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Business Standard
3 days ago
- Business
- Business Standard
Trump denies 'chickening out' on tariffs amid frequent rate changes
US President Donald Trump wants the world to know he's no chicken just because he's repeatedly backed off high tariff threats. The Republican president's tendency to levy extremely high import taxes and then retreat has created what's known as the TACO" trade, an acronym coined by The Financial Times' Robert Armstrong that stands for Trump Always Chickens Out". Markets generally sell off when Trump makes his tariff threats and then recover after he backs down. Trump was visibly offended when asked about the phrase Wednesday and rejected the idea that he's chickening out", terming the reporter's inquiry nasty". "You call that chickening out? It's called negotiation, Trump said, adding that he sets a ridiculous high number and I go down a little bit, you know, a little bit" until the figure is more reasonable. Trump defended his approach of jacking up tariff rates to 145 per cent on Chinese goods, only to pull back to 30 per cent for 90 days of negotiations. Similarly, last week he threatened to impose a 50 per cent tax on goods from the European Union starting June, only to delay the tariff hike until July 9 so that negotiations can occur while the baseline 10 per cent tariff continues to be charged. Similar dramas have played out over autos, electronics and the universal tariffs that Trump announced on April 2 that were based in part on individual trade deficits with other countries. In each case, Trump generally took the stock market on a roller coaster. Investors sold-off when the tariff threats were announced as they implied slower economic growth and higher prices, which would hurt companies' profits. Stocks then rebounded after Trump stepped back. As of Wednesday afternoon, the S and P 500 stock index was up slightly so far this year. But the index was down as much as 15 per cent on the year on April 8, a reflection of the volatility that Trump's changing policies have created. He said that approach has led to USD 14 trillion in new investment in the US, a figure that appears to be artificially high and has not been fully verified by economic data. Don't ever say what you said, Trump said with regard to the notion of him chickening out. To me, that's the nastiest question. Trump also said that EU officials would not be negotiating if not for his 50 per cent tariff, saying he usually has the opposite problem of being too tough".
Forbes
04-04-2025
- Business
- Forbes
Labor Market Still Strong In March - Calm Before The Storm?
The jobs report for March, just released by the Bureau of Labor Statistics, is stronger than expected. Payroll growth was 228,000. Most economists had predicted a number of about 140,000. The numbers of new payroll jobs in January and February were revised downward to 111,000 and 117,000 respectively, but the 3-month average is 152,000 - very close to what it was for all of 2024. Payroll growth was strongest in health care (54,000) a leisure and hospitality (43,000). In the survey of households, the unemployment rate ticked up very modestly to 4.2 percent, but it stays within the small range of just above 4 percent where it has been for months. The slight bump in unemployment was more due to a rise in labor force participation that declining employment. Are DOGE cutbacks in federal government employment, as well as among contractors and grantees, visible yet? Federal employment declined by 4,000, bringing the total over the last 2 months to 25,000. These numbers surely understate the magnitudes of federal job loss, perhaps because many took severance pay or are appealing their discharges and view themselves as still employed. Professional services employment also rose by just 3,000. The very small jobs gain in this category might well reflect workers whose contracts or research grants have been cancelled by DOGE. Overall, this is a quite strong jobs report; the US labor market and economy have been resilient to date, as employment and consumer spending have remained strong. But there is good reason to believe that this month will be an outlier in an otherwise weaker job market this spring and summer. For one thing, DOGE cutbacks will no doubt be more visible in the coming months. More broadly, consumer sentiment has declined and retail sales growth has weakened, reflecting the uncertainty of customers over where the economy is headed. This, in turn, will likely generate weak or negative job growth in consumer sectors like retail trade and leisure and hospitality in the coming months, as will our new trade war. The chaos and negative forecasts generated by the large new tariffs imposed earlier this week by President Trump have yet to be felt in the job market. But financial markets have reacted very negatively, with the S and P 500 now down by nearly 12 percent from its recent peak and likely to continue falling. Other countries are beginning to retaliate against Trump's tariffs by raising their own, which will weaken employment in export sectors as well as those based on imports whose prices will rise quite substantially. Inflation rates that have stubbornly remained in the vicinity of 3 percent will likely rise. Forecasts of an economic slowdown or even recession are rising. Of course, if Congress passes and Trump signs another major tax cut later this year, it will counteract some of the negative effects of DOGE cuts and tariffs. On the other hand, inflation might further increase, as will concern over an ever-rising level of federal debt. Thus, to say that the economic outlook for 2025 and beyond is uncertain is a great understatement. The road ahead will no doubt be very bumpy for some time. The Federal Reserve faces a challenging economic environment, in which both inflation and economic activity could worsen, creating a dilemma over where to set interest rates. In recent weeks they have been falling, as forecasters predict a weaker economy and investors head to the bond market to find more stability than in stocks (since more investor demand for bonds raises bond prices, which lowers interest rates); future trends are less clear. Stay tuned to see how all of this plays out in the labor market in the months ahead.
Yahoo
31-03-2025
- Business
- Yahoo
‘Mayhem': $38bn wiped off Aussie market
The ASX200 slumped on Monday to the tune of $38bn, as investors fear the worst from the US President Donald Trump's tariff policy. The local benchmark was down 1.6 per cent by lunchtime, following falls of 2 per cent on Wall Street's S and P 500 index on Friday night. But Australia's falls were not alone, with much of the world's markets slumping as a report from Goldman Sachs says Mr Trump's tariff policy is increasing the risk of a recession in the US. According to the report, a recession is now a 35 per cent possibility, up from 20 per cent just a few weeks earlier. IG market analyst Tony Sycamore said global markets listen to Goldman Sachs, with the report sending shares heavily in the red. 'When they put something out like that the markets sit up and take notice,' he said. 'At the very top line the idea of the US heading into a recession ends up creating mayhem. We have 'liberation day' coming out on Thursday. US President Donald Trump has promised his reciprocal tariff plan on April 2 will include all nations, not just a smaller group of 10 to 15 that has the biggest trade imbalance with the United States. While the full details of the tariff plans are unknown, so far he has imposed tariffs on aluminium, steel and the automotive industry, as well as increased tariffs on all goods coming in from China. There are tariffs on Canada and Mexico that are due to start early next week. AMP chief economist Shane Oliver said while a US recession was not their base case, a tariff war added to uncertainty. 'It's ambiguous or unknown as to what Trump ultimately wants here,' Dr Oliver said. 'Is it all bringing production back to the US or is it about negotiating better exports for the US in global markets. 'So [April 2] is not necessarily the end of the matter, which could still escalate from here.' Dr Oliver said in total there were up to $23.9bn worth of exports from Australia to the US across, aluminium, steel, pharmaceuticals, agriculture and copper that could be impacted by Trump's tariffs. 'If lots of countries are hit and a trade war sees an escalation which leads to a slump in global trade, with the US, Europe, Japan and China heading towards a recession, then that would adversely affect us more than the direct impact of the tariffs,' he said. Mr Sycamore said the mayhem could last for years to come. 'There's this real concern that Trump is going to carry on and do what he is going to do, but the rest of the world is getting on with it,' he said. 'The risk is the US is backing itself into the corner. The world is becoming a more uncertain place and that is why the ASX 200 is slumping today.' Mr Sycamore said global markets were currently in a correction, meaning they are down 10 per cent or more, but it could get worse. 'If we go into a recession, the decline will be closer to between 25 and 35 per cent. That is the fear now, especially as Trump and [US secretary of the treasury] Scott Bessent say a recession is a possibility,' he said. 'The problem is if we go into recession, share prices haven't fallen enough. Sign in to access your portfolio
