Latest news with #UnitedSta
Mint
02-06-2025
- Business
- Mint
China hits backs at US, says Washington seriously undermined tariff truce
Beijing, China on Monday hit back at the US, accusing it of seriously violating their recent Geneva trade truce by introducing multiple restrictive measures like AI chip export control guidelines, stopping the sale of chip design software to China and revoking visas for Chinese students. The US has seriously undermined the consensus reached during the China-US economic and trade talks in Geneva by successively introducing multiple discriminatory restrictive measures against China, a spokesperson for the Commerce Ministry said in a statement, refuting President Donald Trump's allegation that China had 'totally violated agreement with us'. The US measures included issuing guidance on AI chip export controls, halting sales of chip design software to China, and announcing the revocation of visas for Chinese students, the spokesperson said. It is significant that China has clubbed the student visas with that of trade and tariff-related issues. About 2.7 lakh Chinese students, the second largest after India, studying in the US scrambled to work out their plans after US Secretary of State Marco Rubio announced on May 29 that America would begin revoking the visas of some Chinese students, including those studying in 'critical fields' and 'those with connections to the Chinese Communist Party.' These actions severely violated the consensus reached during a phone call between the two heads of state on Jan. 17 and gravely harmed China's legitimate rights and interests, the statement said. The US has unilaterally and repeatedly provoked new economic and trade frictions, exacerbating uncertainty and instability in bilateral economic and trade relations, the spokesperson said. Both the US and China agreed to lower tit-for-tat tariffs after talks last month in Geneva. The truce is due to last 90 days to provide time for the top two economies to reach a broader substantive agreement to end their tariff war. Trump imposed 145 per cent of tariffs against the Chinese exports of about USD 439.9 billion and China retaliated with 125 per cent on American exports of about USD 143 billion. China also put restrictions on the exports of rare-earth minerals which are all critical materials for defence, new energy batteries, semiconductors and advanced manufacturing and Beijing has not lifted the curbs. Under the Geneva agreement, the US lowered tariffs imposed on goods from China from 145 per cent to 30 per cent while China dropped its retaliatory tariffs from 125 per cent to 10 per cent. The recriminations began after Trump said on Friday that China had "totally violated its agreement with us" but did not give details. However, US Trade Representative Jamieson Greer later said China had not been removing non-tariff barriers as agreed under the deal, according to reports from Washington. Trump stirred further controversy Friday, saying he will no longer be nice to China on trade, declaring in a social media post that the country had broken an agreement with the United States. Hours later, Trump said in the Oval Office that he would speak with Chinese President Xi Jinping and hopefully "we'll work that out", while still insisting China had violated the agreement. "The bad news is that China, perhaps not surprisingly to some, HAS TOTALLY VIOLATED ITS AGREEMENT WITH US," Trump posted. "So much for being Mr. NICE GUY!" Greer later told TV network CNBC that China was yet to properly roll back other trade restrictions it had levied on the US, BBC reported. Greer said when China responded to the US's tariffs with its own, they also put in place countermeasures such as putting some US companies on blacklists and restricting exports of rare earth magnets, a critical component in cars, aircraft and semiconductors. "They removed the tariff like we did but some of the countermeasures they've slowed on," Greer said. The strong statements from both sides have raised concerns that trade tensions could again escalate between the world's two largest economies despite recent negotiations. The US has unilaterally and repeatedly provoked new economic and trade frictions, exacerbating uncertainty and instability in bilateral economic and trade relations, the spokesperson said. "Instead of reflecting on its own actions, the US has groundlessly accused China of violating the consensus, a claim that grossly distorts the facts. China firmly rejects these unjustified accusations," the spokesperson said. Calling the outcomes of the Geneva talks "hard-won," the spokesperson said, "China is firm in safeguarding its rights and interests, and sincere in implementing the consensus' and urged the US to immediately correct its wrong practices, jointly uphold the consensus of the talks, and promote the healthy, stable and sustainable development of China-US economic and trade relations. 'If the US side insists on going the wrong way and continues to harm China's interests, China will resolutely take forceful measures to safeguard its legitimate rights and interests, according to the spokesperson,' the spokesperson added. This article was generated from an automated news agency feed without modifications to text.
Yahoo
24-04-2025
- Business
- Yahoo
Congressional Republicans Might Set Off the Debt Bomb
Congressional Republicans have approved the most fiscally irresponsible budget resolution since the modern budget process began five decades ago. It allows Congress to slash taxes by $5.3 trillion and expand spending by $517 billion over the decade. This $5.8 trillion addition to the deficit (plus interest) would exceed the cost of the 2017 tax cuts, 2020 CARES Act, 2021 American Rescue Plan, and 2021 Bipartisan Infrastructure Law—combined. Tales of impending debt crises have been scaring voters since the days of Ronald Reagan, without coming true. But surviving an unhealthy diet and lifestyle until now doesn't mean you can disregard your health forever. Washington's debt path is so unsustainable that it ultimately endangers the United States economy. And time is running out to change course without substantial disruption. Economists agree that annual budget deficits—when the government spends more than it brings in—are less meaningful than the total debt held by the public as a share of the economy. The federal debt temporarily exceeded 100 percent of the economy during World War II, but subsequently averaged just 40 percent through 2008. At a 5 percent interest rate, the cost of paying interest on that debt sustainably consumed 2 percent of GDP, or one-ninth of annual tax revenues. Since 2008, trillion-dollar budget deficits have pushed the debt to 100 percent of the economy—approaching World War II levels. The dangerous combination of rising debt and interest rates have driven annual interest costs up from $352 billion in 2021 to nearly $1 trillion this year. During that time, interest costs have surpassed Medicaid, defense, and finally, Medicare to become the most expensive federal budget item after Social Security—which itself will be surpassed in perhaps 15 years. [Annie Lowrey: It turns out that the debt matters after all] Simply continuing today's tax and spending policies will escalate the federal debt to 241 percent of the economy over the next three decades. And if interest rates rise even one percentage point above the government's long-term projections, which they easily could, the debt would reach 295 percent of GDP. Interest on the debt would then consume four-fifths of all annual federal revenues. Debt at that scale would force Washington to borrow an enormous share of the economy's savings—leaving less money available to families and entrepreneurs for home, auto, and business loans. This lack of savings available for investment would choke economic growth and push up interest rates. As a result, the Congressional Budget Office estimates that this debt surge would shave up to one-third off the long-term growth of family incomes. Few developed nations have run their debt levels past 150 percent of GDP in the postwar era. The main outlier is Japan, which currently has a 260 percent debt ratio: Even with a high savings rate to finance its government's debt, Japan's economy has suffered three consecutive 'lost decades.' The United States might own the world's reserve currency, but other nations' demand for dollars cannot finance a debt of this magnitude. Over the next three decades, extending current policies will hike the debt held by the public from $30 trillion to approximately $200 trillion. Who will fund all this borrowing? China and Japan together hold nearly $2 trillion of Treasury debt and lack the willingness and capacity to finance the rest; other nations are even smaller players. That leaves American lenders such as mutual funds, pension funds, insurance companies, state governments, and banks. Even with a rising GDP, this will squeeze financial markets and force up interest rates. And each percentage point in higher sustained interest rates—just a single percentage point!—would add $40 trillion in interest costs over three decades. That's nearly the equivalent of adding another Defense Department. This is the vicious cycle of excessive federal debt: Issuing ever more bonds leads to higher interest rates, which in turn forces Washington to borrow more money to pay those interest costs. If this sounds hysterical, note that the sober-minded economists at the University of Pennsylvania's Wharton School recently tried to model out the long-term economy under baseline debt projections. Instead, they discovered that 'these models effectively crash when trying to project future macroeconomic variables under current fiscal policy. The reason is that current fiscal policy is not sustainable and forward-looking financial markets know it.' The cause of this projected debt is no secret. The combination of retiring Baby Boomers, longer lifespans, generous benefit expansions, and rising health-care costs are causing Social Security and Medicare to run an annual cash shortfall that has leaped to $728 billion this year, and is on the way to well over $2 trillion within a decade. In 30 years, Social Security and Medicare are projected to run a staggering cash deficit of $124 trillion—or three-quarters of all projected budget deficits over this period. These long-predicted shortfalls drove the calls to reform Social Security and Medicare in the 1990s and 2000s. Back then, an overall debt of just 40 percent of the economy meant no crisis was imminent. The idea was to gradually begin phasing in reforms while the Boomers were young enough to adjust their retirement expectations accordingly. Instead, we continued sleepwalking into what President Bill Clinton's former chief of staff Erskine Bowles called 'the most predictable economic crisis in history.' [Rogé Karma: The tariff damage that can't be undone] Budget deficits of $1.8 trillion—heading toward $3.6 trillion within a decade under current policies—can be addressed only by putting all spending and taxes up for reconsideration. The popular targets of government waste, defense cuts, and taxing the rich can contribute at the margins, but the unforgiving budget math will force most long-term deficit reduction to come from the lead deficit drivers of Social Security and Medicare, as well as middle-class taxes. Of course, those three reform categories face intense bipartisan opposition. Ultimately, the bond market will leave Washington with no alternative. Delaying reform until a debt crisis occurs would be devastating. At that point, elevated interest rates and debt will have deepened the hole at the same time that Baby Boomers are too old to adapt to Social Security and Medicare changes. That leaves drastic tax increases and spending cuts, and the temptation to just run the printing press to pay Washington's bills, unleashing hyperinflation. Perhaps more likely than a single cataclysmic debt crisis is a series of minor economic panics as deficits spook and stretch the capacity of financial markets. Rising interest rates and deficits might first compel Congress to pare back the lower-hanging fruit of government waste and tax loopholes. When that proves insufficient to tame escalating deficits, another mini panic might bring defense reductions and new taxes on the rich. Lawmakers would continue to dig deeper until it becomes clear that only reforms to Social Security and Medicare themselves—as well as higher middle-class taxes—can sufficiently slow the debt surge. The end result, perhaps 25 years from now, would be markedly higher payroll and income taxes, a steep value-added tax, reduced federal benefits, and notably less generous Social Security and Medicare systems—in other words, European-size taxes without the corresponding European-style social benefits for the poor and working class. The taxes would instead be funding steep interest costs and senior benefits. The White House and congressional leaders I regularly brief know that Washington's debt path is unsustainable. They also expect to be out of government when the bill comes due and see no reason to anger voters in the meantime by ending the tax-cuts-and-spending party. But eventually the American public will be left holding the bag. No one can say exactly when that moment will arrive, but we are getting dangerously close to finding out. Article originally published at The Atlantic
Atlantic
24-04-2025
- Business
- Atlantic
Congressional Republicans Might Set Off the Debt Bomb
Congressional Republicans have approved the most fiscally irresponsible budget resolution since the modern budget process began five decades ago. It allows Congress to slash taxes by $5.3 trillion and expand spending by $517 billion over the decade. This $5.8 trillion addition to the deficit (plus interest) would exceed the cost of the 2017 tax cuts, 2020 CARES Act, 2021 American Rescue Plan, and 2021 Bipartisan Infrastructure Law— combined. Tales of impending debt crises have been scaring voters since the days of Ronald Reagan, without coming true. But surviving an unhealthy diet and lifestyle until now doesn't mean you can disregard your health forever. Washington's debt path is so unsustainable that it ultimately endangers the United States economy. And time is running out to change course without substantial disruption. Economists agree that annual budget deficits—when the government spends more than it brings in—are less meaningful than the total debt held by the public as a share of the economy. The federal debt temporarily exceeded 100 percent of the economy during World War II, but subsequently averaged just 40 percent through 2008. At a 5 percent interest rate, the cost of paying interest on that debt sustainably consumed 2 percent of GDP, or one-ninth of annual tax revenues. Since 2008, trillion-dollar budget deficits have pushed the debt to 100 percent of the economy—approaching World War II levels. The dangerous combination of rising debt and interest rates have driven annual interest costs up from $352 billion in 2021 to nearly $1 trillion this year. During that time, interest costs have surpassed Medicaid, defense, and finally, Medicare to become the most expensive federal budget item after Social Security—which itself will be surpassed in perhaps 15 years. Annie Lowrey: It turns out that the debt matters after all Simply continuing today's tax and spending policies will escalate the federal debt to 241 percent of the economy over the next three decades. And if interest rates rise even one percentage point above the government's long-term projections, which they easily could, the debt would reach 295 percent of GDP. Interest on the debt would then consume four-fifths of all annual federal revenues. Debt at that scale would force Washington to borrow an enormous share of the economy's savings—leaving less money available to families and entrepreneurs for home, auto, and business loans. This lack of savings available for investment would choke economic growth and push up interest rates. As a result, the Congressional Budget Office estimates that this debt surge would shave up to one-third off the long-term growth of family incomes. Few developed nations have run their debt levels past 150 percent of GDP in the postwar era. The main outlier is Japan, which currently has a 260 percent debt ratio: Even with a high savings rate to finance its government's debt, Japan's economy has suffered three consecutive ' lost decades.' The United States might own the world's reserve currency, but other nations' demand for dollars cannot finance a debt of this magnitude. Over the next three decades, extending current policies will hike the debt held by the public from $30 trillion to approximately $200 trillion. Who will fund all this borrowing? China and Japan together hold nearly $2 trillion of Treasury debt and lack the willingness and capacity to finance the rest; other nations are even smaller players. That leaves American lenders such as mutual funds, pension funds, insurance companies, state governments, and banks. Even with a rising GDP, this will squeeze financial markets and force up interest rates. And each percentage point in higher sustained interest rates—just a single percentage point!—would add $40 trillion in interest costs over three decades. That's nearly the equivalent of adding another Defense Department. This is the vicious cycle of excessive federal debt: Issuing ever more bonds leads to higher interest rates, which in turn forces Washington to borrow more money to pay those interest costs. If this sounds hysterical, note that the sober-minded economists at the University of Pennsylvania's Wharton School recently tried to model out the long-term economy under baseline debt projections. Instead, they discovered that 'these models effectively crash when trying to project future macroeconomic variables under current fiscal policy. The reason is that current fiscal policy is not sustainable and forward-looking financial markets know it.' The cause of this projected debt is no secret. The combination of retiring Baby Boomers, longer lifespans, generous benefit expansions, and rising health-care costs are causing Social Security and Medicare to run an annual cash shortfall that has leaped to $728 billion this year, and is on the way to well over $2 trillion within a decade. In 30 years, Social Security and Medicare are projected to run a staggering cash deficit of $124 trillion—or three-quarters of all projected budget deficits over this period. These long-predicted shortfalls drove the calls to reform Social Security and Medicare in the 1990s and 2000s. Back then, an overall debt of just 40 percent of the economy meant no crisis was imminent. The idea was to gradually begin phasing in reforms while the Boomers were young enough to adjust their retirement expectations accordingly. Instead, we continued sleepwalking into what President Bill Clinton's former chief of staff Erskine Bowles called 'the most predictable economic crisis in history.' Rogé Karma: The tariff damage that can't be undone Budget deficits of $1.8 trillion—heading toward $3.6 trillion within a decade under current policies—can be addressed only by putting all spending and taxes up for reconsideration. The popular targets of government waste, defense cuts, and taxing the rich can contribute at the margins, but the unforgiving budget math will force most long-term deficit reduction to come from the lead deficit drivers of Social Security and Medicare, as well as middle-class taxes. Of course, those three reform categories face intense bipartisan opposition. Ultimately, the bond market will leave Washington with no alternative. Delaying reform until a debt crisis occurs would be devastating. At that point, elevated interest rates and debt will have deepened the hole at the same time that Baby Boomers are too old to adapt to Social Security and Medicare changes. That leaves drastic tax increases and spending cuts, and the temptation to just run the printing press to pay Washington's bills, unleashing hyperinflation. Perhaps more likely than a single cataclysmic debt crisis is a series of minor economic panics as deficits spook and stretch the capacity of financial markets. Rising interest rates and deficits might first compel Congress to pare back the lower-hanging fruit of government waste and tax loopholes. When that proves insufficient to tame escalating deficits, another mini panic might bring defense reductions and new taxes on the rich. Lawmakers would continue to dig deeper until it becomes clear that only reforms to Social Security and Medicare themselves—as well as higher middle-class taxes—can sufficiently slow the debt surge. The end result, perhaps 25 years from now, would be markedly higher payroll and income taxes, a steep value-added tax, reduced federal benefits, and notably less generous Social Security and Medicare systems—in other words, European-size taxes without the corresponding European-style social benefits for the poor and working class. The taxes would instead be funding steep interest costs and senior benefits. The White House and congressional leaders I regularly brief know that Washington's debt path is unsustainable. They also expect to be out of government when the bill comes due and see no reason to anger voters in the meantime by ending the tax-cuts-and-spending party. But eventually the American public will be left holding the bag. No one can say exactly when that moment will arrive, but we are getting dangerously close to finding out.
Euronews
28-02-2025
- Business
- Euronews
Donald Trump plans tariffs on Mexico and Canada for Tuesday
In a Truth Social post on Thursday, Trump said illicit drugs such as fentanyl are being smuggled into the United States at 'unacceptable levels" and that import taxes would force other countries to crack down on the trafficking. 'We cannot allow this scourge to continue to harm the USA, and therefore, until it stops, or is seriously limited, the proposed TARIFFS scheduled to go into effect on MARCH FOURTH will, indeed, go into effect, as scheduled,' the Republican president wrote. 'China will likewise be charged an additional 10% Tariff on that date.' The prospect of escalating tariffs has already thrown the global economy into turmoil, with consumers expressing fears about inflation worsening and the auto sector and other domestic manufacturers suffering if Trump raises import taxes. But Trump has also at times engaged in aggressive posturing only to give last-minute reprieves, previously agreeing to a 30-day suspension of the Canada and Mexico tariffs that were initially supposed to start in February. Market reaction The threat of tariffs frightened the stock market with the S&P 500 index falling 1.6% on Thursday. The S&P 500 is now just 1.4% higher than it was after Trump won the election in November, giving up almost all of the gains that the president once cited as evidence of an economic revival. Asked Thursday about the fact that tariffs are largely paid for consumers and importing companies, Trump dismissed any concerns by saying: 'It's a myth.' It's possible for a stronger US dollar to offset some of the costs of tariffs, but Trump's statement goes against most economic modeling given the breadth of his planned taxes. Trump intends to put 25% tariffs on imports from Mexico and Canada, with a lower 10% tax on Canadian energy products such as oil and electricity. The move, ostensibly about drug trafficking and immigration, led Mexico and Canada to respond by emphasising their existing efforts to address these issues. Canada created a fentanyl czar, and Mexico sent 10,000 members of its National Guard to its border with the United States. Mexican President Claudia Sheinbaum said on Thursday that she hoped to speak with Trump after the Cabinet-level meetings occurring in Washington this week. Mexico's Foreign Affairs Secretary Juan Ramón de la Fuente was scheduled to meet with Secretary of State Marco Rubio on Thursday afternoon. Trump, 'as you know, has his way of communicating,' Sheinbaum said. But she said that her government would stay 'cool-headed' and optimistic about an agreement coming together to avoid the tariffs. 'I hope we are able to reach an agreement and on March 4 we can announce something else,' she said. She said Mexico's security chiefs were discussing intelligence sharing with their American counterparts that would allow for important arrests in the US. On the economic front, she said Mexico's goal is to protect the free trade pact that was negotiated during the first Trump administration between Mexico and the United States. That 2020 deal, which included Canada, was an update of the North American Free Trade Agreement from 1994. Canadian Prime Minister Justin Trudeau said his country has invested more than 1 billion Canadian dollars to improve border security, adding that his government's ministers and officials are also in Washington this week. 'There is no emergency for the United States at the border with Canada when it comes to fentanyl, and that is exactly what we are demonstrating at this time,' Trudeau said in Montreal. 'If the United States goes ahead and imposes tariffs, we already shared the details of our plan. We have $30 billion worth of US products that will be subject to tariffs. And $125 billion of tariffs that will be applied three weeks later. But we don't want to be in that position.' Trump did impose a 10% tariff on China for its role in the manufacturing of chemicals used to make fentanyl, and that tax would now be doubled, according to his social media post. On Thursday, China's Commerce Minister Wang Wentao wrote to Jamieson Greer, the newly confirmed US trade representative, that differences on trade should be resolved through dialogues and negotiations. The 25% tariffs on Mexico and Canada would amount to a total tax increase on the US public of somewhere between $120 billion to $225 billion annually, according to Jacob Jensen, a trade policy analyst at the American Action Forum, a center-right think tank. The additional China tariffs could cost consumers up to $25 billion. The potential for higher prices and slower growth could create political blowback for Trump, who promised voters in last year's presidential election that he could quickly lower the inflation rate, which jumped during Democratic President Joe Biden's term. But Trump also campaigned on imposing broad tariffs, which he plans to launch on April 2 by resetting them to match the taxes that he determines are charged by other countries on American goods. 'The April Second Reciprocal Tariff date will remain in full force and effect,' Trump said as part of his new social media post. In an interview with News Nation, Kevin Hassett, the director of the White House National Economic Council, said progress by Mexico and Canada on fentanyl 'was not as impressive as the president had hoped.' There are significant differences between Canada and Mexico on the scale of drug smuggling. US customs agents seized 43 pounds (19.5 kilograms) of fentanyl at the Canadian border during the last budget year, compared with 21,100 pounds (9,570 kilograms) at the Mexican border. Hassett stressed that the reciprocal tariffs would be in addition to the ones being placed on Canada and Mexico. Trump indicated Wednesday that European countries would also face a 25% tariff as part of his reciprocal tariffs. He also wants separate tariffs on autos, computer chips and pharmaceutical drugs that would be levied in addition to the reciprocal tariffs. The president already announced that he's removing the exemptions on his 2018 steel and aluminum tariffs, in addition to planning taxes on copper imports. The prospect of a broader trade conflict should other nations follow through with their own retaliatory tariffs is already spooking US consumers, potentially undermining Trump's promise to unleash stronger economic growth. The Conference Board reported on Tuesday that its consumer confidence index had dropped 7 points to a reading of 98.3. It was the largest monthly decline since August 2021, when inflationary pressures began to reverberate across the United States as the economy recovered from the coronavirus pandemic. Average 12-month inflation expectations jumped from 5.2% to 6% in February, the Conference Board noted. 'There was a sharp increase in the mentions of trade and tariffs, back to a level unseen since 2019,' said Stephanie Guichard, a senior economist at the Conference Board. "Most notably, comments on the current administration and its policies dominated the responses.'
