Temu Under Increased EU Scrutiny for Illegal Product Sales
The EU's executive branch, the European Commission, preliminarily found Temu in breach of the bloc's online content rulebook, it said in a statement Monday. It added that a risk assessment of illegal sales Temu conducted in October was inaccurate and that the commission's own analysis and test purchases showed users in the EU are at high risk of receiving unsafe or counterfeit products such as baby toys or electronics.
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Bloomberg
a minute ago
- Bloomberg
Ferrari Earnings Rise as Luxury-Car Maker Shrugs Off Tariffs
Ferrari NV's earnings climbed in the second quarter as robust demand for its SF90 XX and 12Cilindri models and customized supercars helped offset additional tariff expenses. Revenue rose 4% €1.79 billion ($2 billion) in the period from a year earlier amid stable shipments, while operating earnings increased 6% to €709 million, the manufacturer said Thursday. Ferrari said it's more confident in its full-year guidance after the recent US-European Union trade deal lowered the duties.
Washington Post
a minute ago
- Washington Post
Trump is using the ‘Laffer curve' to find the tariff sweet spot
In his first term, President Donald Trump awarded the Presidential Medal of Freedom to economist Arthur Laffer, inventor of the 'Laffer curve,' which provided the intellectual foundation for President Ronald Reagan's supply-side tax cuts. Now in his second term, Trump is essentially applying the Laffer curve to his tariff policies. The Laffer curve, which the economist famously drew on a napkin during a 1974 lunch with Donald H. Rumsfeld and Dick Cheney, shows that when you set tax rates at zero, you get zero tax revenue (because the government collects nothing), and when you set tax rates at 100 percent, you also get zero revenue (because no one has an incentive to work). Somewhere between zero and 100 percent is an optimal tax rate that achieves both growth and maximum tax revenue. Reagan applied this principle to lowering income tax rates — which were egregiously high when he took office — spurring 92 months of uninterrupted economic growth, the longest peacetime economic expansion in U.S. history and dramatic growth in federal revenue. Trump is applying the same principle to tariffs. Tariffs are taxes: When you have no tariffs, you get zero revenue, and when you impose tariffs of 100 percent (or more), it throttles trade and revenue. Somewhere between zero and 100 percent is an optimal tariff rate that yields maximum revenue without unduly disrupting trade. When Trump took office in January, U.S. tariffs were close to zero, which meant they brought in little tax revenue. Trump is negotiating trade deals that, instead of reducing tariffs, raise them to something approximating the revenue-maximizing tariff rate. Consider the deal he struck this week with the European Union. In 2018, Trump offered the Europeans a zero-for-zero trade deal, but the E.U. showed little interest in his proposal. Now, seven years later, Trump has struck a deal that includes a 15 percent baseline tariff on most European exports to the United States, while most U.S. exports to the E.U. will be duty-free. The E.U. also committed to purchasing $750 billion in U.S. energy and investing $600 billion in the United States by 2028. Some European leaders are complaining that the deal is heavily tilted to the U.S. They are right, but that is the price the Europeans pay for turning up their noses at Trump's zero-for-zero offer when it was on the table in 2018. Trump has also set minimum tariffs in other recent trade deals. His deal with Japan similarly includes a 15 percent baseline tariff, while his deal with Britain sets the baseline tariff at 10 percent. And his deal with Vietnam sets it at 20 percent. Trump says the baseline tariff rate for the world will be 'in the range of 15 to 20 percent … probably one of those two numbers.' What is the optimal rate? It's hard to know, but 10 percent is better than 20 percent — because, as the Laffer curve shows, if the baseline tariffs are too high, above a certain point the United States will get less revenue, not more, which is bad for the U.S. bottom line. There are exceptions. For example, the E.U. deal includes a 50 percent tariff on steel — far exceeding any revenue-maximizing rate. That is because Trump's goal in this case is not to bring in more revenue, but to reduce foreign steel imports and spur domestic production for national security purposes. That is why he has set steel tariffs at a protectionist level. Raising tariffs might seem like an improbable way of channeling Reagan's supply-side principles. But so long as the baseline remains low, it will allow the United States to bring in more revenue without having to raise taxes on household income or corporate profits. Trump has brought in $150 billion in tariff revenue since taking office, including an unexpected government surplus in June. To put that in perspective, at this pace, the country's expanded tariff revenue will be more than enough to cover the estimated cost of Trump's 'Golden Dome' missile defense shield. When Trump awarded Laffer the Medal of Freedom in 2019, he pointed out that the economist had proved that when tax rates are too high, 'the result is less growth and lower tax revenues,' while 'lower tax rates spur investment, economic growth, and raise government revenue.' That lesson applies to trade as well. Trump is right to raise the baseline U.S. tariff from near zero. But he should remember that the Laffer curve works both ways — and raising tariff rates too high will result in less growth and less revenue, not more.
Time Magazine
a minute ago
- Time Magazine
Why Trump's Threats Won't Alter Putin's Course in Ukraine
On Monday, President Donald Trump signaled growing impatience with Vladimir Putin by telling reporters in Scotland that Russia's president must halt the fighting in Ukraine within '10 or 12 days' to avoid sanctions and secondary tariffs, tightening a 50-day deadline he set earlier this month. But this latest threat is unlikely to change Putin's plans. Judged from the outside, it's hard to see why the war continues. Putin, the one person who could bring it to an end, can see that Russia has paid a steep price over the past three years and five months to gain just 20% of Ukraine's land. By some estimates, Russia has suffered more than one million battlefield casualties, with a quarter million killed. The war has strengthened NATO, which Putin says is Russia's true enemy, by bringing in new members and persuading European governments to spend much more on defense. Since the invasion, roughly one million young Russians have fled the country to avoid conscription, find better job prospects, or both. Though scaling up Russia's war machine briefly boosted its economy, the long-term loss of energy customers in Europe, a surge of inflation that has pushed interest rates to historic highs, and a deepening reluctance among Russian consumers to spend leaves Russia's economic future on dangerous ground. How hard would it be, outsiders wonder, for Putin to cut a deal, stop the bleeding, declare victory, and consolidate Russia's gains? But Putin believes time is still on his side. In the coming months, Russian forces will probably gain enough new ground in Ukraine's east to keep him committed to a strategy of maximum pressure to wear away at Ukrainian resolve. Drone and missile strikes on Ukrainian cities and infrastructure will continue because Kyiv hasn't found a way to stop them. Russian forces will apply more pressure in other regions to further thin Ukraine's defenses. That's enough to persuade Russia's president to stay in the game. Not that Volodymyr Zelensky is ready to offer concessions. Ukraine's president is weakened domestically by a failed attempt by his government to leash a corruption watchdog that had begun growling at his political allies. Even if he were stronger, Ukrainians have absorbed much too much Kremlin-inflicted pain to offer concessions substantial enough to satisfy a Russian president who will likely want more. Nor will Ukrainians trust Putin and future Russian leaders to honor the promises they make to end the current fighting. Trump doesn't have the leverage to change any of this. There isn't enough direct trade flow between the U.S. and Russia to credibly threaten, but he has warned of possible tariffs on countries that trade with Russia. Yet, Putin has good reason to doubt that Trump will pick new fights with China and India, now Russia's two biggest energy customers, particularly as Trump works to lock down big trade deals with both countries. EU sanctions won't alter Putin's calculus. The main tool in Europe's 18th sanctions package against Russia, an adjustable oil price cap, will force Russian oil exporters to rely more heavily on the shadow fleet of tankers they've used to evade the cap. But without U.S. support, their impact won't amount to much, and the EU has little ability to slow Russia's defense sector. Nor is Trump's ability to pressure Zelensky as potent as it appeared just weeks ago, because the ever-changing, seemingly contradictory tactical approaches to both Ukraine and Russia suggest the U.S. president might again change his mind. Putin and Zelensky are also aware that Trump has many more demands on his attention at the moment. There's one other possible reason Putin might prolong this increasingly costly war of attrition. Perhaps his confidence in continuing the war is one more item on a lengthening list of his strategic mistakes. The invasion itself was a spectacular miscalculation of both Russian and Ukrainian strength. Perhaps he's not making a deal because he still can't see how much Russia has to lose.
