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    in Economy

    High Inflation and New Tariffs Will Make the Fed’s Job Tougher

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    Fresh tariffs amid high inflation are making the Fed’s job uniquely difficult and feeding uncertainty about what to expect for interest rates this year.High inflation is stoking fresh debate about how the Federal Reserve should respond to President Trump’s sweeping plans to reorder the world economy through tariffs, leading to questions about whether old playbooks still apply.On Saturday, Mr. Trump is poised to impose 25 percent tariffs on imports from Mexico and Canada as well as an additional 10 percent tariff on Chinese goods. That move comes on the heels of threats to impose hefty tariffs on Colombia, which were rescinded after its government complied with Mr. Trump’s demands to accept deported migrants.Howard Lutnick, Mr. Trump’s nominee to oversee the Commerce Department and trade, said at a confirmation hearing on Wednesday that he favored “across-the-board” tariffs that would hit entire countries.The volume of trade policy proposals is making the Fed’s already tricky job even more difficult and sowing uncertainty about what to expect from the central bank as it tries to fully wrestle inflation back to more normal levels.Tariffs are broadly seen by economists and policymakers as likely to stoke higher prices for U.S. businesses and consumers at least initially, and over time weigh on growth. That, as well as Mr. Trump’s plans to also enact mass deportations, steep tax cuts and reduced deregulation, has complicated the path forward for the Fed, which is debating how quickly to resume rate cuts and by what magnitude after pressing pause this week.What comes next is far from clear, leaving central bank officials to parse playbooks both old and new to formulate the right strategy.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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    G.M. Has Plans Ready for Trump’s Canada and Mexico Tariffs

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    General Motors, the largest producer of cars in Mexico, won’t provide details on how it would react if President Trump imposes 25 percent tariffs from the two countries.General Motors executives are closely tracking President Trump’s plans to impose tariffs on imports from Canada and Mexico, but the company is not yet making any major changes to its strategy in North America in response to the threatened tariffs.The automaker has pulled together an “extensive playbook” of possible options but won’t put them in place “until the world changes dramatically, and we see a permanent level of tariffs going forward,” the company’s chief financial officer, Paul Jacobson, told reporters in a conference call on Monday evening.“I won’t go into the details exactly but we’ve been preparing for that and want to make sure that we are prudent and don’t overreact,” he added.Mr. Trump said last week that he planned to impose tariffs of 25 percent on goods from Canada and Mexico starting on Saturday, Feb. 1. If he followed through on those plans, the tariffs would deal a big blow to G.M. and other automakers that produce vehicles and components in those countries, and probably increase the prices of many vehicles sold in the United States.G.M. produced nearly 900,000 vehicles in Mexico in 2024, more than any other carmaker, and most of those were shipped to the United States. Among them are the Chevrolet Silverado and GMC Sierra pickup trucks, as well as the Chevrolet Equinox sport-utility vehicle — all top-sellers and big sources of profit for the company. It also produces some Silverados and electric delivery vans in Canada.G.M. said on Tuesday that it lost $3 billion in the final three months of 2024, stemming from a $4 billion noncash expense related to a restructuring of its joint venture operations in China. The company’s revenue in the quarter rose 11 percent.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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    Trumps Threatens Tariffs Feb. 1 on Canada, Mexico and China

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    When President Trump did not follow through with his promise to immediately impose new tariffs on his first day in office, business executives and others who support international trade breathed a sigh of relief.That relief was short-lived. On Monday night, just hours after his inauguration speech, Mr. Trump said he planned to put a 25 percent tariff on products from Canada and Mexico beginning on Feb. 1, claiming that the countries were allowing “mass numbers of people and fentanyl” to come to the United States.On Tuesday evening, Mr. Trump said he would also put an additional 10 percent tariff on Chinese products by the same date, accusing China of sending fentanyl to Mexico and Canada, which was then crossing into the United States.Mr. Trump’s threats leave just 10 days before significant levies could go into effect on the United States’ three largest trading partners, a move that could throw American diplomatic relationships and global supply chains into disarray.Mexico, China and Canada account for more than a third of the goods and services that are imported to or bought from the United States, supporting tens of millions of American jobs. Together, the countries purchased more than $1 trillion of U.S. exports and provided nearly $1.5 trillion of goods and services to the United States in 2023, the last year government data is available.While tariffs have long been used by the United States as punishment for unfair trading practices, Mr. Trump’s first use of them is aimed at an entirely different outcome: tightening American borders against immigrants and illegal drugs.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 Is Said to Push for Early Reopening of North American Trade Deal

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    The president wants to begin renegotiating a U.S. trade deal with Canada and Mexico earlier than a scheduled 2026 review, people familiar with his thinking said.The Trump administration intends to push to renegotiate the U.S. trade deal with Canada and Mexico ahead of a required 2026 review of it, seeking to shore up U.S. auto jobs and counter Chinese firms that are making inroads into the Mexican auto sector, people familiar with the deliberations said.The U.S.-Mexico-Canada Agreement, which Mr. Trump signed in 2020, required the three countries to hold a “joint review” of the deal after six years, on July 1, 2026. But Mr. Trump intends to begin those negotiations sooner, according to the people, who spoke on the condition of anonymity to discuss plans that had not been made public.Trump officials particularly want to tighten the pact’s rules governing the auto sector, to try to discourage auto factories from leaving the United States, they said. They are also seeking to block Chinese companies making cars and auto parts from being able to export to the United States through factories in Mexico.Mr. Trump has also threatened to impose a 25 percent tariff on products from Canada and Mexico, saying those countries are allowing drugs and migrants to flow across American borders. Speaking from the Oval Office on Monday night after his inauguration, he said he planned to move forward with the tariffs on Feb. 1.Members of the Trump team believe that Mexico has been violating the terms of a separate agreement to limit metal exports to the United States, and they are eager to show the Mexican government that they mean to take action against such trade violations, one person familiar with the conversations said.The Wall Street Journal earlier reported that Mr. Trump was pushing for an early renegotiation of his North American trade deal. The three countries are required to meet to discuss the terms of the trade deal six years after the agreement went into force, but trade experts have expected the Trump team to speed up work on the issue.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

  • 138 Shares169 Views

    in Economy

    Trump Pitches External Revenue Service to Collect Tariffs: What to Know

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    President Trump has promised to generate a “massive” amount of revenue with tariffs on foreign products, an amount so big that the president said he would create a new agency — the External Revenue Service — to handle collecting the money.“Instead of taxing our citizens to enrich other countries, we will tariff and tax foreign countries to enrich our citizens,” Mr. Trump said on Monday in his inaugural address, where he reiterated a promise to create the agency. “It will be massive amounts of money pouring into our Treasury coming from foreign sources.”Much about the new agency remains unclear, including how it would differ from the government’s current operations. Trade experts said that, despite the name “external,” the bulk of tariff revenue would continue to be collected from U.S. businesses that import products.Here’s what you need to know about what Mr. Trump has proposed.The U.S. has an established system for collecting tariffs.Tariff revenue is currently collected by U.S. Customs and Border Protection, which monitors the goods and the people that come into the United States through hundreds of airports and land crossings.This has been the case nearly since the country’s inception. Congress established the Customs Service in 1789 as part of the Treasury Department, and for roughly a century tariffs were the primary source of government revenue, counted in stately customs houses that still stand in most major cities throughout the United States, said John Foote, a customs lawyer at Kelley, Drye and Warren.With the creation of the income tax in 1913, tariffs became a minor source of government revenue, and after the Sept. 11 attacks, the customs bureau was moved from the Treasury Department to the Department of Homeland Security.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 Holds Off on Tariffs, but Paves the Way for Future Trade Action

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    President Trump will stop short of immediately imposing tariffs on imported products on Monday, but will issue an executive order directing federal agencies to begin studying a broad list of trade issues that could ultimately result in taxes on goods from China, Canada, Mexico and other countries in the coming months.The decision suggests that Mr. Trump is taking a more measured approach to fulfilling a key campaign promise of using tariffs to reorder America’s trading relationships. It will also delay — at least for now — fights that have been brewing with foreign governments, which have promised to answer Mr. Trump’s levies with tariffs of their own.The topics Mr. Trump will direct his officials to investigate in an executive order Monday will be extensive, including trade deficits and trade deals signed with China, Canada and Mexico. That could tee up the ability of the president to deploy tariffs on numerous targets for many different reasons, potentially scrambling international supply chains and spawning global trade wars in the weeks and months to come.The executive order will direct federal agencies to examine unfair trade and currency practices and to assess whether foreign governments have complied with terms of the two trade deals Mr. Trump signed in his first presidency. It will also require the government to assess the feasibility of creating an “External Revenue Service” to collect tariffs and dutiesMr. Trump is also ordering a study of tariffs that the United States has imposed for national security reasons, as well as the use of a special trade exemption, called de minimis, that allows low-value goods to come into the United States tariff free. That loophole has allowed large volumes of Chinese goods to escape the tariffs Mr. Trump slapped on China during his first term. The details of the executive order were earlier reported by The Wall Street Journal.While Mr. Trump has decided to hold off on tariffs for now, his advisers say he remains more convinced than ever that they can be used to great advantage.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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    Chinese Companies Have Sidestepped Trump’s Tariffs. They Could Do It Again.

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    The companies have found plenty of new channels to the U.S. market — demonstrating the potential limits of the tariffs Donald Trump has promised to impose.After President Donald J. Trump slapped tariffs on Chinese bicycles in 2018, Arnold Kamler, then the chief executive of the bike maker Kent International, saw a curious trend play out in the bicycle industry.Chinese bicycle factories moved their final manufacturing and assembly operations out of China, setting up new facilities in Taiwan, Vietnam, Malaysia, Cambodia and India. Using parts mostly from China, those companies made bicycles that they could export directly to the United States — without paying the 25 percent tariff had the bike been shipped straight from China.“The net effect of what’s going on with these tariffs is that Chinese factories in China are setting up Chinese factories in other countries,” said Mr. Kamler, whose company imports some bicycles from China and makes others at a South Carolina factory.Pushing those factories into other countries resulted in additional costs for companies and consumers, without increasing the amount of manufacturing in the United States, Mr. Kamler said. He said he had been forced to raise his prices several times as a result of the tariffs.“There’s no real gain here,” said Mr. Kamler, whose bikes are sold at Walmart and other retailers. “It’s very inflationary.”Arnold Kamler said he had to raise prices at Kent International several times as a result of President Donald J. Trump’s 2018 tariffs.Kate Thornton for 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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    Trump’s Tariff Threat Pits Canada Against Mexico

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    If President-elect Donald J. Trump’s threat of hefty tariffs on Canada and Mexico was intended as a divide-and-conquer strategy, early signs show that it might be working.After his missive on Monday, in which he said he planned to impose a 25 percent tariff on all imports from both of the United States’ neighbors, Ottawa and Mexico City followed starkly different approaches.Mexico took a tough stance, threatening to retaliate with its own tariffs on U.S. goods. Canada, instead, emphasized that it was much closer aligned to the United States than Mexico.The trade agreement between the three North American nations has been carefully maintained over the past three decades through a delicate balance between the United States and its two key allies.As Mr. Trump prepares to take office, his willingness to tear that up to pressure the two countries on migration could open the door to the United States-Mexico-Canada agreement being replaced by separate bilateral deals with the United States.Chrystia Freeland, Canada’s finance minister, has tried to show that Canada is aligned with Mr. Trump’s hawkish attitude toward China.Blair Gable/ReutersWe 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