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Business Standard
12 hours ago
- Business
- Business Standard
China's factory activity contracts in May amid trade tensions, PMI at 49.5
While the manufacturing index indicated sector growth, the new orders index remained below 50, signalling ongoing weakness despite some improvement New Delhi China's factory activity contracted in May, though the pace of decline eased compared to April as the country reached a deal with the United States to reduce former president Donald Trump's steep tariffs, Associated Press reported. According to the National Bureau of Statistics, China's purchasing managers index (PMI) increased from 49.0 in April to 49.5 in May. The PMI scale ranges from 0 to 100, with 50 marking the threshold between growth and contraction. While the manufacturing index indicated sector improvement, the new orders index remained below 50, signalling continued weakness despite some recovery. A senior statistician at the National Bureau of Statistics said firms engaged in US trade saw faster resumption of foreign orders, and import-export conditions showed signs of improvement. Earlier this month, China and the US reached an agreement to reduce tariffs: Trump's tariffs were cut from 145 per cent to 30 per cent for 90 days, allowing more time for detailed negotiations. China also lowered taxes on US goods from 125 per cent to 10 per cent. However, tariffs still remain higher than pre-Trump levels, and uncertainty lingers over whether the temporary truce will hold. US President Donald Trump declared on Friday that he would no longer be 'Mr. Nice Guy' with China on trade, saying that China had broken its agreement with the United States. The specific agreement Trump referred to was not detailed. Posting on social media, he said, 'The bad news is that China, perhaps not surprisingly to some, HAS TOTALLY VIOLATED ITS AGREEMENT WITH US. So much for being Mr. NICE GUY!' He acknowledged that the tariff reduction helped stabilise China's economy and provided relief to US companies struggling under high import duties, which had previously hindered their ability to import Chinese goods and threatened their businesses. These remarks highlight the persistent tensions between the world's two largest economies, with Trump seeking to demonstrate that his tariffs yield tangible benefits such as boosting US manufacturing and encouraging domestic investment. The administration also intensified its confrontation with China this week by announcing plans to revoke visas for Chinese students studying in the United States.
The Wire
a day ago
- Business
- The Wire
The Trump Policy Tsunami: More Shock than Therapy?
Menu हिंदी తెలుగు اردو Home Politics Economy World Security Law Science Society Culture Editor's Pick Opinion Support independent journalism. Donate Now Economy The Trump Policy Tsunami: More Shock than Therapy? Ashok Bardhan 16 minutes ago Many of the pronouncements and policies being implemented by the Trump administration seem to defy analysis. US President Donald Trump at the White House. Photo: AP/PTI Real journalism holds power accountable Since 2015, The Wire has done just that. But we can continue only with your support. Contribute now The hazard of analysing the policies of the Donald Trump administration is that you never know if what you've written is already outdated. It's a roller coaster ride with many detours. We are still in the early stages of the Trump phenomenon but, given that scores of policies are already in the process of being implemented, both domestically and in the international arena, perhaps it's time to take stock. This is especially relevant since the early impact of tariffs and economic uncertainty has been felt in the contraction of the GDP in the first quarter of 2025, although experts had already predicted a slowing economy for 2025 back in 2024. How do we make coherent sense of what appear to be drastic initiatives? Is there a pattern to this chaotic, impulsive force of nature? Whose interests are being served? How to assess, at this moment, the domestic and international consequences of these inconsistent proclamations and policies? Many of these pronouncements and policies being implemented seem to defy analysis. In a pre-Trump era, the reasoning could be somewhat more linearly predictable. Surely a country with a huge military industrial complex would not cut down on 'endless wars,' or throw sand in the wheels of international commerce, until now a source of profits to the financial backers of any administration? If this is crony capitalism, then the cronies cannot be happy with the gyrations in financial markets or with the on-and-off-and on-again tariffs, at least, at this moment, before the tax cuts kick in to placate them. One possible framework to understand the Trump phenomenon and his support base is by looking through the prism of several dichotomous categories and fault lines, which throw light on the underlying contradictions, and perhaps help understand the potential consequences. The Constituency: 'MAGA folks vs Tech Bros' The 'Make America Great Again (MAGA) folks' and 'Tech Bros' are the two key demographics who represent, broadly speaking, different sides of two pressing issues –immigration and tariffs – the outcomes of which have consequences reflecting something close to a class schism within the Trump movement itself. Believing that the Maga supporters care only for regressive cultural issues, seeing everything through a primarily nativist prism, is a mistake. The Democrats paid a price for buying into that simplistic belief. Biden not only lost a substantial percentage of the white working-class vote, but also Black and Hispanic working class votes because of their precarious economic status, low employment prospects and inflation (it should be noted that the US economy was creating over 230,000 jobs per month in the 1990s, whereas it created an average of 186,000 jobs per month in 2024, when the population was 30% higher and the economy was supposed to be experiencing robust post-pandemic growth). Signs of conflict between the two camps are evident when it comes to their stance on immigration and tariffs. After all, in the eyes of many working-class folks, immigrants who enter 'illegally' compete with them and keep their wages depressed, while benefiting those who are purchasers of their services. We cannot also discount the impulse of some settled immigrants to 'shut the door behind them'. Tech tycoons, on the other hand, need unfettered access to global labor and free trade. The perennial specters of job creation and inequality loom over these topics. The domestic realm: The sociocultural versus the economic Throughout the presidential campaign, Trump's core domestic themes were sociocultural (the gender-trans debate and diversity, equity, inclusion (DEI), for example) and economic (the promise to bring manufacturing back, restore America economic dominance, and correct the trade imbalance). The key policy instruments for the former were a mix of executive orders and conservative value signaling, such as attacks on DEI; for the latter, they were the promise of higher tariffs and tax breaks. In Trump's vision, the sociocultural and economic policies are aimed at complementing each other – both immigration and DEI are supposed to positively impact jobs for key constituencies, whereas tax cuts would benefit the business constituency. Considering the alacrity with which many US companies have withdrawn their DEI initiatives, it is clear that many segments of the business world are perfectly happy to live with or without them. In the case of tariffs, it's a more complex calculation, and can play out in number of harmful ways for the support base, with the business world harmed by rising input costs and most others by general consumer goods inflation. A key factor underlying the two sets of policies is what some have called the politics of resentment; resentment against immigrants is often discussed. To this one can add resentment against foreign countries, especially those whose economic success and sovereign actions would seem to threaten US dominance in economic, financial and geo-political spheres. The foreign realm: America first versus globalism and the empire's interests With the exception of two constant foreign policy themes – talk of disengagement from Ukraine and doubling down on support for Israel – the main thrust of Trump's campaign had been a focus on domestic issues. Even his trade policy had the resurgence of the US economy as a primary domestic concern. The shift of economic power away from the old western axis – with greater competition in global markets and pushback from the BRICS have compelled a look for a renewal at home. Global developments over the last couple of decades, including the aftermath of the wars in Iraq, Afghanistan, the conflict with Houthis, and the grinding attrition of the war in Ukraine, together with other hotspots, has led to a more realistic and pragmatic view of the limits of US global power, and the recognition that it might be spread too thinly. The immediate manifestation of this may well be disentanglement from Ukraine. Instead, we see consolidation in the near abroad in the American hemisphere with what might be otherwise considered strange goings on with Panama, Canada, and Greenland, together with selective muscle flexing in other parts of the world. However, the global stage is too much of a temptation for grandstanding, what with an opportunity to promote peace in Ukraine, or cease-fire between India and Pakistan, and trying to redraw the Middle East. These twists and turns are a feature not a bug. And if one parses the Riyadh speech closely one could say that there's really nothing much more to see here than business as usual, the stress being on business. Also Read: A Tale of Two Wars and Two Different Economic Consequences In a sense, the frantic deal-making in the middle-east underscores the possibility for Trump to both hunt with the hound and run with the hare. As long as Israeli security is not on the line, business with the rest of the Arab world presents vast opportunities; Israel in that regard holds limited appeal. Make America dominant again is a subtext of the Maga slogan and, given the make-up of the administration as well as many of its announcements and policies there is reason to believe that the US may have altered, but not put to rest, its imperial ambitions. The logic: The idiosyncratic versus the systemic There is a tendency, bordering on the obsessive, to focus on the personalities of Trump and people in his administration. But it would be a mistake to discount the large, though contradictory, forces behind him and their impact on his policies. The idiosyncratic aspect plays out in impulsiveness, cussedness and doubling down. It also shows up in open promotion of short term pain versus a promised long-term gain, easy talk of recession, and tariff-induced price increases and cuts in government spending as a ' harsh but necessary medicine to restore the economy to health.' Scott Bessent, the Treasury secretary is on record with the claim that the economy needed a ' detox period '. Beyond personalities, however, lies the systemic. The forces that drive the US economy, polity and society are too decentralised to be completely subordinate to a single locus of power. The actions of any state, let alone one occupying as dominant a global position as the US, are based on evaluation of overall interests and competing powers. They may not always be well thought out, but they cannot be attributed wholly to whims of those in power. In the long run, the underlying structural interests that constitute the foundational bedrock of US society and economy will emerge on top, and Trump may end up doing what needs to be done for a modified form of status quo. Is there a visible and coherent ideology behind these policies, even if based on an incomplete analysis of both the structural problems faced by the US economy, and the assessment of its place in the global order? A somewhat tenuous analogy from the recent past, from a vastly different country can help shed some light on what is unfolding. Also Read: The Birth Pangs of a New World Order: Is BRICS the New Golden Child? Trump, Musk and their group of radical reformers have taken a battering ram to the institutions in Washington. Their methods bring to mind the aftermath of the collapse of the Soviet Union, with a similar unfolding of a full spectrum upheaval. Here are some early takeaways, with echoes of a 30-year-old past (Caveat: the Trump phenomenon is sui generis and a peculiar product of US conditions. All the same, here goes). In the runup to both sets of abrupt policy changes, there was a widely shared and growing sense of unease (in Soviet Union then, in the US today), a sense that they were headed down the wrong path, with economic stagnation for a sizable part of the population, accompanied by a plethora of slogans and performative progressivism. Like some of the so-called 'young energetic reformers' under Yeltsin (Jeffrey Sachs, an early participant, who quit his advisory role in dissent in 1993, has written a clarifying note on the contentious developments of the 1990s), the young troops of the Department of Government Efficiency, and many of the newly minted Secretaries at various departments have shown considerable enthusiasm for tearing down the Ancien Régime, while the outline of what is to come is still nebulous, apart from broad homilies about deregulation and dismantling welfare. The traumatic reform approach of the Gorbachev/Yeltsin era focused primarily on domestic issues. This is also true of the Trump administration, as I have suggested above. However, given that the United States and the then Soviet Union were global powers, turbulence in the domestic sector set off shock waves in different parts of the world. In the case of the Soviet Union, the first global impact was the withdrawal from East Europe; in the US case, Ukraine seems to be playing that role. Both in the 1990s as well as now, the objective of this rapid fire, shock and awe approach, apart from paralysing the opposition, was to create a sense of inevitability and irreversibility. One need not take the analogy too far, but a key question that it raises is – what are the unforeseen consequences of this 'shock therapy'? After all, none of the reformers of 1990s Russia aimed for the kind of Russia that exists today, which, to a large extent, has come about as a result of the reaction to the 1990s. Policies of the Trump administration are symptoms of a deeper crisis going back decades In conclusion, there are two developments, one global, and one domestic, that colour the policies of this administration. Many of the trade and economic policies of the Trump administration are symptoms of a deeper crisis going back decades. Those who have been studying the easy route taken by US manufacturing companies to pad their profits by offshoring an overwhelming majority of their manufacturing capacity sounded the alarm a while ago. The ongoing hectic activity seems like a reaction and result of reassessment of priorities in the wake of a relative decline in global fortunes, but will it lead to further waning of the empire, or a rejuvenation of national prospects, by means yet unknown? On the domestic front, the limits of presidential power and the inbuilt checks and balances are being tested. Many aspects of American democracy that functioned well did so due to two social compacts. The first is well known: the promise of the American dream, that anyone who worked hard had a good shot at living better than their parents. That is still operative but has been tarnished for a significant chunk of the population. It seems, in retrospect, that the other reason American democracy flourished is due to something akin to a gentleman's agreement between different branches of the political elite rather than institutional solidity; an agreement that above all else guaranteed an even playing field for the elite during stable prosperous times. It's that gentleman's agreement that is being disrupted today. Ashok Bardhan is an independent economist. Make a contribution to Independent Journalism Related News US to Impose Visa Restrictions on Foreign Officials Accused of Censoring Americans Abroad Trump Warns Apple: Pay 25% Tariff if iPhones are Made in 'India, or Anyplace Else' India Rejects Claim That Trump's Trade Threat Averted War With Pakistan Full Text: Experts on Tariffs, India and the Global South Today Ahead of Bilateral Talks, India Notifies WTO About Proposal to Impose Tariffs on Imports from the US Trump's Afrikaners are South African Opportunists, Not Refugees: What's Behind the US Move 'US Did Call Up, But Ceasefire Was Negotiated Directly Between India and Pakistan': Jaishankar How to Survive an Oval Office Ambush: A Guide for Heads of State What the Modi Govt Can Learn From an Indian President's Rebuttal to Bill Clinton 25 Years Ago View in Desktop Mode About Us Contact Us Support Us © Copyright. All Rights Reserved.
Yahoo
2 days ago
- General
- Yahoo
Opinion - Colleges must give up federal funding to achieve true intellectual freedom
The Trump administration's sudden cuts to federal research grants to Harvard, Columbia and other universities have rightly raised alarm. But restoring the pre-Trump status quo, as Harvard and many academics demand, will not safeguard intellectual freedom. Why not? Because the administration's actions are only a vile escalation of the infringement on intellectual freedom inherent in any system of federal funding. Both are destructive, and both must go. Start with the Trump administration. Under the pretext of combatting the real problem of antisemitism on campus — this from a president who dines with antisemites — the administration is demanding intellectual control over Harvard's faculty and student body. Harvard must submit to an audit of 'its student body, faculty, staff, and leadership for viewpoint diversity.' Specific departments including the Divinity and Medical schools will get special scrutiny to see if they 'reflect ideological capture.' Diversity, equity and inclusion or DEI programs must also end. Harvard must not admit any international student whom the government considers 'hostile to the American values and institutions inscribed in the U.S. Constitution and Declaration of Independence.' (Presumably foreign supporters of Jan. 6— that day of love — are exempt.) Harvard is right to balk at all this. It is right to declare that no government 'should dictate what private universities can teach, whom they can admit and hire, and which areas of study and inquiry they can pursue.' And a private university like Harvard could choose to ignore the administration's demands — but that means forfeiting federal research funding, which puts it at an unfair disadvantage when competing for students, faculty and donors with universities that continue to receive massive federal payouts. If Harvard and other private universities truly seek freedom, therefore, they should demand that federal research funding be phased out altogether. Harvard should argue that since all federal funding comes with some government strings attached, it infringes on intellectual freedom. Instead, Harvard is demanding more government funding and objecting only to the specific nature of the strings or to the way they are currently being pulled. For instance, Harvard does not challenge the government demanding that it do more to combat antisemitism, it simply laments that the present administration seems unwilling 'to work with us to address antisemitism in a cooperative and constructive manner.' Harvard does not object when administrations impose ideological goals it agrees with, such as the many DEI initiatives like that require grant applicants to submit 'diversity plans'; it only objects when it disagrees with the government's ideological goals. But universities cannot get around the fact that federal grants, by their nature, selectively fund certain ideas at the expense of others. The government picks intellectual winners and losers among private citizens, which is the exact opposite of intellectual freedom. How was Harvard awarded the billions of dollars that the Trump administration is now threatening to withdraw? Federal employees at agencies such as the National Science Foundation, National Institutes of Health and the National Endowment of the Humanities look through tens of thousands of grant applications every year and decide which private researchers will receive federal grants and which will not. Even in the best-case scenario, when federal bureaucrats try to proceed conscientiously, such a system creates increased conformity within an academic field. The bureaucrats will tend to defer to recognized experts in the field, which means established theories and methodologies are much more likely to receive federal support, making it difficult for intellectual minorities and innovators to compete. This plays out across the entire university, which is strongly incentivized to hire researchers likely to receive federal grants. In worse scenarios, bureaucrats actively pursue an ideological agenda, deliberately rewarding some viewpoints and penalizing others. This is a major cause of how DEI swept through the universities. And this is now what the Trump administration is nakedly claiming the power to do. Tellingly, in its latest harangue, the administration says it is punishing Harvard for crudely political reasons, including that 'Harvard hired failed Mayors Bill De Blasio and Lori Lightfoot, perhaps the worst mayors ever to preside over major cities in our country's history.' Intellectual freedom is the principle that all individuals have the right to think for themselves, to express their convictions on any subject, and to give their support, financial or otherwise, only to the ideas they choose. When government coercively seizes your money and uses it to subsidize some research program or viewpointfor any reason, it is violating your intellectual freedom. This is the injustice inherent in all government research grants. It is this that private universities like Harvard should now name and challenge. Instead, they fight for 'academic freedom,' which is actually the opposite of intellectual freedom. It asserts the right of universities and professors to teach, write and research whatever they see fit — and to do it at the taxpayer's expense. Trump's measures only replace 'academic freedom' with a worse, more authoritarian form of the same injustice: the license not of universities and professors but of the executive branch to dictate which ideas you will be forced to subsidize as a taxpayer. The threats to Harvard and Columbia should be a wake-up call for private universities and for all who care about intellectual freedom. The right path forward is neither to defend the Trump administration nor to demand a return to the pre-Trump status quo, but to phase out, gradually and impartially, all federal grants and subsidies. Make private universities private again. Let each of us, as individuals, decide which universities we will frequent and fund. Onkar Ghate, Ph.D. in philosophy, is a senior fellow at the Ayn Rand Institute and a contributor to the recent book 'The First Amendment: Essays on the Imperative of Intellectual Freedom.' Sam Weaver, M.A. in liberal arts, is an associate fellow at ARI who writes on education and intellectual freedom issues. Copyright 2025 Nexstar Media, Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
Business Insider
2 days ago
- Business
- Business Insider
Goldman Sachs is pulling back risk as it braces for more fallout from 'disruptive policy' shifts: COO
Goldman Sachs is battening down the hatches as it braces for a wave of volatility resulting from disruptive policy changes in Washington. "I would say, at the moment, we're relatively defensively positioned," the bank's President and COO, John Waldron, said at a conference on Thursday. "We've got heavy liquidity. We've got significant capital buffers. And we're running more muted risk in certain and important pockets in the firm." Trump's tariffs and trade war pronouncements have roiled markets in recent weeks, exposing Wall Street to more stressors than many traders and dealmakers anticipated when the former New York businessman returned to power earlier this year. On Thursday, Waldron said tariffs are just one piece of the puzzle — and no longer as concerning as they were when they were rolled out. "We're moving, as we said, towards more manageable tariff levels," Waldron said, adding, "I think we're likely to avoid a recession with this baseline set of facts." Even if the president's tariff wars are quickly resolved, the barrage of seismic policy shifts will likely continue, he said. "The Trump administration is definitely disrupting a lot of what would be the conventional wisdom of how US policymaking traditionally goes," he said at the annual Bernstein Strategic Decisions conference in New York. "You see first-order impacts right in front of you," he said, referring to the tariffs. "The second- and third-order impacts take longer to work their way through markets. And so we're watching carefully for the second- and third-order impacts, which is another reason why we run a little bit higher buffer and a little bit more cautiously in an environment like this." "So we're going to learn a lot more, and it's going to be volatile," he said. "I think we're just got to live with that volatility for some time." Waldron pointed to two cues that the firm is watching. The first, he said, is leverage in the public sector. Governments have much less wiggle room to inject stimulus into battered economies to maneuver out of tough fiscal positions, diminishing their ability to fend off economic shocks. "I think coming out of COVID, the public sector stimulus from governments around the world to rejuvenate the economy was really, really important," he said. "We're starting to see some elements of that public sector leverage play through. There's a lot less fiscal headroom in the world today than there was back when we were coming through COVID and a pretty peaceful environment." He also pointed to something the firm is terming "lowflation" — that is, its forecast that, because of tariffs, the US should ready itself for "short- to immediate-term slower growth" and "higher inflation." He said Goldman's research showed that the best case scenario for effective tariffs would be between 10% to 15%, still a significant uptick from pre-Trump administration levels. In good news, Waldron said that US consumers had continued to exhibit "tremendous resilience" in the face of these headwinds, and that the firm's pipeline of forthcoming transactions remained strong. "Not surprisingly, the second quarter is not quite as strong from an activity level as the first quarter, given the macro environment we talked about at the beginning of this conversation," he said, adding, "But in investment banking, our engagement levels are actually still very good despite the uncertainty and the volatility our pipelines remain quite strong." "When you have this kind of volatility," he said, "you just fundamentally have a harder time prosecuting transactions that may be in your pipeline."
Yahoo
2 days ago
- Business
- Yahoo
Why the 'TACO Trade' still matters for your portfolio
-- Over the past 48 hours, the term 'TACO Trade' has been widely circulated on social media and even made it to the White House. TACO is an acronym for 'Trump Always Chickens Out', which suggests that despite his tough talk on tariffs, he will always back down in the end. Trump was asked about the TACO trade on Wednesday, enraging the President. '… don't ever say – what you said, that's a nasty question,' Trump slapped back when asked about it. Commenting on the TACO Trade and if the President always chickens, analysts at Sevens Report stated Wednesday, '[s]o far, yes (at least compared to his tariff threats).' They highlight that Trump reduced the impact of tariffs by exempting USMCA goods from Mexico/Canada duties, delaying reciprocal tariffs a week after the 'Liberation Day' announcement, cutting steep China tariffs weeks after implementation, and postponing a 50% EU tariff threat until July 9—the end date for other reciprocal tariff exemptions. Has the TACO trade worked? According to Sevens Report, 'yes.' The analysts note that the TACO trade thesis is simple: buy the Trump tariff dip. Trump's history shows he rarely follows through on extreme tariff threats, so market sell-offs tend to reverse. The S&P 500 rose 2% after the March 4 tariffs on Canada, Mexico, and China. It's up nearly 10% from the April 2 'Liberation Day' dip, and 11% since the April 11 announcement of 145% China tariffs. The index is now higher than before Friday's 50% EU tariff threat. In short, buying during tariff scares has paid off. Will the TACO trade keep working? 'Probably,' according to Sevens. Tariff-related dips may be shallower now as more investors buy them, so caution is warranted. Still, history shows Trump rarely enforces extreme tariffs, they're likely just part of a negotiation tactic: make bold threats to secure moderate outcomes. And so far, that strategy has worked. Sevens added that TACO trade doesn't eliminate tariff or trade war concerns. While Trump often backs off extreme threats, tariffs have still increased significantly, they highlight with 10% on all U.S. partners, 35% on China, and 25% on steel and non-USMCA goods from Canada and Mexico (10% on energy). While these aren't as severe as first proposed, but they're far higher than pre-Trump levels, and their economic impact remains uncertain. The TACO trade's success doesn't mean the risks aren't real. So, while the TACO trade has worked and may keep working short-term, it doesn't change the fact that tariffs are at multi-decade highs. Regarding how investors should approach the TACO trade, they suggest a short-term strategy of buying consumer discretionary (XLY), tech (XLK), financials (XLF), industrials (XLI), and energy (XLE (NYSE:XLE)) after major Trump tariff threats. These sectors fall hardest but rebound strongest. Scale in over a day or two after the sell-off. Meanwhile, for the long term they said, 'Ignore TACO.' The next 15–20% move in the market will hinge on the economy's resilience to tariffs, policy volatility, high rates, no Fed cuts, and weaker consumer spending. Trump's threats may shake sentiment, but unless enforced, they're not long-term drivers. Still, with tariff burdens rising, it's wise to stay long but reduce volatility exposure. So, while the TACO trade received a reprieve today after a federal court struck down President Trump's tariffs as illegal and beyond his authority, the Trump administration has stated it will appeal the ruling. Many on Wall Street expected it to be overturned. Related articles Why the 'TACO Trade' still matters for your portfolio Paramount cut to Neutral at Citi Boeing stock climbs on production ramp-up plans 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
