Evelyn Reynolds

A new car would cost about $5,790 more if President Donald Trump’s plans for 25% tariffs on Mexico and Canada go into effect, according to an estimate from Benchmark.
Benchmark found that more than 22% of finished cars and about 40% of auto parts come to America from the two trading partners.
The auto industry is among the “most exposed” to the risk of higher tariffs, the investment bank said.

In an aerial view, Chevrolet cars and trucks are on display at Novato Chevrolet on Jan. 28, 2025 in Novato, California.
Justin Sullivan | Getty Images

Americans shopping for cars may need to fork over thousands more if President Donald Trump’s proposed tariffs go into effect, according to data from investment bank Benchmark Co.
Analyst Cody Acree estimated that the average sticker price would rise about $5,790, based on the impact of the currently paused 25% levies on cars and components from Mexico and Canada. That would raise the cost of an average new car above $54,500, or nearly 12% higher than in 2024.

“We believe the Auto sector is the most exposed to the risks of increased tariffs,” Acree wrote in a note to clients, “given its sheer size of trade dollars, the complexity of the intertwined supply and manufacturing channel that has been cultivated over decades, and the sheer number of our companies that participate in support of this key consumer industry.”
Trump slapped 25% tariffs on Canada and Mexico at the start of February, briefly rocking markets, but later suspended the duties for one month after reaching tentative agreements with Prime Minister Justin Trudeau and President Claudia Sheinbaum.
Now, consumers and investors alike wonder what form tariffs will take, or if they’ll go into effect at all. Benchmark calculated what 25% levies would mean for the average American’s buying power on a popular big-ticket purchase.
Benchmark’s estimated higher costs for a car is based on more than 22% of finished automobiles sold in the U.S. coming from Mexico and Canada last year. On top of that, the firm said about 40% of parts used in vehicles also come to America from its North American partners.
That amounts to more than $200 billion worth of exports to America last year. Specifically, Acree found that Mexico supplied $95 billion in completed cars to the U.S., in addition to $68 billion in parts in 2024. Canada provided more than $36 billion worth of finished cars and nearly $16 billion in components.

During an industry event this week, Ford Motor CEO Jim Farley said Trump’s proposed tariffs on Canada and Mexico, combined with 25% fees on steel and aluminum imports, have created headaches.
“President Trump has talked a lot about making our U.S. auto industry stronger, bringing more production here, more innovation in the U.S., and if his administration can achieve that, it would be one of … the most signature accomplishments,” Farley said during a Wolfe Research investment conference. “So far what we’re seeing is a lot of cost, and a lot of chaos.”
— CNBC’s Michael Wayland contributed to this report. More

The CPI accelerated a seasonally adjusted 0.5% for the month, putting the annual inflation rate at 3%, both higher than expected. The core CPI ran at 0.4% and 3.3% respectively, also above forecast.
Shelter costs continued to be a problem for inflation, rising 0.4% on the month. Food prices jumped 0.4% and energy prices climbed 1.1% as gasoline prices increased 1.8%.
Markets largely expect the Fed to stay on hold for an extended time and pushed the next rate cut probability out to September following the CPI report.

Inflation perked up more than anticipated in January, providing further incentive for the Federal Reserve to hold the line on interest rates.
The consumer price index, a broad measure of costs in goods and services across the U.S. economy, accelerated a seasonally adjusted 0.5% for the month, putting the annual inflation rate at 3%, the Bureau of Labor Statistics reported Wednesday. They were higher than the respective Dow Jones estimates for 0.3% and 2.9%. The annual rate was 0.1 percentage point higher than December.

Excluding volatile food and energy prices, the CPI rose 0.4% on the month, putting the 12-month inflation rate at 3.3%. That compared with respective estimates for 0.3% and 3.1%. The annual core rate also was up 0.1 percentage point from December.

Markets tumbled following the news, with futures tied to the Dow Jones Industrial Average sliding more than 400 points while bond yields scaled sharply higher.
“The ‘wait and see’ Fed is going to be waiting longer than anticipated after a red-hot January CPI inflation report,” wrote Josh Jamner, investment strategy analyst at ClearBridge Investments. “This report puts the final nail in the coffin for the rate cut cycle, which we believe is over.”
Indeed, market pricing shifted the outlook for the next rate cut to at least September, even as Fed Chair Jerome Powell said he would offer “a note of caution” about reading too much into the CPI report.
“We don’t get excited about one or two good readings and we don’t get excited about one or two bad readings,” Powell said in testimony before the House Financial Services Committee. He added that the Fed more closely adheres to the Commerce Department’s personal consumption expenditures prices gauge, which will get more clarity following Thursday’s producer price index report from the BLS.

Shelter costs continued to be a problem for inflation, rising 0.4% on the month and accounting for about 30% of the entire increase, the BLS said. Within the category, a metric in which homeowners estimate what they could get if they rented their homes increased 0.3% on the month and was up 4.6% on an annual basis.

“Shelter costs continue to be the main driver of core inflation as higher mortgage rates push more Americans into a rental market in which vacancy rates are near record lows,” said Erik Norland, chief economist at CME Group. “Traders appear to believe that today’s data make additional Fed cuts less likely than they had expected previously.”
Food prices jumped 0.4%, pushed by a 15.2% surge in egg prices related to ongoing problems with avian bird flu that have forced farmers to destroy millions of chickens. The bureau said it was the largest increase in egg prices since June 2015 and it was responsible for about two-thirds of the rise in food-at-home prices. Egg prices have soared 53% over the past year.
Nonalcoholic beverages posted a 2.2% gain over the past 12 months, while in January tomatoes fell 2% and other fresh vegetables declined 2.6%.
New vehicle prices were flat, but used cars and trucks saw a 2.2% increase and motor vehicle insurance was up 2%, pushing the annual gain to 11.8%. Energy prices climbed 1.1% as gasoline prices rose 1.8%.
The report comes a day after Powell indicated the central bank could be on hold for a while when it comes to interest rates. Powell told members of the Senate Banking Committee that he thinks the Fed doesn’t need to be in a rush to lower rates as it evaluates progress on inflation and as President Donald Trump continues plans to levy tariffs against imports.
Markets largely expect the Fed to stay on hold for an extended time and pushed the next rate cut probability out to September following the CPI report, according to CME Group data. Traders also implied about a 70% probability that the Fed will cut only once this year.
Trump, though, is still pushing for lower rates. In a post on Truth Social about half an hour before the CPI release, the president said, “Interest Rates should be lowered, something which would go hand in hand with upcoming Tariffs!!!”
The CPI release, though, could complicate further easing in monetary policy.
The jump in prices ate into worker paychecks, as the CPI increase entirely offset the 0.5% move higher in average hourly earnings, the BLS said in a separate release.
Correction: Josh Jamner is an investment strategy analyst at ClearBridge Investments. An earlier version misspelled his name.

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A pillar of President Trump’s policies has been tariffs, which are taxes on products imported from other countries. He has imposed or threatened to impose them as a way to influence global supply chains, raise revenue and extract concessions from other countries. But what can often be lost amid proclamations targeting other countries is who […] More

The outlook for the January CPI calls for a monthly increase of 0.3% for the all-items index and a 12-month inflation rate of 2.9%. Core readings are projected at 0.3% and 3.1%, respectively.
Things only get more complicated from here as President Donald Trump’s tariffs could act as an inflationary counterweight to an otherwise disinflationary trend.

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

The January consumer price index report is likely to tell a familiar story: another month, another expected miss for inflation as it relates to the Federal Reserve’s goal, with concerns aplenty about what happens from here.
So instead of looking for hope from the headline readings, which aren’t expected to change much from December, markets will pore through the details for trends that could shed some hope that the Fed eventually will be able to start lowering rates again.

“Inflation is stuck above target, with risks skewed to the upside, activity is strong, and the labor market appears to have stabilized around full employment,” Bank of America economist Stephen Juneau said in a note. “If our January CPI forecast is correct, the case for the Fed to stay on hold will strengthen further.”
Bank of America is one of the most pessimistic voices on Wall Street in terms of expecting further Fed easing.
In fact, the bank’s economists believe the Fed will stay on hold for the rest of the year — and beyond — as inflation holds higher, the labor market remains strong and the economy generally stays out of the kind of trouble that would necessitate rate cuts. Traders otherwise figure the Fed to approve a quarter percentage point reduction in July and then stay put, according to CME Group data.
More immediately, Bank of America’s forecast pretty much meshes with the Dow Jones outlook for January CPI: a monthly increase of 0.3% for the all-items index and a 12-month inflation rate of 2.9%, the latter the same as December. Excluding food and energy, the respective core readings are projected at 0.3% and 3.1%, the annual mark just a notch down from the 3.2% reading in December.
From a details standpoint, increases are likely to be driven by rises in car prices and auto insurance as well as communications, according to Goldman Sachs. The firm expects only moderate downward pressure from airfares and, importantly, the rent-related categories that make up about one-third of the CPI weighting and have been largely responsible for inflation holding above the Fed’s 2% goal.

Things only get more complicated from here.

Optimism despite tariff concerns

While economists expect a good share of disinflation from some key categories, President Donald Trump’s tariffs could act as an inflationary counterweight.
“Going forward, we see further disinflation in the pipeline over the next year from rebalancing in the auto, housing rental, and labor markets, but an offset from an escalation in tariff policy,” Goldman economists said in a note.
There’s been some good news lately, though. While the University of Michigan’s consumer survey showed a surprising bump in inflation expectations, other measures indicate the outlook is actually softening.
The National Federation of Independent Business survey for January showed that just 18% of the small business gauge reported inflation as being their biggest issue, the lowest level since November 2021. Also, the Cleveland Fed’s first-quarter Survey of Firms’ Inflation Expectations showed that CEOs and other top executives see CPI to run at a 3.2% rate over the next 12 months. While that’s well above the 2% standard, it is a sharp drop from the 3.8% in the fourth quarter.
Amid the conflicting information, the Fed is expected to stay put.
Fed Chair Jerome Powell on Tuesday said the central bank is in no rush to cut rates further, while Cleveland Fed President Beth Hammack noted the persistence of inflation that could be exacerbated by tariffs as reason to stay put.
“While monetary policy needs to be forward-looking in nature, forecasts are no substitute for realizations. Or as they might have put it in Jerry Maguire, ‘show me the low inflation,'” Hammack said. More

Ursula von der Leyen (CDU, r), President of the European Commission, stands in the plenary chamber of the European Parliament.
Philipp von Ditfurth | Picture Alliance | Getty Images

The European Union plans to retaliate against the United States for new steel and aluminum tariffs, adding another element to rising global trade tensions.
“Unjustified tariffs on the EU will not go unanswered — they will trigger firm and proportionate countermeasures,” European Commission President Ursula von der Leyen said in a statement late Monday.

The statement comes after U.S. President Donald Trump signed an executive order to impose 25% tariffs on steel and aluminum. Shares of American steelmakers rallied sharply on Monday following the order.
Tariffs are effectively a tax paid to import a good into a country. The latest tariffs could raise the price of foreign steel, and thereby help to support U.S. steel producers at the expense of international competitors. Von der Leyen called tariffs “bad for business, worse for consumers.”
Trump has taken an aggressive approach with tariffs early in his second tenure in the White House. He has already ordered tariffs on China, Canada and Mexico. The Canada and Mexico tariffs have since been delayed one month.
Europe is not alone in pushing back against the U.S. tariffs. Last week, China announced new levies against select U.S. imports.
Reuters has reported that von der Leyen is scheduled to meet U.S. Vice President JD Vance on Tuesday.
The rising trade tensions come at a time when inflation, both in the U.S. and globally, has yet to completely return to pre-pandemic levels. Some economists warn that tariffs could be passed on to consumers in the form of higher prices, which would push up inflation.

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Duties of 25 percent on steel and aluminum will flow through to car buyers, beer drinkers, home builders, oil drillers and other users of metal goods.America has seen this movie before: President Trump, who imposed stiff tariffs on Monday on imported steel and aluminum, did so once before, in 2018. So domestic industries have a pretty good idea of how the story ends.Manufacturers of trucks, appliances and construction equipment scramble to find U.S. sources of metal inputs, keeping steel and aluminum producers busier than they were before. Companies that need specific alloys that aren’t made domestically are forced to pay more. Prices rise, making end products more expensive.But there may be plot twists along the way. Will Mr. Trump cut deals with some countries, allowing large shipments in without the new duties? Will he set up a process to give companies a reprieve if they can demonstrate a hardship? (On Monday, a White House official said there would be no exclusions.)All of those could affect the outcome, which is why steel users are proceeding with caution. Angela Holt, who runs a precision machining company and heads the board of the Indiana Manufacturers Association, says the potential impacts on businesses are “complex.”“It could affect not only the cost but the availability, depending on their situation,” Ms. Holt said. “It’s highly varied, even among industries — I think it’s going to depend on an individual basis where they source their materials, what the competition looks like.”Lessons From Last TimeAlthough the American steel and aluminum industries are far weaker than they were in their heyday in the 1970s, U.S. companies import only about 26 percent of the steel they use, according to the International Trade Administration, and that number has been falling.Aluminum and Steel Prices Remain Elevated PostpandemicProducer price indices show a slight increase after tariffs were imposed in 2018, but lockdowns and increased demand for goods made a bigger impact two years later.

Source: Bureau of Labor StatisticsBy 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

Trump said Friday that he would announce reciprocal tariffs — duties that match those levied on U.S. goods by respective countries — as soon as Tuesday, to take effect immediately.
Most economies in Asia had higher average tariffs on imports compared with the U.S. as of 2023, Barclays said, citing data from the World Trade Organization.
“Just because these economies have dodged tariffs for now, [it] doesn’t mean they can breathe easy,” Stefan Angrick, senior economist at Moody’s Analytics told CNBC. “Washington’s mood could shift and tariffs could still be imposed later.”

PORTSMOUTH, UNITED KINGDOM – OCTOBER 28: The container ship Vung Tau Express sails loaded with shipping containers close to the English coast on October 28, 2024 in Portsmouth, England.  
Matt Cardy | Getty Images News | Getty Images

As the specter of Donald Trump’s reciprocal tariffs looms, several Asian economies that enjoy substantial trade surpluses with Washington are scrambling to negotiate favorable solutions with the U.S president to prevent being slapped with higher duties.
Trump said Friday that he would announce reciprocal tariffs — duties that match those levied on U.S. goods by respective countries — as soon as Tuesday, to take effect immediately. Trump did not identify which countries will be hit but indicated it would be a broad effort to help eliminate U.S. trade deficits.

While the details remain unclear, “it is likely that U.S. import tariffs will rise for most emerging Asian economies,” a team of analysts at Barclays said Monday, with the exceptions of Singapore and Hong Kong, with which the U.S. enjoys trade surpluses.
Based on World Trade Organization estimates, most economies in Asia applied higher average tariffs on imports compared with the U.S. as of 2023. India led with a 17% simple average rate on countries with the most-favored-nation status, compared with the U.S. that levies 3.3%. The U.S. enjoys MFN status with most major economies, except Russia. 

China topped trade surplus with the U.S. last year at $295.4 billion, followed by Vietnam’s $123.5 billion, Taiwan’s $74 billion, Japan’s $68.5 billion and South Korea’s $66 billion, according to U.S. Census bureau.
“Just because these economies have dodged tariffs for now, [it] doesn’t mean they can breathe easy,” Stefan Angrick, senior economist at Moody’s Analytics told CNBC, stressing that “Washington’s mood could shift and tariffs could still be imposed later.”
These countries, except for Vietnam, were spared in Trump’s opening tariff salvo thanks to their deep security ties with Washington and large investments in the U.S., Angrick said, but “they shouldn’t get too comfortable.”

Vietnam braces for fallout

Vietnam is “undoubtedly one of the most exposed economies” to being a target of Trump’s trade restrictions, due to its large surplus with the U.S. and sizeable Chinese investment in the country, Angrick said.

Garment factory workers working in a factory in Hanoi, Vietnam on May 24, 2019.
Manan Vatsyayana | AFP | Getty Images

Vietnam’s trade surplus with the U.S. soared nearly 18% annually to a record high last year. The country’s simple average tariff rate on MFN partners stood at 9.4%, according to WTO data.
Beverages and tobacco imported into the country face up to 45.5% tariffs on average, while categories such as sugars and confectionery, fruits and vegetables, clothing and transport equipment are subjected to tariffs between 14% and 34%.
Trump, who in 2019 called Vietnam “almost the single worst abuser” of trade practices, has not made any public remarks about the nation after his re-election in November.
Hanoi has made efforts in recent months to find compromises with Washington on trade. In November, the country vowed to buy more aircraft, liquified natural gas and other products from the U.S.
Vietnamese Prime Minister Pham Minh Chinh last week asked Cabinet members to prepare for the impact of a possible global trade war this year.
Vietnam was a major beneficiary of the trade barriers Trump imposed on Beijing in his first term, which spurred manufacturers to shift production out of China. Consequently, the Southeast Asian nation became one of the largest recipient of foreign direct investment from China.
The U.S. may double its tariffs on Vietnam to 8% if it enforces “full tariff reciprocity,” Michael Wan, senior currency analyst at MUFG Bank said in a note on Monday. That said, he expects a less extreme U.S. stance on the country, with “some sector-specific tariffs” as a more likely possibility.

India readies concessions

India could be the most vulnerable to “reciprocal” tariffs as it imposes duties on U.S. imports that are significantly steeper than U.S. levies on shipments from India, according to estimates by several research firms.
U.S. tariffs on India could rise to above 15% from 3% currently, according to MUFG Bank’s Wen.
New Delhi in its union budget earlier this month reduced tariffs on a range of products including motorcycles, electronic goods, critical minerals and lithium ion batteries. Finance Secretary Tuhin Kanta Pandey said in an interview that “we are signaling that India is not a tariff king.”
Indian Prime Minister Narendra Modi is reportedly prepared to discuss further tariff cuts across a dozen sectors and buying more energy and defense equipment from the U.S. at his meeting with Trump later this week.

Narendra Modi, India’s prime minister, left, and U.S President Donald Trump, arrive for a news conference at Hyderabad House in New Delhi, India, on Tuesday, Feb. 25, 2020.
T. Narayan | Bloomberg | Getty Images

India’s surplus with the U.S., its third-largest trading partner, reached $45.7 billion last year. Notably, the country’s imported agricultural goods were subjected to hefty 39% duties.
During Trump’s first term, he had warm relations with Modi, but during his campaign for re-election, Trump had called India a “very big abuser” with tariffs.
In a phone call with Modi last month, Trump emphasized the importance of India buying more U.S.-made security equipment to reach a “fair bilateral trading relationship,” according to the White House statement.
Some market watchers floated the idea that the two sides may resume discussion on the long-awaited U.S.-India free trade accord. The Joe Biden administration had reportedly rebuffed India’s interest in exploring a free trade agreement, Indian local media reported, citing the country’s commerce and industry minister.
“Such a deal now would require substantial tariff reductions by New Delhi because it has much higher tariff rates than Washington; Trump believes in some degree of reciprocity,” according to Kenneth Juster, distinguished fellow at Council on Foreign Relations.
India could also offer to shift its oil imports from Russia toward the U.S. significantly to align with Trump’s plans of boosting oil and gas exports, said Arpit Chaturvedi, South Asia adviser at Teneo.

Japan as most favored nation

Japan appears to have secured a positive relationship with Trump and could be be shielded from higher tariffs “for now,” analysts said, as Prime Minister Shigeru Ishiba wrapped up a whirlwind visit to Washington over the weekend.

U.S. President Donald Trump gifts Japanese Prime Minister Shigeru Ishiba a book during a joint press conference in the East Room at the White House on February 07, 2025 in Washington, DC. 
Andrew Harnik | Getty Images News | Getty Images

Tokyo maintains relatively low tariffs of around 3.7% on countries with MFN status, according to WTO data. That suggests “little scope for substantial increases in tariffs on Japanese goods,” Kyohei Morita, chief Japan economist at Nomura said in a note Monday.
During the summit last week, Japan agreed to import more natural gas from the U.S. and expressed interest in a project to deliver LNG through a pipeline from northern Alaska.
The two leaders also agreed on a compromise that instead of acquiring U.S. Steel, Japan’s Nippon Steel will “invest heavily” in the U.S. firm. Japan will provide technology for U.S. Steel to manufacturer better quality products in the U.S., Ishiba said.
Japan, which has been the largest foreign investor in the U.S. for five straight years, also pledged to expand that investment to $1 trillion, from $783.3 billion in 2023.
“While Japan may not avoid all the effects of future US tariff policies, Tokyo may avoid the targeted treatment seen with countries like Canada, Mexico, and China,” James Brady, vice president of Teneo said in a Saturday note.
“It may even hope for more lenient trade treatment than other major economies, as it appears to enjoy the status of one of Trump’s most favored nations,” Brady said.

China looks ready to talk

Chinese national flags flutter on boats near shipping containers at the Yangshan Port outside Shanghai, China, February 7, 2025. 
Go Nakamura | Reuters

Beijing’s tit-for-tat measures — including 15% levy on U.S. coal, liquified natural gas, 10% duties on crude oil, farming equipment, cars and pickup trucks — are believed to be modest and restrained.
The tariff package is estimated to cover $13.9 billion worth of China’s imports from the U.S. in 2024, according to data compiled by Nomura, accounting for 8.5% of China’s total U.S. imports and just 0.5% of China’s total imports.
That is significantly lower than the $50 billion worth of U.S. goods targeted during Trump’s first term, said Tommy Xie, head of Asia macro research at OCBC Bank in a note on Monday.
The “calibrated approach” signaled that “China is opting for a more diversified response,” with non-tariff countermeasures such as export controls and regulatory probes into U.S. corporates, while also “leaving room for further negotiations,” Xie added. More

President Trump announced sweeping tariffs on foreign steel and aluminum on Monday, re-upping a policy from his first term that pleased domestic metal makers but hurt other American industries and ignited trade wars on multiple fronts.The president signed two official proclamations that would impose a 25 percent tariff on steel and aluminum from all countries. Mr. Trump, speaking from the Oval Office on Monday evening, called the moves “a big deal — making America rich again.”A White House official who was not authorized to speak publicly told reporters on Monday that the move was evidence of Mr. Trump’s commitment to use tariffs to put the United States on equal footing with other nations. In contrast to Mr. Trump’s first term, the official said, no exclusions to the tariffs for American companies that rely on foreign steel and aluminum will be allowed.The measures were welcomed by domestic steelmakers, who have been lobbying the Trump administration for protection against cheap foreign metals.But the tariffs are likely to rankle America’s allies like Canada and Mexico, which supply the bulk of U.S. metal imports. They could also elicit retaliation on U.S. exports, as well as pushback from American industries that use metals to make cars, food packaging and other products. Those sectors will face significantly higher prices after the tariffs go into effect.That is what happened in Mr. Trump’s first term, when the president levied 25 percent tariffs on foreign steel and aluminum. While Mr. Trump and President Joseph R. Biden Jr. eventually rolled back those tariffs on most major metal suppliers, the levies were often replaced with other trade barriers, like quotas on how much foreign metal could come into 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