Economy

The blanket tariffs, once considered extreme, still threaten to harm world trade and make everything more expensive for businesses and consumers.President Trump’s global 10 percent tariff is likely to make consumer goods more expensive.When Donald J. Trump championed the idea of a 10 percent blanket tariff during the campaign, many people, whether for or against, were taken aback by how radical the idea was.Alarms sounded about higher inflation, lost jobs, slower growth or recession. The prospect seemed so outlandish that most economists and Wall Street analysts who gamed out the possibilities tended to treat a 10 percent tariff simply as a bargaining tool.Now, after a rapid-fire series of announcements from the White House that promised, imposed, reversed, delayed, decreased and increased tariffs, the 10 percent solution is looking like the most temperate choice rather than the most revolutionary, especially now that a red-hot trade war between China and the United States is blazing.Yet 10 percent tariffs have not lost their sting.At that level, universal tariffs still hit more than 10 times as many imports as the ones targeted during Mr. Trump’s first term, and are significantly higher and broader than anything the United States has tried in more than 90 years.The tariff rate is “quite extreme,” said Carsten Brzeski, chief eurozone economist at ING, a Dutch bank. “It still brings us back to levels last seen during the 1930s.”In addition to measures targeting China, Mr. Trump powered up a long list of punishing taxes — including a flat 10 percent tariff on most imports — on April 9. 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

Unlock the White House Watch newsletter for freeYour guide to what the 2024 US election means for Washington and the worldDonald Trump has threatened to apply tariffs on critical minerals in a move that could increase tensions with China and open a new front in a global trade war that has rattled markets. In an executive order on Tuesday, the US president ordered the commerce department to study the critical mineral supply chains and come up with ways to boost American production while cutting reliance on imports.The investigation could lead to new tariffs being imposed. Trump’s announcement comes just over two weeks after his “liberation day” tariffs sparked days of market turmoil and warnings that the deepening stand-off with China could tip the global economy into recession. “President Trump recognizes that an overreliance on foreign critical minerals and their derivative products could jeopardize US defense capabilities, infrastructure development, and technological innovation,” the order read. The investigation threatens to trigger a new critical minerals trade war as the US tries to wrestle back control of a crucial industry that is dominated by China. It comes after China suspended exports of several heavy rare earth metals and rare earth magnets used in the defence, robotics and energy industries to buyers around the world.The Trump administration is following on from initiatives started during the Biden administration to reduce American reliance on adversaries for minerals and metals that are used in everything from electric car batteries to jet engines to missiles.Although the White House emphasised the importance of minerals and rare earths for military applications, any shortage could affect companies in sectors from energy to auto manufacturing.The Financial Times reported this week that the White House was drafting an executive order to enable the stockpiling of metal found on the Pacific Ocean seabed, as part of the broader effort to counter China’s dominance of rare earth supply chains.The probe would be carried out under Section 232 of the Trade Expansion Act of 1962, which Trump has used to launch investigations into chips, copper and lumber. He has also used the law to apply tariffs to autos, steel and aluminium.  The executive order said any resulting tariffs would replace any “reciprocal” tariff rates placed on these critical minerals, which could in theory lead to tariffs on those minerals being lowered instead of raised. The White House said the US remained “heavily dependent on foreign sources, particularly adversarial nations, for these essential materials”, arguing that it exposed the country to “economic coercion”.In a recent article in the Washington Quarterly, Evan Medeiros and Andrew Polk, two China experts, said Beijing had since 2018 expanded its set of economic tools to retaliate against the US and other countries. Instead of fighting tariffs with tariffs, Beijing has significantly expanded its coercive tool kit to include export controls on critical minerals. In December 2023, for example, China hit back at American efforts to cut its reliance on Chinese mineral supply chains by banning the export of critical rare earths processing equipment.Along with barring exports of rare earths this week, China recently banned exports to the US of gallium, germanium and antimony, in addition to other materials with military applications, the White House said. Last year, Beijing warned Japan that it would block exports of gallium, germanium and graphite if Tokyo aligned too closely with Washington on technology-related export controls. The US wanted to impose certain controls to make it harder for China to obtain advanced American technologies in the fields of semiconductors and artificial intelligence. More

Unlock the Editor’s Digest for freeRoula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.US product design software company Figma has filed for an initial public offering that will test investor appetite for tech listings as Donald Trump’s tariffs roil global financial markets.Figma on Tuesday said it had confidentially submitted a draft registration statement with the US Securities and Exchange Commission, paving the way for an IPO. Market volatility unleashed by the president’s fast-changing tariffs policies has chilled the market for new US listings that many bankers had expected to explode back to life under a Republican administration after a three-year drought.Trump’s steep levies on trade have weighed on global equities markets, and US stocks in particular, as investors worry that they will knock the world’s economy. Several big IPOs were postponed after Trump launched his “liberation day” tariffs in early April, including a $15bn float of fintech Klarna and a $50bn listing for medtech company Medline.Cloud computing group CoreWeave went public in late March after slashing the size and value of its IPO amid wavering investor demand for artificial intelligence infrastructure. Shares in the company have gained just over 2 per cent.Figma said the number of shares and the price range for a potential public offering had not been determined. It was valued at $12.5bn in a share sale to employees and investors last year, with participation from existing investors including Sequoia and Andreessen Horowitz. It has raised about $333mn across seven funding rounds.A confidential filing with US regulators allows companies to privately move forward with their plans to list, before publicly unveiling their documents closer to pursuing a flotation.One person close to the listing process told the Financial Times that Tuesday’s announcement was a sign that Figma felt confident in the strength of its business despite the current market turmoil.In late 2023, the San Francisco-based company came close to being acquired by Adobe, which eventually abandoned its proposed $20bn acquisition following scrutiny from UK and EU watchdogs. Figma specialises in online software for designing apps and websites, while Adobe makes a broad range of digital marketing and creative tools, including Photoshop and InDesign. Regulators had been concerned that Adobe would take out a potential competitor and had pressed the companies to ensure a deal would divest overlapping operations, such as Adobe’s Illustrator or Photoshop, or Figma’s core product, Figma Design. More

President Trump is staking everything on winning by imposing tariffs on China. But the fight threatens to choke off negotiations about other issues like Taiwan, fentanyl, TikTok and more.President Trump came into office sounding as if he were eager to deal with President Xi Jinping of China on the range of issues dividing the world’s two biggest superpowers.He and his aides signaled that they wanted to resolve trade disputes and lower the temperature on Taiwan, curb fentanyl production and get to a deal on TikTok. Perhaps, over time, they could manage a revived nuclear arms race and competition over artificial intelligence.Today it is hard to imagine any of that happening, at least for a year.Mr. Trump’s decision to stake everything on winning a trade war with China threatens to choke off those negotiations before they even begin. And if they do start up, Mr. Trump may be entering them alone, because he has alienated the allies who in recent years had come to a common approach to countering Chinese power.In conversations over the past 10 days, several administration officials, insisting that they could not speak on the record, described a White House deeply divided on how to handle Beijing. The trade war erupted before the many factions inside the administration even had time to stake out their positions, much less decide which issues mattered most.The result was strategic incoherence. Some officials have gone on television to declare that Mr. Trump’s tariffs on Beijing were intended to coerce the world’s second-largest economy into a deal. Others insisted that Mr. Trump was trying to create a self-sufficient American economy, no longer dependent on its chief geopolitical competitor, even if that meant decoupling from the $640 billion in two-way trade in goods and services.Shipping containers in the port of Tianjin, China, last month. Beijing has matched every one of Mr. Trump’s tariff hikes, trying to send the message that it can endure the pain longer than the United States can. 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

The Trump administration took steps on Monday that appear likely to result in new tariffs on semiconductors and pharmaceutical products, adding to the levies President Trump has put on imports globally.Federal notices put online Monday afternoon said the administration had initiated national security investigations into imports of chips and pharmaceuticals. Mr. Trump has suggested that those investigations could result in tariffs.The investigations will also cover the machinery used to make semiconductors, products that contain chips and pharmaceutical ingredients.In a statement confirming the move, Kush Desai, a White House spokesman, said the president “has long been clear about the importance of reshoring manufacturing that is critical to our country’s national and economic security.”The new semiconductor and pharmaceutical tariffs would be issued under Section 232 of the Trade Expansion Act of 1962, which allows the president to impose tariffs to protect U.S. national security.Earlier in the day, Mr. Trump hinted that he would soon impose new tariffs on semiconductors and pharmaceuticals, as he looked to shore up more domestic production.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

Federal Reserve Governor Christopher Waller said Monday he expects the effects of President Donald Trump’s tariffs on prices to be “transitory.”
The central banker embraced a term that got the central bank in trouble during the last bout of inflation.
“Since it didn’t work out the way you expected, does that mean that you shouldn’t call for the tush push the next time you face a similar situation?” he added.

Federal Reserve Governor Christopher Waller speaks during the Clearing House Annual Conference in New York City, on Nov. 12, 2024.
Brendan Mcdermid | Reuters

Federal Reserve Governor Christopher Waller said Monday he expects the effects of President Donald Trump’s tariffs on prices to be “transitory,” embracing a term that got the central bank in trouble during the last bout of inflation.
“I can hear the howls already that this must be a mistake given what happened in 2021 and 2022. But just because it didn’t work out once does not mean you should never think that way again,” Waller said in remarks for a policy speech in St. Louis that compared his inflation view to the controversial “tush push” football play.

Laying out two scenarios for what the duties eventually will look like, Waller said larger and longer-lasting tariffs would bring a larger inflation spike initially to a 4% to 5% range that eventually would ebb as growth slowed and unemployment increased. In the smaller-tariff scenario, inflation would hit around 3% and then fall off.
Either case would still see the Fed cutting interest rates, with timing being the only question, he said. Larger tariffs might force a cut to support growth, while smaller duties might allow a “good news” cut later this year, Waller added.
“Yes, I am saying that I expect that elevated inflation would be temporary, and ‘temporary’ is another word for transitory,'” he said. “Despite the fact that the last surge of inflation beginning in 2021 lasted longer than I and other policymakers initially expected, my best judgment is that higher inflation from tariffs will be temporary.”
The “transitory” term harkens back to the inflation spike in 2021 that Fed officials and many economists expected to ease after supply chain and demand factors related to the Covid-19 pandemic normalized.
However, prices continued to rise, hitting their highest since the early 1980s and necessitating a series of dramatic rate hikes. While inflation has pulled back substantially since the Fed started raising in 2022, it remains above the central bank’s 2% target. The Fed cut its benchmark borrowing rate by a full percentage point in late 2024 but has not cut further this year.

A Trump appointee during the president’s first term, Waller used a football analogy to explain his views on “transitory” inflation. He cited the Philadelphia Eagles’ famed “tush push” play that the team has used to great effect on short-yardage and goal line situations.
“You are the Philadelphia Eagles and it is fourth down and a few inches from the goal line. You call for the tush push but fail to convert by running the ball,” he said. “Since it didn’t work out the way you expected, does that mean that you shouldn’t call for the tush push the next time you face a similar situation? I don’t think so.”
Waller estimated that Trump has either of two goals from the tariffs: to keep the levies high and remake the economy, or use them as negotiating tactics. In the first case, he sees growth slowing “to a crawl” while the unemployment rate rises “significantly.” If the tariffs are negotiated down, he sees the effect on inflation to be “significantly smaller.”
In the other case, he said “one of the biggest shocks to affect the U.S. economy in many decades” is making forecasting and policymaking difficult. Fed officials will need to “remain flexible” in deciding the future path.
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Consumer worries grew over inflation, unemployment and the stock market as the global trade war heated up in March, according to a New York Fed survey.
The probability that the unemployment rate would be higher a year from now surged to 44%, up 4.6 percentage points and the highest level going back to the early Covid pandemic days of April 2020.
The expectation that the market will be higher a year from low slid to 33.8%, a decline of 3.2 percentage points to the lowest reading going back to June 2022.

People shop for produce at a Walmart in Rosemead, California, on April 11, 2025. 
Frederic J. Brown | Afp | Getty Images

Consumer worries grew over inflation, unemployment and the stock market as the global trade war heated up in March, according to a Federal Reserve Bank of New York survey released Monday.
The central bank’s monthly Survey of Consumer Expectations showed that respondents saw inflation a year from now at 3.6%, an increase of half a percentage point from February and the highest reading since October 2023.

Along with concerns over a higher cost of living came a surge in worries over the labor market: The probability that the unemployment rate would be higher a year from now surged to 44%, a move up of 4.6 percentage points and the highest level going back to the early Covid pandemic days of April 2020.
The survey also showed angst about the uncertainty translating into problems for stock market prices.
The expectation that the market will be higher a year from low slid to 33.8%, a decline of 3.2 percentage points to the lowest reading going back to June 2022. While the expectations for equities pulled back, respondents said they figure gold to rise by 5.2%, the highest since April 2022.
The survey reflects other readings, such as the University of Michigan consumer sentiment survey, which showed one-year expectations in mid-April at their highest since November 1981.
In the case of the New York Fed measure, the survey took place ahead of President Donald Trump’s April 2 “liberation day” tariff announcement, as well as the 90-day suspension of the order a week later. However, it is largely consistent with other measures reflecting consumer concern over the impact tariffs will have, even as market-based measures show inflation worries are low among traders.

Expectations for inflation at the five-year horizon actually edged lower to 2.9%, down 0.1 percentage point, and were unchanged for the three-year outlook at 3%. The outlook for food prices a year from now nudged up to 5.2%, its highest since May 2024, and was at 7.2% for rent, an increase of half a point. The outlook for medical care costs also jumped to an expected 7.9% increase, the most since August 2024.
Respondents expect gasoline to rise by 3.2%, a 0.5 percentage point drop from the February outlook.
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Unlock the White House Watch newsletter for freeYour guide to what the 2024 US election means for Washington and the worldThe author is vice-chair at Oliver Wyman and former global head of banks and diversified financials research at Morgan StanleyWhat will the longer-term financial consequences of Trump’s tariffs be? We may be in a 90-day pause but the question remains urgent. A look back at Richard Nixon’s experience in 1971 could help investors understand what might happen next.Certainly recent events share some hallmarks with the “Nixon shock”, which occurred when the then president took the dollar off the gold standard, implemented a 10 per cent import tariff and introduced temporary price controls. This de-anchoring of the regime resulted in a period of global economic instability and uncertainty. It not only caused a loss in business confidence but led to stagflation. Nixon’s price and wage controls spectacularly backfired, triggering product shortages and helping to fuel a wage-price spiral. The whole episode was a pivotal contributor to the huge inflation of the ‘70s.As with Trump’s tariffs, Nixon’s were introduced to cudgel countries into changing the terms of trade to help reduce the US trade deficit. His biggest concerns were Japan and Germany. “My philosophy, Mr President, is that all foreigners are out to screw us and it’s our job to screw them first,” Treasury secretary John Connally had said to him.In today’s hyperfinancialised world, we have already seen that bond markets can force the hands of politicians far more quickly. It took four months in 1971 before Nixon’s tariffs were removed via the Smithsonian agreement. But the shock had already done enough to catalyse extraordinary changes in finance, leading to the creation of new instruments to bet on the direction of interest rates and hedge currency risk, including FX futures and options. The pain of stagflation in the banking system prompted a huge change in financial behaviour and financial regulation. Investors shifted asset allocation to gold and real assets to preserve value. Meanwhile corporates and depositors increasingly moved their activities from banks to bond markets. Bank lending as a share of total borrowing in the economy has been falling ever since. In short, modern finance was forged in the early 1970s. There are parallels as well for countries outside the US currently worrying about tariffs. Back in 1971 there was also shoddy treatment for the US’s closest allies. Nixon hit Canada with tariffs despite its currency already floating. Like Prime Minister Mark Carney today, Canadians didn’t back down and eventually the tariffs were removed. It could have been even worse: Connally had also wanted the US to withdraw from a long-standing pact with Canada on cars and auto parts. But Paul Volcker fixed that, according to his memoirs, by cheekily encouraging a State Department official to tear off the last page of every press release which mentioned it. Ultimately, the need to stabilise international relations with allies helped tip the balance away from the tariffs. Henry Kissinger, then the national security adviser, “grew concerned about the unsettling impact of a prolonged confrontation on allied relationships”. Nixon also put huge pressure on the Fed for expansionary monetary policy to offset the shock. William Safire, Nixon’s speechwriter, recounts how the administration kept up a steady stream of anonymous leaks to pressure Fed chair Arthur Burns, including floating one proposal to expand the size of the Federal Reserve, so that Nixon could pack the committee with supportive new members.At the end of it all, Nixon’s four-month tax may have helped facilitate dollar revaluation, but it fell short of the desired goals and had no discernible impact on imports. The move’s economic shockwaves, however, rippled through the decades. Even the creation of the euro stems from it. Might a digital euro or deeper European capital markets be next? It’s not yet clear but history suggests the fallout from this latest shock will be felt for years to come. More