The Trump administration said on Saturday it would impose stiff tariffs on Mexico, Canada and China — three countries that for decades have been the United States’ largest trading partners. Source: Census Bureau Notes: Countries with at least a 2 percent share in 2024, through November, are shown, accounting for about three-quarters of imports. The […] More
Ties between the United States and Mexico have deepened over 30 years of free trade, creating both benefits and irritants.When Dennis Nixon started working at a regional bank in Laredo, Texas, in 1975, there was just a trickle of trade across the border with Mexico. Now, nearly a billion dollars of commerce and more than 15,000 trucks roll over the line every day just a quarter mile from his office, binding the economies of the United States and Mexico together.Laredo is America’s busiest port, and a conduit for car parts, gasoline, avocados and computers. “You cannot pick it apart anymore,” Mr. Nixon said of the U.S. and Mexican economies. Thirty years of economic integration under a free trade deal has created “interdependencies and relationships that you don’t always understand and measure, until something goes wrong,” he said.Now that something is looming: 25 percent tariffs on Mexican products, which President Trump plans to impose on Saturday as he looks to pressure the Mexican government to do more to curb illegal immigration. Mr. Trump is also expected to hit Canada with 25 percent levies and impose a 10 percent tax on Chinese imports.A longtime proponent of tariffs and a critic of free trade deals, Mr. Trump seems unafraid to upend America’s closest economic relationships. He is focusing on strengthening the border against illegal immigration and the flow of fentanyl, two areas that he spoke about often during his 2024 campaign.But the president has other beefs with Mexico, including the economic competition it poses for U.S. workers. The president and his supporters believe that imports of cars and steel from Mexico are weakening U.S. manufacturers. And they say the United States-Mexico-Canada Agreement, the trade deal Mr. Trump signed in 2020 to replace the North American Free Trade Agreement, needs to be updated — or perhaps, in some minds, scrapped.Many businesses say ties between the countries run deeper than most Americans realize, and policies like tariffs that seek to sever them would be painful. Of all the world’s major economic partners, the United States and Mexico are among the most integrated — linked by business, trade, tourism, familial ties, remittances and culture. It’s a closeness that at times generates discontent and efforts to distance the relationship, but also brings many benefits.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
In the latest effort to put his stamp on the federal work force, President Trump on Friday issued a memorandum invalidating government labor contracts finalized in the last 30 days before a presidential inauguration.The policy applies to certain contracts negotiated toward the end of the Biden administration, the memo says. Such “last-minute, lame-duck” agreements, it states, “are purposefully designed to circumvent the will of the people” and “inhibit the President’s authority to manage the executive branch.”Unions at several agencies rushed to negotiate collective bargaining agreements ahead of Mr. Trump’s inauguration to preserve some practices of the previous administration, like remote work, and insulate them from changes that could make it easier to fire civil servants.The memo appears to allude to such practices, which it calls “inefficient and ineffective,” and cites an agreement with the Education Department that attempts to preserve remote work arrangements. The memo says the agreements could be undone if they have not yet been approved by an “applicable” agency head.Other agencies, like the Social Security Administration, approved new collective bargaining agreements outside the 30-day window, presumably leaving them unaffected by the memo.It was unclear if the memo would survive legal pushback initiated by federal employee unions, though it appeared to anticipate legal challenges, noting that it should remain in force if a portion alluding to prohibited bargaining agreements from the Biden administration is found to be invalid.“Federal employees should know that approved union contracts are enforceable by law, and the president does not have the authority to make unilateral changes to those agreements,” Everett Kelley, the president of the American Federation of Government Employees, said in a statement. “Members will not be intimidated. If our contracts are violated, we will aggressively defend them.” More
President Trump plans to impose stiff tariffs on Mexico, Canada and China on Saturday, a move aimed at pressuring America’s largest trading partners into accepting more migrants and halting the flow of migrants and drugs into the United States.Mr. Trump will put a 25 percent tariff on goods from Mexico and Canada, along with a 10 percent tariff on Chinese products, Karoline Leavitt, the White House press secretary, said in a news briefing Friday.Speaking to reporters in the Oval Office on Friday, Mr. Trump said the tariffs were punishment for Canada, Mexico and China allowing drugs and migrants to flood into the United States.Mr. Trump’s decision to hit America’s trading partners with tariff could mark the beginning of a disruptive and damaging trade war, one that is far messier than the conflict that defined Mr. Trump’s first term.Back then, Mr. Trump placed tariffs on nearly two-thirds of Chinese imports, resulting in China hitting the U.S. with levies of its own. Mr. Trump also imposed tariffs on steel and aluminum, inciting retaliation from the European Union, Mexico and Canada.While the tariffs against allies were viewed as controversial, they were relatively limited in scope. It remains to be seen exactly what products Mr. Trump’s new tariffs apply to, but the president has implied that they would be expansive and cover imports from Canada and Mexico, close allies of 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
Companies in the United States do not appear to be making a concerted effort to rush in shipments from Mexico and Canada ahead of the high tariffs that President Trump has threatened to impose on Saturday.Mr. Trump said after taking office that the United States would apply tariffs of 25 percent on imports from Canada and Mexico, contending that they were allowing “mass numbers of people to come in and fentanyl to come in.”The tariffs would raise the cost of imports significantly, especially since tariffs are not applied to most goods under the U.S.-Mexico-Canada Agreement, the trade deal that Mr. Trump signed in 2020. Canada and Mexico together account for 30 percent of U.S. trade. Many industries could be saddled with extra costs, including the vast auto operations that straddle the U.S. borders with Mexico and Canada.Mr. Trump could withdraw his threat or reduce the tariff if he decides Canada and Mexico are doing more to address his complaints, Howard Lutnick, the president’s nominee to lead the Commerce Department, suggested on Wednesday.With the tariff deadline near, some data shows higher freight volumes on road and rail, but the increases are not especially large, and transportation experts say rail and trucking companies have the capacity to cope. The situation, they said, is quite different from 2021 and 2022, when a deluge of imports overwhelmed supply chains, causing shipping costs to skyrocket and helping fuel a rapid acceleration of inflation.“The industry’s probably never been in a better spot to deal with significant changes in the marketplace,” said Scott Shannon, vice president of North America cross-border at C.H. Robinson, a freight forwarder.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
The personal consumption expenditures price index increased 2.6% on a year-over-year basis in December, while core PCE was at 2.8%, both in line with expectations but well ahead of the Fed’s 2% target.
Personal income climbed 0.4% as forecast, while spending rose 0.7%.
Inflation closed out 2024 on a strong note, as a price gauge the Federal Reserve focuses on came in well above the central bank’s target, the Commerce Department reported Friday.
The personal consumption expenditures price index increased 2.6% on a year-over-year basis in December, 0.2 percentage point higher than the November reading and in line with the Dow Jones estimate.
Excluding food and energy, core PCE registered a 2.8% reading, also meeting expectations and the same as the prior month. Though the Fed considers both readings, historically officials have seen core as the better gauge of long-run inflation.
On a monthly basis, headline PCE rose 0.3% while core increased 0.2%, both in line with forecasts as well.
The Fed targets annual inflation at 2%, a level the price gauge has not seen since February 2021.
Chicago Fed President Austan Goolsbee told CNBC that the PCE data was “even a little better than expected.”
“I don’t make too much of any one month, but you know, I’ve been saying that I felt like we are on path to 2%,” he said during a “Squawk on the Street” interview. “I have comfort, I won’t say overconfidence, but I have comfort that we’re on that path.”
Food prices increased just 0.2% on the month, but energy jumped 2.7%. Durable goods prices, which include items such as aircraft, appliances and electronics, showed deflation, falling 0.4%. Nondurables saw a 0.5% increase.
The report comes two days after the central bank voted unanimously to hold its key interest rate in a range between 4.25%-4.5%, taking a break after three consecutive cuts totaling a full percentage point.
“Inflation is still firmly above the Federal Reserve’s 2% target. While Friday’s PCE print was in-line with expectations, the data shows that inflation remained elevated in December to end 2024, making it somewhat ironic that the Federal Reserve cut interest rates during the same month,” wrote Clark Bellin, chief investment officer at Bellwether Wealth.
In remarks delivered Friday morning, Fed Governor Michelle Bowman said she expects inflation to decelerate through 2025, but thinks the central bank should stay on hold until there are clear signs that is happening, particularly in light of uncertainty on fiscal policy out of the Trump administration.
“There is still more work to be done to bring inflation closer to our 2 percent goal. I would like to see progress in lowering inflation resume before we make further adjustments to the target range,” Bowman said in remarks before business leaders in Portsmouth, New Hampshire. “I do expect that inflation will begin to decline again and that by year-end it will be lower than where it now stands.”
The report Friday also showed that personal income increased 0.4% in December as forecast, while spending rose 0.7%, or one-tenth of a percentage point ahead of the estimate.
In related news, the Bureau of Labor Statistics reported Friday that the employment cost index rose at a seasonally adjusted 0.9% in the fourth quarter of 2024, in line with expectations though slightly ahead of the third-quarter reading. On an annual basis, the ECI increased 3.8%, one-tenth of a point below the Q3 reading.
Correction: Consumer spending rose 0.7% in December. An earlier version misstated the metric.
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Customers waiting at the checkout in a supermarket.
Markus Scholz | Picture Alliance | Getty Images
German inflation was unchanged year-on-year at 2.8% in January, preliminary data from the country’s statistics office Destatis showed Friday in the last reading before Germans head to the polls next month.
The reading was also in line with a forecast from economists polled by Reuters. The print is harmonized across the euro area for comparability.
On a monthly basis, the harmonized consumer price index fell by 0.2%
Germany’s inflation rate has now stayed above the European Central Bank’s 2% target for the fourth month in a row, after falling below that threshold in September last year.
This roughly mirrors the development of re-accelerating inflation in the wider euro area. The European Central Bank on Thursday said that disinflation in the bloc “is well on track” and has broadly developed in line with staff projections.
Euro area inflation came in at 2.4% in December. The January figures are slated for release next week.
The January inflation print is among the final key economic data released before Germany’s election on Feb. 23, which is taking place earlier than originally scheduled after the collapse of the ruling coalition in November 2024.
Germany’s economy has been one of big topics during campaigning next to immigration, as the country has been grappling with lackluster economic growth and the renewed rise of inflation.
The government earlier this week slashed gross domestic product expectations to 0.3% for full-year 2025, after annual GDP contracted in the last two years. Quarterly growth has also been sluggish, even as the economy has so far avoided a technical recession characterized by two consecutive quarter of contraction.
Non-harmonized inflation is expected to average 2.2% this year, the government added in its annual economic report.
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Fresh tariffs amid high inflation are making the Fed’s job uniquely difficult and feeding uncertainty about what to expect for interest rates this year.High inflation is stoking fresh debate about how the Federal Reserve should respond to President Trump’s sweeping plans to reorder the world economy through tariffs, leading to questions about whether old playbooks still apply.On Saturday, Mr. Trump is poised to impose 25 percent tariffs on imports from Mexico and Canada as well as an additional 10 percent tariff on Chinese goods. That move comes on the heels of threats to impose hefty tariffs on Colombia, which were rescinded after its government complied with Mr. Trump’s demands to accept deported migrants.Howard Lutnick, Mr. Trump’s nominee to oversee the Commerce Department and trade, said at a confirmation hearing on Wednesday that he favored “across-the-board” tariffs that would hit entire countries.The volume of trade policy proposals is making the Fed’s already tricky job even more difficult and sowing uncertainty about what to expect from the central bank as it tries to fully wrestle inflation back to more normal levels.Tariffs are broadly seen by economists and policymakers as likely to stoke higher prices for U.S. businesses and consumers at least initially, and over time weigh on growth. That, as well as Mr. Trump’s plans to also enact mass deportations, steep tax cuts and reduced deregulation, has complicated the path forward for the Fed, which is debating how quickly to resume rate cuts and by what magnitude after pressing pause this week.What comes next is far from clear, leaving central bank officials to parse playbooks both old and new to formulate the right strategy.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
