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E&E News
5 days ago
- Business
- E&E News
White House report extols fossil fuels as economic engine
Increased production of oil and natural gas could boost U.S. gross domestic product nearly 2 percent by 2035, the White House Council of Economic Advisers said in a report released Thursday. To meet the needs of artificial intelligence and other energy-hungry enterprises, the report — 'The Economic Benefits of Unleashing American Energy' — calls for accelerating the construction of gas pipelines, preventing coal plant retirements, quickly permitting all kinds of oil and gas projects and boosting liquefied natural gas exports. The report says the 'energy potential of public lands remains underutilized' while highlighting provisions in the One Big Beautiful Bill Act to expand lease sales, lower lease royalties, and nix wind and solar tax credits. Advertisement 'Policies that promote the energy sector's growth,' it says, could raise GDP by 1.9 percent over the next decade.
Business Times
16-07-2025
- Business
- Business Times
Is the US dollar's era of exorbitant privilege ending?
THE US dollar's global standing is a mixed blessing. Its status as a safe haven and dominant reserve currency lowers the US cost of borrowing – the so-called 'exorbitant privilege' – which means more investment, more growth and higher incomes in the aggregate. But the dollar's strength also leans against the economy's competitiveness in international trade, which puts some of its producers at a disadvantage. What a shame that, on the face of it, you can't collect the benefits of a strong currency alongside the benefits of a weak one. On one interpretation, though, the Trump administration is aiming to do just that. According to a strategy mapped out by Stephen Miran, chairman of the president's Council of Economic Advisers, it's possible to nudge the dollar's value lower without causing long-term interest rates to rise – thus achieving greater competitiveness in trade without surrendering the exorbitant privilege. The key is to change the terms of international trade and finance by using all the instruments of US power. By itself, declaring a weak-dollar policy might spur a flight from dollar assets and, as a result, sharply higher interest rates. So it's better, as Miran explained, to start with tariffs. They wouldn't do much to reduce the trade deficit, because lower imports would mean a stronger dollar, reversing the gain in competitiveness and squeezing exports as well. But this is only the first stage. The threat of punitive tariffs would give the US leverage to use alongside other pressure (such as threats to withdraw security cooperation) to extract concessions on trading partners' tariffs and non-tariff barriers – and to impose new currency arrangements (including the management of dollar reserves) that would enable an orderly dollar depreciation. This new 'Mar-a-Lago Accord' would affirm the dollar's global standing, prevent dollar flight and restrain long-term interest rates. Get the sequencing right and the end result could be moderate tariffs (as opposed to the sky-high rates threatened at the outset) and less government borrowing (thanks to tariff revenues), causing a smaller inflow of capital, a smaller trade deficit, a judiciously depreciated currency and no spike in borrowing costs. Ambitious. I noted some of the difficulties with all this (many, to be sure, emphasised by Miran) in a previous article. But how is is it working out? So far, not quite as envisaged. The initial onslaught of actual and threatened tariffs caused the dollar to depreciate, not appreciate, and pushed long-term US bond yields higher. That's not good. The combination of a cheaper dollar and higher long-term interest rates is unusual. At the very least, it suggests an uptick in nervousness about holding dollar assets – intimations, you might say, of a 'Truss moment'. BT in your inbox Start and end each day with the latest news stories and analyses delivered straight to your inbox. Sign Up Sign Up Granted, it's early days. Trade flows and currency fluctuations will be hard to read until the smoke clears, if it ever does. (For instance, many importers have accelerated their purchases to build up stocks before most of the tariffs kick in, clouding the eventual effect on prices, trade volumes and exchange rates.) The administration is rewriting the rules of global trade even as it champions a huge expansion in government borrowing (tariff revenues notwithstanding) and threatens the independence of the Federal Reserve. Given all of the above, recent fluctuations in interest rates and the dollar, though notable, have been modest. Nonetheless, investors clearly have their doubts. One obvious reason for anxiety is confusion over how the strategy is meant to unfold. The endless back-and-forth on country-by-country tariffs, threats and retractions, ever-shifting deadlines and contradictory rationales make the thinking opaque to trading partners and investors alike. Yet defenders of this approach would say that's the whole idea. 'Strategic uncertainty', as Treasury Secretary Scott Bessent calls it, gives the US leverage in negotiations. On this view, you don't want the other side to know what you're thinking. Once you've struck the best possible deal, clarity will ensue. Maybe. Despite the risks, one can imagine investors coming to terms with disruption as long as it's yielding wins for US interests. Much more dangerous is the administration's failing to see where US interests really lie and, in particular, failing to see that trust in US leadership – and with that, the dollar's preeminence – is a vital US asset. Initial confusion over tariff policy is consistent with the Mar-a-Lago project; reconfiguring the international monetary and financial system is indispensable to it. Here is the core contradiction. The programme envisages new arrangements that spread the costs of global governance more equitably. It doesn't just want to smash the existing multilateral norms and institutions, a process now well under way; it wants new ones, not least to underwrite the dollar's exorbitant privilege. If confidence in the dollar subsides, other governments might question their reliance on dollar reserves for liquidity purposes and wonder whether their financial systems should be so closely integrated with America's – potentially, a vicious circle. The administration understands this threat. It has told the expanded Brics group of developing and emerging-market economies to expect higher tariffs on goods they sell to the US if they move forward with plans to rely less on the dollar in their trade with each other. Another way to defend the exorbitant privilege, discussed by Miran, would be to demand that other governments change the composition of their dollar reserves by adjusting the duration of their holdings to avoid upward pressure on long-term yields. But all such deals depend on mutual advantage and trust – and the administration's goals and methods unsettle both. In the era now ending, the US was mostly perceived as a beneficent hegemon providing global public goods and enjoying the exorbitant privilege (and other benefits besides) in return. In the new era, it promises to exert power more selfishly – to be less exploited by other countries, as the administration would say. Yet it still wants a kind of multilateralism (a durable system of arrangements and understandings) and it still wants to be in charge. The dilemma for other countries is acute. It isn't just that they're to be denied some of the benefits of pre-Trump US hegemony – in Europe's case, for instance, the protection of US military power at relatively little cost. It's also that the new order, once such concessions have been banked, will be far less stable. Favouring US imports and terming out dollar reserves might do for now, but what comes next? Even if financial markets, against the odds, take the trifecta of tariffs, fiscal incontinence and Fed intimidation in stride, one question will surely erode global confidence in the dollar system: How far can you trust a more selfish, impatient and erratic hegemon? If Trump cares about the dollar, he needs a clearer endgame and a better answer. BLOOMBERG
Fibre2Fashion
13-07-2025
- Business
- Fibre2Fashion
US reciprocal tariffs not causing inflation: Economic Advisers Council
Prices of imported goods in the United States have fallen this year and have declined faster than overall goods prices since February, according to a new report from the Council of Economic Advisers (CEA), an agency within the executive office of the US President. The findings contradict claims that the US administration's reciprocal tariffs or fears induced by such announcements would lead to a rise in inflation. Prices of imported goods in the US have fallen this year and have declined faster than overall goods prices since February, a new report from the Council of Economic Advisers said. The findings contradict claims that the US reciprocal tariffs or fears induced by such announcements would lead to a rise in inflation. The report did not identify the counterfactual in which tariffs are not instituted. The report breaks down the personal consumption expenditure (PCE) price index, an inflation gauge watched closely by the Federal Reserve and financial markets, and the consumer price index (CPI), an inflation gauge most commonly used by the public, into imported and domestic components. While overall goods prices in the PCE index jumped by 0.4 per cent from December to May, corresponding to a 1-per cent annualised rate, the imported component of PCE goods prices dropped by 0.1 per cent during that same time period, the report said. "CEA's directional findings using this method of analyzing the PCE are consistent across core goods (excluding food and energy), durables (which last for at least three years), and nondurables," the report noted. "The import contribution to inflation includes both the direct impact of imported final goods for consumption and indirect effects of imported intermediate inputs." Similar analysis for the CPI showed that imported goods dipped 0.8 per cent while overall goods prices remained flat. "The results clearly show the price of imported components declining, starting in March, while overall prices were close to unchanged or increased slightly," the report read. "Cumulatively, overall PCE prices have increased by about 1.1 per cent since December compared to about 0.2 per cent for PCE import prices. However, those values include pricing for services, which tend to have lower import intensity, so the divergence could be due to stickier services prices," the report added. The report did not identify the counterfactual in which tariffs are not instituted. Fibre2Fashion News Desk (DS)
Business Times
12-07-2025
- Business
- Business Times
Trump's 50% copper import tariff said to cover refined metal
[NEW YORK] US President Donald Trump's promised 50 per cent copper tariffs are set to include all refined metal, indicating the president's far-reaching efforts to bolster American production of one of the world's most ubiquitous materials. Trump's announcement of the levy, which he said would begin on Aug 1, was devoid of much detail, but refined copper will be included, according to people familiar with the matter who asked not to be named as discussions are private. Refined copper represents the biggest category of the metal that is imported by the US, and including it in the tariff list will have widespread impacts. The metal is vital for electric grids, construction, carmaking and consumer electronics. Semi-finished products also would be hit with levies, Bloomberg News reported earlier. The tariff measures have not yet been formalised and they should not be considered final until announced by Trump, according to a White House official. Just hours after Trump unexpectedly announced the 50 per cent copper tariff on Tuesday (Jul 8), the White House's Council of Economic Advisers met with industry representatives who asked the president not include export controls of copper scrap, according to the people. The US is one of the world's biggest generators of metal scrap, which annually outpaces domestic consumption. The extra metal gets shipped abroad. Leading metals companies including miner Rio Tinto, fabricator Southwire and trader Trafigura have asked the White House to restrict exports of ore and scrap metal rather than imposing tariffs on imports. BLOOMBERG
CNBC
09-07-2025
- Business
- CNBC
CNBC Daily Open: Wishing upon a meteor that tariffs won't cause inflation
U.S. President Donald Trump announced Tuesday that copper and pharmaceutical imports will face tariffs of 50% and as high as 200%, respectively. Following the news, the S&P 500, which hit multiple record closes last week, ground to a halt and closed mostly flat. That said, it's a muted response for such hefty tariffs, suggesting investors are either brushing off Trump's tariffs as hollow threats, or discounting the effects they could have on inflation and the economy. Such complacency could be a mistake, as some market watchers have cautioned. It also mirrors the White House's stance on the effects of tariffs, which might not be a position investors want to take. On Tuesday, Stephen Miran, chairman of Trump's Council of Economic Advisers, told CNBC's "Squawk Box" that the odds of tariffs leading to higher prices is a "rare event" like "pandemics or, or meteors or whatever." "I don't mean to be dismissive," Miran clarified. "All I mean to say is that prediction is difficult, and we should always speak in terms of odds and possibilities." For the record, there's a 0.004% chance of an asteroid that will fly near Earth in 2023 striking our planet, according to NBC News. New tariffs on copper and pharmaceuticals. Copper imports will attract a 50% duty while that of pharmaceuticals will be subject to tariffs as high as 200%, Trump said Tuesday. He didn't specify when they would take effect, but said the latter might kick in within a year and half. China's producer prices plunged in June. The wholesale price index fell 3.6% from a year earlier, its largest decline in nearly two years. But consumer prices in June staged an early recovery, inching up 0.1% from the same period last year. South Korea and Japan's economies could shrink further. First-quarter gross domestic product of both countries contracted from the previous three months — and could experience steeper falls in the months ahead because of Trump's newly unleashed tariffs. U.S. stocks were mostly unchanged. On Tuesday, the S&P 500 and Nasdaq Composite closed around the flatline, while the Dow Jones Industrial Average slipped 0.37%. Asia-Pacific markets traded mixed Wednesday. [PRO] Retail investors outperformed fund managers. Robinhood's CEO told CNBC that the institutional players which spent weeks after Trump's "liberation day" seeking safe havens lost out to retail investors who stuck with a simple strategy. Global stock markets' best and worst performers in a Trump-fueled 2025 — and where they're headed Global stocks have surged in the first half of 2025, even as U.S. President Donald Trump announced steep tariffs on imports to the United States. The MSCI All Country World Index, which measures the performance of more than 2,500 stocks from both developed and emerging market equities, rose nearly 10% since the start of the year to hit a record high on July 4. "The global trade war that the U.S. started has been, and will continue to be, the catalyst for this ex-U.S. outperformance," said Peter Boockvar, chief investment officer at Bleakley Financial Group.
