<!–> –><!–> [–><!–>The escalating trade war between the United States and China has created deep uncertainty for U.S. companies that rely on Chinese suppliers. Retaliations in recent days by the two countries have resulted in huge average tax rates on their each other’s imports, with tariffs often costing more than the price of the goods […] More
Germany has long taken flak from Wall Street and financial capitals around Europe for the extreme fiscal conservatism that has kept the country’s debt levels low. But as global markets convulsed this week, investors rewarded Germany’s caution by snapping up its government bonds, which are known as bunds.Investors have reeled after President Trump imposed 10 percent tariffs on nearly every trading partner, temporarily rescinded even higher “reciprocal” tariffs hours after they came into effect and steadily ratcheted up tariffs on China to well above 100 percent.The resulting tumult hit U.S. assets hard, including Treasuries and the dollar, normally considered haven assets. That sent investors seeking other places for safety, such as gold, the Swiss franc and German bunds.The 10-year yield on German bunds, which moves inversely to prices, fell to 2.56 percent, near its lowest level in more than a month. That is notable relative to the 10-year U.S. Treasury yield, arguably the most important interest rate in the world, which has soared higher. On Friday, the 10-year U.S. yield was around 4.5 percent, climbing nearly half a percentage point in one week, a huge move in that market.Germany’s strict limits on government borrowing have given the country a stellar AAA credit rating. But last month, lawmakers decided that the next government could abandon the borrowing limit and take on trillions of euros in fresh debt to bolster the country’s military and crumbling public infrastructure. Germany’s export-driven economy is also heavily exposed to tariffs, given the large amount of trade its automakers and other industrial companies do with the United States.The prospect of extra borrowing and a slowing economy had begun to put pressure on German bunds. But the turmoil elsewhere in recent weeks prompted investors to turn back to the country’s debt as a source of safety.This week, Germany’s expected next chancellor, Friedrich Merz, also announced the blueprint for his government, which included an economic plan to jump-start the ailing German economy. And ahead of its planned borrowing binge, Germany benefits from low debt relative to the size of its economy, at about 60 percent of gross domestic product. By comparison, U.S. debt is about 120 percent of the size of its economy.It was “very striking” that in a moment of stress German bunds were acting as the “haven of choice” instead of U.S. Treasuries, said Sander Tordoir, chief economist at the Centre for European Reform, a research institute.“There does seem to be a real safety premium now being place on German government debt,” he said. More
The bedrock of the financial system trembled this week, with government bond yields rising sharply as the chaotic rollout of tariffs shook investors’ faith in the pivotal role played by the United States in the financial system.U.S. government bonds, known as Treasuries because they are issued by the U.S. Treasury, are backed by the full faith of the American government, and the market for Treasuries has long been deemed one of the safest and most stable in the world.But the Treasury market’s erratic behavior all week has raised fears that investors are turning against U.S. assets as President Trump’s trade war escalates.The yield on the 10-year Treasury, which underpins corporate and consumer borrowing and is arguably the most important interest rate in the world, rose roughly 0.1 percentage points on Friday. The rise added to sharp moves throughout the week that have taken the yield on the 10-year Treasury from less than 4 percent at the end of last week to around 4.5 percent.These increases may seem small, but they are large moves in the Treasury market, prompting investors to warn that Mr. Trump’s tariff policies are causing serious turmoil. It matters to consumers as well. If you have a mortgage or car loan, for example, then the interest rate you pay is related to the 10-year yield.Ten-year treasuries are also considered a safe haven for investors during time of volatility in the stock market, but this week’s sharp rise in yields have made this market unusually perilous.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
President Trump’s latest tariffs are about to become an unavoidable and expensive reality for American businesses and for people who rely on foreign goods.Shoppers buying clothes from retailers in China may soon pay more than twice as much, now that a special exemption for lower-value imports is disappearing. And companies involved in international trade must now make even more complicated calculations to decide how much they owe in tariffs.“Maybe 3 percent of the people are well prepared,” said Jeremy Page, a founding partner of Page Fura, an international trade law firm, whose clients include large companies. “And that might even be charitable.”Imports from China have been hit with tariffs of 145 percent. That means for every $100 worth of goods a business buys from that country, it has to pay $145 to the federal government. Goods from most other countries have a new 10 percent tax, though that could rise if the countries do not reach trade agreements with the United States by July. And there are separate tariffs on cars, steel and aluminum. Mr. Trump has also said he wants to impose new tariffs on pharmaceuticals and computer chips.Mr. Trump contends that the tariffs will encourage businesses to produce goods in the United States. The tariffs on Chinese goods will almost certainly reduce imports from the country. But American businesses will not be able to quickly get goods from elsewhere — U.S. imports from China totaled $439 billion last year — and they will end up owing huge amounts in tariffs.A garment factory in Guangzhou, China. Imports from China have been hit with tariffs of 145 percent. Qilai Shen 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
President Trump has big ambitions for the global trading system and is using tariffs to try to rip it down and rebuild it. But the European Union is taking action after action to make sure the continent is at the center of whatever world comes next.As one of the globe’s biggest and most open economies, the E.U. has a lot on the line as the rules of trade undergo a once-in-a-generation upheaval. Its companies benefit from sending their cars, pharmaceuticals and machinery overseas. Its consumers benefit from American search engines and foreign fuels.Those high stakes aren’t lost on Europe.Ursula von der Leyen, the president of the European Commission, the E.U.’s executive arm, has spent the past several weeks on calls and in meetings with global leaders. She and her colleagues are wheeling and dealing to deepen existing trade agreements and strike new ones. They are discussing how they can reduce barriers between individual European countries.And they are talking tough on China, trying to make sure that it does not dump cheap metals and chemicals onto the European market as it loses access to American customers because of high Trump tariffs.It’s an explicit strategy, meant to leave the economic superpower stronger and less dependent on an increasingly fickle America. As Ms. von der Leyen and her colleagues regularly point out, the U.S. consumer market is big — but not the be-all-end-all.“The U.S. makes up 13 percent of global goods trade,” Maros Sefcovic, the E.U.’s trade commissioner, said in a recent speech. The goal “is to protect the remaining 87 percent and make sure that the global trade system prevails for the rest of us.”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
When Congress voted to normalize trade relations with China at the beginning of this century, U.S. manufacturers braced for a stream of cheap goods to begin flowing into U.S. ports.Instead, they got a flood. Imports from China nearly tripled from 1999 to 2005, and American factories, with their higher wages and stricter safety standards, couldn’t compete. The “China shock,” as it has come to be known, wiped out millions of jobs in the years that followed, leaving lasting scars on communities from Michigan to Mississippi.To President Trump and his supporters, those job losses are an object lesson in the damage caused by decades of U.S. trade policy — damage he promises that his tariffs will now help to reverse. On Wednesday, he further raised duties on imports from China, well beyond 100 percent, even as he suspended steep tariffs he had imposed on other trading partners.Few economists endorse the idea that the United States should try to bring back manufacturing jobs en masse. Even fewer believe that tariffs would be an effective tool for doing so.But economists who have studied the issue also argue that Mr. Trump misunderstands the nature of the China shock. The real lesson of the episode wasn’t about trade at all, they say — it was about the toll that rapid economic changes can take on workers and communities — and by failing to understand that, Mr. Trump risks repeating the mistakes he claims he has vowed to correct.“For the last 20 years we’ve been hearing about the China shock and how brutal it was and how people can’t adjust,” said Scott Lincicome, a trade economist at the Cato Institute, a libertarian research organization. “And finally, after most places have moved on, now we’re shocking them again.”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
Among those opposed to President Trump’s tariffs on imports from China: a legal group funded by some of the biggest names in conservative politics.Last week, a Florida business owner challenged the Trump administration’s moves in court, arguing that her company, Simplified, which makes notebooks and planners, was harmed by the dramatic trade war with China that has only deteriorated further since the lawsuit was filed.Her lawyers are from the New Civil Liberties Alliance, a libertarian-leaning nonprofit that counts among its financial backers Donors Trust, a group with ties to the billionaire Leonard A. Leo, who is a co-chairman of the Federalist Society.The Federalist Society is an influential legal group that advised Mr. Trump through the confirmation of justices he appointed to form the current conservative supermajority on the Supreme Court, though some in Mr. Trump’s circle came to believe that its leaders were out of step with the president’s political movement.Another donor to New Civil Liberties Alliance is Charles Koch, the billionaire industrialist and Republican megadonor.In what appeared to be the first tariff-related lawsuit against the Trump administration, the founder of Simplified, Emily Ley, argued that President Trump overstepped his authority in February when he first imposed new import taxes on Chinese goods. Since then, China has retaliated with its own tariffs, and Mr. Trump has escalated the fight with more levies. All Chinese imports face a minimum tariff rate of 145 percent as of Thursday, a dramatic increase.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
On the open 15th floor of a loft building in Midtown Manhattan, about a dozen skilled workers make their way through piles of pants, stitching each piece together with focus and precision. Some of the items are designed by Outlier, a fashion brand that produces its smaller runs and experimental products with the garment district’s ecosystem of contract manufacturers.It’s the kind of work that should get a boost from the stiff tariffs newly imposed on products entering the United States from nearly every other country. But the storeroom where Outlier keeps its fabric tells a more complicated story.The rolls of cloth and boxes of recycled goose down come from Italy and Switzerland, Thailand and New Zealand, countries with specialized industries developed over generations that are unlikely to be recreated in America. Take the linen, made from flax grown in a coastal region stretching from northern France to the Netherlands.“It would take a decade to get a crop growing,” said Tyler Clemens, Outlier’s co-founder. A linen shipment was headed for the cutting room; Mr. Clemens had just gotten the bill from the Department of Homeland Security with a charge labeled “IEEPA-RECIPROCAL,” after the International Emergency Economic Powers Act, one of the laws used to justify President Trump’s tariff measures.A fabric order for Outlier arriving at a factory in Manhattan. The fabric was made in Japan and dyed in Portugal before being shipped to the United States, where it incurred a tariff.Karsten Moran for The New York TimesOutlier’s material comes from abroad, as do some of its finished products. Karsten Moran 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
