Latest news with #Trump-tariff
Yahoo
19-05-2025
- Business
- Yahoo
Does Donald Trump Know He Has Lost His Trade War?
The U.S. has already lost Donald Trump's trade war. It's now up to the president to decide how disastrous that loss will be. The best-case scenario for the U.S. economy right now is the Trump administration fully backing down and acknowledging this loss, and quickly. Each day that passes locks in more economic damage. Like a recalcitrant general, Trump doesn't appear ready to surrender, saying Friday that he wants to reinstate the tariffs he put in place in early April and paused shortly thereafter. 'We have, at the same time, 150 countries that want to make a deal, but you're not able to see that many countries,' he said Friday in Abu Dhabi. 'So at a certain point, over the next two to three weeks, I think [Treasury Secretary] Scott [Bessent] and [Commerce Secretary] Howard [Lutnick] will be sending letters out, essentially telling people ― we'll be very fair ― but we'll be telling people what they'll be paying to do business in the United States.' That is an economically ominous statement. If Trump is buoyed by how the stock market has recovered from its Trump-tariff induced dive, he's ignoring the mounting tolls elsewhere. His trade war has already created something akin to the largest tax hike in post-war U.S. history, according to J.P. Morgan analysis. Even after the rollbacks and pauses, economists at the bank wrote in a briefing to clients that 'the trade war shock is still material... we now estimate an effective ex-ante tariff rate of 14.4%. This is akin to a $475bn tax hike on US households and businesses, worth 1.6% of GDP (still sitting close to the largest tax hike in the post WWII period).' Not only has a massive effective tax hike been put in place, but government spending is dropping, and the U.S. economy shrank 0.3% in the first quarter of the year. The tariffs against China caused a more than 60% decline in ocean container bookings from China to the U.S. Now that the U.S.'s punitive Chinese tariffs have been largely paused, there's such a rush to book space on American-bound ships from China that capacity will sell out, leading to a backlog, Flexport's chief executive Ryan Petersen said earlier this week. This kind of import-export whiplash, with weeks of incoming goods lost sitting on foreign docks, can destroy the ability of a business to plan and manage inventory, cause shortages, and lead to price increases. Indeed, Walmart said Thursday morning that tariff-induced price hikes will start hitting their stores in just a few weeks. As Paul Krugman, a Nobel-winning trade economist, pointed out Friday, the trade war never ended: 'Even after Trump's 'climbdown' we're still looking at a shock to the economy 7 or 8 times as big as Smoot-Hawley, the previous poster child for destructive tariff policy.' At its current 30% tariff rate, Krugman estimates that trade with China will drop by 65%. Trump is now saying he wants to take a policy and make it more economically destructive. The 'announce, cave, tough statement, re-announce' cycle has been a constant of this administration's trade policy. After Trump's initial announcement of massive tariffs on April 2, the Trump administration struggled to find a consistent message to explain the point of the crippling charges on trade with Europe, China and global industrial powerhouses like Madagascar. Was it a bold negotiating gambit that would force world leaders to the table to strike trade deals that were favorable to the United States? Or was this, in fact, the true, optimal trade policy that the president had been working diligently to craft, backing down from which would be a betrayal? 'I don't think there's any chance that President Trump's going to back off his tariffs,' Lutnick said the day after they were announced. 'The tariffs are coming,' he told CBS' 'Face the Nation'. 'He announced it and he wasn't kidding,' a senior administration official told Axios. 'No. No, no, no,' was Bessent's response when asked on 'Meet the Press' if the president was going to negotiate with countries to reduce tariffs. Then Trump posted that 'negotiations with other countries... will begin taking place immediately.' The same day, Trump's trade advisor, Peter Navarro, published an op-ed in the Financial Times, writing that 'this is not a negotiation. For the US, it is a national emergency triggered by trade deficits caused by a rigged system.' Bessent then told CNBC that the plan had been to wait for other countries to think the U.S. was serious in order to kickstart negotiations. Then, before any of those negotiations had actually been conducted, Trump got spooked to some extent by sliding stocks but particularly by cratering demand for U.S. government debt, and paused the tariffs he had imposed. The U.S. and the United Kingdom proceeded to announce a bilateral trade deal. The deal, however, wasn't a formal trade deal and didn't change much about the U.S.'s economic relationship with a relatively small trading partner. As the BBC put it, the informal agreement with America's eighth-largest trading partner 'did not appear to meaningfully alter the terms of trade between the countries, as they stood before the changes introduced by Trump this year.' Meanwhile, the U.S.'s third largest trading partner, China, effectively negotiated with the Trump administration by refusing to do anything and getting pretty much everything they wanted from the U.S. After the Trump administration ratcheted up to a 145% tariff on most Chinese imports, the U.S.-China deal pauses almost all of the recent, punitive tariffs the two countries placed on one another for 90 days. To get back to that status quo, Chinese negotiators only had to roll back the tariffs they had put in place in response to U.S. tariffs. 'It's clear that Trump wants to ease the tariffs, not increase them,' AGF Investments' Greg Valliere wrote of the deal. 'The Trump Administration has blinked, big time.' No wonder The Wall Street Journal reported that Chinese President Xi Jinping feels vindicated and triumphant. Bloomberg summed up the outcome with the headline: 'Xi Defiance Pays Off As Trump Meets Most Chinese Trade Demands.' Not surprisingly, neither the European Union nor Japan is in a hurry to strike a deal with the U.S: Why do that when you can get a great deal by just waiting and letting the Trump administration negotiate with itself? Trump Says He Will Call Putin On Monday To Discuss The War In Ukraine Larry Summers Says 'It's Very Clear' Who Blinked On U.S.-China Trade War Trump Retreats On His Trade War's Chinese Front, Claims Big Victory
ABC News
29-04-2025
- Business
- ABC News
Mark Carney's Liberals fall short of majority in Canadian election
Canadian Prime Minister Mark Carney's Liberals will form government with a minority, according to Canadian public broadcaster CBC. The party The Liberals had 169 confirmed seats with two races left to call in a setback for the party but a result that puts them in strong position to pass legislation, including measures to confront United States President Donald Trump. Not having an outright majority means Mr Carney's party will have to seek help from another, smaller party in the nation's next parliament. Elections Canada has processed nearly all the ballots, but there will be at least one mandatory recount and the result of that might not be known for days. Mark Carney and his wife Diana Fox Carney react after the Liberal Party won the Canadian election in Ottawa on Tuesday, April 29, 2025. ( AP: Frank Gunn/The Canadian Press ) Mr Carney's rival, populist Conservative Party leader Pierre Poilievre, was leading in the election race until three months ago when the US president began a trade war with the country and threatened to annex it as the 51st American state. The Conservatives had won at least 144 electoral districts as of Tuesday, but Mr Poilievre was voted out of the seat he held for 20 years. "It was the 'anybody-but-Conservative' factor, it was the Trump-tariff factor, and then it was the [former PM Justin] Trudeau departure … which enabled a lot of left-of-centre voters and traditional Liberal voters to come back to the party," Shachi Kurl, president of the Angus Reid Institute polling firm, told Reuters. The Liberals, who have been in power since November 2015, were 20 percentage points behind in surveys in January before the unpopular Mr Trudeau announced he was stepping down. Carney says system of open global trade 'over' The Globe and Mail newspaper, citing a senior Liberal official, said Mr Carney would name a cabinet and reconvene Canada's House of Commons within two weeks. Another priority will be the annual budget, which is usually presented in March or April. Mr Carney, saying Mr Trump wanted to break Canada, had repeatedly vowed to open talks on new security and economic ties with the US president as soon as possible after the election. Photo shows Conservative Party of Canada's leader Pierre Poilievre speaks to supporters infront of a large Canadian flag at a campaign. Canadians have gone to the polls, with the ruling Liberal Party poised to retain power after an extraordinary turnaround following Donald Trump's return to the US presidency. "Our old relationship with the United States, a relationship based on steadily increasing integration, is over," he said in his victory speech in Ottawa on Tuesday. "The system of open global trade anchored by the United States, … [which] has helped deliver prosperity for our country for decades, is over. These are tragedies, but it's also our new reality." Mr Carney said the coming months would be challenging and require sacrifices. He has promised a tough approach to Washington's import tariffs and said Canada will need to spend billions to reduce its reliance on the US. ABC/wires
