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Fed's Kugler: Tariffs could cause inflation to be prolonged
Fed Governor Adriana Kulgler argued on Wednesday that rising tariffs could lead to a longer period of inflation than expected. She disputed the view that only imported goods would see an increase in price. Kugler stated that "there may be reasons" why tariffs cause a more lasting effect than merely a spike in the price for imported goods. New tariffs already implemented by President Donald Trump Target intermediate goods such as aluminum and steel. Kugler, speaking at an event held at Princeton University, said that "this will affect all sectors via supply chain networks...It might take longer to filter this through the economy." She said that the possibility of retaliation from other countries, and a possible shift in U.S. expectations of inflation, could also have an impact. As could the risk of tariffs distorting prices so much, it could shift capital to produce goods "into which we may not have a competitive advantage." Kugler stated, "That means we will be paying more for products that could have been made cheaper elsewhere." Kugler spoke at a time when Trump was introducing a new set of levies around the world. Some countries will be hit with hefty new tariffs of up to 46%, while historic allies such as the European Union are being hit with levies of 20%. Some Fed officials are concerned that Trump's actions could slow down growth in the coming months, even though prices continue to rise. This is a difficult situation for a central banks charged with maintaining prices and employment. Kugler stated that "we are already seeing upside risks in inflation...We might also see a slight slowdown down the road." Right now she said she felt higher-than-anticipated inflation was the bigger risk, particularly given that consumers seemed to be frontrunning tariffs with auto purchases, for example, that may add to growth in the near term. In remarks prepared for the occasion, she said that she supports keeping the Fed's current rate of interest steady "for so long as these inflation risks continue" given the continued economic growth and stable employment. Fed officials said that they wanted more clarity about the impact of Donald Trump's policy. Fed policymakers expect slower growth and higher inflation in 2019 than they did last year before Trump's tariffs became more clear. Howard Schneider is reporting; Paul Simao, Diane Craft and Diane Craft are editing.
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Commodities-Gold rallies and crude oil declines after Trump's tariffs
The price of crude oil fell on Wednesday and the price of gold rose after U.S. president Donald Trump announced tariffs on U.S. imported goods. This move fueled a global trade conflict and raised concerns about a possible economic slowdown. Grain futures declined ahead of Trump's announcement of tariffs. They were likely to continue their losses, as traders waited for retaliatory action from global importers who are easy targets of retaliation. Aluminum prices fell on Wednesday as investors weighed up trade action against supply concerns. Trump announced on Wednesday that all U.S. imports would be subject to a baseline 10% tariff, and he'd impose even higher duties against dozens of major trading partners including China and the European Union. Trading partners should respond to countermeasures with their own. U.S. Stock Futures fell after the announcement. Oil prices dropped to negative territory following a dollar-plus increase in the post-settlement market ahead of the announcement of tariffs on fears that a trade war could dampen demand. The oil market has reacted negatively due to fears that the U.S. Tariffs will slow economic growth in the rest of the world and other countries may retaliate with tariffs," said Andrew Lipow of Lipow Oil Associates, based in Houston. Grain futures fell on Wednesday, as traders feared that U.S. exports would suffer if Trump’s tariffs caused retaliation by major buyers such as China, the top soybean importer in the world, and Mexico, No. Mexico is the world's No. 1 corn purchaser. Mike Zuzolo is the president of Global Commodity Analytics. He said, "We are likely to see a weaker open due to a weaker Asian Market." The dollar's weakness could offer support to the market.
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INSTANT VIEW: Trump's hefty tariffs shock markets and cause S&P futures to fall
U.S. president Donald Trump escalated the trade war by announcing on Wednesday that he would impose reciprocal duties to match duties placed on U.S. products by other countries. Trump told an audience in the White House Rose Garden that "it's our declaration" of independence. "We will set a minimum base tariff of 10%." The rates for China will be 34% while those for the European Union, Japan and Canada would be 20% and 24% respectively. S&P futures fell 3%, indicating that investors are expecting deep losses on Wall Street when it opens Thursday. S&P 500 Futures fell 3%. This suggests investors will suffer heavy losses on Wall Street when it opens Thursday. Nasdaq Futures, which reflect tech companies like Apple, Nvidia, and Microsoft, fell almost 4%. S&P 500 futures tumbled 3%, suggesting investors expect deep losses when Wall Street opens on Thursday. COMMENTS: SARAH KETTERER CEO, CAUSEWAY CAPITAL MANAGEMENT LOS ANGELES: "This is a salvo. This isn't a final list. It's only another round in what will be countless rounds of negotiation." "Market weakness should allow you to invest in global equity markets. European spending is going to be huge and pivotal. It will also be very stimulating, especially if combined with increased bank lending. It's certainly not "Happy Days", but global equity markets, and especially European stocks that have trailed U.S. stock prices for 17 years, will be able to perform better. We believe that some of the gap will be closed." BYRON ANDERSON HEAD OF FIXED RESULTS, LAFFER-TENGLER INVESTMENTS SCOTTSDALE ARIZONA "We're back at the inflection points for Treasury yields. We're basically at the average of the previous two years. The bond market initially reacted as we had expected, namely by selling off. Did we receive reciprocal tariffs? The market is also not sure. "If we can get some moderation in today's market, it will be crucial to the bond scenario. It will also help calm down the markets." "Reciprocal Tariffs will eventually be deflationary, as our trading partners will begin to eliminate tariffs." If we do get some moderation, the market is not in a good position. We should also see the unwinding of the flight of safety. This means that treasury rates are rising and high yield credit spreads will be softer. Expect volatility as certain countries continue to defend their status quo." NANCY TENGLER is CEO and CIO of LAFFER TENGLER Investments, SCOTTSDALE (ARIZONA). "The Administration prided itself in being the administration for the common man. The common man is employed by the automotive industry. If the auto tariffs are imposed, the demand for automobiles will decrease. You can stop there. As purchasing managers tried to stay ahead of tariffs, we have seen a pull-forward in economic numbers. Imports are up, which puts downward pressure on the GDP. The decline in manufacturing PMIs is most puzzling, as they printed contractionary readings last months due to the drop in new orders and employment. Carvana surged in after-hour trading on Trump tariffs. Tesla (mostly made in the U.S.A.) is also trading up. Ford and GM are both flat. Carvana will profit from the increased demand for used vehicles." ADAM HETTS GLOBAL HEAD, MULTI ASSET, JANUS HENDERSON INVESTOR, DENVER: "Eye watering tariffs, country by country, scream negotiation tactics, and will keep the markets on edge in the near future. This means that there is room to lower tariffs, even though a baseline of 10% has been set. The administration has shown a surprising tolerance for market pain. Now the question is, how much tolerance does it have for real economic pain during negotiations? The S&P 500's recovery after a positive ADP jobs report was a reminder of the broader economic focus. The ISM nonfarm payrolls and services data this week will be closely scrutinized, as any weakness will fuel recession fears." JOHN HARDY CHIEF MACRO STRATEGIST SAXO BANK COPENHAGEN : "I was shocked at how negative or heavy these tariffs are. This will lead to a lot of tit for tat negotiations. What concessions can the U.S. make to lower these tariffs, what leverage they use to convince other countries to reduce these levels, be it defense concerns in Europe or Japan. China, I suspect, sticks. The Chinese response may be interesting." The market's reaction is expected to be negative. Treasuries are a safe-haven trade, particularly at the low end of the yield spectrum. Even longer-term Treasuries may do well." "If Republicans continue to hammer on about tax reductions, I wonder whether (longer-term Treasuries are a good investment). For now, the direction seems clear. "Gold, especially short-dated U.S. Treasury bonds, is the best option for safe-keeping. You can also use it as a wildcard for long-term investments." WALTER TODD CHIEF INVESTOR, GREENWOOD CAPITAL GREENWOOD SOUTH CAROLINA WALTER: "We only have one side to the story. That's what we do. The other side is how other countries react to what we do. This is a major factor in how the market will ultimately respond to what's being said. The other part of the puzzle is how individual countries or groups of countries react to what's being said... Depending on what other countries are doing, I still feel like the market is looking to use the 5,500 level of the S&P 500 as a springboard. JASON BRITTON CHIEF INVESTMENT OFFICER REFLECTION ASSET MANAGEMENT CHARLESTON SOUTH CAROLINA 'I see this as a net positive. These tariff levels are a good starting point for future negotiations. Mexico and Canada remain exempted from any further tariffs. I believe the market will calm down, parse out the details and see that it is at best a mixed bag. "I am looking at the large technology companies who have huge piles of cash. I am a buyer of weakness if they are going to be squeezed by this retreat. "It's the market that's overreacting and I'm happy to take full advantage." JOHN LUKE TYNER, APTUS CAPITAL AFFILIATES, FAIRHOPE ALABAMA Many other countries have imposed tariffs on the U.S. and, from Trump's and many other people's perspectives, it is unfair to offer more free trade while we are being pillaged by other countries. These tariffs are not temporary, they seem to be here to stay. The rhetoric has caused a decrease in consumer spending and corporate spending. It has created a bad feeling about the future which is slowing down things. "You've seen the slowdown in capital projects and CEOs' comments on markets and economy." You cannot kill the market and tax revenue and squash the economy at the same time. In many ways, the market is the economic system. So, the biggest risk is that, if the economy is really messed up in one spot, even for a short time, where does the debt to GDP end up in such an environment? "What happens to fiscal deficits if there is a 10% or 5% decline in GDP and other economic indicators? That's when things get really scary." CHRIS ZACCARELLI CHIEF INVESTMENT OFFICER NORTHLIGHT ASSESSMENT, CHARLOTTE N.C. Tariffs will increase corporate costs and decrease profits. "If we see a change in the economy, the markets will react differently, but for now, the knee-jerk reaction to price increases is the first one." PETER CARDILLO CHIEF MARKET ECONOMIST, SPARTAN CAPITALSECURITIES, NEW YORK Now, it depends on the trading partners. Will they negotiate at the table or will they retaliate?" The effects of inflation could worsen and we could be heading toward recession." The markets are under severe pressure, and one could say that they have reached an oversold state. "I think the markets will rally." FREDERIQUE CARRIIER, HEAD of INVESTMENT STRATEGY, RBC Wealth Management "We expect the EU will retaliate quickly." "Europe will face steep blanket tariffs of up to 20%, which is higher than what was feared." Profit taking on the European equity market could continue tomorrow. The impact of tariffs is unlikely to be as painful on European economies, because Europe doesn't trade with the US enough. However, it could be more severe depending on the way the situation develops, the EU response, and the extent to which tariffs harm business and consumer confidence.
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Gold and equity futures rise after Trump's tariffs
Investors worried about U.S. president Donald Trump's announcement that 10% tariffs will be applied to all imports with higher rates for certain trading partners, fell into the equity futures market on Wednesday following the U.S. stock market closing. Gold and bonds were also up in price as they are considered safe havens. S&P 500 Eminis futures rose initially after Wall Street closed higher in the regular session, but lost ground when Trump detailed his tariff plans at a White House Rose Garden Event. S&P futures dropped 1.6% after Trump's speech, while Nasdaq Futures fell 2.4%. Trump, who referred to the day as "Liberation Day", has announced a number of tariffs for various countries, including 34% on imports coming from China, 20% on imports coming from the European Union, and 24% on Japan imports. He also announced a 25% tariff on cars, light trucks and engines. When the press conference began, the President announced that tariffs would begin with a baseline of 10% across the board. This was better than anticipated, and that's why futures rallied," said Chris Zaccarelli. Chief investment officer at Northlight Asset Management, Charlotte, North Carolina. Zaccarelli continued, "But as soon as he started to give examples that were higher than 10% - the futures went from positive to negative." In the short term, tariffs will increase costs and decrease corporate profits. "If we have a reshaping the economy, markets will have a very different judgement, but in the short term, the knee-jerk response is to initial price increases." On Wednesday, investors focused on the announcement of reciprocal taxes. The Dow Jones Industrial Average closed the session up 235.36, or 0.56%. Meanwhile, the S&P 500 gained 37.90, or 0.67%. The Nasdaq Composite ended the session with a gain of 151.16 or 0.87% at 17,601.05. The MSCI index of global stocks rose by 3.96 points (0.48%) to 836.11. Some investors have noted that the future of the market will depend on how U.S. trading partner's respond. "We only have one side to the story - what we do." Walter Todd, Chief Investment Officer at Greenwood Capital, Greenwood, South Carolina, said: "The other side is how other countries react to what we are doing." Todd said it would be "a major component of how the market will ultimately digest what is said right now." After the announcements, gold prices are moving closer to records highs. This is due to safe-haven flows. Spot gold increased by 0.64%, to $3.130.38 per ounce. U.S. Gold Futures increased 1.3% to $3.159.30 per ounce. After Trump's tariff announcement, U.S. Treasury rates fell. Two-year yields dropped to their lowest levels in three weeks. The yield on the benchmark 10-year U.S. notes dropped 1.6 basis points, to 4.14% from 4.156% at late Tuesday. The 30-year bond rate fell 0.5 basis point to 4.5098%, from 4.515% on Tuesday. The yield on the 2-year bond, which is usually in line with expectations of interest rates for the Federal Reserve fell by 0.5 basis points, to 3.858% from 3.863% at late Tuesday. The dollar has lost its currency value. The euro rose 0.38% to $1.0834, while the sterling strengthened by 0.54% at $1.2989. The dollar fell 0.17% against the Japanese yen to 149.36. Oil prices on energy markets fell after tariff news raised fears that a trade war could dampen crude demand. U.S. crude dropped 0.27%, to $71.00 per barrel after rising 0.72%. Brent, however, fell to $74.07 a barrel, down by 0.59%, after having settled at $74.95 a barrel. (Reporting from Sinead carew in New York and London, Amanda Cooper in Singapore, Ankur Banerjee, in Singapore, and Tomaszjanowski, Alex Richardson Matthew Lewis, Nia Williams, and Tomaszjanowski)
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Wall Street's reaction to Trump's reciprocal Tariffs
Donald Trump announced on Wednesday that he will impose a baseline 10% tariff on all imports into the United States, and higher duties for some of the biggest trading partners. This could lead to a trade conflict and upset the global economy. Countermeasures from trading partners could result in a dramatic increase in prices of everything, including bicycles and wine. LENNY LARCCA, KPMG U.S. AUTOMOTIVE LEADERS "U.S. Automakers are looking for steps they can take to mitigate tariffs in the short term, such as working on items that can be shipped to the U.S. rapidly without major investment." Massive longer-term investments require more time and clarity." The current playbook of the U.S. automobile industry is insufficient, and it's a momentous time for them. Automakers have an opportunity to change the way they do business. Leverage emerging technologies like AI in all areas of their business. Explore and make alliances quicker. "Speed up the vehicle production cycle time." This watershed moment presents an opportunity for mergers and purchases. DAVID McCALL, PRESIDENT UNITED STAINWORKERS INTERNATIONAL We must make sure that our trade policy is aimed at cheaters and not trusted economic allies such as Canada. We should work to build relationships, not barriers, with partners who have shown their commitment to join us in tackling the global overcapacity. The administration must also take measures to prevent companies using tariffs to increase prices on consumers. NIGEL GREEN is the CEO of DEVERE GROUP, a global financial advisory firm. This is how you can sabotage world economic engines while claiming that they are supercharged. "It is a historic day for the global trade." Trump is destroying the post-war economic system that has made the U.S., and the rest of the world, more prosperous. He's doing this with reckless confidence." "Tariffs, plain and simply, are taxes. The American consumer will be the one to bear the brunt." "The truth is that these tariffs are going to push up prices on everyday items - like phones and food - at a time where inflation is already unbearably persistent." MIKE HAWES is the CEO of UK's Society of Motor Manufacturers and Traders. The tariffs cannot be absorbed, and the U.S. consumer may pay more for British products, while UK producers could have to reduce production due to a constrained market. SETH GOLDSTEIN MORNINGSTAR ANALYST FOR U.S. SETH GOLDSTEIN, MORNINGSTAR ANALYST ON U.S. "I expect lower volumes due to tariffs." Tariffs are likely to be passed on to the consumer in order to increase prices of products. "I expect that consumers will buy less goods." Due to the high fixed costs of chemical production, lower volume would have a large impact on profits. We could also see a further year of falling profits if tariffs are widely implemented. Many chemical producers manufacture their products in the U.S. for domestic sales, so there is less direct impact. DAVID FRENCH EXECUTIVE V.P. OF GOVERNMENT RELATIONS AT THE NATIONAL RESTAURANTS FEDERATION "More Tariffs = More Anxiety and Uncertainty for American Businesses and Consumers. Tariffs represent a tax that is paid by U.S. importers and passed on to the final consumer. No foreign country or supplier will pay tariffs. "We encourage President Trump, to hold trading partners responsible and restore fairness for American business without creating economic instability and higher prices for American family." ART WHEATON DIRECTOR, ILR SCHOOL CORNELL UNIVERSITY, DIRECTOR, LABOR STUDIES It will take years and billions to bring new manufacturing jobs online. However, expansions in existing factories can happen much faster. Companies prioritize stability. Frequent policy changes can slow down investment decisions, as businesses wait to see clearer long-term signals. MICHAEL ASHLEY SCHULMAN IS A PARTNER AT RUNNINGPOINT CAPITAL ADVISORS AND THE CIO. "Trump may be trying not only to bring manufacturing back to the U.S. but also to increase the economic instability of China by putting tariffs on Chinese goods. Tariffs of 34% on Chinese products could force Chinese manufacturers to shut down, increasing social unrest and unemployment in China. If these tariffs are imposed, they will have a significant impact on the PC, server, and semiconductor manufacturers. Investors, analysts and politicians will all be watching with bated breathe to see what happens after this 'Liberation Day volley' from the administration. The announcement today is likely to be a worst-case scenario. Hopefully, any negotiations will lead to improvements. Reporting by Juby B. in Mexico City, and Vallari S., Neil Kanatt, Shivansh T., Mrinalika R., Unnamalai L., Jaspreet S., and Dhanush B. in Bengaluru. Editing by S. Ghosh, Shounak Dasgupta, and Shounak D.
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Trump's auto tariffs will cover imports worth $600 billion, including laptops
According to an analysis of tariff codes in a Federal Register notice published on Wednesday, President Donald Trump's auto tariffs of 25% will cover imports of nearly $600 billion of cars and auto parts annually. They also include all computer imports to the U.S. including laptops. Updated Trump's auto-tariff proclamation last week, it included almost 150 auto part categories that would be subject to tariffs beginning on May 3, one month after the 25% tariffs were activated on Thursday at midnight. List includes codes for major components such as engines, transmissions and lithium-ion battery, but also less expensive ones like tires, shocks absorbers, wires for spark plugs and brake hoses. The inclusion of a four-digit code for all computers was a big surprise. According to U.S. Census Bureau figures, the category is expected to be worth $138.5 billion by 2024. The list of parts, as well as the timing of tariffs on May 3, was revealed just before Trump announced that all U.S. imported goods would be subject to a 10% baseline tariff. Many countries were then hit with higher reciprocal tariffs meant to counteract nontariff trade barriers. Senior Trump Administration officials confirmed that autos and auto components subject to Section 232 National Security Tariffs will not be charged separate baseline or reciprocal duties. The auto tariffs are not stacked on top of the new, April 5th, reciprocal tariffs. The White House has directed the Commerce Department that domestic producers can request to have other parts imported targeted within 90 days. Importers of vehicles that qualify under the U.S. Mexico Canada Agreement's rules for origin can only pay 25% duty on the non-U.S. portion of their order.
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INSTANT VIEW: Trump's hefty tariffs shock markets and cause S&P futures to fall
U.S. president Donald Trump escalated the trade war by announcing on Wednesday that he would impose tariffs in return for duties imposed by other countries on U.S. products. Trump told an audience in the White House Rose Garden that "it's our declaration" of independence. "We will set a minimum base tariff of 10%." The rates for China will be 34% while those for the European Union, Japan and Canada would be 20% and 24% respectively. S&P futures reversed their gains and fell by 1.6%, indicating that investors are expecting a steep drop when Wall Street opens Thursday. Nasdaq Futures, which reflect tech companies like Apple, Nvidia, and Microsoft, fell 2.3% on Thursday after earlier gaining. COMMENTS: JOHN HARDY CHIEF MACRO STRATEGIST SAXO BANK COPENHAGEN: I was surprised at how negative or heavy these tariffs are. This will lead to a lot of tit for tat negotiations. What concessions can the U.S. make to lower these tariffs, what leverage they use to convince other countries to reduce these levels, be it defense concerns in Europe or Japan. China, I suspect, sticks. The Chinese response may be interesting." The market's reaction is expected to be negative. Treasuries are a safe-haven trade, particularly at the low end of the yield spectrum. Even longer-term Treasuries may do well. "If Republicans continue to hammer on about tax reductions, I wonder whether (longer-term Treasuries are a good investment). For now, the direction seems clear. "Gold, especially short-dated U.S. Treasury bonds, is the best option for parking your money. You can also use a wildcard for long-term investments." WALTER TODD CHIEF INVESTOR, GREENWOOD CAPITAL GREENWOOD SOUTH CAROLINA WALTER: "We only have one side to the story, and that's what we do. The other side is how other countries react to what we do. This is a major factor in how the market will ultimately respond to what's being said. The other part of the puzzle is how individual countries or groups of countries react to what's being said...depending on the actions of other countries, I still feel that the market is looking to use the 5,500 level of the S&P 500 as a springboard. JASON BRITTON CHIEF INVESTMENT OFFICER REFLECTION ASSET MANAGEMENT CHARLESTON SOUTH CAROLINA 'I see this as a net positive. These tariff levels are a good starting point for future negotiations. Mexico and Canada remain exempted from any further tariffs. I believe the market will calm down, parse out the details and see that it is at best a mixed bag. "I am looking at the large technology companies who have huge piles of cash. If this retreat is going to pinch them, I am a buyer at a weakness. "It's the market that's overreacting and I'm happy to take full advantage." JOHN LUKE TYNER, APTUS CAPITAL ANALYST FAIRHOPE ALABAMA, "From here on, I imagine that it will be a back-and-forth negotiation with many of these nations." From Trump's and many other people's perspectives, it is unfair to allow more free trade while other countries are pillaging us. What it has set in stone for me is that these tariffs are not temporary, they look like they are here to stay. The White House, and their staff who make these decisions behind closed door are fully aware of the policies they're putting into place. At least the rhetoric created a slowdown both in consumer spending and corporate spending. It has created a bad feeling about the future which is slowing down things. "You've seen a slowdown in capital projects and CEOs' comments on the markets and economy." "We are 120 percent or more in debt relative to our GDP." You can't kill the market and squash the economy at the same time. In many ways, the market is the economic system. So, the biggest risk is that, if the economy is messed up, even in the short-term, where does the debt to GDP ratio go? "What happens to fiscal deficits if there is a 10% or 5% decline in GDP and other economic indicators? That's when things get really scary." CHRIS ZACCARELLI, CHIEF INVESTMENT OFFICER, NORTHLIGHT ASSET MANAGEMENT, CHARLOTTE, N.C. "At the beginning of the press conference, the President stated that tariffs would begin with a baseline of 10% across the board. Futures rallied because it was better than expected. "But once he started to give examples that were higher than 10% and he began giving specifics, the futures went negative as it was worse than anticipated." In the short term, tariffs will increase costs and decrease corporate profits. "If we have a reshaping the economy, markets will have different judgments but the immediate knee-jerk response is to initial price increases." Peter Cardillo, Chief Market Economist, Spartan Capital Securities, New York "We'll have to wait to see if the trade war ends in the way that the administration wants it to...It now depends on our trading partner." Will they negotiate with us or will they retaliate? The markets are under intense pressure, and one could say that they have reached an oversold state. "I think the markets will rally." FREDERIQUE CARRIIER, DIRECTOR OF INVESTMENT STRATEGY, RBC WEALTH MANAGERMENT "Europe is going to be subjected a steep reciprocal tariff, around 20%. This is at the higher end of what market participants had feared." "The calculation includes the sales tax (VAT), a tax that is levied on domestic and foreign products, and does not discriminate between US products. The VAT is a major source of revenue for governments in Europe, so member states are limited in their flexibility. Profit taking on the European equity market could continue tomorrow." The impact of tariffs is not likely to be as painful on European economies, despite the fact that they are unhelpful for economic growth. This is because Europe doesn't trade with the US enough. "We expect swift retaliation from the EU." The EU had announced targeted tariffs against the U.S. but they were not implemented. "We would expect that they be implemented in a short time."
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Wall Street's reaction to Trump's reciprocal Tariffs
Donald Trump announced on Wednesday that he will impose a baseline 10% tariff on all imports into the United States, and higher duties for some of the biggest trading partners. This could lead to a trade conflict and upset the global economy. Countermeasures from trading partners could result in a dramatic increase in prices of everything, including bicycles and wine. SETH GOLDSTEIN MORNINGSTAR ANALYST FOR U.S. SETH GOLDSTEIN, MORNINGSTAR ANALYST ON U.S. "I expect lower volumes due to tariffs." Tariffs are likely to be passed on to the consumer in order to increase prices of products. "I expect that consumers will buy less goods." Due to the high fixed costs of chemical production, lower volume would have a large impact on profits. We could also see another year with declining profits if tariffs are widely implemented. Many chemical producers manufacture their products in the U.S. for domestic sales, so there is less direct impact. BRIAN JACOBSEN IS THE CHIEF ECONOMIST AT ANNEX FINANCIAL MANAGEMENT It could have been worse. It is hoped that framing tariffs as reciprocal will encourage officials to negotiate rather than retaliate." "There is still a price to pay, and this cost comes in the form of either higher prices for consumers or lower profits. Investors are not going to be happy with either option. It's understandable that the market is reacting this way, as it now depends on how long tariffs will remain in place. DAVID FRANCES, EXECUTIVE V.P. OF GOVERNMENT RELATIONS AT THE NATIONAL RELATIONS FEDERATION "More Tariffs = More Anxiety and Uncertainty for American Businesses and Consumers. Tariffs represent a tax that is paid by U.S. importers and passed on to the final consumer. No foreign country or supplier will pay tariffs. "We encourage President Trump, to hold trading partners responsible and restore fairness to American businesses without creating uncertainty or higher prices for American consumers." ART WHEATON DIRECTOR, ILR SCHOOL CORNELL UNIVERSITY, LABOR STUDIES It will take years and billions to bring new manufacturing jobs online. However, expansions in existing factories can happen much faster. Companies prioritize stability. Frequent policy changes can slow down investment decisions, as businesses wait to see clearer long-term signals. MICHAEL ASHLEY SCHULMAN IS A PARTNER AT RUNNINGPOINT CAPITAL ADVISORS AND THE CIO. "Trump may be trying not only to bring manufacturing back to the U.S. but also to increase the economic instability of China by causing them to lose their manufacturing. Tariffs of 34% on Chinese products could force Chinese manufacturers to shut down, increasing social unrest and unemployment in China. If these tariffs are imposed, they will have a significant impact on the PC, server, and semiconductor manufacturers. Investors, analysts and politicians will all be watching with bated breathe to see what happens after this 'Liberation Day volley' from the administration. The announcement today is likely to be a worst-case scenario. Hopefully, any negotiations will lead to improvements. Reporting by Juby B. Babu, Vallari Srivastava and Neil Kanatt in Mexico City, and Mrinalika R. Roy, Shivansh T. Tiwary, and Mrinalika K. Roy, in Bengaluru. Editing by S. Ghosh, Shounak Dasgupta, and Sayantani D.
Trump Administration weighs new coal leasing at North Dakota mine
The Trump administration took a major step on Tuesday in leasing new areas for a North Dakota mine that plans to operate until 2045.
Why it Matters
The publication of an environmental draft analysis of the new lease areas of North Dakota's Freedom Mine aligns with President Donald Trump’s goal of increasing U.S. fossil-fuel production and reviving coal for electricity production.
The United States' electricity supply, formerly dominated by coal, is now only about 16 percent, as natural gas and renewable energy are cheaper.
By the Numbers
Freedom Mine is owned by a NACCO division and produces between 11.5 to 13.5 million tonnes of lignite annually in Mercer County.
The company has requested the lease of tracts covering 1,350 acres, which contains approximately 24 million tonnes of mineable coal.
The owner of the mine was not immediately available to comment.
Key Context
Freedom Mine, which supplies coal to Basin Electric Power Cooperative power plants, first applied for the lease of the new areas in 2019.
The company submitted an emergency application that would require a portion coal from the new lease area to be mined in three years.
Leases consist of a mix of surface land owned by private and federal owners, and subsurface coal.
What's Next?
The Bureau of Land Management is seeking public feedback on the proposed leasing until May 2. The Interior Department's Bureau of Land Management, a division, is evaluating a variety of options including leasing less land.
The assistant secretary of Interior for Land and Minerals must approve the company's modification to its mining plan. (Reporting and editing by Nichola Grroom)
(source: Reuters)