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Rising Inflation Underscores Risks in Trump’s New Tariff Threats

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New data showing price increases last month could foreshadow even higher costs if the president imposes steep tariffs on Aug. 1.President Trump’s steep tariffs have started to weigh on consumers’ wallets, sending prices higher as the White House readies a more drastic — and potentially costly — expansion of its global trade war.The risks in Mr. Trump’s economic strategy began to show on Tuesday, with the release of data that found inflation had accelerated in June. Prices rose noticeably on appliances, clothing and furniture, products that are all heavily exposed to the president’s taxes on imports from Canada, China and other major trading partners.The inflation report undercut Mr. Trump’s continued assertions that Americans would not face financial repercussions from his increasingly aggressive trade brinkmanship. Since taking office, the president has imposed withering duties on allies and adversaries alike, with additional taxes on a range of products such as cars and steel.The latest reading of the Consumer Price Index recorded the first signs of what economists had predicted all along, with U.S. businesses and consumers shouldering a growing share of the burden from the taxes Mr. Trump has imposed on imports.The data also carried perhaps a new warning for the president as he prepares another round of tariffs on dozens of countries in about two weeks, including a 30 percent tax on the European Union. Some experts said that an uptick in inflation could foreshadow more significant price increases later, especially if Mr. Trump proceeds as planned.“Up until this report, you could have argued that inflation is on a journey lower,” said Padhraic Garvey, who leads ING’s research team for the Americas. “Now we are on a journey higher.”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 Economy Has Been Resilient. The New Round of Tariffs May Hit Harder.

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    The economy’s resilience so far to President Trump’s global trade war risks emboldening him and unleashing the sort of economic devastation that economists have long feared.President Trump has had little reason to scale back his global trade war ambitions with inflation subdued, unemployment stable and U.S. stock markets back to record highs.But the latest escalation, including 30 percent levies on the European Union, could deliver a much more painful blow to the United States. If the tariffs go into effect on Aug. 1, they could unleash the sort of devastation to consumers and businesses that economists have long worried about and that Mr. Trump has mostly avoided. Their fear stems from the specter of a stagflationary shock, in which inflation intensifies as growth stalls.“The higher that tariffs end up being, the more stagflationary it will be,” said Eric Winograd, an economist at the investment firm AllianceBernstein.Tariffs have already had an impact on the economy in a number of ways, and the levies now threatened against the European Union risk causing even more painful disruptions, given that the bloc and the United States are each other’s largest trading partner.Ursula von der Leyen, the president of the European Commission, said in a statement that Mr. Trump’s latest tariffs “would disrupt essential trans-Atlantic supply chains, to the detriment of businesses, consumers and patients on both sides of the Atlantic.”So far, businesses have been able to mitigate some of the impact of Mr. Trump’s levies. To get ahead of the tariffs, they stockpiled products earlier this year, causing imports to surge before later crashing down. Americans have grown less confident about the economy as uncertainty surrounding Mr. Trump’s policies has frozen businesses in place.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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    Trump Takes Reins on U.S. Economy With Policy Bill and Tariffs Renewal

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    His expensive tax cuts have been signed into law. His steep global tariffs are taking clearer shape. And his twin campaigns to deregulate government and deport immigrants are well underway.With the major components of his agenda now coming into focus, President Trump has already left an indelible mark on the U.S. economy. The triumphs and turbulence that may soon arise will squarely belong to him.Not even six months into his second term, Mr. Trump has forged ahead with the grand and potentially disruptive economic experiment that he first previewed during the 2024 campaign. His actions in recent weeks have staked the future of the nation’s finances — and its centuries-old trading relationships — on a belief that many economists’ most dire warnings are wrong.Last week, the president enacted a sprawling set of tax cuts that he believes to be the ingredients for rapid economic growth, even as fiscal experts warned that the law may injure the poor while putting the U.S. government on a risky new fiscal path.Then, on Monday, Mr. Trump began to issue his latest round of tariff threats, insisting that “we’re done” negotiating as economists warned about a potential surge in consumer prices that could arise from taxing imports.The White House also proceeded with its aggressive and legally contested plans to eliminate scores of federal regulations and deport millions of migrants. The immigration crackdown, in particular, could come to the detriment of many sectors, like agriculture, that rely heavily on foreign labor, experts believe.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

  • 113 Shares189 Views

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    Consumers Show Signs of Strain Amid Trump’s Tariff Rollout

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    <!–> [–><!–> –> <!–> –><!–> [–><!–> –><!–> [–><!–> –><!–> [–><!–>For now, consumers are still spending, although more slowly than in the past. Their attitudes about the economic outlook have soured in recent months in anticipation of elevated prices, slower growth and higher unemployment. Americans have also become choosier about how they spend their money. Leisure […] More

  • 138 Shares149 Views

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    A Tidal Wave of Change Is Headed for the U.S. Economy

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    When the Covid pandemic hit, factories in China shut down and global shipping traffic slowed. Within a matter of a few weeks, products began disappearing from U.S. store shelves and American firms that depend on foreign materials were going out of business.A similar trend is beginning to play out, but this time the catalyst is President Trump’s decision to raise tariffs on Chinese imports to a minimum of 145 percent, an amount so steep that much of the trade between the United States and China has ground to a halt. Fewer massive container ships have been plying the ocean between Chinese and American ports, and in the coming weeks, far fewer Chinese goods will arrive on American shores.While high tariffs on Chinese products have been in place since early April, the availability of Chinese products and the price that consumers pay for them has not changed that much. But some companies are now starting to raise their prices. And experts say that the effects will become more and more obvious in the coming weeks, as a tidal wave of change stemming from canceled orders in Chinese factories works its way around the world to the United States.The number of massive container ships carrying metal boxes of toys, furniture and other products departing China for the United States has plummeted by about a third this month.The reason consumers haven’t felt many of the effects yet is because it takes 20 to 40 days for a container ship to travel across the Pacific Ocean. It then takes another one to 10 days for Chinese goods to make their way by train or truck to various cities around the country, economists at Apollo Global Management wrote in a recent report. That means that the higher tariffs on China that went into effect at the beginning of April are just starting to result in a drop in the number of ships arriving at American ports, a trend that should intensify.By late May or early June, consumers could start to see some empty shelves, and layoffs could occur for retailers and logistics industries. The major effects on the U.S. economy of shutting down trade with China will start to become apparent in the summer of 2025, when the United States might slip into a recession, said Torsten Slok, an economist at Apollo.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

  • 88 Shares129 Views

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    How Trump May Unintentionally Cut Carbon Emissions

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    President Trump has expressed little interest in fighting climate change. One of his key cabinet officials has even sought to evaluate whether humanity benefits from a warming climate, in a bid to undermine environmental rules.Yet even as he works to accelerate oil and gas production, Mr. Trump’s economic approach may inadvertently reduce greenhouse gas emissions, as consumption slows in response to a global trade war.Any reprieve for the planet, however, would be brief. Over the longer term, tanking the economy with tit-for-tat tariffs is likely to impede progress, because of how much clean energy deployment depends on overseas supply chains and because voters are less likely to support climate policy when they’re financially stressed.Carbon emissions, largely a byproduct of going places and making things, have always been tethered to economic growth. Forecasters increasingly anticipate that Mr. Trump’s aggressive use of tariffs could tip the economy into recession as companies and consumers cut spending in the face of higher prices for imported goods.“If we’re talking about a traditional recession, people fly less, they buy less stuff, there’s less investment in capital goods,” said Alex Heil, a senior economist at the Conference Board, who focuses on energy and climate. “And just a slowdown in economic activity is likely to slow down carbon emissions.”That is what happened in the last two recessions. Global carbon emissions dipped slightly, before resuming their upward march. (Emissions in the United States continued to decline after 2008 as cheap natural gas displaced coal, and it’s possible that a similar peak is nearing for the rest of the world.)Carbon Emissions Slow When the Economy Takes a Hit

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    Global annual carbon emissions
    Source: Global Carbon BudgetBy 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

  • 175 Shares159 Views

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    As Tariffs Hit, Americans Are Racing to Buy Car Seats, iPhones and Christmas Gifts

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    Many Americans have purchased foreign-made products out of fears that companies could start to raise prices soon.Emily Moen, a coffee shop manager in Omaha, was scrolling through TikTok earlier this week when she came across a video informing her that President Trump’s tariffs could lead to higher prices for essential baby products.Ms. Moen, who is 15 weeks pregnant, said that she had not planned to buy a car seat soon. But after watching the video, she researched the one made by Graco that she had been eyeing, and learned that it was manufactured in China. Worried that the $200 seat could get even more expensive, she bought the item on Amazon the same day.“It was like an awakening to get this done now,” said Ms. Moen, 29.As the Trump administration’s trade war with China escalates, many consumers have raced to purchase foreign-made products out of fear that companies could start to raise prices soon. Some have rushed to buy big-ticket items like iPhones and refrigerators. Others have hurriedly placed orders for cheap goods from Chinese e-commerce platforms.The White House this week imposed a minimum tariff rate of 145 percent on all Chinese imports to the United States, on top of other previously announced levies, including a 25 percent tariff on steel, aluminum, cars and car parts.And last week, Mr. Trump ordered the end of a loophole that had allowed goods from China worth less than $800 to enter the United States without tariffs.Early data show that consumers stocked up on goods after the Trump administration announced sweeping tariffs on nearly all trading partners.Angela Weiss/Agence France-Presse — Getty ImagesWe 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

  • 88 Shares129 Views

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    Fed Under Pressure as Inflation Expectations Surge

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    Federal Reserve officials have had one clear message since President Trump sharply escalated the global trade war this month. Keeping inflation expectations in check as price pressures rise is their No. 1 priority.On Friday, they faced a big setback.A new survey released by the University of Michigan found that as consumer sentiment took another nosedive because of fears associated with Mr. Trump’s tariffs, expectations about inflation — in the year ahead and over a longer time horizon — jumped sharply.Over the next 12 months, respondents now expect inflation to surge to 6.7 percent, the highest reading since 1981 and a significant increase from the March level of 5 percent. In five years’ time, they are bracing for inflation to stay stuck above 4 percent. The Fed’s goal is 2 percent inflation.There are reasons to take this data with a grain of salt. For one, the survey tends to reflect political biases. Since Mr. Trump returned to the White House, Democrats, once optimistic about the outlook, have turned much more downbeat, about not only inflation but also growth and the labor market. Republicans, meanwhile, have flipped from being far more pessimistic during Biden’s presidency to much more positive.On the margins, that political divide may be beginning to narrow, with the decline in sentiment in April “pervasive and unanimous across age, income, education, geographic region and political affiliation,” according to Joanne W. Hsu, director of the consumer surveys. Independents are also starting to change their opinions in a distinct way, accounting for a large part of the rise in longer-run inflation expectations.What has helped to somewhat alleviate concerns about the survey findings is the fact that market measures of longer-run inflation expectations, which are based on U.S. government bonds, have stayed far more stable. The divergence has been so stark as to prompt Jerome H. Powell, the Fed chair, to refer to the University of Michigan survey as an “outlier,” as recently as last month.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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    Walmart Says Trump’s Tariffs Have Added Uncertainty to Its Outlook

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    The timing was a bit awkward.Walmart’s investor event — which happens every two years and aims to showcase the company’s strengths and strategy for growth — also happened to fall on the same day that U.S.-imposed tariffs went into effect worldwide and a trade war heated up.As the largest retailer in the United States, Walmart relies on suppliers from around the world. And for the Wall Street analysts who attended the event in Dallas on Wednesday, tariffs were top of mind.Doug McMillon, Walmart’s chief executive, acknowledged the uncertainty. In response to one of several questions from analysts about tariffs, he said: “There’s so many variables playing out in terms of what costs are going to be, where people source from. We’re going have to manage this as we always do, daily.”Or by the minute.As the event got underway on Wednesday, the United States had imposed worldwide tariffs, including a levy of 104 percent on Chinese goods, and China quickly retaliated with 84 percent tariffs on U.S. goods. Mr. McMillon, speaking just after Beijing’s additional tariffs went into effect, said the situation was “very fluid.” In fact, not long after Mr. McMillon’s question-and-answer session with analysts, President Trump said he was pausing his worldwide reciprocal tariffs for 90 days and raising the rate on China to 125 percent.During the session, Mr. McMillon emphasized that Walmart was well placed to cope with uncertainty, having navigated “the period after 9/11, the global financial crisis, a pandemic and more recently high inflation.” Walmart’s customer base includes a large number of lower-income shoppers, who have less capacity to absorb the higher prices that the tariffs could bring.John David Rainey, Walmart’s chief financial officer, emphasized that two-thirds of what Walmart sells in the United States is made, grown or assembled domestically; the figure includes groceries, which generally have lower margins. The other third of what Walmart sells comes from all over the world, especially from China and Mexico, he said.Mr. Rainey said the tariffs had made it harder for Walmart to predict its first-quarter operating income growth. “We’re one week into this new tariff environment, and we’re still working through what this means for us,” he said. “For the current quarter, the uncertainty and decline in consumer sentiment has led to a little more sales volatility week to week and, frankly, day to day.”Walmart reiterated expectations for first-quarter sales growth of about 3 to 4 percent and said its annual sales growth guidance remained unchanged, with customers still expected to migrate toward e-commerce and delivery, key parts of Walmart’s strategy. Walmart will report its first-quarter results on May 15. More