Economy

Unlock the White House Watch newsletter for freeYour guide to what Trump’s second term means for Washington, business and the worldThe Trump administration has signalled its support for renewing a 25-year-old trade pact with Africa that was credited with kick-starting valuable manufacturing industries in some of the continent’s poorest countries.The African Growth and Opportunity Act (Agoa), which offers tariff-free access to US markets for 32 African countries, will expire on Tuesday unless US Congress intervenes to save the deal.However, in a signal the Trump White House may be open to backing an extension, Massad Boulos, President Donald Trump’s senior adviser for Africa and father-in-law of Trump’s daughter Tiffany, said the administration “agreed with the objectives” of Agoa.“We support the objectives,” Boulos told the Financial Times. “There are sometimes issues with some of the details or how it’s being executed, some aspects [that the administration does not like], but the overall objectives we agree with.” His comments come after days of speculation among aid and trade analysts that Agoa would be allowed to lapse when a 10-year extension that was agreed in 2015 runs out on September 30.Any extension would need to be approved by Congress, which has not yet taken up legislation to extend the deal but has in the past retroactively extended expired trade legislation and refunded importers. A White House official confirmed on Friday that “the administration is supportive of a one-year extension of the programme”.The tariff-free access offered by Agoa is credited with enabling manufacturing successes, such as the garment industry in the mountain kingdom of Lesotho, which is the largest African exporter of apparel to the US and serves companies including Levi’s and Wrangler.Mokhethi Shelile, Lesotho’s trade minister, said members of Congress had assured him of a one-year extension by “November at the latest” during a trade visit to Washington this week.“We spoke with more than 10 people from different sides of the aisle,” he said. “All of them are saying it is prudent to extend it for a limited period while looking at how [they] can make it an America First type of an arrangement.”Some content could not load. Check your internet connection or browser settings.Some content could not load. Check your internet connection or browser settings.The signal that the administration may be open to extending Agoa was welcomed by senior UN trade officials who warned this week that allowing it to lapse would have a “debilitating” impact on some African manufacturing centres for clothing, leather and footwear.Pamela Coke-Hamilton, executive director of the International Trade Centre, a joint agency of the UN and World Trade Organization, said that extending an agreement that was first signed into law by former US president Bill Clinton in 2000 would be a “win-win” for both sides.“The renewal or extension of Agoa would provide for the continuation of a programme that has been critical to growth sectors in many African countries. It would promote employment and foreign exchange earnings while also enabling US firms to benefit and remain competitive,” she said.Modelling by ITC economists published this week warned of a “major drop in exports to the US” from countries including Kenya, Mauritius, Tanzania, Madagascar and Eswatini, with losses concentrated on clothing and tuna exports.Analysts have accused the US, which has under Trump imposed punishing tariffs on trading partners around the globe in a bid to force more “reciprocal” terms, of waging an assault on the rules-based global economic order.The trade pact has faced opposition from some US producers, who have lobbied to exclude sugar and certain other products from being included in the programme, according to a report earlier this year by the non-partisan Congressional Research Service.Some opponents had also “argued that the lack of reciprocity” in market access presents an unnecessary obstacle to US exporters, CRS said.Max Mendez-Parra, principal research fellow at the ODI Global think-tank, said Agoa had enabled Africa to compete with Asian powerhouses such as Bangladesh and Cambodia. “For countries like Lesotho and Tanzania the preferential tariff rates under Agoa made a big difference to them,” he added.Data visualisation by Amy Borrett and additional reporting by Aime Williams in Washington More

Overseas sales of the US’s top farm export have plummeted as China shuns American soyabeans in a “devastating” blow to the country’s farmers.The new export season for soyabeans has opened with no sales or shipments to China, government data shows — a sharp break from a year ago, when it had already booked 6.5mn tons. Meanwhile, inventories have begun to pile up with the onset of the fall US harvest season. For decades, more than half of all US soyabeans went to China, the world’s biggest buyer. But this year, as trade talks between Washington and Beijing stall, not a single American soyabean has headed east, leaving farmers struggling to stay afloat as bins fill and prices sag while China turns to record supplies from Brazil.“We’re up against the clock right now,” says Darin Johnson, president of the Minnesota Soybean Growers Association and a fourth generation farmer. “Even if we do come to terms on an agreement [with China], it’s just not going to be in time for this harvest.”Like soyabean farmers across the US, Johnson is staring down a harvest with nowhere to go. Growers are facing “a glut of soyabeans”, he says, the impact of which could be “devastating”. Soyabeans are primarily used as livestock feed, and also have applications in industrial and consumer manufacturing. Byproducts like soyabean oil can be used to create products from biofuels to firefighting foam.Soyabean pods awaiting harvest on a farm in Centreville, Maryland this week More

Client Challenge

JavaScript is disabled in your browser.
Please enable JavaScript to proceed.

A required part of this site couldn’t load. This may be due to a browser
extension, network issues, or browser settings. Please check your
connection, disable any ad blockers, or try using a different browser. More

Client Challenge

JavaScript is disabled in your browser.
Please enable JavaScript to proceed.

A required part of this site couldn’t load. This may be due to a browser
extension, network issues, or browser settings. Please check your
connection, disable any ad blockers, or try using a different browser. More

Client Challenge

JavaScript is disabled in your browser.
Please enable JavaScript to proceed.

A required part of this site couldn’t load. This may be due to a browser
extension, network issues, or browser settings. Please check your
connection, disable any ad blockers, or try using a different browser. More

Client Challenge

JavaScript is disabled in your browser.
Please enable JavaScript to proceed.

A required part of this site couldn’t load. This may be due to a browser
extension, network issues, or browser settings. Please check your
connection, disable any ad blockers, or try using a different browser. More

Client Challenge

JavaScript is disabled in your browser.
Please enable JavaScript to proceed.

A required part of this site couldn’t load. This may be due to a browser
extension, network issues, or browser settings. Please check your
connection, disable any ad blockers, or try using a different browser. More

The core personal consumption expenditures price index showed inflation in August at 2.9% on an annual basis after rising 0.2% for the month. Both were in line with estimates.
Though the Fed targets inflation at 2%, the readings are unlikely to change course for policymakers who indicated they see two more quarter percentage point reductions before the end of the year.
Spending and income numbers were slightly higher than expected.

Core inflation was little changed in August, according to the Federal Reserve’s primary forecasting tool, likely keeping the central bank on pace for interest rate reductions ahead.
The personal consumption expenditures price index posted a 0.3% gain for the month, putting the annual headline inflation rate at 2.7%, the Commerce Department reported Friday.

Excluding food and energy, the more closely followed core PCE price level was 2.9% on an annual basis after rising 0.2% for the month.
The headline annual inflation rate was a slight increase from the 2.6% in July while the core rate was the same.
All of the numbers were in line with the Dow Jones consensus forecast.
Spending and income numbers were slightly higher than expected.
Personal income increased 0.4% for the month, while personal consumption expenditures accelerated at a 0.6% pace. Both were 0.1 percentage point above the respective estimates.

Though the Fed targets inflation at 2%, the readings are unlikely to change course for policymakers who last week indicated they see two more quarter percentage point reductions before the end of the year.
Stock market futures added to gains after the report while Treasury yields edged lower.
The report further indicates that President Donald Trump’s tariffs have had only a limited pass-through effect on consumer prices. Though many economists expected Trump’s expansive levies to juice prices, companies have relied on a mixture of pre-tariff inventory accumulations and cost-absorbing measures to limit the impact.
Goods prices increased 0.1% while services rose 0.3%. Food showed a gain of 0.5% while energy goods and services jumped 0.8%. Housing costs posted a 0.4% rise.
Moreover, the data showed that consumers have been resilient despite the round of tariffs, continuing to spend strongly as incomes have held up. The personal saving rate also increased on the month, rising to 4.6%, up 0.2 percentage point.
“Net, net, consumers literally hit it out of the park with very strong gains in spending not just for August, but June and July as well,” said Chris Rupkey, chief economist at Fwdbonds. “Summer was the time for consumer revenge spending after hunkering down in retreat from the shops and malls during the uncertainty and fear produced by the White House tariff rollout in April and May.”
Fed officials including Chair Jerome Powell say a likely scenario for the tariffs is that they are a one-time boost to prices rather than a longer-term cause of underlying inflation. However, some policymakers have continued to express reservations and see limited room for further rate cuts.
Markets are strongly betting on a rate cut in October, though there’s a bit less enthusiasm for another move in December. The Federal Open Market Committee last week approved a quarter percentage point reduction in the fed funds rate, the first easing of the year that took the benchmark down to a target range of 4%-4.25%. More