused to slash interest rates. The extraordinary demand made on Trump's Truth Social account underscored how aggressively the president has been pressuring the independent central bank to support his economic agenda. Trump denounced Powell as "stubborn," repeating months of verbal attacks against the Fed chief. Traditionally, the Federal Reserve operates free from partisan politics, with its mandate focused on price stability and maximum employment. However, Trump has been openly frustrated by Powell's refusal to move interest rates lower in the face of mounting economic headwinds. So far this year, Powell has resisted changing the Fed's benchmark overnight lending rate, which remains steady at an average of 4.33 percent. He has argued that policymakers need time to measure the economic effects of Trump's sweeping tariffs on foreign goods. In Powell's view, those tariffs could still ripple through inflation and broader financial conditions, making it too risky to act hastily. Trump, however, is demanding drastic action. "If Powell doesn't substantially lower rates, THE BOARD SHOULD ASSUME CONTROL, AND DO WHAT EVERYONE KNOWS HAS TO BE DONE!" he wrote. Interestingly, two Fed governors—Christopher Waller and Michelle Bowman, both appointed by Trump—have begun to echo part of the president's argument. In statements released August 1, the pair said that they see Trump's tariffs as essentially creating a one-time bump in prices, not a sustained inflationary threat. They added that the labor market appears to be cooling. As a result, they dissented at Wednesday's policy meeting, advocating for minor rate cuts, though not nearly as deep as Trump wants. Trump quickly celebrated their stance, calling their opposition "strong dissents," even as he continues to insist that the broader U.S. economy is thriving. His political calculus is clear: rate cuts would both ease borrowing costs for households and reduce federal debt servicing expenses, helping him head into the election claiming credit for strong growth. But fresh economic data complicates his narrative. The July jobs report showed only 73,000 new positions created, far below expectations. Meanwhile, earlier employment figures for May and June were revised downward to just 14,000 and 19,000, respectively—evidence that the economy is slowing more sharply than the White House has admitted. Trump insists inflation is not a concern, but the Fed's preferred measure currently runs at 2.6 percent annually, above the central bank's two percent target. Cutting rates by the three percentage points he is demanding would amount to an unprecedented shift. Economists warn such a steep move could flood the system with liquidity, driving up prices rather than containing them. The clash between Trump and Powell is not only economic but also constitutional. In May, the Supreme Court ruled that a president cannot dismiss a Fed chair merely over disagreements about policy. That decision forced the White House to explore other legal avenues, including whether Powell could be ousted "for cause" because of cost overruns tied to the Fed's US$2.5 billion headquarters renovation. For now, Powell remains secure in his post. His current term as chair runs until May 2026, after which Trump—if still in office—will be able to nominate a successor subject to Senate confirmation. Until then, the tug-of-war between the president's political demands and the Fed's cautious independence looks set to continue.
Canada News.Net
20 minutes ago
- Canada News.Net
US hiring falters in July as unemployment rate edges higher
WASHINGTON, D.C.: The U.S. labor market lost momentum in July, with job growth slowing more than expected and major downward revisions to prior months adding to concerns about the strength of the economy. The data has renewed speculation that the Federal Reserve may cut interest rates as soon as September. The Labor Department said on August 1 that nonfarm payrolls rose by just 73,000 last month, well below the 110,000 economists had forecast. June's job gain was revised down to 14,000, the weakest monthly increase in nearly five years. May's figures were also slashed, from 144,000 to just 19,000 jobs, resulting in a combined revision of 258,000 fewer jobs than previously reported. "The labor market is not rolling over, but it is badly wounded and may yet bring about a reversal in the U.S. economy's fortunes," said Christopher Rupkey, chief economist at FWDBONDS. "The door to a Fed rate cut in September just got opened a crack wider." July's hiring was once again concentrated in healthcare, which added 55,000 jobs. Social assistance roles increased by 18,000. However, federal government employment continued to decline, shedding another 12,000 jobs and bringing the total reduction to 84,000 since January. More cuts may be on the way following a Supreme Court ruling that gave the Trump administration the green light for broader federal layoffs, though some agencies have indicated they will hold off. The unemployment rate rose to 4.2 percent in July, up from 4.1 percent in June. The increase was attributed in part to declines in the volatile household employment measure and a continued, though slower, exodus from the labor force. Despite leaving interest rates unchanged earlier this week, the Federal Reserve may now have a more transparent case for easing. Fed Chair Jerome Powell described the labor market as "in balance" due to falling labor demand and supply, but he also acknowledged this shift could present a "downside risk." Uncertainty around trade policy is compounding the issue. On July 31, President Donald Trump imposed sweeping tariffs on dozens of countries, including a 35 percent duty on Canadian imports, contributing to concerns about rising inflation and policy-driven economic strain. Following the report, the dollar slipped, and U.S. Treasury yields dropped, as markets began to shift expectations back toward a possible rate cut in September. Earlier in the week, many had expected the Fed to delay easing until at least October. The Bureau of Labor Statistics noted that the May and June revisions were "larger than normal" but did not offer a specific reason, attributing the changes to late-arriving data and seasonal adjustment recalculations. In September, the Fed may receive further clarity when the BLS issues its annual benchmark revision, which could confirm that job growth over the past year was even weaker than payroll data had suggested. The labor market has also been affected by structural changes. Reduced immigration due to the Trump administration's crackdown has limited the labor supply, and an acceleration of baby boomer retirements is adding to the demographic pressure.
CBC
42 minutes ago
- CBC
Wildfire smoke blankets Canada
Aug. 3, 2025 | Wildfire smoke blankets skies from B.C. to Montreal, putting millions under air quality advisories. Canada pushes for a trade deal after the U.S. increases tariffs. And, what's driving up the cost of Canadian beef.
