US Initial Jobless Claims Rise to Highest Level Since October
Initial claims increased by 8,000 to 247,000 in the week ended May 31, a period that included Memorial Day. The median forecast in a Bloomberg survey of economists called for 235,000 applications.
The four-week moving average of new applications, a metric that helps smooth out volatility, rose to 235,000, also the highest since October.
Continuing claims, a proxy for the number of people receiving benefits, fell slightly to 1.9 million in the previous week, according to Labor Department data released Thursday. They remain elevated compared with last year, a sign it is taking longer for out-of-work people to find a job.
We are still in the mini-seasonal upcycle but claims are 4-5% above 2024 levels.
Ed Yardeni:
US-based employers announced 93,816 job cuts in May, down 12% from 105,441 cuts in April, and up 47% from 63,816 announced in the same month last year, according to Challenger, Gray & Christmas. In March, this series peaked at over 275,000. So far, there has been no similar spike in initial unemployment claims. In the past, they both tended to spike together.
Trump Says He Discussed Trade, Rare Earths in Call With China’s Xi President calls conversation productive; Beijing’s account is less conciliatory
President Trump spoke Thursday with Chinese leader Xi Jinping and suggested after the call that one point leading to a breakdown in trade talks—the export of rare-earth minerals, which are critical to the U.S. auto industry—had been addressed.
Trump called the conversation productive and said both sides agreed to meet soon. He also said Xi invited him to visit China and that he reciprocated the offer. “The call lasted approximately one and a half hours, and resulted in a very positive conclusion for both Countries,” Trump wrote on social media.
“There should no longer be any questions respecting the complexity of Rare Earth products,” Trump wrote.
“We had a very good talk and we’ve straightened out any complexity,” Trump told reporters later Thursday, without elaborating. “I think we’re in very good shape with China and the trade deal.”
Details were unclear, however, and Beijing struck a less conciliatory note in its account of the call, with an official Xinhua News Agency account saying that Xi urged Trump to remove “negative” measures that have disrupted bilateral trade. It made no mention of rare earths.
The two heads of state agreed that their teams would hold a new round of talks as soon as possible. The Chinese team is led by Vice Premier He Lifeng, who has a clear mandate from Xi of not catering to America’s demands without getting concessions in return. The U.S. would be represented by Treasury Secretary Scott Bessent, Commerce Secretary Howard Lutnick and U.S. Trade Representative Jamieson Greer, Trump said.
The addition of Lutnick to the U.S. negotiating team, in addition to Bessent and Greer, suggests that Beijing is getting a desired channel of communication with the cabinet member overseeing export controls.
The partly conflicting accounts of the conversation raised questions of whether Trump had extracted a firm commitment from Xi to loosen controls over rare earths and other critical minerals.
“The asymmetry in Beijing’s and Washington’s reporting of the call suggests that Xi held to a tough line and Trump did not get much acquiescence to his demands,” said Eswar Prasad, a former senior International Monetary Fund official in China and now an economics professor at Cornell University.
The conversation was focused almost entirely on trade, Trump said, and they didn’t discuss the war in Ukraine and other global hot spots. However, the Chinese readout indicated that Xi had cautioned Trump on Taiwan, following reports of increased U.S. arms shipments to the island. Xi emphasized that the U.S. should handle the Taiwan issue cautiously, Xinhua said.
According to Xinhua, the call took place at Trump’s request. It was the first time the two leaders spoke since Trump took office in January. (…)
After the call, Trump told reporters, “Chinese students are coming—no problem. It’s our honor to have them, frankly.” He added, “We want to have foreign students, but we want them to be checked.” (…)
Carney agrees to high-level talks with Beijing on resolving Canada-China trade war
Prime Minister Mark Carney and his Chinese counterpart agreed Thursday to “regularize channels of communication” in Canada’s estranged relationship with China and hold talks to resolve a trade war affecting billions of dollars of trade between the two countries. (…)
Canada and China are locked in this conflict that was triggered by Ottawa’s decision in 2024 to follow the Biden administration in imposing 100-per-cent tariffs on Chinese-made electric vehicles. Canada also enacted a 25-per-cent tariff on Chinese steel and aluminum.
China responded in 2025 with retaliatory tariffs on Canadian canola oil and meal, peas and seafood. (…)
It said the two countries have agreed to convene the Joint Economic and Trade Commission (JETC), a deputy-minister level consultation mechanism, at an early date “to address outstanding trade issues.” The JETC exists to promote trade between Canada and China. (…)
Efforts to repair relations with China, Canada’s second largest export market, come as the United States is seeking help from allies including Canada in its rising competition with China. Last month, U.S. State Department spokesperson Tammy Bruce told a media briefing in Washington that the U.S. government also wants Ottawa’s help in “countering the Chinese Communist Party influence in our hemisphere.”
In an interview with The Globe and Mail this week, China’s ambassador to Canada Wang Di said Canada’s 100-per-cent tariffs on Chinese electric vehicles are preventing the sort of investment here that has led to new auto-sector factories and jobs in Europe and Asia, and warned that U.S. President Donald Trump’s administration’s call for Ottawa to join forces against Beijing represents an outdated “Cold War mentality.” (…)
Canada’s auto sector is heavily dependent on its American counterpart. Since the EV tariffs on China, however, Mr. Trump has said he doesn’t want Canada making cars for his country and wants auto production moved inside U.S. territory.
Mr. Wang, the Chinese ambassador to Canada, said Tuesday that Chinese EV makers were previously interested in investing in Canada but the 100-per-cent tariffs had discouraged them from doing so.
“Let’s find a solution quickly to remove these tariffs so that we can focus more on how we can strengthen our co-operation together,” he told The Globe.
“China’s EV industry has the world-leading technology. And Canada has a very good foundation in terms of automaking industry,” he said. “That means we have great complementarities in this area.”
He noted Chinese battery maker Contemporary Amperex Technology Co. Ltd. is partnering with Ford Motor Co. to build a US$3.5-billion EV battery plant in Michigan, and Spanish vehicle maker Ebro-EV Motors and China’s Chery Automobile have begun vehicle production in a joint venture in Barcelona. Geely Auto, another Chinese producer, is also looking at setting up a factory in Spain to serve the European market, he said, while BYD has set up a plant in Thailand.
The European Union, which also imposed tariffs on Chinese EVs, has been in negotiations with Beijing for months on resolving its trade war with China.
China’s ambassador has made diplomatic inroads with one of the provinces hurt by Beijing’s retaliatory tariffs. Mr. Wang said he met with Saskatchewan Premier Scott Moe and members of his cabinet the week of May 12.
During a press conference with Mr. Carney following the Prime Minister’s meeting with Canadian premiers on June 2, Mr. Moe told reporters he wants this country to secure a broader trading relationship with Beijing.
The trade plot thickens. Could Canada welcome Chinese automakers?
In the NYT May 13:
- Tariffs Drive Honda to Move S.U.V. Production From Canada to U.S. Honda is also postponing a major electric vehicle factory in Canada.
In the face of U.S. tariffs, Honda said on Monday that it would shift production of one of its popular vehicles from Ontario to a U.S. factory and postpone an $11 billion plan to make electric vehicles and batteries in Canada. (…)
Honda’s chief executive, Toshiro Mibe, said in a news conference in Japan that the decision to move the manufacturing of the CR-V sport utility vehicle to the United States was part of the company’s plans to “optimize” production to reduce the effects of tariffs.
The majority of the CR-Vs made in Canada are shipped to the United States.
The $11 billion expansion of the Ontario factory complex, which would have added battery and electric vehicle production, was projected to employ 1,000 people and was the signature piece of a series of government-backed moves to shift Canada’s auto industry toward electric vehicles. (…)
The announcement by Honda is the latest in a series of moves by the auto industry to pull back plans for expansion in Canada after the imposition of tariffs by the United States.
Temporary shutdowns and production pauses have occurred at some Canadian plants, such as the Stellantis facility in Windsor, but these have not yet led to permanent relocations.
In today’s Globe & Mail:
Canada’s exports of automobiles to the United States fell by 23 per cent in April as vehicle makers cut production in the first month that President Donald Trump’s tariffs kicked in.
Combined with parts, automotive shipments to Canada’s largest trading partner plunged by more than 17 per cent in value from the previous month, the largest sectoral drop in merchandise trade shipments reported by Statistics Canada on Thursday.
Carmakers based in Ontario have responded to the tariffs by slashing production, idling assembly lines and laying off workers. The U.S. is the buyer of almost all of Ontario’s auto production.
Flavio Volpe, head of the Automotive Parts Manufacturers’ Association that represents Canadian suppliers, said the tariffs are hurting companies in Canada and the U.S. He noted three of Ontario’s vehicle exporters are Detroit-based, and are the importers that bear the cost of the tariffs.
“We’re so intertwined, half of that effect is being borne by American balance sheets,” Mr. Volpe said, calling the drop in shipments a “self-inflicted wound.”
Canada’s trade deficit hits record high $7.1-billion as tariffs hammer exports
(…) The value of exports to the U.S. fell a stunning 15.7 per cent, compared to the previous month, Statistics Canada reported Thursday. The decline was broad-based, led by a sharp pullback in autos, consumer goods and crude oil exports. Imports from the U.S. dropped 10.8 per cent. (…)
The drop in exports will weigh on Canada’s trade-oriented economy, with the Bank of Montreal forecasting a contraction in the second quarter. (…)
Meanwhile, there was a 2.9-per-cent increase in exports to countries other than the U.S., led by exports of various products to China, unwrought gold to the United Kingdom, iron ore and wheat to Algeria and potash to Brazil. This suggests some trade diversification is happening, but the increase was much smaller than the 24.8 per cent jump in non-U.S. trade seen in March. (…)
Natural gas pipeline across Northern B.C. can proceed, regulator rules
(…) Plans call for the 750-kilometre pipeline to supply the future Ksi Lisims LNG facility, which is undergoing an environmental review for exporting liquefied natural gas. (…)
This is natural gas that will not find its way to the USA.
Trump’s foreign-investment tax is a ‘diplomatic weapon’ that punishes Canadians
Canada needs to quickly diversify its economy, too dependent on its Southern neighbor, not so friendly anymore…
US Firms in China Will Stay Put Despite Tariffs, AmCham Says
(…) A 90-day truce reached in Geneva last month is being closely followed by American firms in China, with 21% saying they would shift more production and sales into China if US tariffs go back up, according to the AmCham survey of 112 companies. Another 13% would move production in China to other countries in that scenario, while 41% wouldn’t make significant changes, the results showed.
AmCham didn’t disclose the names or sizes of the companies that responded to the May 23-28 survey. The chamber’s members include a wide range of companies — including some of the biggest US brands like Microsoft Corp. and Coca-Cola Co. — but also smaller firms with less than $1 million in global revenue.
In another sign of how serious the trade war was at its peak in April to mid-May, about a third of those surveyed said the duties at the time made their operations unprofitable, while 7% said the US tariffs made them consider closing operations in China.
No respondents said they would shift production back to the US if tariffs jumped back to previous levels, which included 145% rates on many imports from China. About 11% reported seeing contract or order cancellations from local partners and clients after higher levies initially went into effect April 2, the survey found.
A majority of US firms said tariffs were increasing costs, though about 27% reported they obtained product exemptions from the Chinese side. However, 4% reported the exemptions were recently removed or denied at customs, highlighting the opacity and confusion at the borders.
About 22% of respondents said they have experienced export controls as a form of US government pressure since April 2, compared to 13% of respondents who reported facing Chinese export control pressure since then.
About 12% of respondents reported experiencing issues around the export of rare earths. Out of 12 responding companies, five said they and their partners have been unable to export rare earths since May 12, another five said they were in the process of getting the required licenses, and the remaining two said they have been able to export.
So, if tariffs go back up, 21% would move more production in China and 13% would move production out of China. No respondents said they would shift production back to the US if tariffs jumped back to [145%].
Bessent, Lutnick and Greer keep Japan guessing in US tariff talks Differing views on trade by Trump’s negotiating team frustrate Tokyo
The ongoing U.S.-Japan tariff negotiations have become notably complicated due to the involvement of three senior U.S. officials—Treasury Secretary Scott Bessent, Commerce Secretary Howard Lutnick, and U.S. Trade Representative Jamison Greer—each holding distinct and sometimes conflicting views on trade policy. Their rivalry and public disagreements have created significant uncertainty for the Japanese delegation, making it difficult for Tokyo to discern the true intentions and negotiating stance of the Trump administration.
U.S. Trade Deficit Cut in Half on Record Drop in Imports Businesses had rushed to get ahead of Trump’s tariffs in March; in April, they stayed more on the sidelines.
The trade deficit narrowed to a seasonally adjusted $61.6 billion in April, the Commerce Department reported on Thursday, its lowest level since September 2023. That was down sharply from the record $138.3 billion it hit in March, when businesses were racing to bring in imports before the “Liberation Day” tariffs that President Trump imposed April 2.
In dollars, the drop was the largest monthly change in the goods and services deficit in data back to 1992. By percentage, the 55% drop was second only to a 59% decrease recorded in February 1992. (…)
Imports of goods and services fell 16% to $351 billion, the largest decline on record. Imports of consumer goods fell 32% to $69.9 billion, a decline that was largely driven by a $26 billion drop in pharmaceutical products. Worries that the Trump administration would hit them with tariffs had led drug companies in particular to race to bring goods to the U.S.
Away from consumer goods, imports of industrial supplies and materials and of motor vehicles and motor vehicle parts also fell sharply. (…)
Imports from the European Union fell by more than $29 billion between March and April on a not-seasonally-adjusted basis. Imports from Canada and Mexico each were down by more than $6 billion, and from China down $4 billion. (…)
On the other side of the ledger, exports of goods and services rose 3% to a record $289.4 billion. That might have in part reflected businesses in other countries moving to buy American products before retaliatory measures against the U.S. went into effect. (…)
Data: U.S. Census Bureau, U.S. Bureau of Economic Analysis, U.S. International Trade in Goods and Services; Chart: Axios Visuals
European Industry Contracts as Tariffs Pull Exports Lower German and French industrial output both contracted 1.4% on month in April
German industrial output contracted 1.4% on month in April, statistics agency Destatis said Friday, a sharper fall than the 1.0% decline expected by economists polled by The Wall Street Journal.
That offsets much of the 2.3% jump in output in March, when U.S. firms stockpiled imports to get ahead of the impact from expected tariffs.
Trade data, also published Friday, showed goods exports to the U.S. sinking 10.5% as companies adapted to the new post-“Liberation Day” trade reality. Overall, exports from Germany fell 1.7%. (…)
In France, the eurozone’s second-largest economy, production also declined 1.4%, quashing the signs of recovery booked there in the previous two months, and flipping consensus expectations that output would rise.
April’s data suggests that just as U.S. stockpiling boosted some overseas economies in the first quarter, the end of that process is set to be a headwind for them in this quarter.
Production dived 18% for the export-orientated pharmaceutical industry in Germany after a strong rise in March, with machinery production also feeding the overall decline, Destatis said. (…)
The Trump-Musk ‘War of the Roses’ The erstwhile political allies will both lose this nasty divorce.
(…) It certainly makes for entertaining political theater, at least for Democrats. First came Mr. Musk’s broadside against the One Big Beautiful Bill Act as an “abomination.” Mr. Trump replied that he was disappointed but that his buddy Elon knew what was in the bill all along.
Mr. Musk raised the bidding with a demand sent to his followers on X.com to “KILL the BILL.” The President suggested Mr. Musk suffered from “Trump derangement syndrome,” to which Mr. Musk replied that the President wouldn’t have won without him. (…)
[Yaddi, yaddi, yadda.]
Where this stops nobody knows (…) but no one wins a divorce as nasty as this one.
It would be greatly entertaining if not so pathetic and actually frightening considering who these two guys are.
FYI:
Musk posted a poll on X asking his more than 200 million followers whether it was time to create a new political party that would better represent most of the country.
Within minutes, Mark Cuban, the billionaire businessman who has flirted with running for president, posted on social media three check marks next to Musk’s suggestion of starting a third party.
Wait, wait: “Trump tells Politico “it’s okay” regarding public dispute with Elon Musk. Claims things are “going very well, never done better.” White House aides arrange Friday call with Musk to mend ties. 
This might have helped:
Data: Financial Modeling Prep. Chart: Axios Visuals