As the Fed waits on the impact of tariffs, some are already feeling it
Happy Juneteenth! Since the BI Today team is off for the holiday, we're running an abbreviated version of the newsletter.
But we've still got time for a scoop! Meta's deal with Scale AI has left its Big Tech clients eager to distance themselves from the company.
In today's big story, the Fed is holding firm on interest rates as Fed Chair Jerome Powell waits to see the impact of Trump's tariffs. However, some people are already feeling them.
The big story
Holding pattern
Getty Images; Alyssa Powell/BI
Stop me if you've heard this before: The Fed didn't cut interest rates as it waits to see the impact of tariffs.
For the fourth-straight time this year, the central bank chose not to adjust interest rates. And as was the case before, the impact of President Donald Trump's trade war was a key part of the decision, writes BI's Allie Kelly.
It's tricky to navigate for multiple reasons. First, the ultimate severity of the tariffs is unclear as negotiations are ongoing. Second, the financial data hasn't yet indicated notable price changes due to the trade war.
Still, Powell said he ultimately expects the cost of tariffs will fall to the consumer.
"We expect a meaningful amount of inflation to arrive in the coming months," Powell said Wednesday, adding, "Someone has to pay for the tariffs."
In some cases, it's already happening. (Much to the surprise of the customer.)
BI's Emily Stewart has a story on the sticker shock customers are getting when steep import bills arrive on their doorsteps.
Some people even questioned the legitimacy of the bills. A customer who purchased an $850 bag from Spain thought the text she got from UPS billing her $250 for the delivery was a scam, she told Emily.
It's led to a lot of finger-pointing about who is to blame. Retailers often say their websites explain — albeit oftentimes in the fine print — that import duties are the customers' responsibility.
Carriers like UPS and FedEx say they are just passing the bill they had to pay to the US government on to the buyers.
Meanwhile, buyers are left frustrated with additional fees they often weren't aware of ahead of time. What's worse: Even if they return the item, they're still on the hook for the tariff bill.
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The Hill
26 minutes ago
- The Hill
6 top issues to review in US-Mexico-Canada trade
The second Trump administration has come out swinging on trade. New tariffs — some targeted, others startlingly wide-ranging and broad — have reignited uncertainty across global supply chains and forced America's economic allies to find ways of placating the White House. For Canada and Mexico, Washington's partners in Trump's U.S.-Mexico-Canada Agreement, this has been a stark reminder of how easily trust can erode, even in the most integrated trade relationship in the world. But the first formal review of the agreement in 2026 offers the opportunity to not only overcome this uncertainty but also to build for a stronger shared future. In terms of trade, the stakes could not be higher: Mexico and Canada are the United States' no.1 and no. 2 trading partners. In 2024, U.S.-Mexico trade reached $840 billion; with Canada, the number was $761 billion (compared with $582 billion in two-way trade with China). These are intricate trading relationships, and the review process will be more than a box-checking exercise. Anxiety over the process is already rampant in Washington and among investors. But the U.S.-Mexico-Canada partners don't just trade enormous amounts with each other; they build things together and export them to the world through complex supply chains. Therefore, the review process is also a chance to modernize North America's trade architecture, reinforce strategic industries, and rebuild the foundations of regional trust and cooperation. America's competitiveness depends heavily on the integrated North American manufacturing platform, and thus on the success of Mexico and Canada, its partners. There are many contentious issues requiring resolution, too many to mention here. However, we can currently identify six key areas where substantial effort will be necessary. Addressing these areas holds the potential for significant improvements in regional competitiveness and economic security. A foreign investment committee for North America. The issue of competition with China was marginally addressed in Article 32.10 of the U.S.-Mexico-Canada Agreement with a provision concerning trade with 'non-market economies,' but the topic of Chinese investment in the region was not covered. The Committee on Foreign Investment in the United States, an interagency body, is tasked with that role to assess and mitigate national security risks within the U.S., while Canada has a similar entity. Mexico, however, has not established such a mechanism. Implementing a trilateral or regionally coordinated investment screening system, tailored to the shared interests and legal frameworks of the U.S., Canada and Mexico, could address this gap effectively. Rules of Origin Are Only as Good as Our Tools to Enforce Them. The North American agreement's stronger rules of origin, especially for automotive and steel products, were a signature achievement. But enforcement remains a weak link. Self-certification and uneven oversight have created loopholes for transshipped and misclassified goods. To address this, North America should move toward a shared product passport system — a digital framework that enables real-time verification of supply chain data and regional content. Without it, even the best rules risk being undermined by outdated systems and bad actors. A Reinvigorated Approach to Energy and Critical Minerals. Chapter 8 of the U.S.-Mexico-Canada Agreement was a compromise: The U.S. and Canada sought more liberalization and investment protections in the energy sector, while Mexico prioritized sovereignty. The review must establish commitments to cooperation, regulatory coordination and investor protections, especially in Mexico, where uncertainty has hindered investment. But just as importantly, there is now an opportunity to establish institutionalized cooperation between the partners in building regional critical minerals supply chains, a key area of strategic competition with China. Dispute Resolution Must Be Enhanced. When the USMCA replaced the North American Free Trade Agreement, dispute settlement mechanisms were seriously weakened. Over the past six years, the need for stronger investor protections and legal recourse in the face of expropriation and regulatory abuse has become clear, especially in the case of Mexico. The agreement's dispute settlement systems must be strengthened to ensure they are timely, impartial and resilient against political pressure. If North America wants to remain an attractive investment environment, confidence in the rules must go hand in hand with confidence in how they're enforced. Labor Standards and the Gap Between Words and Action. The current agreement's labor provisions marked a leap forward from NAFTA. 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Engadget
42 minutes ago
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The golden Trump Phone is almost certainly not made in the US
Not content with a real estate empire and the presidency of the United States, the Trump family is wading into the phone wars like it's 2011 with a shiny gold monstrosity called the T1, the marketing of which leans extensively on the narrowest idea of patriotism. Beyond the immediate question — why do this, like, at all? — the T1 invites a question that's perhaps easier to interrogate: How can any modern smartphone claim to be made in the US? Over the last 40 years America has led a massive globalization effort that allows companies to pick and choose where they develop and build hardware that finds its way back to the US. The best chips to run your phone are built in Taiwan — regardless of the phone maker. The best phones are built in China, India or Vietnam. The displays are often produced in Korea. The glass is actually made in America. The sand that will eventually become the silicon wafers chips are made of is sourced here too. 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