Evelyn Reynolds

Liquor is leverage as the world careens toward another trade dispute. European tariffs on American whiskey snap back after March 31 unless an extension is granted.Liquor lobbyists gathered in a ritzy private club on a recent rainy evening in Brussels to swill cocktails with names like “Toasts Not Tariffs” and fret over the potential disaster confronting their industry. Again.Seven years ago, the spirits industry found itself a casualty in a worldwide trade war as President Trump unleashed tariffs on America’s partners. The European Union retaliated with a spate of tariffs that included a 25 percent charge on American whiskey — aiming to deliver a blow to Senator Mitch McConnell, Republican of Kentucky and the then majority leader. A series of tit-for-tat tariffs followed, hitting spirits from rum to cognac on both sides of the Atlantic.The levies were suspended during the Biden administration, but with Mr. Trump back in office and trying to rewrite the rules of global trade once again, alcohol is back in the crossfire.The European Union suspended the tariffs in question in 2021 and extended that decision in 2023, but the hiatus lasts only until March 31. After that, ramped-up tariffs of 50 percent will automatically apply to American whiskey, and charges will hit a range of other goods, including motorcycles.But it is the spirits industry that has been the most vocal about the risks the levies pose. Industry leaders and craft distillers say the taxes would decimate their export business, especially in growth markets like Germany and France, while risking retaliatory tariffs that would hit other kinds of alcohol.Bars have been importing extra bottles to try to get ahead of a trade war, distilleries have been putting overseas expansion plans on ice, and industry leaders have been flocking to Brussels, Washington and Rome, where Prime Minister Giorgia Meloni has become Mr. Trump’s bridge to Europe, to try to convince policymakers to help them avoid the looming pain of 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

Rows of white concrete buildings near the Pearl River in southern China house one of the world’s fastest-growing industries: Gritty workshops are churning out inexpensive clothing that is exported straight to homes and small businesses around the world. No tariffs are paid, and no customs inspections are conducted.The laborers who make these goods earn as little as $5 an hour, including overtime, for workdays that can last 10 hours or more. They pay $130 a month to sleep on bunk beds in tiny rooms above factories packed with sewing machines and mounds of cloth.“It’s hard work,” said Wu Hua, who sews pants, seven days a week, at a factory in Guangzhou, a vast metropolis that straddles the Pearl River.E-commerce giants have forged close links from international markets to workers like Mr. Wu, shaking retailing and economies around the globe.The number of duty-free shipments to the United States has risen more than tenfold since 2016, to four million parcels per day last year. Similar shipments to the European Union have climbed even faster, reaching 12 million parcels a day last year. Duty-free shipments to developing countries like Thailand and South Africa have also surged.Now a global backlash is underway. President Trump ordered a halt on Feb. 4 to the duty-free entry, without inspection, of parcels with goods worth up to $800. Mr. Trump temporarily suspended his order to give officials time to devise a plan for dealing with the mounds of parcels that immediately started piling up at airports for inspection.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

President Trump on Thursday set in motion a plan for new tariffs on other countries globally, an ambitious move that could shatter the rules of global trading and is likely to set off furious negotiations.The president directed his advisers to come up with new tariff levels that take into account a range of trade barriers and other economic approaches adopted by America’s trading partners. That includes not only the tariffs that other countries charge the United States, but also the taxes they charge on foreign products, the subsidies they give their industries, their exchange rates, and other behaviors the president deems unfair.The president has said the step was necessary to even out America’s “unfair” relationships and stop other countries from taking advantage of the United States on trade. But he made clear that his ultimate goal was to force companies to bring their manufacturing back to the United States.“If you build your product in the United States, there are no tariffs,” he said during remarks in the Oval Office.Howard Lutnick, the president’s nominee for commerce secretary, said the measures could be ready as soon as April 2. He will oversee the plan along with Jamieson Greer, Mr. Trump’s pick for trade representative, if they both are confirmed to those posts, and other advisers.The decision to rework the tariffs that America charges on imported goods would represent a dramatic overhaul of the global trading system. For decades, the United States has set its tariff levels through negotiations at international trade bodies like the World Trade Organization.Import Taxes Around the WorldThe average tariff rate the United States charges for imports is relatively low compared with that of most other countries. In general, wealthier countries tend to levy lower tariffs than poorer ones. More

Defense stocks dropped sharply Thursday afternoon after President Donald Trump suggested the U.S. could massively cut defense spending.
Trump has sent mixed messages on military spending throughout his 2024 campaign and in the early days of his presidency.

U.S. President Donald Trump sits in the Oval Office of the White House in Washington on Feb. 13, 2025.
Kevin Lamarque | Reuters

Defense stocks dropped sharply Thursday afternoon after President Donald Trump suggested the U.S. could massively cut defense spending.
Trump said Thursday at the White House the U.S. could cut defense spending in half at some point in the future. The comments came in the context of Trump discussing a potential conference on defense spending with China and Russia.

“At some point, when things settle down, I’m going to meet with China and I’m going to meet with Russia, in particular those two, and I’m going to say there’s no reason for us to be spending almost $1 trillion on the military … and I’m going to say we can spend this on other things,” Trump said.
“When we straighten it all out, then one of the first meetings I want to have is with President Xi of China and President Putin of Russia, and I want to say let’s cut our military budget in half. And we can do that, and I think we’ll be able to do that,” he added.
Defense stocks that had been higher earlier in the day quickly fell. Shares of Lockheed Martin dropped 1.6%, Northrop Grumman sank 3.4% and General Dynamics lost 2.1%.
Trump has sent mixed messages on military spending throughout his 2024 campaign and in the early days of his presidency.
On one hand, Trump has enlisted Elon Musk and the so-called Department of Government Efficiency to find places to cut costs throughout the government. Trump has also pushed for a quick resolution of the war in Ukraine, which has involved the purchase of a lot of American weapons.

On the other hand, he has touted the importance of having a strong military and signed an executive order to explore building an “Iron Dome of America” missile defense system. Trump also said Thursday that the U.S. has the “greatest military equipment in the world.”
“Right now, people are confused by a number of different crosscurrents” on defense spending, TD Cowen policy analyst Roman Schweizer told CNBC last week.

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The producer price index increased by a seasonally adjusted 0.4% on the month, compared with the Dow Jones estimate for 0.3%.
Stock market futures moved slightly higher following the release while Treasury yields fell. Wall Street strategists cited details of the report that suggested a slightly more benign inflation picture.

A gauge of wholesale prices rose more than expected in January, though some details of the report indicated that pipeline inflation pressures are easing.
The producer price index, which measures what producers get for their goods and services, increased by a seasonally adjusted 0.4% on the month, compared with the Dow Jones estimate for 0.3%, the Bureau of Labor Statistics reported Thursday.

Excluding food and energy, the core PPI was up 0.3%, in line with the forecast.
Stock market futures moved higher following the release while Treasury yields were sharply lower, despite the higher-than-expected headline number. Wall Street strategists cited details of the report that suggested a slightly more benign inflation picture.
In particular, some costs related to health care showed easing — physician care, for instance, fell 0.5%. Also, domestic airfares declined by 0.3% and brokerage services prices were off 2.2%.
Over the past year, the all-items PPI increased 3.5%, well ahead of the central bank’s objective. Futures pricing indicates the market now does not expect the Fed to lower its benchmark interest rate again until October.
While the producer and consumer price index releases are widely cited inflation gauges, they are not the principal ones the Fed uses. Rather, the central bank focuses on the personal consumption expenditures prices index, which the Commerce Department will release later in February. The PPI and CPI releases do feed into that measure.

Fed Chair Jerome Powell on Wednesday noted the Fed’s greater focus on the PCE measure, while telling the House Financial Services Committee that “we’re not quite there yet” on inflation though he cited “great progress” made so far.
Putting the data together, the core PCE measure likely will show a 0.22% increase, down from 0.45% in December, according to Citigroup estimates. That would push the annual inflation rate down to 2.5%, the firm said.
The PPI release comes the day after the BLS reported that the consumer price index rose 0.5% on the month, putting the annual inflation rate at 3% and well out of reach of the Fed’s 2% long-run goal.
Together, the reports are pushing back expectations for a rate cut until the second half of the year, though inflation data can be volatile and the outlook could change depending on what subsequent months show.
“Wholesale price growth came in slightly higher than expected for January, and the read for December was adjusted upward,” said Elizabeth Renter, senior economist at personal finance site NerdWallet. “In other words, inflation at the producer level remains high, and one concern is that this inflation could ultimately be passed along to consumers.”
Revisions to the December numbers also complicated the inflation picture, with the gain now put at 0.5%, compared with the 0.2% increase previously reported.
In January, producer prices for services increased 0.3% while goods rose 0.6%. Services prices were led by a 5.7% jump in the traveler accommodation services category, which the BLS said accounted for more than one-third of the gain.
On the goods side, a 10.4% surge in diesel fuel costs was a significant factor. The PPI data also reflected the massive jump in egg prices as farmers destroy millions of chickens to prevent the spread of avian flu. Eggs for fresh use exploded 44% higher on the month and were up 186.4% from a year ago.
In other economic news Thursday, the Labor Department reported that initial filings for unemployment claims changed little for the week ended Feb. 8. Claims totaled 213,000, a decrease of 7,000 from the prior period and close to the 215,000 estimate. Continuing claims, which run a week behind, fell to 1.85 million, down 36,000.

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Hedge fund titan Ray Dalio issued a fresh warning about the U.S. economy, warning of dire consequences if debt is not significantly cut.
He stressed that governments are responsible, and that leaders should make a pledge to reduce the U.S. budget deficit from 7.5% to 3% of gross domestic product or resign.
U.S. gross national debt stood at approximately $36.22 trillion as of Feb. 11.

DUBAI, United Arab Emirates — Hedge fund titan Ray Dalio issued a fresh warning about the U.S. economy, warning of dire consequences if the Trump administration does not cut the country’s debt.
“It’s like if I was a doctor and I was speaking with you about your condition, I would say to you, this is now very, very serious. All of these are major problems,” Dalio told CNBC’s Dan Murphy at the World Governments Summit in Dubai. “What you need to do is cut your deficit from about seven and a half percent of GDP to 3% of gross domestic product, and you can do that. There are certain things that you can do that cut it in a certain way that’ll make it much healthier, so the real problem is a political problem.”

The U.S. gross national debt stood at approximately $36.22 trillion as of Feb. 11, with $28.8 trillion of that as debt held by the public in the form of securities owned by individuals, corporations, state or local governments, Federal Reserve banks, foreign governments, and other entities outside the U.S. government. 
High debt means the government spends more on interest payments and is more economically vulnerable in the event of future economic crises. It also leads to higher inflation and creates a burden for future generations.

“I want to alert people. I want to alert government officials,” the billionaire Bridgewater Associates founder said. “I want to help, you know, and so I feel like the doctor, and then I would say everybody, politically … if this doesn’t happen, and we have the equivalent of, you know, an economic heart attack, or a heart attack of the bond market, then you know who’s responsible, because it can happen.”
“So it requires the same kind of discipline as if I was to say to you, OK, you need to change how you eat, you need to change your exercise routine, and you need to do these things.”
Dalio stressed that governments are responsible, and that leaders should make a pledge to reduce the U.S. budget deficit from 7.5% to 3% of its GDP or resign.

When asked what his message was to the Trump administration, Dalio replied:
“I think they recognize the problem, and then in the actions that are being taken, how do you cut costs? How do you raise productivity? … Make sure that you really know what you’re doing and you’re practical, and do it on … the conservative side, because you know, how much can the cutting actually be? We’ll see, and what are the consequences of the cutting and each one of those. So you better take a sharp pencil and be conservative.”
Dalio also warned of debt in private credit, saying a “debt death spiral is that part of the cycle, when the debtor needs to borrow money in order to pay debt service, and it accelerates, and then everybody sees that, and they don’t want to hold the debt. That’s where we’re approaching.”
Dalio’s Bridgewater Associates is one of the world’s largest hedge funds. It had $171.7 billion in assets under management as of September 2023, according to the U.S. Securities & Exchange Commission. More

A Fed interest rate cut won’t be coming until at least September, if at all this year, following a troubling inflation report Wednesday.
Chair Jerome Powell, in an appearance before the House Financial Services Committee, insisted the Fed had made “great progress” on inflation from its cycle peak “but we’re not quite there yet.”

Cartons of eggs are displayed at a grocery store with a warning that limits will be placed on purchases as bird flu continues to affect the egg industry on Feb. 10, 2025 in New York City. 
Spencer Platt | Getty Images

A Federal Reserve interest rate cut won’t be coming until at least September, if at all this year, following a troubling inflation report Wednesday, according to updated market pricing.
Futures markets shifted from the expectation of a June cut and possibly another before the end of the year to no moves until the fall, with a minimal chance of a follow-up before the end of 2025.

“The Fed will see January’s hot inflation print as confirmation that price pressures continue to bubble beneath the economy’s surface,” Bill Adams, chief economist at Comerica, wrote in commentary that echoed others around Wall Street. “That will reinforce the Fed’s inclination to at least slow and possibly even end rate cuts in 2025.”
Reduced optimism for Fed easing came after the January consumer price index report showed a 0.5% monthly gain, pushing the annual inflation rate to 3%, a touch higher than December and only slightly lower than the 3.1% reading in January 2024. Excluding food and energy, the news was even worse, with a 3.3% rate that showed core inflation, which the Fed tends to rely on more, also rising and holding well above the central bank’s goal.
Fed Chair Jerome Powell, in an appearance Wednesday before the House Financial Services Committee, insisted the central bank had made “great progress” on inflation from its cycle peak “but we’re not quite there yet. So we want to keep policy restrictive for now.”

U.S. Federal Reserve Chair Jerome Powell testifies before a House Financial Services Committee hearing on “The Semiannual Monetary Policy Report to the Congress,” on Capitol Hill in Washington, D.C., U.S., February 12, 2025. 
Nathan Howard | Reuters

As the Fed targets 2% inflation and the report showed no recent progress, it also dimmed hopes that the central bank will view further policy easing as appropriate after it lopped a full percentage point off its benchmark short-term borrowing rate in 2024.
Fed funds futures trading pointed to just a 2.5% chance of a March cut; only 13.2% in May, up to 22.8% in June, then 41.2% in July and finally up to 55.9% in September, according to the CME Group’s FedWatch gauge as of late Wednesday morning. However, that would leave the probability still up in the air until October, when futures contracts pricing implies a 62.1% probability.

Odds of a second cut by the end of 2025 were at just 31.3%, with pricing not indicating another reduction until late 2026. The fed funds rate is currently targeted in a range between 4.25%-4.5%.
The issues raised in the CPI report are not happening in isolation. Policymakers also are watching White House trade policy, with President Donald Trump pushing aggressive tariffs that also could boost prices and complicate the Fed’s desire to get to its goal.
“There is no getting away from the fact that this is a hot report and with the sense that potential tariffs run upside risk for inflation the market is understandably of the view the Federal Reserve is going to find it challenging to justify rate cuts in the near future,” said James Knightley, chief international economist at ING.
While the Fed pays attention to the CPI and other similar price measures, its preferred inflation gauge is the personal consumption expenditures price index, which the Bureau of Economic Analysis will release later in February. Elements from the CPI filter into the PCE reading, and Citigroup said it expects to see core PCE fall to 2.6% for January, a 0.2 percentage point decline from December.

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President Trump pledged to lower costs on “Day 1” as a candidate. His administration now acknowledges it will take more time.President Trump promised voters that, if elected, he would enact policies that would bring prices down on “Day 1” in office.But three weeks into his term, Mr. Trump and White House officials have become more measured in how they discuss their efforts to tame inflation. They have begun downplaying the likelihood that consumer costs like groceries will decline anytime soon, reflecting the limited power that presidents have to control prices. Those are largely determined by global economic forces.The shifting tone could allow Mr. Trump to reset expectations about how fast prices will come down as he pursues policies like tariffs and tax cuts, which economists say could exacerbate inflation.Mr. Trump and his advisers believe that expanding American energy production and rolling back regulations will reduce costs. They also argue that some of Mr. Trump’s tax proposals, such as eliminating taxes on overtime, would curb inflation by giving workers more incentives to work longer hours, therefore expanding the labor force.But in an interview this week, Mr. Trump demurred when pressed about when families struggling with high prices would start to feel some relief. He suggested that his policies would make America a rich country, which would reduce the burden on consumers by, in theory, increasing their earnings.“I think we’re going to become a rich — look, we’re not that rich right now,” Mr. Trump said on Fox News. “We owe $36 trillion. That’s because we let all these nations take advantage of us.”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