Evelyn Reynolds

President-elect Donald J. Trump has threatened tariffs on many countries for many different reasons.On Monday, he found a new purpose for his favorite economic tool. Mr. Trump said he would “tariff Denmark at a very high level” if it refused to allow Greenland — a North American island that is an autonomous territory within the Kingdom of Denmark — to become part of the United States.“They should give it up, because we need it for national security,” Mr. Trump said of Greenland. Denmark, which has a smaller population than New York City, is not a huge trading partner for the United States. The country — a U.S. ally and a NATO member — sent the United States more than $11 billion worth of goods in 2023, just a tiny slice of more than $3 trillion of imports. The United States, in turn, sends Denmark more than $5 billion in goods, including industrial machinery, computers, aircraft and scientific instruments.But despite its small size, Denmark, which handles Greenland’s foreign and security affairs, is home to some products that are very well-loved in America, goods that could become more expensive if Mr. Trump follows through with heavy tariffs. According to the Observatory of Economic Complexity, a trade data platform, roughly half of Denmark’s recent exports to the United States are packaged medicines, insulin, vaccines and antibiotics.That’s largely because the country is home to Novo Nordisk, the maker of Ozempic and Wegovy, the popular weight-loss drugs. The company is so important to the Danish economy — it has recently accounted for half of Denmark’s private sector job growth and all of the country’s economic growth — that some have branded Denmark a “pharmastate.”Novo Nordisk is increasing its U.S. production to meet the soaring demand for its GLP-1 weight loss products. The company does not specify publicly how much of its products are exported, but it produces drugs in Denmark and the United States for the U.S. market.A spokesperson for Novo Nordisk said in a statement that they were following the situation closely but would not comment on hypotheticals and speculation.We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More

Companies added a seasonally adjusted 122,000 jobs for the month, down from 146,000 additions in November and less than the Dow Jones consensus forecast for 136,000.
On wages, pay grew at a 4.6% rate from a year ago, the slowest pace since July 2021.

A worker adjusts hiring signage at a job and resource fair hosted by the Mountain Area Workforce Development Board in partnership with NCWorks in Hendersonville, North Carolina, US, on Tuesday, Nov. 19, 2024. 
Allison Joyce | Bloomberg | Getty Images

Private sector job creation eased more than expected in December while wages grew at the slowest pace in nearly three-and-a-half years, payment processing firm ADP reported Wednesday.
Companies added a seasonally adjusted 122,000 jobs for the month, down from 146,000 additions in November and less than the Dow Jones consensus forecast for 136,000. It was the smallest increase since August.

On wages, pay grew at a 4.6% rate from a year ago, the slowest pace since July 2021.
“The labor market downshifted to a more modest pace of growth in the final month of 2024, with a slowdown in both hiring and pay gains,” ADP chief economist Nela Richardson said.
The ADP report comes two days ahead of the more closely watched nonfarm payrolls count from the Bureau of Labor Statistics. Economists polled by Dow Jones expect that report to show a gain of 155,000, which in itself would mark a sharp slowdown from November’s unexpectedly strong 227,000.
Federal Reserve policymakers are watching the jobs numbers closely as they plot their next moves for monetary policy. While most Fed officials have said they believe the labor market is solid, they are looking to keep interest rates less restrictive so as not to threaten job creation.
They also have expressed more confidence that inflation has stabilized though it is still above the Fed’s 2% target. The ADP numbers could add to the case that wages aren’t pressuring inflation.

From a sector standpoint, job creation was strongest in the education and health services category, which added 57,000 positions. Other significant gains came in construction (27,000), leisure and hospitality (22,000) and financial activities (12,000).
Several sectors reported job losses, including manufacturing (-11,000), natural resources and mining (-6,000) and professional and business services (-5,000).
Almost all of the jobs came from big companies with more than 500 workers, which amounted to 97,000. More

President-Elect Donald Trump is considering putting the U.S. in a state of national emergency to execute his broad tariff plan, according to CNN, citing sources familiar.
A final decision has not yet been made and Trump’s team is also evaluating alternative legal options for implementing the taxes on imports, CNN’s sources said.
Stock futures slipped following CNN’s report.

U.S. President-elect Donald Trump makes remarks at Mar-a-Lago in Palm Beach, Florida, U.S. Jan. 7, 2025. 
Carlos Barria | Reuters

President-Elect Donald Trump is contemplating calling a national economic emergency to implement his wide-reaching tariff policies, four sources familiar with the matter told CNN.
A declaration of this nature will give Trump power to create the tariff program he made a pinnacle of his campaign for the White House through the International Economic Emergency Powers Act, CNN reported. Also known as IEEPA, the act allows the president to oversee imports in a period of national crisis.

Stock futures weakened following the CNN report and the U.S. dollar gained in value against most other currencies.
CNN’s sources noted that a final decision has not been reached on whether Trump will declare a national emergency. Trump’s team is also evaluating alternative legal arguments, such as pointing to specific sections of the U.S. trade law, per CNN’s reporting.
Trump pitched taxes on imports frequently on the campaign trail, calling at times for fees of 60% or more on Chinese products. Weeks after his victory, the Republican vowed to hike tariffs on Chinese imports by 10% and slap 25% fees on products coming from Canada or Mexico.
The Washington Post reported Monday that Trump would narrow the focus of his tariffs, an approach Wall Street seems to favor. But the President-Elect later denied that report.
Read CNN’s full story here. More

The ISM services index Tuesday posted a reading of 54.1%, up 2 percentage points from November and above the Dow Jones consensus forecast of 53.4%.
Along with the better overall reading, the prices index jumped to 64.4%, an increase of 6.2 points or more than 10%. It was the first time the index had eclipsed 60% since January of 2024.
Treasury yields, particularly at the longer end of the curve, moved higher after the release.

A person shops at a Whole Foods Market grocery store on December 17, 2024 in New York City. 
Spencer Platt | Getty Images

Activity in the U.S. services industry accelerated in December but brought with it a sharp rise in expectations for price increases as businesses grew concerned about the impact tariffs would have on inflation.
The Institute for Supply Management’s services index Tuesday posted a reading of 54.1%, representing the share of businesses expecting growth. That was up 2 percentage points from November and better than the Dow Jones survey of economists showing a consensus forecast of 53.4%.

Along with the better overall reading, the prices index jumped to 64.4%, an increase of 6.2 points or more than 10%. It was the first time the index had eclipsed 60% since January 2024, said Steve Miller, chair of ISM’s Business Survey Committee. The prices index hit its highest level since February 2023.
“There was general optimism expressed across many industries, but tariff concerns elicited the most panelist comments,” Miller said.
President-elect Donald Trump has vowed to enact sweeping tariffs after he takes office later this month. Trump on Monday denied a Washington Post report that he was considering a narrower, more targeted approach.
The ISM manufacturing survey for the month also reflected higher prices, with the index rising to 52.5%, up 2.2 points on the month.
Treasury yields, particularly at the longer-dated end of the curve, moved higher following the release. The benchmark 10-year note most recently yielded 4.68%, up 0.065 percentage point, or 6.5 basis points, on the session.

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10-year yield

In the services survey, multiple respondents cited tariffs as a concern while noting a generally positive business climate wrapping up 2024.
“Seems to be a lot of uncertainty about tariffs and purchasing decisions. A lot of wait and see,” said one respondent in the transportation and warehousing industry.
“Generally optimistic that the incoming administration will positively affect regulatory, tax and energy policies that will spur economic improvement. We are concerned about tariff activity and are hoping for the best,” an information services industry manager reported.
The business activity index also moved higher, rising to 58.2%, an increase of 4.5 points.
Employment was little changed at 51.4%; in the ISM manufacturing survey, the index fell to 45.3%, a decline of 2.8 points. Any reading in the ISM surveys below 50% represents contraction.
Readings on inflation and employment conditions are critical for the Federal Reserve as it contemplates future moves in monetary policy. The central bank lowered its benchmark borrowing rate by a full percentage point from September through December in 2024 but is expected to move at a more cautious pace now as it evaluates incoming economic data.
A separate report Tuesday indicated that job openings nudged higher in November while fewer workers left their jobs.
The Labor Department’s Job Openings and Labor Turnover Survey showed available positions rising to 8.1 million, an increase of 259,000 for the month and higher than the 7.7 million estimate from Dow Jones. At the same time, quits fell to 3.06 million, a decline of 218,000.
The level of job openings to available workers held around 1.1 to 1.

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Annual inflation in the euro zone rose for a third straight month to reach 2.4% in December, statistics agency Eurostat said Tuesday.
The preliminary reading was in line with the forecast of economists polled by Reuters and marked an increase from a revised 2.2% print in November. Core inflation held at 2.7% for a fourth straight month while services inflation nudged up to 4% from 3.9%.
“This won’t stop the [European Central Bank] from cutting interest rates further,” said Jack Allen-Reynolds, deputy chief euro zone economist at Capital Economics. “The high level of services inflation is partly due to temporary effects that should fade this year.”

A man rides bicycle on a snow-covered street after snowfall in Frankfurt am Main, western Germany, on December 29, 2024. 
Kirill Kudryavtsev | Afp | Getty Images

Annual inflation in the euro zone rose for a third straight month to reach 2.4% in December, statistics agency Eurostat said Tuesday.
The preliminary reading was in line with the forecast of economists polled by Reuters and marked an increase from a revised 2.2% print in November. Core inflation held at 2.7% for a fourth straight month, also meeting economists’ expectations, while services inflation nudged up to 4% from 3.9%.

Headline inflation was widely expected to accelerate after hitting a low of 1.7% in September, as base effects from lower energy prices fade. The full extent of increases in the reading — along with persistence in services and core inflation — will be closely watched by the European Central Bank, which markets currently expect to cut interest rates from 3% to 2% across several trims this year.
The pace of price rises in the euro zone’s largest economy, Germany, hit a higher-than-expected 2.9% in December, according to figures published separately this week. Inflation in France meanwhile came in at 1.8% last month, below a Reuters analyst poll forecasting a 1.9% print.
The euro held early-morning gains against the U.S. dollar following the print, trading 0.33% higher at $1.0424 at 10:43 a.m. in London. Traders are assessing whether the euro could decline to parity with the greenback this year, if the U.S. Federal Reserve proves significantly more hawkish than the ECB.

Haig Bathgate, director of Callanish Capital, told CNBC’s “Squawk Box Europe” that ECB policymakers would not be overly concerned by a hotter monthly inflation reading, as long as it was broadly in line with expectations.
“There’s now a lot more predictability in a lot of the data series we’re seeing… the direction of travel of rates [lower] in Europe is much more predictable than say, the U.K.,” Bathgate said Tuesday.

While markets have frontloaded pricing for rate cuts toward the start of the year, Jack Allen-Reynolds, deputy chief euro zone economist at Capital Economics, said the stickiness of services inflation meant that the ECB was “likely to keep cutting interest rates only slowly even as the economic outlook remains poor.”
“Most important for the monetary policy outlook is that core inflation was unchanged at 2.7% for the fourth consecutive month… This won’t stop the ECB from cutting interest rates further,” Allen-Reynolds said in a note.
“The high level of services inflation is partly due to temporary effects that should fade this year. Meanwhile, the labor market has loosened, wage growth is slowing and the growth outlook is weak.”
The euro zone economy grew by 0.4% in the third quarter, but economists warn that political instability, ongoing manufacturing weakness and the potential for escalating trade tensions under the incoming administration of U.S. President-elect Donald Trump have clouded the outlook for 2025. More

Michael Barr oversaw an attempt to rewrite financial regulations that came under attack from a wide range of groups, including banks, lawmakers and even some of his colleagues.Michael Barr will step down from his role as the Federal Reserve’s vice chair for supervision by Feb. 28, or sooner if President-elect Donald J. Trump appoints a successor, the Fed said on Monday.Mr. Barr will continue to serve on the central bank’s Board of Governors. But in an interview, Mr. Barr said the decision to leave his role as vice chair of supervision was intended to sidestep a protracted legal battle with Mr. Trump that he believed could damage the central bank.Some individuals attached to the Trump administration wanted to fire Mr. Barr before his term as vice chair expired, according to people familiar with the matter who spoke on background because of the sensitivity of the issue.That could have resulted in a lengthy — and costly — legal fight over whether an incoming president has the authority to remove someone from a Senate-confirmed position at an independent agency.Some financial regulatory experts questioned why Mr. Barr — and the Fed itself — would allow a political change to influence who served in a powerful role. Jerome H. Powell, the Fed’s chair, has made a point of saying that the Fed is independent of the White House and that its decisions are not influenced by politics. Mr. Powell has also insisted that Mr. Trump lacks the legal authority to fire him from his role as Fed chair, which is also confirmed by the Senate.“I’m surprised by Barr’s announcement, because I expected him to resist Republican calls for his ouster and make a point of defending the Fed’s independence,” Ian Katz, managing director at Capital Alpha, said in an email.We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More

President-elect Donald Trump is considering a tariff plan that will narrow the focus to a select set of goods and services, according to a Washington Post report.
Trump, however, disputed the report in a post on Truth Social, saying “That is wrong.”

U.S. President-elect Donald Trump looks on during Turning Point USA’s AmericaFest at the Phoenix Convention Center on December 22, 2024 in Phoenix, Arizona. 
Rebecca Noble | Getty Images

President-elect Donald Trump is considering a plan that still would apply tariffs to all nations but narrow the focus to a select set of goods and services, according to a Washington Post report.
The new approach to tariffs likely wouldn’t be as powerful as Trump’s earlier ideas but still would cause major changes to global commerce, the paper said, citing people familiar with Trump’s thinking.

Trump, however, disputed the report in a post on Truth Social.
“The story in the Washington Post, quoting so-called anonymous sources, which don’t exist, incorrectly states that my tariff policy will be pared back. That is wrong,” he wrote.
The report comes amid concerns that the incoming president’s insistence on imposing universal tariffs of 10% or 20% and specifically targeting China and Mexico would cause another spike in inflation.
During Trump’s first term, duties on a wide range of imports did little to raise prices broadly and in fact were kept in place when Joe Biden took over as president. However, economists worry that conditions are different now and aggressive tariffs would have a greater impact.
The Post report said it’s still not clear which sectors would be affected by the plans, though early discussions are looking at various industrial metals, medical supplies and energy.
The U.S. is running a $74 billion monthly trade deficit that exploded during the Covid pandemic.

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Confidence among U.K. firms has tumbled to its lowest level since the market-rocking “mini-budget” crisis of fall 2022, according to a survey by the British Chambers of Commerce.
The trade group said sentiment had “declined significantly” in its largest poll since the Labour government’s debut budget last October, which included a hike in the amount many employers pay out in National Insurance (NI), a tax on earnings. 
The BCC cited firms in hospitality, manufacturing, construction and health-care expressing worries about how they would cover additional costs and saying they would likely scale back investment.

UK firms are planning to raise prices to cover higher tax payouts as confidence among businesses tumbled to its lowest level since the market-rocking “mini-budget” crisis of fall 2022, according to a survey by the British Chambers of Commerce.
The trade group said sentiment had “declined significantly” in its largest poll since the Labour government’s debut budget last October, which included a hike in the amount many employers pay out in National Insurance (NI), a tax on earnings. 

The BCC said 63% of businesses cited tax as a worry in the survey, up from 48% in the third quarter. More than half (55%) said they expect prices to go up in the next three months, primarily due to higher labor costs.
The percentage of companies saying they expected turnover to increase in the next twelve months fell to 49%, from 56%. Concerns about inflation and interest rates remained roughly steady.
The BCC cited firms across hospitality, manufacturing, construction and healthcare expressing worries about how they would cover additional costs and saying they would likely scale back investment.

“We recognize what [Reeves] said, that she’s got to increase taxes to fill her black hole, but what we need to see her do now is mitigate against that. What are we going to do to drive the economy?” Shevaun Haviland, head of the BCC, told CNBC’s “Squawk Box Europe” on Monday.
“Businesses are going to have to shoulder this tax increase, but what we want to see her do is act, and they need to act quickly. It’s important that they’re putting strategies in place, industrial strategy, trade strategy, infrastructure plan, for later on this year, but we need to see action now.”
U.K. borrowing costs have climbed following the October 2024 budget, exceeding the levels they spiked to following the “mini-budget” of September 2022, which saw then-Prime Minister Liz Truss announce sweeping, uncosted tax cuts.
However, economists say the recent rise in bond yields is not equivalent to the surge seen in 2022 as the moves have been significantly less dramatic and the macro backdrop — including a cooling of inflation — has changed.

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