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    Trump’s New Crackdown on China Is Just Beginning

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    The administration is positioning itself to clamp down on Chinese investment and access to technology. But the wild card may be the president himself.President Trump’s tough talk on China typically centers on tariffs. But a closer look at the decisions he has made since taking office shows that the president is considering a far wider set of economic restrictions on Beijing, ones that could hasten America’s split from a critical trading partner.The Trump administration has so far proposed expanding restrictions on investments flowing between the United States and China. It has appointed officials who, because of national security concerns, are likely to push for more curbs on Chinese investments and technology sales to China. And Mr. Trump has ushered in a 10 percent tariff on Chinese imports, a move that he called an “opening salvo.”After years in which officials from both parties gradually pared back America’s economic relationship with China, Mr. Trump’s moves suggest that he is prepared to sever ties more aggressively.Samm Sacks, a senior fellow at Yale Law School’s Paul Tsai China Center, said the investment memorandum that the administration issued on Friday read like “a call to finish the unfinished task of fully unwinding commercial ties with China.”“So far, pragmatists have prevailed in getting a more narrow version of decoupling,” Ms. Sacks said.The pronouncements could be “a bargaining tool” for Mr. Trump to kick off negotiations with the Chinese leader, Xi Jinping, Ms. Sacks said. “But should that fall apart or not work out — which is probably most likely — I see this as the blueprint to finish the job of decoupling.”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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    Americans Brace for Inflation as Trump’s Tariffs Start to Take Effect

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    Fresh off the worst inflation shock in decades, Americans are once again bracing for higher prices.Expectations about future inflation have started to move up, according to metrics closely watched by officials at the Federal Reserve. So far, the data, including a consumer survey from the University of Michigan and market-based measures of investors’ expectations, does not suggest that price pressures are perceived to be on the verge of spiraling out of control.But the recent jump has been significant enough to warrant attention, stoking yet more uncertainty about an economic outlook already clouded by President Trump’s ever-evolving approach to trade, immigration, taxation and other policy areas. On Tuesday, a survey from the Conference Board showed that consumer confidence fell sharply in February and inflation expectations rose as Americans fretted about the surging price of eggs and the potential impact of tariffs.If those worries persist, it could be a political problem for Mr. Trump, whose promise to control prices was a central part of his message during last year’s campaign. It would also add to the challenge facing policymakers at the Fed, who are already concerned that progress against inflation is stalling out.“This is the kind of thing that can unnerve a policymaker,” Jonathan Pingle, who used to work at the Fed and is now chief economist at UBS, said about the overarching trend in inflation expectations. “We don’t want inflation expectations moving up so much that it makes the Fed’s job harder to get inflation back to 2 percent.”Most economists see keeping inflation expectations in check as crucial to controlling inflation itself. That’s because beliefs about where prices are headed can become a self-fulfilling prophecy: If workers expect the cost of living to rise, they will demand raises to compensate; if businesses expect the cost of materials and labor to rise, they will increase their own prices in anticipation. That can make it much harder for the Fed to bring inflation to heel.That’s what happened in the 1960s and 1970s: Years of high inflation led consumers and businesses to expect prices to keep rising rapidly. Only by raising interest rates to a punishing level and causing a severe recession was the Fed able to bring inflation fully back under control.

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    Expected rate of inflation in the next five years, by political party
    Source: University of Michigan Survey of Consumer SentimentBy 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

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    Markets and Corporate America Are Unfazed by Washington Chaos, for Now

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    The federal budget debate has big implications for the economy. Businesses are betting that tax cuts will be extended and the math will work out.Even by Washington standards, the second Trump presidency has begun in frenetic fashion: mass firings at federal agencies, tariff threats against allies and foes alike, and haggling over how to get a Republican budget through a narrowly divided Congress.Business leaders and corporate investors are confident that things will turn out fine, at least for them. “Markets aren’t showing all that much concern,” Jason Pride, chief of investment strategy and research at the Glenmede Trust Company, noted.But that could change, with high-stakes implications for the markets and the U.S. economic outlook.Investors fully expect the tax cuts from President Trump’s first term, which mostly benefited businesses and the wealthy, to be fully extended before the end of the year. Trade groups including the Business Roundtable and the National Association of Wholesaler-Distributors are confident the extension will be taken care of — especially since not doing so “would impose, effectively, a tax increase,” Mr. Pride added.Still, the arithmetic remains tenuous. The cost of extending the tax cuts may total $4 trillion over 10 years. That means Congress is being left to barter over what else can save or raise money, and whose federal benefits might be cut.The bond market — where traders price the risk of both inflation and an economic downturn — has, for its part, shimmied off moments of worry brought on by Mr. Trump’s boomeranging style of negotiation over tariffs. The bet is that the threats of an import tax are more a geopolitical tool than a key revenue raiser, as the administration has portrayed the tariffs in budget discussions.Some of the underlying calm stems from Wall Street’s confidence in Treasury Secretary Scott Bessent. A billionaire hedge fund manager before assuming his new position, he has convinced many analysts that the ultimate suite of policies coming from the White House will be beneficial once it coalesces, and he “has also added to some optimism around lower deficits” in future budgets, according to Matt Luzzetti, the chief economist at Deutsche Bank.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 Eyes a Bigger, Better Trade Deal With China

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    During the Biden administration, Donald J. Trump would sit in his mirrored and gold-trimmed salon at Mar-a-Lago where he had once hosted China’s leader, Xi Jinping, brooding to visitors about the outcome of the trade agreement he signed with China in 2020.Mr. Trump would castigate “stupid people” in the White House for failing to honor “my trade agreement,” and muse about how, if he won a second term, he could strike the deal of a century with Mr. Xi.Now back in the Oval Office, President Trump is eyeing the possibility of a new trade deal with China.More than half a dozen current and former advisers and others familiar with Mr. Trump’s thinking say that, although there would be significant hurdles to reaching any agreement, the president would like to strike a wide-ranging deal with Mr. Xi, one that goes beyond just reworking the trading relationship.Mr. Trump has expressed interest in a deal that would include substantial investments and commitments from the Chinese to buy more American products (despite China’s failure to buy an additional $200 billion of goods and services under the 2020 agreement). He would like an agreement to also include issues like nuclear weapons security, which he envisions ironing out man to man with Mr. Xi, his advisers say.Mr. Trump is already following a familiar playbook of tariffs and other threats as he looks to negotiate a deal. On Feb. 1, he hit Beijing with 10 percent tariffs on all Chinese imports — what the president called an “opening salvo” — quickly resulting in retaliation from the Chinese. He has also floated the idea of revoking the permanent normal trading relations the United States extended to China more than 20 years ago.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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    Senate Confirms Howard Lutnick as Commerce Secretary

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    The Senate on Tuesday voted 51 to 45 to confirm Howard Lutnick to be President Trump’s commerce secretary, putting in place one of the administration’s top economic officials who will help oversee an agenda around tariffs and protectionism.Mr. Lutnick, who was the chief executive of the financial services firm Cantor Fitzgerald, became a central economic adviser to Mr. Trump over the past year and led his transition team. He has defended tariffs as a tool to protect U.S. industries from international competition, promoted lower corporate taxes and called for an expansion of energy production.As commerce secretary, Mr. Lutnick will take on a broad portfolio that includes defending U.S. business interests worldwide and overseeing restrictions on technology exports to countries like China.At his confirmation hearing last month, Mr. Lutnick said he would take a tough stance on the department’s oversight of technology sales to China and back up U.S. export controls with the threat of tariffs. He said the recent artificial intelligence technology released by the Chinese start-up DeepSeek had been underpinned by Meta’s open platform and chips sold by the U.S. company Nvidia.“We need to stop helping them,” Mr. Lutnick said of China, adding, “I’m going to be very strong on that.”As the United States resumes economic negotiations with the country, Mr. Lutnick is expected to play a central role. Mr. Trump said the new commerce secretary would oversee the work of the Office of the United States Trade Representative, which is traditionally the hub of trade policy.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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    Can the Federal Reserve Look Past Trump’s Tariffs?

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    Top officials are grappling with how to handle potential price increases caused by the administration’s policies.As President Trump’s efforts to restructure the global trade system with expansive tariffs begin to take shape, one question continues to dog officials at the Federal Reserve: How will these policies impact the central bank’s plans to lower interest rates?One influential Fed governor made clear on Monday that he did not expect Mr. Trump’s policies to derail the Fed’s efforts to get inflation under control, suggesting instead that fresh interest rate cuts are still in play this year.“My baseline view is that any imposition of tariffs will only modestly increase prices and in a nonpersistent manner,” Christopher J. Waller, the official, said in remarks at an event in Australia Monday evening. “So I favor looking through these effects when setting monetary policy to the best of our ability.”Economists are concerned that tariffs, which are essentially taxes on American consumers, will increase prices in the United States, at least temporarily, and over time slow economic growth.Mr. Waller acknowledged that the economic impact of the tariffs could be larger than anticipated depending on how they are structured and later put in place. But he suggested that any uptick in prices from tariffs could be blunted by other policies, which could have “positive supply effects and put downward pressure on inflation.”Mr. Waller’s views matter given that he is one of the seven officials who make up the Board of Governors and votes at every policy meeting.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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    Uncertainty About Economic Policy Is Hampering Business Decisions

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    The lack of clarity about tariffs and other policies could hurt hiring and investing. But the strong U.S. economy should provide a buffer.It is an axiom heard countless times in business school lecture halls and on corporate earnings calls: Uncertainty is bad for business.The U.S. economy is about to test that proposition like never before.The first weeks of the second Trump administration have been a dizzying whirlwind of economic policy moves: A spending freeze was declared, then rescinded. Federal programs, and even entire agencies, have been suspended or shut down. Tariffs have been threatened, announced, canceled, delayed or enacted — sometimes in a matter of days or even hours. Measures of economic policy uncertainty have soared to levels normally associated with recessions and global crises.Business leaders — many of whom cheered President Trump’s election victory, expecting lower taxes and reduced regulation — have been left shaking their heads.“Your guess is as good as mine what’s happening in Washington,” said Nicholas Pinchuk, chief executive of the automotive toolmaker Snap-on.“So far what we’re seeing is a lot of costs and a lot of chaos,” Jim Farley, the chief executive of Ford Motor, told investors at a conference in New York this week.“It’s like your head is spinning with what’s coming down — you just never know,” said Chad Coulter, founder and chief executive of Biscuit Belly, a chain of breakfast restaurants based in Louisville, Ky.

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    Economic policy uncertainty index
    Note: Daily data, shown as biweekly average.Source: Federal Reserve Bank of St. LouisBy 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

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    What to Know About VAT, the Tax System Used in Europe That Trump Despises

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    The president says the VAT system used across Europe gives other countries unfair trade advantages. Here’s how the system started.President Trump on Thursday ordered his advisers to determine new tariff rates on America’s trading partners, a move that he said would “correct longstanding imbalances in international trade.”As part of his plan, Mr. Trump has taken aim at the value-added tax, a system used widely in Europe and elsewhere to tax the consumption of goods and services. The president and his team describe the tax as giving other countries an unfair trade advantage over the United States.Here’s what to know.What is a value-added tax?It’s a consumption tax that adds tax on a good or service at each stage of production. The final VAT is the sum of the tax paid at each stage. This system is unlike a sales tax in the United States, which is imposed by states on the final sale of the good.In Europe, VAT rates vary by country, but on average are about 20 percent — far higher than state sales taxes in the United States, which averaged 6.6 percent in 2023, according to the Tax Foundation.Value-added taxes are assessed at each stage of production for a good or service. The cost is borne by the final consumer, not by the business. If the goods are exported, much of the value-added taxes are given back to the exporter. That provides an incentive for businesses to export goods instead of selling in their home market.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