Latest news with #TACO
Mint
2 days ago
- Business
- Mint
TACO debate: Trump's tariff disruptions seem unlikely to damage the US economy this year
Next Story Thomas Black The US President has 'chickened out' of harsh tariffs before. Even if he doesn't back off from his August levies, US retailers have already negotiated burden sharing with Chinese suppliers. Whatever tariff surprises Donald Trump springs won't show up until next year. Trump's repeated tariff tweaks and pull backs have earned him the moniker of TACO—Trump Always Chickens Out. Gift this article While disruptive, the tariffs that President Donald Trump has been glibly tossing out, including new ones last week, haven't yet produced the widespread damage to the economy that many had predicted. While disruptive, the tariffs that President Donald Trump has been glibly tossing out, including new ones last week, haven't yet produced the widespread damage to the economy that many had predicted. In large part that's because Trump has tweaked and pulled back enough on them to prevent a catastrophe. This has earned him the moniker of TACO—Trump Always Chickens Out—but this is a bit misplaced because the tariffs are real and the money flowing in from these duties is large—to the tune of $26.6 billion in June compared with $6.3 billion in the month a year earlier. Even after calling a truce on the 145% tariffs on Chinese goods until August, the import duties on those products averaged 55%, according to the Port of Los Angeles. Maybe a few years ago the thought of such high tariffs on the US's largest trade partner would have been a recipe for shipping chaos, skyrocketing prices, empty shelves and ruined year-end holidays. The supply chain—the thermometer for health of global trade—reflected the tariff-induced whiplash when import volume plummeted in May and then recovered in June. Still, ocean container imports have continued strong in July as retailers prepare for both the back-to-school and holiday seasons. It may be surprising that even with the tariff volatility, the transport industry will have its first relatively normal peak season since before the pandemic—although it will be absent any big shipping rate increases. Remember, last year's peak was marred by the closing of the Suez Canal route because of Houthi rockets and the threat of a US East Coast port worker strike that precipitated an earlier-than-usual shipping season. Those events drove up ocean carrier rates. The big question this year is how much of the tariffs will be absorbed along the supply chain—manufacturers, distributors, retailers and consumers—and how the higher-priced goods will impact consumer demand. Unlike during the pandemic, when widespread inflation accelerated after a demand surge overwhelmed the supply chain and production capacity, the higher prices this time should be isolated to imported goods and more specifically those from China. There's anecdotal evidence that a lot of the tariff pain is being absorbed, while some will filter through to the consumer. After movements of ocean cargo plummeted in May during the quasi-embargo on China, imported goods rebounded in June and continue strong in July. US retailers put in their orders to Chinese factories (and if they haven't by now, it's too late) and negotiated on sharing the tariff bite. There was no surge of front-loading. That happened earlier this year before Trump's tariffs took effect. Following the truce, ocean shipping rates spiked above $5,000 per 40-foot container on the benchmark Shanghai-Los Angeles route for two weeks before settling down to less than $3,000. This steady stream of products shows that Trump pulled back from the May virtual embargo on Chinese imports just in time to save both back-to-school and Christmas shopping. No doubt he was urged on by the largest retailers, which were alarmed at the prospect of empty shelves in the fall and in December and lobbied hard for a truce. The uncertainty still lingers on what will happen to tariffs after the August deadlines with China and other countries. But any consequences from a breakdown of negotiations and potentially higher tariffs won't reach US consumers until well into next year. Also Read: Dani Rodrik: How ideology sometimes trumps material interests By the end of August, retailers will have their goods either in a warehouse or on a ship heading to the US. As in a typical peak season, trucks will be more active in the August-to-October period to take goods to stores. Then in November and December, the parcel carriers get busy. January is the month for retailers to process returns and hold clearance sales. The end of February next year will be Chinese New Year, a period when many factories shut down. This January-to-March transportation lull is called the quiet period. This means that whatever additional pain Trump decides to inflict with tariffs after the August deadlines won't really impact consumers until March of next year or afterward. While the shipping patterns will return to a more normal peak season this year, that doesn't mean the shopping experience will be unfazed. To cope with the extra cost of tariffs, retailers and distributors are reducing the variety of items they import and are concentrating on the most profitable products to protect margins. Anecdotal evidence suggests that the tariff bite is being shared along the chain. You can bet that if consumers begin to balk at higher prices, retailers will adjust to make the sale. Bobby Djavaheri, president of Yedi Housewares, is coping with a worst-case tariff exposure because China is the sole source for small kitchen appliances and dinnerware that the company sells to large retailers. Djavaheri said Yedi is raising prices by 10%—a fraction of the current tariff level. 'It's simply impossible to pass on all of it because folks aren't going [to] buy the product," Djavaheri said on Monday during a press conference with Gene Seroka, executive director of the Port of Los Angeles. Store shelves could get bare this Christmas shopping season if demand is strong because retailers are erring on understocking instead of overstocking and limiting the number of items for sale. In these times of tariffs, that would be the better problem to have than an excess of expensive merchandise. Consumers aren't likely to be in the mood for buying sprees with all the uncertainty swirling around tariffs, jobs, inflation and interest rates. When Trump's August deal deadlines hit, there are three likely outcomes: Trump goes TACO and pushes back deadlines again; Trump goes nuclear and boosts tariffs; Trump gets deals done. It could be a combination of all three. No matter the path, the impacts won't really be felt by consumers until next year. ©Bloomberg The author is a Bloomberg Opinion columnist writing about the industrial and transportation sectors Topics You May Be Interested In Catch all the Business News, Market News, Breaking News Events and Latest News Updates on Live Mint. Download The Mint News App to get Daily Market Updates.
CNBC
2 days ago
- Business
- CNBC
How the EU is preparing to reach a tariff deal in Trump's game of chicken
The U.S. has doubled down on its plan to impose 30% tariffs on the European Union next month, seeking to ramp up pressure on the bloc to reach a deal. With less than two weeks to go until U.S. President Donald Trump's Aug. 1 deadline, the EU continues to negotiate with U.S. trade officials, while drawing up a series of possible countermeasures if a deal is not forthcoming. For its part, the U.S. said the EU continues to be "very eager" in negotiating a trade agreement, according to White House press secretary Karoline Leavitt. Speaking at a news conference on Thursday, Leavitt said the EU is exploring "ways to lower their tariff and their non-tariff barriers that we have long said harm our workers and our companies." The U.S. president, whose trade war tactics have earned him the TACO nickname, will not accept a postponement of the Aug. 1 deadline, Leavitt said. TACO stands for "Trump always chickens out" in reference to the president's tendency to date to announce high import tariffs, only to later delay or lower them. Michal Baranowski, Polish undersecretary of state at the ministry of economic development and technology, said that, as work continues in a bid to reach a deal, the first part of the EU's strategy is to negotiate with U.S. officials in good faith. "The second one is, let's prepare for countermeasures in case we don't [reach a deal]. And we have countermeasures on both the steel and aluminium tariffs as well as the initial package of 72 billion [euros] for so-called reciprocal tariffs," Baranowski told CNBC's "Europe Early Edition" on Friday. "Point three, we are comparing notes with other countries that are affected by U.S. tariffs, not to necessarily coordinate but to get a sense of where everyone else is, because the other countries negotiating with the U.S. are a bit on the same wagon," he continued. "Fourth, we are really strengthening European competitiveness." Poland's Baranowski said the EU represents the "most vital economic relationship" for the U.S., adding that Washington has "as much to gain or to lose from this relationship as Europe." His comments come shortly after the EU's top trade negotiator Maros Sefcovic traveled to Washington for further trade talks. The prospect of fresh U.S. tariffs represents a major blow to the EU. The 27-nation bloc had been scrambling to secure a preliminary agreement to spare it from receiving a Trump letter dictating a new, across-the-board tariff on its exports to the U.S. The U.S. and EU have the largest bilateral trade and investment relationship in the world, representing almost 30% of global trade in goods and services, and accounting for 43% of the global gross domestic product (GDP), according to EU figures. Last year alone, the value of EU-U.S. trade amounted to 1.68 trillion euros ($1.96 trillion), equivalent to roughly 4.6 billion euros of trade per day. Trump has repeatedly hit out at the EU for what he perceives to be an unfair trading relationship, often citing the EU's trade surplus with the U.S. As part of its push to reach a U.S.-EU framework trade deal, the European bloc is said to be planning to offer the U.S. tit-for-tat tariff reductions on cars. The move, as reported by the Financial Times on Thursday, would see the EU drop its 10% duties on U.S. car exports if the Trump administration reduces its own tariffs on the sector to below 20%. The European Commission, the EU's executive arm, declined to comment on the report when contacted by CNBC on Friday. The U.S. president imposed 25% tariffs on foreign-made vehicles and parts earlier in the year, hitting companies across Europe particularly hard. Sweden's Volvo Cars, for instance, on Thursday reported a sharp decline in second-quarter operating profit, saying the result reflects an ongoing challenging environment for the industry. The automaker, which is seen as one of the most exposed European automakers to U.S. tariffs, was the first regional carmaker to release results in what is expected to be a bruising earnings season.
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Business Standard
2 days ago
- Business
- Business Standard
Has TACO trade in stocks run its course? Chris Wood of Jefferies decodes
From a market standpoint, Wood believes, it is just a matter of time before the negative impact of tariffs starts to show up in the macro-economic data premium Puneet Wadhwa New Delhi Listen to This Article TACO (Trump Always Chickens Out) trade may have run its course as a positive factor for the markets, suggests Christopher Wood, global head of equity strategy at Jefferies in his recent note to investors, GREED & fear. 'But GREED & fear has started to wonder if TACO has run its
Time of India
3 days ago
- Business
- Time of India
TACO vs WACO: How Donald Trump's tariff war turned into a windfall for US
It's $50 billion and counting: President 's aggressive tariff campaign has, so far, yielded significant financial gains for the US government. TL;DR Trump's tariffs have brought the US a record surge in customs revenue-$64 billion in Q2 2025. The US is effectively using its dominant consumer market position as leverage in trade disputes. Global supply chains are absorbing some costs, and many global brands are spreading tariff price hikes across markets, not just US consumers. The strategy has led to only modest inflation so far but hints of rising prices in tariff-affected goods are emerging. The world is watching what happens as the next tariff deadlines approach, with the risk of escalation always present. For now, Trump's approach is delivering short-term wins, but long-term costs and risks are quietly building beneath the surface. TACO vs WACO: When tariffs roared and the world whispered The summer of 2025 finds America emboldened, its trade war chest swelling as most foreign capitals recoil from Trump's escalating tariff agenda. Tired of too many ads? go ad free now Four months after launching sweeping tariffs-10% on global imports, 50% on steel and aluminum, and 25% on autos-America's trading partners have, largely, folded rather than fought. Only China and Canada have dared retaliation, but both have retreated under pressure, wary of a president whose critics once jeered him as "Trump always chickens out (TACO).' Instead, Trump has pocketed nearly $50 billion in extra customs revenues, racking up a record $64 billion in duties during the last quarter alone, according to a Financial Times report. As per the Financial Times reports: 'Only China and Canada have dared to hit back at Washington,' with the duties imposed worldwide on American exports representing 'a tiny fraction of the US revenue during the same period.' Instead of a global front, most nations opted for negotiation and delay, with the European Union repeatedly deferring countermeasures in hopes of securing a deal by Trump's self-imposed August deadline. So far, it seems to be a case of WACO-World always chickens out and not TACO. Why it matters The world's reluctance to hit back reflects the dominant economic clout of the US as the world's largest consumer market, the complexity of global supply chains, and the political and security considerations driving some US allies to tread cautiously. For now, the US is collecting billions in additional revenue and maintaining leverage as it pushes trade partners toward better terms. The lack of retaliation offers Trump clear political cover to double down ahead of his August 1 tariff escalation deadline. Countries like the EU and Mexico have opted for diplomatic delay tactics rather than confrontation. But economists warn that the costs-rising consumer prices, potential business cutbacks, and slower job growth-may quietly mount over time, sounding a cautionary note on the sustainability of Trump's tariff strategy. The reluctant retaliators As per the FT report, even China - the world's export giant - only managed a 1.9% increase in customs receipts from its counter-tariffs this past year-an anemic haul compared to the US surge. In May, Chinese exports to the US cratered by a third after tariffs soared to 145%, before both countries agreed to a 90-day pause, dialing rates back to 30%. Tired of too many ads? go ad free now Canada's bravado proved similarly fleeting: after imposing C$155 billion in retaliatory tariffs, Prime Minister Mark Carney retreated, axing a digital services tax and declining to mirror Trump's latest tariff hikes. As Dan Nowlan, a Canadian political adviser, put it: 'Carney's 'elbows up' rhetoric worked during the election campaign, but we can't be confrontational with the US. It's now a much more realist approach. ' For many countries, submission has been less about courage and more about cold calculus. 'Unlike the 1930s when countries had more balanced trading relationships, today's world features a hub-and-spoke system with the US at the centre,' Marta Bengoa of City University of New York told FT. 'That makes retaliation economically less desirable for most countries, even when it might be politically satisfying.' The economic case for chickening out While the specter of retaliatory spirals haunts the halls of history, today's global order is different. 'I'd like to think leaders were learning the lessons of history, but I fear that's optimistic,' Alexander Klein, economic historian at the University of Sussex, told FT. 'More likely, the EU, Canada and many other governments fear the hit to global supply linkages and inflation from escalation. Trump cares less about that, so is taking advantage. ' Between the threat of lost access to the world's largest consumer market and the risk of still higher tariffs, America's partners have chosen deterrence by deference. The EU's latest list of potential counter-tariffs, targeting €72 billion in US goods, notably omitted specific rates-a peace offering to avoid Trump's ire. In a phrase that captures the nervous uncertainty, an EU official acknowledged that trade talks now 'affect the whole spectrum of US relations including those regarding security,' particularly at a time when Europe needs support for Ukraine. Tariffs beginning to bite, but not break While inflation remains manageable, early signs show tariffs are quietly pushing prices up on key imported goods like furniture and clothing, per June inflation data. UBS reported the fastest price jump in core goods (excluding autos) in three years Economists estimate tariffs could eventually shave $2,800/year off US household income 'Tariffs are beginning to bite,' said Omair Sharif of Inflation Insights. 'It could become self-reinforcing,' added economist Isabella Weber of UMass Amherst. Fed officials acknowledge the impact is just beginning. 'It's still early days for the effects of tariffs,' said New York Fed President John Williams this week. 'I expect those effects to increase in coming months.' The full burden is not landing at once, as brands and retailers distribute costs globally or absorb them with slimmer margins. 'Global brands can try and swallow some of the tariff cost through smart sourcing and cost savings but the majority will have to be distributed across other markets, because US consumers might swallow a 5 per cent increase, but not 20 or even 40,' Simon Geale of supply chain consultancy Proxima told FT. Major US banks, flush with profits, note that consumer resilience has so far exceeded expectations, though Citigroup CEO Jane Fraser cautioned, 'We have seen pauses in capex and hiring amongst our client base.' Wells Fargo CEO Charles Scharf added: 'Many have found ways to avoid passing the 10% tariffs on to their customers... they are preparing for the downside and are not growing inventories or hiring aggressively.' What's next? Trump is pressing hard for more deals. In an interview, he claimed deals with India are 'very close' and suggested a possible agreement with the EU, though talks with Canada remain uncertain. Meanwhile, the White House is preparing to impose 10% to 15% tariffs on over 150 smaller countries as part of a broader trade shakeup, signaling continuing pressure on global supply chains, a Bloomberg report said. Whether the rest of the world will muster unified resistance remains to be seen. Diplomatic sources note that the August 1 tariff deadline is a critical moment: if Trump raises tariffs to 30% as threatened, the EU and others may feel they 'have nothing to lose,' potentially sparking a more intense conflict. For now, the trending strategy has been de-escalation and negotiation, not retaliation. (With inputs from agencies)
Bloomberg
3 days ago
- Business
- Bloomberg
Tariff Disruption Is Skipping the Shipping Industry — for Now
While disruptive, the tariffs that President Donald Trump has been glibly tossing out, including new ones last week, haven't yet produced the widespread damage to the economy that many had predicted. In large part that's because Trump has tweaked and pulled back enough on them to prevent a catastrophe. This has earned him the moniker of TACO, or Trump Always Chickens Out, but this is a bit misplaced because the tariffs are real and the money flowing in from these duties is large — to the tune of $26.6 billion in June compared with $6.3 billion in the month a year earlier. Even after calling a truce on the 145% tariffs on Chinese goods until August, the import duties on those products averaged 55%, according to the Port of Los Angeles.
