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    China can outfox Trump’s tariffs

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    Macquarie strategist reflects on lessons from the Carter administration

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    The firm said the current market environment, marked by mixed economic data and rising concerns over sovereign debt, invites parallels with the challenges faced by President Jimmy Carter in the late 1970s.Macquarie notes that economic hardship during Carter’s (NYSE:CRI) presidency from 1977 to 1981 was largely beyond his control. However, his legacy includes “positive structural changes to the US economy,” particularly the appointment of Paul Volcker at the Federal Reserve. This was a pivotal decision that helped steer the country through stagflation, said Macquarie. The firm’s report highlights two key lessons from Carter’s time that remain relevant today: “(1) the importance of an independent Fed, and (2) the benefits of a well-articulated foreign policy doctrine.” These principles are seen as vital to navigating economic uncertainty, especially in an era where inflation and fiscal pressures are once again taking center stage.In today’s environment, traders are struggling to find direction, with mixed labor-market data and uncertainty surrounding the December U.S. employment report, according to Macquarie. The firm’s analysts suggest that attention should focus on the unemployment rate, which may rise to 4.3%. Meanwhile, global markets are contending with rising bond yields, particularly in the UK, where sovereign risk concerns are intensifying.For Macquarie, the lessons of the Carter era are said to provide a roadmap for modern policymakers, emphasizing the need for strong economic leadership and strategic decision-making.  More

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    ‘So Much Uncertainty’: Businesses Worry About Trump’s Many Tariff Plans

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    The incoming president has floated numerous tariff plans. Retailers say their livelihood could depend on which ultimately come to fruition.For Klem’s, a general store in rural Massachusetts, each year has seemed more challenging than the last.First, there was the pandemic, then a global supply chain breakdown that left the store short of lawn mowers and shoes. Next, a spate of inflation raided American pocketbooks. All along, Amazon continued to pull customers away from brick and mortar stores like Klem’s.Now Jessica Bettencourt, Klem’s owner, says she is facing a new challenge that has left her wondering if the store — which was started by her grandparents in 1949 — will survive. The sweeping tariffs that President-elect Donald J. Trump has promised to impose could raise the price of foreign-made products and cut into her business’s already slim profits, she says.“A huge tariff increase would potentially decimate us,” she said. “A retail store like mine has slim margins to begin with.” It wouldn’t take a whole lot before “all of a sudden, those slim little pennies that you might make are gone,” she said.Mr. Trump comes into office having floated a wide variety of tariff plans. He has proposed a universal tariff on nearly all imports, plus levies ranging from 10 to 200 percent on products from China, Canada, Mexico, the European Union and elsewhere.Mr. Trump has promised to use tariffs for multiple goals: cajoling companies to make their products in the United States, funding tax cuts, persuading other countries to stem the flows of drugs and migrants and even forcing Denmark to cede Greenland to the United States.We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More

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    The Federal Work Force Grew Briskly Under Biden. It’s Still Historically Low.

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    Government agencies that shrank in President-elect Trump’s first term have mostly bounced back, and some have become even larger.When it comes to the federal payroll, two seemingly contradictory things are true.One, the Biden administration went on a hiring spree that expanded the government work force at the fastest pace since the 1980s. And two, it remains near a record low as a share of overall employment.In the four years separating President-elect Donald J. Trump’s two terms, the federal civilian head count has risen by about 4.4 percent, according to the Labor Department, to just over three million, including the Postal Service.But that’s a much slower pace than private payrolls have grown over the past four years. And it leaves the federal government at 1.9 percent of total employment, down from more than 3 percent in the 1980s.The incoming administration promises to erase whole sections of the federal bureaucracy: Vivek Ramaswamy, co-chair of what Mr. Trump is calling the Department of Government Efficiency, has said 75 percent of the work force could go, in pursuit of $2 trillion in cuts. But it will be a challenge to find cuts without depleting services.“When we’re looking at the numbers of the federal work force, it’s still about the same size as it was in the 1960s,” said Max Stier, president of the Partnership for Public Service, a think tank. “The narrative out there is the federal government work force is growing topsy-turvy, and the reality is that it’s actually shrinking,”Compared with the overall work force, the federal employee base has been shrinking for decadesNot including the armed forces, federal government employees as a share of all nonfarm workers are near an all-time low.

    Federal employment includes the Postal Service.Source: Bureau of Labor StatisticsBy The New York TimesHow Big Are Agencies, and Have They Grown or Shrunk? The number of people who work in the federal government’s largest departments, and how they’ve changed in size since 2020.

    Note: Total work force numbers are as of March 2024.Source: Office of Personnel ManagementBy 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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    Martial law and Trump: political shocks add to South Korea’s economic woes

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    South Korea’s worst political crisis in decades is playing out against a darkening economic backdrop, as policymakers grapple with challenges ranging from a tumbling currency and weak consumer confidence to slowing job growth and intensifying competition from China.Asia’s fourth-largest economy is facing these problems as it navigates twin political shocks: Donald Trump’s re-election in the US and the fallout from South Korean President Yoon Suk Yeol’s failed attempt to impose martial law.While South Korea’s political strife is likely to exacerbate its economic woes, analysts stressed that these weaknesses predate and go beyond the current crisis.“Even if the present political crisis were to be resolved soon, there are not many reasons to be optimistic about our economic outlook,” said Park Chong-hoon, head of research at Standard Chartered in Seoul.Currency weaknessThe South Korean won was the worst performer in Asia against the US dollar last year, weakening more than 10 per cent in the fourth quarter. And while a weaker currency often benefits export-oriented economies, South Korea’s reliance on expensive imports, notably energy, outweighed any potential benefits, economists said.The currency’s slide led the Bank of Korea to defy widespread expectations on Thursday and hold its benchmark interest rate at 3 per cent, despite sluggish growth and signs of trouble in the job market.“The weaker won seems to be the biggest factor for the BoK’s decision,” said Oh Suk-tae, an economist at Société Générale in Seoul. “It is aware of the bad economic situation, but the bank remains more sensitive to exchange rates than to economic growth.”Some content could not load. Check your internet connection or browser settings.Trump threatsSouth Korea was the largest source of foreign direct investment in the US last year as the country’s manufacturers, attracted by generous subsidies, rushed to set up chip and battery plants.But a surge in US imports of South Korean goods for those facilities helped drive a record trade surplus, a long-standing bugbear for Trump, making Seoul vulnerable to retaliation.Finance minister and acting president Choi Sang-mok acknowledged this week that Trump’s threats of across-the-board trade tariffs would have a “significant impact” on South Korea’s export-oriented economy.“Although Trump is likely to increase tariffs only gradually, this will shake our financial markets and have an adverse impact on our economy,” said Shin Min-young, professor at Hongik University in Seoul.Slowing growthThe BoK also warned on Thursday that the country was likely to miss its 2024 GDP growth forecast of 2.2 per cent and trimmed its 2025 forecast to 1.8 per cent. That is down from an average annual rate of more than 3 per cent in the 2010s.“Downside risks to economic growth have intensified, and the volatility of exchange rates has increased,” said Bank of Korea governor Rhee Chang-yong, citing “political risks that have recently escalated”.Analysts note that pressure on the won as a result of the BoK’s back-to-back rate cuts in October and November was compounded by the US Federal Reserve’s pivot to slowing its pace of easing in response to Trump’s election.If Trump’s protectionist trade and immigration policies fuel US inflation, as many economists expect, a more hawkish Fed would put further pressure on the won and South Korea’s growth.Economists also warn that slowing growth is likely to have an outsized long-term impact because of the looming demographic crisis in South Korea, which has the world’s lowest fertility rate.Political turmoilSouth Korea’s ability to address structural economic issues — as well as policymakers’ efforts to lobby the incoming Trump administration — has been paralysed by an unfolding domestic political crisis.Shortly after Yoon’s aborted martial law declaration last month, Rhee told the Financial Times that Trump’s trade policies constituted a greater risk to the economy than the turmoil at home.But with the crisis showing no signs of abating after Yoon was arrested this week on insurrection and abuse of power charges, Rhee has changed his tune.“Previously, US monetary and trade policies were the biggest factors determining how much lower the growth rate would fall,” Rhee said on Thursday. “But I think it now depends more on whether the political process will function stably and whether the economy will perform in the interim.”South Korea’s President Yoon Suk Yeol, left, was arrested by police on Thursday after a dramatic predawn raid on his hilltop compound More