Trump plans to roll back tariffs on metal and aluminium goods Latest softening of levies comes amid persistent voter anxiety about affordability in the US

The US president hit steel and aluminium imports with tariffs of up to 50 per cent last summer, and has expanded the taxes to a range of goods made from those metals including washing machines and ovens.

But his administration is now reviewing the list of products affected by the levies and plans to exempt some items, halt the expansion of the lists and instead launch more targeted national security probes into specific goods, according to three people familiar with the matter.

The people said trade officials in the commerce department and US trade representative’s office believed the tariffs were hurting consumers by raising prices for goods such as pie tins and food and drink cans. (…)

More than 70 per cent of US adults rate economic conditions as fair or poor, according to a Pew Research Center poll published this month. About 52 per cent of Americans think Trump’s economic policies have made conditions worse. (…)

Officials felt the tariff regime was “too complicated to enforce”, one person said, and needed to be simplified. (…)

The commerce department last offered US companies an opportunity to nominate foreign suppliers to be hit with tariffs in October, but blew past its own 60-day deadline to greenlight new levies. 

As part of that round, American manufacturers of mattresses, cake tins and bicycles all lobbied for extra duties on foreign businesses.

The close to 100 filings underscore the broad range of items that companies are now arguing pose a national security risk to the US. 

One company argues in its filing that “without bread, buns, baguettes, crusty rolls, cakes, muffins and the like”, soldiers in the US military “will not be able to maintain a healthy diet”.

The commerce department, the US trade representative’s office and the White House all declined to comment.

Yeh! I would too…

• Trump pauses China tech bans ahead of Xi summit

The Trump administration has shelved a number of key tech security measures aimed at Beijing ahead of an April meeting between the two countries’ presidents. The measures include a ban on China Telecom’s U.S. operations and restrictions on sales of Chinese equipment for U.S. data centers, sources said.

The U.S. has also put on hold proposed bans on domestic sales of routers made by TP-Link and the U.S. internet business of China Unicom and China Mobile along with another measure that would bar sales of Chinese electric trucks and buses in the U.S., four people said, declining to be named.

They are the latest moves by the Trump administration to rein in U.S. government actions that could antagonize Beijing following a trade truce reached by China’s Xi Jinping and U.S. President Donald Trump in October, the sources said. (…)

TP-Link Systems Inc., a California-based company that was spun off from a Chinese firm in 2024, emphasized that it is an independently owned American company, “with U.S.-managed software, U.S.-hosted data, and security practices that meet U.S. industry standards.”

“Any suggestion that we are subject to foreign control or pose a national security risk is categorically false,” it added. (…)

All the measures that the administration has now paused were initially aimed at keeping Beijing from accessing and exploiting sensitive American data for blackmail or intellectual property theft and positioning itself deep within internet-connected systems to sabotage critical infrastructure, two of the sources said.

Throughout much of last year, Commerce Undersecretary Jeffrey Kessler dragged his heels on advancing the measures, citing the need to get buy-in from the White House and Commerce Secretary Howard Lutnick, two of the people said. The Commerce Department and Kessler did not respond to requests for comment on this description.

But after the October trade truce, leadership instructed staffers in the office charged with policing foreign tech threats to “focus on Iran and Russia,” two of the sources said. Iran is not viewed as a tech threat on par with China or Russia. Commerce did not comment on questions about its shift in focus. (…)

Wendy Cutler, a former acting deputy U.S. trade representative, now with the Asia Society Policy Institute, said it stands to reason that the administration would shelve punitive tech measures as it seeks “stabilization” with China.

“The Chinese have made it very clear that stabilization in their mind means no more export controls and other restrictive tech measures…, so particularly in the lead-up to the April visit to China, I would not expect the issuance of more… controls,” she said, emphasizing China’s potent threat of fresh curbs on rare-earth mineral exports.

“Not only does it have leverage, it is willing to use it. It ties the president’s hands,” she added.

TP-Link contacted the Commerce Department last year with suggestions for ways it could address national security concerns, two sources said, clearing the path for a less restrictive regulation of its U.S. router sales.

In response to Reuters’ questions about the measure targeting its technology, the company said its routers are not uniquely targeted for cyberattacks and that its code has been rigorously tested by U.S.-based experts to prevent the use of covert methods to bypass security controls. The company also said it has “fully cooperated with the Commerce Department” and does not comment on the “specifics of a government investigation.”

Americans With Higher Incomes Are Starting to Fall Behind on Payments Rising debt levels and more missed payments pushed a financial stress gauge to its highest level ever

While credit-counseling agencies typically help low-income people restructure their debt and avoid bankruptcy, now people who earn higher incomes have been walking through their doors, according to the National Foundation for Credit Counseling.

The average client seeking help from credit-counseling agencies across the country now makes about $70,000 a year, with unsecured debt levels approaching $35,000, or half their annual income, according to the NFCC. Before the pandemic, the typical client enrolled in counseling made about $40,000 a year and carried $10,000 in unsecured debt, or roughly 25% of their annual income.

Clients have rising debt-to-income levels and more are falling behind on payment plans. Those colliding factors pushed NFCC’s gauge of financial stress to its highest level since the nonprofit group began tracking consumer health in 2018.

NFCC expects that its financial stress forecast—which weighs payment trends from consumers already in counseling against broader economic indicators—will climb in the current quarter.

“We are seeing a disturbing shift from discretionary debt to survival debt,” said Mike Croxson, chief executive of the NFCC.

The increasing number of missed payments by existing counseling clients is particularly concerning, Croxson said, because those borrowers are already on structured repayment plans, with fixed monthly payments based on budgets designed to be manageable. (…)

Traditional credit models also may no longer fully reflect how distressed borrowers behave.

About a third of borrowers seeking counseling have fallen behind on their bills, according to Consolidated Credit. Many borrowers stay current on revolving credit, while falling behind on other obligations, like utility bills, because access to revolving credit has become a financial lifeline for them, Croxson said.

“When the financial buffer runs out, the climb in stress isn’t gradual,” he said. “It’s vertical.”

BTW, re: January surprising +130k new jobs

Goldman on NFP: The BLS introduced a methodological change to how it estimates net business formation (the “birth-death” model) that we suspect increased the volatility of monthly job growth in January.

We estimate that the birth-death model boosted job growth in January by about 70k relative to December (SA by GS), of which about 50k came from the healthcare and education sector.

Our estimate of the underlying pace of job growth based on the payroll and household surveys now stands at +55k, though we note that more volatile payrolls readings from the birth-death methodological change could argue for putting a little less weight on payroll growth or smoothing it over a longer horizon than we currently use in our estimates. (@neilksethi)

US Firms Paid Nearly 90% of 2025 Tariff Costs, NY Fed Study Says

Nearly 90% of the economic burden from tariffs in 2025 was borne by US companies and consumers, according to a new study by economists at the Federal Reserve Bank of New York found.

Using data through November 2025, the study finds that about 94% of the tariff costs were passed through to US firms and consumers in the first eight months of the year.

By November, foreign exporters were absorbing slightly more — a 10% tariff was associated with a 1.4% decline in export prices — but pass-through still stood at 86%. (…)

AI CORNER

AI Agents Are Here to Stay, Businesses Say The AI bots are becoming widespread among large companies, even as cybersecurity and tech governance issues still need to be ironed out

Companies are thinking very differently about AI agents than they were at this time last year. There’s no more second-guessing whether the bots are here to stay.

That’s according to attendees at The Wall Street Journal’s Technology Council Summit, which attracts some of the nation’s leading information-technology executives.

When the summit convened at the same place in Silicon Valley one year ago, the main takeaway was that AI agents had yet to find their place among large enterprises. This year, however, AI agents are everywhere. And while their evolution and adoption are still very much a work in progress, the sense that they are “nowhere” has passed.

While it’s true that AI agents are increasingly getting deployed inside companies, summit attendees said many tech and personnel challenges remain—from concerns about cybersecurity and governance to resistance from employees who fear AI will take their jobs. (…)

“You can’t do anything hardly anymore without your employees using AI,” Kay said Wednesday during an interview on the sidelines of the summit. “To really get the pace and scale and things that you need, you have to use AI to get there.”

Stephen Carvelli, chief technology officer of Sonic Automotive, said the publicly traded dealership chain has had “pretty good success” with AI agents that improve the customer experience. “You can, with agents, be there 24/7,” Carvelli said during a panel Wednesday.

Bank of New York Mellon Chief Information Officer Leigh-Ann Russell said during Wednesday’s panel that the company has 130 AI-powered “digital employees” that have human managers. (…)

Meanwhile, in Silicon Valley, agents are doing more and more. Alex Balazs, Intuit’s chief technology officer, said Wednesday that the Mountain View, Calif.-based software company has found success with AI agents that can close books on its behalf.

AI agents for software development, in particular, have improved by leaps and bounds, Balazs added. “The days of AI assisting you with coding have become you are assisting the AI with coding,” he said. (…)

Though Wall Street’s top brass have sought to soothe investor jitters over AI’s threat to software, many attendees at Wednesday’s summit said they are more concerned about putting AI agents to work inside their companies than replacing their existing software with AI.

“There are issues with allowing agents to be able to do their work properly, even authentication,” Carvelli said on a panel. “The tools need to be a certain level of security, a certain level of capability.”

• Anthropic subscription surge cuts into OpenAI’s lead

The share of companies paying for Anthropic increased to 20% from 17%, per Ramp, a company that offers corporate credit cards and expense-management tools to roughly 50,000 companies nationwide.

• OpenAI dropped slightly from 37% to 36%.
• 1 in 5 businesses that use Ramp now pay for Anthropic, up from 1 in 25 last year.

The competition between Anthropic and OpenAI is shaping up to be the Kendrick vs. Drake tech battle of our time.

• It’s not a zero-sum game in either realm. You can enjoy listening to “Not Like Us” and “God’s Plan.” Similarly, companies appear willing to pay for both companies’ tools.
• Anthropic isn’t gaining users at OpenAI’s expense — at least so far, per the report. According to Ramp, about 79% of OpenAI users also pay for Anthropic.

Anthropic’s new software coding product, which went viral earlier this year, helped drive adoption.

The Ramp data doesn’t take into account workers inside companies who are using free AI tools — which would skew the numbers more in OpenAI’s favor, as ChatGPT remains the leader for consumers overall.

• And Ramp’s data skews toward more tech-forward early adopter type companies; not the full breadth of the business sector.

• A December 2025 report from Menlo Ventures found that Anthropic captures 40% of enterprise LLM spend — up from 24%, while OpenAI’s share fell to 27%, down from 50%. But the data looked only at API usage (not chatbot sessions or consumer subscriptions).
• Adoption is happening crazy fast: Nearly 47% of businesses paid for AI in January, a new high. In 2023, that number was less than 7%.

“The race isn’t zero-sum,” says Ramp’s Kharazian in a release Wednesday. “At least not yet.”

Data: Ramp AI Index; Chart: Axios Visuals

• Wall Street hunts next casualty from AI threat to white-collar work

Wall Street has come alive to the threat from AI to broad swaths of white-collar work, indiscriminately wiping billions of dollars off stocks in sectors from wealth managers to insurance brokers and property services. (…)

Traders have seized on developments by little-known start-ups, triggering waves of selling for shares of incumbent players in the traditional financial services industry and beyond, from Charles Schwab to CBRE. Trucking stocks joined the selling on Thursday over threats to their freight brokerage businesses.

“It feels like a mob with bats looking for the next hit, it’s indiscriminate,” said Peter Hébert, co-founder of US tech investor Lux Capital and a former Lehman Brothers equity analyst.

Launches of new tools from insurance AI start-up Insurify and tax planning chatbot developer Altruist hit financial stocks on both sides of the Atlantic and left investors asking which industries would be next. 

Traders are increasingly taking heed of warnings from AI founders such as Dario Amodei of Anthropic that the technology could soon become a “general labour substitute” for white-collar work.

Azeem Azhar, founder of Exponential View, a popular AI newsletter, said stock market investors were extrapolating from the speed with which AI services have improved over the past year. Today’s abilities of so-called agents — bots capable of completing a wide range of tasks with little to no human intervention — “would have been incomprehensible a year ago”, he said.

That has created an “idea contagion” that many computer-based tasks could be automated. Benedict Evans, an independent tech industry analyst, said there has been a “massive expansion of the number of things” that can now be done by AI which previously required a human to “slog through in Excel”. (…)

However, even the tech investors that are betting on big returns from AI start-ups have been alarmed by the speed with which Wall Street has started to sell legacy companies. “I think there’s a little bit of an overcorrection happening,” said Andreas Helbig, partner at London-based tech investors Atomico. “It’s really hard to vibe code a bank.” “A lot of people are jumping at shadows,” said Evans. (…)

• The software sell-off (part one)

(…) Here’s a chart of the software and services sub-index of the S&P 500. It is down 27 per cent since late October:

Of course this sub-index does not capture everything that’s going on — AI panic came for trucking companies yesterday for goodness’ sake. (…)

Below is the valuation premium of the software and services subsector to the whole S&P 500, based on the price/earnings ratio of the two. Software is selling at a discount for only the second time in 30 years:

That’s relative valuation. The absolute valuation is not as attractive. The sector now trades at a bit above 22 times expected earnings. It was lower than that continuously from 2008 to 2016:

(…) Microsoft’s earnings may have been a mere catalyst for a change that was coming one way or another. But it’s still particularly important, inasmuch as it accounts for half of the software sub-index, and its 26 per cent fall since October accounts for half of the sub-index’s decline. (…)

Scott Chronert’s strategy team at Citigroup makes a useful observation about this. Software margins had grown very wide recently and the endurance of those margins all the way to the financial horizon got priced into the stocks. That was never going to last. Chronert’s chart:

All of these comments amount to context rather than attacking the big difficult question directly. That question is whether AI machines can make legacy software companies obsolete or at the very least offer them an intense new form of competition.

Ed Yardeni’s chart is in buy-low area, or is it?

MSFT’s valuation since 2020 per Koifin. Clearly buy-low:

MSFT’s valuation since 2000 per Koifin. Not quite as clear:

More from the FT’s Richard Waters:

(…) For their part, the AI model-builders are playing down the threat and describe themselves as partners rather than challengers. That is not surprising: a large part of their business involves selling access to their models to power the services of other companies that may soon become their competitors.

Their positioning, however, suggests greater competition is inevitable. OpenAI recently laid out big ambitions for Frontier, its own entry in the enterprise software stakes.

This includes controlling all the AI agents that may one day want to access a company’s systems, evaluating and optimising their performance, and providing the business context in which all of this takes place.

These are the sort of functions that existing enterprise software companies see as their natural turf. If Frontier controls this new layer of software, orchestrating the agents, it pushes others further into the background.

This battle is only just coming into focus. The incumbents have already shown that they are ready to defend their territory. That includes companies like Salesforce, which last year blocked access to third-party AI services that wanted to draw data from its Slack communications service.

But blocking new services from third party companies will not make them popular with their own customers. Incumbents need to move fast themselves to create similar services, while also cementing themselves at the centre of the emerging agent universe.

• Thomson Reuters CEO says plunge in software stocks driven by anxiety, not fundamentals

(…) This week, Thomson Reuters was one of several companies, particularly those that make legal software, that suffered when Anthropic released new AI-backed productivity tools for lawyers, feeding into investor uncertainty about who will be the winners and losers from AI. (…)

The company’s pushback against market jitters is rooted in its conviction that the vast troves of legal, tax and accounting content that it has amassed over decades, curated by a staff of more than 2,700 attorney editors and tax experts, will allow it to train better AI-based products than its newer competitors.

Most of those competitors are using AI to build new tools to help legal professionals with research, document drafting and other repeatable tasks that can be at least partly automated.

“Our bet is that we can take our content and our expertise and our leadership position in research and know-how and use that to drive a leadership position in the legal AI-driven workflows,” Mr. Hasker said Thursday. “And our bet is that others cannot come the other way.”

He said companies such as Anthropic are building tools that are good at automating general-purpose tasks, but unless they make the huge investments to buy content and acquire expert staff, they will struggle to replicate what Thomson Reuters offers.

At the same time, Thomson Reuters is spending heavily to build “agentic” AI tools – which can do complex tasks that have multiple steps with fewer prompts from human users – into its main line of products. The company spent more than US$200-million on AI upgrades in 2025 and expects to repeat that this year.

“For those professionals, principally lawyers and tax professionals, the stakes are remarkably high,” Mr. Hasker said. “They have to be correct.” (…)

(Koifin)

FYI:

@DKThomp

Note: nothing above is investment advice.

January Employment: Strong Start Out of the Gate

Nonfarm payrolls rose 130K in January, far exceeding the Bloomberg consensus expectation of 65K and our estimate of 80K. Data over the prior two months were revised modestly lower (-17K). Together, the three-month average pace of job growth improved to 73K, its strongest pace since last February.

 

Today’s release brought more than the usual two-month revisions that come from late survey responses. The annual benchmark revised down the level of payrolls in March 2025 by 862K (-0.5%) marking the largest downward adjustment since 2009.

Data for the “post benchmark” period (i.e., April 2025-December 2025) were also subject to revisions with the update of new seasonal adjustment factors and modifications to the birth-death model. While smaller in magnitude than the annual benchmark, payroll growth in the post-benchmark period is now reported to have increased an average of 13K per month compared to 28K as previously reported.

While revisions show materially weaker job growth for 2025 as a whole, recent monthly data suggest the trend in hiring has firmed since the summer.

Private sector nonfarm payrolls jumped 172K in January, and the three-month average, at 103K, is well ahead of the flat reading registered in last August. Yet, healthcare & social services remains the dominant driver of job growth, having added 124K jobs—the largest monthly change since August 2020. Job growth in other segments continue to struggle, highlighting that job opportunities are not nearly as widespread as today’s headline beat implies. (…)

The unemployment rate fell to 4.3% (4.28% unrounded) in January, as employment rose a solid 528K and unemployment fell 141K. The unemployment rate’s slide over the past few months puts it back at the top end of the range that most Fed officials consider to be consistent with “full employment” and signals that labor demand and supply are better balanced than previously believed.

Like payrolls, however, there are signs of softness under the headline’s surface. Smoothing with a three-month moving average, the number of people who are working part-time for economic reasons (i.e., a suitable full-time job is not available) rose 19% year-over-year in January. Meantime, the average duration of unemployment slipped to 23.9 weeks in January but remains 9% longer than a year ago.

These indicators align with separate measures of labor demand, such as JOLTS and the Conference Board’s labor differential, that point to sluggish labor demand and suggest there are still pockets of the jobs market that are struggling.

Wage growth remains reasonably solid. Average hourly earnings rose 0.4% in January and were up 3.7% year-over-year, unchanged from December. Steady wage growth is a positive for employed households, but the benchmark’s downward revisions to the level of employment meaningfully pared aggregate labor income growth in the first half of 2025 and better aligns the establishment survey with the more comprehensive data on personal income. (…)

Today’s data suggest the labor market is closer to stabilization than rapid deterioration, and that will diminish the case from the doves that more rate cuts are needed, at least imminently.

Jay Powell had warned that the employment numbers were overestimated by about 60k per month. It was more like 80k in 2025.

But Wells Fargo saying that “there are still pockets of the jobs market that are struggling” is also an understatement as this WSJ chart illustrates. Other than health and education, every other sector is struggling.

Parts of the healthcare industry have become increasingly reliant on an immigrant workforce. (…)

Foreign-born workers are particularly concentrated at the upper and lower ends of the skill ladder in healthcare. By 2024, they accounted for less than 15% of the U.S. population but 39% of home health aides, 28% of physicians and 24% of dentists, according to census data aggregated by IPUMS, a population database.

The rise of healthcare and construction jobs—because of the nation’s massive data center build-out—presents a puzzle in the job market: Since President Trump has severely restricted immigration and ramped up deportations, who is filling these jobs now?

Around one-quarter of workers in the construction industry are foreign-born, census data show. But the ratio is much higher in certain construction specialties, with immigrants making up around half of all drywall installers and roofers, 45% of painters, and 39% of general laborers.

Immigration raids are starting to take an economic toll on the construction industry, making workers harder to come by and slowing building projects.

“You just don’t have the access to the labor that you normally have,” said Joe Brusuelas, chief economist at RSM. The labor shortage is pushing up construction costs, making it harder to build badly needed housing. “It’s a hard supply constraint,” he said.

Demand is strong for data centers and high-end hospitality and residential projects, according to John Fish, CEO of Suffolk Construction Company. Hiring, he said, has become more difficult for mechanical, electrical, and plumbing trades because of retirements and immigration policy. “There’s a complete misalignment between demand and supply,” he said.

In the healthcare sector, demand for nurses and nurse practitioners is so strong that healthcare providers have to outbid each other, offering five-figure signing bonuses and generous paid time off, said Sari Gillen, a Houston-based healthcare recruiter at Goodwin Recruiting.

Many job candidates are juggling several offers, and she makes a habit of checking in on them every day to make sure they don’t jump to the competition. “It’s a race to the finish line,” she said.

Healthcare jobs can be labor-intensive and less susceptible to automation than other skilled professions. Demand for healthcare workers is expected to remain strong as the U.S. population ages, although changes to Medicare payment rates pose a risk in the short term, companies say. (…)

The US job market is also K-shaped. The orange line above explains the productivity gains last year.

Meanwhile, the Employment Cost Index for healthcare and construction workers is up 4.1% vs +3.3% (and slowing) for all private employees.

It’s a good thing that some employees are getting real wage increases because the US consumer sector is now essentially running on wage gains to sustain spending. Hopefully, January’s blowout jobs won’t be revised down too much. Virtually all monthly jobs data were revised lower in 2025.

Speaking of healthcare, how healthy is this?

Greg Ip:

Declining labor share is sometimes attributed to businesses underpaying workers. In fact, it is more due to a shift in the sorts of businesses that dominate the economy. Today’s fastest-growing “superstar” companies pay well, but don’t have many workers. In the past three years Google parent Alphabet’s revenue has grown 43%, while head count has remained flat. Amazon is a major employer because of its fulfillment centers, but even it is eliminating jobs.

In such companies, the line between capital and labor blurs. Employees who design the technology are a form of human capital, and are compensated in stock to reflect that. Some corporate acquisitions dubbed “acquihires” are aimed primarily at talent, such as when Meta Platforms paid $14 billion for a stake in Scale AI to nab founder Alexandr Wang.

Since the end of 2019, just before the pandemic, workers have basically just kept up. After inflation, average hourly wages are up 3%. For workers in aggregate, total compensation is up 8%. Meanwhile, profits have climbed 43%.

Last year was decent for wages, but even better for profits. Last week’s blowout earnings for big tech helped lift profit margins for the S&P 500 to their highest since at least 2009, according to FactSet. Multiply rising earnings by a higher ratio of share price to earnings, and you get a levitating stock market.

Households’ stock wealth is now equal to almost 300% of their annual disposable income, compared with 200% in 2019. At such levels, wealth starts to rival wages as the driver of consumption, at least for the affluent households who own most stocks.

Doug Peta, a strategist with BCA Research, estimates that a 10% stock return, including dividends, taxed at the highest marginal rate, boosts spending capacity as much as an 18% rise in income. No wonder tepid job and income growth aren’t holding back the economy. (…)

Trump Privately Weighs Quitting USMCA Trade Pact He Signed

The president has asked aides why he shouldn’t withdraw from the agreement, which he signed during his first term, though he has stopped short of flatly signaling that he will do so, according to the people who spoke on condition of anonymity to describe internal discussions. (…)

Greer said Tuesday that the administration would hold separate talks with Mexico and Canada, arguing that trade ties with Canada are more strained. He did not say whether Trump would approve an extension.

“Generally speaking, these negotiations are going to proceed bilaterally and separately, the Mexicans are being quite pragmatic right now. We’ve had a lot of discussions with them. With the Canadians, it’s more challenging,” Greer said on Fox Business. (…)

If the countries agree to a renewal, the accord would remain in force for another 16 years. But if that doesn’t happen, it could trigger annual reviews for a decade until the deal’s expiration in 2036. Any country could announce their intent to withdraw with six months’ notice.

Such a move would shake the foundations of one of the largest trading relationships in the world — the pact covers roughly $2 trillion in goods and services — and even the threat of a US departure would stoke uncertainty for investors and world leaders.

US business groups and lawmakers would almost certainly rebel. The prospect of higher tariffs would also threaten to exacerbate affordability concerns heading into November’s midterm elections, in which Trump’s Republicans already face an uphill battle to keep control of Congress. (…)

It’s unclear if Trump will threaten publicly to leave or formally give the warning. It’s possible if he did so, he may use it as leverage to reach a more favorable deal rather than follow through on pulling the US out of the agreement. (…)

Trump threatened to leave Nafta before agreeing to the new deal that tightened rules, raised US auto content requirements and included a sunset clause, which mandated this summer’s renegotiation.

Even though he negotiated the current system, Trump has soured on the North American trading relationship. During a visit to a Ford Motor Co. plant near Detroit, he called the pact “irrelevant” but stopped short of saying he would quit it. He has also floated the possibility of negotiating bilateral agreements with Canada and Mexico.

“I don’t even think about USMCA,” he said. “I want to see Canada and Mexico do well, but the problem is we don’t need their product.” (…)

China Eases Duties on EU Dairy in Latest Sign of Trade Thaw

China set final import tariffs on some dairy products from the European Union well below preliminary rates outlined late last year, in the latest sign of stabilizing trade ties between Beijing and Brussels.

The duties — set at as much as 11.7% following an anti-subsidy investigation — apply to goods including fresh and processed cheese and will take effect from Friday, China’s Ministry of Commerce said on Thursday. That compares with initial duties, collected in the form of deposits, of as much as 43% that were announced in December.

There have been efforts to deepen economic cooperation between the two sides following a leaders summit in July, including a recent visit by French President Emmanuel Macron to China. Earlier this week, the EU moved to exempt one of Volkswagen AG’s China-built electric vehicles from hefty import duties, the first car to get approval under a new mechanism aimed at thawing tensions. (…)

The final import tariff rates set on pork — announced in December — also came in significantly lower than initial levels.

“China is willing to maintain dialogue with the European side to create an open, stable market environment for Chinese and European industries,” Ministry of Commerce spokesperson He Yadong said on Thursday, praising a “soft landing” of tariff disputes over Chinese-made EVs. (…)

Donald Trump’s policies will add $1.4tn to US deficit over next decade, watchdog says Congressional Budget Office warns Washington’s public finances are ‘not sustainable’

Donald Trump’s policies will expand the federal budget deficit by $1.4tn over the coming decade, Congress’s fiscal watchdog has warned, driving up public debt and leaving government finances on an unsustainable path.

The Congressional Budget Office on Wednesday raised its estimate of cumulative deficits to the end of 2035 by 6 per cent, compared with a previous forecast in January 2025, following the implementation of the president’s sweeping tax and spending bill and his immigration policies.

It said the annual deficit would rise from $1.9tn this year to $3.1tn by 2036, pushing federal debt levels beyond their second world war record as soon as 2030.

“Our budget projections continue to indicate that the fiscal trajectory is not sustainable,” said CBO director Phillip Swagel.

The warning from the non-partisan agency that sits within the legislative branch of government will add to heightened investor concerns about the scale of the US debt pile. “There’s no sugarcoating it: America’s fiscal health is increasingly dire,” said Jonathan Burks at the Bipartisan Policy Center. “Our debt is now 100 per cent of GDP, and rather than pumping the brakes, we are accelerating.”

The 2025 One Big Beautiful Bill Act, the president’s flagship fiscal law, which extended tax cuts from his first term, will increase deficits by $4.7tn by 2035, the CBO said on Wednesday. The administration’s crackdown on immigration will add a further $500bn. Revenues from the president’s tariffs on trading partners will partly offset the rise, lowering overall deficit levels by about $3tn.

The widening deficits will push debt from 101 per cent of GDP this year to 108 per cent by 2030, eclipsing the previous high of 106 per cent in 1946 in the wake of the second world war. By 2036 it is set to reach 120 per cent.

The US government debt market is five times the size it was in 2008, and investors have long been worried that the supply of Treasury debt is straining the limits of demand. The scale of debt on offer has hit prices and helped lift yields on the benchmark 10-year Treasury note, which sets the rate at which the government borrows money, as well as mortgage rates.

The Trump administration, intent on lowering the deficit and making housing more affordable, has expressed a desire to lower long-dated Treasury yields. The 10-year yield rose on Tuesday after an auction of $42bn worth of notes was met with soft demand. Primary dealers, big banks required to buy the remainder of the offering after the auction is over, took up the biggest percentage since August 2025, according to BMO Capital Markets.

“The fiscal trajectory of the US still needs some fixing in the longer run,” said Gennadiy Goldberg, head of US interest rates at TD Securities. “The CBO’s estimate will add to the narrative that the US fiscal picture is unsustainable.”

Other analysts warned the extent of the borrowing would leave the US unable to take adequate steps in the face of any unexpected downturn. “A healthy balance sheet is critical for a growing economy, national security and the ability to respond to unforeseen emergencies,” said Maya MacGuineas, president of the Committee for a Responsible Federal Budget.

“With debt around 100 per cent of GDP and growing, we will enter the next crisis with a higher debt-to-GDP ratio than we have ever had before.” Goldberg at TD Securities cautioned that significant uncertainty remained around tariffs, with a pending case before the Supreme Court set to determine the legality of many of the president’s levies. “A lot of these numbers could also change significantly depending on the outcome . . . I think the CBO is making their estimate in a really uncertain environment,” he said.

Hmmm…someone at the CBO could soon be looking for another job…