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    Canada’s Carney Puts Tariffs on U.S.-Made Cars as Stellantis Plant Pauses Production

    Prime Minister Mark Carney said that Canada had introduced a 25 percent tariff on cars and trucks made in the United States in retaliation for the tariffs that went into effect Thursday morning on Canadian vehicles.Five hours before the tariffs imposed by President Trump took effect, the automaker Stellantis told the union representing workers at its minivan and muscle car factory in Windsor, Ontario, that the plant would close Monday for two weeks so it could assess the effects of the tariffs, idling about 3,600 employees.Mr. Carney estimated that Canada would collect about $5.7 billion from the retaliatory tariffs he said it was imposing — on top of the $42 billion or so he said Canada would generate from the tariffs it imposed on March 4. That money, Mr. Carney said, would go toward helping workers and businesses affected by the U.S. tariffs.“We take these measures reluctantly,” Mr. Carney said at a news conference after a meeting with Canada’s premiers. “And we take them in ways that’s intended and will cause maximum impact in the United States and minimum impact here in Canada.”He added, “We can do better than the United States. Exactly where that comes out depends on how much damage they do to their economy.”Canada’s tariffs, Mr. Carney said, would exclude auto parts, and the country would still allow companies that make cars in Canada — Stellantis, Ford, General Motors, Honda and Toyota — to import vehicles built in the United States without paying tariffs.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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    Federal Reserve is unlikely to rescue markets and economy from tariff turmoil anytime soon

    Now that President Donald Trump has set out his landmark tariff plans, the Federal Reserve finds itself in a potential policy box.
    The central bank is tasked with full employment and low prices. If tariffs challenge both, choosing whether to ease to support growth or tighten to fight inflation won’t be easy.
    The general consensus is that unless the duties are negotiated lower, they will take growth down to near zero or perhaps even into recession, while putting core inflation in 2025 north of 3%.

    U.S. Federal Reserve Chair Jerome Powell and U.S. President Donald Trump.
    Craig Hudson | Evelyn Hockstein | Reuters

    Now that President Donald Trump has set out his landmark tariff plans, the Federal Reserve finds itself in a potential policy box, having to choose between fighting inflation, boosting growth — or simply avoiding the fray and letting events take their course without intervention.
    Should the president hold fast to his tougher-than-expected trade policy, there’s a material risk of at least near-term costs, namely the potential for higher prices and a slowdown in growth that could turn into a recession.

    For the Fed, that presents a potential no-win situation.
    The central bank is tasked with using its policy levers to ensure full employment and low prices, the so-called dual mandate of which policymakers speak. If tariffs present challenges to both, choosing whether to ease to support growth or to tighten to fight inflation won’t be easy, as each courts its own peril.
    “The problem for the Fed is that they’re going to have to be very reactive,” said Jonathan Pingle, chief U.S. economist at UBS. “They’re going to be watching prices rise, which might make them hesitant to respond to any growth weakness that materializes. I think it’s certainly going to make it very hard for them to be preemptive.”
    Under normal conditions, the Fed likes to get ahead of things.
    If it sees leading gauges of unemployment perk up, the Fed will cut interest rates to ease financial conditions and give companies more incentive to hire. If it sniffs out a coming rise in inflation, it can raise rates to dampen demand and bring down prices.

    So what happens when both things occur at the same time?

    Risks to waiting

    The Fed hasn’t had to answer that question since the early 1980s, when then-Chair Paul Volcker, faced with such stagflation, chose to uphold the inflation side of the mandate and hike rates dramatically, tilting the economy into a recession.
    In the current case, the choice will be tough, particularly coming on the heels of how the Jerome Powell-led central bank was flat-footed when prices started rising in 2021 and he and his colleagues dismissed the move as “transitory.” The word has been resurrected to describe the Fed’s general view on tariff-induced price increases.
    “They do risk getting caught offsides with the potential magnitude of this kind of price increase, not unlike what happened in 2022, where they might feel the need to respond,” Pingle said. “In order for them to respond to weakening growth, they’re really going to have to wait until the growth does weaken and makes the case for them to move.”
    The Trump administration sees the tariffs as pro-growth and anti-inflation, though officials have acknowledged the potential for some bumpiness ahead.
    “It’s time to change the rules and make the rules be stacked fairly with the United States of America,” Commerce Secretary Howard Lutnick told CNBC in an interview Thursday. “We need to stop supporting the rest of the world and start supporting American workers.”
    However, that could take some time, as even Lutnick acknowledged that the administration is seeking a “re-ordering” of the global economic landscape.
    Like many other Wall Street economists, Pingle spent the time since Trump announced the new tariffs Wednesday adapting forecasts for the potential impact.

    Bracing for inflation and flat growth

    The general consensus is that unless the duties are negotiated lower, they will take prospects for economic growth down to near zero or perhaps even into recession, while putting core inflation in 2025 north of 3% and, according to some forecasts, as high as 5%. With the Fed targeting inflation at 2%, that’s a wide miss for its own policy objective.
    “With price stability still not fully achieved, and tariffs threatening to push prices higher, policymakers may not be able to provide as much monetary support as the growth picture requires, and could even bind them from cutting rates at all,” wrote Seema Shah, chief global strategist at Principal Asset Management.
    Traders, however, ramped up their bets that the Fed will act to boost growth rather than fight inflation.
    As is often the reaction during a market wipeout like Thursday’s, the market raised the implied odds that the Fed will cut aggressively this year, going so far as to put the equivalent of four quarter-percentage-point reductions in play, according to the CME Group’s FedWatch tracker of futures pricing.
    Shah, however, noted that “the path to easing has become narrower and more uncertain.”
    Fed officials certainly haven’t provided any fodder for the notion of rate cuts anytime soon.
    In a speech Thursday, Vice Chair Philip Jefferson stuck to the Fed’s recent script, insisting “there is no need to be in a hurry to make further policy rate adjustments. The current policy stance is well positioned to deal with the risks and uncertainties that we face in pursuing both sides of our dual mandate.”
    Taking the cautious tone a step further, Governor Adriana Kugler said Wednesday afternoon — at the same time Trump was delivering his tariff presentation in the Rose Garden — that she expects the Fed to stay put until things clear up.
    “I will support maintaining the current policy rate for as long as these upside risks to inflation continue, while economic activity and employment remain stable,” Kugler said, adding she “strongly supported” the decision in March to keep the Fed’s benchmark rate unchanged.
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    Trump’s Tariffs Follow Anger Over Trade Imbalances and Lost Manufacturing Jobs

    Economists and legal experts question how the strongest economy in the world can be facing a national emergency over the trade deficit.President Trump upended the international trading system on Wednesday with a blunt package of global tariffs, making the case that the United States faces a dire economic emergency as a result of trade imbalances with countries across the globe.It’s a sentiment that Mr. Trump has expressed for decades, one that helped propel him to the presidency amid anger over lost manufacturing jobs and widening trade deficits. While the United States has the largest and strongest economy in the world, Mr. Trump — and many of his supporters — have long held the view that America has been ripped off by other countries and that tariffs are the answer to rectify decades of what they call unfair treatment that has shuttered factories, decimated communities and hurt workers.“Every prediction our opponents made about trade for the last 30 years has been proven totally wrong,” Mr. Trump said on Wednesday, pointing to trade deals such as NAFTA and the Trans-Pacific Partnership as well as the tariffs he imposed during his first term. “We can’t do what we’ve been doing for the last 50 years.”Since his days as a real estate developer in the 1980s, Mr. Trump has been railing against the trade and business practices of other countries that he found to be unfair. Back then, when Japan was a booming economic rival, Mr. Trump used to assail its tactics.“If you ever go to Japan right now, and try and sell something, forget about it, Oprah. Just forget about it,” Mr. Trump said, in a 1988 interview with Oprah Winfrey, adding, “They come over here, they sell their cars, their VCRs, they knock the hell out of our companies.”This week he made good on his promise to try to force more companies to make their products in the United States. He punished trading partners with stiff tariffs, despite anxiety from economists, investors and businesses that his approach could send prices soaring and tip the economy into recession.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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    U.S. tariff rates under Trump will be higher than the Smoot-Hawley levels from Great Depression era

    President Donald Trump’s new policies put the effective tariff rate above the level of around 20% set by 1930’s Smoot-Hawley Tariff Act, according to Sarah Bianchi, a strategist at Evercore ISI.
    An estimate from Fitch Ratings said that the tariff rate would hit its highest level since 1909.
    The full economic impact of the new duties will likely depend on how long they are in place and whether other nations retaliate.

    U.S. President Donald Trump holds a chart next to U.S. Secretary of Commerce Howard Lutnick as Trump delivers remarks on tariffs in the Rose Garden at the White House in Washington, D.C., on April 2, 2025.
    Carlos Barria | Reuters

    The tariff policy outlined by President Donald Trump on Wednesday appears set to raise the level of U.S. import duties to the highest in more than 100 years.
    The U.S. introduced a baseline 10% tariff on imports, but also steep country-by-country rates on some major trading partners, including China. The country-by-country rates appear to be related to the trade deficit the U.S. has with each trading partner.

    Sarah Bianchi, Evercore ISI chief strategist of international political affairs and public policy, said in a note to clients late Wednesday that the new policies put the effective tariff rate above the level of around 20% set by 1930’s Smoot-Hawley Tariff Act, which is often cited by economists as a contributing factor to the Great Depression.

    Arrows pointing outwards

    Evercore ISI

    “A very tough and more bearish announcement that pushes the overall U.S. weighted average tariff rate to 24%, the highest in over 100 years – and likely headed to as high as 27% once anticipated 232s are complete,” Bianchi wrote. The “232s” is a reference to some sector-specific tariffs that could be added soon.
    JPMorgan’s chief U.S. economist Michael Feroli came up with similar results when his team crunched the numbers.
    “By our calculations this takes the average effective tariff rate from what had been prior to today’s announcement around 10% to just over 23%. … A White House official mentioned that other section 232 tariffs (e.g. chips, pharma, critical minerals) are still in the works, so the average effective rate could go even higher. Moreover, the executive order states that retaliation by US trading partners could result in even higher US tariffs,” Feroli said in a note to clients.

    An estimate from Fitch Ratings was in the same range, with a report saying the tariff rate would hit its highest level since 1909.

    Trump referenced the Smoot-Hawley Act in his Rose Garden remarks on Wednesday. The president said the issue was not the tariffs imposed in 1930 but the previous decision to remove the higher tariffs that existed earlier in the 20th century.
    “It would have never happened if they had stayed with the tariff policy. It would have been a much different story. They tried to bring back tariffs to save our country, but it was gone. It was gone. It was too late,” Trump said.
    The full economic impact of the new tariffs will likely depend on how long they are in place and if other countries retaliate. Trump and Treasury Secretary Scott Bessent have indicated that the country-by-country tariffs could come down if those trade partners change their policies.
    JPMorgan global economist Nora Szentivanyi warned that Trump’s tariffs were likely to push the U.S. and global economy into a recession this year if they are sustained. More

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    Trump Imposes Tariffs on Remote Islands

    President Trump’s tariffs have spared almost no corner of the Earth. Even tiny, sparsely populated islands that export close to nothing.Among the countries and territories listed on sheets of paper that were distributed to reporters in the White House Rose Garden on Wednesday were Heard Island and McDonald Islands, Australian territories near Antarctica where many penguins but no people live. Also listed were the British Indian Ocean Territory, a collection of islands that are mostly uninhabited aside from U.S. and British soldiers stationed at the joint military bases on Diego Garcia.Some territories face even higher tariffs than their governing nations. Norfolk Island, an Australian territory in the South Pacific Ocean, faces 29 percent tariffs, compared with the 10 percent rate Mr. Trump imposed on the country.“I’m not quite sure that Norfolk Island, with respect to it, is a trade competitor with the giant economy of the United States,” said Prime Minister Anthony Albanese of Australia. “But that just shows and exemplifies the fact that nowhere on earth is safe from this.”In 2023, Norfolk Island exported $655,000 worth of products to the United States, including leather shoes and vehicle parts, and imported $116,000 worth of products from the United States, including chemical fertilizers, according to the Observatory of Economic Complexity, a data visualization platform.Other islands subjected to a 10 percent tariff rate included Tokelau, a territory of New Zealand that has fewer than 2,000 inhabitants. The Norwegian islands of Svalbard, which has about 3,000 residents, and Jan Mayen, where the only humans are the military personnel who operate a weather and coastal services station, were also targeted.The White House did not respond to a request for comment about why certain islands with few or no inhabitants were targeted.Réunion, a French territory east of Madagascar that has a population of less than 1 million, faces particularly steep tariffs, at 37 percent, compared to the 20 tariffs imposed on France. The Falkland Islands, a self-governing British Overseas Territory, will have to pay 41 percent or 42 percent tariffs (the White House gave two different figures), compared to 10 percent rates that Britain faces. More

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    Why Did Trump Impose Tariffs, and What’s Next? Everything to Know.

    President Trump announced what could be one of the most drastic economic policy changes in decades on Wednesday, when he substituted America’s longstanding system of taxing imports with a new tariff system of his own devising.The president said the tariffs would reverse decades of what he called unfair treatment by the rest of the world and result in factories and jobs moving back to the United States.“The markets are going to boom” and “the country is going to boom,” Mr. Trump said on Thursday, as global financial markets suffered their biggest rout in years. He added that other countries “have taken advantage of us for many, many years.”Economists’ estimates have been far more grim, with most predicting that the president’s sweeping tariffs and likely retaliation will slow U.S. economic growth, push up costs for consumers and make life difficult for businesses that depend on international supply chains.The president’s measure is both consequential and complicated. Here’s what you need to know.What did the president just do?Mr. Trump announced two big tariff plans that apply to most of the world. One component is a “base line” tariff of 10 percent that will apply broadly to nearly all U.S. imports, except for products coming from Canada and Mexico.The second measure is what the president is calling a “reciprocal” tariff. That levy will apply to 57 countries that Mr. Trump says have high tariffs and other unfair economic practices that have hurt American exporters. He said this is a reciprocal tariff because it will match the way other countries treat the United States.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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    After Trump Tariffs, Volkswagen to Add ‘Import Fees’ to Cars Sold in U.S.

    Volkswagen, the German automaker, has told its car dealers that it plans to add an import fee later this month to the price of imported cars sold in the United States.The company’s move is one of the first and clearest examples of automakers using price increases to deal with the 25 percent tariffs President Trump imposed on car and auto parts imports. The tariffs on vehicles went into effect on Thursday and the levies on parts will become effective on May 3.In an April 1 memo to dealers, Volkswagen said that the exact fees would be determined by the middle of April. The New York Times reviewed a copy of the memo. The automaker also told dealers it planned to cut back on sales incentives and had halted rail shipments of cars to the United States from its plants in Mexico, although shipments by sea continue.Volkswagen plans to hold cars that are subject to the tariffs in port for “the near term.” It also told dealers that the price of the Volkswagen Atlas sport utility vehicle, which is made in Chattanooga, Tenn., could be affected by the tariffs because it includes important imported components. The extent of the impact most likely will not be known until May, the memo said.The automaker, including its Audi and Porsche brands, imports almost all the cars it sells in the United States. Besides the Atlas, Volkswagen also assembles the ID.4 electric sport-utility vehicle in Tennessee.In a statement, Volkswagen confirmed it had sent the memo to dealers because it wanted to be “very transparent about navigating through this time of uncertainty.”“We have our dealers’ and customers’ best interest at heart, and once we have quantified the impact on the business we will share our strategy with our dealers,” the company said.Other automakers are also making adjustments to respond to the tariffs. Stellantis, which owns Jeep, Ram, Dodge and Chrysler, said on Thursday that it is temporarily halting production at a plant in Mexico and another in Canada in response to the auto tariffs.The company said that a factory in Windsor, Ontario, that makes the Chrysler Pacifica minivan and the Dodge Charger muscle car will shut down for two weeks. And a plant in Toluca, Mexico, that makes the Jeep Compass and Wagoneer S will be idled starting on April 7 for the rest of the month.Stellantis said that the production stoppages in Canada and Mexico would force it to lay off about 900 workers in Indiana and Michigan. More

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    Apple Leads Tech Stock Sell-Off After Trump Tariffs, Falling 9 Percent

    On Thursday morning, Tim Cook, Apple’s chief executive, woke up to the worst day for his company’s stock in five years.Apple shares fell more than 9 percent in response to President Trump’s plan to put steep tariffs on products made abroad. The declines at the world’s most valuable company led a sharp sell-off in tech stocks as the Nasdaq composite index, which is loaded with technology companies, sank nearly 6 percent.Collectively, the largest tech companies, which have been at the forefront of the U.S. economy over the past decade, lost nearly $1 trillion in the day of trading. The declines at Apple, Nvidia, Microsoft, Meta, Alphabet and Amazon resulted in one of the industry’s worst-performing days since the Covid-19 pandemic turned the global economy upside down.Instead of “liberation day,” as Mr. Trump branded his tariff news conference, some market observers began calling it “obliteration day.” Richard Kramer, an analyst at Arete Research, said, “Today is an across-the-board disruption of the American economy, so anything with consumer exposure is getting creamed.”Apple was at the forefront of the tech industry’s drop because it makes almost all of its iPhones, iPads and Macs overseas. The company counts on the sale of those devices for three-quarters of its nearly $400 billion in annual revenue. It will either have to cover the costs of tariffs, cutting into its profits, or pass them on to customers by raising prices, which could reduce the number of devices it sells.The potential hit to the company’s profits triggered one of its steepest declines in its share price during trading since March 2020, when Apple fell 10 percent as fears of the coronavirus triggered a market sell-off. 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