Poland's Baranowski outlines the EU's four-part strategy to U.S. trade talks
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CBS News
40 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.
UPI
3 hours ago
- UPI
Volkswagen cites U.S. tariffs for decrease in operating profit
1 of 2 | Volkswagen said Friday year-over-year operating profit fell by $1.84 billion in the second quarter, as the German automaker navigates the effects of tariffs imposed by U.S. President Donald Trump. File Photo by Peter Foley/UPI | License Photo July 25 (UPI) -- Volkswagen said Friday its year-over-year operating profit fell by $1.84 billion in the second quarter, as the German automaker navigates the effects of tariffs imposed by U.S. President Donald Trump. The company, headquartered in Wolfsburg, Germany, released its latest financial results Friday, showing a second-quarter operating profit of $4.49 billion, down from $6.33 billion during the same quarter last year, a 29% decline. "Our half-year figures present a contrasting picture: on the one hand, we achieved strong product success and made progress in realigning the company," Arno Antlitz, who serves as the company's chief operating officer and chief financial officer, said in the statement Friday. "On the other, the operating result declined by a third year-on-year -- also due to higher sales of lower-margin all-electric models. In addition, increased U.S. import tariffs and restructuring measures had a negative impact. Excluding these items, the operating margin in the second quarter is at nearly 7%, representing the upper end of our expectations." The company's revenue for the first half of the year amounted to $185.7 billion), while operating profit for the first six months came in at $7.86 billion. Second-quarter sales revenue of $94.8 billion fell short of analysts' expectations of $96.5 billion. "Decline in operating result primarily due to high costs from increased U.S. import tariffs (1.3 billion euros), provisions for restructuring at Audi, Volkswagen Passenger Cars and Cariad, and expenses related to CO₂ regulation," Volkswagen said in Friday's financial results. The European Union continues to negotiate with U.S. officials to try and reach a deal on import tariffs imposed by Trump. On Thursday, EU countries indicated support to enact 30% retaliatory tariffs if no deal can be reached. Earlier in the week. U.S. Secretary of Commerce Howard Lutnick said the United States is holding firm on a "hard deadline" imposed by Trump of Aug. 1 to impose a 30% baseline tariff on the European Union. Shares of Volkswagen were up 34 cents, or 2.94%, Friday on the OTC market, trading at $11.92 as of mid-afternoon.
Bloomberg
3 hours ago
- Bloomberg
Meta to Stop Selling Political Ads in the EU
Meta plans to stop selling political and issue-focused advertising in the European Union ahead of the start of new regulations in the bloc. Bloomberg's Kurt Wagner explains what's behind the move with Caroline Hyde and Ed Ludlow on 'Bloomberg Tech.' (Source: Bloomberg)
