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Yahoo
7 hours ago
- Business
- Yahoo
Trump wants a manufacturing boom. The industry is buckling.
President Donald Trump is vowing to spark a manufacturing boom with tariffs to protect American workers and industry. So far, it's manufacturers that have borne the brunt of the pain. The president's surprise decision to raise tariffs on imported steel and aluminum to 50 percent will hit domestic manufacturing just as a new report shows the industry is already contracting. Uncertainty about where tariff rates will ultimately land — or where they'll be applied — has forced businesses to make hard decisions that could cut into both profits and hiring. And a leading trade group on Thursday called on Trump to give the companies a break on the tariffs. 'For a president who is intent on building U.S. manufacturing, the tariff strategy he's laid out is remarkably short-sighted,' said Gordon Hanson, a Harvard Kennedy School professor whose groundbreaking 2016 research work, 'The China Shock,' was among the first to sound the alarm about the threat to American industry. 'It fails to recognize what modern supply chains look like.' 'Even if you're intent on reshoring parts of manufacturing, you can't do it all,' he said. 'Steel and aluminum are part of that.' If Trump's tariffs fail to result in a manufacturing renaissance — a central focus of his presidential campaign — it could weaken the prospects of a GOP coalition that's increasingly reliant on working-class voters who supported his protectionist trade policies. But as unanticipated tariffs continue to drive up input costs for companies that need steel and aluminum for production, the warning signs emanating from manufacturers are getting louder. An index published this week by the Institute for Supply Management, which tracks manufacturing, slipped for the third straight month in May as companies made plans to scale back production. A quarterly survey conducted by the National Association of Manufacturers reported the steepest drop in optimism since the height of the Covid-19 pandemic, with trade uncertainty and raw material costs cited as top concerns. Federal Reserve data this month reported weaker manufacturing output. The manufacturers' association on Thursday urged Trump to develop a 'speed pass' that would allow companies to avoid costly new duties on imported raw materials and components that are essential to U.S. producers. 'The steel and aluminum tariffs are almost custom-made to hurt American manufacturing,' said Ernie Tedeschi, a former top Biden administration economist who's now with the Yale Budget Lab. Trump and top administration officials argue that tariffs will encourage investment in domestic manufacturers, which should lead to better-paying jobs, a more resilient economy and more secure supply chains. Exports climbed in April as the president's tariffs took hold, which contributed to an eye-popping decline in the U.S. trade deficit. Indeed, the overall economy remains solid, and businesses are continuing to hire, according to Friday's jobs report for May. Despite the trade headwinds, employment in the manufacturing sector has remained steady since Trump took office. 'As the president says, if you don't make steel, you can't fight a war. He's protecting that industry and bringing it back,' Commerce Secretary Howard Lutnick told Senate lawmakers this week. 'You're going to see more steel and aluminum furnaces and mills in the history of this country get built over the next three years.' The White House did not respond to a request for comment. Trump welcomed the monthly jobs report, posting on Truth Social:'AMERICA IS HOT! SIX MONTHS AGO IT WAS COLD AS ICE! BORDER IS CLOSED, PRICES ARE DOWN. WAGES ARE UP!' Still, domestic manufacturers who rely on international supply chains for critical steel and aluminum inputs will face tough choices if they want to maintain their profits while keeping output steady. 'Higher costs are expected. Higher input prices. The question is, what do you do with those costs? How much can you pass along to the consumer? How much can you negotiate with your suppliers?' said Andrew Siciliano, a partner at KPMG who leads the consulting firm's trade and customs practice. The challenges posed by the increase in steel and aluminum tariffs are particularly acute because it's far from clear whether domestic suppliers will be able to meet the demands of domestic manufacturers. Almost half the aluminum used in the U.S. last year came from foreign sources, according to federal data, and roughly a quarter of all steel is imported. Either way, 'input costs are going to be higher,' Siciliano said. 'If they pass it on, it could affect demand. If they don't pass it on, it could affect profitability.' That isn't to say manufacturers won't benefit from tariffs in the long term. To the extent that Trump's overall tariff regime limits imports, U.S.-based industrial production could expand to address unmet demand. The Budget Lab's analysis of Trump's tariff regime — which includes the 50 percent tariffs on steel and aluminum — projects that manufacturing output could grow by 1.3 percent over the next five years if existing import duties are left in place. But Tedeschi cautioned that growth may exclude segments like electronic and semiconductor production — which tend to generate higher incomes for workers. Meanwhile, output in other sectors like construction or agriculture would likely contract. Julia Coronado, founder of MacroPolicy Perspectives, also said the flurry of new import duties may prompt some manufacturers to actually move their manufacturing facilities offshore rather than subject their supply chains and production processes to multiple tariffs. 'If I have to assemble a bunch of parts and inputs, why don't I just don't do that on the Canadian or Mexican side of the border and then pay the tariff on the final good?' she said. An even bigger challenge may involve finding and training workers who can staff up any facilities that reshore. Most Americans work in the service sector and, to the extent tariffs lead to reshoring, those facilities will likely rely heavily on automation, according to economists at the Bank of America Institute. Finding qualified workers in the U.S. is either too difficult or too expensive. 'Whatever manufacturing production comes back to the U.S. will require far fewer jobs than 30 or 40 years ago,' Hanson said. 'It's just the way the world has gone."
Politico
7 hours ago
- Business
- Politico
Trump wants a manufacturing boom. The industry is buckling.
President Donald Trump is vowing to spark a manufacturing boom with tariffs to protect American workers and industry. So far, it's manufacturers that have borne the brunt of the pain. The president's surprise decision to raise tariffs on imported steel and aluminum to 50 percent will hit domestic manufacturing just as a new report shows the industry is already contracting. Uncertainty about where tariff rates will ultimately land — or where they'll be applied — has forced businesses to make hard decisions that could cut into both profits and hiring. And a leading trade group on Thursday called on Trump to give the companies a break on the tariffs. 'For a president who is intent on building U.S. manufacturing, the tariff strategy he's laid out is remarkably short-sighted,' said Gordon Hanson, a Harvard Kennedy School professor whose groundbreaking 2016 research work, 'The China Shock,' was among the first to sound the alarm about the threat to American industry. 'It fails to recognize what modern supply chains look like.' 'Even if you're intent on reshoring parts of manufacturing, you can't do it all,' he said. 'Steel and aluminum are part of that.' If Trump's tariffs fail to result in a manufacturing renaissance — a central focus of his presidential campaign — it could weaken the prospects of a GOP coalition that's increasingly reliant on working-class voters who supported his protectionist trade policies. But as unanticipated tariffs continue to drive up input costs for companies that need steel and aluminum for production, the warning signs emanating from manufacturers are getting louder. An index published this week by the Institute for Supply Management, which tracks manufacturing, slipped for the third straight month in May as companies made plans to scale back production. A quarterly survey conducted by the National Association of Manufacturers reported the steepest drop in optimism since the height of the Covid-19 pandemic, with trade uncertainty and raw material costs cited as top concerns. Federal Reserve data this month reported weaker manufacturing output. The manufacturers' association on Thursday urged Trump to develop a 'speed pass' that would allow companies to avoid costly new duties on imported raw materials and components that are essential to U.S. producers. 'The steel and aluminum tariffs are almost custom-made to hurt American manufacturing,' said Ernie Tedeschi, a former top Biden administration economist who's now with the Yale Budget Lab. Trump and top administration officials argue that tariffs will encourage investment in domestic manufacturers, which should lead to better-paying jobs, a more resilient economy and more secure supply chains. Exports climbed in April as the president's tariffs took hold, which contributed to an eye-popping decline in the U.S. trade deficit. Indeed, the overall economy remains solid, and businesses are continuing to hire, according to Friday's jobs report for May. Despite the trade headwinds, employment in the manufacturing sector has remained steady since Trump took office. 'As the president says, if you don't make steel, you can't fight a war. He's protecting that industry and bringing it back,' Commerce Secretary Howard Lutnick told Senate lawmakers this week. 'You're going to see more steel and aluminum furnaces and mills in the history of this country get built over the next three years.' The White House did not respond to a request for comment. Trump welcomed the monthly jobs report, posting on Truth Social: 'AMERICA IS HOT! SIX MONTHS AGO IT WAS COLD AS ICE! BORDER IS CLOSED, PRICES ARE DOWN. WAGES ARE UP!' Still, domestic manufacturers who rely on international supply chains for critical steel and aluminum inputs will face tough choices if they want to maintain their profits while keeping output steady. 'Higher costs are expected. Higher input prices. The question is, what do you do with those costs? How much can you pass along to the consumer? How much can you negotiate with your suppliers?' said Andrew Siciliano, a partner at KPMG who leads the consulting firm's trade and customs practice. The challenges posed by the increase in steel and aluminum tariffs are particularly acute because it's far from clear whether domestic suppliers will be able to meet the demands of domestic manufacturers. Almost half the aluminum used in the U.S. last year came from foreign sources, according to federal data, and roughly a quarter of all steel is imported. Either way, 'input costs are going to be higher,' Siciliano said. 'If they pass it on, it could affect demand. If they don't pass it on, it could affect profitability.' That isn't to say manufacturers won't benefit from tariffs in the long term. To the extent that Trump's overall tariff regime limits imports, U.S.-based industrial production could expand to address unmet demand. The Budget Lab's analysis of Trump's tariff regime — which includes the 50 percent tariffs on steel and aluminum — projects that manufacturing output could grow by 1.3 percent over the next five years if existing import duties are left in place. But Tedeschi cautioned that growth may exclude segments like electronic and semiconductor production — which tend to generate higher incomes for workers. Meanwhile, output in other sectors like construction or agriculture would likely contract. Julia Coronado, founder of MacroPolicy Perspectives, also said the flurry of new import duties may prompt some manufacturers to actually move their manufacturing facilities offshore rather than subject their supply chains and production processes to multiple tariffs. 'If I have to assemble a bunch of parts and inputs, why don't I just don't do that on the Canadian or Mexican side of the border and then pay the tariff on the final good?' she said. An even bigger challenge may involve finding and training workers who can staff up any facilities that reshore. Most Americans work in the service sector and, to the extent tariffs lead to reshoring, those facilities will likely rely heavily on automation, according to economists at the Bank of America Institute. Finding qualified workers in the U.S. is either too difficult or too expensive. 'Whatever manufacturing production comes back to the U.S. will require far fewer jobs than 30 or 40 years ago,' Hanson said. 'It's just the way the world has gone.'
Yahoo
9 hours ago
- Business
- Yahoo
4 Top No-Load Mutual Funds to Add to Your Portfolio
Major U.S. indexes, such as the Nasdaq Composite and the Dow Jones Industrial Average, have recovered from the start of 2025 but remain down by 0.1% and 0.5%, respectively, whereas the S&P 500 has gained 1%. Investors' sentiment remains clouded due to mixed domestic economic data, geopolitical tensions and ongoing concerns regarding Trump's foreign tariff policy with major trading partners. The personal consumption expenditure (PCE) index, the Federal Reserve's preferred inflation gauge, has climbed 0.1% sequentially in April and 2.1% on a year-over-year basis, after increasing 2.3% in March. Consumer spending, which is the largest component of the U.S. GDP, rose 0.2% in April after an unrevised 0.7% jump in March. Personal income increased 0.8% month over month in April. Disappointing jobs data raise concerns as businesses struggle due to tariff uncertainties. The economy added only 37,000 private employees in May, less than the downwardly revised 60,000 jobs in April and sharply lower than the consensus estimate of 110,000. The Institute for Supply Management's (ISM) Services Purchasing Managers Index (PMI) fell to 49.9 in May from April's reading of 51.6. Any reading below 50% indicates a contraction in service activities. Geopolitical tension has flared up due to Ukraine's fresh attack on Russia's military assets, which has caused panic and might affect the global supply chain. Amid the current market conditions, investors looking for higher returns can consider no-load mutual funds like Fidelity Select Semiconductors Portfolio FSELX, Invesco SteelPath MLP Select 40 MLPTX, DWS Science and Technology KTCSX and Fidelity Select Defense & Aerospace FSDAX as these have a low expense ratio, which can translate into higher returns. Other factors such as the funds' performance history, investment style and risk tolerance also act in their favor. Investors with disposable income who wish to diversify their portfolios can opt for no-load mutual funds. These passively managed funds don't have any commission fees or any other charges for buying and selling that are generally associated with actively managed funds. The sales charges — referred to as a 'front-end load,' which is charged upon purchasing shares, or 'back-end load,' which is charged upon the selling of shares — are absent in such funds because shares are distributed directly by the investment company, instead of any third-party involvement like a broker, advisor or other professionals. Even a few additional basis points saved in fees can boost the overall return by minimizing expenses. However, charges like the fund's expense ratio, 12b-1 fees for marketing, distribution, and service, redemption fees, exchange fees, and account fees are commonly charged even if there is no load. The load charges are generally within the range of 0-6%. To understand the math, let's assume an investor wants to invest $1000 in a mutual fund that has a 5% entry and exit load. Then, $950 ($1000-$50 [5% of $1000]) is left with the mutual fund house to invest. Now, let's assume the fund has given a 15% return over the year. So, the current value of the portfolio is $1092.5 ($950+ $142.5 [15% of $950]). Now, when an exit load of 5% is applied, the investor is left with $1037.87 ($1092.5-$54.63 [5% of $1092.5]). According to the above hypothesis, the returns earned by the investor with front and back load are 3.78%, whereas he could have enjoyed a much higher return without load. We have thus selected four no-load mutual funds that boast a Zacks Mutual Fund Rank #1 (Strong Buy), have positive three-year and five-year annualized returns, minimum initial investments within $5000, and carry a low expense ratio. Notably, mutual funds, in general, reduce transaction costs and diversify portfolios without an array of commission charges mostly associated with stock purchases (read more: Mutual Funds: Advantages, Disadvantages, and How They Make Investors Money). Fidelity Select Semiconductors Portfolio invests most of its net assets in common stocks of domestic and foreign companies that areprincipally engaged in the design, manufacture, or sale of semiconductors and semiconductor equipment. FSELX chooses to invest in stocks based on fundamental analysis factors such as each issuer's financial condition and industry position, and market and economic conditions. Adam Benjamin has been the lead manager of FSELX since March 15, 2020. Most of the fund's exposure was to companies like NVIDIA (25.0%), Taiwan Semiconductor Manufacturing (8.3%) and Broadcom (8%) as of Feb. 28, 2025. FSELX's three-year and five-year annualized returns are nearly 24.4% and 28.3%, respectively. FSELX has an annual expense ratio of 0.62%. To see how this fund performed compared to its category and other 1, 2, and 3 Ranked Mutual Funds, please click here. Invesco SteelPath MLP Select 40 fund invests most of its assets, along with borrowings, if any, in the master limited partnership of companies, which are engaged in the transportation, storage, processing, refining, marketing, exploration, production, and mining of minerals and natural resources. MLPTX advisors also invest in derivatives and other instruments with similar economic characteristics in the same industry. Stuart Cartner has been the lead manager of MLPTX since April 1, 2010. Most of the fund's exposure was in companies such as MPLX (8.4%), Energy Transfer (7.8%), and Western Midstream Partners(7%) as of Feb. 28, 2025. MLPTX'sthree-year and five-year annualized returns are 20.10% and 28.4%, respectively. MLPTX has an annual expense ratio of 1.01%. DWS Science and Technology fund invests most of its assets, along with borrowings, if any, incommon stocks and initial public offerings of domestic science and technology companies, irrespective of their market capitalization. KTCSX advisors may also invest in foreign companies from the technology sector or other industries within the technology sector from developed and emerging market economies. Sebastian P. Werner has been the lead manager of KTCSX since Dec. 1, 2017. Most of the fund's exposure was in companies like Meta Platforms (9.6%), NVIDIA (8.1%) and Microsoft (7.7%) as of Jan. 31, 2025. KTCSX's three-year and five-year annualized returns are 18.8% and 17.3%, respectively. KTCSX has an annual expense ratio of 0.68%. Fidelity Select Defense & Aerospace fund invests most of its net assets in common stocks of domestic and foreign companies that areprincipally engaged in research, manufacture, or sale of products or services related to the defense or aerospace industries. FSDAX advisors choose to invest in stocks based on fundamental analysis factors such as financial condition and industry position, along with market and economic conditions. Clayton Pfannenstiel has been the lead manager of FSDAX since December 27, 2021. Most of the fund's holdings were in companies like General Electric (20.9%), The Boeing Company (11.9%) and Raytheon Technologies (10%) as of Feb. 28, 2025. FSDAX's three-year and five-year annualized returns were 17.8% and 16.3%, respectively. FSDAX has an annual expense ratio of 0.65%. Zacks' free Fund Newsletter will brief you on top news and analysis, as well as top-performing mutual funds, each week. Get it free >> Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Get Your Free (FSDAX): Fund Analysis Report Get Your Free (FSELX): Fund Analysis Report Get Your Free (MLPTX): Fund Analysis Report Get Your Free (KTCSX): Fund Analysis Report This article originally published on Zacks Investment Research ( Zacks Investment Research
Axios
a day ago
- Business
- Axios
Tariffs are raising prices, surveys show
Tariffs raise prices. It's textbook economics, and we're starting to see it happen now, anecdotally at least. Why it matters: To put it mildly, Americans dislike high inflation. It's politically toxic, as Democrats recently learned. The big picture: Tariffs are happening fast, and they're a moving target. Yesterday's 25% is today's 50%. Increases have yet to show up in the official inflation data. State of play: Surveys and anecdotes about price increases are piling up. "Tariffs have increased the cost of doing business," a firm in transportation and warehousing said in the comments of yesterday's Institute for Supply Management report on activity in the service sector. The Beige Book, a collection of nationwide business anecdotes published by the Federal Reserve, said prices increased at a "moderate pace" since its last report in April. One standout anecdote: A clothing retailer told the Boston Fed it took a "rare step" to re-tag its inventory "with higher prices to cover the cost of tariffs, and those items will hit store shelves this summer." Tariff-related price hikes appear to be hitting the shelves at Walmart and Target, Business Insider reported this week. Employees have been posting pictures of certain products showing sharp increases. Zoom in: About three-fourths of companies said they were either fully or somewhat passing along higher tariffs by raising prices, per a survey of businesses out Wednesday from the New York Fed. The survey was conducted among manufacturers and service firms early last month, before President Trump lowered tariffs on Chinese imports to 30% from 145%. While this is a regional survey of New York and New Jersey firms, the authors indicated that these are trends observed nationwide. The intrigue:"A significant share" of firms surveyed said they raised prices of goods and services unaffected by tariffs, as a way to spread higher costs across inventory, or to take advantage of customer expectations that prices are rising. It's not a new phenomenon. After the first Trump administration raised tariffs on washing machines, the price of dryers — unaffected by tariffs — increased as well, while companies took advantage of the moment. A significant point of contention during the high inflation of 2022 was whether businesses were "taking price," or using the moment to fatten their profit margins at a time when consumers expected to pay more. "A big increase in the tariff level is a perfect opportunity for companies to use a price shock to raise prices," Alex Jacquez, an economist who served in the Biden White House, said on a press call Wednesday. Nearly everyone has heard about the tariffs. "People are primed to expect prices to go up," he said. Reality check: Tariff policies will increase inflation by 0.4 points in 2025 and 2026, "reducing the purchasing power of households and businesses," per the latest estimates from the Congressional Budget Office out yesterday. That's not nothing, but it's not near what we saw in 2022 and 2023. The other side: There are some, particularly in the Trump administration, who argue the costs of tariffs are outweighed by the benefits, like returning production back to the U.S., creating better jobs, and strengthening supply chains. Between the lines: Higher prices are going to hit differently than they did when inflation spiked in 2022. Back then the economy kept chugging along thanks to an overheated labor market, which gave companies the freedom to keep raising prices, and people had jobs and could afford to pay. The cushion is missing now, former Fed economist Claudia Sahm wrote on Substack. And that could make it harder to raise prices, she said.
Arab Times
2 days ago
- Business
- Arab Times
Asian shares trade mixed after Wall Street's rally stalls on US economic data
TOKYO, June 5, (AP): Asian shares were mixed on Thursday, as Wall Street's big recent rally lost some momentum following a pair of potentially discouraging reports on the American economy. US futures edged lower and oil prices declined. Japan's benchmark Nikkei 225 shed 0.2% to 37,658.46, while Australia's S&P/ASX 200 declined nearly 0.1% to 8,535.10. In South Korea, the Kospi jumped 2.1% to 2,829.48 after the country's new president and leading liberal politician Lee Jae-myung began his term, vowing to restart talks with North Korea and beef up a trilateral partnership with the US and Japan. Hong Kong's Hang Seng gained 0.9% to 23,856.54, while the Shanghai Composite was little changed, inching down less than 0.1% to 3,374.30. On Wednesday, the S&P 500 finished the day virtually unchanged at 5,970.81 and remained 2.8% below its all-time high. The Dow Jones Industrial Average fell 0.2% to 42,427.74, and the Nasdaq composite added 0.3% to 19,460.49. The action was stronger in the bond market, where Treasury yields tumbled following the weaker-than-expected economic updates. One said that activity contracted for US retailers, finance companies and other businesses in the services industries last month, when economists were expecting to see growth. Businesses told the Institute for Supply Management in its survey that all the uncertainty created by tariffs is making it difficult for them to forecast and plan. A second report from ADP suggested US employers outside of the government hired far fewer workers last month than economists expected That could bode ill for Friday's more comprehensive jobs report coming from the US. Labor Department, which is one of Wall Street's most anticipated data releases each month. So far, the US job market has remained remarkably resilient despite years of high inflation and now the threat of President Donald Trump's high tariffs. But weakness there could undermine the rest of the economy
