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Irish Times
29-07-2025
- Business
- Irish Times
Trump's tariffs: What the world got wrong about US president's trade policy
At the beginning of the year, the world was in striking agreement on one point: if US president Donald Trump proceeded with tariffs, it would strengthen the dollar and trigger stagflation. Chief executives, investors and commentators all said the same. Economists estimated that every percentage point increase in the tariff rate would shave 0.1 per cent off US growth and add 0.1 per cent to inflation. But so far, the consequences have been far less disruptive than just about anyone expected. Some analysts still think that's because Trump's threats have been mostly posturing. But the effective US tariff rate has already risen from 2.5 per cent to 15 per cent. Tariff revenue is rolling in at an annual rate above $300 billion (€249 billion), roughly four times the pace this time last year. Many economists had assumed that, by lowering imports, tariffs would strengthen the dollar almost automatically, as an accounting identity. Instead, it suffered its worst fall over the first half of a year since the early 1970s. READ MORE [ EU-US tariffs deal at 15% preferable to 'ruinous' trade war, says Taoiseach Opens in new window ] This unexpected turn is now attributed to the fact that the dollar started the year historically overvalued. Many foreigners were heavily exposed to dollar assets. Of late, they have been hedging those risks and investing more outside the US. Many countries are increasingly attractive places to park money, in part because tariff threats inspired them to push economic reform and cut trade deals with non-US partners. The bigger mystery is why the stagflationary impact of tariffs has yet to materialise in the aggregate data. Is the US really enjoying a free lunch, taking in $300 billion a year in tariff revenues with none of the expected heartburn? By some estimates, foreign exporters are indeed absorbing 20 per cent of the costs – a much larger share than they did in response to tariffs in Trump's first term. The remaining 80 per cent, however, is still getting paid in roughly equal shares by US corporations and consumers. The likely answer is that the negative economic effect of tariffs is being countered by other forces, including the mania for artificial intelligence (AI) and more government stimulus. Since January, estimates of what the big tech companies will spend this year on building out AI infrastructure have risen $60 billion to $350 billion. Smaller businesses are scrambling to catch the wave too, further boosting growth. And all this excitement is neutralising the fear that trade policy uncertainty would dampen animal spirits and freeze new capex. How will the updated National Development Plan shape Ireland in years to come? Listen | 35:59 AI-driven bullishness is also lifting growth by keeping financial conditions loose, even with higher interest rates. According to a new index from the Federal Reserve, those conditions would be neutral, not loose, were it not for the stock market, which has continued rising this year due largely to AI stocks. Meanwhile, the promise of tax relief makes it easier for US corporations to absorb a larger than expected share of the tariff costs, rather than pass it all on to consumers. Trump's 'big, beautiful Bill' is expected to save US businesses about $100 billion this year and more than that in 2026, mainly in tax breaks. That is not to say tariffs have no negative economic effect. The costs are starting to show up in higher prices for big household appliances, sporting goods and toys. Yet the overall inflation rate has been held in check by falling rents and prices for other kinds of goods, including used cars and energy. And those prices are declining for reasons unrelated to tariffs; used-car prices are still retreating from highs created by supply disruptions during the pandemic. So economists were not entirely wrong about the tariffs. And stagflation may yet materialise, particularly if the average effective rate continues to climb. But so far, even a much higher rate has not been enough to overwhelm the larger forces sustaining growth and containing inflation. In a way, what we are seeing is a replay of 2023. That year, too, many expected a big shock (then mainly from Fed rate rises) to dramatically slow US growth, only to find the impact offset by the AI spending boom and the US government's seemingly bottomless capacity to keep doling out fiscal support. What the world got wrong, then and now, starts with its mental frameworks. The timeworn mistake of employing simple models, in which a headline-grabbing input A leads in a straight line to outcome B, has been greatly magnified by the global obsession with Trump. He is the only input anyone cares to analyse any more. But complex economies are rarely shaped by just one factor, not even a shock as big as Trump's tariffs. – Copyright The Financial Times Limited 2025
Daily Mail
14-07-2025
- Business
- Daily Mail
Australia's highest paying jobs
If you're banking on your child becoming a doctor or lawyer to rake in serious cash, you're not completely off the mark, but don't expect them to make Australia's Rich List anytime soon. Fresh tax data from the Australian Taxation Office for 2022-23 reveals who's really earning the big bucks. While medicine still dominates, the journey to billionaire status seems to take a different route. Top of the pay scale? Surgeons, by a long shot, with an average annual income of $472,475, making it the highest-paid job in the country. Close behind are anaesthetists on $447,193, followed by financial dealers, who take home $355,233 annually. Internal medicine specialists, who diagnose tricky conditions and manage long-term illnesses, make $342,457, while psychiatrists, in growing demand amid rising mental health issues, earn $286,146. A broad group of other medical professionals, like radiologists and pathologists, sit around $259,802. Outside of healthcare, mining engineers bring in $206,423, just edging out judges and top-tier lawyers, who earn $206,408. Chief executives and managing directors average $194,987, while financial investment managers aren't far behind at $191,986. Engineering managers take home $185,785, and importers/exporters earn $180,571. Barristers make $167,390, and dentists aren't far behind on $165,723. IT managers, who keep the digital backbone of companies running, earn $163,886. General practitioners, often the first port of call in Australia's healthcare system, make $163,232. Management consultants earn $162,982, guiding businesses through change and strategy. Geologists and geophysicists, who work in everything from mining to climate science, average $162,889. Financial investment consultants follow closely at $162,842, and economists, who shape financial policy and crunch national data, round out the list at $161,633. Further down the list are building project managers at $132,992, drilling plant operators at $132,272, electricians on $111,035, and plumbers at $86,722. Waiters had the lowest average income of $28,885, with many working part-time or casual roles. So who features on the rich list? Not a single medical specialist appeared on the 2025 Rich List of Australia's 200 wealthiest people. In fact, the path to extreme wealth in Australia appears to be paved less by education and expertise - and more by inheritance and property. According to the Australian Financial Review, property remains the most common source of wealth, with 44 of the top 200 fortunes linked to real estate. But family ties are proving just as powerful. Of the 23 mining moguls on the list, eight inherited their wealth from the original fortunes of Lang Hancock and Peter Wright. In media and gaming, nearly half of the Rich List can trace their riches back to just two names: Frank Packer and Keith Murdoch. So much for the self-made millionaire myth: these days, it seems being born into the right family is still the ultimate power move. Others featured on the rich list had founded their own companies, such as Melanie Perkins of Canva who's now worth $5.8billion and Mike Cannon-Brookes of Atlassian worth $12.4billion. David Burt, director of entrepreneurship at UNSW's start-up incubator told the Australian Financial Review that while the path to the top 200 may not lie in medicine, neither did it lie in being an employee. He recommended parents encouraged entrepreneurialism in their offspring. 'Entrepreneurs come from all walks of life,' he said. 'Do a lemonade stand on the corner, get them to try and raise money for a charity, a job where they're forced to talk to people. Successful entrepreneurs have the ability to ask for that sale or ask for real feedback.' But if the aim is simply to get rich, it won't happen, he said. 'If your only motivator is, "I want to make money as fast as possible" then don't start a company. 'That will not sustain you through the terror that comes with building a business because there's a lot of uncertainty, stress, ambiguity, financial risk, late nights and early mornings.'
