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Yahoo
2 hours ago
- Business
- Yahoo
U.S. Tariffs Are a Big Win for Mexico, Report Finds
Tariffs are expected to push companies to bring manufacturing back to the U.S., but a new report said that automation will likely replace some of that job creation. While reshoring has created about 2 million U.S. jobs over the past decade and a half, manufacturing still accounts for only about 8% of the U.S. workforce. 'Nearshoring,' where production is moved to closer or more friendly countries, is seen as a more likely result of tariffs, with Mexico, Vietnam, and India expected to be big beneficiaries, a Bank of America report are set to be a big win for one North American country: Mexico. A new report from Bank of America showed that while higher import taxes pushed by President Donald Trump may bring some manufacturing back to the U.S., the policy is more likely to create even more production opportunities for nearby countries like Mexico. According to the BofA Global Research survey of 56 of the firm's analysts, only 20% of respondents expect that tariffs and other policy changes will result in significant 'reshoring,' where manufacturing that is based in another country is relocated to the U.S. Instead, nearly two in five said that relocation back to the U.S. is more likely to be "mild" and focused on specific sectors. 'Therefore, nearshoring, or friendshoring, appears much more likely to benefit from tariffs this time around,' the June 5 report said. 'Mexico is considered to be a net beneficiary from the [move] from cost efficiency to geopolitical risk management.' The report comes as Mexico has been subject to its own set of tariffs by the Trump administration, though some have been delayed. Trump has argued that tariffs will benefit the U.S. economy, namely that they will bring manufacturing back to the U.S. and reduce the U.S. trade deficit. However, the report showed that most reshoring is likely to occur in select industries like electronics, biotechnology, and metals and mining. Reshoring already has been happening, the report found, creating nearly 2 million U.S. manufacturing jobs over the past 15 years, with about half of that coming in the past five years. However, manufacturing jobs still only account for 8% of the U.S. workforce, down from 30% in the 1980s. That's thanks to higher tariffs introduced in Trump's first administration, along with job-creating legislative initiatives from former President Joe Biden's administration like the Inflation Reduction Act (IRA) and the Creating Helpful Incentives to Produce Semiconductors (CHIPs) Act. Most of the new manufacturing jobs in the U.S. are focused on electrical equipment, appliances, electric vehicle batteries, and computers, as well as transportation equipment like cars and airplanes, the report said. But advances in automation may undercut some job creation, it added. 'Since most of the reshoring will be concentrated in industrials and manufacturing, reshoring will not create a significant number of new jobs as those new production lines will be mostly automated,' the report said. What's more expected, especially in more labor-focused industries, is 'friendshoring' or 'nearshoring,' in which production is moved out of places like China and either closer to the U.S., or to places with better U.S. relations, the survey found. 'The United States-Mexico-Canada Agreement (USMCA) and geographical proximity makes Mexico a more straightforward potential beneficiary,' the report found. 'Additionally, Mexico should be a net beneficiary in transportation, food and beverages, restaurants, and homebuilders.' Other countries likely to benefit from this shift are Vietnam, Thailand, and India, the report found. Read the original article on Investopedia Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
New Straits Times
12 hours ago
- Business
- New Straits Times
Rupee nearly flat, tracking subdued Asia FX; forward premiums retreat
MUMBAI: The Indian rupee was nearly unchanged on Monday, tracking muted moves in Asian currencies, while dollar-rupee forward premiums eased after stronger-than-expected US labour market data dented hopes of rate cuts by the Federal Reserve. The rupee was at 85.6175 against the US dollar as of 11:00 a.m. IST, little changed from its close at 85.6250 in the previous session. The dollar index was hovering just shy of the 99 handle after rising nearly 0.5 per cent on Friday, boosted by upbeat US jobs data which gave investors some relief following bleak US economic data last week. "The most likely near-term catalyst for USD upside lies in the ongoing US data resilience or even a reacceleration, even if temporary," BofA Global Research said a note. The jobs data also pegged back hopes of Fed rate cuts, with interest rate futures now pricing in 60 per cent odds of a reduction in or before September, compared to nearly 75 per cent before the report was released, according to the CME Group's FedWatch Tool. The scaling back of expectations pushed up near-tenor US bond yields, weighing on dollar-rupee forward premiums, with the 1-year implied yield declining to 1.78 per cent, its lowest level since July 2024. Meanwhile, the BSE Sensex and Nifty 50 - India's benchmark equity indexes - rose 0.5 per cent each on the day, tracking gains in regional equities. The focus on Monday will be on talks aimed at mending a trade rift between the United States and China. The discussions are expected to focus on critical minerals, whose production is dominated by China. In April, China had decided to suspend exports of a wide range of rare earths and related magnets. The curbs have upended supply chains crucial to automakers, aerospace manufacturers, semiconductor companies and military contractors.
Yahoo
4 days ago
- Business
- Yahoo
BofA stays bearish on the U.S. dollar
-- BofA Global Research reiterated its bearish stance on the U.S. dollar in a note Thursday, even as it acknowledged that the view is becoming increasingly mainstream. 'We remain bearish on the dollar, but recognize this is becoming an increasingly consensus view, posing risks,' analysts wrote. While BofA continues to expect medium- to long-term weakness in the greenback, the firm outlined several upside risks that could support the dollar in the short term. 'Upside USD risks: ongoing US data resilience, further cooling of trade tensions, & congress finding the fiscal 'sweet spot,'' the bank stated. Still, analysts cautioned that those scenarios, while plausible, do not alter the broader trajectory. 'We remain core dollar bears, but near-term upside risks cannot be ignored,' the firm wrote. The ongoing strength in U.S. economic data remains a key risk to that outlook, even if the trend proves temporary. 'The most likely near-term catalyst for USD upside lies in the ongoing US data resilience or even a reacceleration, even if temporary.' However, BofA maintained that the longer-term effects of escalating trade tensions would likely weigh on the dollar over time. 'We view the longer-term impacts of a US-induced global trade war as ultimately keeping the USD as the main relief valve for the economy, especially from a starting point of elevated valuations,' the analysts noted. Ultimately, the bank feels that any short-term gains in the dollar are expected to be fleeting. 'We would expect any near-term USD rallies to ultimately be seen as selling opportunities, barring major policy and economic shifts,' BofA said. Related articles BofA stays bearish on the U.S. dollar U.S. dollar dips as Trump delays EU tariff hike Dollar surges on US-China trade deal, but Deutsche Bank sees reason for caution Sign in to access your portfolio
Time of India
6 days ago
- Business
- Time of India
Will the US dollar continue to weaken amid economic uncertainties and rising treasury yields? Claudio Irigoyen answers
The US dollar is expected to remain somewhat soft, but not necessarily experience a sharp disorderly decline, said Claudio Irigoyen , head of global economics research at BofA Global Research . In a conversation with Himadri Buch, New York-based Irigoyen shared his views on the US dollar outlook , treasury yields , the fiscal bill and why India continues to stand out in the emerging markets pack. Edited excerpts: The US treasury yields have been rising while the US dollar is struggling to stay steady. Is there a crisis of confidence? Sponsored Links Sponsored Links Promoted Links Promoted Links You May Like Villa For Sale in Dubai Might Surprise You Villas in Dubai | Search ads Learn More Undo What we are witnessing is probably a recalibration of expectations in response to a confluence of fiscal and policy uncertainties. The uncertainty is certainly weighing on consumer and business sentiment, prompting a natural wait-and-watch approach among companies, particularly about investment decisions. However, this hesitation, when paired with the broader fiscal gap, is prompting markets to demand a higher risk premium on US assets. That is leading to a sharp rise in treasury yields. At the same time, global investors, who had been heavily overweight on US assets and underweight on European assets, have begun rebalancing their portfolios. This is contributing to the US dollar's relative weakness against the euro and other currencies. I expect the US dollar to remain somewhat soft, but not necessarily experience a sharp disorderly decline. However, this should not be misconstrued as a threat to the US dollar's reserve currency status. Do you see money moving out of the US on account of the dollar weakening? Which are the regions that could benefit? The global investor base had become significantly overweight on US assets, so some moderation was to be expected. Consumption in the US is slowing but not to a degree that signals recession. While the US outlook has softened, it remains more compelling than much of Europe, where structural challenges persist and growth remains tepid. Among emerging markets, there are bright spots. India stands out as a resilient story, benefiting from structural reforms, demographic momentum and robust domestic demand. A few others may attract flows on a relative basis, but we should be realistic — when global growth slows, as we now expect it to, very few markets are immune. In a world, where US and China, the twin engines of global demand, are slowing, capital may rotate selectively, but broad decoupling is unlikely. Live Events How are investors looking at India? Global investors continue to view India as one of the more compelling narratives in an otherwise challenging global environment. While growth expectations have moderated slightly, we still expect India's GDP to expand 6.3% in 2025. Inflation is also trending lower, creating space RBI to cut rates further. Compared to other emerging markets, India's story remains structurally solid. Your evaluation of the US tax bill? The fiscal bill is one of the key concerns for the US economy. While the bill may provide some immediate stimulus, it risks entrenching a structural fiscal imbalance at a particularly fragile juncture. Moreover, the risks are that higher rates on the back of a larger deficit abort any stimulative effect on the economy. Preliminary assessments suggest that the approved bill could validate a primary deficit of around 3.5% of GDP and a headline deficit of 6.9%, which will not be sustainable in the absence of robust revenue growth. The dynamics of fiscal policy are now more critical than ever
Economic Times
6 days ago
- Business
- Economic Times
Will the US dollar continue to weaken amid economic uncertainties and rising treasury yields? Claudio Irigoyen answers
At the same time, global investors, who had been heavily overweight on US assets and underweight on European assets, have begun rebalancing their portfolios. Synopsis BofA Global Research's Claudio Irigoyen suggests the US dollar will likely remain soft without a major collapse. Rising US treasury yields reflect recalibrated expectations due to fiscal and policy uncertainties, impacting consumer and business sentiment. Portfolio rebalancing by global investors, shifting away from US assets, further contributes to the dollar's struggle. The US dollar is expected to remain somewhat soft, but not necessarily experience a sharp disorderly decline, said Claudio Irigoyen, head of global economics research at BofA Global Research. In a conversation with Himadri Buch, New York-based Irigoyen shared his views on the US dollar outlook, treasury yields, the fiscal bill and why India continues to stand out in the emerging markets pack. Edited excerpts: ADVERTISEMENT The US treasury yields have been rising while the US dollar is struggling to stay steady. Is there a crisis of confidence?What we are witnessing is probably a recalibration of expectations in response to a confluence of fiscal and policy uncertainties. The uncertainty is certainly weighing on consumer and business sentiment, prompting a natural wait-and-watch approach among companies, particularly about investment decisions. However, this hesitation, when paired with the broader fiscal gap, is prompting markets to demand a higher risk premium on US assets. That is leading to a sharp rise in treasury yields. At the same time, global investors, who had been heavily overweight on US assets and underweight on European assets, have begun rebalancing their portfolios. This is contributing to the US dollar's relative weakness against the euro and other currencies. I expect the US dollar to remain somewhat soft, but not necessarily experience a sharp disorderly decline. However, this should not be misconstrued as a threat to the US dollar's reserve currency status. Do you see money moving out of the US on account of the dollar weakening? Which are the regions that could benefit? The global investor base had become significantly overweight on US assets, so some moderation was to be expected. Consumption in the US is slowing but not to a degree that signals recession. While the US outlook has softened, it remains more compelling than much of Europe, where structural challenges persist and growth remains tepid. Among emerging markets, there are bright spots. India stands out as a resilient story, benefiting from structural reforms, demographic momentum and robust domestic demand. A few others may attract flows on a relative basis, but we should be realistic — when global growth slows, as we now expect it to, very few markets are immune. In a world, where US and China, the twin engines of global demand, are slowing, capital may rotate selectively, but broad decoupling is unlikely. How are investors looking at India? Global investors continue to view India as one of the more compelling narratives in an otherwise challenging global environment. While growth expectations have moderated slightly, we still expect India's GDP to expand 6.3% in 2025. Inflation is also trending lower, creating space RBI to cut rates further. Compared to other emerging markets, India's story remains structurally solid. ADVERTISEMENT Your evaluation of the US tax bill? The fiscal bill is one of the key concerns for the US economy. While the bill may provide some immediate stimulus, it risks entrenching a structural fiscal imbalance at a particularly fragile juncture. Moreover, the risks are that higher rates on the back of a larger deficit abort any stimulative effect on the economy. Preliminary assessments suggest that the approved bill could validate a primary deficit of around 3.5% of GDP and a headline deficit of 6.9%, which will not be sustainable in the absence of robust revenue growth. The dynamics of fiscal policy are now more critical than ever (You can now subscribe to our ETMarkets WhatsApp channel) Nikita Papers IPO opens on May 27, price band set at Rs 95-104 per share Nikita Papers IPO opens on May 27, price band set at Rs 95-104 per share Why gold prices could surpass $4,000: JP Morgan's bullish outlook explained Why gold prices could surpass $4,000: JP Morgan's bullish outlook explained Cyient shares fall over 9% after Q4 profit declines, core business underperforms Cyient shares fall over 9% after Q4 profit declines, core business underperforms L&T Technology Services shares slide 7% after Q4 profit dips L&T Technology Services shares slide 7% after Q4 profit dips Trump-Powell standoff puts U.S. Rate policy in crosshairs: Who will blink first? 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