Trump's combustible mix: tariffs, inflation, and Fed meddling
Lifted a ban on sales of powerful computer chips to China, potentially helping the US's top rival close the gap in the AI race.
Told GOP lawmakers
There's a common thread: Trump is fixated on tariffs as a tool to bolster US manufacturing, but he's running up against their inflationary impact.
The government's latest cost-of-living report showed prices creeping higher for imports such as home furnishings, appliances, and computers — even though the steepest are still on hold.
Early warning:
Advertisement
Analysts said it was the first indication that import taxes are feeding into prices. Tariffs are paid by the importer, but the costs are typically passed on to consumers. The same goes for made-in-the-USA products that use foreign parts.
Get Starting Point
A guide through the most important stories of the morning, delivered Monday through Friday.
Enter Email
Sign Up
Prices jumped on appliances and other heavily imported products such as clothes, shoes, and audio equipment. Inflation moved higher even as vehicle prices fell.
Why it matters:
Trump's campaign tapped into Americans' frustration with high prices, which he vowed to bring down.
But that promise clashes with another pledge: to use
Advertisement
Inflation could reach 3.2 percent by the end of the year, Gregory Daco, chief economist at EY-Parthenon, said in a note. The acceleration would be 'entirely a function of the administration's tariff-centric trade agenda,' he said.
Deadlines dictated:
Trump last week set Aug. 1 as the deadline for Canada, the European Union, Japan, Mexico, and South Korea to agree to measures to cut their trade surpluses and open their markets to US exports.
Trump also
China syndrome:
After battling with Beijing in his first term with not much success, Trump cranked up the pressure in his second — imposing levies of up to 145 percent, high enough to make Chinese imports economically unfeasible.
But more recently he has changed tack, tacitly acknowledging that ending trade with a country that supplies so many low-priced consumer goods came with inflation and national security risks he wasn't willing to take.
The two sides reached a truce last month that lowered tariffs and eased export restrictions, including on Chinese rare earth minerals and magnets vital to the US aerospace and auto industries.
And earlier this week the president
The restrictions were a key US tactic in the race for AI superiority, and the move left some experts wondering if it would hurt America's competitive advantage in a technology poised to reshape economies worldwide.
Advertisement
After years of accusing the country of ripping off the US, Trump said this week that he would fight China 'in a very friendly fashion.'
The fallout:
Investors haven't freaked out like they did when Trump unveiled his aggressive 'Liberation Day' tariffs on April 2.
They're holding tight, waiting to see if the president pulls the trigger or backs down as he did in April after stock and bond markets fell sharply. (Trump's habit of issuing threats, only to back down when markets react negatively, has been dubbed 'the TACO trade' — Trump Always Chickens Out.)
Also holding firm: the Fed. Which brings us back to Powell.
Trump has repeatedly blasted Powell for not slashing interest rates and has mused like Hamlet about
A majority of Fed policy makers want to keep rates steady in case tariffs lead to sustained price increases, which would dictate higher — not lower — rates. The central bank's longer-term target for inflation is 2 percent, last hit in early 2021.
On Tuesday Trump told a gathering of GOP lawmakers that he was on the verge of firing Powell — even though his term ends next May and he lacks the authority to do so except for cause. On Wednesday, when media outlets reported on his comments, stocks fell.
Investors fear that a Fed chair willing to do the president's bidding would strip the central bank of its credibility and ability to manage the economy.
Advertisement
Shortly afterward Trump told reporters it was 'highly unlikely' he would try to dismiss Powell 'unless he has to leave for fraud' — a reference to GOP assertions that the chair has permitted the costs of renovating the Fed's headquarters to spiral out of control.
Markets recovered.
Final thought:
Trump's efforts to reorder trade have met stiff resistance — not only from other countries, but from investors who fear he'll trigger higher inflation and a recession.
The president has said he will press on.
We should know by Aug. 1 whether he's serious or bluffing once again.
Larry Edelman can be reached at
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Yahoo
23 minutes ago
- Yahoo
News Analysis: Trump's 'force of personality' hasn't delivered on key foreign policy goals
When President Trump returned to the White House in January, he promised to deliver big foreign policy wins in record time. He said he would halt Russia's war against Ukraine in 24 hours or less, end Israel's war in Gaza nearly as quickly and force Iran to end to its nuclear program. He said he'd persuade Canada to become the 51st state, take Greenland from Denmark and negotiate 90 trade deals in 90 days. 'The president believes that his force of personality … can bend people to do things," his special envoy-for-everything, Steve Witkoff, explained in May in a Breitbart interview. Six months later, none of those ambitious goals have been reached. Ukraine and Gaza are still at war. Israel and the United States bombed Iran's nuclear facilities, but it's not clear whether they ended the country's atomic program once and for all. Canada and Denmark haven't surrendered any territory. And instead of trade deals, Trump is mostly slapping tariffs on other countries, to the distress of U.S. stock markets. It turned out that force of personality couldn't solve every problem. 'He overestimated his power and underestimated the ability of others to push back,' said Kori Schake, director of foreign policy at the conservative American Enterprise Institute. 'He often acts as if we're the only people with leverage, strength or the ability to take action. We're not.' Read more: Inside Trump's ICE expansion: Can he really hire 10,000 new agents? The president has notched important achievements. He won a commitment from other members of NATO to increase their defense spending to 5% of gross domestic product. The attack on Iran appears to have set Tehran's nuclear project back for years, even if it didn't end it. And Trump — or more precisely, his aides — helped broker ceasefires between India and Pakistan and between Rwanda and the Democratic Republic of Congo. But none of those measured up to the goals Trump initially set for himself — much less qualified for the Nobel Peace Prize he has publicly yearned for. 'I won't get a Nobel Peace Prize for this,' he grumbled when the Rwanda-Congo agreement was signed. The most striking example of unfulfilled expectations has come in Ukraine, the grinding conflict Trump claimed he could end even before his inauguration. For months, Trump sounded certain that his warm relationship with Russian President Vladimir Putin would produce a deal that would stop the fighting, award Russia most of the territory its troops have seized and end U.S. economic sanctions on Moscow. 'I believe he wants peace,' Trump said of Putin in February. 'I trust him on this subject.' But to Trump's surprise, Putin wasn't satisfied with his proposal. The Russian leader continued bombing Ukrainian cities even after Trump publicly implored him to halt via social media ('Vladimir, STOP!'). Critics charged that Putin was playing Trump for a fool. The president bristled: "Nobody's playing me." But as early as April, he admitted to doubts about Putin's good faith. 'It makes me think that maybe he doesn't want to stop the war, he's just tapping me along," he said. 'I speak to him a lot about getting this thing done, and I always hang up and say, 'Well, that was a nice phone call,' and then missiles are launched into Kyiv or some other city,' Trump complained last week. 'After that happens three or four times, you say the talk doesn't mean anything." The president also came under pressure from Republican hawks in Congress who warned privately that if Ukraine collapsed, Trump would be blamed the way his predecessor, President Biden, was blamed for the fall of Afghanistan in 2022. So last week, Trump changed course and announced that he will resume supplying U.S.-made missiles to Ukraine — but by selling them to European countries instead of giving them to Kyiv as Biden had. Trump also gave Putin 50 days to accept a ceasefire and threatened to impose 'secondary tariffs' on countries that buy oil from Russia if he does not comply. He said he still hopes Putin will come around. 'I'm not done with him, but I'm disappointed in him,' he said in a BBC interview. It still isn't clear how many missiles Ukraine will get and whether they will include long-range weapons that can strike targets deep inside Russia. A White House official said those details are still being worked out. Russian Foreign Minister Sergei Lavrov sounded unimpressed by the U.S. actions. 'I have no doubt that we will cope,' he said. Foreign policy experts warned that the secondary tariffs Trump proposed could prove impractical. Russia's two biggest oil customers are China and India; Trump is trying to negotiate major trade agreements with both. Meanwhile, Trump has dispatched Witkoff back to the Middle East to try to arrange a ceasefire in Gaza and reopen nuclear talks with Iran — the goals he began with six months ago. Despite his mercurial style, Trump's approach to all these foreign crises reflects basic premises that have remained constant for a decade, foreign policy experts said. 'There is a Trump Doctrine, and it has three basic principles,' Schake said. 'Alliances are a burden. Trade exports American jobs. Immigrants steal American jobs.' Robert Kagan, a former Republican aide now at the Brookings Institution, added one more guiding principle: 'He favors autocrats over democrats.' Trump has a soft spot for foreign strongmen like Putin and China's Xi Jinping, and has abandoned the long-standing U.S. policy of fostering democracy abroad, Kagan noted. Read more: Trump threatens Russia with tariffs and boosts U.S. weapons for Ukraine The problem, Schake said, is that those principles 'impede Trump's ability to get things done around the world, and he doesn't seem to realize it. 'The international order we built after World War II made American power stronger and more effective,' she said. 'Trump and his administration seem bent on presiding over the destruction of that international order.' Moreover, Kagan argued, Trump's frenetic imposition of punitive tariffs on other countries comes with serious costs. 'Tariffs are a form of economic warfare,' he said. 'Trump is creating enemies for the United States all over the world. ... I don't think you can have a successful foreign policy if everyone in the world mistrusts you.' Not surprisingly, Trump and his aides don't agree. 'It cannot be overstated how successful the first six months of this administration have been,' White House Press Secretary Karoline Leavitt said last week. 'With President Trump as commander in chief, the world is a much safer place.' That claim will take years to test. Get the L.A. Times Politics newsletter. Deeply reported insights into legislation, politics and policy from Sacramento, Washington and beyond, in your inbox twice per week. This story originally appeared in Los Angeles Times.
Chicago Tribune
24 minutes ago
- Chicago Tribune
Chicago-area children get deportation letters: Leave or ‘the federal government will find you'
Thirteen-year-old Xally Morales stared blankly at a letter she received from the Department of Homeland Security last month. She could not read the dozens of lines in English addressed to her. She arrived in the country from Mexico a little over seven months ago, crossing the southern border in search of safety. Xally knows very little English. 'They say I have to leave the country immediately,' the young teen whispered in Spanish, barely meeting anyone's eyes at a Chicago law firm on a recent Friday afternoon. No explanation. No hearing. And no time. The night she received the letter, she said, the family went into hiding after her older sister translated the letter for her. 'Trump wants me to go back to Mexico. But how can I do that alone?' Xally told the Tribune. 'I'm scared ICE will come for me.' Xally is one of at least 12 children in the Waukegan area — all unaccompanied minors from Mexico — who received sudden deportation letters from DHS last month, according to advocates. All of the girls legally entered the country within the past year under humanitarian parole as unaccompanied minors and were later reunited with undocumented parents or other family already living in the U.S. But despite that reunification, the girls are unable to be legally represented by their parents in immigration court due to the way they entered the country. Immigration advocates warn that these cases are becoming more common, with a growing number of children now receiving letters from DHS ending their humanitarian parole. They say this could signal a troubling shift under the Trump administration: a move to strip asylum protections from children, even those with pending claims, and accelerate the deportation of minors without due process. 'Do not attempt to unlawfully remain in the United States — the Federal Government will find you,' the June 20 letter reads. Unless their families can find and afford scarce legal representation, the children could be at risk of getting detained or could be forced to face a judge alone, advocates and attorneys said. But an assistant secretary of DHS, Tricia McLaughlin, in an emailed statement to the Tribune said that 'accusations that ICE is 'targeting' children are FALSE and an attempt to demonize law enforcement.' McLaughlin added that Immigration and Customs Enforcement 'does not 'target' children nor does it deport children.' The agency also does not separate families, she said in the statement. Instead, 'ICE asks mothers if they want to be removed with their children or if the child should be placed with someone safe whom the parent designates.' But questions regarding why letters are being sent to unaccompanied minors, like Xally, and what the protocol is to deport them, as stated in the letter, were left unanswered. Sitting next to her mother in the law office that afternoon, she held her hand tight. Since receiving the letter, the two had been staying at a Waukegan church because they were afraid that ICE agents would suddenly show up to their home and take Xally. Her mother, Francisca Petra Guzman, 48, arrived in the country in January, also as an asylum-seeker. The two, she said, ran away from domestic abuse and death threats. But churches are no longer a safe refuge. Instead, the pastor of the church, longtime activist Julie Contreras, escorted the mother and daughter to meet with a group of attorneys who could help them understand their options: return to the country they fled, possibly together to avoid detention, or remain in the U.S. for safety. 'As much as I tried, I couldn't provide for Xally in Mexico. I couldn't keep her safe,' Guzman said. 'Then my health started to decline. We had no other option than to come here.' Shortly after President Donald Trump took office, DHS began widely sending these letters. While the agency has always had the discretion to revoke any type of parole, the practice has expanded significantly under his administration, according to the legal and immigration experts. Minors, however, had not been targeted until now. Still, the letter may not mean that ICE will in fact show up to the family's home or their school to deport the children, said immigration attorney John Antia. Many of these children may qualify for other forms of legal protection, Antia said. The first step is meeting with an experienced immigration lawyer. That's something, however, that's often out of reach for families due to financial hardship or lack of understanding about their rights. 'Whether ICE can lawfully detain these children largely depends on each child's immigration status and individual circumstances,' Antia said. When he learned that Xally and other children were taking sanctuary at a Waukegan church after getting the letters, he offered to meet with them, attempting to ease their anxiety and fear. 'The reality is that under this administration, no one is safe anywhere. They (immigration authorities) are unpredictable and desperate to meet a quota even if it means detaining a child,' Antia said. 'This administration doesn't care whether you are in the hospital, whether you are in the courthouse, whether you are in your home, definitely not at church.' While Xally and her mother didn't leave the law office with clear answers about their future, they said they felt a small sense of hope. The attorneys said they would explore legal options to help Xally stay in the country, or at the very least, protect her from detention. They returned to the church, packed their bags and went home. The fear, however, lingers more than ever. Every morning, Xally wakes up wondering if agents will show up at her door the way they have been showing up to other homes in Waukegan and other cities near Chicago. The girl and her mother avoid going out altogether, spending most days watching TV, doing her nails, writing or reading. 'When I begin to feel anxious, I pray,' Xally said as she scrolled though a photo of her late father on her cellphone background. Her nails are painted in bright pink polish and glitter. She painted them while she was staying at the church with other children who received similar letters from DHS. She said she is used to living in fear since she lived in Mexico. Only briefly after arriving did she think her life would take a turn for the best. Xally still remembers the day she first saw Lake Michigan after arriving in the Chicago area. It was Sept. 19 of last year. Before that, she had spent nearly a month in a Texas federal facility run by the Office of Refugee Resettlement, surrounded by other children who, like her, had crossed the southern border seeking asylum. 'More than scared, I was nervous and excited,' Xally said. She was eager to leave behind a life marked by pain and instability after her father died from COVID over five years ago. When her mother remarried, they found themselves trapped in an abusive household, her mother recalled. As the threats heightened, her mother desperately searched for a way to protect her youngest daughter. At first, she left Xally with her elderly grandmother in their impoverished Mexican hometown. But soon, Guzman realized her best option was to send Xally to the United States, where her older sisters — both U.S.-born — lived. Guzman herself had lived in the U.S. unauthorized as a teenager. It was where she met Xally's father. The couple decided to return to Mexico when Xally's grandfather was on his deathbed and they wanted to see one last time. Shortly after, Xally was born. With the help of Contreras, founder of United Giving Hope, an organization supporting immigrant families in suburban Illinois, Xally was granted humanitarian parole as an unaccompanied minor and successfully reunited with her older sisters in Waukegan. 'It was a new start for a young girl with big dreams,' Contreras said. 'She arrived at a place of safety every child deserves.' Over the past decade, Contreras has helped hundreds of children and mothers legally cross the southern border seeking asylum, assisting with paperwork and connecting them to attorneys to support their cases. But now, about a dozen of those children, including Xally, have received letters from DHS ordering them to leave the country. 'This is deeply concerning and alarming,' Contreras said. 'These children are not the criminals Trump claimed ICE would target. They are victims of human rights violations and are being terrorized. Even if ICE doesn't come for them immediately, the threat alone causes severe psychological trauma.' While Xally and her mother choose to endure the uncertainty, others cannot bear it and have opted to return to their native towns. Even when it means facing danger, Contreras said. Sixteen-year-old Daneli Mendez, who arrived in the Chicago area last October, decided to go back to her native Veracruz, Mexico. After staying at the church with Contreras for nearly a week, terrified that ICE would arrive and arrest her, Daneli told her family she would rather return voluntarily than risk detention. The girl has heard of others being detained in detention centers in poor conditions for undetermined amounts of time. Most recently, a 15-year-old Mexican boy was reportedly arrested by federal authorities and taken to Alligator Alcatraz, a notorious detention facility in Florida. On July 5, just a day after Independence Day, Contreras escorted Daneli to O'Hare International Airport and watched as the young girl boarded a flight back to the country she once fled. 'It's heartbreaking to see their dreams shattered. But this is about more than dreams, it's about their safety,' Contreras said. Daneli returned with nothing but a small backpack, a few English words she had learned, and a broken heart, leaving her family behind once again. 'She would much rather do that than be detained and deported,' Contreras said. Under U.S. immigration law, unaccompanied minors, children under 18 who arrive at the border without a parent or legal guardian, are supposed to receive special protections. They are typically placed under the care of the Office of Refugee Resettlement and granted humanitarian parole while their cases are processed. But in recent months, immigration advocates and attorneys say the system is being quietly dismantled. 'We're seeing more and more unaccompanied minors having their parole revoked and being thrown into immigration proceedings where they're completely unequipped to defend themselves,' said Davina Casa, pastor and leader of the Monarchy Organization. The group provides legal guidance and other services for immigrants in Illinois. Its main goal is to reunify families. Casas and Contreras have worked closely together to help Xally and other children arrive safely in the United States. What's more concerning, she said, is that in March, the Trump administration cut federal funding for legal representation for unaccompanied minors. Only after 11 immigrant groups sued, saying that 26,000 children were at risk of losing their attorneys, did a court order temporarily restore the funding, but the case is still ongoing. Those groups argued that the government has an obligation under a 2008 anti-trafficking law to provide vulnerable children with legal counsel. That same law requires safe repatriation of the children. But Casas is skeptical of that. Even if the funding has been restored, the demand can't keep up. In April, more than 8,300 children ages 11 and under were ordered deported by immigration courts. That is the highest number for that age group in any month since tracking began over 35 years ago, according to court data from the Transactional Records Access Clearinghouse, as first reported by The Independent. Since Trump took office in January, judges have ordered the removal of over 53,000 immigrant children, according to the data collected. Most of those children are elementary school age or younger. Approximately 15,000 were under the age of 4, and another 20,000 were between 4 and 11 years old. Teenagers have also been affected, with 17,000 ordered deported, though that number is still below the peak seen in 2020, during Trump's first term. Some of the children are unaccompanied minors, like Xally and Daneli, but it's unclear how many, since immigration authorities stopped tracking that data years ago. In the Chicago area, it's hard to know how many children are currently being detained or deported, due to gaps in the available data. But according to data obtained by the Deportation Data Project and analyzed by the Tribune, at least 16 minors were deported or left the U.S. after being booked in Chicago-area ICE detention centers during Trump's first 150 days back in office. Another seven cases are still pending. If all seven of those cases result in deportation, that would bring the total to 23 minors — about the same number as were deported in the final 150 days of the Biden administration. But the latest available ICE data doesn't capture any efforts since late June. When Xally learned that Daneli had returned home, she panicked. The two girls had spent a few nights at the church, confiding in each other the fear that few other young girls would understand. 'Would I have to do that too?' she asked herself. 'I don't want to. I like school here, I want to go back after summer break.' Xally is enrolled at Robert Abbott Middle School in Waukegan, where she would enter eighth grade if she stays in the country. Meanwhile, her summer has been shadowed by fear and uncertainty. Just days after receiving the letter, her family quietly marked her 13th birthday — no guests, no music, no gifts. She can't even go anymore to the beach, a place that once felt like the freedom and safety she and her mother had desperately sought after being released from federal custody.
The Hill
24 minutes ago
- The Hill
Trump administration turns hostile on Aspen Security Forum
The Trump administration's last-minute snub of the Aspen Security Forum this week betrays a growing animosity between the U.S. government and wider national security community. The Pentagon on Monday pulled senior Defense Department officials from the annual event —only a day before the start of the four-day summit in Colorado — claiming the bipartisan gathering 'promotes the evil of globalism, disdain for our great country, and hatred for the President of the United States.' The strong wording has alarmed some experts and former government officials, who see a growing tendency for the administration to cut off anyone who criticizes or so much as offers an alternative view to that of the current U.S. government — putting up a barrier between them and the decision makers. 'The Trump administration doesn't like dissent, I think that's pretty clear. And they don't like dissenting views at conferences,' a Republican political strategist and frequent forum attendee told The Hill. 'Causing a stir about perceived criticism of the Trump administration makes people afraid to cross them and lose access to the administration. They might be cut off from people who are implementing policies.' But the shunning of events on the national security and foreign policy circuit does no favors for the administration's national security goals, experts say, as they lend a platform to potentially different viewpoints that could be useful for Washington. Case in point, those that gathered at the mountain retreat were described as 'bewildered' by the decision due to the forum's well-known bipartisan agenda, with several former Trump administration officials slated to speak, according to the political strategist, who spoke on the condition of anonymity. 'It was a surprise because most of us were traveling to the conference when the announcement occurred,' they said. 'I think most people who attend the event frequently never viewed it as being partisan or anti-Trump. So it was bewildering and I think a little bit concerning.' The Aspen Security Forum, described as the 'premier national security and foreign policy conference,' is among the most high-profile such events and for years has attracted Republican and Democratic administration officials, business leaders, and analysts. During Trump's first term, several top officials including then-CIA chief and later Secretary of State Mike Pompeo attended the forum. This year's lineup included Mark Esper, an acting defense secretary in Trump's first term, Condoleezza Rice, a former national security advisor and secretary of state under President George W. Bush, and David Petraeus, the short-lived CIA director under President Obama. Speakers covered a range of issues that included the U.S. strategy on Taiwan, Russia's war in Ukraine, NATO, and how Trump's tariffs will affect Washington's alliances. More than a dozen pulled administration officials were set to appear on several panels, including Navy Secretary John Phelan. But the Pentagon suddenly declared they would not attend and would not do so moving forward as 'their values do not align with the values of the DoD,' according to spokesperson Sean Parnell. Only one administration official ended up attending the conference and they were not associated with the Pentagon: Adam Boehler, Trump's special envoy for hostage release. Even without the defense officials in attendance, panelists praised a number of Trump's recent moves, including his decision to offer lethal aid for Ukraine, the U.S. airstrikes on Iranian nuclear facilities and prompting NATO countries to foot more of the bill when it comes to defense spending. National security elites also appeared resigned that the norms and conventions that sprang up following World War II — which have dictated U.S. use of military force and how Washington addresses long-held partners and alliances — are now upended thanks to Trump. 'We have to recognize that we're probably not going back to exactly that system,' Rice, a co-chair of the Aspen Strategy Group, said at the closing panel of the summit. Michael O'Hanlon, a senior fellow in foreign policy at the Brookings Institution think tank, said he wasn't doing any hand-wringing over Trump's 11th hour snub, and was viewing the official pullout as just the new norm for at least the next three years. 'If they want to have a little bit of a culture war over this particular forum, I'm just going to view it as a reminder of how they view the world, as opposed to a major problem,' O'Hanlon said, referring to the administration's isolationist tendencies. 'They'll be willing to just hold a grudge if they decide you've slighted them or you're not of their worldview. And that's just the way it's going to be,' he added. O'Hanlon noted that as long as administration officials appear at some similar forums and are willing to engage, he doesn't see an issue. But should they stop attending any such events moving forward, that's a cause for concern. 'If they just occasionally feel a slight from somebody and pull out of this or that, that's one thing. If they stop being willing to engage in any kind of forum, unless you somehow prove that you're a complete MAGA Republican, that would be much more concerning.' Aspen organizers, meanwhile, have made clear their invitation to the Trump officials remains open. The political strategists said the organizers were more concerned about ensuring that there's a presence of government officials going forward at the event. 'This is a major security forum, it's an open exchange of ideas, and they made it very clear throughout the event that the officials are invited back anytime in the future,' they said. 'I think there's a hope that that they will come back next year.'
