Hello,
The slow grind in the world of tariffs continues, as one more country reached a tentative deal with the White House that leaves a high rate in place, while Donald Trump's threats at the end of last week drew a big ol' shrug from the markets.
Trump last week threatened a 30% tariff on the European Union as well as higher tariffs on Mexico. That follows an endless series of threats on Brazil, as well as expected sectoral tariffs on the likes of copper, pharmaceuticals and semiconductors that may have more lasting effect if they come to pass following U.S. investigations into trade. On the other side, he announced a deal with Indonesia - still with a 19% tariff rate for imports from that nation - while many other nations continue talks.
What that means is that the overall U.S. tariff rate is going to continue to be high - higher than it has been since the early part of the 20th century, according to the International Chamber of Commerce.
There is evidence now that the tariffs - which are paid by importers of goods, not the countries that export to the United States - are trickling into daily U.S. spending. Inflation rose in June for the first time in several months, and prices of certain goods - coffee in particular - are spiking.
Heading into earnings season, the topic is still well on the mind of businesses around the globe, from airlines to fruit growers. Analysts have said businesses are moving away from modeling various scenarios because of Trump's unpredictable nature, and instead starting to respond to the changing conditions on the ground. Suppliers to Walmart have recently cancelled or delayed some orders from Bangladesh, due to the uncertainty.
Levi's and other retailers are starting to plan for a holiday season that may include fewer types of products. The reason? With high tariffs, it's cost prohibitive to import goods that are destined for the discount rack - so they're getting more selective. Watch for more companies to say they're managing SKUs - product codes - in coming weeks.
Read the latest tariff headlines below. If you like this newsletter or have suggestions on how we can make it better, send me an email to david.gaffen@thomsonreuters.com.
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