Finance

A federal trade court blocked a large piece of President Trump’s tariff agenda in a ruling Wednesday.
An appeals court temporarily paused that order on Thursday.
Even if the lower court’s ruling holds, the average household would lose $950 of purchasing power in 2025 as a result of tariffs that remain on the books, on products like steel, aluminum and automobiles, according to a Yale Budget Lab analysis.
The Trump administration has signaled more tariffs may be coming for pharmaceuticals, semiconductors, copper and lumber.

President Donald Trump holds a chart as he announces a plan for tariffs on imported goods during an event April 2, 2025, in the Rose Garden at the White House.
Demetrius Freeman/The Washington Post via Getty Images

The fate of many of President Trump’s tariffs is uncertain after a string of court rulings this week.
But even if a court block on country-specific tariffs is upheld, others that would remain on the books — for products like steel and automobiles — are still expected to cost consumers almost $1,000 a year, according to a new analysis by the Yale Budget Lab.

“It does pinch” consumers’ wallets, said Ernie Tedeschi, director of economics at the Yale Budget Lab and former chief economist at the White House Council of Economic Advisers during the Biden administration.
Tariffs are a tax paid on imports, paid by U.S. entities importing the good. Businesses are expected to pass on at least some of those costs to consumers.
However, the dollar impact of those remaining tariffs is “a far cry” from what it would be if the country-specific tariffs were to remain, he said.
The U.S. Court of International Trade on Wednesday blocked country-specific tariffs, including a 10% baseline tariff on most nations and separate levies on Canada, Mexico and China tied to allegations of fentanyl trafficking.
A three-judge panel found Trump exceeded his authority by invoking the International Emergency Economic Powers Act to impose those import duties.

An appeals court temporarily paused the order on Thursday as it reviews the case.

Steel, aluminum auto tariffs remain

However, 25% tariffs on steel, aluminum, automobiles and auto parts are still in place, with some carve-outs, as well as certain tariffs on China imposed during Trump’s first term and expanded during the Biden administration, Jennifer McKeown and Stephen Brown, economists at Capital Economists, wrote in a note Thursday.
Those tariffs were imposed using different legal authorities.
If the lower court’s order holds, those remaining tariffs would cost the average household $950 of purchasing power in 2025, according to the Yale Budget Lab analysis published Thursday. That amounts to a 0.6% increase in consumer prices, it found.
More from Personal Finance:Trump administration axes Biden-era barrier for crypto in 401(k) plansTrade schools may be a winner of battle between Trump, HarvardCourt order challenges Trump’s plan to move federal student loans
Another way consumers can view this legal development: The initial court ruling, if upheld, would save households more than $1,800 this year, said Tedeschi.
That’s because the average household would lose about $2,800 in 2025 if the country-specific tariffs were to stay on the books, Tedeschi said.
In that case, consumer prices would rise about 1.7% this year, he said.

McKeown and Brown estimate the court ruling would lower the effective tariff rate to 6.5% from 15%. It was 2.5% at the start of the year, they said.
“The most direct impact” of the remaining tariffs will be on car buying, Tedeschi said. Car prices would likely rise about 8% this year and 5% over the longer term, he said.
But steel and aluminum are inputs in a swath of consumer products, from homebuilding to household appliances.

Not necessarily ‘the end of things’ for tariffs

The Supreme Court may be the final arbiter for Trump’s country-specific tariffs, a process that may take “many months,” according to McKeown and Brown.
Additionally, “it would be unlikely to mark the end of the tariff war given the various other routes through which the Trump administration could impose tariffs,” they wrote.
The Trump administration has also signaled an intent to put duties on additional products like pharmaceuticals, semiconductors, copper and lumber.
Yesterday’s court decision was a “landmark ruling,” Tedeschi said. “I don’t expect it’ll be the end of things.” More

After an election, America’s financial agencies experience what is known as the “regulatory pendulum”. Priorities and philosophies change as the new president picks appointees to supervise American markets, banks and other financial institutions. Although the pendulum has swung violently in the past, it has never swung quite as violently as now. More

At a get-together entitled “Recent Global Events: Opportunities for India”, Narendra Modi, the prime minister, stressed that his government was boosting its own capital spending and called on his country’s business titans to do the same. He asked the assembled bosses to “take risk and increase investments”, according to one participant. That was in 2015. More

If China dominates the 21st-century economy, its industrial policy will get a lot of the credit. The state’s efforts to cultivate new industries, breed winners and foster technological advances inspire awe and anger from outside observers. Kyle Chan of Princeton University recently compared China’s policies to the Manhattan Project, which invented the atomic bomb. On present trends, he argues, “the battle for supremacy” in artificial intelligence (AI) will be fought not between America and China but between leading Chinese cities like Hangzhou and Shenzhen. More

Decades ago, when Victor Owen Schwartz first tasted cold, polished ginjo sake, it was a “light-bulb moment”, he has written. His firm, which imports alcohol to America from over a dozen countries, began adding the drink to its list. It now offers varieties from 19 breweries. More

Industry giant BYD announced a slew of discounts — some of nearly 30% or more – on selected models.
The average car price has fallen by around 19% over the past two years in China to around 165,000 yuan ($22,900).
Rather than reflecting market expansion, double-digit growth of new energy vehicles sales in China is just eating into internal combustion engine cars’ slice of the pie, Ying Wang, Fitch managing director, APAC Corporate ratings, told reporters Tuesday.

Customers look at BYD electric cars at an auto show in Yantai, in eastern China’s Shandong province on April 10, 2025.
Stringer | Afp | Getty Images

BEIJING — Competition in China’s electric car market just got fiercer with consequences for the domestic economy and even the global auto market.
Industry giant BYD last week announced a slew of discounts — some of nearly 30% or more — across several of its lower-end battery-only and hybrid models. The budget-friendly Seagull compact car saw its price drop to 55,800 yuan ($7,750).

Other major Chinese automakers have begun following suit.
“BYD’s action this time has made the industry rather nervous,” Zhong Shi, an analyst with the China Automobile Dealers Association, said in Mandarin, translated by CNBC.
“The industry is in [a state of] relatively large shock,” he said, noting smaller automakers are now more worried about their ability to compete.
The industry has been a rare bright spot in an economy that has been seeing slower growth and lackluster consumer demand. Part of Beijing’s latest attempt to spur consumption included subsidies for new energy vehicles, a category that includes battery-only and hybrid-powered cars.
“The latest car price competition underscores how supply-demand imbalance continues to fuel deflation,” Morgan Stanley’s Chief China Economist Robin Xing said in a report Wednesday.

“There is growing rhetoric about the need for rebalancing [to more consumption], but recent developments suggest the old supply-driven model remains intact,” he said. “Thus, reflation is likely to remain elusive.”

China’s electric car market has already been in a price war for the last two years, partly fueled by Tesla.
But this time, traditional automakers, including state-owned ones, are feeling significant heat as the share of new energy vehicles has come to account for about half of new passenger cars sold in China.
Last week, Great Wall Motors Chairman Wei Jianjun warned of an “Evergrande” in China’s auto industry that had yet to explode, comparing the fast-growing EV industry to the country’s bloated real estate sector. The outspoken private sector autos executive was speaking to Chinese media outlet Sina in an interview posted on May 23.
Once China’s real estate giant, Evergrande defaulted on its debt in late 2021 as the property market slumped after Beijing cracked down on the company’s high debt levels. Demand for homes also fell following tighter government regulations, leaving the developer struggling to finance the remaining construction of pre-sold units.
As Chinese media scrutiny on automakers’ financial situation rose, BYD on Wednesday refuted reports that it excessively pressured one of its dealers on cash flow. The dealer, Jinan Qiansheng in the eastern province of Shandong, did not immediately respond to a CNBC request for comment. BYD referred CNBC to its statement to Chinese media.
In the early years of China’s state-supported efforts to become a global leader in the emerging electric vehicle industry, the Ministry of Finance said it found at least five companies cheated the government of over 1 billion yuan ($140 million). The high-level policy encouraged a flood of startups, of which only a handful survived.

A 19% price drop over two years

In China, the average car retail price has fallen by around 19% over the past two years to around 165,000 yuan ($22,900), according to a Nomura report this week, citing industry data from Autohome Research Institute.
Price cuts were far steeper for hybrid or range-extension vehicles, at 27% over the last two years, while battery-only cars saw prices slashed by 21%, the report said. It noted that traditional fuel-powered cars saw a below-average 18% price cut.
In contrast, the average price of a new car in the U.S. was $48,699 in April, up nearly 1% from two years earlier, according to CNBC calculations of data from Cox Automotive. The average electric car price last month was an even higher $59,255.
BYD’s latest round of price cuts didn’t include the company’s higher-end models priced around 200,000 yuan, such as its flagship Han electric sedan. Reuters pointed out the newest model of the Han released in February was about 10% cheaper than its previous version, according to its calculations.
The Chinese auto giant, which was backed by Warren Buffett in its early years, has rapidly captured market share in China with its wide range of cars at various price points. The company reported a net profit increase of 49% to 14.17 billion yuan last year. Total current liabilities rose by more than 60% to 57.15 billion yuan. Cash and cash equivalents fell slightly to 102.26 billion yuan.

Price war to continue

Rather than reflecting market expansion, double-digit growth of new energy vehicles sales in China is just eating into internal combustion engine cars’ slice of the pie, Ying Wang, Fitch managing director, APAC Corporate ratings, told reporters Tuesday. She noted how the country’s auto market hasn’t grown much since 2018, and expects autos retail sales to only increase by low single digits this year.
Automakers will keep on using price cuts to gain market share in China this year, she said. Wang pointed out another option is for companies to include more features, such as advanced driver-assist systems, for free instead of asking consumers to pay more for them as an add-on.
Geely-backed Zeekr in March said it was releasing its advanced driver-assist system for free, while Tesla has attempted to charge its customers for a similar feature. A month earlier, BYD announced it was rolling out driver-assist capabilities to more than 20 of its car models.

Weekly analysis and insights from Asia’s largest economy in your inboxSubscribe now

In the last several months, China’s top leaders have increasingly called for efforts to address non-productive business competition, known as “involution.” The term was mentioned in the premier’s annual work report in March and in the market regulator’s meeting last week which called for “comprehensively rectifying ‘involutionary’ competition.”
However, the massive effort to produce lower-cost electric cars in China, and the automakers’ subsequent move to expand into other markets, has increased worries about the impact on other countries’ auto industries.
The European Union slapped tariffs on imports of China-made electric cars after probing the companies over the use of government subsidies in their manufacture. The U.S. also imposed duties of 100% on China-made electric cars, quashing hopes that the vehicles might enter the world’s second-largest auto market.
But in the EU, tariffs have had limited effect. In April, BYD outsold Tesla in Europe for the first time, according to JATO Dynamics. Tesla’s Europe sales plunged by 49% that month, according to the European Automobile Manufacturers’ Association.
— CNBC’s Bernice Ooi contributed to this report More

The summary Wednesday of the May 6-7 meeting of the Federal Open Market Committee reflected ongoing misgivings about the direction of fiscal and trade policy.
“Participants noted that the Committee might face difficult tradeoffs if inflation proves to be more persistent while the outlooks for growth and employment weaken,” the minutes said.
As it has done since the last cut in December, the FOMC kept its benchmark federal funds rate in a target between 4.25%-4.5%, with officials saying policy is well positioned against the current risks.

Federal Reserve officials at their meeting earlier this month worried that tariffs could aggravate inflation and create a difficult quandary with interest rate policy, minutes released Wednesday show.
The summary of the May 6-7 meeting of the Federal Open Market Committee reflected ongoing misgivings about the direction of fiscal and trade policy, with officials ultimately deciding the best course was to keep rates steady.

“Participants agreed that uncertainty about the economic outlook had increased further, making it appropriate to take a cautious approach until the net economic effects of the array of changes to government policies become clearer,” the minutes said. “Participants noted that the Committee might face difficult tradeoffs if inflation proves to be more persistent while the outlooks for growth and employment weaken.”
Though policymakers expressed concern about the direction of inflation and the vagaries of trade policy, they nevertheless said that economic growth was “solid,” the labor market is “broadly in balance” though risks were growing that it could weaken, and consumers were continuing to spend.
As it has done since the last cut in December, the FOMC kept its benchmark federal funds rate in a target between 4.25%-4.5%.
“In considering the outlook for monetary policy, participants agreed that with economic growth and the labor market still solid and current monetary policy moderately restrictive, the Committee was well positioned to wait for more clarity on the outlooks for inflation and economic activity,” the summary said.
The post-meeting statement noted that “uncertainty about the economic outlook has increased further.” Also, the committee said meeting its dual goals of full employment and low inflation have been complicated due to policy uncertainty.

Since the meeting, officials have repeated that they will wait until there’s more clarity about fiscal and trade policy before they will consider lowering rates again. Market expectations have responded in kind, with futures traders now pricing in virtually no chance of a cut until the Fed’s September meeting.
Trade policy also has evolved since the Fed last gathered.
Tariffs and ongoing saber-rattling between the U.S. and China eased a few days after the central bank meeting, with both sides agreeing to drop the most onerous duties against each pending a 90-day negotiation period. That in turn helped kindle a rally on Wall Street, though bond yields continue to climb, something President Donald Trump has sought to contain.
Amid the trade war and signs that inflation is slowly coming in toward the Fed’s 2% target, Trump has hectored central bank officials to lower rates. Fed Chair Jerome Powell, though, has said the Fed won’t be swayed by political interference.
The meeting also featured discussion about the Fed’s five-year policy framework.
When officials last visited their long-range policy, they devised what became known as “flexible average inflation targeting,” which essentially asserted that officials could allow inflation to run above their 2% target for a while in the interest of promoting more inclusive labor market gains.
In their discussion, officials noted that the strategy “has diminished benefits in an environment with a substantial risk of large inflationary shocks” or rates aren’t near zero, where they had been in the years after the 2008 financial crisis. The Fed held interest rates near the lower boundary despite inflation surging following the Covid pandemic, forcing them into aggressive hikes later.
The minutes noted a desire for policy that is “robust to a wide variety of economic environments.” Officials also said they have no intention on altering the inflation goal.

Don’t miss these insights from CNBC PRO More

Imagine someone who found secondary-school maths difficult being grilled about logarithms. That is how a lot of equity investors look if you ask them about currency risk. It is not because the question is novel: any client can spot that the share price of an overseas firm, or one doing business across borders, ought to depend on foreign-exchange (FX) rates. It is because it is easy to pose, but maddeningly hard to answer. Forecasting earnings is already a pain. It becomes much worse when the task is to make forecasts for each company in a portfolio, before splitting costs and revenues by perhaps a dozen currencies, and then netting it all off against hedging arrangements made years ago by a now-retired treasurer. Unsurprisingly, such analysis is often dumped in the “too hard” bucket. More