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      Trump says Fed chair would resign if asked and condemns him over interest rates

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      Donald Trump early on Thursday condemned the Federal Reserve chair, Jerome Powell, for not lowering US interest rates, and expressed a wish for him to be gone from his role.The US president lambasted Powell as “always too late and wrong” in a post on his Truth Social platform. Trump noted that the European Central Bank (ECB) was poised on Thursday to lower interest rates again, without mentioning that the body has been responding to the chaos caused by Trump’s initiatives on tariffs.Addressing reporters later in the day, Trump claimed Powell would resign if he asked him to. Powell himself has said that he would not resign if asked to do so by the president.Trump has been pressuring Powell to cut US interest rates for months, even though the central bank is independent of the administration in setting monetary policy and the White House typically does not publicly lobby the Federal Reserve.The ECB had been expected to cut interest rates for the seventh time this year in order to prop up economic growth, and then did so not long before US markets were due to open. Powell enraged Trump on Wednesday night by warning that the president’s sweeping tariffs could raise inflation. That would make the Fed even more hesitant to cut interest rates.Christine Lagarde, the ECB president, in explaining the reasons why it has – unlike the Fed – cut interest rates, said “the economic outlook is clouded by exceptional uncertainty” because of Trump’s tariffs, which constitute a negative demand shock.Lagarde was speaking after cutting the ECB’s main deposit rate by 25 basis points to 2.25%.Europe had been preparing another interest rate cut following the global financial turmoil caused by Trump’s tariffs push, in which he has gone back and forth on whether, when and how deeply to tax imports from other countries, and on which countries, since he returned to the White House for a second term.He retreated sharply earlier this month from his decision to impose tariffs worldwide, pausing most of the charges for 90 days, although most notably not on China, after markets plunged and US government bonds – traditionally seen as one of the world’s safest financial assets – had suffered a dramatic sell-off. Wall Street chiefs and other experts also forecast a heightened likelihood of recession. Economists polled by Reuters on Thursday put US recession odds at 45%.After insisting for days that he would hold firm on his aggressive trade strategy, unveiled in full on 2 April, which he dubbed “liberation day”, Trump announced on 9 April that all countries that had not retaliated against US tariffs would receive a reprieve – and only face a blanket US tariff of 10% – until July.Powell on Wednesday said the US economy was well-positioned but added that Trump’s tariffs were likely to cause “at least a temporary rise in inflation. The inflationary effects could also be more persistent.”He indicated that the prospect of sweeping tariffs on virtually every trade partner could put the Fed in the unenviable position of having to choose between tackling inflation and unemployment.The World Trade Organization, meanwhile, warned that Trump’s tariffs would send international trade into reverse this year, depressing global economic growth.The International Monetary Fund (IMF) managing director, Kristalina Georgieva, said the global outlook was also weakening in the face of the Trump tariff onslaught, adding central banks like the Federal Reserve needed to remain agile and credible.“Resilience is being tested again – by the reboot of the global trading system,” she said.Trump also said as part of his Truth Social post at daybreak on Thursday that “Powell’s termination cannot come fast enough”. He dubbed him, further in the post, “Too Late” and put forward the argument that prices were coming down, from oil to eggs.Trump nominated Powell to become Fed chair during his first term in the White House, in 2018, and Joe Biden renominated him during his term in the White House, in 2022. The US Senate confirms the chair and the US president cannot terminate the head of the Federal Reserve before the end of their four-year fixed stints. Powell is in place until next spring.The US central bank has held interest rates steady at 4.25% to 4.5% since the start of this year.Trump said in his post: “The ECB is expected to cut interest rates for the 7th time, and yet, “Too Late” Jerome Powell of the Fed, who is always TOO LATE AND WRONG, yesterday issued a report which was another, and typical, complete “mess!” Oil prices are down, groceries (even eggs!) are down, and the USA is getting RICH ON TARIFFS. Too Late should have lowered Interest Rates, like the ECB, long ago, but he should certainly lower them now. Powell’s termination cannot come fast enough!”The New York Fed president, John Williams, spoke to Fox Business on TV on Thursday and backed up Powell’s wariness on rates.“I don’t see any need to change the setting of the Fed funds rate any time soon … It’s really about collecting information, understanding better what’s happening in the economy during the rest of this year, understanding kind of how the uncertainty plays out,” Williams said.Meanwhile, Politico, citing unnamed sources, reported after Trump’s post that the treasury secretary, Scott Bessent, had been cautioning White House officials against any attempt to fire Powell, for which there is no tested mechanism, saying it would risk destabilizing financial markets.And there was a fresh alarm bell sounded on the risk of stagflation, in which high inflation combines with high unemployment amid stagnant economic growth.“A sudden crystallization of the threat to Fed independence would both intensify market stress and shift it in more of a stagflationary direction with a sharp increase in tail risk,” Krishna Guha, vice-chair of an arm of the financial advisory firm Evercore ISI, said in a note.Reuters contributed reporting More

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      ‘Shock to the system’: farmers hit by Trump’s tariffs and cuts say they need another bailout

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      Farmers across the United States say they could face financial ruin – unless there is a huge taxpayer-funded bailout to compensate for losses generated by Donald Trump’s sweeping cuts and chaotic tariffs.Small- and medium-sized farms were already struggling amid worsening climate shocks and volatile commodities markets, on top of being squeezed by large corporations that dominate the supply chain.In recent weeks, farmers in Texas and across the midwest have suffered millions of dollars of crop losses due to unprecedented heavy rainfall and flooding.The climate crisis-fueled extreme weather is compounded by the US president’s looming trade war and the administration targeting popular federal programs and staff, leaving farmers reeling and resigned to needing another bailout.“There’s a lot of uncertainty around and I hate to be used as a bargaining chip. I am definitely worried,” said Travis Johnson, who lost more than 1,000 acres of cotton, sorghum and corn after a year’s rain fell within 48 hours in the Rio Grande Valley (RGV) in southern Texas last month, turning parched fields into lakes.RGV farmers sell sorghum, wheat, corn and vegetables to Mexico among other crops, while buying fertilizer and equipment – and relying on Mexican farmhands for cheap labor. Mexico is the US’s largest trading partner, while China is the main buyer of American sorghum and cotton. All US products destined for China face a 125% tax thanks to Trump’s tariff war, and could cut farmers off from core markets.View image in fullscreen“I can see how some tariffs might help us compete with Mexico but are we really getting targeted by every other country or are we on the wrong side of this? We’ve already had two years of absolute disaster with falling prices and weather patterns … no farmer wants this but without a bailout this could be devastating and a lot more people could go under,” Johnson said.Rural counties rallied behind Trump in 2024, giving him a majority in all but 11 of the 444 farming-dependent counties last year, averaging 78% support, according to analysis by Investigate Midwest.Trump’s vote share rose among farming communities, despite his last trade war which required a $23bn taxpayer bailout for farmers in 2018-19.Yet anxiety is mounting among the agricultural base.First came widespread cuts to oversubscribed and chronically underfunded federal climate and conservation schemes designed to reduce costs and greenhouse gases, and improve yields and environmental health.Trump is also shuttering local food programs which provide farmers with stable domestic markets like public school districts and food banks, helping make farms more resilient to global economic shocks. The USAID, which purchased about $2bn every year in agricultural products particularly wheat, sorghum and lentils for humanitarian aid programs, has been dismantled.The loss in federal programs alone would have been tough to cope with, but then came the trade chaos. Trump’s tariff announcements began when most farmers already had spring crops in the ground – or at the very least had prepared the land and purchased inputs such as seeds and pesticides, making it impossible to switch to crops that could potentially find a market domestically.View image in fullscreenConsensus is growing among experts that the turmoil represents an opportunity for rival agriculture economies – and disaster for US farmers.“It’s all happening so fast and in the middle of the growing season, it’s a shock to the system that’s going to be tough for farmers, especially those growing commodities for export,” said Ben Lilliston, director of rural strategies and climate change at the Institute for Agriculture and Trade Policy (IATP). “Tariffs are not magical, they need to be used strategically as part of wider reforms to the domestic economic agenda.”“The volatility of the tariff policy decisions, with new tariffs frequently being announced, paused and placed will take a toll on the American agricultural industry,” writes economist Betty Resnick in an article for Farm Bureau, a right-leaning lobby group. “Without direct support from USDA or a farm bill with an updated safety net, farmers will almost certainly bear the brunt of these tariffs.”Ben Murray, senior researcher with the consumer advocacy group Food and Water Watch, said: “Without a bailout, we can only imagine how bad this will be for farmers and what an opportunity for Brazil – and this is all being done for a tax cut for the wealthy.”For decades now, US farmers have been heavily incentivized through the Farm Bill to grow commodity crops destined for export such as wheat, corn, soy, sorghum, rice and cotton, rather than produce for domestic consumption. The price of commodities is tied to the global market, even if sold domestically. Meanwhile US imports of fruits and vegetables mostly from Latin America have risen, now accounting for more than 50% of consumption, according to USDA data.This globalized agricultural system favors large and corporate-owned operations, as smaller farms struggle more with boom and bust prices, and access to government subsidies and other credit. The number of farms continues to decline, while the average size continues to rise. Market consolidation and corporate profits tend to surge in the agriculture industry after every economic shock including the Covid pandemic, Trump’s last trade war and the banking crisis.Biden implemented a range of modest, imperfect policies to try to ease the pain for smaller-scale farmers including a greater focus on anti-trust, local and regional food systems, and climate resilience – all of which are under attack by the Trump administration.The vast majority of a $19.5bn funding package by the Biden administration for evidence-based conservation practices that improve soil health, air quality and reduce the use of costly fertilizers, pesticides and water will not be honored. The 10-year fund allocated through the Inflation Reduction Act was an addendum to money ring-fenced in the Farm Bill for four oversubscribed programs, after years of pressure from farmers to expand access to the initiatives.Two Biden-era healthy eating schemes worth a combined $1bn to local farmers have been canceled: the Local Food Purchase Assistance (LFPA) program matching producers to food banks, and the Local Food for Schools Cooperative Agreement Program which helped public schools add healthy, locally grown produce on to lunch menus. (The USDA recently agreed to unfreeze funding for existing contracts.)View image in fullscreen“My farm will survive because we’ve been working with school districts for 20 years, but for others in our coalition the funding cliff is very real,” said Anna Knight, who owns an 80-acre citrus farm in southern California.Piling on further misery are mass layoffs within the USDA that were seemingly orchestrated by the billionaire Trump donor Elon Musk.More than 10% of USDA staff have already reportedly agreed to voluntary buyouts, with more expected in coming weeks. This is in addition to several thousand probationary employees who were laid off last month – a move which disproportionately hit local offices beefed up under the Biden administration, and is being challenged in the courts.USDA field offices play a crucial role in rural communities, the place where farmers go for tailor-made technical help from agencies including the National Resource Conservation Service (NRCS) and the Farm Service Agency (FSA) on the latest pest control and planting practices, conservation programs, loans and disaster assistance programs.“It makes no sense taking billions of dollars off the table for programs that improve long-term farm viability and resilience – and which farmers have been lining up for years for – and then spend billions bringing back farmers from financial collapse,” said Jesse Womack, policy expert at the National Sustainable Agricultural Coalition. “It’s looking really bleak with a lot of pain ahead for farmers.”A coalition of environmental and agricultural groups is suing the USDA after it purged an array of climate-related online resources including information on the NRCS website helping farmers access federal grants for conservation practices, and technical guidance on cutting emissions and strengthening resilience to extreme weather like floods and drought.Even if there is a bailout, getting the money to farmers in time to avoid bankruptcy will be much more complicated this time, according to Lilliston from IATP.“Another bailout seems inevitable but there are serious questions about how quickly it could be implemented with such a dysfunctional Congress, local USDA offices shuttered and fewer staff. It’s a very messy situation and farmers are already experiencing harm.”And in the medium and long term: “The US reputation has taken a huge hit. We can no longer be considered a reliable trading partner which is terrible for farmers,” added Lilliston.Even before the current mayhem, almost two-thirds of US rural bankers surveyed in March expected farmer income to decline in 2025, with farm equipment sales dropping for the 19th straight month, according to the latest Rural Mainstreet Economy survey by Creighton University. Grain and cotton prices have plummeted since 2022.View image in fullscreen“We were already in a precarious situation but now, unless there’s a bailout or this trade war is resolved by harvest time, it will be disastrous and a critical mass of farmers could go out of business,” said Adam Chappell, 46, a commodities farmer growing corn, cotton, soybean and rice in Arkansas, where dozens of local USDA staff have reportedly been furloughed or fired in recent weeks.Chappell’s town Cotton Plant was hit with 13in of rain in early April, causing crop losses for many farmers. Chappell’s fields survived the rain but he spent a nervous few weeks after the USDA froze all conservation funds, unsure whether the government would reimburse him, as agreed, for an upfront investment in cover crops and a compost operation. Eventually, after a backlash, the administration backtracked and agreed to honor existing contracts.“The weather is getting stranger and more challenging to deal with every year, while big monopoly corporations are allowed to manipulate the system and squeeze us at every part of the supply chain. Farmers like me lean heavily on the NRCS conservation programs to improve soil health and reduce input costs,” said Chappell. “The tariffs are like adding salt on the wound.”Despite last week’s partial U-turn, Trump’s ongoing and increasingly chaotic trade war risks causing irreparable harm to international markets for farmers, especially but not exclusively China, as well as pushing up the cost of agricultural imports such as pesticides, fertilizer and machinery.China is the US’s third biggest agricultural export market, worth $24.7bn in 2024, down 15% from 2023, as soybean, corn and sorghum sales fell amid rising competition from South America, according to USDA data. China’s top imports from the US are oilseeds and grains. US exports to China supported almost a million US jobs in 2022, according to the US-China Business Council, mostly around agriculture and livestock production.As of Friday, at least 15 agricultural department programs worth billions of dollars to American farmers and rural communities remain frozen, according to Politico, more than two months after they were halted for review to ensure compliance with Trump’s priorities opposing diversity, equity and inclusion (DEI) efforts as well as his crackdown on climate change initiatives.This includes the Biden-era partnerships for climate-smart commodities (PCSC) program – a five-year $3.2bn real-life study into the effectiveness of conservation practices such as cover cropping and reduced tillage for commodity farms.“PSCS was about increasing our evidence base on climate benefits that also help commodity farmers improve soil health, air and water quality – and their bottom line,” said Omanjana Goswami, a scientist with the food and environment program at the Union of Concerned Scientists. “Abandoning this will come at a cost to American farms and the taxpayer.”On Monday, the agriculture secretary, Brooke Rollins, defended dismantling PSCS, claiming it amounted to a Biden-era “climate slush fund” of which less than half the money went to farmers.A spokesperson added: “The USDA has a variety of programs available to producers who have been impacted by recent disasters … [and] is currently building a framework to deliver over $20bn in congressionally appropriated funds to producers who suffered losses during the 2023/2024 crop year. With 16 robust nutrition programs in place, USDA remains focused on its core mission: strengthening food security, supporting agricultural markets, and ensuring access to nutritious food.”And some Trump supporters are keeping the faith.“There are some concerns out there but our farmers are willing to make sacrifices for long-term gains,” said Sid Miller, the Texas agriculture commissioner. “Tariffs are a temporary tool, they won’t be permanent, China needs our grains, they are prideful but will come around like last time.” More

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      US begins inquiry into pharmaceutical and chip imports in bid to impose tariffs

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      The Trump administration is kicking off investigations into imports of pharmaceuticals and semiconductors into the US as part of an attempt to impose tariffs on both sectors on national security grounds, notices posted to the Federal Register on Monday showed.The filings scheduled to be published on Wednesday set a 21-day deadline from that date for the submission of public comment on the issue and indicate the administration intends to pursue the levies under authority granted by the Trade Expansion Act of 1962. Such inquiries need to be completed within 270 days after being announced.The Trump administration has started 232 investigations into imports of copper and lumber, and inquiries completed in the US president’s first term formed the basis for tariffs rolled out since his return to the White House in January on steel and aluminum and on the auto industry.The US began collecting 10% tariffs on imports on 5 April. Pharmaceuticals and semiconductors are exempt from those duties, but Trump has said they will face separate tariffs.Trump said on Sunday he would be announcing a tariff rate on imported semiconductors over the next week, adding there would be flexibility with some companies in the sector.The US relies heavily on chips imported from Taiwan, something the then president, Joe Biden, sought to reverse by granting billions in Chips Act awards to lure chipmakers to expand production in the US.Taiwan’s economy minister, Kuo Jyh-huei, said its government would run simulations for various levels of tariffs on semiconductors and seek talks with the US.Taiwan is home to TSMC, the world’s leading producer of the most advanced chips and a main contributor to the island’s GDP. Speaking to reporters outside parliament, Kuo said he would seek to ensure “fair competition” for the Taiwanese industry.The Taiwanese and US chip sectors are complementary, he added.The investigation announced on Monday will include pharmaceuticals and pharmaceutical ingredients as well as other derivative products, the notice showed.Drugmakers have argued that tariffs could increase the chance of shortages and reduce access for patients. Still, Trump has pushed for the fees, arguing that the US needs more drug manufacturing so it does not have to rely on other countries for its supply of medicines.Companies in the industry have lobbied Trump to phase in tariffs on imported pharmaceutical products in hopes of reducing the sting from the charges and to allow time to shift manufacturing.Large drugmakers have global manufacturing footprints, mainly in the US, Europe and Asia, and moving more production to the US involves a major commitment of resources and could take years. More

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      ‘The sky won’t fall’: China plays down Trump tariff risks as stock markets rally

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      China has played down the risk of damage to its exports from Donald Trump’s tariffs, with an official saying the “the sky won’t fall”, as stock markets rose on Monday amid signs of a retreat on electronics restrictions.The world’s second-largest economy has diversified its trade away from the US in recent years, according to Lyu Daliang, a customs administration spokesperson, in comments reported by state-owned agency Xinhua.China has retaliated forcefully to Washington’s tariffs, with 125% levies on US imports against the US’s total of 145% border taxes on goods moving the other way. The trade war has prompted turmoil on financial markets since Trump first revealed tariffs on every country in the world on 2 April. Since then he has partly retreated on the highest levies on most trading partners for at least 90 days, but has doubled down in his spat with China.The White House offered further relief over the weekend with an exemption from the steepest tariffs for electronics including smartphones, laptops and semiconductors. Trump officials later appeared to walk that back with the commerce secretary, Howard Lutnick, saying such devices would be “included in the semiconductor tariffs which are coming in probably a month or two”.Trump said on Sunday night on his social network, Truth Social, that “NOBODY is getting ‘off the hook’”, highlighting that smartphones are still subject to 20% levies and suggesting they could still rise higher.However, investors on Monday appeared unconvinced by Trump’s attempts to play down the retreat. Japan’s Nikkei gained 1.2% while Hong Kong’s Hang Seng rose by 2.2% and the Shanghai and Shenzhen exchanges climbed by 0.8% and 1.2%, respectively. European stock market indices also jumped in opening trades, with London’s FTSE 100 up by 1.6%, Germany’s Dax up 2.2%, and France’s Cac 40 up 2%.“The sky won’t fall” for Chinese exports,” China’s Lyu said. “These efforts have not only supported our partners’ development but also enhanced our own resilience”.The customs report also played up China’s “vast domestic market”, and said “the country will turn domestic certainty into a buffer against global volatility”. China has increasingly tried to stimulate private consumption.skip past newsletter promotionafter newsletter promotionChina’s president, Xi Jinping, on Monday criticised the US tariffs, during a visit to Vietnam. Vietnam has in recent decades grown to become the eighth largest source of goods for US consumers, but it is facing the threat of 46% tariffs when Trump’s 90-day pause expires.In an article in a Vietnamese newspaper, Xi said that a “trade war and tariff war will produce no winner, and protectionism will lead nowhere”. More

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      Worried about your stock market savings as Trump tariffs wreak havoc? Don’t panic

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      This week was enough to make anyone worried about their stock market savings. As a certified public accountant, I don’t give investment advice. But I’m comfortable leaving my money in the stock market. Why? Let’s put things into perspective.Markets are still way upMany younger millennials and gen Z-ers may be panicking about recent falls in the market. But we’ve been here before – and worse. In March 2009, the Dow Jones Industrial Average lost more than half its value from the levels it reached less than two years before. In the past 15 years it has increased sixfold.Today’s economic problems are not as severe as 2009. Corrections happen, and rumors move markets. Which is why the Dow Jones average is down about 15% from its high back in November. However, it’s still at the highest level it’s ever been from before late 2022.Despite losses – and there will always be more losses – overall, people who invested in the markets over the past decade are still in very good shape.The economy is OKLast month the economy added more than 228,000 jobs, despite shedding hundreds of thousands of government workers. Meanwhile, other indices remain strong. True, manufacturing slipped into contraction last month – but that’s not really news, considering that – other than a few blips – it has been in contraction for years. Service industries are in their ninth consecutive month of expansion. Unlike 2009, capital is available and our banking system is strong. Consumers continue to spend. Wages are outpacing inflation.It’s too early to judge Trump’s tariff movesYes, Donald Trump’s trade war is disruptive. Maybe in the next few months – or a little longer – the smoke clears. We’ll see how this plays out. Maybe Trump’s decision to force the US economy to “take the medicine” so early in his administration aims to time this upside towards the end of his term. I wouldn’t be surprised to see more market volatility based on rumors, guesses and people trying to get attention for themselves. But I wouldn’t expect them to tank like they did in 2008.Growth policies under wayThere are also some very pro-growth policies under way and more coming.Like it or not, regulatory oversight from the federal government has already been scaled back thanks to a bunch of executive orders and the dismantling of agencies. This will help business owners keep their eye on their businesses, rather than the federal government. More importantly, both the House and Senate are moving to debate and then finalize a number of tax decreases which will include extending or making permanent many of the tax benefits from the 2017 Tax Cuts and Jobs Act as well potentially eliminating taxes on capital gains, overtime, social security and tips.All of this won’t happen, but some of it will and when it does consumers may have more in their pockets and businesses will enjoy a further long-term boost that should encourage more investment and growth.A cooling of inflation?The bond market thinks that inflation will cool down. That’s because bond yields have significantly decreased over the past few weeks. When inflation is expected to fall, so do yields. These traders think that – despite tariffs – there will be enough of a slowdown to dampen price increases and encourage the Federal Reserve to lower interest rates. Will the slowdown cause a recession? Maybe. But lower interest rates mean a lower cost of borrowing. It also helps reduce the government’s spending towards paying down debt.One big beneficiary of lower interest rates would be the residential real estate industry – which represents up to 18% of the US economy. Many homebuyers (and sellers) have been holding back due to higher interest rates. But now that bond yields are falling, so too are mortgage rates (which are also based on future inflation). In late 2023 the average mortgage rate was about 8%. Now it’s close to 6.5%. We’re getting close to a tipping point that could ignite this market. As we head into the spring and summer I would expect to see more buyers and sellers come out of hiding.I’m sure plenty of economists, academics and pundits will argue with these takes. The bottom line: don’t sell your stocks. Hold firm. History shows that, unless you speculate or get lucky with an isolated home run, investing in the broad stock market via mutual and index funds generally outpaces all other investments. If you have excess cash, consider putting more into these funds. Of course, consult a competent wealth adviser and evaluate your specific risks. But relax. You’ll be fine. More

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      No retreat on tariffs, Trump promised. Hours later, he blinked

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      He vowed: “My policies will never change.” He insisted: “Sometimes you have to take medicine to fix something.” He boasted: “I know what I’m doing.” And at 9.33am on Wednesday, he entreated: “BE COOL. Everything is going to work out well.”But less than four hours later, Donald Trump blinked. As the economic and political pressure became unbearable, the US president announced on social media that he would pause for 90 days higher trade tariffs for most countries, excluding China.It was a dramatic climbdown by a leader who has spent years cultivating the image of a strongman able to project indifference through every storm. White House aides immediately swung into gear, attempting to spin the retreat as the masterstroke of peerless dealmaker and genius chess player.The damage had been done, however. Damage to America’s standing as an honest broker and dependable ally. Damage to the US dollar and financial system as the world’s anchor of financial stability. And damage to Trump’s reputation on his signature issue, the economy, in the eyes of business leaders, Republicans and voters.“It’s obviously far too soon to talk about a failed presidency, but to me there are clear indications that Donald Trump’s presidency is endangered,” said Larry Jacobs, director of the Center for the Study of Politics and Governance at the University of Minnesota. “That’s an extraordinary statement for month three, but he’s taken such extreme measures and the responses are unusual, particularly for Republicans. They’re very demonstrative and they’re very directed at his power.”The past two weeks have witnessed the most volatile period for financial markets since the coronavirus pandemic lockdowns five years ago. This time, however, the cause is not a highly contagious virus but the grievances and whims of one man.On 2 April, standing in the White House Rose Garden, Trump announced sweeping “reciprocal” tariffs on dozens of countries, billing it as a “declaration of economic independence” on a “liberation day” that would restore America’s “golden age”. After decades of getting ripped off, he claimed, “it’s our turn to prosper”.The tariffs were calculated based on a country’s trade deficit with the US divided by the value of goods imported from that country. The formula was immediately criticised for inaccuracies and absurdities, such as assigning tariffs to Heard Island and McDonald Islands, which are inhabited entirely by penguins.Yet in Trump’s telling, the long-threatened tariffs were a necessary measure to restore US manufacturing and address trade imbalances. The Rose Garden event was attended by workers in hard hats and yellow construction vests – a reminder of how Trump has sought to steal Democrats’ identity as the party of the working class.Some analysts on the left and the right agree that the US industrial midwest was hit hard by globalisation with factories shuttered, communities hollowed out and jobs shipped overseas. But few believe that Trump, who for decades has believed that the US is getting ripped off, and his sledgehammer approach to tariffs are the right solution.Bill Galston, a senior fellow at the Brookings Institution thinktank in Washington, said: “I have always believed that his understanding of when America was great was in the 1950s and 1960s, when 30% of the workforce was in manufacturing and when the rest of the world was flat on its back and America bestrode the world like a colossus.“His dream is to restore that America to the greatest extent possible, and he genuinely believes that high tariff walls will force people who are doing manufacturing in China and all across south-east Asia and elsewhere to come here.”Galston added: “It is, most economists would say, a fantasy that could make a difference at the margins. Right now, manufacturing employment in the United States as a share of the total is 8%, down from its peak above 30% in the 1970s, and that’s not going to be reversed.”Trump had effectively taken the world economy hostage. The repercussions were immediate and widespread, including market instability, strong international condemnation, retaliatory measures from China and deep uncertainty for businesses and consumers.View image in fullscreenLarry Summers, a former treasury secretary, described it as “the biggest self-inflicted wound we’ve put on our economy in history”. Some chief executives who had backed Trump in last year’s election expressed buyer’s remorse as their fortunes sank. Tech giants such as Apple saw their stock prices drop; analysts predicted potential price increases for iPhones by as much as 43%.In the White House, Trump’s closest advisers were rattled. Elon Musk, the world’s richest man, engaged in a highly public and insulting feud with Trump’s trade adviser Peter Navarro over the impact of tariffs on Tesla, calling Navarro a “moron” and “dumber than a sack of bricks”.Trump insisted he was right and elite opinion was wrong. As he blithely golfed over the weekend, even as markets crashed and haemorrhaged trillions of dollars, the treasury secretary, Scott Bessent, flew to Trump’s Mar-a-Lago estate in Florida to plea for a strategy that could include improved trade deals with foreign countries.Republicans were anxious as they heard the complaints of constituents worried about retirement savings. Some spoke out or considered legislation to curb Trump’s tariffs power. Senator Ted Cruz, a staunch Trump supporter, warned: “Tariffs are a tax on consumers, and I’m not a fan of jacking up taxes on American consumers.”It was a notable break from a party long criticised for a sycophantic, cultish devotion to Trump on all other issues. James Bennet, a columnist for the Economist magazine, told the Guardian’s Politics Weekly America podcast: “There are limits to how far Donald Trump can go and it is conceivable that Republicans could rise up against him.skip past newsletter promotionafter newsletter promotion“They haven’t been willing to do it as Donald Trump has embarked on this campaign of retribution, using the justice department to punish his foes. They haven’t been willing to do it over speech issues or the deportation of completely innocent people to a prison in El Salvador. But these tariffs were a step too far for them and that’s a signal that there is the possibility of Republican resistance at some point to this administration, which is the only thing that can really restrain it.”The mounting pressure from Republicans, business leaders and financial markets stoked fears of a recession that could even tip into a depression. Finally, Trump yielded and, on Wednesday, announced a 90-day pause for most countries while inviting them to negotiate bilateral trade deals.Antjuan Seawright, a Democratic strategist, said: “He saw the pressure from not only the American people but he saw people from within his own ecosystem screaming and yelling about how bad this was. Donald Trump has a history of caving because he is a paper tiger leader in many ways and this was just further proof of that. He wants to play hardball but with a soft bat.”White House aides argued otherwise, deploying the Trump playbook learned from his lawyer Roy Cohn: always claim victory and never admit defeat. Stephen Miller, White House deputy chief of staff, tweeted: “You have been watching the greatest economic master strategy from an American president in history.”But the president himself admitted that he had been monitoring the bond market and people were “getting a little queasy” as bond prices had fallen and interest rates increased. He said: “People were jumping a little bit out of line. They were getting yippy.”Even Trump, whose second term has been characterised by audacity, impunity and brazen lies, had reached the capacity of his reality distortion field and its amplification by rightwing media. The cold facts of the market were not to be denied.Kurt Bardella, a strategic communications adviser, said: “We’re seeing now, for the first time in Trump 2, the limitations of propaganda, of drinking your own Kool-Aid. There are economic realities, market realities that are larger than the lie that they tell themselves and the American people over and over again. Their attempt to try to sell that lie to the world clearly did not work.“He can go out there all day long till he’s blue in the face and say to friendly media and his Maga puppets [that] we’re being ripped off and this will lead to the greatest economic boom we’ve ever seen – but no one else is believing it. The private sector that he has propped himself up on for so long completely rejected all of this.”Bardella, a former congressional aide, added: “For all the ‘Let’s run the government like a business’ crowd, if any business ran themselves this way there would be a vote of no confidence and that CEO would be ousted that very day for deliberately tanking that company’s own stock.”After an initial surge, the markets dipped again. While the pause has offered a temporary reprieve, a 10% blanket duty on almost all US imports remains in effect. Karoline Leavitt, the White House press secretary, claimed on Friday that more than 75 countries have contacted the Trump administration with a view to addressing trade issues. “The phones have been ringing off the hook to make deals,” she said.But it remains uncertain whether the US will be able to secure significant concessions from other countries within 90 days. The mercurial nature of Trump’s decision-making on the on-again, off-again levies could add to the whiplash while eroding faith in the US and the reliability of the dollar.And the trade war with China continues to escalate, posing a significant threat to the global economy. Trump raised tariffs on China to 145%, prompting retaliation. US consumers are likely to feel the pain from price hikes on clothing and other products. China also threatened further non-tariff measures, such as blacklisting US companies and restricting exports of rare earth minerals.Larry Sabato, director of the Center for Politics at the University of Virginia, said: “It’s not over at all. The worst part is probably ahead because of China. Is he going to work out a deal with all these other countries? Get real. He has scrambled everything and America is no longer trusted in any sphere now – defence, international relations, economics. It’s sad.” More

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      ‘It’s going to be messy’: Americans on how Trump’s tariffs are shaping their spending

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      A few weeks ago, Dane began stocking up on “paper products”, “cases of paper towels, toilet paper”, “piddle-pads” for their shih-tzu, and his wife upgraded from an iPhone 8 to 14.The 73-year-old in South Carolina said the purchases – which were made to get ahead of Donald Trump’s trade policies – reminded him of the early weeks of the Covid pandemic, when he scrambled to buy masks, gloves and toilet paper.“It’s scary,” Dane said. “Prices are going to go up because of tariffs … It’s going to be messy.”While campaigning last year, Trump constantly touted his love of tariffs. But it was not until his so-called “liberation day” on 2 April – where the president announced sweeping duties on incoming goods, punishing competitors, allies and small and developing countries alike – that he spooked global financial markets and provoked fears of spiralling inflation and stagnant growth.Amid a US government bond sell-off, the president paused his most eye-watering tariffs for 90 days, apart from China, whose goods are set to be hit with a 145% levy.Hundreds of Americans got in touch with the Guardian to share how the uncertainty is affecting their consumption habits.Dane, who is retired, worked as an entrepreneur with his wife most of his career before later becoming an English teacher. He said he was a Republican in the 1980s but is fearful about how the US is “not going the right way” under Trump, and is unhappy with his “dystopian” policies towards global allies, the economy, education, scientific research and more.View image in fullscreenCurrently, Dane is on a trip to Paris and plans to bring home consumer goods potentially hit by 10% tariffs on European Union imports.“We’ll probably be getting tea, bringing back some cheese, some butter,” he said. “I would love to bring back eggs but that would be a disaster. I’d have scrambled eggs in my suitcase.”Amid tariff uncertainty, Heather, a 61-year-old college professor in Texas, said she and her husband can mostly weather food cost fluctuations, but brought forward the purchase of a new car “inanticipation of price hikes”.She said they owned a 14-year-old Mini Cooper, which ran on gas, that they planned to replace with a hybrid vehicle at some point. They decided to replace their car now to avoid potential inflation – and reduce expenditure on gas.“The economic instability of the Trump administration certainly gives one pause,” she said. “It’s just so much instability, chaos and [the] unknown.”It’s a similar story for Stefanie, a 56-year-old educator and former tech worker in Nevada, who bought a Toyota Tacoma to replace her old Jeep as well as converting some investments into cash.Stefanie began strategizing about being more resilient to tariffs as soon as Trump was elected.“The one thing I learned in the first administration is to believe him: he says bizarre things, and then he does bizarre things,” she said.She’s cutting back on subscriptions and future travel plans, while stockpiling kitchen staples such as rice, cooking oils, vinegar and flour and replacing worn-out clothes including shoes and jeans, “before inflation hits”.“The supply chain is so globalized that tariffs really hit everything,” Stefanie said.But for Ishaan*, a 51-year-old engineer in Texas, the economic picture means he is abstaining from major purchases.“Everyone I know has started tightening their belts,” he said. “I am cutting out unnecessary expenses, cancelled my gym membership, focusing on savings.”The focus for Ishaan, who fears higher prices and an economic slowdown, is to build up his savings in cash. He feels “scared to invest in any stocks or bonds right now” amid market volatility.Likewise for Jonathan*, a 70-year-old in New Jersey, the financial fallout from Trump’s trade wars means he has been forced to rule out planned purchases and strip consumption back to the essentials.Jonathan said his individual retirement account (IRA) was initially “decimated” – although it ticked up slightly after Trump paused his tariffs on Wednesday. He said it was currently down about 15%.That means cancelling plans to redo the carpet in his house and replace two old televisions, Jonathan said. “In short, we’ll buy only necessities and pay bills until this stupidity ends.”Russ a 35-year-old physicist in New Mexico, said the Trump administration’s policies were “causing me to think about what kinds of spending behavior I could have done without this whole time”.He has an eight-year-old phone and nine-year-old MacBook computer that still work fine, which he will not be replacing. The prospect of runaway price rises for consumer electronics, often from China, have led him to reconsider: “Do I really need this, or do I just want this?“I see these things as being as much toys as necessities,” he said. “Maybe I’ll just go back to a dumbphone or something like that – I fantasize sometimes about not getting all these notifications all the time, like the phones we had back in 2005. But maybe that’s a Luddite fantasy.”Russ said that he was already boycotting Amazon and Target – companies that many feel have aligned themselves with Trump’s agenda such as rolling back their own DEI schemes. He’s trying to shop more at local, independent shops rather than “everything stores”, which he notes is more expensive and time consuming but ultimately worth it.“As an American citizen and registered voter, nobody really cares what you think until November of every other year, you feel kind of voiceless,” he said. “You think, well, if dollars are the only tools we have any more, then damn it, I’m going to cast those votes and allocate my spending accordingly.”View image in fullscreenLikewise, small business owner Christine* said the disruption could cause a wider re-evaluation of US consumer habits.Amid the uncertainty, Christine, 41, stocked up on supplies for her Miami acupuncture business for two years, and bought her son’s fifth birthday present – a bike – early for July. But she said she had already noticed less demand for her work.More broadly, the prospect of inflationary tariffs is accelerating Christine’s reconsideration of how much “stuff” she needs. She’s recently attended “these lovely parties” where friends bring unwanted clothes and they “switch it all around” rather than buying fast fashion.“I really resent being drafted into this mad trade war,” Christine said, “but if there is a silver lining, maybe it’s that at least some people like me will question their unsustainable capitalistic practices.”*Some names have been changed. More

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      Trump was playing chicken with tariffs. Then he chickened out | Steven Greenhouse

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      By imposing punitively high tariffs, Donald Trump was playing a high-stakes game of chicken with the US’s trading partners – but it was Trump who chickened out and suspended his tariffs just hours after they took effect. The president couldn’t ignore the worldwide economic havoc that he had caused singled-handedly – stock markets were plunging, business executives were panicking and consumers were seething.Eager to persuade manufacturers to build new plants in the US, Trump said on Monday that many of his tariffs would be permanent. But for Trump, permanent evidently meant two days.Once again, Trump showed that his second term is one of fiat, flub and flip-flop, of bluster and blunder, of shooting first and aiming later. It’s also a mix of cutting, gutting and cruelty.And foolery. Trump’s tariffs are worse than, as the Wall Street Journal put it, the “dumbest trade war in history”: they are the dumbest economic policy that any US president has ever adopted. His tariffs quickly caused vast and totally unnecessary damage to stock markets, industries and diplomatic relations across the globe. Before Trump unexpectedly suspended the tariffs, US stock markets had lost more than $10tn in value, and stock markets overseas plummeted, too. Millions of retirees had seen their 401(k)s plunge in value, consumers were facing substantially higher prices and many workers were already losing their jobs as Trump’s tariffs sent shockwaves through the global economy.Trump’s embarrassing climbdown on tariffs was one of the rare times he bowed to common sense. If only he would do the same when it comes to his dangerously myopic cuts to scientific research, environmental protection and foreign aid.Trump has not climbed down, however, in his showdown with China. In a fit of pique over China’s retaliatory tariffs, Trump has imposed stratospheric 145% tariffs on China. Attention Walmart shoppers: that is going to more than double the price of many things you buy.When it came to tariffs, Trump made some basic political fumbles. Not only did he go golfing and speak at a million-dollar-a-head fundraiser as this economic disaster unfolded, but he failed to give a coherent explanation for his screw-everyone-else tariffs. Trump and his team pointed to a potpourri of often-conflicting goals: to erase trade deficits, to collect trillions of dollars for the treasury, to bring back manufacturing jobs, to give Trump negotiating leverage to crack down on fentanyl and immigration and reduce other countries’ tariffs.Let’s not delude ourselves. There are two main reasons for Trump’s tariffs: first, to satisfy his never-ending thirst for vengeance against those he feels have wronged him (which seems to mean every country in the world except Russia) and second, to fulfill his desire to wield a club over everyone and everything. By using staggeringly high tariffs as a weapon, Trump has been acting like a mob enforcer, telling every business in town: I’m going to clobber you with my baseball bat unless you do what I want.There’s another reason for Trump’s tariffs: his ignorance about how the world’s economy works. Trump’s “liberation day” speech on tariffs gave the looney, but unmistakable, impression that he believes that Vietnam, for instance, is looting and pillaging the US by selling more sneakers and other goods to the US than the US sells to Vietnam. Trump thinks this even though millions of Americans are delighted to buy well-made sneakers from Vietnam (which would cost consumers far more if they were made in the US).With his grievance-driven, zero-sum worldview, Trump no doubt believes that other countries are unfairly taking advantage of the US whenever we trade with them – and he wants to get even.Trump thinks that trade deficits are evil. If Trump had taken a class with Robert Solow, a Nobel Prize-winning economist at MIT, he might have heard Solow’s wisdom about why there’s no big worry about bilateral trade deficits: “I have a chronic deficit with my barber, who doesn’t buy a darned thing from me.”That Trump got to impose his calamitous tariffs at 12.01am on Wednesday reflects the dismal quality of his cabinet and advisers. Too many are lackeys who automatically cheer whatever he does, while some others, like the treasury secretary, Scott Bessent, no doubt realized that his tariffs were dumb and disastrous, but they’re too cowardly to tell the Tariff King. The tariffs would inevitably increase inflation and probably push the US into recession. Even though Republicans have vowed never to raise taxes, Trump’s tariffs are unarguably a tax, a regressive tax and the largest tax increase in 60 years. Trump’s tariffs were bound to destroy smoothly running supply chains and hurt untold numbers of US companies. They were also a disaster for relations with our allies. They were already triggering massive retaliation.If Trump had some smart, principled advisers, they might explain to him that many obstacles might prevent his tariffs from achieving their goals. With the nation’s low 4% unemployment rate, it will be hard to find workers to do the manufacturing jobs that Trump wants to bring back, especially when he’s rounding up and expelling many immigrant workers. Moreover, US corporations have largely lost the technological knowhow to compete in various industries and that complicates hopes to bring back far more factories.Then there’s another big problem – the chaotic Trump is the worst possible president to persuade companies to build factories in the US to produce goods they now obtain from abroad. King Donald the Capricious does not exactly exude the air of stability that executives insist on before they decide to make big investment decisions, like building new factories.Trump trumpeted his tariffs in part to show strength, but he ended up in an embarrassing retreat (he did maintain a 10% tariff on many countries). Trump is eager to get China to heed his wishes, but China, the world’s leading manufacturing country, can now see that Trump will back down when the heat is too great.China doesn’t have clean hands on trade. It improperly subsidizes many industries to help them outcompete manufacturers in the US and elsewhere. China also has ambitions to vastly increase its manufacturing capacity – a strategy that could kill off important industries in the US, Canada, Europe, Japan and other countries. If Trump were smart and strategic, he – instead of alienating those countries with his tariffs – would have formed an alliance with those countries to pressure China. But now those countries are too angry at the Trump to do that.Trump, never one to admit defeat, insists that his climbdown was a victory, that the mess he made was marvelous strategy. He says many countries are eager to make deals with him. “I’m telling you, these countries are calling us up, kissing my ass,” he said on Wednesday. “They are dying to make a deal.”Our allies are no doubt furious with Trump. Not only were they already angry that he stabbed Ukraine in the back and sidled up to Putin, but they’re unhappy that his tariff foolishness violated numerous international agreements and sought to blow up a smoothly running trade system. And then Trump ridicules them by saying they were rushing to kiss his behind.I hardly ever agree with Elon Musk, but he was right that Trump’s tariffs were the work of morons who were “dumber than a sack of bricks”.

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