India non-committal on revival of Russia-India-China framework
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Mint
25 minutes ago
- Mint
TACO debate: Trump's tariff disruptions seem unlikely to damage the US economy this year
Next Story Thomas Black The US President has 'chickened out' of harsh tariffs before. Even if he doesn't back off from his August levies, US retailers have already negotiated burden sharing with Chinese suppliers. Whatever tariff surprises Donald Trump springs won't show up until next year. Trump's repeated tariff tweaks and pull backs have earned him the moniker of TACO—Trump Always Chickens Out. Gift this article While disruptive, the tariffs that President Donald Trump has been glibly tossing out, including new ones last week, haven't yet produced the widespread damage to the economy that many had predicted. While disruptive, the tariffs that President Donald Trump has been glibly tossing out, including new ones last week, haven't yet produced the widespread damage to the economy that many had predicted. In large part that's because Trump has tweaked and pulled back enough on them to prevent a catastrophe. This has earned him the moniker of TACO—Trump Always Chickens Out—but this is a bit misplaced because the tariffs are real and the money flowing in from these duties is large—to the tune of $26.6 billion in June compared with $6.3 billion in the month a year earlier. Even after calling a truce on the 145% tariffs on Chinese goods until August, the import duties on those products averaged 55%, according to the Port of Los Angeles. Maybe a few years ago the thought of such high tariffs on the US's largest trade partner would have been a recipe for shipping chaos, skyrocketing prices, empty shelves and ruined year-end holidays. The supply chain—the thermometer for health of global trade—reflected the tariff-induced whiplash when import volume plummeted in May and then recovered in June. Still, ocean container imports have continued strong in July as retailers prepare for both the back-to-school and holiday seasons. It may be surprising that even with the tariff volatility, the transport industry will have its first relatively normal peak season since before the pandemic—although it will be absent any big shipping rate increases. Remember, last year's peak was marred by the closing of the Suez Canal route because of Houthi rockets and the threat of a US East Coast port worker strike that precipitated an earlier-than-usual shipping season. Those events drove up ocean carrier rates. The big question this year is how much of the tariffs will be absorbed along the supply chain—manufacturers, distributors, retailers and consumers—and how the higher-priced goods will impact consumer demand. Unlike during the pandemic, when widespread inflation accelerated after a demand surge overwhelmed the supply chain and production capacity, the higher prices this time should be isolated to imported goods and more specifically those from China. There's anecdotal evidence that a lot of the tariff pain is being absorbed, while some will filter through to the consumer. After movements of ocean cargo plummeted in May during the quasi-embargo on China, imported goods rebounded in June and continue strong in July. US retailers put in their orders to Chinese factories (and if they haven't by now, it's too late) and negotiated on sharing the tariff bite. There was no surge of front-loading. That happened earlier this year before Trump's tariffs took effect. Following the truce, ocean shipping rates spiked above $5,000 per 40-foot container on the benchmark Shanghai-Los Angeles route for two weeks before settling down to less than $3,000. This steady stream of products shows that Trump pulled back from the May virtual embargo on Chinese imports just in time to save both back-to-school and Christmas shopping. No doubt he was urged on by the largest retailers, which were alarmed at the prospect of empty shelves in the fall and in December and lobbied hard for a truce. The uncertainty still lingers on what will happen to tariffs after the August deadlines with China and other countries. But any consequences from a breakdown of negotiations and potentially higher tariffs won't reach US consumers until well into next year. Also Read: Dani Rodrik: How ideology sometimes trumps material interests By the end of August, retailers will have their goods either in a warehouse or on a ship heading to the US. As in a typical peak season, trucks will be more active in the August-to-October period to take goods to stores. Then in November and December, the parcel carriers get busy. January is the month for retailers to process returns and hold clearance sales. The end of February next year will be Chinese New Year, a period when many factories shut down. This January-to-March transportation lull is called the quiet period. This means that whatever additional pain Trump decides to inflict with tariffs after the August deadlines won't really impact consumers until March of next year or afterward. While the shipping patterns will return to a more normal peak season this year, that doesn't mean the shopping experience will be unfazed. To cope with the extra cost of tariffs, retailers and distributors are reducing the variety of items they import and are concentrating on the most profitable products to protect margins. Anecdotal evidence suggests that the tariff bite is being shared along the chain. You can bet that if consumers begin to balk at higher prices, retailers will adjust to make the sale. Bobby Djavaheri, president of Yedi Housewares, is coping with a worst-case tariff exposure because China is the sole source for small kitchen appliances and dinnerware that the company sells to large retailers. Djavaheri said Yedi is raising prices by 10%—a fraction of the current tariff level. 'It's simply impossible to pass on all of it because folks aren't going [to] buy the product," Djavaheri said on Monday during a press conference with Gene Seroka, executive director of the Port of Los Angeles. Store shelves could get bare this Christmas shopping season if demand is strong because retailers are erring on understocking instead of overstocking and limiting the number of items for sale. In these times of tariffs, that would be the better problem to have than an excess of expensive merchandise. Consumers aren't likely to be in the mood for buying sprees with all the uncertainty swirling around tariffs, jobs, inflation and interest rates. When Trump's August deal deadlines hit, there are three likely outcomes: Trump goes TACO and pushes back deadlines again; Trump goes nuclear and boosts tariffs; Trump gets deals done. It could be a combination of all three. No matter the path, the impacts won't really be felt by consumers until next year. ©Bloomberg The author is a Bloomberg Opinion columnist writing about the industrial and transportation sectors Topics You May Be Interested In Catch all the Business News, Market News, Breaking News Events and Latest News Updates on Live Mint. Download The Mint News App to get Daily Market Updates.
Mint
26 minutes ago
- Mint
US senator seeks details from Defense Department on Microsofts Chinese engineers
SAN FRANCISCO (Reuters) -A U.S. senator is asking the Pentagon for more information on Microsoft's reported use of Chinese engineers in maintaining military cloud computing systems, according to a copy of the letter seen by Reuters. Senator Tom Cotton, an Arkansas Republican who chairs the chamber's intelligence committee and also serves on its armed services committee, sent the letter to Defense Secretary Pete Hegseth after a report in investigative journalism publication ProPublica earlier this week. The report detailed Microsoft's use of Chinese engineers to work on U.S. military computing systems under the supervision of U.S. "digital escorts" hired through subcontractors who have security clearances but often lacked the technical skills to assess whether the work of the Chinese engineers posed a cybersecurity threat. Contacted by Reuters about both the ProPublica report and Cotton's letter, Microsoft declined to comment. The company, which is a major contractor to the U.S. government and whose systems have been breached by both Chinese and Russian hackers, told ProPublica that it disclosed its practices to the U.S. government during an authorization process. The Defense Department did not immediately respond to a request for comment. Cotton asked the U.S. military for a list of all contractors that use Chinese personnel and for more information on how U.S. "digital escorts" are trained to detect suspicious activity. "The U.S. government recognizes that China's cyber capabilities pose one of the most aggressive and dangerous threats to the United States, as evidenced by infiltration of our critical infrastructure, telecommunications networks, and supply chains," Cotton wrote in the letter. The U.S. military "must guard against all potential threats within its supply chain, including those from subcontractors." (Reporting by Stephen Nellis in San Francisco; Editing by Leslie Adler)
Time of India
an hour ago
- Time of India
Report warns: A little-known Microsoft program can expose US national security secrets to Chinese hackers
Microsoft is using engineers in China to help maintain the Defense Department's most sensitive computer systems with minimal US supervision, potentially exposing critical national security data to America's leading cyber adversary, a ProPublica investigation revealed this week. The arrangement relies on US citizens with security clearances, known as " digital escorts ," to oversee foreign engineers remotely. However, these escorts often lack the technical expertise to detect malicious activity from highly skilled Chinese developers who could insert harmful code into federal networks, the investigation found. "We're trusting that what they're doing isn't malicious, but we really can't tell," said one current escort who spoke anonymously to ProPublica, fearing professional repercussions. Chinese engineers gain access to Pentagon's most sensitive data The digital escort system has operated for nearly a decade, allowing Microsoft to bypass Pentagon rules that ban foreign citizens from accessing highly sensitive government data. The Chinese engineers work on "high impact level" information that includes materials directly supporting military operations and data whose compromise "could be expected to have a severe or catastrophic adverse effect" on national security. Microsoft's arrangement involves Chinese engineers filing support tickets and then remotely instructing American escorts—some earning barely above minimum wage—to input commands into Defense Department cloud systems. Many escorts are former military personnel with little coding experience, creating a dangerous skills gap. "If someone ran a script called 'fix_servers.sh' but it actually did something malicious then [escorts] would have no idea," Matthew Erickson, a former Microsoft engineer who worked on the escort system, told ProPublica. Senator demands Pentagon investigation into security risks The revelations prompted Senator Tom Cotton , who chairs the Senate Intelligence Committee, to demand answers from Defense Secretary Pete Hegseth. In a letter obtained by Reuters, Cotton requested a complete list of contractors using Chinese personnel and details about how digital escorts are trained to detect suspicious activity. National security experts expressed alarm at the program's existence. Harry Coker, former CIA and NSA senior executive, called it an "avenue for extremely valuable access" that intelligence operatives would covet. John Sherman, former Defense Department chief information officer, said the situation warrants "a thorough review" by military cybersecurity agencies. The program's low profile meant even Defense Department officials struggled to find personnel familiar with it when contacted by reporters. AI Masterclass for Students. Upskill Young Ones Today!– Join Now
