Evelyn Reynolds

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    Trump’s Vast Tariffs Would Rock Global Businesses and Shake Alliances

    Economists said Donald Trump’s plan to return trade barriers to levels not seen in generations would be “a grenade thrown in the heart” of the international system.At a rally in Latrobe, Pa., earlier this month, former President Donald J. Trump paused in front of a crowd holding signs that read “Save Our Steel” to pay homage to one of his favorite concepts.Tariff, he said, “is the most beautiful word in the dictionary. More beautiful than love, more beautiful than respect.”Mr. Trump demonstrated a deep affinity for tariffs during his presidency, using them as a cudgel to punish both allies and rivals as he tried to force companies to make their products in the United States.If he wins again in November, he is promising a much more aggressive approach, a full-scale upending of the trading system in which the United States is no longer a partner in the global flow of goods, but a mercantilist nation intent on walling itself off from the world.The former president, who has described himself as a “Tariff Man,” has talked about tariffs as the solution to an array of problems, from making the country rich to funding tax cuts and paying for child care. But most central to his vision is the ability of tariffs to reverse decades of globalization and force factories to move back to the United States.Mr. Trump has threatened to slap steep tariffs on every country — the most punishing levies reserved for China — to raise the cost of foreign products and try to reorder global supply chains. His tariffs would hit almost all U.S. imports, more than $3 trillion of goods.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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    Can Harris’s Economic Plans Sway Small Business Owners to Vote Democratic?

    Kamala Harris has leaned in with promises to aid start-ups, but proprietors are often more focused on taxes and regulations.Presidential campaigns often use the backdrop of small businesses — record stores, diners, machine shops — to emphasize their candidates’ authenticity and hometown values. But this election cycle has taken those businesses a bit more seriously.In speeches and ads, Vice President Kamala Harris has sought to infuse entrepreneurship into her brand — an avowed capitalist, but for the little guy. Her economic policy platform mentions “small business” 77 times, including a section aimed at addressing owners’ needs, such as easing licensing requirements and funneling more federal contracts their way.It’s not hard to see why a candidate might lean in on Main Street: Small businesses are collectively the most respected institution in American life, according to research from Gallup and Pew. Ms. Harris’s messaging might also help counter former President Donald J. Trump’s reputation as a successful business owner, which continues to bolster his economic credentials among voters despite his many bankruptcies and sometimes fraudulent practices.Ms. Harris’s focus on small business isn’t completely new. She also took on the issue as vice president, visiting businesses to hand out billions of dollars in loans funded by the American Rescue Plan Act. She often talks about her “second mother,” Regina Shelton — who ran a nursery school in Berkeley, Calif. — as a small-business owner and an integral part of the community.“Kamala’s economic plans are designed to help people like Mrs. Shelton, so that they have enough in the bank to start a business or pass something on to their kids,” said Felicia Wong, who runs Roosevelt Forward, a progressive advocacy group.Ms. Harris has sought to portray herself as an avowed capitalist, but for the little guy.Kenny Holston/The New York TimesWe 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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    Foreign investors flock to flagship Saudi economic conference — but face less free-flowing cash

    Thousands of financiers, founders and investors are set to descend on the Saudi capital of Riyadh for the eighth edition of the kingdom’s Future Investment Initiative.
    As Saudi Arabia moves full steam ahead with its focus on domestic investment, it’s introduced more stringent conditions for foreigners coming to the kingdom to take capital elsewhere.
    The kingdom is taking clear steps to scale back spending, as oil prices fall well below its fiscal breakeven figure and it continues with crude production cuts agreed upon by OPEC+.

    A delegate arrives at the King Abdulaziz Conference Centre in Saudi Arabia’s capital Riyadh to attend the Future Investment Initiative (FII) forum.
    Fayez Nureldine | Afp | Getty Images

    Thousands of financiers, founders and investors are set to descend on the Saudi capital of Riyadh for the eighth edition of the kingdom’s Future Investment Initiative, the flagship economic conference at the heart of Vision 2030 — the multi-trillion dollar plan to modernize and diversify Saudi Arabia’s economy.
    Described in past years by some attendees as a bonanza for Saudi cash, fund managers who spoke to CNBC this year draw a distinctly different picture as the kingdom simultaneously upholds more requirements for prospective fundraisers and investors, while also facing a revenue crunch amid lower oil prices and production.

    “Without question, it’s gotten way more competitive to attract money from the kingdom,” Omar Yacoub, a partner at U.S.-based investment firm ABS Global, which manages nearly $8 billion in assets, told CNBC. “Everyone and anyone has been going to ‘kiss the rings,’ so to speak, in Riyadh.”
    “Competition for capital has heated up, combined with other factors such as Saudis always having a ‘home bias’ towards investing, plus the broader dynamic of a tighter budget throughout the kingdom due to lower oil prices,” Yacoub said. “This has meant that investing internationally has become much more selective.”
    As Saudi Arabia moves full steam ahead with its focus on domestic investment, it’s introduced more stringent conditions for foreigners coming to the kingdom to take capital elsewhere. The kingdom’s $925 billion sovereign wealth fund, the Public Investment Fund, saw its assets jump 29% to 2.87 trillion Saudi riyals ($765.2 billion) in 2023 — and local investment was a major driver.

    Saudi Arabia’s recently-updated Investment Law seeks to attract more foreign investment as well — and it’s set itself a lofty target of $100 billion in annual foreign direct investment by 2030. Currently, that figure is still a long way from that goal as foreign investment has averaged around $12 billion per year since Vision 2030 was announced in 2017.
    “It’s no longer about ‘take our money and leave’ — it’s about adding value,” said Fadi Arbid, founding partner and chief investment officer of Dubai-based investment manager Amwal Capital Partners. “Value meaning hiring, developing the asset management ecosystem, creating new products, bringing in talent, and investing in Saudi capital markets also. So it’s multi-faceted investment, not only a pure financial transaction. It’s beyond that.”

    ‘More disciplined, more rational’

    At the same time, the kingdom is taking clear steps to scale back spending, as oil prices fall well below its fiscal breakeven figure and it continues with crude production cuts agreed upon by OPEC+.
    That fiscal breakeven oil price — what the kingdom needs a barrel of crude to cost in order to balance its government budget — has risen sharply as Saudi Arabia pours trillions of dollars into giga-project NEOM.
    The IMF’s latest forecast in April, put that breakeven figure at $96.20 for 2024; a roughly 19% increase on the year before, and about 28% higher than the current price of a barrel of Brent crude, which was trading at around $72.75 as of Monday morning.
    “I don’t think Saudi has the same means that they had literally two years ago,” one regional investor, who requested anonymity in order to speak freely, said. Nonetheless, they added, the kingdom “remains one of the very few countries that still have money to give. It might be somewhat on pause today, but … now it’s more disciplined, more rational.”

    Some fund managers with years of experience in the Gulf suggested it may be too little too late for many of the investors making their first forays to the kingdom.
    “You should have started that process two, three, four years ago,” Arbid said. However, he added, “For those that are coming in queue now, that doesn’t mean that they shouldn’t position — because it’s a cycle, right? But now, I think they’re more deliberate about it — they say you need to commit to the country.”
    One example is the kingdom’s headquarters law, which went into effect on Jan. 1, 2024, and requires foreign companies operating in the Gulf to base their Middle Eastern HQ offices in Riyadh if they want contracts with the Saudi government.

    In the shadow of regional war

    The glitzy conference, held in the opulent Ritz-Carlton Riyadh, also takes place against the backdrop of regional war and just over a year after Israel launched its war on Hamas in Gaza.
    In that time, attacks between Israel and Iranian proxies including Hezbollah and Yemen’s Houthis have soared, with the Jewish state invading Lebanon in September. The region has been on tenterhooks awaiting Israel’s avowed revenge against Iran for its missile barrage over Tel Aviv and other parts of the country on Oct. 1.
    Early on Saturday, Israel struck military sites in Iran targeting missile manufacturing factories. Israel’s military later said it had completed “targeted” attacks in Iran, adding that it was ready to “conduct defensive and offensive action.”
    Oil prices and the Saudi economy appear to so far have stayed largely unscathed, dropping 4% early Monday after Israel’s weekend strike on Iran. A key reason for that may be the rapprochement deal the kingdom signed with Iran, brokered by China, in March 2023.

    “Saudi has done a phenomenal job recently of shielding itself from geopolitical events,” Arbid said.
    That is also aided by the fact that local investors make up the majority of market participants, and local investor confidence is strong. The Tadawul All Shares Index, Saudi Arabia’s leading stock market index, is up 16.48% in the last year.
    Still, some analysts in the region warn that the expanding crises in the Middle East have the potential to cause further instability.
    “The war has gradually escalated to the point where there is a de-facto regional war,” Aziz Alghashian, director of research at the Observer Research Foundation Middle East, told CNBC. “The ongoing war is not only a geopolitical crisis, but the continuation of it has potential to create more radicalization in and around the region.”
    “Attracting FDI and tourism, while maintaining oil prices at a desired level, are key for keeping Saudi Arabia’s mega projects and diversification plans on track,” Alghashian said.
    “This of course is complicated by regional war, and so economy and security go very much hand in hand.” More

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    Global Economic Leaders Confront a New Era of Industrial Policy

    Policymakers brace for more protectionism and the demise of “neoliberalism” if Donald J. Trump is re-elected in the U.S.At the annual meetings of the International Monetary Fund and the World Bank this week, Kristalina Georgieva, the head of the I.M.F., expressed a mix of relief and trepidation about the state of the world economy.Policymakers had tamed rapid inflation without causing a global recession. Yet another big economic problem loomed. Rising protectionism and thousands of new industrial policy measures enacted by countries around the world over the last year are threatening future growth prospects.“Trade, for the first time, is not the engine of growth,” Ms. Georgieva said at an event sponsored by the Bretton Woods Committee.Economic policymakers who convened in Washington showed little indication that they might heed the warnings.Eighty years after the International Monetary Fund and the World Bank were created to stabilize the global economy in the wake of World War II, the role of those organizations and the guiding principles behind their creation has largely fallen out of fashion. The I.M.F. and World Bank were designed to embrace a new system of economic order and international cooperation, one that would stitch the world economy together and allow rich nations to help poorer ones through trade and investment.But today, those who espouse such “neoliberal” notions of open markets are increasingly lonely voices.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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    Alabama Prison Labor Program Faces Legal Challenges

    In the back of a nondescript industrial park on the outskirts of Montgomery, Ala., past the corner of Eastern Boulevard and Plantation Way, there is a manufacturing plant run by Ju-Young, a car-part supplier for Hyundai. On a Tuesday in May, about half of the workers there — roughly 20 — were prisoners.Listen to this article with reporter commentaryThey were contracted to the company by the Alabama Department of Corrections as part of a “work-release” day labor program for inmates who, according to the state, have shown enough trustworthiness to work outside prison walls, alongside free citizens.The inmates bused there by the state make up just one crop of the thousands of imprisoned people sent to work for private businesses — who risk disciplinary action if they refuse.Sitting against a chain-link fence under the shade of a tree in the company parking lot, commiserating over small talk and cigarettes with fellow assembly workers, one of the imprisoned men, Carlos Anderson, argued that his predicament was simple. He could work a 40-hour week, at $12 an hour — and keep a small fraction of that after the state charges transportation and laundry fees, and takes a 40 percent cut of pretax wages — or he could face working for nothing at the prison.Under Alabama prison rules, there are thin lines between work incentives, forced labor and “involuntary servitude” — which reforms to the Alabama Constitution in 2022 banned. From the viewpoint of Mr. Anderson and more than a dozen other Alabama inmates interviewed by The New York Times, the ultimate message, in practice, is straightforward: Do this, or else.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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    German finance minister warns of retaliation if U.S. kicks off trade war

    German Finance Minister Christian Lindner on Friday warned that if the U.S. kicked off a trade war with the European Union, there could be retaliation.
    “Trade controversy sees never winners, only losers,” Lindner told CNBC’s Karen Tso on the sidelines of the International Monetary Fund’s annual meeting in Washington, D.C.
    Trade is a key pillar of the German economy, and the U.S. is one of its most important trading partners.

    Christian Lindner, Germany’s finance minister, during a meeting Janet Yellen, US treasury secretary, not pictured, at the annual meetings of the IMF and World Bank in Washington, DC, US, on Thursday, Oct. 24, 2024.
    Ting Shen | Bloomberg | Getty Images

    German Finance Minister Christian Lindner on Friday warned that if the U.S. kicked off a trade war with the European Union, there could be retaliation.
    “Trade controversy sees never winners, only losers,” Lindner told CNBC’s Karen Tso on the sidelines of the International Monetary Fund’s annual meeting in Washington, D.C.

    What U.S. trade policy could look like if Donald Trump were elected as president is a key issue, Lindner suggested. “In that case we need diplomatic efforts to convince whoever enters the White House that it’s not in the best interest of the U.S. to have a trade conflict with [the] European Union. We would have to consider retaliation,” he said. Lindner belongs to the pro-business Free Democratic Party which is currently in coalition with Chancellor Olaf Scholz’s Social Democratic Party.
    The U.S.’ problem with trading lies with China rather than the EU, Lindner said, adding that the EU “should not become a negative side effect” of controversy between the U.S. and China.

    Trump has floated the idea that, if he were elected, blanket tariffs of 10% to 20% could be imposed on almost all imports, no matter where they came from.
    If such a 20% tariff were implemented by the U.S., the EU’s and Germany’s gross domestic product would fall in the coming years, Reuters reported Thursday citing a study by German economic institute IW. Trade is one of the main pillars of the German economy, suggesting heightened tensions, uncertainty and tariffs would hit the country harder than others.
    Earlier this month, the German statistics office, Destatis, said that the U.S.’ importance as a trading partner for Germany has been growing. The agency said that since 2021, the U.S. had been the second-most important trade partner for Germany behind China, but in the first half of 2024, foreign trade turnover with the U.S. was higher than that with China. In 2023, around 9.9% of German exports went to the U.S., according to Destatis.

    Trade tensions between the U.S. and China, and the EU and China, have been rising throughout the year. Both the U.S. and EU have implemented higher tariffs and on some goods imported from China, citing unfair trade practices.
    China in turn has also announced higher temporary tariffs on some imports from the EU. Several probes and investigations into one another’s competition, subsidy, and other practices are also ongoing as the tit-for-tat measures continue.

    After the EU voted to impose tariffs on Chinese-made electric vehicles, Germany’s Lindner urged the union not to start a trade war. Germany had previously advocated against higher duties, raising concerns about what they could mean for the country’s struggling carmakers.
    Earlier in the week, Gita Gopinath, deputy managing director of the IMF, told CNBC that an escalation of trade and tariffs tensions between the U.S. and China would be “costly for everybody.” More

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    Russia Raises Interest Rate to 21 Percent, Its Highest in Decades

    Military spending and recruitment are causing the country’s economy to overheat, leaving regulators in a struggle to rein in rising prices.Russia’s central bank raised the cost of borrowing in the country to its highest level in more than two decades on Friday in an effort to slow inflation that is being fueled by record military spending and recruitment.The central bank raised Russia’s benchmark interest rate to 21 percent during its regular monetary policy meeting. That makes borrowing in the country even more expensive than at the start of Russia’s invasion of Ukraine in February 2022, when the central bank sharply increased interest rates to calm the economy. The effective cost of borrowing in Russia is now the highest since 2003.It was the third increase in a row, and Elvira Nabiullina, the central bank’s president, said that interest rates could rise further later this year.“We don’t see inflationary pressures slowing down,” Ms. Nabiullina, who maintains some policy independence from the Kremlin, told reporters after announcing the new rate.The increase underscores the challenges that Ms. Nabiullina faces as she tries to cool inflation, which she forecasts will average 8.8 percent this year. At that level, prices are rising more than twice as quickly as the central bank considers healthy for the Russian economy.Ms. Nabiullina implicitly blamed Russia’s war in Ukraine for the continued price increases. She said the Kremlin’s decision to raise spending by $15.5 billion next year, mostly to cover war-related costs, was overheating the economy and feeding inflation.In particular, she said, high government spending blunts the central bank’s main tool for controlling inflation — setting interest rates. This is because companies that receive military contracts are willing to take out loans at any cost to meet production deadlines.Labor shortages resulting from military recruitment during the war have also fueled inflation.The war has left hundreds of thousands of Russian men dead or seriously injured, according to Western intelligence agencies. Hundreds of thousands more have left the country to avoid being called up. And hundreds of thousands of others have joined the army to benefit from ever-rising payouts, leaving the civilian economy deprived of workers.“Spare hands no longer exist in the economy,” Ms. Nabiullina said, which leaves companies competing for workers by offering them higher wages.In turn, those rising wages spur consumer spending, further contributing to inflation.Military spending has caused a boom in the Russian economy: The International Monetary Fund said this week that Russia’s economy would grow 3.6 percent this year, 0.4 percentage points higher than its previous forecast. But economists say that the situation is breaking the balance between supply and demand, with potential long-term consequences for the country’s financial stability.Yet the Kremlin is showing no signs of letting up on war spending.“Our main priority are the goals of the special military operation,” Finance Minister Anton Siluanov told RBC, a business newspaper, this week, referring to the war in Ukraine. “We will spend as much money as we need on the battlefield, on the victory.”Oleg Matsnev More

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    Russia’s central bank raises key rate to 21% to rein in higher-than-forecast inflation

    Russia’s central bank on Friday raised its key interest rate by 200 basis points to 21%, citing consumer price increases considerably above its forecast and warning of ongoing high inflation risks in the medium term.
    The move exceeds the 100 basis-point hike expected by analysts and brings the institution’s benchmark rate to its highest since February 2003, according to Reuters.
    The key rate was previously taken up by 100 basis points to 19% in September.

    09 June 2024, Russia, Moskau: A guardhouse of the Kremlin (l) and the Foreign Ministry (M, background) stand in the center of the capital. Photo: Ulf Mauder/dpa (Photo by Ulf Mauder/picture alliance via Getty Images)
    Picture Alliance | Picture Alliance | Getty Images

    Russia’s central bank on Friday raised its key interest rate by 200 basis points to 21%, citing consumer price increases considerably above its forecast and warning of ongoing high inflation risks in the medium term.
    The key rate was taken up by 100 basis points to 19% in September.

    The Friday move exceeds the 100 basis-point hike expected by analysts and brings the institution’s benchmark rate to its highest since February 2003, according to Reuters. It was last near similar levels in February 2022, when Russia’s policymakers lifted it to 20% to soothe local markets within days of Moscow’s invasion of neighboring Ukraine.
    The bank struck a hawkish tone regarding further policy steps on Friday. In a briefing following the decision, Russian Central Bank Governor Elvira Nabiullina said that the institution’s board of directors had considered boosting the benchmark rate above 21% and leave open the possibility of further hikes at the next meeting in December, according to Google-translated comments carried by Russian state news agency Tass.
    It noted annual seasonally adjusted inflation hit an average of 9.8% in September, up from 7.5% in August. It now anticipates the print will sit in a 8.0–8.5% range by the end of 2024 — and is running “considerable above” a July forecast of near 6.5-7.0%.
    “Over the medium-term horizon, the balance of inflation risks is still significantly tilted to the upside,” the bank said in a statement. “The key risks are associated with persistently high inflation expectations and the upward deviation of the Russian economy from a balanced growth path, as well as with a deterioration in foreign trade conditions.”
    The bank anticipates annual inflation will decline to 4.5–5.0% in 2025 and to 4.0% in 2026.

    Russia’s economy has been constrained by depressed global prices for its key oil exports and by Western sanctions, which have restricted trade to deplete Moscow’s coffers for the war in Ukraine and contributed to declines in the ruble. The U.S. dollar was up 0.36% against the ruble at 12:52 p.m. London time.
    The Russian interest rate hikes — which take place at a time when the European Central Bank and the U.S. Federal Reserve are embarking on steps to ease monetary policy — have raised concerns over a potential stifling of the nation’s economic growth.
    The International Monetary Fund forecasts Russia’s inflation will average 7.9% this year, noting in its World Economic Outlook of October that the country’s GDP will decline from 3.6% this year to 1.3% in 2025, “as private consumption and investment slow amid reduced tightness in the labor market and slower wage growth.” More