Job Openings Stabilize in January, but Likely Short-Lived
The first Job Opening and Labor Turnover Survey for 2025 showed the labor market maintained solid momentum heading into the year. Job openings rose slightly to 7.7 million, and the ratio of jobs-per-unemployed worker ticked modestly higher to 1.13. Layoffs and discharges remained historically depressed at just 1.0% of total employment, and the recent sideways trends in the hiring rate and quits rate are welcome compared to the downward slides that punctuated most of last year.
Yet while today’s JOLTS report offers further evidence that the jobs market started the year in decent shape, headwinds have emerged more recently. The low rate of hiring leaves the jobs market in a vulnerable position to a renewed deceleration in labor demand.
The more up-to-date Indeed Job Postings point to much lower JOLTS number in March/April. With this low hiring rate…
How Do You Like the Trade War Now? Trump is furious that Canada won’t take his tariffs lying down.
The WSJ Editorial Board:
President Trump wanted a trade war with the world, and Americans are getting it, good and hard. (…)
North Americans awakened Monday to the news that Ontario premier Doug Ford said he was raising the price of his province’s electricity exports to the U.S. by 25% in response to Mr. Trump’s on-and-off 25% tariffs on Canada. That’s a hit to consumers in the U.S. Midwest and Northeast.
Mr. Trump went ballistic, even by his standards. (…)
The U.S. sources about two-thirds of its primary aluminum and 60% of scrap aluminum imports from Canada. Both are used by secondary U.S. aluminum manufacturers and fabricators, which oppose Mr. Trump’s tariffs. They have a hard enough time competing against lower-cost producers in China and Turkey.
Canada makes up a smaller share of U.S. steel consumption (about 6%). But Mr. Trump’s tariffs will still raise costs for steel users that depend on Canadian supplies. Hot-rolled coil steel prices are up a third since Mr. Trump took office because U.S. manufacturers like Cleveland-Cliffs and Nucor have raised prices in anticipation of tariffs.
Commerce Secretary Howard Lutnick said over the weekend that the President’s tariffs would make some foreign products more expensive but “American products will get cheaper.” Huh? Companies that use foreign components will have to raise prices or swallow narrower profit margins. Does Mr. Lutnick understand, well, commerce?
Domestic manufacturers that compete with foreign goods will raise their prices to take advantage of the protectionism to increase their margins. A study in the American Economic Review found that consumers paid $817,000 for each new manufacturing job created by Mr. Trump’s washing machine tariffs in his first term.
And Mr. Trump is only getting started as he prepares to take his trade war global. He promised Tuesday to “substantially increase” tariffs on cars on April 2, which he said would “essentially, permanently shut down the automobile manufacturing business in Canada.” So first he whacks U.S. auto makers with tariffs that raise their production costs, then he tries to shield them from foreign competition by whacking American consumers.
Ontario’s Mr. Ford at least showed some maturity late Tuesday, saying he’ll suspend his 25% tax on electricity pending talks. He and Mr. Lutnick plan to meet Thursday about renewing the USMCA trade agreement, which comes up for review next year. Stocks pared some of their losses after the news.
The trouble with trade wars is that once they begin they can quickly escalate and get out of control. All the more so when politicians are nearing an election campaign, as Canada now is. Or when Mr. Trump behaves as if his manhood is implicated because a foreign nation won’t take his nasty border taxes lying down.
We said from the beginning that this North American trade war is the dumbest in history, and we were being kind.
- Is Trump Throwing It Away? His tariff circus undermines U.S. standing just when it would be most useful.
(…) A few short weeks have seen Mr. Trump, to continue his favorite metaphor, scattering his best card to the winds. The U.S. has been the best-functioning, most innovative economy in the world at a time when its rivals and partners are all struggling for different reasons.
He’s throwing it away with his tariff policy.
Canada was about to elect a more Trump-minded government until Mr. Trump revived its Liberals with his trade warfare. Germany just elected its most promising government in a generation, yet Mr. Trump is attacking Europe and NATO’s joint prosperity at the very moment Europe is becoming a partner worth having again.
Mr. Trump’s program of noisy, chaotic gestures has always raised the question: Is there anything coherent behind it? (…)
- Trump’s Economic Messaging Is Spooking Some of His Own Advisers President’s team receives flood of calls from business executives concerned about the mixed messaging on tariffs
Senior officials, including White House chief of staff Susie Wiles, have received panicked calls from chief executives and lobbyists, who have urged the administration to calm jittery markets by outlining a more predictable tariff agenda, according to people familiar with the discussions. Many in the business community have abandoned efforts to get the president to reverse course on trade, instead pleading with the White House for clarity on his approach, the people said. (…)
The mixed messages from the president and his advisers have raised concerns among some Republicans that Trump lacks a cohesive economic plan. (…)
Trump’s aggressive approach to tariffs has unnerved some Trump administration economic officials, including staff on the National Economic Council, who are concerned that tariffs and uncertainty over trade policy are tanking the stock market and fueling price increases on everything from energy to construction materials, people familiar with the matter said. The president’s economic advisers have warned him that tariffs could hurt the market and economic growth, but he has largely been undeterred, the people said. (…)
The spate of tariff proclamations and the resulting economic convulsions have brought to the surface long-simmering tensions among members of Trump’s economic team. (…)
In one instance last week, Lutnick went on Fox News and announced that Canada and Mexico could soon strike a deal with the U.S. to avoid some of the 25% tariffs Trump had imposed over fentanyl trafficking. That surprised Greer and CEA staff, leaving them rushing to come up with a solution, eventually persuading Trump to grant a one-month pause on tariffs for goods that comply with a U.S.-Mexico-Canada trade agreement, according to people familiar with the matter. (…)
On CBS News on Tuesday night, Lutnick defended the administration’s rollout of its trade policy, saying: “It is not chaotic, and the only one who thinks it’s chaotic is someone who’s being silly.” (…)
In Trump’s first term, he watched the markets almost hourly, and even a temporary dip could lead to a change in policy, former senior administration officials said. This time, he is still interested in the markets, but is less inclined to abandon his tariff plans, though he has delayed the implementation of some duties, an administration official said. (…)
“We don’t know what this is gonna look like tomorrow,” said Sen. Mike Rounds (R., S.D.), adding that he is “very frustrated” by the uncertainty that the tariff agenda is foisting on farmers and businesses in his state. (…)
“Swinging from one extreme to another is not the right policy approach,” Chevron CEO Mike Wirth told an energy conference in Houston on Monday. “We have allocated capital that’s out there for decades, and so we really need consistent and durable policy.” (…)
Funny he did not also say “sensible”…
Walmart Faces Heat From Beijing After Demand for Price Cuts
Chinese authorities summoned Walmart Inc. executives on Tuesday over reports it asked suppliers to bear rising costs incurred by increased US tariffs.
Several Chinese authorities, including the Ministry of Commerce, have met with the US retailer to learn about its negotiations over price cuts with suppliers in China, according to a post by Yuyuantantian, a Weibo account affiliated with state-run China Central Television that regularly signals Beijing’s thinking about trade.
The post said such demands risk fracturing the global supply chain and hurting the interests of both US and Chinese companies and of American consumers. It also hinted that Walmart could expect more actions from Beijing if it continues to do so. (…)
Bloomberg reported last week that Walmart asked some suppliers for major price reductions as a way to insulate American consumers from higher levies on Chinese goods. (…)
The stakes are high for Walmart. Unlike many global retail brands that have lost their historical dominance in China to local competition, Walmart has defied the country’s consumption slump with robust growth for its membership store Sam’s Club through the sale of premium cuts of meat and other high quality foods increasingly favored by China’s middle class. (…)
The CCTV-affiliated post said Walmart sourced around 60% of products from China and warned that being condescending to Chinese suppliers could prompt local consumers to seek out alternatives.
“Chinese consumers know how to look for the suppliers that make Walmart’s products and purchase directly from them,” the post said.
Any demands on suppliers, if true, would be bad for Walmart’s operations and developments in China, the post said. (…)
Chinese exporters are resisting any moves to cut their prices further as they already have razor-thin margins due to Walmart’s strategy of sourcing goods at a low price to stay competitive. (…)
China Says US Owes ‘Big Thank You’ on Fentanyl, Calls for Talks
China said it has forcefully cracked down on the fentanyl trade and condemned President Donald Trump’s tariffs, as the world’s two largest economies remain at odds over the conditions for any talks to cool tensions.
Officials from China’s Foreign Ministry and the Ministry of Public Security said in a briefing on Wednesday the country has achieved success in controlling the drugs and done all it can for the US. The officials asked not to be identified discussing sensitive matters.
A Foreign Ministry official said Beijing has done the US a favor and Washington should have said a “big thank you” instead of slapping levies on Chinese imports. He also called on the Trump administration to return to dialogue and expressed willingness to continue working with the US.
Talks between the US and China on trade and other issues are stuck at lower levels, with both sides failing to agree on the best way to proceed. (…)
Is Trump Taking a ‘Liquidationist’ Approach to the Economy? The administration’s view that damaging the economy now could help it later comes with little upside for investors
During President Trump’s first term, stocks rode high on the belief that he would always pull back on policies that led to a selloff. Now, the administration is making a much tougher pitch: that even if tariffs and budget cuts cause a period of havoc, there are unexpected gains to be made on the other side.
The problem is there isn’t much evidence to make investors believe that. Indeed, such views edge close to the “liquidationist” approach historically espoused by laissez-faire economists, and most infamously associated with former President Herbert Hoover’s Treasury secretary who advised him to let the economy fall. (…)
Treasury Secretary Scott Bessent has spoken about the need for the economy to undergo a “detox period” from fiscal stimulus. (…)
The moves mark a clear break with Trump’s tariffs eight years ago, which were rolled out slowly and only after aggressive tax cuts that had spurred growth. During that period Trump was also seen as eager to strike a deal with China to diffuse trade tensions that had led to market declines. (…)
Bessent said that equity investors must stop thinking about a “Trump put” and embrace a “Trump call” instead. That is, a bet that stocks will see a surge once economic misallocation is purged out of the system.
The theory does have some backers on Wall Street: In a research note sent to clients Monday, economists at Morgan Stanley argued that short-term pain for stock markets could be offset by a longer-term gain by the end of this year and into next year, as the shift from public to private spending stokes a broad-based rally that is less reliant on a few technology megacorporations. (…)
Could the Trump administration feasibly engineer a more sustained domestic-investment boom through its efforts to reshore production, particularly if the U.S.’s wide trade deficit narrows? Possibly, but its erratic tariff policies so far are a poor instrument for doing so, only blunting incentives for investment by raising uncertainty. (…)
Currently, however, it is Trump’s tariffs that risk stoking inflation, making it harder for the Federal Reserve to cushion any blows by lowering interest rates.
Investors are clearly unimpressed with the liquidationist turn in policy. They can be forgiven for thinking that the Trump administration’s call option will expire worthless.
Ed Yardeni:
Uncertainty typically increases in advance of a presidential election then decreases once the new president’s policy goals are clearer. If uncertainty lingers, then consumers may pull back on spending and companies might be reluctant to invest, ultimately hurting the jobs market. The stock market is increasingly discounting this scenario, pushing the Nasdaq into correction territory with the S&P 500 heading in the same direction.
Consumers are getting anxious. According to the New York Fed’s February consumer survey, more households were expecting their financial situation to deteriorate over the coming year. Following the November election, they were the most optimistic about their financial situations since just before the pandemic. Positive financial expectations tend to inversely track consumers’ inflation expectations, which are creeping higher probably reflecting the likelihood that tariffs will raise prices.
We are still betting on the resilience of the US economy, but we’ve clearly warned that prolonged tariff turmoil could dim the economic outlook and cause a bear market in stocks. For now, the labor market still looks to be in good shape, which will continue so long as US companies are able to continue growing their earnings and feel confident enough to invest. The percentage of small business owners saying its a good time to expand remains elevated, but near-term capital spending plans dropped sharply last month.
Credit markets have also become angsty in recent weeks: spreads widened along with declining equities (inversed) while T10 yields dropped 60 bps. Widespread uncertainty and worries.
- Employee confidence — as measured by workers’ confidence in their employer’s business outlook — fell to a record low in February, according to new data from workplace review platform Glassdoor.
The eroding confidence extends beyond DOGE anxiety. Employee confidence increased in fewer than half (10) of the 24 sectors tracked by Glassdoor in February, including health care, which has been responsible for a significant share of job gains in recent months. (Axios)
Data: Glassdoor. Note: Index based on monthly average of 50,000 to 60,000 ratings. Chart: Axios Visuals
FYI:
On Tuesday, Citi analysts said U.S. exceptionalism has paused under the Donald Trump administration. While downgrading U.S. equities, the firm upgraded China stocks to overweight, citing the DeepSeek AI breakthrough, government support for the technology sector and attractive valuations.
On Monday, an analyst highlighted a shifting trend in China after robust February EV deliveries. Battery electric vehicles (BEV) are outpacing plug-in hybrid vehicles (PHEV) in a reversal of recent trends, RBC Capital Markets analyst Tom Narayan said.
BYD (BYDDF), which makes both BEVs and PHEVs, saw a 164% sales boom last month. Its startup rivals, including Li Auto, also grew February EV deliveries, while Tesla‘s (TSLA) sales fell to the lowest level since July 2022. (…)
Trade Wars Won’t Make American Farming Great Again The US trade war will hurt food exports and increase the agricultural trade deficit.
Across the US grain belt, the vast majority voted for President Donald Trump last year, embracing his “Make America Great Again” slogan even more enthusiastically than other demographic groups did. Yet, there isn’t anything great about the American farming industry — and Trump is to blame for a lot of its recent decline.
The deterioration is clear on many measures, but one stands out. For decades, the US exported more foodstuff than it imported. It was, to borrow the slogan of one of the country’s top commodity traders, a “supermarket to the world.” Not anymore. (…) America hasn’t seen three straight years of agricultural deficits since Dwight Eisenhower was in the White House.
With Trump’s second term, those agricultural deficits are likely to become permanent. Trade wars are bad for the US agricultural sector. And the White House should know it; or probably knows, but it doesn’t care. Every time the government has embarked on one, the US has lost market share in global agricultural markets. (…)
Presidents Barack Obama and Joseph Biden at least didn’t hurt the sector. In between, President Trump not only neglected it, but hurt it via his original trade war with China. Beijing responded to Trump’s tariffs by targeting its imports of American foodstuffs — suggesting the Communist Party, previously nervous about stoking inflation, is confident it can feed its nation from elsewehere.
Now, Trump is causing more harm. Not only he is fighting a trade war against China, currently the third-largest buyer of US agricultural commodities, but also against Mexico and Canada, respectively the first- and second-largest importers. Together, the three nations purchased nearly half of all US food exports last year. (…)
It gets worse — because Trump’s tariffs on Canada will the cost of fertilizers. The US imports more than 80% of its potash, a key crop nutrient, from Canada. Acknowledging the damage, Trump recently lowered the tariff on Canadian potash to 10% from 25%. Still, the cost increase of a must-have input will further damage the farming economy. (…)
The previous trade war cost American farmers about $27 billion, according to a USDA study. The number will be larger this time, with Beijing already targeting food for retaliation. The American Farm Bureau Federation, the most powerful institution representing the country’s rural areas, has broken with its traditional support for Republican presidents, warning Trump he’s making a mistake. “For the third straight year, farmers are losing money on almost every major crop planted,” it said earlier this month. “Adding even more costs and reducing markets for American agricultural goods could create an economic burden some farmers may not be able to bear.”
The Trump administration should read a 1983 government report analyzing the impact of American food embargoes and trade spats in the 1970s and 1980s, under Presidents Richard Nixon and Jimmy Carter. The three lessons are crystal clear – and as applicable in 2025 as they were half a century ago. The US became viewed as an “unreliable” world supplier of agricultural commodities; the report found that “major countries that compete with the United States in the world grain and soybean markets expanded their production and exports of these commodities so as to capture a growing share of the world trade”; and the US government “incurred costs to cushion the adverse effects” of the trade policies. Rinse, wash, repeat.
The US’s agricultural rivals, notably Russia and Argentina, have room to expand — even more so if Chinese capital helps. Argentina is the must-watch nation. It’s never previously threatened the US because local politics, via large export taxes on grains and oilseeds, curbed the full development of its agricultural sector. Ironically, Milei, a free-market-supporting politician who’s close to Trump, could be poised to unleash Argentina’s potential.
American farmers face many enemies — foreign and domestic. But, ultimately, the US rural electorate is getting what it voted for.
- USAID Is Unraveling and US Farmers Are Collateral Damage The Iowans, Minnesotans and Kansans who sell food to the hunger-fighting agency are watching their crops go to waste.
USAID has been struck by the full fury of President Donald Trump, who attacked not only the agency’s existence but its reputation, calling its leaders “radical lunatics” and accusing it, without evidence, of massive corruption.
That charge has been echoed by Elon Musk, head of the so-called Department of Government Efficiency. Musk — who is neither an accountant nor deeply experienced in the workings of Washington agencies — has declared USAID to be “evil” and a “criminal organization” that is “beyond repair.” (No formal charges of wrongdoing have been made and many of the diatribes launched have been incorrect or misleading.)
After a three-week barrage, USAID is in tatters. Its doors are shuttered, its offices closed, its grants canceled. Thousands of staff have been put on administrative leave, leaving desperately needed projects in limbo.
Their pain is shared by American farmers, who supply more than 40% of the food that USAID sends around the world: corn, wheat, soybeans, sorghum and peas. In 2024 alone, the agency paid US farmers $2 billion for those crops. (…)
As Aaron Lehman, president of the Iowa Farmers Union, put it, “USAID is important for farmers. The grain goes all over the world with USAID.” Farmers were already suffering from low crop prices, especially for corn and soybeans, and were depending on those global USAID contracts. (…)
Minnesota Representative Angie Craig, the ranking Democrat on the House Agriculture Committee, said more than 550 million metric tons of food is now sitting in ports and storage facilities, unable to be delivered. (There is little farmers hate more than wasted food.)
Kim Barnes, chief financial officer of the Pawnee County co-op in Kansas, where he has worked for 51 years, said he has never seen financial impropriety on the grain side of USAID.
“My concern is these will be potential markets we’ll lose, and people will go hungry,” he said. His idea of USAID is a simple one: “We help you today, get you back on your feet and you could be a purchaser down the road.” (…)
FYI:
FYI #2:
