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Yahoo
2 days ago
- Business
- Yahoo
Tariffs to slow spending, economic growth during H2: Conference Board
This story was originally published on CFO Dive. To receive daily news and insights, subscribe to our free daily CFO Dive newsletter. Dive Brief: U.S. economic growth will likely slow during the second half of 2025 as tariffs push up the prices of goods and dampen consumer sentiments, the Conference Board said Monday. Rising claims for unemployment insurance, gloomy consumer expectations and weak new manufacturing orders last month outweighed a bump up from a strong gain in the Standard & Poor's 500 stock index, the Conference Board said, citing components of its Leading Economic Index. While a recession is unlikely, growth in gross domestic product 'is expected to slow substantially in 2025 compared with 2024,' Justyna Zabinska-La Monica, senior manager for business cycle indicators at the Conference Board, said in a statement. GDP will likely increase 1.6% this year, 'with the impact of tariffs becoming more apparent in H2 as consumer spending slows due to higher prices.' Dive Insight: Following President Donald Trump's announcement this month of 30% tariffs on imports from Mexico and the EU, consumers face an average effective tariff rate of 20.6% — the highest level since 1910 — and a 2.1% short-run increase in prices, according to the Yale Budget Lab. The higher prices from the planned tariffs and those announced this spring will likely set back the average U.S. household by $2,800 this year, the Yale Budget Lab said in a study published July 14. Tariffs will probably push up unemployment by 0.5 percentage point by the end of this year and, over the long run, trim 0.5 percentage point from GDP, the Yale Budget Lab said. Both public- and private-sector economists disagree over whether the import duties will trigger a brief, one-shot increase in prices or a sustained inflationary tide that sweeps across of the economy. Most economists, while expressing surprise at the resilience of the U.S. economy, forecast GDP growth will decline for the remainder of 2025 and into 2026. 'The economy has slowed decisively, with GDP growth likely averaging about 1.5% in the first half from 3% over the previous three years,' Pantheon Macroeconomics said in a note to clients on Thursday. After a slight gain during the first quarter, economic growth likely increased at a 2.4% annual rate during the second quarter, the Federal Reserve Bank of Atlanta said on Friday. During the first half of 2025, the Conference Board's Coincident Economic Index measuring the current state of the economy rose 0.8%, a decline from a 1% gain during the second half of 2024, the Conference Board said. Still, all four of the index's components improved last month, including payroll employment, industrial production, manufacturing and trade sales, and personal income less transfer payments, the Conference Board said. Looking ahead, and 'based on what the data tell us today, I expect uncertainty and tariffs to restrain spending and reduced immigration to slow labor force growth,' New York Fed President John Williams said Wednesday. 'As a result, I expect real GDP growth this year to be about 1 percent.' Recommended Reading Economic data 'point to headwinds ahead,' Conference Board says Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Axios
4 days ago
- Business
- Axios
U.S. still looking at 10% baseline tariff, not higher, Lutnick says
The U.S. still intends to put a baseline tariff of 10% on many smaller countries, despite recent suggestions it could go higher, Commerce Secretary Howard Lutnick said Sunday. Why it matters: It's a small sign of relief for the market, which has watched nervously as President Trum p repeatedly suggested in recent days that baseline rates could go to 15% or even 20%. Catch up quick: Earlier this month, Trump sent letters to dozens of countries, unilaterally setting tariff rates as of August 1. Hundreds more are expected in the coming days. So far, only one of those countries, Indonesia, has made a nominal deal for a better rate than the letter imposed, though it's not clear if that arrangement is anywhere close to finalized. The Yale Budget Lab estimates that Americans — including the impact of the August 1 letters — now face the highest tariff rate since 1910, an average cost of $2,800 per household this year. What they're saying: "You should assume that the small countries, the Latin American countries, the Caribbean countries, many countries in Africa, they will have a baseline tariff of 10%," Lutnick said on CBS's "Face the Nation" Sunday. "The bigger economies will either open themselves up or they'll pay a fair tariff to America," he said. Zoom out: Lutnick said August 1 was a hard deadline, and that no nation was going to "negotiate away" tariffs entirely. "10% is definitely going to stay. Many countries will pay higher," he said. The intrigue: CBS released a new poll Sunday morning showing 60% of respondents oppose tariffs, and 61% believe the administration is putting too much emphasis on tariffs. Lutnick dismissed the finding."They're going to love the deals that President Trump and I are doing. They're just going to love them," he said. He also dismissed any concerns about tariffs causing prices to rise. "I think you're going to see inflation stay right where it is," he said. The recent CPI report showed inflation has been creeping steadily higher in recent months, including in the goods categories most exposed to tariffs.
Yahoo
5 days ago
- Business
- Yahoo
Are Trump's tariffs helping the US economy? Experts weigh in
President Donald Trump's tariffs tanked markets and unleashed recession forecasts when the president unveiled sweeping levies little more than 100 days ago. Now, as Trump continues to tout the policy, the economy is humming along and Wall Street is responding to each new tariff with a shrug. A recent round of tariff threats has added a new layer of uncertainty, but the monthslong track record affords economists an opportunity to evaluate what the tariffs have yielded so far. Analysts who spoke to ABC News credited the tariffs for delivering higher-than-expected tax revenue and helping to elicit some commitments from companies bent on investing in new production in the U.S. MORE: Are tariffs to blame for rising inflation? Experts weigh in But, some analysts cautioned, those company commitments carry a long time horizon and wiggle room for firms to renege upon the spending as the tariff policy fluctuates. Meanwhile, tariffs have started to push up some prices, risking a bout of inflation that could hurt consumers and disrupt the economy, they said. Trump has rolled back many of his steepest tariffs over recent months, including a sky-high levy on China, the top source of U.S. imports. In recent days, however, Trump announced plans to slap tariffs as high as 50% on dozens of countries, including 25% tariffs on top U.S. trade partners such as Japan and South Korea. In all, consumers currently face an effective tariff rate of 20.6%, the highest since 1910, the Yale Budget Lab found this week. The Trump administration touts tariffs as part of a wider set of 'America First economic policies,' which have 'sparked trillions of dollars in new investment in U.S. manufacturing, technology, and infrastructure,' according to the White House's website. In theory, levies on imports incentivize firms to build manufacturing in the U.S. as a means of averting the tax burden. Scores of companies have pledged new investment in the U.S., including tech giants Apple and Nvidia, pharmaceutical companies Merck and Johnson & Johnson as well as automakers Hyundai and Stellantis, the White House says. 'The whole idea is to encourage reshoring of manufacturing and change the balance of trade. That could all have some positive impact,' Morris Cohen, a professor emeritus of manufacturing and supply chains at Duke University, told ABC News. Companies face the choice of making costly, long-term investment decisions amid Trump's on-again, off-again tariff policies, which the White House has altered numerous times since Trump took office, some analysts said. A pair of court rulings in May thrust some of the tariffs into legal limbo, adding another layer of uncertainty as federal appeals court judges determine whether a major swath of the policies pass legal muster. 'The companies making promises are trying to politically deal with Trump,' Matias Vernengo, a professor of economics at Bucknell University, told ABC News, adding that he expects many firms will ultimately fall short of their commitments. 'It would be nice if he announced a tariff policy and stuck to it. But that's not what's happening,' Vernengo added. The Trump administration has rebuked criticism of its tariff approach, saying the flexibility affords White House officials leverage in trade negotiations with countries targeted by the levies. The tariffs, meanwhile, have yielded a burst of tax revenue as importers to pay the federal government when they bring targeted goods into the U.S. The U.S. recorded about $27 billion in tariff-related tax revenue last month, bringing total payments so far this year to more than $100 billion, Treasury Department data showed. Mark Zandi, chief economist at Moody's Analytics, said tariff revenue could exceed $300 billion by the end of 2025, which would amount to nearly 1% of U.S. gross domestic product. That revenue could help ease government deficits, some analysts noted. 'The tariff revenues are more substantial than I anticipated at the start of the year,' Zandi said, noting that tariff levels had remained higher than he expected. Still, Zandi voiced skepticism about the staying power of the tax payments. 'It would not be prudent for lawmakers to count on this revenue in the future, as it is unclear whether the tariffs will remain in place given they may be found to be illegal or future Presidents may decide to lower or eliminate them under executive order,' Zandi said. Meanwhile, the U.S. economy so far has defied analysts' fears of a large, tariff-induced price spike. Still, tariffs contributed modestly to the rise of inflation last month, analysts previously told ABC News, citing the price hikes in product categories made up primarily of imports. Consumer prices rose 2.7% in June compared to a year ago, matching economists' expectations but marking an uptick from a month earlier. Still, the inflation rate clocked in below the 3% recorded in January, the month Trump took office. MORE: Markets are shrugging off Trump's tariffs. Experts explain why. The price of toys -- a product dependent almost entirely on imports -- increased six times faster in June than it had just two months prior. Commonly imported products like clothes, furniture and bed linens were also among the goods that jumped in price. Vernengo, of Bucknell University, said tariffs would likely push up inflation for a temporary period, putting pressure on the Fed to keep interest rates elevated and in turn risk an economic slowdown. 'Prices will go up as Trump imposes tariffs. Then, as tariffs are established and prices adjust themselves, they will stop growing,' Vernengo said. 'It's the Fed's reaction that will matter more in my view than the tariffs.' Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
5 days ago
- Business
- Yahoo
What have Trump's tariffs achieved so far? Experts weigh in.
President Donald Trump's tariffs tanked markets and unleashed recession forecasts when the president unveiled sweeping levies little more than 100 days ago. Now, as Trump continues to tout the policy, the economy is humming along and Wall Street is responding to each new tariff with a shrug. A recent round of tariff threats has added a new layer of uncertainty, but the monthslong track record affords economists an opportunity to evaluate what the tariffs have yielded so far. Analysts who spoke to ABC News credited the tariffs for delivering higher-than-expected tax revenue and helping to elicit some commitments from companies bent on investing in new production in the U.S. MORE: Are tariffs to blame for rising inflation? Experts weigh in But, some analysts cautioned, those company commitments carry a long time horizon and wiggle room for firms to renege upon the spending as the tariff policy fluctuates. Meanwhile, tariffs have started to push up some prices, risking a bout of inflation that could hurt consumers and disrupt the economy, they said. Trump has rolled back many of his steepest tariffs over recent months, including a sky-high levy on China, the top source of U.S. imports. In recent days, however, Trump announced plans to slap tariffs as high as 50% on dozens of countries, including 25% tariffs on top U.S. trade partners such as Japan and South Korea. In all, consumers currently face an effective tariff rate of 20.6%, the highest since 1910, the Yale Budget Lab found this week. The Trump administration touts tariffs as part of a wider set of 'America First economic policies,' which have 'sparked trillions of dollars in new investment in U.S. manufacturing, technology, and infrastructure,' according to the White House's website. In theory, levies on imports incentivize firms to build manufacturing in the U.S. as a means of averting the tax burden. Scores of companies have pledged new investment in the U.S., including tech giants Apple and Nvidia, pharmaceutical companies Merck and Johnson & Johnson as well as automakers Hyundai and Stellantis, the White House says. 'The whole idea is to encourage reshoring of manufacturing and change the balance of trade. That could all have some positive impact,' Morris Cohen, a professor emeritus of manufacturing and supply chains at Duke University, told ABC News. Companies face the choice of making costly, long-term investment decisions amid Trump's on-again, off-again tariff policies, which the White House has altered numerous times since Trump took office, some analysts said. A pair of court rulings in May thrust some of the tariffs into legal limbo, adding another layer of uncertainty as federal appeals court judges determine whether a major swath of the policies pass legal muster. 'The companies making promises are trying to politically deal with Trump,' Matias Vernengo, a professor of economics at Bucknell University, told ABC News, adding that he expects many firms will ultimately fall short of their commitments. 'It would be nice if he announced a tariff policy and stuck to it. But that's not what's happening,' Vernengo added. The Trump administration has rebuked criticism of its tariff approach, saying the flexibility affords White House officials leverage in trade negotiations with countries targeted by the levies. The tariffs, meanwhile, have yielded a burst of tax revenue as importers to pay the federal government when they bring targeted goods into the U.S. The U.S. recorded about $27 billion in tariff-related tax revenue last month, bringing total payments so far this year to more than $100 billion, Treasury Department data showed. Mark Zandi, chief economist at Moody's Analytics, said tariff revenue could exceed $300 billion by the end of 2025, which would amount to nearly 1% of U.S. gross domestic product. That revenue could help ease government deficits, some analysts noted. 'The tariff revenues are more substantial than I anticipated at the start of the year,' Zandi said, noting that tariff levels had remained higher than he expected. Still, Zandi voiced skepticism about the staying power of the tax payments. 'It would not be prudent for lawmakers to count on this revenue in the future, as it is unclear whether the tariffs will remain in place given they may be found to be illegal or future Presidents may decide to lower or eliminate them under executive order,' Zandi said. Meanwhile, the U.S. economy so far has defied analysts' fears of a large, tariff-induced price spike. Still, tariffs contributed modestly to the rise of inflation last month, analysts previously told ABC News, citing the price hikes in product categories made up primarily of imports. Consumer prices rose 2.7% in June compared to a year ago, matching economists' expectations but marking an uptick from a month earlier. Still, the inflation rate clocked in below the 3% recorded in January, the month Trump took office. MORE: Markets are shrugging off Trump's tariffs. Experts explain why. The price of toys -- a product dependent almost entirely on imports -- increased six times faster in June than it had just two months prior. Commonly imported products like clothes, furniture and bed linens were also among the goods that jumped in price. Vernengo, of Bucknell University, said tariffs would likely push up inflation for a temporary period, putting pressure on the Fed to keep interest rates elevated and in turn risk an economic slowdown. 'Prices will go up as Trump imposes tariffs. Then, as tariffs are established and prices adjust themselves, they will stop growing,' Vernengo said. 'It's the Fed's reaction that will matter more in my view than the tariffs.' Sign in to access your portfolio
5 days ago
- Business
What have Trump's tariffs achieved so far? Experts weigh in.
President Donald Trump's tariffs tanked markets and unleashed recession forecasts when the president unveiled sweeping levies little more than 100 days ago. Now, as Trump continues to tout the policy, the economy is humming along and Wall Street is responding to each new tariff with a shrug. A recent round of tariff threats has added a new layer of uncertainty, but the monthslong track record affords economists an opportunity to evaluate what the tariffs have yielded so far. Analysts who spoke to ABC News credited the tariffs for delivering higher-than-expected tax revenue and helping to elicit some commitments from companies bent on investing in new production in the U.S. But, some analysts cautioned, those company commitments carry a long time horizon and wiggle room for firms to renege upon the spending as the tariff policy fluctuates. Meanwhile, tariffs have started to push up some prices, risking a bout of inflation that could hurt consumers and disrupt the economy, they said. Trump has rolled back many of his steepest tariffs over recent months, including a sky-high levy on China, the top source of U.S. imports. In recent days, however, Trump announced plans to slap tariffs as high as 50% on dozens of countries, including 25% tariffs on top U.S. trade partners such as Japan and South Korea. In all, consumers currently face an effective tariff rate of 20.6%, the highest since 1910, the Yale Budget Lab found this week. The Trump administration touts tariffs as part of a wider set of 'America First economic policies,' which have 'sparked trillions of dollars in new investment in U.S. manufacturing, technology, and infrastructure,' according to the White House's website. In theory, levies on imports incentivize firms to build manufacturing in the U.S. as a means of averting the tax burden. Scores of companies have pledged new investment in the U.S., including tech giants Apple and Nvidia, pharmaceutical companies Merck and Johnson & Johnson as well as automakers Hyundai and Stellantis, the White House says. 'The whole idea is to encourage reshoring of manufacturing and change the balance of trade. That could all have some positive impact,' Morris Cohen, a professor emeritus of manufacturing and supply chains at Duke University, told ABC News. Companies face the choice of making costly, long-term investment decisions amid Trump's on-again, off-again tariff policies, which the White House has altered numerous times since Trump took office, some analysts said. A pair of court rulings in May thrust some of the tariffs into legal limbo, adding another layer of uncertainty as federal appeals court judges determine whether a major swath of the policies pass legal muster. 'The companies making promises are trying to politically deal with Trump,' Matias Vernengo, a professor of economics at Bucknell University, told ABC News, adding that he expects many firms will ultimately fall short of their commitments. 'It would be nice if he announced a tariff policy and stuck to it. But that's not what's happening,' Vernengo added. The Trump administration has rebuked criticism of its tariff approach, saying the flexibility affords White House officials leverage in trade negotiations with countries targeted by the levies. The tariffs, meanwhile, have yielded a burst of tax revenue as importers to pay the federal government when they bring targeted goods into the U.S. The U.S. recorded about $27 billion in tariff-related tax revenue last month, bringing total payments so far this year to more than $100 billion, Treasury Department data showed. Mark Zandi, chief economist at Moody's Analytics, said tariff revenue could exceed $300 billion by the end of 2025, which would amount to nearly 1% of U.S. gross domestic product. That revenue could help ease government deficits, some analysts noted. 'The tariff revenues are more substantial than I anticipated at the start of the year,' Zandi said, noting that tariff levels had remained higher than he expected. Still, Zandi voiced skepticism about the staying power of the tax payments. 'It would not be prudent for lawmakers to count on this revenue in the future, as it is unclear whether the tariffs will remain in place given they may be found to be illegal or future Presidents may decide to lower or eliminate them under executive order,' Zandi said. Meanwhile, the U.S. economy so far has defied analysts' fears of a large, tariff-induced price spike. Still, tariffs contributed modestly to the rise of inflation last month, analysts previously told ABC News, citing the price hikes in product categories made up primarily of imports. Consumer prices rose 2.7% in June compared to a year ago, matching economists' expectations but marking an uptick from a month earlier. Still, the inflation rate clocked in below the 3% recorded in January, the month Trump took office. The price of toys -- a product dependent almost entirely on imports -- increased six times faster in June than it had just two months prior. Commonly imported products like clothes, furniture and bed linens were also among the goods that jumped in price. Vernengo, of Bucknell University, said tariffs would likely push up inflation for a temporary period, putting pressure on the Fed to keep interest rates elevated and in turn risk an economic slowdown. 'Prices will go up as Trump imposes tariffs. Then, as tariffs are established and prices adjust themselves, they will stop growing,' Vernengo said. 'It's the Fed's reaction that will matter more in my view than the tariffs.'
