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    Yellen Says U.S. Is Considering New Sanctions on Iran and Hamas

    Treasury Secretary Janet L. Yellen said on Wednesday that the Israel-Gaza war was a potential concern for the global economy and signaled that additional U.S. sanctions could be coming in response to the attack on Israel by Hamas.Questions about the economic impact of the war were growing as Ms. Yellen offered a forceful defense of Israel and pushed back on the notion that U.S. sanctions against Iran — a key backer of Hamas — have become too lenient. Ms. Yellen said the Treasury Department continued to review its sanctions on Iran, Hamas and Hezbollah, the Lebanese militant group that is also a longtime adversary of Israel.“We have not in any way relaxed our sanctions on Iranian oil,” Ms. Yellen said at a news conference on the sidelines of the annual meetings of the International Monetary Fund and the World Bank in Marrakesh, Morocco. “We have sanctions on Hamas, on Hezbollah, and this is something that we have been constantly looking at and using information as it becomes available to tighten sanctions.”She added: “We will continue to do that.”The Treasury secretary also did not rule out reversing a decision made last month — to unfreeze $6 billion of Iranian funds in exchange for the release of American hostages — if it is determined that Iran was involved in the attack by Hamas.At the time of the exchange, the United States informed Iran that it had transferred about $6 billion in Iranian oil revenue from South Korea to a Qatari bank account. The money is supposed to be used only for food, medicine and other humanitarian goods.“These are funds that are sitting in Qatar that were made available purely for humanitarian purposes, and the funds have not been touched,” Ms. Yellen said, adding: “I wouldn’t take anything off the table in terms of future possible actions.”The crisis in Israel poses a new challenge for the world economy and the Biden administration, which has spent the last year working to combat inflation in the United States and to corral energy prices that have become volatile because of Russia’s war in Ukraine. Another war in the Middle East complicates those efforts by threatening to constrain oil supplies and send prices higher.Ms. Yellen said geopolitical “shocks” continued to pose risks to the world economic outlook.“Of course, the situation in Israel poses additional concerns,” she said.Economic officials across the Biden administration are closely tracking developments in global oil markets this week. Global oil prices jumped on Monday after the terrorist attacks in Israel but were falling slightly on Wednesday. Administration officials are concerned that a sustained increase in the cost of crude could hurt economic growth and dent Mr. Biden’s approval rating, by pushing up the price of gasoline for American drivers.Ms. Yellen said she continued to believe that the U.S. economy could achieve a so-called soft landing — where inflation eases without a recession — but was closely watching for any economic fallout from the new conflict in the Middle East.“While we’re monitoring potential economic impacts from the crisis, I’m not really thinking of that as a major driver of the global economic outlook,” Ms. Yellen said. “We will see what impact it has. Thus far, I don’t think we’ve seen anything suggesting it will be very significant.”International policymakers gathered in Morocco for a week of meetings, as the global economic recovery is losing momentum. The prospect of a new regional conflict gave other policymakers more reason to feel anxious about a sluggish world economy that has been battered by war, a pandemic and inflation in recent years. Central banks around the globe have been raising interest rates to tame rapid inflation, and investors had begun to hope that a recent slowdown in price gains could signal an end to those rate increases.“I think central bank governors are concerned about what might happen to energy prices if the Israel-Gaza conflict were to turn into a bigger regional conflict and have implications for supply of oil on markets,” Gita Gopinath, the first deputy managing director of the I.M.F., said in an interview on Wednesday.Ms. Gopinath added that higher oil prices could elevate prices more broadly, complicating interest rate decisions for central bankers. She suggested that it was too soon to say how the economic impact of the conflict in the Middle East might compare with the effects of the war in Ukraine, but that overlapping crises were a headwind.“The geopolitical risks are certainly piling up in Russia’s invasion of Ukraine and we’re seeing now in Israel and Gaza,” she said.That sentiment was echoed on Wednesday by Ajay Banga, the World Bank president, who said at a news conference that he now expected interest rates to be “higher for longer” despite signs that inflation was cooling.“I believe that wars are completely and extremely challenging for central banks who are trying to find their way out of a very difficult situation,” Mr. Banga said.It is not yet clear what steps the Biden administration would take to contain oil prices if the Israel-Gaza war intensifies or how that might affect its efforts to curb Russia’s oil revenues.Ms. Yellen suggested on Wednesday that the “price cap” policy that the Group of 7 devised last year, which forbids Russia to sell oil over $60 a barrel using Western banking and insurance services, had been successful.“Global energy prices have been largely unchanged while Russia has had to either sell oil at a significant discount or spend huge amounts on its alternative ecosystem,” she said.Jim Tankersley More

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    Already a humanitarian crisis, war with Hamas could have major impact on Israel’s economy

    More than 300,000 ordinary Israeli workers are now out of the economy, and in the fight.
    The amount of the economic damage, however, will depend on how long the reservists are away from their jobs.
    “There will be a temporary hit for the startup industry but when the soldiers return so will investment and demand,” said an economics professor at Hebrew University.

    Israeli armuy soldiers deploy at a position near the border with Gaza in southern Israel on October 11, 2023.
    Menahem Kahana | AFP | Getty Images

    As Israel prepares for what could be a long war with massive humanitarian implications, there are also concerns about how a protracted fight could weigh on the country’s dynamic economy.
    Since Hamas militants staged a surprise terrorist attack over the weekend, Israel’s defense forces called up more than 300,000 reservists for duty, an unprecedented number in recent history. Israel’s standing army, air force and navy is is comprised of 150,000 members. 

    The reserve force, made up of a cross section of Israeli society, has about 450,000 members, many of which are more experienced in combat than the younger soldiers in the standing army. The reservists are teachers, tech workers, startup entrepreneurs, farmers, attorneys, doctors, nurses, tourism and factory workers.
    “The impact is substantial,” said Eyal Winter, a professor of economics at Hebrew University in Jerusalem who has studied the economic impact of Israel’s wars.
    The amount of the economic damage, however, will depend on how long the reservists are away from their jobs in the country, which has a population of over 9 million and a gross domestic product of $521.69 billion. 
    “In a case like this, tourism dries up immediately” said Winter. But, he added, “there’s also a major increase in tourism when the fighting ends due to pent up demand.”

    Where does the Israeli economy stand now?

    Many of Israel’s key employment sectors will continue uninterrupted during the war due to the fact that they’re heavily staffed with foreign workers. 

    That includes Israel’s chemical sector, which is a major source of exports. 
    The Dead Sea region is rich in minerals. The Port of Ashdod, just 20 miles north of the Gaza Strip, is a major hub for potash exports. Wall Street was so concerned about the prospect of a potash supply problem stemming from Israel, several fertilizer stocks saw significant jumps earlier this week, including Mosaic and CF Industries. Both were up almost 7% in the first day of trading after Saturday’s attack.
    So far this week the main Israeli stock index is down 6%. There’ve been no new warnings from ratings agencies about Israel’s debt. All, however, were concerned about economic problems before the fighting due to the instability in Israel’s political climate over proposed reforms to the judicial system. 
    Since Hamas’ takeover of Gaza in 2007, Israelis have always believed the status quo wasn’t sustainable.  Winter of Hebrew University believes as bleak as things are right now, there will be an improvement for the country and the economy. 
    “Confidence is high that in the end we’ll have a military victory, even as it’s likely we’ll suffer terrible losses,” Winter said. “But Gaza has been an unstable problem for years, this war should end that.” 

    What is the impact on Israel’s tech industry?

    Winter has also seen increased economic activity in other segments of the economy after previous wars.
    In the case of Israel’s ever-growing technology industry, when many of the soldiers come home, they will take experiences they learned on the battlefield and turn them into security businesses. 
    “There will be a temporary hit for the startup industry but when the soldiers return so will investment and demand,” Winter said.
    Almost every major American technology company also has significant production or research and development offices in Israel, including Microsoft, Alphabet, Apple and Oracle, to name a few. Intel is investing in a manufacturing facility 30 minutes away from the Gaza border.
    While nobody would comment directly due to security concerns, one high-tech manager in Israel said “because of our experience with allowing employees to work from home during and after Covid, work continues, unless you’ve been called in to a reserve unit.” More

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    Federal Reserve Officials Were Cautious in September

    Minutes from their last meeting showed that Fed officials saw risks of doing too much — or too little — to tame inflation.Federal Reserve policymakers expected that rates might need to rise slightly higher as of their September meeting, freshly released minutes from the gathering showed. But they were also determined to creep forward carefully, wary that they could overdo it and clamp down on the economy too hard.Officials left interest rates unchanged at their Sept. 19-20 meeting, having raising them sharply since March 2022. Rates are now set to 5.25 to 5.5 percent, up from near-zero 19 months ago.Even as policymakers left borrowing costs steady last month, they projected that they might need to make one more rate move in 2023. They also estimated that they would leave interest rates at a high level for a long time, lowering them only slightly next year. Because steeper Fed rates make it more expensive to borrow to buy a house or expand a business, those higher costs would be expected to gradually cool the economy, helping central bankers to curb demand and wrestle inflation under control.Yet Fed officials have become increasingly wary that they could overdo their campaign to slow economic growth. Inflation has begun to moderate, and central bankers do not want to crimp the economy so aggressively that they cause unemployment to jump or spur a meltdown in financial markets.“Participants generally noted that it was important to balance the risk of overtightening against the risk of insufficient tightening,” according to the minutes, released on Wednesday.The economy has so far proved to be very resilient to higher interest rates. Even as Fed officials have pushed their policy rate to the highest level in 22 years, consumers have continued to spend money and businesses have continued to hire. The September jobs report showed that employers added far more new workers last month than economists had expected.That staying power has caused policymakers and Wall Street alike to hope that the Fed might be able to pull off what is often called a soft landing, gently cooling the economy and lowering inflation without tanking growth and pushing unemployment drastically higher.But soft landings are historically rare, and officials remain wary about risks to the outlook. Fed officials identified the autoworkers’ strike as a new risk facing the economy, one with the potential to both increase inflation and slow growth, the minutes showed. They also saw climbing gas prices as something that could make it harder to bring inflation under control. At the same time, they pointed out that a slowdown in China could cool global growth, and noted that stress in the banking sector could also pose a hurdle to the economy.There is also the possibility that the economy will not slow down enough to allow inflation to fully moderate.As of the September meeting, “a majority” of Fed officials thought one more rate move would be needed, while “some” thought rates would probably not need to be raised again.Since that gathering, longer-term interest rates in markets have moved up notably. That has caused investors to doubt that officials will actually follow through with a final rate move.Fed policymakers themselves have signaled that they may not need to raise rates any further, since higher borrowing costs in markets will help to slow the economy.Christopher J. Waller, a Fed governor who often favors higher rates, said at an event on Wednesday that officials were in a position to “watch and see” what happened, and would keep a “very close eye” on the move and “how these higher rates feed into what we’re going to do with policy in the coming months.” More

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    Investors Are Calling It: The Federal Reserve May Be Done Raising Rates

    Investors doubt that central bankers will lift borrowing costs again following big market moves that are widely expected to cool growth.Investors are betting that the Federal Reserve, which has raised interest rates to their highest levels in 22 years, may finally be finished.Several top Fed officials have indicated in recent days that the central bank’s effort to cool the economy through higher borrowing costs is being amplified by recent market moves that are essentially doing some of that job for them.In particular, attention has focused on a run-up in interest rates on U.S. government debt, with the yield on the 10-year Treasury bond briefly touching a two-decade high last week. That yield is incredibly important because it acts as the market’s foundation, underpinning interest rates on many other types of borrowing, from mortgages to corporate debt, and influencing the value of companies in the stock market.Philip N. Jefferson, the vice chair of the Fed, said this week that although “it may be too soon to say confidently that we’ve tightened enough,” higher market rates can reduce how much businesses and households spend while depressing stock prices. He added that the Fed wanted to avoid doing too much and hurting the economy unnecessarily.Given that, he said the Fed “will be taking financial market developments into account along with the totality of incoming data in assessing the economic outlook.”Investors have sharply reduced expectations of another rate increase before the end of the year. They see about a one-in-four chance that policymakers could lift rates again.“If financial conditions are tightening independent of expectations for monetary policy” then “that will reduce economic activity,” said Michael Feroli, the chief U.S. economist at J.P. Morgan. “Things change, you change your forecast.”Investors have expected the Fed to stop raising interest rates before and been proven wrong. There is still a chance now that the market dynamics that are helping to raise borrowing costs could reverse, and this week, some of the recent pop in the yield on 10-year bonds has eased. But if market rates stay high, it could keep adding to the substantial increase in borrowing costs the Fed had already ushered in for consumers and companies.Philip Jefferson, the vice chair of the Federal Reserve, said that “it may be too soon to say confidently that we’ve tightened enough to return inflation.”Ann Saphir/ReutersThe Fed has raised its key interest rate from near zero to above 5.25 percent over the past 19 months in an attempt to tame inflation. But the Fed directly controls only very short-term rates. It can take a while for its moves to trickle through the economy to affect longer-term borrowing costs — the kind that influence mortgages, business loans and other areas of credit.There are likely several reasons those longer term rates in markets have climbed sharply over the past two months. Wall Street may be coming around to the possibility that the Fed will leave borrowing costs set to high levels for a long time, economic growth has been strong, and some investors may be concerned about the size of the nation’s debt.Over time, the rise in yields on Treasury bonds is likely to weigh on the economy, and Fed officials have been clear that it could do some of the work of further raising interest rates for them.Officials had forecast in September that they might need to make one more rate move this year. But comments by Mr. Jefferson, along with some of the Fed’s more inflation-focused members have been widely seen as a signal that the Fed is likely to be more cautious.Christopher J. Waller, a Fed governor who has often favored higher rates, said at an event on Wednesday that officials were in a position to “watch and see” what happens, and would keep a “very close eye” on the move and “how these higher rates feed into what we’re going to do with policy in the coming months.”Lorie K. Logan, president of the Federal Reserve Bank of Dallas, said on Monday that higher market yields “could do some of the work of cooling the economy for us, leaving less need for additional monetary policy tightening.”But she noted that it would depend on why rates were rising. If they had climbed because investors wanted to be paid more to shoulder the risk of holding long-term bonds, the change was likely to squeeze the economy. If they had climbed because investors believed the economy was capable of growing more strongly even with high rates, it would be a different story.The yield on 10-year Treasury bonds soared to its peak this month, a sharp move that has subsequently jolted mortgage rates.Caitlin O’Hara for The New York TimesEven Michelle W. Bowman, a Fed governor who tends to favor higher rates, has softened her stance. Ms. Bowman said on Oct. 2 that further adjustment would “likely be appropriate.” But in a speech she delivered on Wednesday, that wording was less definitive: She said policy rates “may need to rise further.”The softer tone among Fed officials appears to have helped halt the rise in market rates, with the yield on the 10-year Treasury bond easing 0.2 percentage points so far this week. On Tuesday, the yield fell by the most in a day since the turmoil induced by the banking crisis in March. That likely reflected investors who rushed to the safety of U.S. government debt as war broke out in Israel and Gaza. Still, the yield remains around 4.6 percent, roughly 0.8 percentage points higher than at the start of July.“It seems like there is a little skittishness,” said Subadra Rajappa, head of U.S. rates strategy at Société Générale.Higher interest rates also typically weigh on stock prices, with major indexes under pressure over the summer alongside the rise in yields. The S&P 500 suffered its worst month of the year through September but has risen 2 percent so far this month, alongside retracing yields.Policymakers will get another read on the effect of rate rises with the release of the Consumer Price Index on Thursday. Economists expect the data to show a gradual slowdown in inflation is continuing, despite the unexpected resilience of the economy.That could change, however, especially if yields continue to fall, relieving some of the pressure on the economy.A robust economy could keep the possibility of another Fed rate move alive, even if investors see it as unlikely. Ms. Logan warned that policymakers should avoid overreacting to market moves if they quickly fade.And Neel Kashkari, president of the Federal Reserve Bank of Minneapolis, said on Tuesday that long-term rates might have moved up in part because investors expected the Fed to do more. Therefore, if the Fed signals that it will be less aggressive, they could retreat.“It’s hard for me to say definitively — hey, because they have moved, therefore we don’t have to move,” Mr. Kashkari said. “I don’t know yet.” More

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    Wholesale inflation rose 0.5% in September, more than expected

    The producer price index increased 0.5% for September, against the Dow Jones estimate for a 0.3% rise.
    Excluding food and energy, core PPI was up 0.3%, versus the forecast for 0.2%.
    Inflation pressures came primarily from final demand goods, which surged 0.9% on the month, while services increased 0.3%.

    A worker prints a label for a fire hose at the NewView Oklahoma facility in Oklahoma City, Sept. 16, 2021.
    Nick Oxford | Bloomberg | Getty Images

    A measure of wholesale prices rose more than expected in September, indicating simmering inflation pressures for the U.S. economy.
    The producer price index, which measures costs for finished goods that producers pay, increased 0.5% for the month, against the Dow Jones estimate for a 0.3% rise, the Labor Department reported Wednesday. That was less than the 0.7% increase in August.

    Excluding food and energy, the core PPI was up 0.3%, versus the forecast for 0.2%. Excluding food, energy and trade services, the index rose 0.2%, in line with the estimate.
    Markets showed only a mild reaction to the PPI release, with stock futures off slightly and Treasury yields off their lows though still negative on most longer-duration issues.
    Inflation pressures came primarily from final demand goods, which surged 0.9% on the month, while services increased 0.3%. Much of the goods prices increase came from gasoline, which jumped 5.4%.
    On the services side, prices for final demand services less trade, transportation and warehousing rose 0.3%, while final demand trade services costs increased 0.5%. Also in the services category, the costs for deposit services at commercial banks surged 13.9%.
    On a year-over-year basis, the headline PPI increased 2.2%, the largest move since April. The 12-month pace had slowed to as low as 0.2% in June but has been on the rise since.

    Markets look at the PPI as a leading indicator for inflation, as it gauges a wide variety of costs for pipeline goods that feed to consumer products. On Thursday, the Labor Department will release its more closely watched consumer price index, which is expected to show a slight easing in the pace of inflation.
    Both reports feed into policy decisions from the Federal Reserve, which has been raising interest rates aggressively in an effort to stem inflation.
    In recent days, central bank officials have indicated that they may not need to enact additional hikes as Treasury yields have risen sharply on their own, tightening financial conditions. That in turn has helped assuage market fears, leading stocks higher this week.
    The Fed targets 2% annual inflation but doesn’t expect to get there for several years. Market pricing indicates the central bank is likely done raising rates in this cycle, even though officials have one more increase penciled in before the end of the year. More

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    Exxon Acquires Pioneer Natural Resources for $60 Billion

    The acquisition of Pioneer Natural Resources, Exxon’s largest since its merger with Mobil in 1999, increases the company’s presence in the Permian basin in Texas and New Mexico.Exxon Mobil announced on Wednesday that it was acquiring Pioneer Natural Resources for $59.5 billion, doubling down on fossil fuel production even as many global policymakers grow increasingly concerned about climate change and the oil industry’s reluctance to shift to cleaner energy.After decades of investing in projects around the world, the deal would squarely lodge Exxon’s future close to its Houston base, with most of its oil production in Texas and offshore in the Gulf of Mexico and along the coast of Guyana.By concentrating its production close to home, Exxon is effectively betting that U.S. energy policy will not move against fossil fuels in a major way even as the Biden administration encourages automakers to switch to electric vehicles and utilities to make the transition to renewable energy.Exxon executives have said that in addition to producing more fossil fuels, the company is building a new business that will capture carbon dioxide from industrial sites and bury the greenhouse gas in the ground. The technology to do that remains in an early stage and has not been successfully used on a large scale.“The combined capabilities of our two companies will provide long-term value creation well in excess of what either company is capable of doing on a standalone basis,” said Darren Woods, Exxon’s chief executive.American oil production has reached a record of roughly 13 million barrels a day, around 13 percent of the global market, but growth has slowed in recent years. Despite a wave of consolidation among oil and gas companies, and higher oil prices after the Russian invasion of Ukraine last year, producers are having a more difficult time finding new locations to drill.The Pioneer deal is a sign that it is now easier to acquire an oil producer than to drill for oil in a new location.Exxon, a refining and petrochemical powerhouse, needs a lot more oil and gas to turn into gasoline, diesel, plastics, liquefied natural gas, chemicals and other products. Much of that oil and gas is likely to come from the Permian basin, the most productive U.S. oil and gas field, which straddles Texas and New Mexico and where Pioneer is a major player.Exxon’s $10 billion Golden Pass terminal near the Texas-Louisiana border is scheduled to begin shipping liquefied natural gas to the rest of the world next year. Gas bubbles up with oil from the Permian basin, making the basin all the more valuable for exports as Europe weans itself from Russian gas.The Pioneer deal would be Exxon’s largest acquisition since it bought Mobil in 1999. It is bigger than the company’s ill-fated $30 billion acquisition of XTO Energy, a major natural gas producer, in 2010. Exxon had to write off much of that investment later when natural gas prices collapsed from the high levels that prevailed when it bought XTO.By buying Pioneer now, when the U.S. oil benchmark is around $83 a barrel, Exxon is counting on prices remaining relatively high in the next few years.Exxon has been careful in recent years to invest modestly in new production as it raised its dividends and bought back more of its own stock. Buying Pioneer would add production, a big change in its strategy.The acquisition would make Exxon the dominant player in the Permian basin, far outpacing Chevron, its biggest rival.Pioneer has been a darling of Wall Street investors as it has capitalized on the shale drilling boom. Scott Sheffield, its chief executive, got the company out of Alaska, Africa and offshore fields while buying up shale operations in the Permian at cheap prices. By 2020, it had become one of the biggest American drillers, with relatively low cost production.Mr. Sheffield is retiring at the end of the year. His company has a market value of about $50 billion, roughly one-eighth the size of Exxon. Many of its oil and gas fields are still untapped.“While the company has a solid succession plan in place, oil and gas markets have been volatile and the capital available to traditional oil and gas companies in the U.S. has been limited,” said Peter McNally, an analyst at Third Bridge, a research and analytics firm.The deal would be Exxon’s first major acquisition since Mr. Darren Woods became chief executive in 2017, replacing Rex Tillerson, who went on to become secretary of state.Exxon, which reported a record profit of $56 billion last year, is flush with cash that it could invest in Pioneer’s untapped fields. Since Exxon is also a large producer in the Permian, analysts say the merger would bring greater efficiencies in operations of both companies.This is just the latest in a series of mergers and acquisitions in the oil industry in recent years. But it has been consolidating. Occidental Petroleum acquired Anadarko Petroleum four years ago for nearly $40 billion, a deal that made Occidental a major competitor to Exxon and Chevron in the Permian basin. Pioneer spent more than $10 billion buying two other Permian producers, Parsley Energy and DoublePoint Energy, in 2021.Exxon bought Denbury, a Texas energy company that owns pipelines that can transport carbon dioxide, for $4.9 billion this year. More

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    G.M. Reaches Deal With Canadian Union

    General Motors and the Unifor union reached an agreement hours after more than 4,000 workers went on strike on Tuesday.General Motors and a Canadian union, Unifor, reached a tentative deal on a new contract on Tuesday, ending a short-lived strike by more than 4,000 workers that began earlier in the day.The deal includes the same raises and other terms that Unifor had agreed to last month with Ford Motor, including a 20 percent wage increase for production workers over three years and a 25 percent raise for skilled trades workers.The contract must be ratified by Unifor members before it can take effect. Workers at Ford’s Canadian operation have ratified their contract.Work was expected to restart at the three G.M. plants and distribution centers that were struck on Tuesday afternoon.This agreement “recognizes the many contributions of our represented team members with significant increases in wages, benefits and job security while building on G.M.’s historic investments in Canadian manufacturing,” the company said in a statement.The tentative deal was reached after nearly 4,300 Unifor workers walked off the job at midnight on Tuesday at three locations in Ontario: a vehicle assembly plant and stamping site in Oshawa that makes the company’s popular Chevrolet Silverado pickup truck; a plant in St. Catharines that supplies engines and transmissions to G.M. factories around the world; and a parts distribution center in Woodstock.Unifor had been pushing G.M. to accept the same terms as those in the Ford contract, a practice known as pattern bargaining that the automakers and their unions have long used.“When faced with the shutdown of these key facilities, General Motors had no choice but to get serious at the table and agree to the pattern,” Unifor’s national president, Lana Payne, said in a statement. “The solidarity of our members has led to a comprehensive tentative agreement that follows the pattern set at Ford Motor Company to the letter.”Ford’s agreement with Unifor, in addition to wage increases, provides productivity bonuses, higher entry-level wages, improved pensions, cost-of-living allowances and other improvements. G.M. also agreed to convert all temporary workers into permanent employees over the life of the agreement.Workers at G.M.’s CAMI Assembly Plant in Ingersoll, Ontario, are covered by a separate contract and did not go on strike on Tuesday. Unifor represents 315,000 workers in a variety of industries.In the United States, the United Automobile Workers union is on strike at a G.M. pickup truck plant in Missouri, a sport-utility plant in Michigan and parts warehouses around the country. The U.A.W. has also struck two Ford plants. At Stellantis, the maker of Chrysler, Jeep and Ram vehicles, union members have struck one factory and 20 parts warehouses.Altogether, about 25,000 of the 150,000 U.A.W. members employed by the three automakers are on strike. Like Unifor, the U.A.W. is seeking a substantial increase in wages, pensions for a greater number of workers, and a shorter time to move up to the top wage level.Talks began in July, and the strike began on Sept. 15, when the current labor contracts with the companies expired. More

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    U.S. Scales Back Hopes for Ambitious Climate Trade Deal With Europe

    A negotiating deadline is quickly approaching, and the United States has lowered its expectations for a groundbreaking trade deal.For the past two years, the United States and the European Union have been working toward a deal that would encourage trade in steel and aluminum made in more environmentally friendly ways to combat climate change.But longstanding differences on the way governments should treat trade and regulation have cropped up, preventing the allies from coming to a compromise. With an Oct. 31 deadline to reach a deal approaching, the United States has significantly narrowed its ambition for the pact, at least in its initial iteration.The outcome has been deeply disappointing for American negotiators, including Katherine Tai, the United States trade representative in charge of the talks, according to people familiar with the negotiations. In speeches last year, Ms. Tai described the potential deal as “historic” and “a paradigm-shifting model” that would reduce carbon produced by heavy industries, while also limiting unfair trade competition from countries like China, which has been pumping out cheap steel that is not manufactured in an environmentally friendly way.U.S. negotiators had envisioned setting up a club of nations committed to cleaner production, initially with Europe and later with other countries, that together would act to block dirtier steel, aluminum and other products from their markets. Steel and aluminum production is incredibly carbon intensive, with the industries together accounting for about a 10th of global carbon emissions. But Europeans raised a variety of objections to the approach, including arguing that it violated global trade rules for treating countries fairly.Now, the Biden administration is trying to salvage the talks by pushing for a narrower deal in the coming weeks. The more limited U.S. proposal currently includes an immediate agreement for countries to take steps to combat a flood of dirtier steel from countries like China, as well as a commitment to keep negotiating in the coming years for a framework that would discourage trade in products made with more carbon emissions, the people familiar with the negotiations said.Katherine Tai, the U.S. trade representative, has been seeking a far-reaching deal with the Europe Union.Pete Marovich for The New York TimesThe agreement is expected to be a point of discussion at a summit planned for Oct. 20, when President Biden will meet the president of the European Commission, Ursula von der Leyen, at the White House.The stakes are high: The United States is poised to bring back Trump-era tariffs on European steel and aluminum on Jan. 1, unless the sides reach an agreement, or American negotiators issue a special reprieve. Mr. Biden paused those tariffs for two years in 2021, when negotiations began with Europe.Restoring cooperation between the United States and Europe after years of rocky relations during the Trump presidency has been a key objective for Mr. Biden and his deputies.But the talks faced a basic obstacle: the United States and Europe have fundamental differences in how they are addressing climate change, trade and competition from China, and neither side is yet willing to significantly depart from its own policies.The Biden administration has largely dispensed with traditional trade negotiations focused on opening international markets, arguing that past trade deals that lowered global barriers to trade helped multinational corporations, rather than American workers, while supercharging the Chinese economy.Instead, the Biden administration has embraced tariffs, subsidies and trade arrangements that protect industries in the United States and allied countries, while blocking cheaper products made in China. It has done so in lock step with U.S. labor unions, which are opposed to removing tariffs and other policies that protect their industries.The European Union has criticized the American tariffs and subsidy programs as protectionist policies that threaten to undermine international trade rules.“This administration is trying to significantly retool the way we go about global economic engagement,” said Emily Benson, the director of Project on Trade and Technology at the Center for Strategic and International Studies, a think tank. “What’s unclear is the degree to which our allies buy into that agenda.”For their part, European officials are putting their efforts into an ambitious new carbon pricing scheme, that would tax companies across a range of industries in Europe and elsewhere for the greenhouse gases emitted during manufacturing. European officials have urged the United States to adopt a similar approach but American officials argue such a system is not viable in the United States, where Congress would be unlikely to impose new carbon taxes on American companies.The two governments also differ in how to approach China, which makes more than half of the world’s steel, often by burning coal. American steel makers say their Chinese counterparts receive generous government subsidies that allow Chinese steel to be sold at artificially low prices, unfairly undercutting competitors.European officials have been more reluctant to target China specifically. While the E.U. government has begun to take a more skeptical look at Chinese exports, many European nations still regard the country more as a vital business partner than a geopolitical rival.Given the close alignment between the United States and Europe on many issues, the history of trade negotiations between the governments is surprisingly bleak.The Obama administration pursued a trade deal with Europe that ultimately crumbled as a result of irreconcilable differences over regulation and agriculture. After lobbing both criticism and tariffs at Europe, the Trump administration tried for a more limited agreement, with similarly unimpressive results.The Biden administration successfully de-escalated some of those trade fights. But fundamental differences remain in how the United States and Europe view the role of government and regulation.“It’s incredibly complicated, largely because we have markedly different priorities,” said William Alan Reinsch, the Scholl Chair in International Business at the Center for Strategic and International Studies. “I can see a path but the path involves both sides making concessions that they really don’t want to make.”Miriam Garcia Ferrer, a spokeswoman for the European Commission, said the countries were “fully committed to achieving an ambitious outcome” by October.Valdis Dombrovskis, the European commissioner for trade, has warm relations with the American trade representative but that has not yet resulted in an agreement.Andy Wong/Associated PressThe European Union is seeking a permanent solution to U.S. tariffs and “re-establish normal and undistorted trans-Atlantic trade” while also driving decarbonization and addressing the challenge of global steel overproduction, Ms. Garcia Ferrer said.Sam Michel, a spokesperson for the U.S. trade representative, said that the Biden administration had “been fully committed to these negotiations over the last two years and we are hopeful both sides can reach an agreement that demonstrates the close partnership between the United States and the European Union.”People close to the talks say the outcome has been particularly disappointing given the close alignment and warm relations between Mr. Biden and Ms. von der Leyen, and Ms. Tai and her counterpart, Valdis Dombrovskis, the European commissioner for trade.Ms. Tai and Mr. Dombrovskis committed earlier this year to meeting every month. Mr. Dombrovskis, the former prime minister of Latvia, hosted Ms. Tai at a seaside dinner in the Latvian capital in June, and she brought him to the White House on July 4 to watch fireworks from the lawn.U.S. officials initially thought those meetings might mark a turning point for the negotiations. In a trip to Brussels in July, Ms. Tai told her counterparts that time was running out and that they needed to get something done.But that top-level commitment did not fuel momentum at lower levels of the bureaucracy, and progress fizzled as European negotiators left for summer holidays.The pace of talks has accelerated over the past month, but for a much more limited agreement.Jennifer Harris, a former senior director for international economics at the National Security Council who played a key role in starting negotiations, expressed optimism that progress could be made in the final days and weeks of the negotiations, especially given the upcoming meeting between Mr. Biden and Ms. von der Leyen.The talks now need “the kind of swift injection of tailwind that only leaders can provide,” she said. “I don’t think either leader is going to let this thing fail.” More