As Trump attacks Powell, US Treasury's Bessent warns Fed independence at risk from ‘mandate creep'
The Fed's autonomy 'is threatened by persistent mandate creep into areas beyond its core mission, provoking justifiable criticism that unnecessarily casts a cloud over the Fed's valuable independence on monetary policy,' Bessent said in a post on X.
He called Fed monetary policy 'a jewel box' that should be walled off to preserve its independence, which he called a cornerstone of continued US economic growth and stability.
Bessent said a review should be conducted into the Fed's decision to launch a massive renovation project of its headquarters at a time when it is posting operating losses. He did not say who should conduct that review, adding that he has 'no knowledge or opinion on the legal basis' for the project.
President Donald Trump has railed repeatedly against Fed Chair Jerome Powell and urged him to resign because of the central bank's reluctance to cut interest rates.
In recent days Trump has also taken aim at the US$2.5 billion renovation at the Fed's almost 100-year-old Washington headquarters, which has exceeded its budget, suggesting there could be fraud involved and that might be a reason to oust Powell.
A recent Supreme Court opinion has solidified a long-standing interpretation of the law that the Fed chair cannot be fired over policy differences but only 'for cause.'
The Fed's Board of Governors approved the renovation project in 2017, during Trump's first term, and received design approval from the National Capital Planning Commission in 2020 and 2021.
Speaking with CNBC earlier on Monday, Bessent declined to comment on a report that he had advised Trump not to fire Powell, saying it would be the president's decision.
'If this were the (Federal Aviation Administration) and we were having this many mistakes, we would go back and look at why. Why has this happened?' said Bessent, whom Trump has mentioned as a possible candidate to replace Powell. 'All these PhDs over there, I don't know what they do.'
Powell last week responded to a Trump administration official's demands for information about cost overruns on the renovation project, saying it was large in scope and involved a number of safety upgrades and hazardous materials removals.
Bessent declined to be drawn on predictions that US financial markets could crash if Powell was ousted. Powell's term as chair ends in May 2026, although he is due to stay on as a Fed governor through January 2028. Bessent noted another governor seat will come open in January. — Reuters
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The Star
4 hours ago
- The Star
Trump tariffs leave costly China supply question unanswered; Indonesia among countries deeply affected
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South-East Asian nations are highly reliant on Chinese components and raw materials, and US firms that source from the region would bear the extra tariff damage. That's left companies, investors and economists facing several unanswered questions about Trump's tariffs that appear aimed at squeezing out Chinese content, according to Deborah Elms, head of trade policy at the Hinrich Foundation in Singapore. "Is that raw materials? All raw materials? Above a certain percentage?' she said. "How about parts? What about labor or services? What about investment?' In an agreement with Indonesia last week, the White House said the two countries would negotiate "rules of origin' to ensure a third country wouldn't benefit. The deal with Vietnam earlier this month outlined a higher 40% tariff rate for transshipped goods. And Thai officials, who have yet to secure a deal, detailed that they likely need to boost local content in exports to the US. Missing Details The Trump administration isn't providing much clarity on the matter right now. US officials are still working out details with trading partners and looking at value-based local content requirements, to ensure exports are more than just assembled imported parts, according to a person familiar with the matter, who didn't want to be identified discussing private talks. A senior Trump administration official also said this week that details on the approach to transshipment are expected to be released before Aug. 1, the deadline for when higher US tariffs kick in. Some factories are already adjusting their supply chains to comply with rules that will require more locally-made components in production. Frank Deng, an executive at a Shanghai-based furniture exporter with operations in Vietnam - and which gets about 80% of business from the US - said in an interview his firm is making adjustments as authorities appear to be more strictly enforcing country-of-origin rules. Vietnam has always had specific local content requirements for manufacturers, Deng added, including that a maximum of 30% of the volume of raw materials originates from China, and the value after production in Vietnam must be 40% higher than the imported raw materials. "We've been struggling to meet all the standards so that we can still stay in the game,' Deng said. "But I guess that's the only way to survive now.' For most of Southeast Asia, reducing the amount of Chinese-made components in manufacturing will require a complete overhaul of their supply chains. Estimates from Eurasia Group show that Chinese components make up about 60% to 70% of exports from Southeast Asia - primarily industrial inputs that go into manufacturing assembly. About 15% of the region's exports now head to the US, up about four percentage points from 2018. Local Content The US has become increasingly vigilant about China's ability to bypass US trade tariffs and other restrictions through third countries since Trump's first trade war in 2017. Thailand signaled its frustration over the lack of clarity for how much local content is needed in goods exported to the US to avert transshipment rates, but noted it will likely be much higher than a traditional measure of 40%. "From what we've heard, the required percentage could be significantly higher, perhaps 60%, 70%, or even 80%,' Deputy Prime Minister Pichai Chunhavajira said July 14. "Emerging countries or new production bases are clearly at a disadvantage,' he said, as their manufacturing capabilities are still at an early stage and must rely on other countries for raw goods. Vietnam, Thailand and Malaysia have all taken steps this year to address Trump's concerns, increasing scrutiny of trade that passes through their ports including new rule-of-origin policies that centralize processing and imposing harsh penalties on transshippers. Developing nations may still struggle to enforce Trump's rules or comply with the rules if it means going up against China, their largest trading partner and geopolitical partner. "The reality is it's not enforceable at all,' said Dan Wang, China director at Eurasia Group. "Chinese companies have all kinds of ways to get around it and those other countries have no incentive to enforce those measures, or capacity to collect the data and determine local content.' -- Reports from Patpicha Tanakasempipat, Skylar Woodhouse and Nguyen Dieu Tu Uyen. -- ©2025 Bloomberg L.P.
Malay Mail
7 hours ago
- Malay Mail
Trump's ‘fake news' diversion tactics falter as Epstein uproar grows
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Unlike political crises that dogged Trump's first term, including two impeachments and a probe into alleged campaign collusion with Russia, the people propelling the push for more transparency on Epstein have largely been his supporters, not his political foes. Trump has fed his base with conspiracy theories for years, including the false 'birther' claim that former President Barack Obama was not born in the United States. Trump's advisers fanned conspiracies about Epstein, too, only to declare them moot upon entering office. That has not gone over well with the president's right-leaning base, which has long believed the government was covering up Epstein's ties to the rich and powerful. 'Donald Trump's been running a Ponzi scheme based on propaganda for the better part of a decade and it's finally catching up to him,' said Geoff Duncan, a Republican former lieutenant governor of Georgia and Trump critic. 'The far right element is just dug in. They're hell bent on getting this information out.' The White House has dismissed reporting about Trump's ties to Epstein as 'fake news,' though it has acknowledged his name appears in documents related to the Epstein case. Trump and Epstein were friends for years before falling out. 'The only people who can't seem to shake this story from their one-track minds are the media and Democrats,' said White House spokesman Harrison Fields. Before leaving for a trip to Scotland yesterday, the president again urged people to turn their attention elsewhere. 'People should really focus on how well the country is doing,' Trump told reporters, lamenting that scrutiny was not being given to others in Epstein's orbit. 'They don't talk about them, they talk about me. I have nothing to do with the guy.' A person takes a photo as a message calling on President Donald Trump to release all files related to Jeffrey Epstein is projected onto the US Chamber of Commerce building across from the White House in Washington, DC July 18, 2025. — AFP pic The art of distraction Trump in recent weeks has employed a typical diversion playbook. He chastised a reporter for asking about Epstein in the White House Cabinet Room. He claimed in the Oval Office that he was not paying close attention to the issue. And, with help from Tulsi Gabbard, his director of national intelligence, he explosively accused Obama of treason for how he treated intelligence in 2016 about Russian interference in the US election. On Thursday, Trump took his distraction tour to the Federal Reserve, where he tussled with Chair Jerome Powell about construction costs and pressed for lower interest rates. That, said Republican strategist Brad Todd, was more effective than focusing on Obama in 2016, which voters had already litigated by putting Trump back in office. 'The Tulsi Gabbard look backward, I think, is not the way for them to pivot,' Todd said, noting that Trump's trip to the Fed highlighted the issue of economic affordability and taking on a Washington institution. 'If I was him I'd go to the Fed every day until rates are cut.' Democrats have seized on Trump's efforts to move on, sensing a political weakness for the president and divisions in the Republican Party that they can exploit while their own political stock is low in the wake of last year's drubbing at the polls. A Reuters/Ipsos poll this month showed most Americans think Trump's administration is hiding information about Epstein, creating an opportunity for Democrats to press. Trump's supporters and many Democrats are eager to see a release of government files related to Epstein and his case, which the Justice Department initially promised to deliver. 'Yesterday was another example of the Trump folks trying to throw as much stuff against the wall to avoid the Epstein files,' Mark Warner, a Democratic US senator from Virginia, said in a post on X on Thursday about Gabbard's accusations against Obama. Trump allies see the administration's efforts to change topic as a normal part of an all-out-there strategy. 'They are always going at 100 miles an hour. Every department, every cabinet secretary, everybody is out there at full speed blanketing the area with news,' Republican strategist Maguire said. Trump has weathered tougher periods before, and his conservative base, despite its frustration over the files, is largely pleased with Trump's work on immigration and the economy. In a July Reuters/Ipsos poll, 56 per cent of Republican respondents favoured the administration's immigration workplace raids, while 24 per cent were opposed and 20 per cent unsure. Pollster Frank Luntz noted that Trump had faced felony convictions and other criminal charges but still won re-election last year. 'We've been in this very same situation several times before and he has escaped every time,' Luntz said. — Reuters
The Star
8 hours ago
- The Star
Trump administration issues plan to limit AI exports to China
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The department will also lead efforts to increase the monitoring of exported US chip end users and to explore using new chip location verification features to keep them out of 'countries of concern' – a term often used to refer to China, Iran, North Korea and Russia, among others. The plan also directs the Defence and Commerce departments to coordinate with allies on adopting US export controls and to prohibit American adversaries from being involved in their defence supply chains. 'Artificial intelligence is a revolutionary technology with the potential to transform the global economy and alter the balance of power in the world,' White House AI tsar David Sacks said in a written statement. 'To win the AI race, the US must lead in innovation, infrastructure, and global partnerships ... This Action Plan provides a road map for doing that,' he added. The Trump administration decision last week to allow American chipmaker Nvidia to sell its H20 chips to China reinvigorated furious debate about how to extend the US technological lead without compromising national security. That came months after the administration revoked a rule put in place under former President Joe Biden that limited how much US AI computing capability certain countries could access through imported US chips. American AI companies face increased competition from such Chinese rivals as Hangzhou-based DeepSeek, which sent global shock waves earlier this year when it released powerful AI models built far more cheaply than many had thought possible. Trump has previously warned of China's potential to surpass the US in the race for AI dominance. Speaking about the White House plan at an AI summit on Wednesday, Trump said he wants to make the US an 'AI export powerhouse' while maintaining 'necessary protections for our national security'. Commerce Secretary Howard Lutnick and Secretary of State Marco Rubio 'will work to rapidly expand American AI exports of all kinds, from chips to software to data storage', he said, before signing executive orders to fast-track AI development and promote exports. Ryan Fedasiuk, a former technology policy advisor in the State Department's Office of China Coordination, said that taken together, the export control proposals 'thread a difficult needle' in the lead-up to US-China trade talks in Stockholm next week. 'They tighten technology controls without risking an existential blow to the provisional trade deal struck in London, and they focus on enforcement gaps rather than adding sweeping new restrictions,' he said. The real impact of the plan will depend 'entirely' on its execution, Fedasiuk added. 'Allied coordination is where the rubber meets the road. Export controls only work if they're multilateral, and we've seen too many cases where US restrictions just pushed business to Dutch or Japanese competitors.' The new administration blueprint also makes several recommendations focused on countering the spread of Chinese models. To ensure 'that free speech flourishes in the era of AI', the Commerce Department is to evaluate advanced Chinese AI models for alignment with Communist Party talking points and censorship practices. Along with the US State Department, Commerce will lead a campaign to 'vigorously advocate' for international AI governance approaches that 'counter Chinese influence' at diplomatic and standard-setting bodies. Too many existing efforts 'have advocated for burdensome regulations, vague 'codes of conduct' that promote cultural agendas that do not align with American values, or have been influenced by Chinese companies attempting to shape standards for facial recognition and surveillance', the plan said. The two departments will also lead a new initiative to share technology protection measures, including measures in basic research and higher education, with allies and partners. To promote the use of American AI technology rather than that of adversaries, the Commerce Department will gather industry proposals for 'full-stack AI export packages' – bundled systems that include AI hardware, software, and related services intended for export. In recent years, the US has pushed its European and Asian allies to stop exports of advanced chipmaking equipment to China. Wednesday's document carries a thinly veiled threat to allies, warning that failure to align with US export controls could trigger punitive trade measures through secondary tariffs. - SOUTH CHINA MORNING POST
