“Overall, the producer price index (PPI), which measures the prices paid to domestic producers for their output, climbed by 0.9 percent last month (well above expectations) and 3.3 percent on an annualized basis. A few categories saw particularly large increases. Wholesale prices for food, for example, rose by 1.4 percent, while wholesale prices for consumer electronics increased by over 3 percent.
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Lots of domestic products rely on imports of raw materials and intermediate goods. You can’t make a chocolate bar without cocoa beans, for example, and over half of all imports are things that domestic businesses use as inputs.
Economists have warned that tariffs would increase the cost of importing component parts and force domestic firms to increase the prices they charge for their outputs. That seems to be exactly what today’s PPI report shows.
Second, the PPI is often seen as an advance warning system for higher inflation at the consumer level—because higher prices at the wholesale level will likely be passed along at the retail level.”
“Even as some Republicans mocked economists for predicting prices would rise as a result of tariffs, there was a whistling-past-the-graveyard quality to the snickering. Yes, tariffs that had been threatened, delayed, and only partially implemented hadn’t yet much increased costs for consumers, but there were clear signs that importers were rushing to beat high customs duties, and that trouble was on the way. Now we’ve had a weak jobs report and a higher-than-expected producer price index (PPI), and it’s clear that tariffs perform just as we were warned: They raise prices for domestic businesses and consumers.”
“The Trump administration’s 50 percent tariffs on imported steel and aluminum were expanded this week to cover hundreds of imports that plainly are not steel or aluminum. Among the items targeted by the new tariffs: dairy products like milk and cream, as well as gasoline and other fuels, fire extinguishers, baby strollers, furniture, engines, and motorcycles. In short, anything that contains steel or aluminum or that is (as with dairy products) transported or stored in steel or aluminum containers could now be subject to those massive import taxes.”
“The world’s supply of chocolate depends on the global trade of cocoa beans, which are grown exclusively in equatorial climates across Latin America, Africa, and Asia. The United States produces more chocolate than any other country in the world, but there would be no American chocolate-making businesses, large or small, without imports.
A lot of American manufacturing is like that too: U.S.-based businesses rely on imported raw materials when making everything from candy bars to new cars. Policies that make those inputs more expensive or difficult to obtain—policies such as the Trump administration’s tariffs—are leaving a bitter taste.
Chocolatiers, in particular, say trade barriers are a recipe for higher prices, lower quality, less innovation, and smaller profits. Doesn’t sound very sweet, does it?”
“Trump’s contention that Mexico and Canada could “easily solve” the drug trafficking problem was equally dubious. For more than a century, politicians have been promising to “stop the flow” of illegal drugs, and they have never come close to achieving that goal—not for lack of trying, but because the economics of prohibition doom all such efforts.
Prohibition allows traffickers to earn a hefty risk premium that provides a strong incentive to find ways around any barriers that governments manage to erect. Drugs can be produced in many different places, and they can be smuggled into the country in a wide variety of ways. Any serious effort to prevent drugs from entering the United States would entail intolerable disruption of travel and trade, and it still would not succeed. That challenge is magnified in the case of a highly potent drug like fentanyl because large numbers of doses can be transported in small packages that are hard to detect.
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Since Canada accounts for only a tiny percentage of fentanyl entering the United States, “flood” seems like an exaggeration. In any case, it is not clear what would qualify as “adequate steps” or “satisfactory resources” as far as Trump is concerned. Taking Trump at his word, there is no such thing, because there is nothing that Canada or Mexico can do that will be sufficient to achieve the impossible goal of stopping illegal drugs from entering the United States.”
Companies are worried about quarterly earnings. The U.S. does not have a plan B for long-term research. We need to maintain the funding and focus on research in universities. Many technologies that are changing the world today are based on university research from decades ago.
Trump’s trade agreements are not trade agreements. They are not even trade deals. They are more press releases. It’s likely that many of Trump’s tariffs won’t even be legal under U.S. law.
“To place huge new tariffs on imports from China, President Donald Trump claimed that those transactions are “an unusual and extraordinary threat” to the United States.
It’s a threat that the White House now says it can put off addressing for another 90 days.
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This is not just a rhetorical point but a question that’s central to the legality of the tariffs. In front of the U.S. Court of Appeals for the Federal Circuit last month, the Trump administration’s lawyer told skeptical judges that the president’s tariff powers rested upon the existence of an “unusual threat” that the president was taking action to “deal with.”
The latest delay in the China tariffs, then, seems to directly undermine that claim. If Trump wants to use the threat of tariffs to negotiate a new trade deal with China, fine, but then that’s not an emergency—and, as a result, those tariffs cannot be implemented with the emergency powers the president is currently claiming.”
“President Donald Trump and his allies have spent months promising that higher tariffs will usher in a “golden age” of wealth and prosperity for America.
Now, the administration and one of its biggest allies in Congress are pushing for a new round of stimulus checks seemingly aimed at easing the economic pain caused by…yes, those same tariff policies.
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The proposal to send out tariff-funded stimulus checks should at least put an end to two of the more nonsensical claims that the president and his pro-tariff allies have been making. First, this should confirm that Americans—not foreign governments or corporations—are footing the bill for the tariffs.
Second, the idea that tariffs can be used to close the budget deficit should be similarly put to bed. Some estimates suggest that tariffs are likely to widen the deficit (even without any stimulus checks being mailed out), as they will slow economic growth and reduce future tax revenue. Even if you ignore those dynamic projections, there’s a big problem: The $150 billion in tariff revenue collected so far this year can’t be used to pay down the budget deficit if it is first going to be redistributed to Americans in the form of rebate checks.
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If Trump and Hawley want to spare Americans the pain caused by tariffs, there is a much simpler solution here: Get rid of the tariffs.”
“Big American companies are also reporting growing tariff expenses.
Ford said last week it paid $800 million in tariffs in the second quarter and could shell out as much as $3 billion this year. General Motors reported a $1.1 billion tariff hit in the second quarter and said trade friction could cost the automaker $4 billion to $5 billion in 2025.
Heavy equipment manufacturer Caterpillar warned this week that rising tariffs could cost it $1.5 billion this year. And Apple CEO Tim Cook – who was at the White House on Wednesday to announce an additional $100 billion investment in the U.S. — said the company paid $800 million in tariffs in its most recent quarter and faced another $1.1 billion this quarter.
The White House has pointed to the more than $136 billion it has already collected in tariff revenue, as well as agreements from a number of trading partners to lower tariff barriers and invest billions in the U.S., as a sign that Trump’s approach is working.
However, nearly seven months after he took office, there has been no uptick in manufacturing employment, which remains flat at 12.7 million workers. The increased tariff revenue also amounts to slightly more than 7 percent of the $1.9 trillion federal government budget deficit projected in fiscal 2025.
A survey released this week by the National Foreign Trade Council, a business group, found that companies have been increasingly forced to delay or reduce their product and service offerings due to rising costs and sourcing challenges.
The administration has also shown little sympathy for companies complaining of higher tariff costs and supply chain disruptions.”