Economy

Unlock the White House Watch newsletter for freeYour guide to what the 2024 US election means for Washington and the worldDonald Trump is living up to his “tariff man” brand. On Monday, he appeared to invent a new one altogether. Secondary tariffs — a mash-up of secondary sanctions and tariffs — will be imposed by the US on any nation that buys oil or gas from Venezuela. The import duties will take effect from April 2, the day when the world expects to hear what the US administration’s plans are for its headline agenda of reciprocal levies.One Must-ReadThis article was featured in the One Must-Read newsletter, where we recommend one remarkable story each weekday. Sign up for the newsletter hereHow will it work? Trump says America would apply a 25 per cent tariff on buyers of Venezuelan crude “on top of existing tariffs”. How it will be applied and enforced is unclear. But for the US president, the details are beyond the point (America was in fact the largest importer of oil from the South American country last year, based on ship tracking data). Trump reckons the mere threat of losing access to the US market is enough to get other nations to act as he pleases. “It’s quite clever, and could actually work in this situation,” says former UK trade department official Allie Renison, now at consultancy SEC Newgate. “But it’s a concerning move if it becomes precedent and other countries acting in bad faith follow suit.”The White House accuses Venezuela of “purposefully and deceitfully” sending “tens of thousands of high level, and other, criminals” to the US. Oil is a lifeline for President Nicolás Maduro’s authoritarian regime: it accounts for over four-fifths of its exports. Other than the US, most of the rest goes to China, India and Spain.Mess around and find out is in effect what Trump is telling buyers of Venezuelan oil. Analysts reckon most nations will “self-sanction”, by clamping down on Venezuelan oil supplies to, well, avoid finding out. The art of the deal here is creating a supposed win-win situation. The calculation is that lost revenues will force Maduro into accepting more Venezuelan deportees from the US, while also raising tariff income from anyone not complying with the secondary sanction.Trump has form here. In January, the president threatened Colombia with 25 per cent tariffs, among other sanctions, for its refusal to take deported migrants. Colombia’s government backed off. After pulling America out of the Iran nuclear deal in 2018, Trump reintroduced secondary sanctions on those doing business with the country too.Extortion-by-tariff will be a feature of the president’s plans to reshape the international order in his favour. Trump is less keen on financial sanctions, which he has suggested risk undermining the dollar (although his chaotic tariff agenda appears to be doing that anyway.) Though the transactional approach of dangling access to US markets to gain concessions might seem to be potent on a deal-by-deal basis, for Trump’s broader objectives for America, tariffs are a blunt instrument.Venezuelan oil comprises a small portion of the international market, but the most immediate impact has been a jump in global oil prices. That’s probably not what US consumers, who are already fearing higher inflation, wanted to hear. Nor is it consistent with the administration’s objective to lower pump prices, though it could be congruent with its plans to encourage US producers to “drill baby drill”.Who knows? In the leaked Signal messages between senior White House staff, vice-president JD Vance worried air strikes on Houthis could lead to a “spike in oil prices”.That’s the risk of reading too much into Trump’s tariff plans. Beyond trying to coerce other nations, there isn’t a coherent strategy here. Indeed, if the administration continues to use tariffs as its economic tool of choice, faith in doing business with America will fade (as it has started to already). In that case, over time, its tariff threats will lose their bite as well. More

When Starbucks announced last month that it was laying off more than 1,000 corporate employees, it highlighted a disturbing trend for white-collar workers: Over the past few years, they have seen a steeper rise in unemployment than other groups, and slower wage growth.It also added fuel to a debate that has preoccupied economists for much of that time: Are the recent job losses merely a temporary development? Or do they signal something more ominous and irreversible?After sitting below 4 percent for more than two years, the overall unemployment rate has topped that threshold since May.Economists say that the job market remains strong by historical standards and that much of the recent weakening appears connected to the economic impact of the pandemic. Companies hired aggressively amid surging demand, then shifted to layoffs once the Federal Reserve began raising interest rates. Many of these companies have sought to make their operations leaner under pressure from investors.But amid rapid advances in artificial intelligence and President Trump’s targeting of federal agencies, which disproportionately support white-collar jobs, some wonder if a permanent decline for knowledge work has begun.“We’re seeing a meaningful transition in the way work is done in the white-collar world,” said Carl Tannenbaum, the chief economist of Northern Trust. “I tell people a wave is coming.”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

A report card from an engineering group found that American roads, ports and other infrastructure got better last year but could be hurt if federal funding is reduced.Increased federal spending in recent years has helped to improve U.S. ports, roads, parks, public transit and levees, according to a report released on Tuesday by the American Society of Civil Engineers.But that progress could stagnate if those investments, some of which were put on hold after President Trump took office in January, aren’t sustained.Overall, the group gave the nation’s infrastructure a C grade, a mediocre rating but the best the country has received since the group’s first report card in 1998. Most infrastructure, including aviation, waterways and schools, earned a C or D grade; ports and rail did better. The group also projected a $3.7 trillion infrastructure funding shortfall over the next decade.“The report card demonstrates the crucial need for the new administration and Congress to continue sustained investment in infrastructure,” Darren Olson, the chairman of the society’s committee on America’s infrastructure, said on a call with reporters. “Better infrastructure is an efficient investment of taxpayer dollars that results in a stronger economy and prioritizes American jobs.”The report, which is now released every four years, has long noted that the United States spends too little on infrastructure. But that started to change in 2021, the group said, thanks to the Infrastructure Investment and Jobs Act, which authorized $1.2 trillion in funding under President Joseph R. Biden Jr. That investment is showing results, with grades having improved since the last report, in 2021, for nearly half the 18 categories that the group tracks.But in January, Mr. Trump froze much of the funding under that law and another aimed at addressing climate change, pending a review by his agencies. That halted a variety of programs, including those intended to help schools, farmers and small businesses.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 issued an executive order on Monday to crack down on countries that buy Venezuelan oil by imposing tariffs on the goods those nations send into the United States, claiming that Venezuela has “purposefully and deceitfully” sent criminals and murderers into America.In the order, the president said the government of Nicolás Maduro, the Venezuelan leader, and the Tren de Aragua gang, a transnational criminal organization, posed a threat to the national security and foreign policy of the United States.On or after April 2, a tariff of 25 percent may be imposed on all goods imported into the United States from any country that imports Venezuelan oil, either directly or indirectly through third parties, the order said.The order said the secretaries of state, Treasury, commerce and homeland security, as well as the trade representative, would determine at their discretion what tariffs to impose. The tariffs would expire one year after the last date the Venezuelan oil was imported, or earlier if Trump officials so chose, it said.This unconventional use of tariffs could further disrupt the global oil trade as buyers of Venezuelan oil seek alternatives. The United States and China have been the top buyers of Venezuelan oil in recent months, according to Rystad Energy, a research and consulting firm. India and Spain also buy a small amount of crude from the South American country.But in the case of China, Venezuela’s oil makes up such a small portion of the country’s imports that the threat of higher tariffs will probably cause China to look elsewhere for oil, said Jorge León, a Rystad Energy analyst.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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Unlock the White House Watch newsletter for freeYour guide to what the 2024 US election means for Washington and the worldTech stocks led a rebound on Wall Street on Monday amid rising optimism that Donald Trump’s impending tariffs will be less aggressive than feared.The blue-chip S&P 500 jumped 1.8 per cent, while the tech-heavy Nasdaq Composite rallied 2.3 per cent. Tesla, which has tumbled in recent weeks as Big Tech stocks have come under heavy pressure, soared nearly 12 per cent.Monday’s gains come after the S&P last week snapped a four-week losing streak and are the latest sign that a period of marked underperformance for US stocks this year may be easing. Analysts said sentiment had been boosted by reports over the weekend that the White House was considering watering down some of the tariffs expected to take effect on April 2, dubbed “Liberation Day” by Trump. The president said on Friday that there would be “flexibility” in his plans to apply reciprocal tariffs to US trading partners.“I think this ultra bearishness on the US and the end of US exceptionalism theme is a little overcooked,” said Brad Bechtel, an analyst at Jefferies. “We knew this was going to be a noisy process and the noise has created a lot of bearishness. [But] that bearishness will not last and the positive vibes can come back.”Better than expected US manufacturing and services sector data, released on Monday morning, provided investors with further encouragement. S&P Global’s flash US composite purchasing managers’ index rose to a three-month high of 53.5. Any reading above 50 suggests that most businesses are reporting growth in activity. Expansion in the US’s services sector accounted for the rise, with manufacturing activity contracting.Hope that “regularisation and rationalisation of tariff policy is coming” was driving the gains, said Thierry Wizman, global foreign exchange and rates strategist at Macquarie. US government bonds fell sharply on Monday as stocks climbed, with the 10-year Treasury yield, which moves inversely to prices, rising 0.09 percentage points to 4.34 per cent. The dollar rose 0.2 per cent against a basket of six other major currencies.Stocks held their gains after Trump said the US would impose a 25 per cent tariff on all imports from any country that buys oil or gas from Venezuela.European stocks were relatively subdued. The region-wide Stoxx Europe 600 fell 0.1 per cent and Germany’s Dax closed 0.2 per cent lower. London’s FTSE 100 was flat. Investors have rotated out of US equities this year after Trump outlined plans to radically reorientate trade policy and gave Elon Musk licence, as head of the so-called Department of Government Efficiency, to find potential savings across the federal government. More

Chances that the U.S. is heading for a recession are about 43%, according to a Deutsche Bank survey.
That raises more questions about the direction of the U.S. economy.

U.S. dollar banknotes and a label with the word “Recession” are seen in this illustration taken March 19, 2025.
Dado Ruvic | Reuters

Chances that the U.S. is heading for a recession are close to 50-50, according to a Deutsche Bank survey that raises more questions about the direction of the U.S. economy.
The probability of a downturn in growth over the next 12 months is about 43%, as set by the average view of 400 respondents during the period of March 17-20.

Though unemployment remains low and most data points suggest continuing if not slowing growth, the survey results reinforce the message from sentiment surveys that consumers and business leaders are increasingly concerned that a slowdown or recession is a growing risk.
Federal Reserve Chair Jerome Powell last week acknowledged the worries but said he still sees the economy as “strong overall” featuring “significant progress toward our goals over the past two years.”
Still, Powell and his colleagues at the two-day policy meeting that concluded Wednesday lowered their estimate for gross domestic product this year to just a 1.7% annualized gain. Excluding the Covid-induced retrenchment in 2020, that would be the worst growth rate since 2011.
Additionally, Fed officials raised their outlook for core inflation to 2.8%, well above the central bank’s 2% goal, though they still expect to achieve that level by 2027.

The combination of higher inflation and slower growth raise the specter of stagflation, a phenomenon not experienced since the early 1980s. Few economists see that era replicated in the current environment, though the probability is rising of a policy challenge where the Fed might have to choose between boosting growth and tamping down prices.

Markets have been nervous in recent weeks about the prospects ahead. Bond expert Jeffrey Gundlach at DoubleLine Capital told CNBC a few days ago that he sees the chances of a recession at 50% to 60%.
“The recent equity market correction was punctuated by the ‘uncertainty shock’ of ever-evolving tariff policy, with investors concerned it could morph into a slowdown or even recession,” Morgan Stanley said in a note Monday. “What’s really at the heart of the conundrum, however, is that the U.S. might be at risk for a bout of stagflation, where growth slows and inflation remains sticky.”
Powell, however, doubted that a repeat of the previous bout of stagnation is in the cards. “I wouldn’t say we’re in a situation that’s remotely comparable to that is likely,” he said.
Barclays analysts noted that “market-based measures are consistent with only a modest slowing in the economy,” though the firm expects a growth rate this year of just 0.7%, barely above the recession threshold.
UCLA Anderson, a closely watched and widely cited forecasting center, recently turned heads with its first-ever “recession watch” call for the economy, based largely on concerns over President Donald Trump’s tariffs.
Clement Bohr, an economist at the school, wrote that the downturn could come in a year or two though he said one is “entirely avoidable” should Trump scale back his tariff threats.
“This Watch also serves as a warning to the current administration: be careful what you wish for because, if all your wishes come true, you could very well be the author of a deep recession. And it may not simply be a standard recession that is being chaperoned into existence, but a stagflation,” Bohr said.
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Ahead of President Trump’s next big trade move, his administration invited companies to weigh in on the economic barriers they faced abroad.The list of complaints was both sprawling and specific. In hundreds of letters submitted to the administration in recent weeks, producers of uranium, shrimp, T-shirts and steel highlighted the unfair trade treatment they faced, in hopes of bending the president’s trade agenda in their favor. The complaints varied from Brazil’s high tariffs on ethanol and pet food, to India’s high levies on almonds and pecans, to Japan’s longstanding barriers to American potatoes.Mr. Trump has promised to overhaul the global trading system on April 2, when he plans to impose what he is calling “reciprocal tariffs” that will match the levies and other policies that countries impose on American exports. The president has taken to calling this “liberation day,” arguing that it will end years of other countries “ripping us off.”On Monday, Mr. Trump appeared to suggest a potential softening to the tariffs, saying, “I may give a lot of countries breaks.” He added, “It’s reciprocal, but we may be even nicer than that.”“They’ve charged us so much that I’m embarrassed to charge them what they’ve charged us,” he said at an event at the White House. “But it’ll be substantial.”Mr. Trump also signaled that the White House could finalize tariffs on foreign-made cars before April 2, teasing that an announcement could come “fairly soon, over the next few days probably.”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