Evelyn Reynolds

The U.K. finds itself in something of a sweet spot when it comes to trade, given it has deals with both the U.S. and European Union.
That’s a turnaround after the uncertainty that followed the 2016 Brexit referendum, which prompted businesses to shift operations to mainland Europe and exports to fall.
President Donald Trump’s threatened 30% tariffs on the EU might drive some businesses to reconsider the U.K.

A European Union (EU) flies alongside a British Union flag, also known as a Union Jack in London.
Jason Alden | Bloomberg Creative Photos | Getty Images

In 2016, the U.K.’s vote to leave the EU prompted many businesses to shift operations to the European continent, taking investment and headcount with them.
Fast forward to 2025, and the specter of U.S. President Donald Trump’s 30% trade tariffs on the EU, which will kick in on Aug.1 unless a trade deal is reached, could bring them back.

“The U.K. could be a big indirect winner” if the threatened U.S. duties on the EU become a reality, according to Alex Altmann, partner and head of the German desk at London-based accountancy and business advisory firm Lubbock Fine.
“If the tariff rate for the EU finally ends up anywhere near this 30% level then the U.K.’s much lower U.S. tariffs would offer a major incentive for EU companies to shift some of their manufacturing to the U.K. or to expand their existing U.K. facilities,” he noted in emailed comments. 

A Range Rover Sport SUV on the production line at car manufacturing plant in Solihull, U.K.
Chris Ratcliffe | Bloomberg | Getty Images

“The U.K. has a lot of spare manufacturing capacity after Brexit. A big gap between U.K. and EU tariffs would be a major opportunity for the U.K. to regain some of its lost status as a key European manufacturing hub,” added Altmann, who is also the vice president of the British Chamber of Commerce in Germany.
As things stand, the U.K. has already struck a trade deal with the U.S. that reduces duties on cars to 10% and grants it the lowest duty on steel imports. London also has a “reset” deal with the EU, after the Labour government under Prime Minister Keir Starmer — who was opposed to Brexit — carved out a trade agreement following years of post-referendum acrimony.

The post-Brexit trade landscape

The sweet spot the U.K. now finds itself in comes after several years of uncertainty and angst for businesses, as they’ve tried to navigate a post-Brexit world of more red tape and barriers to export.

That’s been an ongoing gripe for exporters, given that the 27-country EU remained the U.K.’s largest trading partner after Brexit was finally enacted in 2020. The EU accounted for more than 50% of Britain’s foreign trade in goods in 2024, according to the European Commission.

A number of big businesses, and particularly financial services firms such as Goldman Sachs and JPMorgan, sought to avoid the transnational regulatory complexities of the post-Brexit landscape by relocating operations and assets to other financial hubs in the EU, such as Dublin, Paris, Amsterdam and Frankfurt. The exodus was ultimately not as dramatic as was initially feared.

Supporters and critics argue over the merits and disadvantages of Brexit and the divorce from the EU’s single market and customs union, as well as the free movement of goods and people that came with EU membership. Yet most economists agree that Brexit dented U.K. exports, jobs and economic growth.
The Office for Budget Responsibility, the U.K.’s independent forecaster, estimates that exports and imports will be around 15% lower in the long run, compared to if the U.K. had remained in the EU.
Although economists argue over the impact on the wider economy, it’s generally agreed that the U.K.’s GDP is around 5% lower than it would have been, had Britain not voted to leave the bloc.

Tariffs windfall? Not so fast

While the U.K. is reveling in its newfound harmony with its American and European business partners, the extent of any windfall that comes as a result of the EU’s trading pain with the U.S. remains to be seen.
It remains unclear whether Trump’s planned 30% tariff on the bloc will actually go ahead on Aug.1. The U.S. president’s mercurial nature means the ultimate levy rate could go higher — he previously threatened a 50% tariff — or lower, toward the baseline 10% level that the EU is pursuing.
Not everyone agrees that the U.K. could benefit from trade misfortunes that befall the EU, whatever the outcome of last-ditch talks between Brussels and Washington.
“First of all, the 30% tariffs for the EU, they’re not a given,” Carsten Nickel, managing director at Teneo, told CNBC last week, pointing out that any potential post-tariffs shift in business investment from Europe back to the U.K. would be unlikely to happen quickly.

President Donald Trump attends a bilateral meeting with European Commission President Ursula von der Leyen during the 50th World Economic Forum (WEF) annual meeting in Davos, Switzerland, January 21, 2020.
Jonathan Ernst | Reuters

“If we were to talk about moving production facilities from Europe to the U.K. because the U.K. has a deal with the U.S. — the time horizon for that is a multi-year, if not decade-long, kind of time horizon,” he said.
In addition, Nickel noted that the U.K.’s strength remained in financial services rather than in manufacturing, which remains more prevalent in export-oriented countries like Germany and Italy.
“The reality is that the U.K.’s comparative advantage is not in high-end manufacturing … so the idea that you’re going with this stuff that you’re currently producing in, say, Germany and Switzerland, and you’re moving that to the U.K. tomorrow … it’s just not a decision that that a business leader in Europe can take just like that,” Nickel said. More

European exporters say a 30% U.S. import tariff would drive prices unsustainably high and hammer their sales.
While some manufacturers are shifting their supply chains stateside or elsewhere, not all businesses have the same flexibility — and can’t easily replace the developed U.S. market.
Exporters have already been grappling with huge uncertainty this year, with a new 10% U.S. tariff and the hit from a weaker U.S. dollar along with unpredictable announcements.

June O’Connell, founder and director at Irish gin and whiskey-makers Skellig Six18 Distillery, said U.S. tariffs have hit her business hard this year.
Paul McCarthy | Skellig Six18 Distillery

Along the “last road in Ireland,” on the country’s rugged west coast, June O’Connell’s business Skellig Six18 makes gin and whiskey — a time-intensive process guided by the wind, rain and cool temperatures that roll in year-round off the Atlantic.
America was a natural target market once their first spirits were ready to sell in 2019, according to O’Connell, given its strong familiarity with Ireland and big appetite for premium drinks. As an independent supplier, negotiations with distributors, marketers and retailers took more than a year, and her first products left County Kerry in November 2023 for a U.S. launch in early 2024.

Then the political tide started turning in the White House.
“Once it became clear which way things were heading, people were trying to get a lot of product stateside ahead of tariffs. We did do some of that, but now warehouses are full, importers are saying don’t send any more, and it’s only the big customers who are getting priority,” O’Connell told CNBC.

Bottles of Irish whiskey at a store in Corte Madera, California. The U.S. is a key market for EU-made spirits, accounting for 20-40% of exports for most producers.
Justin Sullivan | Getty Images News | Getty Images

Since the start of the year, President Donald Trump’s unpredictable tariff announcements have been roiling businesses of all sizes.
The European Union in particular has drawn Trump’s ire for its 198 billion euro ($231 billion) trade surplus in goods with the U.S.
He argues tariffs are needed to create a more balanced relationship; EU officials, however, argue that trade is more even across goods, services and investments, and have pledged to increase oil and gas purchases to narrow the gap.

Last weekend, Trump announced he is planning to hit the EU with a blanket tariff rate of 30% from Aug. 1, after last-minute negotiations failed to produce a framework deal. Huge uncertainty now hangs over whether an agreement can be struck in the next two weeks, and what details or compromises it might contain.

‘It will be a lose-lose situation’

The Trump administration has already imposed a 10% baseline duty on EU imports, along with higher rates for automotives and metals.
The fact that the U.K.’s trade deal with the U.S. maintained a 10% baseline tariff with some sector exemptions has led many to believe that this could be Europe’s best hope. The Financial Times reported Friday that Trump is now taking a harder line in EU negotiations and pushing for minimum tariffs of 15-20%, citing people briefed on the talks. CNBC has not independently confirmed the report.

How the EU is preparing to reach a tariff deal in Trump’s game of chicken

The EU’s food and drink trade with the U.S. is worth almost 30 billion euros, and trade group FoodDrinkEurope warned this week that any escalation in tariffs — which are generally paid by the importer — would hit European producers and farmers, while limiting choice and driving up costs for U.S. consumers.
Even the 10% U.S. import tariff imposed in April has been a blow to business, Skellig Six18’s O’Connell said, with the final price impact on the consumer being much higher once additional costs have been passed up the supply chain.
“In terms of pricing, 30% [tariffs] would be untenable. The whole situation definitely stifles your ambition stateside,” she added.
For Franck Choisne, president of French distillery Combier, a 10% tariff has been just about manageable. Founded in 1834, Combier is best known for making the liqueur triple sec – used in margarita cocktails – and the U.S. represents around 25% of its overall sales.

France’s Distillerie Combier, which produces spirits including triple sec. President Franck Choisne says a 30% U.S. tariff could halve sales to the market.

However, Choisne notes that the 10% tariff comes on top of a hit from the currency market. A weaker U.S. dollar this year has made it more expensive for the U.S. to import foreign goods, an additional dampener on demand.
A 30% tariff, plus exchange rate effects, would mean an overall rate of 45-50% is reflected in final consumer prices, he said, a level that could halve his company’s U.S. sales.
“We understand President Trump wants a better balance between imports and exports, but at that 30% level then of course the EU will respond, trade will be hit and it will be a lose-lose situation,” he said.
U.S. exporters of products such as bourbon would also suffer, a factor Choisne said kept him optimistic that the two sides will eventually negotiate a zero-tariff deal for the spirits industry.
In Italy’s Lombardy countryside, more than half a million huge wheels of Grana Padano cheese roll off the supply lines of family-run business Zanetti each year. The company, which also makes parmesan and other hard cheeses, exports over 70% of its products, and the U.S. accounts for 15% of total turnover.

A shopkeeper holds a Grana Padano Italian cheese inside a supermarket on April 17, 2025 in Turin, Italy.
Stefano Guidi | Getty Images News | Getty Images

According to its president and CEO Attilio Zenetti, the volatility created by tariffs this year has been unlike any before, with contradictory announcements generating a huge amount of additional admin.
“It gives a lot of uncertainty and does not allow us to organise a real strategy,” he said, bar trying to ship as many products as possible before higher rates potentially come into effect.
Zenetti said that the weaker dollar plus tariffs had already increased the company’s U.S. retail prices by 25%. “Further increases would of course directly reflect again on U.S. wholesale and retail prices and we fear that this will affect volumes,” he said.

Supply chain shifts

For some businesses, mitigating the tariff impact has meant looking at new supply chain options.
Alex Altmann, partner at accounting firm Lubbock Fine and VP of the British Chamber of Commerce in Germany, said that some EU manufacturers were considering moving their assembly lines to the U.K. to try to take advantage of its existing 10% agreement. In doing so, they must navigate the complexity of “rules of origin” that determine the source of a product for tax purposes.

Altmann gave the example of a German kitchen appliance manufacturer with strong demand in the U.S. The company sources most of its materials cheaply from Asia and imports them into the EU at a low tariff rate. It is not too difficult to then shift the final assembly process to a factory in the U.K., he said, to benefit from a 10% — instead of a potential 30% — tariff on products as they enters the U.S.
“We might not be facing these big tariff differences for a long time, but even if you cash in for a few months it’s quite significant money,” he added.
Elsewhere, big corporations are considering shifting at least some manufacturing to the U.S. German industrial giant Siemens, for example, told CNBC it had taken steps to localize manufacturing, and engineering group Bosch likewise said it was prioritizing a local-for-local model as it looks to expand its North America business.
However, for Skellig Six18’s O’Connell, moving production is not possible. That’s because the production of “origin protected” items — like an Irish whiskey, Italian parma ham or French champagne — can’t be moved elsewhere.
Instead, O’Connell’s is focusing on new potential markets in Asia, Africa and Latin America, but noted the difficulty of doing so in places without solid existing whiskey sales. Combier distillery’s Franck Choisne, meanwhile, pointed out that becoming established somewhere new is resource-intensive, costly and could take years. In other words, it’s no easy fix for a decline in U.S. sales.
“At times like this I just try to remember that I’m in an industry that’s nearly 700 years old, requires patience and reminds you that things don’t last forever,” O’Connell said. “You just have to keep controlling the controllables.”
— CNBC’s Sam Meredith contributed to this story. More

The University of Michigan’s Survey of Consumers for July showed overall sentiment rose 1.8% from June to 61.8, exactly in line with the estimate and at the highest since February.
On inflation, the outlook at both the one- and five-year horizons both tumbled, falling to their lowest levels since February.

People shop at a Manhattan retail store on July 15, 2025 in New York City.
Spencer Platt | Getty Images

Consumers’ worst fears about tariff-induced inflation have receded, though they are still wary of price increases to come, according to a University of Michigan survey Friday.
The university’s closely watched Survey of Consumers for July showed overall sentiment increased slightly, rising 1.8% from June to 61.8, exactly in line with the Dow Jones consensus estimate and at its highest level since February. Questions on current conditions and future expectations produced monthly gains as well.

On inflation, the outlook at the one- and five-year horizons both tumbled, falling to their lowest levels since February, before President Donald Trump made his “liberation day” tariff announcement on April 2.
The one-year forecast plunged to 4.4%, down from 5% in June and well off the 6.6% level in May, which was the highest reading since late 1981. For the five-year outlook, the expectation slid to 3.6%, down 0.4 percentage point from June.
“Both readings are the lowest since February 2025 but remain above December 2024, indicating that consumers still perceive substantial risk that inflation will increase in the future,” Joanne Hsu, survey director, said in a statement.
Indeed, the respective outlooks in December were for 2.8% and 3%, largely in line with readings throughout 2024, before Trump took office in January.
“Despite risks of rising consumer inflation in the next few months, consumers have well-anchored expectations that tariff inflation will be temporary, and that conditions should improve by the time we enter 2026,” said Jeffrey Roach, chief economist at LPL Financial. “Inflation expectation is an important factor for the Fed and according to this report, the trajectory looks encouraging.”

Inflation worries peaked as Trump levied 10% across-the-board tariffs as well as so-called reciprocal duties that he has backtracked on pending negotiations. However, in recent days he has announced tariffs on individual products such as copper, raising the specter of future price increases.
The readings are below their long-term averages, with the headline sentiment index down 6.9% from a year ago and 16% from December. The expectations reading fell 14.8% from July 2024, though the current conditions index was 6.5% higher.

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Israel’s economic outlook remains buoyant, lifted by significant foreign investment and more recently by renewed investor confidence following its 12-day conflict with Iran. 
In the last year, Israel has managed to significantly degrade the capabilities of its adversaries.
High-tech products and services make up 20% of Israel’s GDP and 56% of its international exports.

A missile is intercepted over Tel Aviv on June 20, 2025, after a Iran fired a fresh salvo of missiles.
John Wessels | Afp | Getty Images

Israel’s stock market is at a record high and has seen the greatest gains of any country in the Middle East over the 22 months of war that began on Oct. 7, 2023. 
Israel has been waging multi-front wars, sustaining the mobilization of hundreds of thousands of troops that would ordinarily be part of the workforce, it’s currently facing charges of war crimes in international courts, all while grappling with a large protest movement and political turmoil at home. Despite this, its economic landscape remains buoyant – lifted by significant foreign investment and more recently by renewed investor confidence following its 12-day conflict with Iran. 

Initially dropping as much as 23% in the month following the October Hamas attack and Israel’s declaration of war, the Tel Aviv Stock Exchange had rebounded to and exceeded pre-war levels by the first quarter of 2024. As of July 17, the TASE is up over 200% from its Oct. 2023 low. 
The country’s GDP for the last quarter of 2023 shrank nearly 20%, following a deep contraction in private consumption and investment triggered by the war. The full year nonetheless finished with modest growth of 2%, and a further 1% GDP growth in 2024, driven mainly by government spending. In June of this year, the OECD forecast 4.9% growth in economic activity for Israel in 2026.
“In 2024, about 161,000 new trading accounts were opened in the Israeli capital market,” a July report published on the Tel Aviv Stock Exchange website stated. That figure represents a threefold jump in the number of accounts opened compared to 2023.
The report added that the first half of 2025 saw a further 87,000 new trading accounts opened, some 33,000 of which were in investment houses.

“The year 2023 was characterized by considerable uncertainty… However, already in 2024, a reversal of the trend could be identified: the public expanded its involvement in the capital market, opened trading accounts, and took advantage of the low price levels in TASE’s indices to enter the local capital market, which also supported the high trading volumes,” Hadar Romano, head of data at TASE, wrote in the report. 

Avi Hasson, CEO of Israel’s Startup Nation Central, credited a number of factors for boosting investor confidence in Israel.  
“As a result of what has been happening in the past 22 months, global investors look at the Middle East now, and specifically at Israel, and say… ‘The risks confronting Israel’s security and economy are actually going down’,” Hasson told CNBC’s Access Middle East. 
In the last year, Israel has managed to significantly degrade the capabilities of its adversaries, particularly Lebanon’s Hezbollah, and its June conflict with Iran – with the help of the U.S. – was widely seen as having dealt a significant blow to Tehran’s abilities to harm the Jewish state.   
When investors “try to look at the fundamentals of the Israeli economy, and more specifically, the tech market, its dynamism, its capabilities, the baby boom, new company creation,” Hasson said, “global investors and global companies are taking notice, when they try to imagine the Middle East. Not necessarily how it is today, but rather in the months and years to come.”

Israel’s tech sector is to thank for much of the country’s economic success. High-tech products and services make up 20% of Israel’s GDP and 56% of its international exports, Hasson said, thanks in part to the government investing heavily into research and development.
Since the start of the war, its defense sector has gained further attention from foreign countries, even in the Arab world – one visible example being the robust presence of Israeli defense firms at Abu Dhabi’s IDEX defense exhibition in February of this year.
Foreign investment has also played a major part in the boost to Israel’s stock market and real estate sector.
In May of this year alone, foreign investors bought approximately 2.5 billion shekels ($743 million) in TASE shares, according to Israeli news outlet Ynet. Since the start of 2025, it reported, total foreign acquisitions have reached roughly 9.1 billion shekels, or $2.7 billion.
And according to Israel’s central bank, outstanding liabilities to foreign investors “increased by approximately $27.5 billion (about 5.2 percent) in the fourth quarter, to about $554 billion at the end of the quarter.” That increase, the bank said, “was primarily due to a combination of an increase in the prices of Israeli securities held by nonresidents and the continued flow of net investments in Israel by nonresidents.”
The Israeli shekel, meanwhile, has gained nearly 7% against the U.S. dollar following the Israel-Iran conflict in June, while S&P Global Market Intelligence expects price inflation in the country to fall within the central bank’s target rate by the third quarter 2025, likely paving the way for further monetary easing. More

Former Federal Reserve Governor Kevin Warsh, called Thursday for sweeping changes on how the central bank conducts business and suggested a policy alliance with the Treasury Department.
“Their hesitancy to cut rates, I think, is actually … quite a mark against them,” Warsh said on CNBC.
Warsh is considered one of three or four finalists to take over at the Fed, and he expressed multiple sentiments in line with what Trump wants.

Former Federal Reserve Governor Kevin Warsh, reportedly on President Donald Trump’s short list to lead the institution, called Thursday for sweeping changes on how the central bank conducts business and suggested a policy alliance with the Treasury Department.
“We need regime change in the conduct of policy,” Warsh said during an interview on CNBC’s “Squawk Box.” “The credibility deficit lies with the incumbents that are at the Fed, in my view.”

Principal among those holdover officials is Chair Jerome Powell, who repeatedly has incurred Trump’s wrath and is certain not to be reappointed when his term expires in May 2026, if attempts aren’t made to remove him before then.
Warsh is considered one of three or four finalists to take over, and he expressed multiple sentiments in line with what Trump wants from the Fed. The president has demanded the central bank cut its benchmark overnight borrowing rate and has urged Powell to resign for not pushing for cuts.
Warsh’s comments indicate he could be at loggerheads not only with the way Powell has led the Fed, but also with holdover members who would be in place should he be put at the organization’s helm.
“Their hesitancy to cut rates, I think, is actually … quite a mark against them,” Warsh said. “The specter of the miss they made on inflation, it has stuck with them. So one of the reasons why the president, I think, is right to be pushing the Fed publicly is we need regime change in the conduct of policy.”

In the latest drama surrounding the Fed and its embattled chair, a Trump administration official on Wednesday confirmed that the president met with Republican lawmakers the previous day and discussed Trump firing Powell. The official said Trump planned to do so soon, but he denied that shortly after.

In addition to the rates issue, White House officials have criticized Powell over a multibillion-dollar renovation program at two of the Fed’s buildings in Washington, D.C.
Asked whether Trump should try to fire Powell, Warsh said, “I think regime change at the Fed will happen in due course.”
Trump’s main stated reason in pushing for rate cuts has been to help lower financing costs on the nation’s $36 trillion debt, which is ostensibly out of the Fed’s twin goals of low unemployment and stable prices.
However, Warsh seemed to take the issue a step further and suggested a coordination between the Fed and the Treasury Department in how the nation manages debt issuance.
“We need a new Treasury-Fed accord, like we did in 1951 after another period where we built up our nation’s debt and we were stuck with a central bank that was working at cross purposes with the Treasury. That’s the state of things now,” he said. “So if we have a new accord, then the .. Fed chair and the Treasury secretary can describe to markets plainly and with deliberation, ‘This is our objective for the size of the Fed’s balance sheet.'”
The Fed is currently shrinking its balance sheet by allowing proceeds from maturing debt to roll off, rather than being reinvested as usual. Warsh generally supports the idea, known as quantitative tightening, but recently asserted that the Fed ought to be working with Treasury to help lower borrowing costs.
“I think the Fed has the balance wrong. A rate cut is the beginning of the process to get the balance right,” he said.
However, the last time the Fed cut rates, Treasury yields actually rose.
Markets expect the Fed to hold its benchmark funds rate steady at its policy meeting in late July, then possibly start cutting in September.

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President Donald Trump denied that he plans to fire Federal Reserve Chairman Jerome Powell, contradicting a senior White House official.
House Republicans said Trump spoke about the plan Tuesday night.
Trump added that firing Powell was “highly unlikely.”

Hours after President Donald Trump told a room full of Republican lawmakers that he will fire Federal Reserve Chair Jerome Powell, he denied plans to do that.
“We’re not planning on doing it,” he said Wednesday at the White House. “I don’t rule out anything,” he added, “but I think it’s highly unlikely, unless he has to leave for fraud.”

At a meeting Tuesday evening in the Oval Office, Trump had asked a group of House Republicans if they thought he should fire Powell. After receiving support for the move, the president said he would follow through, according to a senior White House official.
“The President asked lawmakers how they felt about firing the Fed Chair. They expressed approval for firing him. The President indicated he likely will soon,” said the official, who spoke on the condition of anonymity to speak candidly on the issue.
The members had been invited to the White House to discuss crypto regulation bills that had stalled in the House.
Separately, The New York Times reported that Trump has gone so far as to draft a letter for firing Powell, and that he showed it to lawmakers during the crypto meeting.
A Fed official declined to comment on what happened during the Oval Office meeting.

But Powell has said repeatedly that his firing is “not permitted under the law.”

US Federal Reserve Chair Jerome Powell testifies during a House Financial Services Committee hearing on “The Federal Reserve’s Semi-Annual Monetary Policy Report” on Capitol Hill in Washington, DC on June 24, 2025.
Saul Loeb | Afp | Getty Images

No president ever has attempted to fire the country’s top central banker, though others have criticized prior Fed chairs.
Markets turned lower on the initial reports that Trump planned to fire Powell, but recovered after Trump denied what the White House was telling reporters.
Key players in the Trump White House have launched a multipronged attack on Powell to push the central bank to lower its key borrowing rate. Most recently, they have blasted Powell over renovations to the Fed’s Washington headquarters, raising suspicion that Trump could try to remove the Fed leader for cause.
A recent Supreme Court decision indicated that the president does not have the authority to remove Fed officials at will.
Trump suggested that “cause” could be an issue for Powell, particularly regarding the $2.5 billion renovation of the Fed’s headquarters. The project has been beset by overruns, and Powell has asked the Fed’s inspector general for a review.
“Fraud is possible. … So there could be something to that,” Trump said. “But I think he’s not doing a good job. He’s got a very easy job to do. You know what he has to do? Lower interest rates.”
In a CNBC interview Wednesday, Rep. French Hill, R-Ark., the chair of the House Financial Services Committee, repeated that “I don’t see” Trump firing Powell. Treasury Secretary Scott Bessent also told Bloomberg News on Tuesday that he didn’t expect Trump to move in that direction.

However, Rep. Anna Paulina Luna, a Florida Republican who on Tuesday joined with other party members in blocking the crypto initiative, said on social media site X that a move against Powell was forthcoming.
“Hearing Jerome Powell is getting fired! From a very serious source,” she wrote, later adding, “I’m 99% sure firing is imminent.”
Trump nominated Powell for the chair in November 2018 to succeed Janet Yellen, who went on to become Treasury secretary under then-President Joe Biden.
The Senate confirmed Powell the following February, but has been the subject of frequent criticism from Trump, both during the president’s first term and his second.
The Fed under Powell has held interest rates steady after lowering them in late 2024. Trump has charged that Powell is politically motivated and only cut in 2024 to help the prospects of Democratic nominee Kamala Harris.
“That goes for his board too, because his board is not doing the job as they should,” Trump said Wednesday.
Trump appointed not only Powell but also Governors Michelle Bowman, who now is the vice chair of bank supervision, and Christopher Waller.
Over the past several weeks, both have indicated a willingness to start cutting as soon as the late July meeting of the Federal Open Market Committee, though not at a pace that Trump is suggesting.
The president has indicated he would like the Fed to lop up to 3 percentage points off the central bank’s overnight borrowing rate, which is currently targeted between 4.25%-4.5%.

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The producer price index, a measure of wholesale costs, showed no change in June, against the forecast for a 0.2% increase. The same was true for the core PPI.
Though the numbers for headline and core wholesale inflation were subdued, final demand goods prices rose 0.3%, but were offset by a 0.1% fall in services.
Combined with Tuesday’s consumer price index release, the data suggests that President Donald Trump’s tariffs are indicating only a marginal bite on the U.S. economy.

A measure of wholesale prices showed no change in June, providing a conflicting sign over whether tariffs threaten to boost inflation in the coming months.
The producer price index was flat, according to seasonally adjusted numbers from the Bureau of Labor Statistics reported Wednesday. Economists surveyed by Dow Jones had been looking for an increase of 0.2%.

The same was true for core PPI, which also was expected to show a 0.2% rise.
Combined with Tuesday’s consumer price index release, the data suggests that President Donald Trump’s tariffs are indicating only a marginal bite on the U.S. economy and the prices for goods and services.
Though the numbers for headline and core wholesale inflation were subdued, final demand goods prices rose 0.3%, but were offset by a 0.1% fall in services. Within the goods category, tariff-sensitive communication equipment posted a gain of 0.8%. Core goods prices also rose 0.3%.
At the same time, the PPI level for May, initially reported as a 0.1% increase, saw an upward revision to a 0.3% gain. A 0.3% gain for goods is the biggest gain since February, the BLS reported.
On a year-over-year basis, the headline PPI was up 2.3%, compared with 2.7% in May and good for the lowest level since September 2024. The core PPI was at 2.6% on an annual basis, the smallest gain since July 2024.

Stock market futures rose following the report while Treasury yields fell.
The BLS on Tuesday reported that the consumer price index, which measures what consumers pay for goods and services, showed a monthly increase of 0.3% and an annual inflation rate of 2.7%. Core inflation was at 2.9% annually.
All of the BLS measures for annual inflation are above the Federal Reserve’s 2% target. However, Trump on Tuesday repeated his demands that the Fed start lowering its benchmark interest rate as a way to help reduce borrowing costs for the U.S.
However, markets are pricing virtually no chance of a cut when the Fed meets at the end of July, and have been reducing odds for a September move. Fed officials have said they remain cautious about the impact tariffs will have on inflation and believe the U.S. economy is in a strong enough position now that they can wait to see the impacts before acting on rates.
According to the PPI release, energy prices rose 0.6% in June, while food prices increased 0.2%. Within the food category, chicken eggs tumbled 21.8%.

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