EU Races to Secure US Trade Deal; Japanese PM Suffers Election Setback
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CBS News
39 minutes ago
- CBS News
Tariffs likely to drive up U.S. prices even with Trump trade deals, experts say
The new normal for U.S. tariffs on foreign goods starts at 15%. Even as President Trump seeks to forge new terms of trade with Japan, the European Union and other global economic partners, he is raising the floor for tariffs to their highest level in decades. Speaking at an AI summit on Wednesday, Mr. Trump said "we'll have a straight, simple tariff of anywhere between 15% and 50%," conditioning the lower rate on countries opening their economies to the U.S. The White House has said sharply higher tariffs could take effect on dozens of countries as soon as Aug. 1 unless they ink new trade deals. The Trump administration has a separate negotiating timeline with China, which faces an Aug. 12 deadline for an agreement. As these new rules of international commerce take shape, companies across a range of industries are emphasizing that higher tariffs translate into higher operational costs — and higher prices for consumers. For example, Nestlé on Thursday said it was considering hiking prices for candy bars and other products as tariffs threaten to eat into the food company's profit margins. The same day, Italian fashion brand Moncler said it has already hiked prices for its apparel to offset additional tariff-related costs. And General Electric said this week that proposed U.S. tariffs, should they take effect, would cost the company around $500 million in 2025, noting that it would move to offset those taxes through "cost controls and pricing actions." Orange juice importer Johanna Foods has gone a step further, this week filing a lawsuit against the Trump administration over its proposed 50% tariff on Brazil, which the New Jersey company said would seriously hurt its business and force it to hike product prices by up to 25%. The White House disputes that higher U.S. tariffs will drive up costs for businesses and consumers. "The administration has consistently maintained that the cost of tariffs will be borne by foreign exporters who rely on access to the American economy, the world's biggest and best consumer market," White House spokesman Kush Desai told CBS MoneyWatch in a statement. Desai also pointed to a recent analysis by the White House's Council of Economic Advisers that he said shows import prices falling this year. Economists warn that consumers should brace for higher prices on a range of goods, from leather products and clothing to electronics and automobiles, later this year. "Up to now there has been only limited passthrough from tariffs into final consumer prices, but we still expect the impact to gradually mount in the second half of this year," Paul Ashworth, chief North America economist with Capital Economics, told investors in a research note. "Now that the Trump administration is concluding deals that would see the tariff rate facing most trading partners settling at between 15% and 20%, with even higher rates levied on Chinese imports, we suspect retailers will be forced to finally raise the prices paid by consumers." Inflation in the early part of 2025 remained fairly contained. That's because many companies and consumers accelerated their purchases of imported goods to avoid the risk of paying more if, or when, steep new tariffs take effect. Meanwhile, in the short-term, sharply higher prices are unlikely across the board, according to trade experts. "When you open up the hood of that, it's not going to be even across all categories of spending," Ernie Tedeschi, director of economics at the Budget Lab at Yale, told CBS MoneyWatch. "It's categories of spending where we import more that are going to be more sensitive to tariffs." But over the longer term, an increased baseline tariff, coupled wtih higher levies on individual countries, is projected to drive up U.S. prices by 2% over the next two years, according to an analysis from the Yale Budget Lab. "This isn't an instantaneous, 'We wake up the next morning and the world is different,'" Tedeschi added. But as the new U.S. tariff regime becomes embedded in global supply chains, some import-heavy product categories could see especially sharp price increases, he said. Specifically, foreign-made leather shoes and handbags, along with apparel, could see prices spike by at least 40%, while the cost of electronics could jump more than 20%, according to the Yale Budget Lab.
Yahoo
2 hours ago
- Yahoo
Is 7-Eleven's US IPO on the ropes following failed Couche-Tard buyout?
This story was originally published on C-Store Dive. To receive daily news and insights, subscribe to our free daily C-Store Dive newsletter. Japanese investors and analysts are skeptical about whether Seven & i Holdings will still take 7-Eleven public in North America next year in the aftermath of the c-store retailer's failed megamerger with Alimentation Couche-Tard, according to a report from Bloomberg. Nearly a year after its initial bid, Circle K's parent company withdrew its almost $50 billion buyout offer for Seven & i, operator of over 80,000 7-Eleven c-stores globally, late last week due to what it called a lack of engagement from Seven & i's leadership. Couche-Tard emphasized that Seven & i lacked 'good faith and judgement' during the process, although Seven & i called these accusations a mischaracterization. Regardless of why the potential deal flopped, Couche-Tard is out, and there's now little reason for Seven & i to take 7-Eleven public because it no longer needs to fend off an unsolicited offer, investors and analysts told Bloomberg last week. 'The company should keep holding its entire stake as the situation has changed,' Ikuo Mitsui, a fund manager at financial services firm Aizawa Securities Group, said in the report. '7-Eleven is the company's crown jewel, and it makes more sense for it to keep its 100% stake, which should contribute to higher corporate value.' Taku Sugawara, an analyst at financial services firm Iwai Cosmo Securities, told Bloomberg that Seven & i may have only considered taking 7-Eleven public to boost its own stock price as a means to fend off Couche-Tard's bid. Since the deal is now off the table, 'it's possible for the company to end up scrapping the IPO plan,' Sugawara said in the report. But Seven & i appears set on its plans despite what experts think. Earlier this week in a letter to Couche-Tard, Seven & i's special committee, spearheaded by Chair Paul Yonamine, said it believes management's plan is 'concrete and actionable,' and that the company is now 'turning our full attention to creating value through our standalone plan' since talks with Couche-Tard have ceased. 'We know better than anyone that we need to perform and deliver,' the committee said in its letter. 'Our hard work continues, and we look forward to updating our stakeholders later this summer.' Seven & i revealed plans to take 7-Eleven public in North America back in March. The move, planned for the second half of 2026, is expected to leverage the chain's ubiquity in the U.S. — where it has over 9,000 c-stores — and help it grow faster by giving it more flexibility and responsiveness to its customers while utilizing synergies with Seven & i. Experts told C-Store Dive earlier this year that an IPO would generate significant capital for 7-Eleven in North America, allowing the convenience retailer to invest in its business. That could mean expanding its footprint, remodeling stores or continuing to build its foodservice capabilities. Recommended Reading Fueling Up: Was Seven & i ever interested in Couche-Tard's buyout offer? Sign in to access your portfolio
Yahoo
2 hours ago
- Yahoo
Why Wabash (WNC) Shares Are Sliding Today
What Happened? Shares of semi trailers and liquid transportation container manufacturer Wabash (NYSE:WNC) fell 8.2% in the afternoon session after the company reported weaker-than-expected full-year guidance that overshadowed its second-quarter results. The transportation equipment manufacturer reported a second-quarter adjusted loss of $0.15 per share on revenue of $459 million, both of which were better than analyst expectations. However, investors focused on the company's significantly weakened outlook for the rest of the year. Wabash cut its full-year 2025 revenue forecast to approximately $1.6 billion, well below the $1.71 billion analysts had anticipated. It also lowered its adjusted earnings per share (EPS) guidance to a loss between $1.00 and $1.30, a substantial drop from the consensus estimate of a $0.75 loss. Management pointed to a challenging market, with CEO Brent Yeagy stating that "demand remains muted across the trailer industry." The company's backlog also fell by 23.1% year-over-year, signaling a slowdown in future business. The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks. Is now the time to buy Wabash? Access our full analysis report here, it's free. What Is The Market Telling Us Wabash's shares are extremely volatile and have had 30 moves greater than 5% over the last year. In that context, today's move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business. The previous big move we wrote about was 2 days ago when the stock gained 5.2% as a new trade agreement between the United States and Japan spurred a broad market rally. The positive sentiment swept across markets after it was announced the U.S. and Japan had reached a new trade deal. The agreement included a 15% tariff on Japanese goods imported into the U.S. and a commitment from Japan to invest $550 billion in the U.S. and open its markets to American cars and agricultural products. This development boosted investor confidence and contributed to a widespread rally, lifting stocks across many sectors. The Dow Jones Industrial Average and the S&P 500 both posted gains, creating a favorable environment that likely benefited individual stocks. Wabash is down 42.1% since the beginning of the year, and at $9.84 per share, it is trading 54.2% below its 52-week high of $21.49 from July 2024. Investors who bought $1,000 worth of Wabash's shares 5 years ago would now be looking at an investment worth $833.45. Today's young investors likely haven't read the timeless lessons in Gorilla Game: Picking Winners In High Technology because it was written more than 20 years ago when Microsoft and Apple were first establishing their supremacy. But if we apply the same principles, then enterprise software stocks leveraging their own generative AI capabilities may well be the Gorillas of the future. So, in that spirit, we are excited to present our Special Free Report on a profitable, fast-growing enterprise software stock that is already riding the automation wave and looking to catch the generative AI next. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
