Evelyn Reynolds

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    Euro zone inflation dips to 2.2% in March as U.S. tariffs loom

    Annual Euro zone inflation dipped as expected to 2.2% in March, according to flash data from statistics agency Eurostat published Tuesday.
    It comes after recent preliminary data showed that inflation came in lower than forecast in several major euro zone economies.
    The European Union is at the receiving end of tariffs introduced by U.S. President Donald Trump, including a 25% levy on imported cars.

    A man pushes his shopping cart filled with food shopping and walks in front of an aisle of canned vegetables with “Down price” labels in an Auchan supermarket in Guilherand Granges, France, March 8, 2025.
    Nicolas Guyonnet | Afp | Getty Images

    Annual Euro zone inflation dipped as expected to 2.2% in March, according to flash data from statistics agency Eurostat published Tuesday.
    The Tuesday print sits just below the 2.3% final reading of February.

    So called core-inflation, which excludes more volatile food, energy, alcohol and tobacco prices, edged lower to 2.4% in March from 2.6% in February. The closely watched services inflation print, which had long been sticky around the 4% mark, also fell to 3.4% in March from 3.7% in the preceding month.
    Recent preliminary data had showed that March inflation came in lower than forecast in several major euro zone economies. Last month’s inflation hit 2.3% in Germany and fell to 2.2% in Spain, while staying unchanged at 0.9% in France.

    ECB decision ahead

    The figures, which are harmonized across the euro area for comparability, boosted expectations for a further 25-basis-point interest rate cut from the European Central Bank during its upcoming meeting on April 17. Markets were pricing in an around 80% chance of such a reduction after the release of the euro zone inflation data on Tuesday, according to LSEG data.
    The easing of services inflation especially increased chances of an ECB interest rate cut, Jack Allen-Reynolds, deputy chief euro zone economist at Capital Economics, said in a note Tuesday.
    “We think this decline, together with strong evidence that it will fall further … and continued weakness in the latest activity surveys, will be enough to prompt the ECB to cut interest rates by 25bp again later this month,” he noted.

    Separately on Tuesday, data also showed that the seasonally adjusted unemployment rate in the euro area in February hit 6.1%, continuing on its recent downward trend. Economists polled by Reuters had been expecting it to remain unchanged at 6.2%.
    Unemployment usually falls in low-interest rate environments, as businesses can boost their labor spending amid cheap borrowing costs. Sine it began cutting interest rates last June, the ECB has brought its key rate, the deposit facility rate, down from 4% to 2.5%.

    Tariff uncertainty

    The European Union is set to be slapped with tariffs due in effect later this week from the U.S. administration of Donald Trump — including a 25% levy on imported cars.
    While the exact impact of the tariffs and retaliatory measures remains uncertain, many economists have warned for months that their effect could be inflationary.
    The exact impact of tariff policies from the U.S. and its trading partners on inflation is still largely unclear, according to Bert Colijn, chief Netherlands economist at ING, who said deflation is also an option.
    “US tariffs could result in deflationary pressures on the eurozone market as they depress exports and therefore growth,” he said, adding that they could also lead to increased supply of goods on the euro zone market.
    The European Union’s response could be critical in shaping the economic impact of the tariff conflict, Colijn explained.
    “Retaliatory measures from the European Commission will likely have an upward effect on eurozone inflation, though, as they are essentially a domestic tax that gets introduced and will be paid for by consumers to some extent,” he said. More

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    As Trump Stokes Uncertainty, the Fed Asks Businesses Where It Hurts

    The central bank’s outreach to companies has taken on new significance as the outlook for growth and inflation gets cloudier.Chris Bergen, who runs a commercial greenhouse business in northern Minnesota, finds himself “walking a tightrope” roughly two months into President Trump’s second term. Acute uncertainty about how the administration’s trade and immigration policies will unfold and affect the economy has made him much more cautious about any expansion plans.As one of the country’s biggest producers of bedding plants, perennials and other flowers, Bergen’s Greenhouses is exposed on many fronts.Every June, it trucks in more than six million pounds of peat moss from Manitoba. Suppliers have stopped quoting prices until they have more clarity on tariffs. The plastic flower pots that Mr. Bergen imports from China could also wind up costing more if tariffs remain in place, squeezing already “razor-thin margins,” he said. He is also worried about needing to find workers if Mr. Trump, as part of an immigration crackdown, ends a program that provides temporary visas to many of the company’s agricultural workers.“We’re not putting our foot on the brake, but we are taking our foot off the gas,” said Mr. Bergen, whose family has run the business for over a century.That caution is one of the biggest concerns for the Federal Reserve, which is facing an increasingly challenging economic moment with little precedent. The central bank is trying to get a better read on the economy as it debates when — or if — it can again lower interest rates with inflation still too high for its liking. Businesses are warning of both higher prices and slower growth, effects that have yet to show up entirely in the economic data. The 12 regional presidents at the central bank have always kept close tabs on businesses in their districts in order to understand how economic conditions are evolving. That local outreach has taken on new significance as the range of possible outcomes has widened drastically.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

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    Want to Play a Game? Global Trade War Is the New Washington Pastime.

    Two dozen trade experts gathered recently to simulate how a global trade war would play out. The results were surprisingly optimistic.The world’s biggest powers were deep in a trade war. Economic losses from the tariffs that President Trump had imposed on most of the world, along with global retaliation, were accumulating. Jobs were being lost, inflation was ticking up and the world was both frustrated with and anxious about the United States.While the stakes were real, the trade war was not. Instead, it was a simulation to better understand how a global trade fight might unfold.Last month, two dozen trade experts from the United States and other countries gathered at a Washington think tank to try to simulate what could happen if Mr. Trump moves ahead with his plan to impose punishing tariffs on America’s biggest trading partners.Teams representing China, Europe, the United States and other governments spent a day running between conference rooms, offering proposals to remove the tariffs and make trade deals to forestall economic collapse.The game, which took place at the Center for a New American Security, a bipartisan think tank focused on security issues, included think tank experts and former officials in the Trump and Biden administrations. The exercise was not aimed at predicting the future. Instead, by acting out what might happen, the participants were trying to reveal some of the dynamics that might be at play as Mr. Trump pursues an aggressive trade approach against allies and adversaries alike.In the last two months, Mr. Trump imposed tariffs on China, Canada and Mexico, as well as levies on global steel and aluminum imports. On Wednesday, Mr. Trump is expected to announce a plan to raise tariff rates on other countries, and his 25 percent tariffs on cars and auto parts will go into effect on Thursday.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

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    Trump Administration Tallies Trade Barriers That Could Prompt Tariffs

    The Office of the United States Trade Representative released a report highlighting foreign trade barriers that could influence tariffs the president puts into effect this week.President Trump is set to announce on Wednesday global tariffs that he says will combat unfair trade treatment by other countries and make sure American exporters remain competitive.On Monday, the Office of the United States Trade Representative released a wide-ranging report on foreign trade barriers that could hint at some of the trade battles the Trump administration aims to fight.In an annual report, the office listed the most important barriers to U.S. exports in dozens of countries. Those obstacles included tariffs, but also laws, regulations and policies that the administration said undermine competition. Here are eight of the most consequential trading partners for the United States that could be targeted in the president’s tariff announcements this week.ChinaThe report dedicated almost 50 of its nearly 400 pages to China, which has long been a subject of trade criticism for American officials and companies.The report criticized China as using industrial planning and other policies to support certain sectors it had targeted for “domination,” such as robotics, aerospace, new energy vehicles and biopharmaceuticals. The trade representative’s office argued that those tools sometimes worked by discriminating against or taking advantage of foreign enterprises, and that the program had allowed Chinese firms to win market share at the expense of foreign competitors.The office also pointed out that China had not followed through in rolling out provisions of the trade deal signed with Mr. Trump in his first term, including commitments to open up its agricultural market and protect U.S. intellectual property. Trade data also shows that China fell far short of commitments it made to purchase U.S. goods and services in 2020 and 2021, the report said.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

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    American Wealth Is at a Record High. Sentiment Is Low, and Falling.

    America is more prosperous than ever.U.S. household net worth reached a new peak at the end of 2024. The unemployment rate has levitated just above record lows for three years. The overall debt that households are carrying compared with the assets they own is also near a record low.But even a land of plenty has its shortcomings, influencing both perceptions and realities of how Americans are doing.The U.S. economy remains deeply unequal, with vast gaps in wealth and financial security persisting even as inflation has ebbed and incomes have risen. And data designed to capture the overall population may be obscuring challenges experienced by a broad range of Americans, especially those in the bottom half of the wealth or income spectrum. More

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    Trump’s Tariff Agenda Bets on Americans Giving Up Cheap Goods

    Treasury Secretary Scott Bessent argues that the American dream is about more than cheap televisions, but inflation-weary consumers might disagree.Follow the latest news on the Trump administration.President Trump’s sweeping tariffs are expected to raise the cost of cars, electronics, metals, lumber, pharmaceuticals and other products that American consumers and businesses buy from overseas.But Mr. Trump and his advisers are betting that they can sell an inflation-weary public on a provocative idea: Cheap stuff is not the American dream.“I couldn’t care less if they raise prices, because people are going to start buying American-made cars,” Mr. Trump said on NBC’s Meet the Press show on Sunday in response to fears of foreign car prices spiking.The notion that there is more to life than low-cost imports is an acknowledgment that tariffs could impose additional costs on Americans. It is also a pitch that the burden will be worth it. Mr. Trump’s ability to convince consumers that it is acceptable to pay more to support domestic manufacturing and adhere to his “America First” agenda could determine whether the president’s second term is a success or a calamity.But it is not an easy sell. The onslaught of tariffs has roiled markets and dampened consumer confidence. Auto tariffs that go into effect on Thursday will add a 25 percent tax on imports of cars and car parts, likely upending pricing in the sector. Mr. Trump has already imposed tariffs of 20 percent on Chinese goods and more are expected later this week, when the president announces his “reciprocal” tariffs on major trading partners, including those in Asia and Europe.In confronting anxiety over the trade uncertainty, Mr. Trump and his top economic aides have resorted to asking Americans to think about the bigger picture. They espouse the view that Mr. Trump’s trade wars are necessary to correct decades of economic injustice and that paying a bit more should be a matter of national pride.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

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    Estimates Imply That Trump Tariffs Could Fall Heavily on Consumers

    President Trump has said that the global tariffs he plans to announce this week will correct decades of unfair relationships and stop other countries from ripping off the United States. But whether the president’s so-called reciprocal tariffs will result in higher levies on other nations or lower ones remains unclear.The president has described his global tariffs as a negotiating tool that could force other countries to drop their trade barriers to American products and result in more goods flowing across borders.But the president has also talked about the tariffs as a way to raise revenue for the government and shift supply chains back to the United States. For those goals to be accomplished, relatively high tariffs would have to be imposed, and not dropped.Those conflicting goals will come to a head this week, when Mr. Trump is expected to reveal the details of his reciprocal tariff plan. Mr. Trump has taken to calling April 2 “liberation day,” saying it will represent the country breaking free of past trade relationships that he says have hurt the United States.It’s not yet clear what Mr. Trump will announce. His advisers have been weighing several different strategies and legal authorities, some of which would be more focused on raising revenue, and others that would be geared toward negotiations and opening global markets, three people familiar with the plans said. Some of the plans under consideration could take effect immediately, while others would take more time but be more insulated from legal challenges.Mr. Trump will be the ultimate decision maker, as recent tariff actions have shown. Some of his own advisers, along with the business community, have been surprised by some of the actions he’s announced in recent weeks, such as placing levies on auto parts.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

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    Trump Science Funding Cuts May Hurt Economy, Experts Say

    Since World War II, U.S. research funding has led to discoveries that fueled economic gains. Now cutbacks are seen as putting that legacy in jeopardy.President Trump’s tariffs could drive up prices. His efforts to reduce the federal work force could increase unemployment. But ask economists which of the administration’s policies they are most concerned about and many point to cuts to federal support for scientific research.The Trump administration in recent weeks has canceled or frozen billions of dollars in federal grants made to researchers through the National Institutes of Health, and has moved to sharply curtail funding for academic medical centers and other institutions. It has also, through the initiative called the Department of Government Efficiency, tried to fire hundreds of workers at the National Science Foundation, an independent federal agency. And it has revoked the visas of hundreds of foreign-born students.To economists, the policies threaten to undermine U.S. competitiveness in emerging areas like artificial intelligence, and to leave Americans as a whole poorer, less healthy and less productive in the decades ahead.“Universities are tremendously important engines of innovation,” said Sabrina Howell, a New York University professor who has studied the role of the federal government in supporting innovation. “This is really killing the goose that lays the golden egg.”Scientists have warned that the United States risks losing its status as a leader in cutting-edge research and its reputation as a magnet for top scientific minds from around the world.Already, labs across the country have begun laying off workers and canceling projects — in some cases stopping clinical trials that were already underway — and top universities including Harvard and the University of Pennsylvania have announced hiring freezes. France and other countries have begun recruiting American scientists, promising a more welcoming environment.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