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    Trump’s ‘affordability’ efforts are a mess of absurdity and magical thinking | Steven Greenhouse

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    When running for president last year, Donald Trump wooed and wowed voters by vowing to reduce prices “starting on day one”. But once he was inaugurated, he seemed to pay precious little attention to prices and affordability.All that changed, however, when inflation-weary voters thrashed Trump and the GOP on election day this month – within days, the Trump administration launched a slapdash effort to focus on affordability. Unfortunately, the campaign is a hot mess: a pile of absurdity, contradictions, magical thinking, scapegoating and good ol’ Trumpian dishonesty, with Trump repeatedly blaring that “prices are down”.Two days after election day, Trump got his administration’s affordability drive off to a disastrous start when he said, “Our groceries are way down. Everything is way down … So I don’t want to hear about the affordability.”With those words, billionaire Trump – who spends a lot of time palling around with fellow billionaires – showed utter contempt for the millions of Americans who struggle with affordability every time they go the grocery store. Trump told them they got it all wrong. He told them that they shouldn’t bother him about the trivial issue of affordability when he has bigger things to worry about, such as, perhaps, his obsession with winning the Nobel peace prize. Trump in effect said: I don’t feel your pain.Trump’s statement about everything being “way down” was absurdly obtuse and dishonest. How in the world could every price be way down when his cherished tariffs were pushing up prices? Banana prices are up 6.9% over the past year, beef is up 14.7% and coffee up 18.9% (in part because of the huge, punitive tariffs Trump placed on Brazil’s coffee and beef). Between January and September, prices rose in five of the six main grocery groups tracked in the Consumer Price Index, including meats, poultry and fish (up 4.5%); non-alcoholic beverages (up 2.8%); and fruits and vegetables (up 1.3%).Despite these numbers, Trump keeps pushing his big lie about affordability. Since election day, he has said there’s “virtually no inflation”, “prices are way down” and “it is far less expensive under Trump than it was under sleepy Joe Biden”. Trump said all this even though prices overall have unarguably risen since Biden left office. Right now, inflation is running at a 3% annual clip, which is 50% higher than the Federal Reserve’s 2% goal. In another falsehood, Trump boasted that gas prices have fallen to nearly $2 a gallon, even though his Department of Energy says they average $3.19.Hit in the head by reality (and declining opinion polls), some Trump aides evidently told the Maga king that his “prices are down” rhetoric made him sound dangerously out of touch with typical Americans, many of whom are angry about prices continuing to climb after Trump promised to bring them down. Trump’s advisers seized on one quick fix to reduce some prices: roll back some of Trump’s beloved tariffs. That sensible idea contradicted Trump’s absurd assertion that new tariffs wouldn’t raise prices for US consumers.With some tariffs being rolled back on coffee, beef, tomatoes and bananas along with other tropical fruit, Trump will no doubt trumpet to the world that he’s cut prices as soon as those foods start declining in price. That would be like an arsonist boasting that he put out a fire that he had started.When Trump spoke last Monday to a “summit” of McDonald’s executives and franchisees, he once again showed that he’s out of touch – with typical Americans and the truth. He said, “This is … the golden age of America because we are doing better than we’ve ever done as a country.” He sought to calm angry consumers by adding: “Prices are coming down and all of that stuff.” That’s easy for a billionaire to say, but it’s hard for millions of Americans not to fret about prices “and all of that stuff” and not just because 42 million Americans faced having their food stamps cut off and 24 million face having their health premiums soar, often by over $1,500 a year, because Trump and the Republican-led Congress will not extend Obamacare subsidies.Sorry, Mr President, but Americans strongly disagree with your claim that it’s a golden age. According to a Pew poll in October, 74% of Americans think economic conditions are fair or poor, while just 26% think they are good or excellent. What’s more, according to a CNN poll last month, 61% of Americans say Trump’s policies have “worsened economic conditions in this country”.Scott Bessent, Trump’s treasury secretary, recently contradicted Trump’s boasts of a golden age. Bessent said that far from booming, some parts of the US economy “are in recession”. The manufacturing sector that Trump vowed to save appears to have contracted eight months in a row and lost about 33,000 jobs since January. Pointing to this economic weakness, Bessent called on the Federal Reserve to cut interest rates – a move that would help affordability.Seeing the huge public dismay about affordability, Trump has resorted to one of the oldest tricks in the book. He promised to, in effect, buy off disgruntled Americans, in this case, with “a dividend of at least $2,000 a person (not including high income people!)”. For many struggling Americans, that must sound like manna from heaven, but it’s unlikely that Congress, already alarmed about huge budget deficits, will enact that idea.Trump’s statement that the $2,000 won’t go to “high-income people!” feels like a confession that his “big, beautiful bill” gave far too much in tax cuts to the rich and too little to everyone else. It also shows that the public’s complaints are hitting home that Trump has become the president by, for and of the billionaires.In a recent speech, Bessent said that the administration is “improving affordability” by holding down spending, noting that this helps hold down interest rates. But Trump’s proposed $2,000-a-person payment would undercut all that. It would increase federal spending and thereby push up interest rates and probably inflation, too, by putting more money in consumers’ pockets.In another supposed fix for affordability, Trump put forward the hare-brained idea of creating 50-year mortgages, with the notion that this would help reduce monthly mortgage payments. But the truth is that 50-year mortgages, compared with 30-year mortgages, would do little to lower monthly mortgage payments. They would often reduce payments by just $100 or $200 a month. The bad news is that 50-year mortgages would, as David Dayen has written, often more than double the already huge amount of interest that homeowners pay and would greatly slow their accumulation of equity.In their affordability campaign, Trump and his truth-challenged crew are yet again blaming Biden for the country’s economic problems, including rising prices. JD Vance said: “We inherited a disaster from Joe Biden,” while Kush Desai, a White House spokesperson, said, “Cleaning up Joe Biden’s inflation and economic disaster has been a top focus for President Trump since day 1.”This is absurd, untruthful rubbish. As I’ve written, Biden handed Trump a very strong economy, with inflation way down, economic growth strong and unemployment low. But Trump’s policies, especially his tariffs, have created an economic mess, pushing up prices and slowing GDP growth.Mark Zandi, chief economist at Moody’s Analytics, says that 22 states are already in recession, with their economies damaged by Trump’s tariffs. Zandi fears that if big states like California and New York tumble into recession, the US could slide into a broad economic slump. During recessions, consumers overall have less money to spend, and inflation typically declines. Unfortunately, with Trump’s much-ballyhooed affordability campaign likely to do little to hold down prices, his most effective “tool” in achieving increased affordability could prove to be pushing the nation into recession.That’s something that struggling Americans really can’t afford.

    Steven Greenhouse is a journalist and author, focusing on labor and the workplace, as well as economic and legal issues More

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      Why interest rates are likely to be cut after the Budget

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      The small drop in the inflation rate – from 3.8 per cent to 3.6 per cent – announced on Wednesday morning is the latest indication that a fourth interest rate cut of the year is expected before the end of 2025.The Bank of England’s Monetary Policy Committee voted to hold rates at 4 per cent at the start of November, but there is one final vote to come in 2025 – on 18 December.While the BoE governor Andrew Bailey spoke of wanting to see more data before committing to further cuts, the confirmation that inflation has eased slightly is the latest, and biggest, indicator that a rates cut is required to get the economy moving once more.There is one more major event on the horizon before the vote: Rachel Reeves’ Budget. But expectations are for this to be similarly disinflationary, meaning a rates cut appears almost a certainty.Data showing a stagnant economyAfter two months at 3.8 per cent – September’s data was lower than the 4 per cent expected – we’ve now seen inflation drop back to the level last seen in June, confirming analysts’ expectations that inflation has peaked. One slight concern will be over food prices, which are rising again after a one-month drop. The Food and Drink Federation noted that “manufacturers are paying nearly 40 per cent more for ingredients and energy than they were in January 2020”, explaining the huge uptick in prices. But the wider inflationary picture points to a rates cut.It’s not just inflation that the BoE look to though, and elsewhere the signs also show that a kickstart is needed.The housing market has been far from firing on all cylinders, with many industry experts noting that buyers and sellers alike are holding off for more certainty around any tax implications, given the past few months has seen everything from reports over a Mansion Tax to the Conservatives claiming they would eliminate stamp duty altogether – a move backed by Kirstie Allsopp.More recently, economic data showed the UK’s GDP growth slowing to just 0.1 per cent across the past three months, with production output in particular dropping.Factor in job vacancies falling to the lowest level of the year and the rate of unemployment hitting 5 per cent for the first time since Covid and it’s clear that businesses are no longer investing to the levels required, just as much as people are not moving or spending as much as needed.Get a free fractional share worth up to £100.Capital at risk.Terms and conditions apply.Go to websiteADVERTISEMENTGet a free fractional share worth up to £100.Capital at risk.Terms and conditions apply.Go to websiteADVERTISEMENTBudget details are keyGiven the factors highlighted above, it would have been unsurprising had the BoE pre-empted some of that most recent data by cutting rates on 6 November. Indeed, they almost did – the vote was split 6-5, with governor Bailey casting the deciding vote to stick rather than twist.Perhaps the biggest reason behind that apparent caution was the Budget, and the lack of clarity over what to expect.That said, tax rises on individuals and more costs for businesses are generally disinflationary.“The upcoming Budget is likely to involve measures specifically designed to push down on inflation in things like energy prices, while the overall degree of fiscal consolidation is also likely to weigh on growth and inflation in the medium term,” explained Luke Bartholomew, an economist at Aberdeen.As noted though, it’s not totally clear what’s coming and any surprises could still have the opposite effect.( More

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      in US Politics

      Trump accused of caving to big business after deal to cut Swiss tariffs to 15%

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      Donald Trump agreed to cut US tariffs on Switzerland from 39% to 15% as part of a new trade pact, lowering duties that strained economic ties and hit Swiss exporters.The two countries have signed a “non-binding memorandum of understanding”, the Swiss government announced, following bilateral talks in Washington and intense lobbying by Swiss firms.Critics seized on the announcement as evidence that the White House had put corporate interests ahead of those of struggling Americans, as inflation continues to increase the cost of living nationwide.“While prices for American families are going way up because of Trump’s chaotic tariffs, it’s the billionaires and giant corporations cozying up to Trump that get relief,” Senator Elizabeth Warren, a Massachusetts Democrat, said.Leading Swiss executives met Trump at the White House earlier this month. Rolex, the luxury Swiss watchmaker, also invited the president and a string of his officials to the US Open tennis final in September.Upon arrival, Trump “did ask in jest whether he would have been invited had it not been for the tariffs”, Jean-Frédéric Dufour, the Rolex CEO, later disclosed. This was “a moment that brought a round of laughter all around”, he added.Dufour denied that Rolex had engaged in “any negotiation” with the US over tariffs. The White House dismissed Warren’s criticism as “asinine conspiracy theories”.Trump was gifted a golden table clock by Rolex, which was later spotted on his desk in the Oval Office. Another firm is said to have donated an engraved gold bar.The US trade representative, Jamieson Greer, also confirmed the breakthrough on Friday, telling CNBC, the financial news network, that both sides had “essentially reached a deal”.The Trump administration agreed to limit US tariffs on Switzerland and Liechtenstein “to a maximum of 15%” under the deal, according to a statement from the Swiss government.This brings US tariffs on Switzerland in line with those on the European Union – allowing Swiss exporters the same treatment as rivals in neighboring countries.In return, Switzerland will reduce tariffs “on a range of US products”, the statement said. “In addition to all industrial products, fish and seafood, this includes agricultural products from the US that Switzerland considers non-sensitive.”Swiss officials also committed to granting a series of quotas for US goods that can be exported to Switzerland on a duty-free basis, including 500 tonnes of beef, 1,000 tonnes of bison meat and 1,500 tonnes of poultry.skip past newsletter promotionafter newsletter promotion“The date for implementing these market access concessions will be coordinated with the US to ensure that customs duties are reduced at the same time,” the statement said.This is the latest “framework” trade deal to be struck by Trump and his administration. Unlike formal free trade agreements, which are substantial and can take years to negotiate, these pacts have typically been narrow in focus and light on detail.The precise timing of the implementation, and when the new tariffs and quotas will be enforced, has yet to be finalized.“They’re going to send a lot of manufacturing here to the United States – pharmaceuticals, gold smelting, railway equipment,” Greer claimed on CNBC, “so we’re really excited about that deal and what it means for American manufacturing.”The Swiss government said companies in the country were “planning to make direct investments” in the US worth $200bn “by the end of 2028”. More

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      Trump administration moves again to dismantle top US consumer watchdog

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      The Trump administration has launched its most direct attempt yet to shut down the top US consumer watchdog, arguing the current funding mechanism behind the Consumer Financial Protection Bureau (CFPB) is unlawful.Attorneys for the administration claimed in a court filing that the agency “anticipates exhausting its currently available funds in early 2026”, setting the stage for it to be dismantled.The CFPB is legally barred from seeking additional funds from the Federal Reserve, its typical source of funding, the attorneys suggested.Donald Trump’s officials have tried persistently to close the agency, attempting to fire the vast majority of its workforce. These efforts sparked months of legal wrangling.The CFPB has returned more than $21bn to US consumers since it was set up, in the wake of the financial crisis, to shore up oversight of consumer financial firms.The justice department’s office of legal counsel issued an opinion claiming the CFPB cannot draw money from the Fed currently, claiming the “combined earnings of the Federal Reserve System” refers to profits of the Fed, which has operated at a loss since 2022.Several federal judges have previously rejected that argument used by companies attempting to dismiss lawsuits brought by the agency, reported Politico.Russell Vought, the White House office of management and budget director, said in October that he plans to shut down the agency, and that this would take up to three months.The claim was criticized by Democrats, given previous contrary statements from the administration, and court decisions blocking the agency from being shut down.“These comments are particularly concerning given that a federal court has specifically blocked you from illegally shutting down the agency,” wrote Senate banking committee Democrats in a letter to Vought. “Your continued attempts to shutter the CFPB are illegal, and American families stand to pay the price.”Vought has already suspended most of the agency’s work, as the full DC circuit court of appeals is deciding whether to take the case as a lower court order blocked the firings of about 90% of the agency’s staff.The CFPB did not immediately respond to a request for comment. More

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      in UK Politics

      Half of employers could raise prices if cost of hiring goes up in Budget

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      Britons might need to be poised for fewer jobs or higher prices once more next year, after a new survey of business owners suggested almost half of them (49 per cent) would be considering hiking them if employment costs are raised again in the Budget.Most firms have been hit at least once this year and several of them from multiple angles, following changes to the minimum wage, National Insurance contributions, rules around packaging costs, the end of business rates relief for some industries and the prospect of lower overseas sales due to tariffs.Those cost pressures, along with widespread uncertainty over what is coming in this month’s Budget, has left some firms holding off on hiring additional workers, even as interest rates have slowly lowered across the year.Now research by Employment Hero and a survey of 1,000 business leaders by One Poll shows that pricing and employment plans are both in the firing line if Rachel Reeves delivers further disappointment.Along with the 49 per cent considering raising, a third (33 per cent) also said they would delay further hiring if the cost of employing people rises again. Almost one in four (24 per cent) also said they would consider making redundancies from existing roles.More than half (59 per cent) of business owners suggested they don’t feel Budget decisions consider the needs of small businesses, while a whopping 86 per cent said they were “concerned” over what the Budget would mean for the company over the longer term.The British Chambers of Commerce (BCC) have repeatedly warned the government against any further raises of business taxes, saying firms couldn’t continue to shoulder more and more of the burden to fix the economy.While Ms Reeves has cited the need for economic growth, experts have argued that her policies are taxes are stifling it.Rising prices contributes to increased inflation, which has been a major issue in the UK over the past few years. While the rate was lower than expected at 3.8 per cent in September, it remains well above the 2 per cent target and an inflationary Budget could add to the damage.While the numbers over potential price rises will be of concern, other data may point to a limiting effect in what actually transpires.Business insurance provider Simply Business released a report on Monday showing fewer small firms who had planned to raise prices in spring actually did so – fewer than half, compared to 74 per cent who had planned to do so.However, that in turns means that absorbing extra costs means profitability shrinks, placing further pressure on those who would normally provide jobs.“The Chancellor has an opportunity to address these challenges by reducing the cost of doing business and providing a platform for growth. Small business owners are calling for the government to reduce Corporation Tax for small profits (15 per cent), reverse or reduce employer NI increases (14 per cent), and provide more support for energy bills (14 per cent),” said Julie Fisher, UK CEO of Simply Business.Kevin Fitzgerald, UK managing director at Employment Hero, added: “When you tax small businesses, you tax everyone. It creates a domino effect – higher costs lead to higher prices, fewer jobs and less money in people’s pockets. Small businesses employ the majority of our workforce. Make life harder for them, and you make it harder for Britain to grow.“The Autumn Budget is an opportunity to learn from past mistakes.” More

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      in US Politics

      Growth in global demand for ‘green’ office buildings slows amid Trump policies

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      The growth in global demand for “green” office buildings has slowed after Donald Trump’s assault on environmental protection policies caused a slump in interest in the US, according to a survey of construction industry professionals.Building occupiers and investors across North America and South America expressed significantly lower growth in demand for green commercial buildings, a shift that “seems to be in response to a change in US policy focus”, according to a survey of members of the Royal Institution of Chartered Surveyors (Rics). Reported demand across the rest of the world also fell, albeit not as sharply.Residential and commercial buildings together accounted for 34% of global carbon emissions in 2023, according to the UN Environment Programme. The majority of those emissions came from heating, cooling and powering buildings, although about a fifth came from construction.The UN said there was a “critical need for accelerated action in the buildings sector to meet global climate goals”. However, the Rics survey suggested global construction industry professionals were experiencing slower growth in demand.Green buildings can use a range of techniques to cut their environmental impact, ranging from using materials that reduce high-carbon concrete, to cutting water use, cutting heat lost through windows, and using renewable energy. Energy efficiency improvements in particular also help to cut operating costs.Nicholas Maclean, Rics’s acting president, said: “It seems to me that what we’re seeing at the moment might be a blip.“The people who are going to end up using these buildings want them to be sustainable. Everybody, frankly, knows this is the right thing to do.”He added that green office buildings tend to have a “competitive advantage” in attracting higher rents, because of demand from large-scale corporate tenants, in particular.There were still more US respondents to the survey who reported growth in interest in sustainable commercial buildings. However, the balance of building professionals across the continent reporting higher demand fell sharply, from 25% to 11%.skip past newsletter promotionafter newsletter promotionOutside North and South America, the balance reporting growth in demand was 40%, still down from 48% in 2021, the first year of the survey, but far above the US.Kisa Zehra, Rics’s sustainability analyst, said government policy and regulations have a “huge impact on the confidence of the market”. The Trump administration has made a concerted effort to dismantle a huge range of environmental protections put in place by Republican and Democratic predecessors, undermining confidence in green standards.Rics also highlighted a decline in the number of construction industry professionals who measured their projects’ embodied carbon, such as that emitted in making materials such as steel, glass and concrete, or in the construction process itself. Forty-six percent of construction professionals reported not measuring embodied carbon, up from 34% the year before. Only 16% of respondents said carbon measurement meaningfully informed material choices in project design. More

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      Out-of-touch Trump talks up economy among sycophants and stars in Miami

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      It was the week in which Republicans took a beating at the polls, the government shutdown became the longest in history, and 42 million people across the country, including 3 million in Florida, saw their federal food aid slashed.But in the alternative reality of Miami, where tickets to an overwhelmingly conservative business conference headlined by Donald Trump cost up to $1,990, and billionaires from Saudi Arabia rubbed shoulders with equally wealthy American tycoons such as Jeff Bezos and Ken Griffin, those events created barely a ripple.Instead, in a gesture that appeared almost to mock the widening disparity between the city’s haves and have-nots, organizers of the America Business Forum cooked up a little treat for attendees: a $50 gift card to spend on food to sustain themselves while they listened to their president congratulate himself for a “golden age” he said his “economic miracle” had delivered.Advocates say the move, along with the high-budget opulence of the conference itself, was an ill-timed insult to more than a half-million Miami-Dade county residents who just saw their own ability to buy essential groceries for their families kiboshed by the gutting of the Supplemental Nutrition Assistance Program (Snap).“There’s just a massive cognitive dissonance between what real people are going through, and the elite,” said Larry Hannan, communications and policy director of State Voices Florida, a coalition of more than a hundred non-partisan, pro-democracy and civic engagement groups.“Jeff Bezos does not need a $50 food card. But we saw that with the Great Gatsby theme party last week. They just can’t seem to stop doing things that are shockingly out of touch.“We’ve been through shutdowns before, and while obviously the White House bubble is always somewhat insane, presidents are usually smart enough, they usually know not to flaunt this type of stuff. But this administration does not seem to care.”The president’s hour-long address on Thursday had the flavor of a political rally, with familiar insults for old political foes such as the Senate minority leader, Chuck Schumer, and California’s governor, Gavin Newsom, and a new one: Zohran Mamdani, the newly elected democratic socialist mayor of New York.View image in fullscreenTrump touched on his economic agenda, and lauded a host of speakers from the worlds of politics, sport and business that filled the two-day agenda, created largely by Francis Suarez, mayor of the city of Miami, to showcase south Florida and its investment opportunities.Lionel Messi, the Argentina soccer star and World Cup winner, provided celebrity glitz from sporting circles, along with tennis champions Rafael Nadal and Serena Williams. A conversation between Suarez and María Corina Machado, the Venezuelan opposition leader and democracy activist who last month won the Nobel peace prize that Trump coveted, was well received on day one.Yet overall it was a curious and unmistakably politically charged event with a field of Trump sycophants on the stage, loudly cheered by a crowd of mostly younger and affluent supporters of the president in the audience, some blending business suits with his trademark red Make America Great Again (Maga) caps.How else to explain the presence of Javier Milei, the rightwing president of Argentina, the country whose shaky economy Trump helped shore up last month with a $20bn currency swap lifeline? Or that of Saudi Arabians Fahad AlSaif, head of its $925bn Public Investment Fund, and Reema Bandar Al-Saud, Riyadh’s ambassador to the US, touting their country as ripe for investment while the Trump family’s financial ties and influence there come under greater scrutiny?Then there was Gianni Infantino, head of Fifa, international soccer’s governing body, dropping hints that Trump is in line for the organization’s first peace prize, an unwanted new award that observers see created specially for the president as consolation for his Nobel snub.Other speakers, including Jamie Dimon, the chief executive of JP Morgan; Adam Neumann, founder of WeWork and Flow; and Griffin, the hedge-fund manager and Republican donor; have all previously praised, worked with or voted for Trump, offering more than a suggestion of a politically skewed lineup.Suarez, unsurprisingly, saw it differently.“We wanted it to be a sort of a cross-section from different verticals, right?” he told the Guardian.“We got in a room. We said, ‘Hey, what are the leading voices?’ People from different backgrounds, different ethnicities, different genders … sports, business, politics, technology, things that touch everyone’s lives.”He pointed to discussions of upcoming, money-spinning notable events in Miami, including the Formula One grand prix, next year’s G20 economic summit at Trump’s Doral golf resort, and games during the 2026 World Cup, which he called “a generational opportunity”.“Our hope is that Miamians are transformed by the experience,” Suarez said. “We want them to leave thinking, ‘I can be on that stage.’”View image in fullscreenThe advocates of State Voices Florida, however, believe many Miamians are more focused right now on other issues, especially soaring housing and food costs. Florida’s Republican governor, Ron DeSantis rejected a call from Hannan’s group and others to declare an emergency over Snap benefits and tap state reserves to fund urgent food distribution.“Any civics teacher would tell you it’s his job to look after the people of Florida, and he’s doing the exact opposite,” Hannan said, noting the juxtaposition of a conference of billionaires taking place in the same county in which almost 25% of households rely on Snap benefits to survive.“There just seems to be this detachment at the top. I don’t think the answer is electing a Democrat or electing a Republican, I just think we have to have more empathy for people who are struggling in this state.”Empathy was in short supply in Miami from Trump, a president not known for ever taking responsibility during a crisis.“The radical left Democrats are causing millions of Americans who depend on food stamps to go without benefits,” he said, blaming the out-of-office opposition party for the government shutdown.“I just want to have a country that’s great again. Is that OK?” More

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      in US Politics

      Trump’s supreme court strategy is to redefine ‘tariffs’. Will the justices buy it?

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      Donald Trump faced arguably the biggest test so far of his contentious use of executive power at the US supreme court on Wednesday. The stakes could not be higher – “literally, LIFE OR DEATH” for the US, at least according to the president.Trump’s signature, globe-rattling economic policy, his sweeping tariffs regime, was in the dock – specifically, the legal mechanism his administration has used to enforce it. And the man dispatched to defend the White House put forward a somewhat puzzling argument.“These are regulatory tariffs,” D John Sauer, US solicitor general, assured the court. “They are not revenue-raising tariffs. The fact that they raise revenue is only incidental.”It was a curious, and more than a little confusing, explanation – tariffs on goods from overseas might raise revenue, but are not revenue-raising – designed to counter rulings by lower courts that set the stage for this test before the highest court in the land.A federal appeals court in Washington DC ruled in August that the International Emergency Economic Powers Act (IEEPA), a 1977 law Trump invoked to impose many of his tariffs, did not grant “the power to tax” to the president.Congress is granted sole authority under the constitution to levy taxes. Trump bypassed Congress – lawfully, his aides insist – to drive through a policy estimated to equate to the largest tax hike since 1993.Thus, on Wednesday morning, the administration appeared to argue before the supreme court that these tariffs – taxes paid by myriad US companies on imported products – were not really taxes at all.Critics are not having it. “Anybody can look up in the dictionary,” Maria Cantwell, Democratic senator from Washington, told the Guardian. “Tariffs are an import tax, plain and simple. I would assume the administration understands that.”“I actually am surprised that it was so lacking,” Cantwell added, of the administration’s case.The court did not appear persuaded, either. “You want to say tariffs are not taxes,” said the liberal justice Sonia Sotomayor. “But that’s exactly what they are.”Some conservatives on the bench also sounded skeptical. “The vehicle is the imposition of taxes on Americans, and that has always been a core power of Congress,” said the chief justice John Roberts.The administration’s argument that the fact tariffs raise money is “only incidental” might be more persuasive if the president spent less time boasting about the amount of money they raised. “My tariffs are bringing in hundreds of billions of dollars,” Trump declared in a speech hours after the hearing.The president has argued – in typically binary terms – that the fate of his flagship economic strategy is aligned with that of the nation. But there are many business owners in the US, grappling with the abrupt imposition of steep tariffs, who believe the fate of their companies has been jeopardized by this regime.While official statistics (at least, those published before the government shutdown) have shown persisting inflation and a stalling jobs market, Trump continues to erroneously claim his agenda is producing stellar results. “Our Economy is BOOMING, and Costs are coming way down,” he wrote on social media during Wednesday’s hearing.It is ultimately down to voters, as some did on Tuesday, to deliver their verdict on Trump’s agenda. For now, a handful of small firms, together with a dozen states, have joined forces to challenge the way in which he has rammed it through.“We think that this case is really about executive overreach,” said Stephen Woldenberg, senior vice-president of sales at Learning Resources, a toy company based near Chicago that sued the administration to invalidate Trump’s tariffs as exceeding his authority.At the heart of this case is really a “broader issue”, according to Woldenberg, of who sets taxes – and how – across the US. “We weren’t really willing to let politicians, and really a single politician, decide our fate,” he said.That fate is now in the hands of a court Trump has shaped. The justices have pledged to fast-track their decision. On Wednesday, at least, most sounded unpersuaded by the administration’s defense. More

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      Budget: Pound plummets after Reeves hints at tax rises – but government bonds rally

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      The pound has dropped to a six-month low after Rachel Reeves gave her strongest hint yet that taxes will rise at the Budget in a major speech on Tuesday morning.The pound, which was already lower ahead of the speech, fell further after the comments to stand 0.3 per cent lower at 1.31 US dollars and 0.3 per cent weaker at 1.14 euros, not far off last week’s over two-year low against the single currency.Sterling has been under pressure in recent days amid worries over the UK economy and ahead of the Bank of England’s interest rate decision on Thursday, with another cut seen as being increasingly likely.Experts appear split on whether that cut will come in November or December, but the chances of a further reduction from 4 per cent currently have increased as inflation is thought to have peaked now at 3.8 per cent while the jobs market outlook looks more shaky.Meanwhile Britain’s long-term borrowing costs edged lower after the chancellor reiterated an “ironclad” commitment to her fiscal rules.Rachel Reeves refused to be drawn when asked if the government would break the manifesto pledge not to raise income tax, national insurance or VAT More