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Slumping Oil Prices Reflect Intensifying Economic Worries

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Oil prices continued to fall on Friday, extending Thursday’s sharp drop. Brent crude, the international benchmark, traded at its lowest level in more than three years, below $65 a barrel, a fall of almost 8 percent.Fears that President Trump’s tariffs could slash global economic growth — and demand for oil as a result — were weighing on the market, analysts said.China’s announcement on Friday of 34 percent retaliatory tariffs against the United States has further stoked worries that demand for oil and other commodities could be throttled by the trade turmoil.Thursday’s surprise decision by a Saudi Arabia-led group of countries in the OPEC Plus cartel to accelerate planned production increases has added to the downward pressure. Essentially, the market is worried about a bearish mixture of tariffs weakening demand, compounded by growing pressure from oil-producing countries like Iraq and Kazakhstan to add to supplies.In a note to clients, analysts at Morgan Stanley said that in a recession — which is a looming possibility — demand growth for oil “typically falls at least to zero.” More

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    Trump’s Tariffs Would Reverse Decades of Integration Between U.S. and Mexico

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    Ties between the United States and Mexico have deepened over 30 years of free trade, creating both benefits and irritants.When Dennis Nixon started working at a regional bank in Laredo, Texas, in 1975, there was just a trickle of trade across the border with Mexico. Now, nearly a billion dollars of commerce and more than 15,000 trucks roll over the line every day just a quarter mile from his office, binding the economies of the United States and Mexico together.Laredo is America’s busiest port, and a conduit for car parts, gasoline, avocados and computers. “You cannot pick it apart anymore,” Mr. Nixon said of the U.S. and Mexican economies. Thirty years of economic integration under a free trade deal has created “interdependencies and relationships that you don’t always understand and measure, until something goes wrong,” he said.Now that something is looming: 25 percent tariffs on Mexican products, which President Trump plans to impose on Saturday as he looks to pressure the Mexican government to do more to curb illegal immigration. Mr. Trump is also expected to hit Canada with 25 percent levies and impose a 10 percent tax on Chinese imports.A longtime proponent of tariffs and a critic of free trade deals, Mr. Trump seems unafraid to upend America’s closest economic relationships. He is focusing on strengthening the border against illegal immigration and the flow of fentanyl, two areas that he spoke about often during his 2024 campaign.But the president has other beefs with Mexico, including the economic competition it poses for U.S. workers. The president and his supporters believe that imports of cars and steel from Mexico are weakening U.S. manufacturers. And they say the United States-Mexico-Canada Agreement, the trade deal Mr. Trump signed in 2020 to replace the North American Free Trade Agreement, needs to be updated — or perhaps, in some minds, scrapped.Many businesses say ties between the countries run deeper than most Americans realize, and policies like tariffs that seek to sever them would be painful. Of all the world’s major economic partners, the United States and Mexico are among the most integrated — linked by business, trade, tourism, familial ties, remittances and culture. It’s a closeness that at times generates discontent and efforts to distance the relationship, but also brings many benefits.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 Will Hit Mexico, Canada and China With Tariffs

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    President Trump plans to impose stiff tariffs on Mexico, Canada and China on Saturday, a move aimed at pressuring America’s largest trading partners into accepting more migrants and halting the flow of migrants and drugs into the United States.Mr. Trump will put a 25 percent tariff on goods from Mexico and Canada, along with a 10 percent tariff on Chinese products, Karoline Leavitt, the White House press secretary, said in a news briefing Friday.Speaking to reporters in the Oval Office on Friday, Mr. Trump said the tariffs were punishment for Canada, Mexico and China allowing drugs and migrants to flood into the United States.Mr. Trump’s decision to hit America’s trading partners with tariff could mark the beginning of a disruptive and damaging trade war, one that is far messier than the conflict that defined Mr. Trump’s first term.Back then, Mr. Trump placed tariffs on nearly two-thirds of Chinese imports, resulting in China hitting the U.S. with levies of its own. Mr. Trump also imposed tariffs on steel and aluminum, inciting retaliation from the European Union, Mexico and Canada.While the tariffs against allies were viewed as controversial, they were relatively limited in scope. It remains to be seen exactly what products Mr. Trump’s new tariffs apply to, but the president has implied that they would be expansive and cover imports from Canada and Mexico, close allies of the United States.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’s Plans to Scrap Climate Policies Has Unnerved Green Energy Investors

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    President-elect Donald J. Trump is expected to roll back many of the rules and subsidies that have attracted billions of dollars from the private sector to renewable energy and electric vehicles.Money is the mother’s milk of politics, but the outcome of elections also determines where it flows — and last month’s was especially crucial for the energy industry.Clean investment — including renewable energy as well as the manufacturing of electric vehicles, batteries and solar panels — has boomed since the passage of the 2022 Inflation Reduction Act, championed by President Biden. In the third quarter of 2024, it reached a record $71 billion, according to a tracker maintained by the Rhodium Group, an energy-focused research firm, and M.I.T.The big question looming now on Wall Street: Will President-elect Donald J. Trump, who called Mr. Biden’s policies the “green new scam” during the campaign, pull back enough of those subsidies and regulations to meaningfully change the economics of investing in decarbonization?Market reactions right after the election seemed clear. Clean energy stocks dropped sharply, while shares of oil companies bounced, indicating a divergent view of how the two sectors will fare in the coming years.Near the top of Mr. Trump’s agenda next year is extending his 2017 tax cuts. He will most likely need to reduce spending elsewhere to do that. Clean energy tax credits — worth about $350 billion over just the next three years, according to the Congressional Joint Committee on Taxation — would be a tempting target. The more those subsidies are pared, the more projects would no longer make financial sense.President Biden has championed the 2022 Inflation Reduction Act and other policies designed to address climate change and spur investment in cleaner forms of energy.Kenny Holston/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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    Russian Oil Flows Through Western ‘Price Cap’ as Shadow Fleet Grows

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    A report shows how Russia has largely evaded sanctions aimed at limiting its revenue from oil sales.A plan hatched by wealthy Western nations to deprive Russia of oil revenue is largely faltering, a new report found, with the majority of the Kremlin’s seaborne oil exports evading restrictions that were supposed to limit the price of Russian crude.Almost two years since an oil “price cap” was enacted, nearly 70 percent of the Kremlin’s oil is being transported on “shadow tankers” that are evading the restrictions, according to an analysis published by the Kyiv School of Economics Institute, a Ukraine-based think tank.Russia’s success at circumventing the sanctions imposed by the Group of 7 nations has allowed it to continue to finance its war against Ukraine. The effectiveness of the price cap has been marred by loose enforcement of the policy. Officials in the United States and Europe have tried to balance their goals of crippling Russia’s economy while keeping oil markets well supplied to prevent price spikes.The challenges underscore the limitations that the world’s advanced economies have been facing as they attempt to intervene in global energy markets to try to hasten an end to Russia’s invasion of Ukraine.The Kyiv School of Economics Institute, which has argued for tougher sanctions on Russian oil, noted in its report that Russia’s shadow fleet poses a threat to the world’s oceans because the tankers are often poorly maintained and not properly insured.“There have been several instances of shadow tankers being involved in collisions or coming close to running aground in recent months,” the report said. “Large oil spills have so far been avoided but a major disaster is waiting to happen and cleanup costs would reach billions.”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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    U.S. Faces Economic Turbulence Just as Recession Fears Eased

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    War in the Middle East, a strike by port workers and a devastating hurricane injected uncertainty into the U.S. economy.The United States economy is suddenly staring down new and potentially damaging crises, with tensions flaring in the Middle East and several states grappling with fallout from a devastating hurricane.The events hit just as American policymakers were gaining confidence that they had successfully tamed inflation without pushing the economy into a recession and as polls and consumer surveys suggested that Americans’ sour economic mood had begun to improve. But in just a week, new risks have emerged.The economy now faces the prospect of an oil price spike and the aftermath of a storm that could inflict more than $100 billion in damage upon large swaths of the Southeast. Economists have also been tracking potential consequences of a port workers’ strike, which was suspended on Thursday evening.“There’s new uncertainty,” said Joseph E. Gagnon, senior fellow at the Peterson Institute for International Economics. “If we lose oil output in the Middle East, if the ports are not functioning, then both are inflationary.”That uncertainty is arriving just weeks before a presidential election in which the economy — in particular, inflation — is one of the biggest factors on voters’ minds and less than a month after the Federal Reserve began cutting interest rates from more than a two-decade high. The central bank has gained confidence that inflation is coming back to its 2 percent goal, but has been wary about the labor market weakening.Even before the new risks emerged, the International Monetary Fund was projecting that the U.S. economy would slow next year.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’s Promises to Cut Inflation Are Unrealistic, Many Economists Say

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    Economists and analysts are dubious of Trump’s promises to slash gas prices or prod interest rates lower.As he seeks to return to the White House, former President Donald J. Trump has pledged to cut Americans’ energy costs in half in the span of a year, part of a plan to reduce inflation and drive mortgage rates back toward record lows.But economists and analysts — and Mr. Trump’s own record from his first term — suggest that it is unlikely that Mr. Trump can deliver on those promises.Mr. Trump’s vow to dramatically reduce Americans’ cost of living hinges in part on his plans to quickly expand oil and gas drilling and reduce government impediments to power plant construction, which he says would slash energy bills by “more than half.” As prices fall, he regularly states, interest rates will come down, along with mortgage rates.But Mr. Trump has not cited modeling or other economic analysis to support his assertions. Economic research and historical experience suggest that presidents have only a limited effect on locally regulated electric utilities or on the cost of oil, which is a globally traded commodity.“He doesn’t really have the tools to lower oil prices enough to cut gasoline prices in half,” said Steven Kamin, a senior fellow at the conservative American Enterprise Institute and former Federal Reserve economist.In all, experts and past evidence suggest that Mr. Trump is over-promising on key economic issues related to prices and interest rates. And that fits with a pattern he established during his earlier campaigns — one in which he emphasizes big, catchy outcomes with little attention to costs or how he might make good on his pledges.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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    Ford Pulls Back Its Electric Vehicle Push

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    The automaker said it would invest less in battery-powered cars and scrap a planned electric three-row sport utility vehicle.Ford Motor, which had once hoped to race ahead of other established automakers in electric vehicles, is again slowing the pace of its investments and new battery-powered models.The automaker said on Wednesday that it would delay the introduction of a new large electric pickup truck by about 18 months, to 2027, and scrap a three-row electric sport utility vehicle.The company is also reducing the amount of money it plans to spend on electric vehicles in an effort to stem multibillion-dollar losses on the technology, while adding plans to introduce a new electric delivery van in 2026. A new medium-size electric pickup is expected in 2027 as well, the company said.“The competitive nature of the market is changing globally,” Ford’s chief financial officer, John Lawler, said in a conference call. “That means these vehicles need to be profitable, and if not, we will pivot and adjust and make those tough decisions.”Mr. Lawler said investments in electric vehicles would now account for about 30 percent of the company’s capital budget, down from 40 percent. The company will take a charge of $400 million to account for the cost of manufacturing equipment it purchased for the production of the canceled electric S.U.V., and it may have up to $1.5 billion in additional expenses related to the project.“This is certainly not great news in terms of Ford’s progress on E.V.s,” said Sam Abuelsamid, a principal research analyst at Guidehouse Insights, a research firm. “Clearly they have not yet come to grips with cost-reduced E.V.s and getting more affordable products on the 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

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    New Plan to Target Russia’s Oil Revenue Brings Debate in White House

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    Treasury officials want to impose penalties on tankers that help Russian oil evade sanctions. White House aides worry that risks making gasoline more expensive.Officials in President Biden’s Treasury Department have proposed new actions aimed at crippling a fleet of aging oil tankers that are helping deliver Russian oil to buyers around the world in defiance of Western sanctions.Their effort is aimed at punishing Russia but it has stalled amid White House concerns over how it would affect energy prices ahead of the November election.In an attempt to drain Russia of money needed to continue fighting its war in Ukraine, the United States and its allies have imposed penalties and taken other novel steps to limit how much Moscow earns from selling oil abroad. But Russia has increasingly found ways around those limits, raising pressure on the Biden administration to tighten its enforcement efforts.Treasury officials want to do that, in part, by targeting a so-called shadow fleet of oil tankers that is allowing Russia to sell oil above a $60-per-barrel price cap that the United States and its allies imposed in 2022.That cap was intended to restrict Moscow’s ability to profit from its energy exports while allowing its oil to continue flowing on international markets to prevent a global price shock. But Russia has largely circumvented the cap, allowing it to reap huge profits to fund its war efforts.While Treasury officials want to knock Russian tankers out of commission, economic advisers inside the White House worry that would risk inflaming oil prices this summer and push up U.S. gasoline prices, which could hurt Mr. Biden’s re-election campaign. They have not signed off on the proposals, even as current and former Treasury officials present them with analyses suggesting the risks of a major effect on the oil market are low.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