The US dollar’s position as the world's main reserve currency is slowly being undermined, with several countries shedding their holdings of US Treasury securities, once considered the safest asset. Amid this, economist Peter Schiff warned that the US economy is on the brink of “the biggest economic crisis of our lifetimes,” citing the rise in gold and silver as other factors. What really is the situation with the US dollar? Let's dive in.<h2>Peter Schiff's warning on US economy</h2>Schiff warned that the fall in treasury holdings and rise in gold and silver prices could send consumer prices, bond yields, and unemployment soaring in the US.Some of his predictions could be alarmist and should be taken with a pinch of salt, as Schiff is a well-known gold advocate and frequent critic of US monetary policy. Schiff's forecasts are not new; he has been discussing hyperinflation, gold price surges, and imminent dollar destruction for 15 years, most of which did not happen within his predicted timeframe or scale.<h2>Gold and silver prices are indeed rising</h2>Gold and silver prices fluctuate daily, and both reached record or near-record highs in recent years, with gold around $2,600–$2,700 per ounce in late 2025, and silver above $30–$35 per ounce. Geopolitical uncertainties, Federal Reserve activity, and inflation hedging are among the reasons.<a href="https://www.wionews.com/videos/us-finance-the-dollar-hovers-near-two-month-lows-1765890227661/embed">https://www.wionews.com/videos/us-finance-the-dollar-hovers-near-two-month-lows-1765890227661/embed</a><h2>US Treasuries is a sign of trust in the dollar but who is trimming holdings?</h2>As the world’s primary reserve currency, the dollar is roughly 60 per cent of global reserves. Demand for US Treasuries remains strong. But foreign holdings of US Treasury securities - including bills, notes, and bonds - have slowly been declining, as tracked by the US Treasury Department’s Treasury International Capital (TIC) system.&nbsp;Total foreign holdings currently exceed $9 trillion, with the largest holders being Japan (around $1.1–1.2 trillion), followed by the UK (around $800–900 billion), and China (around $750–800 billion). Net inflows in recent months are primarily driven by private investors and some official institutions.Also read: <a href="https://www.wionews.com/business-economy/how-the-us-government-shutdown-will-affect-gold-dollar-bond-yield-1759309150735">How the US government shutdown will affect gold, dollar, bond yield</a>China has been the most notable long-term reducer of US Treasury holdings, after peaking at around $1.3 trillion in the early 2010s. Its holdings have fallen to roughly $750–760 billion. Diversification into gold and other currencies is part of China’s effort to reduce reliance on dollar assets amid geopolitical tensions.&nbsp;Russia’s holdings fell sharply after 2022 due to sanctions following the Ukraine invasion, declining to under $2 billion from tens of billions before 2022.Saudi Arabia and some other oil exporters have occasionally reduced holdings for short-term capital needs and diversification. Switzerland, Germany, and Norway have also trimmed US Treasury holdings in recent months, as have smaller holders like Brazil and Vietnam.These reductions have not led to broader sell-offs, at least for now.In fact, Japan has increased its holdings to record levels of around $1.15 trillion as of 2025. The UK has risen to the second-largest holder of US Treasuries, surpassing China this year, with around $850–865 billion currently.<h2>India is reducing its US Treasury holdings&nbsp;</h2>India has gradually reduced its US Treasury securities over the past year as part of a broader diversification strategy by the Reserve Bank of India (RBI). Factors include US trade policies, diversification trends, and a preference for gold as a hedge against dollar volatility and inflation.Concerns over US fiscal debt, credit rating issues, and rising yields have also contributed. India's US treasury holdings had peaked in 2024 at $247 billion, but fell to around $220 billion by year-end.Yet, India remains among the top 20 foreign holders of US Treasuries.Also read: <a href="https://www.wionews.com/business-economy/indian-rupee-slips-to-all-time-low-of-90-72-against-us-dollar-trump-tariffs-fpis-stock-market-news-indian-markets-investing-us-economy-1765804328339">Indian rupee slips to all-time low of 90.72 against US dollar</a><h2>India is increasing its gold reserves</h2>The RBI has simultaneously increased gold reserves, adding dozens of tonnes in 2025, bringing total reserves to over 880 metric tonnes. Gold now accounts for roughly 14–15 per cent of the RBI’s reserves. Overall, India’s total foreign exchange reserves have remained robust at around $690–700 billion, adequate to cover a large share of imports and external liabilities.Unlike Japan and the UK, India and other BRICS nations have trimmed exposure, often in response to global uncertainties.India's foreign currency assets usually constitute about 80–85 per cent of total reserves, mostly in US dollar-denominated assets such as US Treasury securities, deposits, and sovereign bonds.

US dollar may be facing a slow decline as the world's reserve currency, while gold and silver prices surge. Countries, including India have trimmed US Treasury holdings. But is it a gloom and doom scenario or a strategic shift? Find out


The US dollar’s position as the world's main reserve currency is slowly being undermined, with several countries shedding their holdings of US Treasury securities, once considered the safest asset. Amid this, economist Peter Schiff warned that the US economy is on the brink of “the biggest economic crisis of our lifetimes,” citing the rise in gold and silver as other factors. What really is the situation with the US dollar? Let's dive in. Peter Schiff's warning on US economy Schiff warned that the fall in treasury holdings and rise in gold and silver prices could send consumer prices, bond yields, and unemployment soaring in the US. Some of his predictions could be alarmist and should be taken with a pinch of salt, as Schiff is a well-known gold advocate and frequent critic of US monetary policy. Schiff's forecasts are not new; he has been discussing hyperinflation, gold price surges, and imminent dollar destruction for 15 years, most of which did not happen within his predicted timeframe or scale. Gold and silver prices are indeed rising Gold and silver prices fluctuate daily, and both reached record or near-record highs in recent years, with gold around $2,600–$2,700 per ounce in late 2025, and silver above $30–$35 per ounce. Geopolitical uncertainties, Federal Reserve activity, and inflation hedging are among the reasons. https://www.wionews.com/videos/us-finance-the-dollar-hovers-near-two-month-lows-1765890227661/embed US Treasuries is a sign of trust in the dollar but who is trimming holdings? As the world’s primary reserve currency, the dollar is roughly 60 per cent of global reserves. Demand for US Treasuries remains strong. But foreign holdings of US Treasury securities - including bills, notes, and bonds - have slowly been declining, as tracked by the US Treasury Department’s Treasury International Capital (TIC) system. Total foreign holdings currently exceed $9 trillion, with the largest holders being Japan (around $1.1–1.2 trillion), followed by the UK (around $800–900 billion), and China (around $750–800 billion). Net inflows in recent months are primarily driven by private investors and some official institutions. Also read: How the US government shutdown will affect gold, dollar, bond yield China has been the most notable long-term reducer of US Treasury holdings, after peaking at around $1.3 trillion in the early 2010s. Its holdings have fallen to roughly $750–760 billion. Diversification into gold and other currencies is part of China’s effort to reduce reliance on dollar assets amid geopolitical tensions. Russia’s holdings fell sharply after 2022 due to sanctions following the Ukraine invasion, declining to under $2 billion from tens of billions before 2022. Saudi Arabia and some other oil exporters have occasionally reduced holdings for short-term capital needs and diversification. Switzerland, Germany, and Norway have also trimmed US Treasury holdings in recent months, as have smaller holders like Brazil and Vietnam. These reductions have not led to broader sell-offs, at least for now. In fact, Japan has increased its holdings to record levels of around $1.15 trillion as of 2025. The UK has risen to the second-largest holder of US Treasuries, surpassing China this year, with around $850–865 billion currently. India is reducing its US Treasury holdings India has gradually reduced its US Treasury securities over the past year as part of a broader diversification strategy by the Reserve Bank of India (RBI). Factors include US trade policies, diversification trends, and a preference for gold as a hedge against dollar volatility and inflation. Concerns over US fiscal debt, credit rating issues, and rising yields have also contributed. India's US treasury holdings had peaked in 2024 at $247 billion, but fell to around $220 billion by year-end. Yet, India remains among the top 20 foreign holders of US Treasuries. Also read: Indian rupee slips to all-time low of 90.72 against US dollar India is increasing its gold reserves The RBI has simultaneously increased gold reserves, adding dozens of tonnes in 2025, bringing total reserves to over 880 metric tonnes. Gold now accounts for roughly 14–15 per cent of the RBI’s reserves. Overall, India’s total foreign exchange reserves have remained robust at around $690–700 billion, adequate to cover a large share of imports and external liabilities. Unlike Japan and the UK, India and other BRICS nations have trimmed exposure, often in response to global uncertainties. India's foreign currency assets usually constitute about 80–85 per cent of total reserves, mostly in US dollar-denominated assets such as US Treasury securities, deposits, and sovereign bonds.

US dollar may be facing a slow decline as the world's reserve currency, while gold and silver prices surge. Countries, including India, have trimmed US Treasury holdings. But is it a gloom and doom scenario or a strategic shift? Find out here &nbsp;

Is US dollar dying slowly? This economist thinks so as gold, silver surge, countries including India trim US Treasury holdings

Brushing off concerns over the economy, the US shoppers spent a whopping $14.5 billion on Cyber Monday, the last day of the five-day Thanksgiving shopping festival. The Black Friday sales stood at a record $11.8 billion. The consumer turned to Artificial intelligence powerd chatbots on online platforms to curate items and come up with the best offers.&nbsp;The total online sales over the Thanksgiving weekend climbed to a record $44.2 billion, up from 7.7 per cent from last year at $41.1 billion, according to a report by Adobe Analytics, as reported by Reuters.&nbsp;Also Read: <a href="https://www.wionews.com/world/-ridiculous-statement-india-rejects-pakistan-s-claims-of-blocking-humanitarian-aid-to-sri-lanka-amid-cyclone-ditwah-1764687512031">'Ridiculous statement': India rejects Pakistan's claims of blocking humanitarian aid to Sri Lanka amid Cyclone Ditwah</a>&nbsp;On the year's busiest shopping day, US online shopping saw an uptick of 9.1 per cent at Adobe Analytics report compared to last year.<h2>Consumer turns to AI-powered chatbots</h2>This year's Thanksgiving week also showcased a shifting trend in Consumer behaviour with increasing use of artificial intelligence as Americans relied on AI-powered chatbots to compare prices and track deals in categories like appliances, toys, video games and jewellery, the report said.&nbsp;Online retail platforms like Amazon.com, Walmart.com and Target presented the shoppers with attractive discounts across categories, catering both to the affluent and budget-conscious customers.&nbsp;AI-linked traffic to the retail sites registered a growth of 670 per cent on Cyber Monday, while during Black Friday it was up 805 per cent from the previous year, as per Adobe data.&nbsp;Also Read: <a href="https://www.wionews.com/trending/world-to-see-a-major-war-in-5-10-years-elon-musk-s-major-prediction-leaves-internet-speculating-1764681973948">World to see a major war in 5-10 years? Elon Musk’s major prediction leaves internet speculating</a>&nbsp;“Buy now, pay later” usage surged to a record level on Cyber Monday, with consumers spending $1.03 billion online, a 4.2% increase from last year, as many looked for financial flexibility amid rising household costs.<h2>Background on Thanksgiving shopping festival</h2>The Thanksgiving shopping period in the United States traditionally begins on the fourth Thursday of November and extends into a five-day shopping festival that includes Black Friday, Small Business Saturday, Sunday sales, and Cyber Monday.&nbsp;This year, Thanksgiving falls on 27 November 2025, kicking off the five-day spree that runs through 1 December 2025, with retailers offering major nationwide discounts online and in stores.

The total online sales over the Thanksgiving weekend climbed to a record $44.2 billion, up by 7.7 per cent from last year at $41.1 billion.

Brushing off concerns over the economy, the US shoppers spent a whopping $14.5 billion on Cyber Monday, the last day of the five-day Thanksgiving shopping festival. The Black Friday sales stood at a record $11.8 billion. The consumer turned to Artificial intelligence powerd chatbots on online platforms to curate items and come up with the best offers. The total online sales over the Thanksgiving weekend climbed to a record $44.2 billion, up from 7.7 per cent from last year at $41.1 billion, according to a report by Adobe Analytics, as reported by Reuters. Also Read: 'Ridiculous statement': India rejects Pakistan's claims of blocking humanitarian aid to Sri Lanka amid Cyclone Ditwah On the year's busiest shopping day, US online shopping saw an uptick of 9.1 per cent at Adobe Analytics report compared to last year. Consumer turns to AI-powered chatbots This year's Thanksgiving week also showcased a shifting trend in Consumer behaviour with increasing use of artificial intelligence as Americans relied on AI-powered chatbots to compare prices and track deals in categories like appliances, toys, video games and jewellery, the report said. Online retail platforms like Amazon.com, Walmart.com and Target presented the shoppers with attractive discounts across categories, catering both to the affluent and budget-conscious customers. AI-linked traffic to the retail sites registered a growth of 670 per cent on Cyber Monday, while during Black Friday it was up 805 per cent from the previous year, as per Adobe data. Also Read: World to see a major war in 5-10 years? Elon Musk’s major prediction leaves internet speculating “Buy now, pay later” usage surged to a record level on Cyber Monday, with consumers spending $1.03 billion online, a 4.2% increase from last year, as many looked for financial flexibility amid rising household costs. Background on Thanksgiving shopping festival The Thanksgiving shopping period in the United States traditionally begins on the fourth Thursday of November and extends into a five-day shopping festival that includes Black Friday, Small Business Saturday, Sunday sales, and Cyber Monday. This year, Thanksgiving falls on 27 November 2025, kicking off the five-day spree that runs through 1 December 2025, with retailers offering major nationwide discounts online and in stores.

The total online sales over the Thanksgiving weekend climbed to a record $44.2 billion, up by 7.7 per cent from last year at $41.1 billion.

US online sales hit record $44.2 billion during Thanksgiving holiday shopping: Report

America is the only major democracy that closes its government with such frequency. Shutdowns were even more frequent in the 1980s, but, back then, they lasted only a day or two. Since the mid-1990s, they have become longer and more damaging. In the next report, we decode why US political parties persist in this game of chicken.

US, the Only Major Democracy to Shut Down With Such Frequency

The United States faces another potential government shutdown as political leaders struggle to reach a budget agreement. This video breaks down the ongoing standoff in Congress, the stakes for federal employees and citizens, and the history of shutdowns in U.S. politics.

US Government Shutdown: The Constant Game of Chicken in US Politics

US President Donald Trump publicly threatened to fire Treasury Secretary Scott Bessent, while Bessent was sitting right in front of him, as the whole room burst into laughter. Trump had been pushing for a rate cut for months now. “Interest rates are down despite the Fed. I mean, Scott, you gotta work on this guy. He’s got some real mental problems. He has something wrong with him,” said Trump. Trump also attacked Federal Reserve Chair Jerome Powell for months over the interest rate policy.&nbsp;“I’ll be honest, I’d love to fire his ass. He should be fired. Guy’s grossly incompetent. And he should be sued for spending $4 billion to build a little building. I’m building a ballroom that’s gonna cost a tiny fraction of that," said Trump, referring to Jerome Powell, at the Kennedy Centre on November 19, while addressing the US-Saudi investment forum.

<blockquote class="twitter-tweet" data-media-max-width="560">Trump on Jerome Powell: &quot;I&#39;d love to fire his ass. He should be fired. The only thing Scott [Bessent] is blowing it on is the Fed. The rates are too high, Scott. And if you don&#39;t get it fixed fast, I&#39;m going to fire your ass.&quot; <a href="https://t.co/s653VB3MI1">pic.twitter.com/s653VB3MI1</a>&mdash; Aaron Rupar (@atrupar) <a href="https://twitter.com/atrupar/status/1991202124135330094?ref_src=twsrc%5Etfw">November 19, 2025</a></blockquote> <script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>

<h2>US economy outlook</h2>Trump had been boasting about the US economy, claiming that it's the 'hottest and the best' at the same time, but he is undermining his own staff and pressing for a rate cut. California Governor Gavin Newsom's office posted, “Translation: the economy isn’t bad enough, let’s speedrun a recession!”Fed officials claim that their decisions are guided by economic figures, with dual goals of stable prices and full employment. However, the feds have delivered two rate cuts in two consecutive months in September and October, bringing the benchmark to its lowest in three years. Inflation remains above the 2 per cent target, and tariffs are expected to push it further higher.&nbsp;

Trump publicly threatened to fire Treasury Secretary Scott Bessent and attacked Fed Chair Jerome Powell as the US economy sees back-to-back rate cuts and rising inflation.

US President Donald Trump publicly threatened to fire Treasury Secretary Scott Bessent, while Bessent was sitting right in front of him, as the whole room burst into laughter. Trump had been pushing for a rate cut for months now. “Interest rates are down despite the Fed. I mean, Scott, you gotta work on this guy. He’s got some real mental problems. He has something wrong with him,” said Trump. Trump also attacked Federal Reserve Chair Jerome Powell for months over the interest rate policy. “I’ll be honest, I’d love to fire his ass. He should be fired. Guy’s grossly incompetent. And he should be sued for spending $4 billion to build a little building. I’m building a ballroom that’s gonna cost a tiny fraction of that," said Trump, referring to Jerome Powell, at the Kennedy Centre on November 19, while addressing the US-Saudi investment forum.

Trump publicly threatened to fire Treasury Secretary Scott Bessent and attacked Fed Chair Jerome Powell as the US economy sees back-to-back rate cuts and rising inflation.

'I wanna get him out, Scott!': Trump publicly jokes about firing Scott Bessent and Jerome Powell

The U.S. government will remain temporarily funded until January 30 following a deal to prevent a shutdown. Lawmakers approved temporary funding to keep federal operations running while negotiations continue over long-term budgets.

US Government Shutdown: Temporary Funding to Keep Government Open Until Jan 30

Huge developments in Washington, Congress is moving to end the longest U.S. Federal government shutdown in history, but key issues remain unresolved, including food aid for millions, and aviation disruptions ahead of the thanksgiving holiday, and an unexpected provision tied to a political investigation.


US Government Shutdown: US House Moves to End Historic Shutdown

The U.S. Congress has approved short-term funding to prevent a government shutdown, keeping operations funded until January 2026. Lawmakers reached a temporary agreement after tense negotiations, ensuring continued support for federal agencies and programs.


US Government Shutdown: Congress Approves Short-Term Funding Until January 2026

While US President Donald Trump speaks highly of a ‘growing’ economy, economists are split on its shape. For many, the k-shaped reference seems apt, where the majority of wealth is parked with the richest. What are the long-term implications of this uneven growth? Take a look at this report for more.

US Economic Divide Deepens Across Jobs, Spending, & Markets 

America’s Record-long Government Shutdown of 41 Days May Finally Be Inching Towards an End. Democrats in the Senate, at Least Eight of Them, Have Now Crossed the Aisle. And They’ve Joined Republicans to Push Through a Compromise Funding Bill. This Deal, if Passed by the House, Will Reopen the Government Through January, Restore Full-year Funding to Some Key Programs and Crucially, Bring Back Pay to More Than a Million Federal Employees, Who Have Been Unpaid Since October 1.


US Government Shutdown: Senate Compromise Could End Record Shutdown 

While US President Donald Trump speaks highly of a ‘growing’ economy, economists are split on its shape. For many, the k-shaped reference seems apt, where the majority of wealth is parked with the richest. What are the long-term implications of this uneven growth? Take a look at this report for more.


US Economic Divide Deepens Across Jobs, Spending, & Markets

U.S.: A looming U.S. Government shutdown could deal a major blow to the release of key economic data, Including the September jobs report and trade figures. Just as markets and policy makers are closely watching every sign of how the economy is performing.


U.S.: Shutdown Threat Halts Key U.S. Economic Data Releases 

U.S. Economy: The U.S. Fed restarted its easing cycle after being on the sidelines since December last year. But will it make a difference? In this report, we deep dive into what investors will watch in the week ahead. Take a look. 

U.S. Economy: Which U.S. Economic Indicators Seem Pointless Now?

US Economy:  A new indicator is suggesting that the U.S. Economy is under strain. And this time it is cardboard boxes that are making the announcement.


US Economy: Is The U.S. Approaching a Recession?

The US national debt is now at a record $37 trillion, the highest in the world. Despite this colossal burden, the United States remains the largest global economy. How is this possible? The answer lies in a combination of US economic growth, the unique role of the US dollar in global financial system, and the structure of its debt. But how long can this party last? Let's find out.<h2>Why the US owes more than it earns: Where does debt come from?</h2>The US debt-to-GDP ratio has climbed above 119 per cent, meaning the country owes more than its entire annual economic output. By mid-2025, the US GDP stood at around $30.3 trillion. Debt is increasing rapidly, meanwhile—by about $1 trillion every five months—making consistent economic growth essential to managing this load.Of the $37 trillion, nearly $24.4 trillion is public debt owed to private investors, mutual funds, and foreign governments. Approximately $7.3 trillion consists of intragovernmental holdings, such as Social Security and Medicare trust funds. The Federal Reserve, the US central bank, holds about $4.6 trillion in US Treasuries, part of its monetary policy operations.<a href="https://www.wionews.com/videos/trumps-fed-rate-demand-trump-urges-powell-to-cut-rates-amid-falling-prices-9068849/embed">https://www.wionews.com/videos/trumps-fed-rate-demand-trump-urges-powell-to-cut-rates-amid-falling-prices-9068849/embed</a><h2>Who are the main foreign holders of US debt?</h2>Japan is the largest foreign creditor with roughly $1.1 trillion in US debt holdings, followed by the UK ($809 billion), China ($756 billion), the Cayman Islands ($455 billion), and Canada ($426 billion). These countries invest heavily in US debt because the US dollar is the world’s primary reserve currency, and US Treasury securities are considered among the safest and most stable investments worldwide.<h2>The rising interest costs challenge the US budget</h2>Interest payments on the debt are increasingly straining the US budget. In fiscal year 2024, net interest costs reached nearly $880 billion—more than the government spends on Medicare or defence. Average interest rates on government borrowing have more than doubled in recent years, rising from around 1.6 per cent in 2022 to 3.35 per cent by mid-2025. This rise has prompted Moody’s to downgrade the US credit outlook, citing growing deficits and debt.Also read: <a href="https://www.wionews.com/world/trump-s-fed-interference-poses-serious-danger-to-world-economy-warns-ecb-chief-christine-lagarde-1756735770893">Trump’s Fed interference poses ‘serious danger’ to world economy, warns ECB chief Christine Lagarde</a><h2>Why the US economy remains dominant</h2>The global demand for US dollars and Treasury securities underpins America’s economic strength in spite of its public debt. The dollar’s role as the primary reserve currency allows the US government to borrow at relatively low interest rates and continuously re-finance its debt. Investors worldwide see US debt as a safe, liquid asset.US GDP growth has been steady, helping to prevent the debt-to-GDP ratio from worsening despite rising debt. Much of the public debt is also held domestically—in pension funds, mutual funds, and financial institutions—reducing reliance on foreign creditors.Also read: <a href="https://www.wionews.com/world/-will-bring-america-back-to-brink-of-economic-catastrophe-trump-administration-urges-supreme-court-to-allow-tariff-imposition-1756992990632">'Will bring America back to brink of economic catastrophe’: Trump administration urges Supreme Court to allow tariff imposition</a><h2>US economic resilience amid challenges: Risks and projections&nbsp;</h2>The US economy has demonstrated remarkable resilience, successfully navigating the 2008 financial crisis and the COVID-19 pandemic with effective fiscal and monetary stimulus measures that stabilised markets and restored growth.However, risks remain. The Congressional Budget Office projects that public debt could rise from 99 per cent of GDP in 2024 to 116 per cent by 2034, potentially reaching 172 per cent by 2054 if current trends continue. Some forecasts suggest debt could hit 130 per cent of GDP over the next decade without significant policy reforms.Consultancy firm EY warns that unchecked debt growth could reduce economic output by $340 billion by 2035, lead to 1.2 million job losses, cut private investment by nearly 14 per cent, and suppress wages.Also read: <a href="https://www.wionews.com/world/us-economy-staring-at-recession-global-investment-bank-puts-risk-at-93-here-s-why-1756971115068">US economy staring at recession? Global investment bank puts risk at 93%. Here's why</a><h2>Can the US sustain its debt?</h2>A sudden collapse under the debt burden is unlikely, but concerns persist. The US financial system remains one of the most credible globally, but credit rating agencies and investors are closely monitoring the country’s fiscal health. The critical question is whether the US government can manage its debt without undermining its economic leadership.For now, America’s unique position as the issuer of the world’s primary reserve currency, its ongoing economic growth, and deep financial markets allow it to maintain global dominance. However, the future depends on prudent fiscal management to prevent the debt from becoming a significant drag on economic progress.

The US holds $37 trillion in national debt, the highest globally, yet remains the world's largest economy. But just how? The strong trust in and demand for the US dollar, steady GDP growth and investor trust in Treasury securities are the answers. How long can this go on?



The US national debt is now at a record $37 trillion, the highest in the world. Despite this colossal burden, the United States remains the largest global economy. How is this possible? The answer lies in a combination of US economic growth, the unique role of the US dollar in global financial system, and the structure of its debt. But how long can this party last? Let's find out. Why the US owes more than it earns: Where does debt come from? The US debt-to-GDP ratio has climbed above 119 per cent, meaning the country owes more than its entire annual economic output. By mid-2025, the US GDP stood at around $30.3 trillion. Debt is increasing rapidly, meanwhile—by about $1 trillion every five months—making consistent economic growth essential to managing this load. Of the $37 trillion, nearly $24.4 trillion is public debt owed to private investors, mutual funds, and foreign governments. Approximately $7.3 trillion consists of intragovernmental holdings, such as Social Security and Medicare trust funds. The Federal Reserve, the US central bank, holds about $4.6 trillion in US Treasuries, part of its monetary policy operations. https://www.wionews.com/videos/trumps-fed-rate-demand-trump-urges-powell-to-cut-rates-amid-falling-prices-9068849/embed Who are the main foreign holders of US debt? Japan is the largest foreign creditor with roughly $1.1 trillion in US debt holdings, followed by the UK ($809 billion), China ($756 billion), the Cayman Islands ($455 billion), and Canada ($426 billion). These countries invest heavily in US debt because the US dollar is the world’s primary reserve currency, and US Treasury securities are considered among the safest and most stable investments worldwide. The rising interest costs challenge the US budget Interest payments on the debt are increasingly straining the US budget. In fiscal year 2024, net interest costs reached nearly $880 billion—more than the government spends on Medicare or defence. Average interest rates on government borrowing have more than doubled in recent years, rising from around 1.6 per cent in 2022 to 3.35 per cent by mid-2025. This rise has prompted Moody’s to downgrade the US credit outlook, citing growing deficits and debt. Also read: Trump’s Fed interference poses ‘serious danger’ to world economy, warns ECB chief Christine Lagarde Why the US economy remains dominant The global demand for US dollars and Treasury securities underpins America’s economic strength in spite of its public debt. The dollar’s role as the primary reserve currency allows the US government to borrow at relatively low interest rates and continuously re-finance its debt. Investors worldwide see US debt as a safe, liquid asset. US GDP growth has been steady, helping to prevent the debt-to-GDP ratio from worsening despite rising debt. Much of the public debt is also held domestically—in pension funds, mutual funds, and financial institutions—reducing reliance on foreign creditors. Also read: 'Will bring America back to brink of economic catastrophe’: Trump administration urges Supreme Court to allow tariff imposition US economic resilience amid challenges: Risks and projections The US economy has demonstrated remarkable resilience, successfully navigating the 2008 financial crisis and the COVID-19 pandemic with effective fiscal and monetary stimulus measures that stabilised markets and restored growth. However, risks remain. The Congressional Budget Office projects that public debt could rise from 99 per cent of GDP in 2024 to 116 per cent by 2034, potentially reaching 172 per cent by 2054 if current trends continue. Some forecasts suggest debt could hit 130 per cent of GDP over the next decade without significant policy reforms. Consultancy firm EY warns that unchecked debt growth could reduce economic output by $340 billion by 2035, lead to 1.2 million job losses, cut private investment by nearly 14 per cent, and suppress wages. Also read: US economy staring at recession? Global investment bank puts risk at 93%. Here's why Can the US sustain its debt? A sudden collapse under the debt burden is unlikely, but concerns persist. The US financial system remains one of the most credible globally, but credit rating agencies and investors are closely monitoring the country’s fiscal health. The critical question is whether the US government can manage its debt without undermining its economic leadership. For now, America’s unique position as the issuer of the world’s primary reserve currency, its ongoing economic growth, and deep financial markets allow it to maintain global dominance. However, the future depends on prudent fiscal management to prevent the debt from becoming a significant drag on economic progress.

The US holds $37 trillion in national debt, the highest globally, yet remains the world's largest economy. But just how? The strong trust in and demand for the US dollar, steady GDP growth and investor trust in Treasury securities are the answers. How long can this go on?&nbsp;

Debtor nation: The US owes $37 trillion, world's largest public debt, but still dominates global economy. How?

The US economy could be staring at a recession by the end of 2025 despite some numbers still looking good, according to UBS, the global investment bank. There is a 93% chance of US going into a recession based on “hard data” from May to July 2025. The situation has, however, been told to be “stable but elevated” in terms of the risk.&nbsp;'Historically worrying levels”, is how the UBS described the current situation of the US economy. It pointed towards the inverted yield curve, which shows stress in bond markets. Currently at 23 per cent, it seems steady but increasingly higher than 2025. Another reason for the prediction is the stress in credit markets that puts the probability of recession due to credit metrics at 41 per cent.&nbsp;UBS further said that the economy is soggy but not collapsing. It pointed out that the US economy recovered at the end of 2024 but slipped again in February 2025 and has remained stagnant since then, not declining sharply.&nbsp;Also Read: <a href="https://www.wionews.com/world/google-fined-381-mn-for-predetatory-gmail-advertising-but-it-s-like-toll-tax-for-alphabet-less-than-0-25-pc-of-its-global-revenue-google-monopoly-1756964314254">Google fined $381 mn for predatory Gmail advertising, but it's like toll tax for Alphabet, less than 0.25 pc of its global revenue</a>&nbsp;Despite its track record of identifying recession in the past, the global investment bank has not officially predicted a recession as according to them economic indicators, like jobs or production, are not collapsing below trend, which is a sign of economic collapse.&nbsp;So, according to UBS, the U.S. economy is stuck in slow growth or mild contraction, not a sudden crash. Rather, the the global investment bank expects 2025 to observe “soggy growth”, improving only marginally in 2026. The bank took everything into account like hard data, yield curve, and credit stress before getting to the conclusion of a 52% overall recession probability in July, up from 37% in January. Historically this is an indicator of recession.&nbsp;

The global investment bank pointed out that the US economy recovered at the end of 2024 but slipped again in February 2025 and has remained stagnant

The US economy could be staring at a recession by the end of 2025 despite some numbers still looking good, according to UBS, the global investment bank. There is a 93% chance of US going into a recession based on “hard data” from May to July 2025. The situation has, however, been told to be “stable but elevated” in terms of the risk. 'Historically worrying levels”, is how the UBS described the current situation of the US economy. It pointed towards the inverted yield curve, which shows stress in bond markets. Currently at 23 per cent, it seems steady but increasingly higher than 2025. Another reason for the prediction is the stress in credit markets that puts the probability of recession due to credit metrics at 41 per cent. UBS further said that the economy is soggy but not collapsing. It pointed out that the US economy recovered at the end of 2024 but slipped again in February 2025 and has remained stagnant since then, not declining sharply. Also Read: Google fined $381 mn for predatory Gmail advertising, but it's like toll tax for Alphabet, less than 0.25 pc of its global revenue Despite its track record of identifying recession in the past, the global investment bank has not officially predicted a recession as according to them economic indicators, like jobs or production, are not collapsing below trend, which is a sign of economic collapse. So, according to UBS, the U.S. economy is stuck in slow growth or mild contraction, not a sudden crash. Rather, the the global investment bank expects 2025 to observe “soggy growth”, improving only marginally in 2026. The bank took everything into account like hard data, yield curve, and credit stress before getting to the conclusion of a 52% overall recession probability in July, up from 37% in January. Historically this is an indicator of recession.

The global investment bank pointed out that the US economy recovered at the end of 2024 but slipped again in February 2025 and has remained stagnant

US economy staring at recession? Global investment bank puts risk at 93%. Here's why

The global economy is at a crossroads with US consumers still spending, China slowing down, and Britain posting a surprise rebound. From inflationary pressures in America to tariff headwinds in Asia and labour shortages in Europe, the week’s data paints a mixed picture of resilience and strain. US retail sales rose for the second straight month in July, marking the first back-to-back advance this year. The data eased fears of a sharp pullback in spending, even as households remain wary of higher prices from potential tariff-driven inflation.&nbsp;As per Bloomberg, the July gains were broad-based and the previous month’s numbers were revised upward. Still, economists caution that weakening consumer sentiment and a softening jobs market could weigh on future demand. At the same time, inflation showed signs of quickening. Underlying US inflation accelerated in July at the fastest pace since the start of 2025, fuelled by services such as airfares. While goods prices rose only modestly, Bloomberg noted that the surge in services pushed the core Consumer Price Index higher, raising questions about whether tariffs could add further inflationary pressure.<h2>Housing affordability crisis deepens</h2>Beyond retail spending, US households are also grappling with worsening housing affordability. According to Bloomberg, buying a home has become significantly more expensive than renting across America’s largest cities. The imbalance stems from limited new construction since the 2008 financial crisis, a “lock-in effect” with homeowners holding onto low-rate mortgages, and regulatory policies that have made both building and buying more costly.<h2>China slows as tariffs bite</h2>China’s economy slowed across the board in July, with factory activity, investment, and retail sales all underperforming. Bloomberg reported that Beijing’s crackdown on destructive price wars, coupled with the impact of higher US tariffs, has weighed heavily on growth. The urban unemployment rate climbed to 5.2 per cent, while outstanding loans contracted for the first time since 2005, a worrying signal of credit stress.&nbsp;India too faces tariff-related pressures. A proposed 50 per cent US duty on imports would be the highest rate imposed on any Asian country. Bloomberg highlighted that such a move could threaten Prime Minister Narendra Modi’s decade-long “Make in India” campaign. Despite government efforts, manufacturing’s share of India’s economy has fallen from 16 per cent in 2015 to 13 per cent last year, according to World Bank data.<h2>UK economy delivers a surprise</h2>Across the Atlantic, Britain’s economy outperformed expectations in the second quarter. The stronger growth offered some relief for Chancellor Rachel Reeves but also complicated the Bank of England’s decision-making.&nbsp;Bloomberg reported that Britain’s labour market appears to be stabilising. Payrolls declined by 8,353 in July, but this was the smallest drop since January, suggesting the worst of the jobs downturn may have passed. For the Bank of England, however, this improvement raises the bar for further interest-rate cuts.<h2>Russia struggles with war economy strains</h2>Russia’s economy is showing signs of strain despite heavy government spending. Bloomberg reported that oil revenues have slumped, the budget deficit has widened to its largest in more than three decades, and inflation alongside interest rates remain painfully high.&nbsp;Behind the scenes, some insiders in Russia’s financial sector are warning of a looming debt crisis, exposing cracks in President Vladimir Putin’s war economy.<h2>Germany faces skills shortage</h2>In Europe’s largest economy, Germany is confronting a deepening skills gap. Bloomberg cited a survey by the German Chamber of Commerce and Industry showing that nearly half of companies offering vocational training in 2024 were unable to fill all positions. Worse, over one-third received no applications at all.&nbsp;With one in three trainees quitting before finishing, businesses are finding it increasingly difficult to hire qualified staff, a trend that could weigh on Germany’s long-term competitiveness.<h2>Emerging markets: Brazil’s inflation eases</h2>Elsewhere, Brazil provided some relief. Inflation fell more than expected in July, according to Bloomberg, helping consumers. But with borrowing costs still near record highs, the central bank is expected to maintain its restrictive stance for now.<h2>Trump reshaping the dollar’s dominance</h2>Beyond individual economies, the global financial order itself is under strain. Bloomberg noted that President Donald Trump’s push to redesign trade rules and tariffs in favour of the US is testing one of the cornerstones of post-war stability: the dollar’s status as the world’s reserve currency.&nbsp;While the dollar remains dominant, efforts by countries like China and Russia to diversify away from it, coupled with America’s more protectionist stance, have raised questions about whether this supremacy can be sustained.&nbsp;The latest data, as per Bloomberg, highlights a world economy where the US still shows resilience, but cracks are widening elsewhere, from China’s slowdown and Russia’s fiscal strains to Europe’s labour shortages. Against this backdrop, global markets remain sensitive to the policy shifts in Washington, Beijing, and London.&nbsp;(With inputs from the agencies)&nbsp;

At the same time, Trump’s tariff-driven trade strategy is testing the dollar’s reserve currency dominance, leaving markets sensitive to policy shifts in Washington, Beijing, and beyond.

The global economy is at a crossroads with US consumers still spending, China slowing down, and Britain posting a surprise rebound. From inflationary pressures in America to tariff headwinds in Asia and labour shortages in Europe, the week’s data paints a mixed picture of resilience and strain. US retail sales rose for the second straight month in July, marking the first back-to-back advance this year. The data eased fears of a sharp pullback in spending, even as households remain wary of higher prices from potential tariff-driven inflation. As per Bloomberg, the July gains were broad-based and the previous month’s numbers were revised upward. Still, economists caution that weakening consumer sentiment and a softening jobs market could weigh on future demand. At the same time, inflation showed signs of quickening. Underlying US inflation accelerated in July at the fastest pace since the start of 2025, fuelled by services such as airfares. While goods prices rose only modestly, Bloomberg noted that the surge in services pushed the core Consumer Price Index higher, raising questions about whether tariffs could add further inflationary pressure. Housing affordability crisis deepens Beyond retail spending, US households are also grappling with worsening housing affordability. According to Bloomberg, buying a home has become significantly more expensive than renting across America’s largest cities. The imbalance stems from limited new construction since the 2008 financial crisis, a “lock-in effect” with homeowners holding onto low-rate mortgages, and regulatory policies that have made both building and buying more costly. China slows as tariffs bite China’s economy slowed across the board in July, with factory activity, investment, and retail sales all underperforming. Bloomberg reported that Beijing’s crackdown on destructive price wars, coupled with the impact of higher US tariffs, has weighed heavily on growth. The urban unemployment rate climbed to 5.2 per cent, while outstanding loans contracted for the first time since 2005, a worrying signal of credit stress. India too faces tariff-related pressures. A proposed 50 per cent US duty on imports would be the highest rate imposed on any Asian country. Bloomberg highlighted that such a move could threaten Prime Minister Narendra Modi’s decade-long “Make in India” campaign. Despite government efforts, manufacturing’s share of India’s economy has fallen from 16 per cent in 2015 to 13 per cent last year, according to World Bank data. UK economy delivers a surprise Across the Atlantic, Britain’s economy outperformed expectations in the second quarter. The stronger growth offered some relief for Chancellor Rachel Reeves but also complicated the Bank of England’s decision-making. Bloomberg reported that Britain’s labour market appears to be stabilising. Payrolls declined by 8,353 in July, but this was the smallest drop since January, suggesting the worst of the jobs downturn may have passed. For the Bank of England, however, this improvement raises the bar for further interest-rate cuts. Russia struggles with war economy strains Russia’s economy is showing signs of strain despite heavy government spending. Bloomberg reported that oil revenues have slumped, the budget deficit has widened to its largest in more than three decades, and inflation alongside interest rates remain painfully high. Behind the scenes, some insiders in Russia’s financial sector are warning of a looming debt crisis, exposing cracks in President Vladimir Putin’s war economy. Germany faces skills shortage In Europe’s largest economy, Germany is confronting a deepening skills gap. Bloomberg cited a survey by the German Chamber of Commerce and Industry showing that nearly half of companies offering vocational training in 2024 were unable to fill all positions. Worse, over one-third received no applications at all. With one in three trainees quitting before finishing, businesses are finding it increasingly difficult to hire qualified staff, a trend that could weigh on Germany’s long-term competitiveness. Emerging markets: Brazil’s inflation eases Elsewhere, Brazil provided some relief. Inflation fell more than expected in July, according to Bloomberg, helping consumers. But with borrowing costs still near record highs, the central bank is expected to maintain its restrictive stance for now. Trump reshaping the dollar’s dominance Beyond individual economies, the global financial order itself is under strain. Bloomberg noted that President Donald Trump’s push to redesign trade rules and tariffs in favour of the US is testing one of the cornerstones of post-war stability: the dollar’s status as the world’s reserve currency. While the dollar remains dominant, efforts by countries like China and Russia to diversify away from it, coupled with America’s more protectionist stance, have raised questions about whether this supremacy can be sustained. The latest data, as per Bloomberg, highlights a world economy where the US still shows resilience, but cracks are widening elsewhere, from China’s slowdown and Russia’s fiscal strains to Europe’s labour shortages. Against this backdrop, global markets remain sensitive to the policy shifts in Washington, Beijing, and London. (With inputs from the agencies)

Fresh economic data paints a mixed global picture: US retail sales rose for a second month in July, easing slowdown fears even as inflation quickened and housing affordability worsened.

US retail sales surprise on upside, China stumbles in tariff-hit economy

US President Donald Trump is weighing a lawsuit against Federal Reserve Chair Jerome Powell, accusing him of gross mismanagement in a multi-billion-dollar renovation of the central bank’s Washington headquarters. The move marks a new escalation in Trump’s pressure campaign on the Fed to cut interest rates, according to Reuters.<h2>White House flags renovation cost overruns</h2>White House spokeswoman Karoline Leavitt confirmed on August 12 that the administration is investigating the renovation of two historic Federal Reserve buildings. Officials allege poor oversight, inflated expenses, and unnecessary luxury additions have driven costs far above initial estimates.&nbsp;When the project began, the Fed expected it to cost $1.9 billion. Updated figures now put the budget at $2.4 billion, a nearly $500 million increase. The central bank says this is due to higher labour and materials costs, asbestos abatement, and other unforeseen construction challenges, as per Fed documents cited by Reuters.&nbsp;Trump personally toured the site last month, a rare presidential visit to the Fed, and repeated his accusations directly to Powell. He also used the meeting to push for rate cuts.<h2>Trump’s social media blast</h2>On Truth Social, Trump referred to Powell as “Jerome ‘Too Late’ Powell” and renewed his call for immediate rate cuts. He accused Powell of overseeing “a horrible, and grossly incompetent” construction job that ballooned into a “three billion dollar” project when it should have been a $50 million fix.“Fortunately, the economy is sooo good that we’ve blown through Powell and the complacent Board,” Trump wrote. “I am considering allowing a major lawsuit against Powell to proceed.”

The White House has not confirmed which specific lawsuit Trump was referring to, but Bloomberg reports the statement appears linked to ongoing legal reviews of the renovation contracts.<h2>Legal and policy backdrop</h2>While presidents cannot remove a Fed chair over policy disagreements, per a recent Supreme Court opinion,Trump’s legal team appears to be exploring alternative channels, such as potential negligence or fraud claims tied to the construction. The dispute comes as Trump seeks aggressive rate cuts ahead of the Fed’s September 16–17 policy meeting. Market bets now suggest an 85% probability of a rate cut, according to Reuters, after data showed core US inflation edged higher in July but goods prices rose more slowly, tempering tariff-driven price pressures.&nbsp;Trump has argued that lower rates would reduce the federal government’s debt servicing costs, even as he insists the economy is strong thanks to his tax, trade, and immigration policies. The Federal Reserve’s headquarters renovation, initially set at $1.9 billion, aimed to modernise two historic Washington buildings while preserving architectural heritage. However, by 2025, the projected cost has surged to $2.4 billion. The Fed attributes this to market-driven labour and material price hikes, unexpected asbestos removal, and logistical challenges inherent in working with protected structures.&nbsp;Trump’s estimate of $50 million that reflects what he claims would have been sufficient for a “basic fix-up,” suggesting the bulk of the spending is excessive. His “$3 billion” figure, while not reflected in official Fed numbers, underscores his accusation of waste and mismanagement. These competing narratives form the core of the legal and political battle over the project’s legitimacy.&nbsp;(With inputs from the agencies)&nbsp;

Trump criticised Powell, calling for immediate rate cuts, and labelled the construction efforts as grossly incompetent. Although presidents cannot remove a Fed chair for policy disagreements, Trump legal team may pursue negligence or fraud claims related to the construction mismanagement.

US President Donald Trump is weighing a lawsuit against Federal Reserve Chair Jerome Powell, accusing him of gross mismanagement in a multi-billion-dollar renovation of the central bank’s Washington headquarters. The move marks a new escalation in Trump’s pressure campaign on the Fed to cut interest rates, according to Reuters. White House flags renovation cost overruns White House spokeswoman Karoline Leavitt confirmed on August 12 that the administration is investigating the renovation of two historic Federal Reserve buildings. Officials allege poor oversight, inflated expenses, and unnecessary luxury additions have driven costs far above initial estimates. When the project began, the Fed expected it to cost $1.9 billion. Updated figures now put the budget at $2.4 billion, a nearly $500 million increase. The central bank says this is due to higher labour and materials costs, asbestos abatement, and other unforeseen construction challenges, as per Fed documents cited by Reuters. Trump personally toured the site last month, a rare presidential visit to the Fed, and repeated his accusations directly to Powell. He also used the meeting to push for rate cuts. Trump’s social media blast On Truth Social, Trump referred to Powell as “Jerome ‘Too Late’ Powell” and renewed his call for immediate rate cuts. He accused Powell of overseeing “a horrible, and grossly incompetent” construction job that ballooned into a “three billion dollar” project when it should have been a $50 million fix. “Fortunately, the economy is sooo good that we’ve blown through Powell and the complacent Board,” Trump wrote. “I am considering allowing a major lawsuit against Powell to proceed.”

President Trump is considering a lawsuit against Federal Reserve Chair Jerome Powell over alleged mismanagement of a costly renovation project for the Fed’s Washington headquarters.&nbsp;

Trump mulls lawsuit against Fed’s Powell over costly headquarters renovation

US President Donald Trump has launched a fresh attack on Wall Street, this time targeting Goldman Sachs CEO David Solomon over the bank’s assessment of his tariff policies. In a post on his Truth Social account, quoted by Reuters, Trump claimed that tariffs have been a boon for the US economy, insisting they have brought in “trillions of dollars” without stoking inflation. He accused Solomon and his team of making “a bad prediction” on the economic effects of tariffs, and suggested the Goldman chief “focus on being a DJ” rather than running a major financial institution.<h2>The trigger: Goldman’s tariff analysis</h2>While Trump did not specify which research note he was referring to, Reuters reports that Goldman Sachs has consistently taken a bearish view on tariffs. In its latest note, chief economist Jan Hatzius said US consumers had absorbed 22 per cent of tariff costs through June, a figure that could rise to 67 per cent if recent levies continue on their current trajectory.&nbsp;Goldman has also warned that sweeping tariffs could weigh on global growth and push the US Federal Reserve to cut interest rates more aggressively than expected. Hatzius&nbsp;declined to comment when contacted by Reuters, and a Goldman Sachs spokesperson also offered no response to Trump’s remarks.<h2>Trump responds&nbsp;</h2>In his Truth Social post, Trump doubled down on his argument that the burden of tariffs falls largely on foreign companies and governments rather than US consumers.&nbsp;“It has been shown that, for the most part, consumers aren’t even paying these tariffs, it is mostly companies and governments, many of them foreign, picking up the tabs,” Trump wrote.&nbsp;

&nbsp;Since February 1, when Trump intensified his trade war by imposing levies on imports from Mexico, Canada, and China, at least 333 companies worldwide have reacted to tariffs in some way, according to a Reuters tracker.<h2>Tariffs: Economic weapon or consumer cost?</h2>Tariffs are taxes on imported goods, usually intended to protect domestic industries or influence trade terms. Their cost distribution depends on global supply chains, market demand, and pricing strategies.According to Reuters’ global tariff tracker, companies reported a combined financial hit of $13.6 billion to $15.2 billion between July 16 and August 8 for the full year from Trump’s tariffs.Economists remain divided:<ul><li>Trump’s view:&nbsp;Tariffs are filling US Treasury coffers, strengthening the stock market, and not causing inflation.</li><li>Goldman and others: The costs are being shared by businesses and consumers, and sustained tariffs could slow growth.</li></ul><h2>Broader corporate tension over tariffs</h2>Trump’s criticism of Goldman Sachs comes amid a broader pattern of presidential rebukes aimed at corporate leaders. He has previously criticised:<ul><li>JPMorgan Chase and Bank of America over alleged “debanking” of individuals.</li><li>Intel CEO Lip Bu-Tan over ties to Chinese firms.</li><li>Apple’s Tim Cook for manufacturing iPhones outside the US</li><li>Amazon for considering listing prices that reflect tariff costs (an idea the company later abandoned).</li><li>A senior JPMorgan Asset Management strategist told Reuters earlier this year that he had toned down his public comments on tariffs due to concerns about internal and external repercussions.</li></ul><h2>US economics backdrop</h2>The clash comes as new data shows US consumer prices rose moderately in July. According to Reuters, costs for services such as airline fares and tariff-sensitive goods like household furniture pushed a measure of underlying inflation to its largest six-month gain.&nbsp;Despite the uptick, markets expect the Federal Reserve to cut interest rates in September amid weakening labour market conditions. But economists warn that the inflationary effects of Trump’s tariffs may still be working through the system, especially as firms sell off pre-tariff inventory.<h2>Political turmoil&nbsp;</h2>Reuters also notes that concerns about data quality are rising after staffing cuts and the suspension of data collection for parts of the Consumer Price Index in some areas. These concerns intensified following the firing of BLS chief Erika McEntarfer earlier this month after weak job growth data in July.&nbsp;Trump has nominated E.J. Antoni, a Heritage Foundation economist and critic of the BLS, to lead the statistics agency. Antoni previously contributed to “Project 2025,” a conservative plan to overhaul the US federal government.&nbsp;(With inputs from the agencies)&nbsp;&nbsp;

Trump argued that the tariff burden mostly falls on foreign companies rather than US consumers. Goldman Sachs analysis indicated that US consumers have absorbed a significant portion of tariff costs and warned that continued tariffs could slow growth

US President Donald Trump has launched a fresh attack on Wall Street, this time targeting Goldman Sachs CEO David Solomon over the bank’s assessment of his tariff policies. In a post on his Truth Social account, quoted by Reuters, Trump claimed that tariffs have been a boon for the US economy, insisting they have brought in “trillions of dollars” without stoking inflation. He accused Solomon and his team of making “a bad prediction” on the economic effects of tariffs, and suggested the Goldman chief “focus on being a DJ” rather than running a major financial institution. The trigger: Goldman’s tariff analysis While Trump did not specify which research note he was referring to, Reuters reports that Goldman Sachs has consistently taken a bearish view on tariffs. In its latest note, chief economist Jan Hatzius said US consumers had absorbed 22 per cent of tariff costs through June, a figure that could rise to 67 per cent if recent levies continue on their current trajectory. Goldman has also warned that sweeping tariffs could weigh on global growth and push the US Federal Reserve to cut interest rates more aggressively than expected. Hatzius declined to comment when contacted by Reuters, and a Goldman Sachs spokesperson also offered no response to Trump’s remarks. Trump responds In his Truth Social post, Trump doubled down on his argument that the burden of tariffs falls largely on foreign companies and governments rather than US consumers. “It has been shown that, for the most part, consumers aren’t even paying these tariffs, it is mostly companies and governments, many of them foreign, picking up the tabs,” Trump wrote.

President Trump criticised Goldman Sachs CEO David Solomon over the bank's negative assessment of his tariff policies, stating that tariffs had positively impacted the US economy.

Trump hits out at Goldman Sachs CEO over tariff research

The US economy is showing signs of strain as the effects of President Donald Trump’s trade policies begin to make their mark. After months of uncertainty surrounding the administration’s sweeping tariffs, key consumer goods are starting to feel the pressure of higher import costs. As the tariff-induced price hikes gradually filter down to everyday products, economists are raising concerns about the long-term impact on household budgets and economic growth. While the broader economy has remained resilient, the growing costs of items like appliances, clothing, and electronics have pushed inflation to its highest level in four months, leading many to question how much longer the US can power through these pressures.Inflation in the United States spiked in June, with the consumer price index (CPI) rising by 0.3 per cent, marking the largest monthly gain since January, according to the data released by the Labor Department's Bureau of Labor Statistics on July 15. This pushed the annual inflation rate to 2.7 per cent, up from 2.4 per cent in May, in line with economists’ expectations. However, the most important thing to be noted here is that the increase in prices is being largely driven by goods exposed to tariffs, including appliances, clothing, and electronics, signalling a potential for sustained inflationary pressures.<h2>Tariff-driven inflation gains momentum</h2>The most recent CPI data provides a clear indication that tariffs imposed by President Trump’s administration are beginning to reach the consumers. While inflation had remained subdued in earlier months due to inventory stockpiles and declining energy prices, economists now warn that the full effects of these tariffs, especially on imports from China, are becoming increasingly visible in consumer goods prices.In particular, the costs for goods like appliances, sporting goods, toys, and apparel have risen sharply. Prices for appliances jumped by 1.9 per cent in June, marking the largest monthly increase since the pandemic’s peak in 2020. Similarly, toys saw a 1.4 per cent increase in June, continuing a trend from earlier in the year. The tariffs on steel and aluminium, which now apply to a wide array of derivative products such as washing machines, refrigerators, and dryers, have contributed significantly to these price hikes.Experts note that these increases are likely just the beginning, and the full impact of these tariffs may not be felt immediately due to businesses’ prior stockpiling of goods, but it will gradually show up on store shelves. Economists predict that the prices of imported goods will continue to rise throughout the year, potentially keeping overall inflation elevated.<h2>Labour market and consumer spending</h2>Despite the uptick in inflation, the broader economy has shown resilience. Employment data still points to job creation, and consumer spending remains relatively strong. On July 15, several of the largest US banks reported better-than-expected quarterly earnings, bolstered by steady demand for consumer loans and credit card spending. However, concerns are growing that inflation may start to affect consumer behaviour, especially for middle-income households.One concerning trend is the slowing growth in industries heavily reliant on immigrant labour, which could be linked to the ongoing immigration crackdown. A shrinking foreign-born labour force since March has contributed to slower job growth in sectors such as construction and hospitality. This trend has made it harder for businesses to fill low-wage positions, which could begin to weigh on overall employment figures in the coming months.In addition, some analysts are observing signs of spending weakness among lower-income Americans, with major banks such as JPMorgan noting declines in consumer confidence in certain income groups. However, spending patterns show that wealthier Americans are still thriving, propping up overall consumer demand and helping to cushion the economy against more significant downturns.The Yale Budget Lab recently estimated that tariffs have increased the average effective tariff rate on imported goods to 20.6 per cent, the highest level since 1910. While these tariffs are not immediately causing widespread price increases, Americans could face an effective $2,800 hit in annual household income due to higher costs on goods such as clothing, electronics, and furniture.<h2>Federal Reserve's dilemma</h2>The growing inflationary pressures come at a time when the Federal Reserve is caught in a delicate balancing act between fighting inflation and supporting economic growth. The June CPI data adds another layer of complexity to the Fed’s decision-making, especially as the central bank contemplates whether to continue interest rate cuts.While the core inflation—which excludes food and energy—rose 2.9 per cent over the past year, the increase was less severe than expected, suggesting that services inflation remains relatively subdued. Housing-related costs, such as rent and home prices, have cooled off, and prices for airfares and hotel rates were weak, possibly reflecting a pullback in discretionary spending. These factors could mitigate some of the pressures from the rising prices of goods.Some economists have noted that even though the CPI was in line with forecasts, the rise in inflation in June suggests that the Fed may pause its interest rate cuts. However, other experts suggested that the Fed may need to remain cautious, noting that there is strain on the middle-class consumer and calling for some relief to support household spending.As the Federal Reserve mulls over its next steps, some expect a rate cut later this year to help relieve financial pressures on middle-income families. But this raises the question of how much longer the US economy can maintain its growth trajectory under the weight of rising costs.<h2>Uncertainty and economic resilience</h2>With a number of economic inputs seeing price hikes and wage growth slowing, the outlook for the second half of the year remains uncertain. The stock market continues to perform well, with major indices hovering near all-time highs, but Treasury yields have risen sharply, with the 30-year bond yield surpassing 5 per cent for the first time since May. This signals growing concerns about long-term economic stability.The full impact of Trump’s trade war and tariff policies will likely take a few more months to fully materialise, but analysts caution that price increases could become a persistent feature in the economy. It’s clear that while the US economy has shown resilience so far, a prolonged period of rising inflation could become a significant challenge for policymakers, businesses, and consumers alike.

While the broader US economy has remained resilient, the growing costs of items like appliances, clothing, and electronics have pushed inflation to its highest level in four months, leading many to question how much longer the US can power through these pressures.

The US economy is showing signs of strain as the effects of President Donald Trump’s trade policies begin to make their mark. After months of uncertainty surrounding the administration’s sweeping tariffs, key consumer goods are starting to feel the pressure of higher import costs. As the tariff-induced price hikes gradually filter down to everyday products, economists are raising concerns about the long-term impact on household budgets and economic growth. While the broader economy has remained resilient, the growing costs of items like appliances, clothing, and electronics have pushed inflation to its highest level in four months, leading many to question how much longer the US can power through these pressures. Inflation in the United States spiked in June, with the consumer price index (CPI) rising by 0.3 per cent, marking the largest monthly gain since January, according to the data released by the Labor Department's Bureau of Labor Statistics on July 15. This pushed the annual inflation rate to 2.7 per cent, up from 2.4 per cent in May, in line with economists’ expectations. However, the most important thing to be noted here is that the increase in prices is being largely driven by goods exposed to tariffs, including appliances, clothing, and electronics, signalling a potential for sustained inflationary pressures. Tariff-driven inflation gains momentum The most recent CPI data provides a clear indication that tariffs imposed by President Trump’s administration are beginning to reach the consumers. While inflation had remained subdued in earlier months due to inventory stockpiles and declining energy prices, economists now warn that the full effects of these tariffs, especially on imports from China, are becoming increasingly visible in consumer goods prices. In particular, the costs for goods like appliances, sporting goods, toys, and apparel have risen sharply. Prices for appliances jumped by 1.9 per cent in June, marking the largest monthly increase since the pandemic’s peak in 2020. Similarly, toys saw a 1.4 per cent increase in June, continuing a trend from earlier in the year. The tariffs on steel and aluminium, which now apply to a wide array of derivative products such as washing machines, refrigerators, and dryers, have contributed significantly to these price hikes. Experts note that these increases are likely just the beginning, and the full impact of these tariffs may not be felt immediately due to businesses’ prior stockpiling of goods, but it will gradually show up on store shelves. Economists predict that the prices of imported goods will continue to rise throughout the year, potentially keeping overall inflation elevated. Labour market and consumer spending Despite the uptick in inflation, the broader economy has shown resilience. Employment data still points to job creation, and consumer spending remains relatively strong. On July 15, several of the largest US banks reported better-than-expected quarterly earnings, bolstered by steady demand for consumer loans and credit card spending. However, concerns are growing that inflation may start to affect consumer behaviour, especially for middle-income households. One concerning trend is the slowing growth in industries heavily reliant on immigrant labour, which could be linked to the ongoing immigration crackdown. A shrinking foreign-born labour force since March has contributed to slower job growth in sectors such as construction and hospitality. This trend has made it harder for businesses to fill low-wage positions, which could begin to weigh on overall employment figures in the coming months. In addition, some analysts are observing signs of spending weakness among lower-income Americans, with major banks such as JPMorgan noting declines in consumer confidence in certain income groups. However, spending patterns show that wealthier Americans are still thriving, propping up overall consumer demand and helping to cushion the economy against more significant downturns. The Yale Budget Lab recently estimated that tariffs have increased the average effective tariff rate on imported goods to 20.6 per cent, the highest level since 1910. While these tariffs are not immediately causing widespread price increases, Americans could face an effective $2,800 hit in annual household income due to higher costs on goods such as clothing, electronics, and furniture. Federal Reserve's dilemma The growing inflationary pressures come at a time when the Federal Reserve is caught in a delicate balancing act between fighting inflation and supporting economic growth. The June CPI data adds another layer of complexity to the Fed’s decision-making, especially as the central bank contemplates whether to continue interest rate cuts. While the core inflation—which excludes food and energy—rose 2.9 per cent over the past year, the increase was less severe than expected, suggesting that services inflation remains relatively subdued. Housing-related costs, such as rent and home prices, have cooled off, and prices for airfares and hotel rates were weak, possibly reflecting a pullback in discretionary spending. These factors could mitigate some of the pressures from the rising prices of goods. Some economists have noted that even though the CPI was in line with forecasts, the rise in inflation in June suggests that the Fed may pause its interest rate cuts. However, other experts suggested that the Fed may need to remain cautious, noting that there is strain on the middle-class consumer and calling for some relief to support household spending. As the Federal Reserve mulls over its next steps, some expect a rate cut later this year to help relieve financial pressures on middle-income families. But this raises the question of how much longer the US economy can maintain its growth trajectory under the weight of rising costs. Uncertainty and economic resilience With a number of economic inputs seeing price hikes and wage growth slowing, the outlook for the second half of the year remains uncertain. The stock market continues to perform well, with major indices hovering near all-time highs, but Treasury yields have risen sharply, with the 30-year bond yield surpassing 5 per cent for the first time since May. This signals growing concerns about long-term economic stability. The full impact of Trump’s trade war and tariff policies will likely take a few more months to fully materialise, but analysts caution that price increases could become a persistent feature in the economy. It’s clear that while the US economy has shown resilience so far, a prolonged period of rising inflation could become a significant challenge for policymakers, businesses, and consumers alike.

While the broader US economy has remained resilient, the growing costs of items like appliances, clothing, and electronics have pushed inflation to its highest level in four months, leading many to question how much longer the US can power through these pressures.

US economy faces growing pressure as tariffs begin to show impact

United States inflation is expected to show a noticeable uptick in June, with new data likely confirming that President Donald Trump’s sweeping import tariffs are beginning to feed through into consumer prices. Economists told Reuters that the long-anticipated impact of tariffs on inflation had so far been delayed, as companies sold off pre-tariff inventories and hesitated to pass on higher costs.&nbsp;But that cushioning effect is now fading, with price hikes expected to spread more broadly in the coming months. The US Labour Department’s Consumer Price Index (CPI) report, due Tuesday, is forecast to show a 0.3 per cent increase in June, after a subdued 0.1 per cent gain in May, the largest monthly rise since January.<h2>Gasoline and tariff-hit goods push prices higher</h2>According to Reuters, the June CPI rebound is expected to reflect higher petrol prices after four consecutive months of declines, as well as price rises for tariff-sensitive goods such as furniture and recreational items.&nbsp;Sarah House, senior economist at Wells Fargo, told Reuters that, “The June CPI report is likely to show inflation beginning to strengthen again, albeit not enough to alarm Fed officials at this juncture. While inventory front-running has mitigated the need to raise goods prices, it will become increasingly difficult for businesses to absorb higher import duties as pre-tariff stockpiles dwindle". Retailers, including giants like Walmart, have already warned of price increases as the full impact of Trump’s tariff policies begins to bite.<h2>Trump’s tariff plan stokes inflation fears</h2>President Trump last week confirmed that new, higher tariffs will come into effect from August 1, targeting imports from major trading partners including Mexico, Japan, Canada, Brazil and the European Union. Economists say the impact of these new duties will likely extend the period of elevated inflation into the second half of the year.&nbsp;Stephen Stanley, chief US economist at Santander US Capital Markets, told Reuters that, “Anecdotal reports suggest that tariff-related price hikes began to finally grow in frequency in June, but I expect the bulk of the impact to come in July and August.”<h2>Headline and core inflation both warming</h2>For the 12 months through June, annual CPI inflation is forecast to have risen 2.7 per cent, up from 2.4 per cent in May. Core CPI, which excludes volatile food and energy components is also expected to post its biggest monthly increase since January, with a 0.3 per cent rise in June compared to 0.1 per cent in May.&nbsp;Reuters reports that economists see tariff-linked price pressures building in goods categories like consumer electronics, automobiles, and apparel, while services inflation is expected to remain more subdued.<h2>Fed likely to hold rates steady — for now</h2>Despite signs of rising price pressures, most analysts say the Federal Reserve is unlikely to be alarmed just yet. The central bank is widely expected to hold its benchmark overnight interest rate in the 4.25%–4.50% range at its policy meeting later this month. Minutes of the Fed’s June 17–18 meeting, published last week, showed only “a couple” of officials saw scope to cut rates as soon as the late-July meeting.&nbsp;Veronica Clark, an economist at Citigroup, told Reuters that even if goods inflation strengthens, the Fed would likely be reassured by contained services inflation that, “This should keep Fed officials comfortable lowering rates in September even if there is some stronger inflation data in the next few months.”<h2>Outlook: Tariff impact to intensify</h2>Investment bank Goldman Sachs is forecasting core CPI inflation to increase 0.3%–0.4% monthly over the next few months, driven by tariff-related price hikes. However, the bank expects a limited near-term impact on core services inflation.&nbsp;This tariff-fuelled inflation backdrop leaves the Federal Reserve in a tricky spot: wary of cutting rates too quickly and reigniting inflation, but also mindful of slowing economic growth and consumer spending pressures.&nbsp;

Annual CPI inflation is forecast at 2.7%, up from 2.4% in May. While services inflation remains subdued, the Fed is likely to hold rates steady in July, despite signs that the inflationary impact of Trump sweeping trade policy will intensify through the second half of 2025.

United States inflation is expected to show a noticeable uptick in June, with new data likely confirming that President Donald Trump’s sweeping import tariffs are beginning to feed through into consumer prices. Economists told Reuters that the long-anticipated impact of tariffs on inflation had so far been delayed, as companies sold off pre-tariff inventories and hesitated to pass on higher costs. But that cushioning effect is now fading, with price hikes expected to spread more broadly in the coming months. The US Labour Department’s Consumer Price Index (CPI) report, due Tuesday, is forecast to show a 0.3 per cent increase in June, after a subdued 0.1 per cent gain in May, the largest monthly rise since January. Gasoline and tariff-hit goods push prices higher According to Reuters, the June CPI rebound is expected to reflect higher petrol prices after four consecutive months of declines, as well as price rises for tariff-sensitive goods such as furniture and recreational items. Sarah House, senior economist at Wells Fargo, told Reuters that, “The June CPI report is likely to show inflation beginning to strengthen again, albeit not enough to alarm Fed officials at this juncture. While inventory front-running has mitigated the need to raise goods prices, it will become increasingly difficult for businesses to absorb higher import duties as pre-tariff stockpiles dwindle". Retailers, including giants like Walmart, have already warned of price increases as the full impact of Trump’s tariff policies begins to bite. Trump’s tariff plan stokes inflation fears President Trump last week confirmed that new, higher tariffs will come into effect from August 1, targeting imports from major trading partners including Mexico, Japan, Canada, Brazil and the European Union. Economists say the impact of these new duties will likely extend the period of elevated inflation into the second half of the year. Stephen Stanley, chief US economist at Santander US Capital Markets, told Reuters that, “Anecdotal reports suggest that tariff-related price hikes began to finally grow in frequency in June, but I expect the bulk of the impact to come in July and August.” Headline and core inflation both warming For the 12 months through June, annual CPI inflation is forecast to have risen 2.7 per cent, up from 2.4 per cent in May. Core CPI, which excludes volatile food and energy components is also expected to post its biggest monthly increase since January, with a 0.3 per cent rise in June compared to 0.1 per cent in May. Reuters reports that economists see tariff-linked price pressures building in goods categories like consumer electronics, automobiles, and apparel, while services inflation is expected to remain more subdued. Fed likely to hold rates steady — for now Despite signs of rising price pressures, most analysts say the Federal Reserve is unlikely to be alarmed just yet. The central bank is widely expected to hold its benchmark overnight interest rate in the 4.25%–4.50% range at its policy meeting later this month. Minutes of the Fed’s June 17–18 meeting, published last week, showed only “a couple” of officials saw scope to cut rates as soon as the late-July meeting. Veronica Clark, an economist at Citigroup, told Reuters that even if goods inflation strengthens, the Fed would likely be reassured by contained services inflation that, “This should keep Fed officials comfortable lowering rates in September even if there is some stronger inflation data in the next few months.” Outlook: Tariff impact to intensify Investment bank Goldman Sachs is forecasting core CPI inflation to increase 0.3%–0.4% monthly over the next few months, driven by tariff-related price hikes. However, the bank expects a limited near-term impact on core services inflation. This tariff-fuelled inflation backdrop leaves the Federal Reserve in a tricky spot: wary of cutting rates too quickly and reigniting inflation, but also mindful of slowing economic growth and consumer spending pressures.

US inflation rebounded in June as Trump’s tariffs pushed up prices on goods like furniture and electronics. With CPI seen rising 0.3%, the Fed is expected to stay cautious on rate cuts despite mounting pressures.

US inflation set to rise in June as tariffs begin to drive up prices

The cost of copper in the US has surged to unprecedented heights following the announcement of a 50 per cent tariff on imported copper, set to take effect on August 1. This new tariff could exacerbate the already-high prices of the industrial metal, used extensively in sectors such as electronics, construction, and renewable energy. On the day of the announcement, copper prices in the US spiked by 13 per cent, the largest single-day jump since 1989, reaching a record $5.69 per pound. By contrast, prices in global markets saw only minimal increases, underscoring the growing disparity between US copper costs and those in other regions.Copper is vital to a vast array of industries, from home appliances to electric vehicles and semiconductors. The price spike is expected to increase the cost of everyday products for US consumers, including goods like refrigerators, air conditioners, and cars. Construction projects, including those related to infrastructure and housing, are also likely to face higher costs, as copper is a key material in wiring, plumbing, and various industrial applications. The potential ripple effect could drive up overall inflation, further straining the US economy.<h2>Unrealistic expectations for domestic production</h2>While the Trump administration’s aim with the tariff is to reduce reliance on foreign copper and boost domestic production, experts warn that this goal is unrealistic in the short term. The US imports nearly half of its copper, primarily from countries such as Chile, Canada, Peru, and Mexico. However, US mines are not equipped to meet the nation’s copper needs in the near future. Increasing domestic production would require substantial investments in mining infrastructure, which could take years, if not decades, to fully ramp up.The tariff could also inadvertently encourage businesses to seek cheaper alternatives, such as aluminium, which could be used in place of copper in some products, despite its higher long-term maintenance costs. Yet, aluminium is not a perfect substitute, as copper’s superior conductivity makes it crucial for industries like renewable energy, semiconductors, and aerospace, where performance is paramount. As a result, some industries may face higher operational costs as they attempt to pivot, creating inefficiencies and increasing product prices for consumers.<h2>Wider economic consequences</h2>The copper tariff, while aimed at strengthening the US economy by fostering domestic production, is likely to backfire in several areas. The most immediate consequence will be price inflation for consumers. Everything from home repairs to new cars could become more expensive as companies pass along their increased costs. This price hike is also expected to affect industries like electric vehicles (EVs), where copper is a crucial component in batteries and wiring.Additionally, industries dependent on copper for infrastructure projects, such as utilities and renewable energy companies, will see rising operational costs. Projects related to energy generation and distribution could be delayed or scaled back due to the increased cost of materials, further straining the US energy grid and impeding progress toward clean energy goals. In sectors like aerospace and defence, where copper is used in everything from aircraft to missile defence systems, the increased costs could hinder innovation and project timelines.The tariff also places a significant burden on US consumers who will bear the brunt of higher prices, particularly in a country where inflation is already a concern. The added cost of everything from home appliances to EVs will strain household budgets, particularly for lower-income Americans.<h2>The long-term picture</h2>In the long term, the success of Trump's tariff strategy hinges on the ability of US manufacturers to ramp up domestic production. However, experts caution that such an outcome is not realistic in the near term. Copper mining is a complex and capital-intensive industry, and even if new mines are developed, it will take years to reach a scale that meets US demand. In the meantime, companies will likely seek workarounds, such as moving production overseas or investing in alternative materials.As global copper prices remain relatively stable, the US faces a stark contrast in pricing. The disparity between US and international copper prices could make US products less competitive on the global stage, further widening the trade imbalance. Ultimately, while the tariff may have been designed to bolster US production, it risks damaging the broader economy in the process.

While the Trump administration’s aim with the tariff is to reduce reliance on foreign copper and boost domestic production, experts warn that this goal is unrealistic in the short term. 

The cost of copper in the US has surged to unprecedented heights following the announcement of a 50 per cent tariff on imported copper, set to take effect on August 1. This new tariff could exacerbate the already-high prices of the industrial metal, used extensively in sectors such as electronics, construction, and renewable energy. On the day of the announcement, copper prices in the US spiked by 13 per cent, the largest single-day jump since 1989, reaching a record $5.69 per pound. By contrast, prices in global markets saw only minimal increases, underscoring the growing disparity between US copper costs and those in other regions. Copper is vital to a vast array of industries, from home appliances to electric vehicles and semiconductors. The price spike is expected to increase the cost of everyday products for US consumers, including goods like refrigerators, air conditioners, and cars. Construction projects, including those related to infrastructure and housing, are also likely to face higher costs, as copper is a key material in wiring, plumbing, and various industrial applications. The potential ripple effect could drive up overall inflation, further straining the US economy. Unrealistic expectations for domestic production While the Trump administration’s aim with the tariff is to reduce reliance on foreign copper and boost domestic production, experts warn that this goal is unrealistic in the short term. The US imports nearly half of its copper, primarily from countries such as Chile, Canada, Peru, and Mexico. However, US mines are not equipped to meet the nation’s copper needs in the near future. Increasing domestic production would require substantial investments in mining infrastructure, which could take years, if not decades, to fully ramp up. The tariff could also inadvertently encourage businesses to seek cheaper alternatives, such as aluminium, which could be used in place of copper in some products, despite its higher long-term maintenance costs. Yet, aluminium is not a perfect substitute, as copper’s superior conductivity makes it crucial for industries like renewable energy, semiconductors, and aerospace, where performance is paramount. As a result, some industries may face higher operational costs as they attempt to pivot, creating inefficiencies and increasing product prices for consumers. Wider economic consequences The copper tariff, while aimed at strengthening the US economy by fostering domestic production, is likely to backfire in several areas. The most immediate consequence will be price inflation for consumers. Everything from home repairs to new cars could become more expensive as companies pass along their increased costs. This price hike is also expected to affect industries like electric vehicles (EVs), where copper is a crucial component in batteries and wiring. Additionally, industries dependent on copper for infrastructure projects, such as utilities and renewable energy companies, will see rising operational costs. Projects related to energy generation and distribution could be delayed or scaled back due to the increased cost of materials, further straining the US energy grid and impeding progress toward clean energy goals. In sectors like aerospace and defence, where copper is used in everything from aircraft to missile defence systems, the increased costs could hinder innovation and project timelines. The tariff also places a significant burden on US consumers who will bear the brunt of higher prices, particularly in a country where inflation is already a concern. The added cost of everything from home appliances to EVs will strain household budgets, particularly for lower-income Americans. The long-term picture In the long term, the success of Trump's tariff strategy hinges on the ability of US manufacturers to ramp up domestic production. However, experts caution that such an outcome is not realistic in the near term. Copper mining is a complex and capital-intensive industry, and even if new mines are developed, it will take years to reach a scale that meets US demand. In the meantime, companies will likely seek workarounds, such as moving production overseas or investing in alternative materials. As global copper prices remain relatively stable, the US faces a stark contrast in pricing. The disparity between US and international copper prices could make US products less competitive on the global stage, further widening the trade imbalance. Ultimately, while the tariff may have been designed to bolster US production, it risks damaging the broader economy in the process.

While the Trump administration’s aim with the tariff is to reduce reliance on foreign copper and boost domestic production, experts warn that this goal is unrealistic in the short term.&nbsp;

Will Trump’s copper tariffs hit the US economy harder than the rest of the world?

US business activity continued to expand in June, although the pace of growth slowed, as tariffs and geopolitical tensions fuelled inflation and cast uncertainty over future growth. The latest flash data from S&amp;P Global shows the Composite PMI Output Index slipped slightly to 52.8 from 53.0 in May (a reading above 50 indicated expansion and a reading below 50 shows contraction), still signalling growth but at a pace well below levels seen in late 2024. While output has now risen for 29 consecutive months, the June data highlights intensifying headwinds from rising input costs, shrinking exports, and geopolitical instability, especially following the recent escalation in West Asia.<h2>Tariffs drive prices higher across sectors</h2>The clearest concern emerging from the June report was the increase in inflationary pressures, driven heavily by tariff-induced price hikes. Nearly two-thirds of manufacturers citing rising input costs blamed tariffs, while over half linked higher selling prices to tariffs. The prices paid index for manufacturers surged to 70, the highest since July 2022, as companies dealt with increased import duties and passed the burden onto consumers. Price increases were also seen in the services sector, with firms reporting elevated costs due to tariffs, rising wages, fuel, and financing costs.While competition in services helped moderate price growth somewhat compared to May, the overall inflation rate for goods and services was the second-highest since early 2023. S&amp;P Global warned that the current price trajectory could see consumer inflation rise toward 4 per cent in the coming months.<h2>Mixed signals on growth: Manufacturing up, exports down</h2>A positive aspect of June’s data was the more balanced growth between manufacturing and services. Manufacturing output rose for the first time since February, even as service sector growth cooled modestly. However, the rise in domestic demand masked a worrying trend—a continued decline in exports. Service providers reported the sharpest quarterly drop in exports since late 2022, and manufacturers also saw a fall in overseas orders. Analysts noted that the decrease reflected the global trade disruption caused by tariff uncertainty and geopolitical tensions.Adding to short-term momentum was a sharp build-up in inventories, with firms increasing purchases at the fastest rate in over three years. But S&amp;P Global’s Chris Williamson warned that stockpiling, driven by fears of future price hikes and supply disruptions, is “likely to unwind in the coming months”.<h2>Labour market shows resilience, but sentiment wanes</h2>Despite economic uncertainties, businesses responded to rising workloads and backlogs by boosting hiring at the fastest pace in over a year. Manufacturing led the gains, with job creation reaching a 12-month high, while services hiring also strengthened.Yet, business confidence dipped in June, especially among service providers, amid concerns over Trump-era policies like government spending cuts and trade protectionism. Manufacturers were marginally more upbeat, hoping to benefit from protectionist measures, but overall sentiment remains well below pre-2025 levels.<h2>Fed expected to hold rates amid uncertain outlook</h2>With inflation accelerating and demand moderating, the Federal Reserve is expected to pause further interest rate cuts. The central bank has held rates steady at 4.25-4.50 per cent since December 2024 after 100 basis points (bps) of cuts last year.S&amp;P Global’s data suggests stagflation risks are rising, as tariff-driven cost pressures and a slowing housing market threaten consumer spending. Despite a slight rise in May’s home sales, the pace was the weakest for that month since 2009, with high mortgage rates discouraging buyers.Economists now expect the US economy to grow by under 1.5 per cent in 2025, the slowest pace since the global financial crisis, excluding the pandemic year of 2020.While markets await clarity on US trade and foreign policy, the Fed is likely to stick with a “wait and see” approach to assess how durable current inflation and growth trends are before taking further action.

Manufacturing in the United States sees modest expansion this month; inflation pressures intensify as backlog builds.

US business activity continued to expand in June, although the pace of growth slowed, as tariffs and geopolitical tensions fuelled inflation and cast uncertainty over future growth. The latest flash data from S&P Global shows the Composite PMI Output Index slipped slightly to 52.8 from 53.0 in May (a reading above 50 indicated expansion and a reading below 50 shows contraction), still signalling growth but at a pace well below levels seen in late 2024. While output has now risen for 29 consecutive months, the June data highlights intensifying headwinds from rising input costs, shrinking exports, and geopolitical instability, especially following the recent escalation in West Asia. Tariffs drive prices higher across sectors The clearest concern emerging from the June report was the increase in inflationary pressures, driven heavily by tariff-induced price hikes. Nearly two-thirds of manufacturers citing rising input costs blamed tariffs, while over half linked higher selling prices to tariffs. The prices paid index for manufacturers surged to 70, the highest since July 2022, as companies dealt with increased import duties and passed the burden onto consumers. Price increases were also seen in the services sector, with firms reporting elevated costs due to tariffs, rising wages, fuel, and financing costs. While competition in services helped moderate price growth somewhat compared to May, the overall inflation rate for goods and services was the second-highest since early 2023. S&P Global warned that the current price trajectory could see consumer inflation rise toward 4 per cent in the coming months. Mixed signals on growth: Manufacturing up, exports down A positive aspect of June’s data was the more balanced growth between manufacturing and services. Manufacturing output rose for the first time since February, even as service sector growth cooled modestly. However, the rise in domestic demand masked a worrying trend—a continued decline in exports. Service providers reported the sharpest quarterly drop in exports since late 2022, and manufacturers also saw a fall in overseas orders. Analysts noted that the decrease reflected the global trade disruption caused by tariff uncertainty and geopolitical tensions. Adding to short-term momentum was a sharp build-up in inventories, with firms increasing purchases at the fastest rate in over three years. But S&P Global’s Chris Williamson warned that stockpiling, driven by fears of future price hikes and supply disruptions, is “likely to unwind in the coming months”. Labour market shows resilience, but sentiment wanes Despite economic uncertainties, businesses responded to rising workloads and backlogs by boosting hiring at the fastest pace in over a year. Manufacturing led the gains, with job creation reaching a 12-month high, while services hiring also strengthened. Yet, business confidence dipped in June, especially among service providers, amid concerns over Trump-era policies like government spending cuts and trade protectionism. Manufacturers were marginally more upbeat, hoping to benefit from protectionist measures, but overall sentiment remains well below pre-2025 levels. Fed expected to hold rates amid uncertain outlook With inflation accelerating and demand moderating, the Federal Reserve is expected to pause further interest rate cuts. The central bank has held rates steady at 4.25-4.50 per cent since December 2024 after 100 basis points (bps) of cuts last year. S&P Global’s data suggests stagflation risks are rising, as tariff-driven cost pressures and a slowing housing market threaten consumer spending. Despite a slight rise in May’s home sales, the pace was the weakest for that month since 2009, with high mortgage rates discouraging buyers. Economists now expect the US economy to grow by under 1.5 per cent in 2025, the slowest pace since the global financial crisis, excluding the pandemic year of 2020. While markets await clarity on US trade and foreign policy, the Fed is likely to stick with a “wait and see” approach to assess how durable current inflation and growth trends are before taking further action.

Manufacturing in the United States sees modest expansion this month; inflation pressures intensify as backlog builds.

US business activity grows in June, but tariffs and inflation cloud outlook

The US services sector regained momentum in May, expanding at a faster pace and defying expectations of a prolonged slowdown, even as tariffs and supply delays continued to exert upward pressure on costs.&nbsp;&nbsp;According to S&amp;P Global’s latest Purchasing Managers’ Index (PMI) data, the Services PMI rose to 53.7 in May from April’s 50.8, comfortably above the 50-mark that separates growth from contraction marked the 28th consecutive month of expansion. The reading also surpassed the preliminary 'flash' estimate of 52.3.&nbsp;The uptick was driven by concurrent increases in business activity and new orders, as firms benefited from a more stable domestic demand environment. However, foreign demand remained subdued for a second straight month amid ongoing global trade uncertainties, particularly around tariffs.<h2>Tariffs drive up costs, but optimism rebounds</h2>While service firms added staff to handle growing workloads, the rise in employment wasn’t sufficient to clear backlogs, which grew at the fastest pace since last November. Tariffs-linked equipment delivery delays were cited as a key factor behind rising work outstanding.&nbsp;Tariffs also contributed to a sharp rise in input cost inflation, which surged to its highest level since June 2023. Businesses faced steeper wage bills and elevated supplier prices, forcing many to pass on the costs to clients. As a result, output charge inflation hit its steepest level since August 2022.&nbsp;Chris Williamson, Chief Business Economist at S&amp;P Global Market Intelligence, noted that while the service sector is showing signs of recovery, inflationary pressures remain a critical concern. “These rising price pressures will only add to policymaker reluctance to reduce interest rates, which we consequently expect to remain on hold until December,” he said.&nbsp;Despite the cost burdens, business confidence improved in May, buoyed by tariff pauses and expectations of a more predictable policy environment. Optimism about the year ahead reached a four-month high, though it still lags behind historical averages. Companies are planning increased marketing and facility expansion as part of their growth outlook.<h2>Composite outlook mixed amid manufacturing weakness</h2>The broader US economy saw a modest improvement in May, with the S&amp;P Global Composite PMI rising to 53.0 from 50.6 in April. However, the services-led rebound masked continued struggles in the manufacturing sector, which contracted for the third consecutive month.&nbsp;The ISM’s separate manufacturing PMI fell to 48.5 in May, its lowest in six months, reflecting persistent weakness. Factories reported declining new orders, worsening supply chain bottlenecks, and ongoing job losses.&nbsp;&nbsp;The effects of tariffs were also evident, with slower deliveries and falling import volumes signaling pressure on the goods-producing sector.&nbsp;Economists warn that while the US economy is avoiding recession for now, growth remains fragile. “The PMI is so far indicating annualized GDP growth barely above 1 per cent in the second quarter,” Williamson said, forecasting modest 1.3 per cent growth for 2025.&nbsp;With inflationary risks rising and manufacturing under strain, the Federal Reserve is expected to hold rates steady through year-end as it monitors evolving macroeconomic dynamics.

The uptick was driven by concurrent increases in business activity and new orders, as firms benefited from a more stable domestic demand environment.

The US services sector regained momentum in May, expanding at a faster pace and defying expectations of a prolonged slowdown, even as tariffs and supply delays continued to exert upward pressure on costs. According to S&P Global’s latest Purchasing Managers’ Index (PMI) data, the Services PMI rose to 53.7 in May from April’s 50.8, comfortably above the 50-mark that separates growth from contraction marked the 28th consecutive month of expansion. The reading also surpassed the preliminary 'flash' estimate of 52.3. The uptick was driven by concurrent increases in business activity and new orders, as firms benefited from a more stable domestic demand environment. However, foreign demand remained subdued for a second straight month amid ongoing global trade uncertainties, particularly around tariffs. Tariffs drive up costs, but optimism rebounds While service firms added staff to handle growing workloads, the rise in employment wasn’t sufficient to clear backlogs, which grew at the fastest pace since last November. Tariffs-linked equipment delivery delays were cited as a key factor behind rising work outstanding. Tariffs also contributed to a sharp rise in input cost inflation, which surged to its highest level since June 2023. Businesses faced steeper wage bills and elevated supplier prices, forcing many to pass on the costs to clients. As a result, output charge inflation hit its steepest level since August 2022. Chris Williamson, Chief Business Economist at S&P Global Market Intelligence, noted that while the service sector is showing signs of recovery, inflationary pressures remain a critical concern. “These rising price pressures will only add to policymaker reluctance to reduce interest rates, which we consequently expect to remain on hold until December,” he said. Despite the cost burdens, business confidence improved in May, buoyed by tariff pauses and expectations of a more predictable policy environment. Optimism about the year ahead reached a four-month high, though it still lags behind historical averages. Companies are planning increased marketing and facility expansion as part of their growth outlook. Composite outlook mixed amid manufacturing weakness The broader US economy saw a modest improvement in May, with the S&P Global Composite PMI rising to 53.0 from 50.6 in April. However, the services-led rebound masked continued struggles in the manufacturing sector, which contracted for the third consecutive month. The ISM’s separate manufacturing PMI fell to 48.5 in May, its lowest in six months, reflecting persistent weakness. Factories reported declining new orders, worsening supply chain bottlenecks, and ongoing job losses. The effects of tariffs were also evident, with slower deliveries and falling import volumes signaling pressure on the goods-producing sector. Economists warn that while the US economy is avoiding recession for now, growth remains fragile. “The PMI is so far indicating annualized GDP growth barely above 1 per cent in the second quarter,” Williamson said, forecasting modest 1.3 per cent growth for 2025. With inflationary risks rising and manufacturing under strain, the Federal Reserve is expected to hold rates steady through year-end as it monitors evolving macroeconomic dynamics.

The uptick was driven by concurrent increases in business activity and new orders, as firms benefited from a more stable domestic demand environment.

US service sector rebounds, but inflation fears clouds outlook

The United States economy is losing momentum as new data reveals the growing strain from elevated tariffs and persistent policy uncertainty.&nbsp;&nbsp;According to the Federal Reserve’s latest Beige Book report released on 4 June, economic activity has declined across much of the country, with businesses reporting increased costs, weaker demand, and concerns about the future.<h2>Fed report highlights a cooling economy</h2>The Beige Book, a compilation of anecdotal evidence collected by the US central bank’s 12 regional branches found that only three districts saw growth in recent weeks. In contrast, half reported outright contraction.&nbsp; This is a sharp deterioration from January 2025, when all 12 districts had registered economic expansion. As per Reuters, the Fed’s snapshot, based on data gathered through 23 May, stated: “On balance, the outlook remains slightly pessimistic and uncertain, unchanged relative to the previous report.”&nbsp; The document warned of widespread expectations among business contacts that “costs and prices will rise at a faster rate going forward.” Businesses across sectors are increasingly concerned about the economic landscape, with some pulling back on stockpiling goods due to escalating costs.&nbsp;&nbsp;A florist in New York said they had begun adjusting flower varieties based on “rapidly changing costs by source country”, while others reported difficulty forecasting demand due to trade policy uncertainty, as per Reuters.&nbsp;<h2>Tariffs reshape pricing and consumer choices</h2>According to the San Francisco Fed, companies are now explicitly including separate tariff lines in contracts and quotes.&nbsp;&nbsp;The report noted that price hikes introduced in anticipation of tariffs were not reversed even after some duties were removed. &nbsp;Retailers are witnessing changes in consumer behaviour. The Cleveland Fed said many car dealerships saw a spike in purchases ahead of planned tariffs but expect sales to decline starting in June due to “tariff-related sticker shock.”&nbsp;&nbsp;Meanwhile, discretionary spending has pulled back, with some consumers downgrading to less expensive alternatives.&nbsp;The Boston Fed described sentiment as “a mix of cautious optimism and blunt pessimism.” While some hoped that resolution of trade tensions would unlock growth, others warned that tariff pressures and federal policies may drag demand further.<h2>Employment flat, with regional divergence</h2>The labour market remains broadly stable, but there is variation across regions and industries. The Richmond Fed reported contrasting trends: a Maryland construction firm plans to hire more due to ongoing demand, whereas a fast-casual restaurant chain in the D.C. region has halted hiring amid economic concerns, as per Reuters.&nbsp;&nbsp;Nationwide, employment was reported as “flat” in most districts. This softening contrasts with official data, which still portrays a relatively healthy labour market.&nbsp;&nbsp;For example, April’s Personal Consumption Expenditures (PCE) Price Index rose by just 2.1 per cent, the lowest in four years and marginally above the Fed’s 2 per cent inflation target.<h2>Fed data diverging from business sentiment</h2>While hard economic indicators show resilience, such as solid employment levels, policymakers are increasingly leaning on real-time insights like those captured in the Beige Book.&nbsp; &nbsp;As reported by Reuters, Fed officials are putting a “premium on day-to-day experiences” of businesses and households to make forward-looking decisions.&nbsp;Additional survey-based data echoes the Fed’s findings. According to a report released on the same day by the Institute for Supply Management, the US services sector contracted in May for the first time in a year, with businesses reporting higher costs for inputs.<h2>IMF warns of weaker 2025 outlook, tight fiscal path</h2>The International Monetary Fund has also revised its 2025 outlook for the US. It now forecasts GDP growth of just 1.9 per cent next year, citing a cooling labour market and tightening fiscal policy.&nbsp;&nbsp;As per the IMF’s Article IV consultation, consumption is expected to moderate, and inflation risks persist, particularly in services.&nbsp;The IMF estimates unemployment will rise to 4.2 per cent by next year, from the current level of 4.1 per cent.&nbsp;&nbsp;Despite easing price pressures, the Fund has warned that global disinflation is slowing, especially in key sectors such as housing, food, and transport.<h2>Fed’s policy dilemma: inflation vs recession</h2>The Federal Reserve has kept interest rates steady in the 4.25–4.50 per cent range since December 2024.&nbsp;&nbsp;Policymakers now face a tough balancing act: fighting inflation without stifling growth. &nbsp;Speaking to Bloomberg, Chicago Fed President Austan Goolsbee suggested that if current conditions persist, the Fed may reduce short-term interest rates within the next 12 to 15 months.&nbsp;&nbsp;However, he cautioned that further escalation in tariffs or a spike in core inflation could delay such a move.<h2>Trump intensifies pressure on Powell</h2>President Donald Trump has renewed calls for rate cuts following weak job numbers. According to Bloomberg, only 37,000 private-sector jobs were added in May, the lowest figure since March 2023 and well below forecasts of 110,000.&nbsp; &nbsp;Trump criticised Fed Chair Jerome Powell on Truth Social, citing Europe’s recent rate reductions as a benchmark.&nbsp;Analysts say the disappointing employment figures, coupled with business unease over tariffs, could lead to monetary easing as soon as the Federal Open Market Committee’s next meeting on 17–18 June, as per Reuters.&nbsp;<h2>What lies ahead?</h2>With tariff pressures mounting, policy clarity lacking, and economic activity softening, the Fed’s next steps will be crucial.&nbsp;&nbsp;The Beige Book has laid bare the fragility beneath surface-level indicators. The central bank must now navigate a narrow path between easing inflation and avoiding a recession , all while under political scrutiny and global uncertainty.&nbsp;(With inputs from the agencies) &nbsp;

 Only three of 12 districts experienced growth, causing concerns about the future. Expectations of faster cost and price increases have led some businesses to adjust operations and reduce inventory due to unpredictable trade policies.

The United States economy is losing momentum as new data reveals the growing strain from elevated tariffs and persistent policy uncertainty. According to the Federal Reserve’s latest Beige Book report released on 4 June, economic activity has declined across much of the country, with businesses reporting increased costs, weaker demand, and concerns about the future. Fed report highlights a cooling economy The Beige Book, a compilation of anecdotal evidence collected by the US central bank’s 12 regional branches found that only three districts saw growth in recent weeks. In contrast, half reported outright contraction. This is a sharp deterioration from January 2025, when all 12 districts had registered economic expansion. As per Reuters, the Fed’s snapshot, based on data gathered through 23 May, stated: “On balance, the outlook remains slightly pessimistic and uncertain, unchanged relative to the previous report.” The document warned of widespread expectations among business contacts that “costs and prices will rise at a faster rate going forward.” Businesses across sectors are increasingly concerned about the economic landscape, with some pulling back on stockpiling goods due to escalating costs. A florist in New York said they had begun adjusting flower varieties based on “rapidly changing costs by source country”, while others reported difficulty forecasting demand due to trade policy uncertainty, as per Reuters. Tariffs reshape pricing and consumer choices According to the San Francisco Fed, companies are now explicitly including separate tariff lines in contracts and quotes. The report noted that price hikes introduced in anticipation of tariffs were not reversed even after some duties were removed. Retailers are witnessing changes in consumer behaviour. The Cleveland Fed said many car dealerships saw a spike in purchases ahead of planned tariffs but expect sales to decline starting in June due to “tariff-related sticker shock.” Meanwhile, discretionary spending has pulled back, with some consumers downgrading to less expensive alternatives. The Boston Fed described sentiment as “a mix of cautious optimism and blunt pessimism.” While some hoped that resolution of trade tensions would unlock growth, others warned that tariff pressures and federal policies may drag demand further. Employment flat, with regional divergence The labour market remains broadly stable, but there is variation across regions and industries. The Richmond Fed reported contrasting trends: a Maryland construction firm plans to hire more due to ongoing demand, whereas a fast-casual restaurant chain in the D.C. region has halted hiring amid economic concerns, as per Reuters. Nationwide, employment was reported as “flat” in most districts. This softening contrasts with official data, which still portrays a relatively healthy labour market. For example, April’s Personal Consumption Expenditures (PCE) Price Index rose by just 2.1 per cent, the lowest in four years and marginally above the Fed’s 2 per cent inflation target. Fed data diverging from business sentiment While hard economic indicators show resilience, such as solid employment levels, policymakers are increasingly leaning on real-time insights like those captured in the Beige Book. As reported by Reuters, Fed officials are putting a “premium on day-to-day experiences” of businesses and households to make forward-looking decisions. Additional survey-based data echoes the Fed’s findings. According to a report released on the same day by the Institute for Supply Management, the US services sector contracted in May for the first time in a year, with businesses reporting higher costs for inputs. IMF warns of weaker 2025 outlook, tight fiscal path The International Monetary Fund has also revised its 2025 outlook for the US. It now forecasts GDP growth of just 1.9 per cent next year, citing a cooling labour market and tightening fiscal policy. As per the IMF’s Article IV consultation, consumption is expected to moderate, and inflation risks persist, particularly in services. The IMF estimates unemployment will rise to 4.2 per cent by next year, from the current level of 4.1 per cent. Despite easing price pressures, the Fund has warned that global disinflation is slowing, especially in key sectors such as housing, food, and transport. Fed’s policy dilemma: inflation vs recession The Federal Reserve has kept interest rates steady in the 4.25–4.50 per cent range since December 2024. Policymakers now face a tough balancing act: fighting inflation without stifling growth. Speaking to Bloomberg, Chicago Fed President Austan Goolsbee suggested that if current conditions persist, the Fed may reduce short-term interest rates within the next 12 to 15 months. However, he cautioned that further escalation in tariffs or a spike in core inflation could delay such a move. Trump intensifies pressure on Powell President Donald Trump has renewed calls for rate cuts following weak job numbers. According to Bloomberg, only 37,000 private-sector jobs were added in May, the lowest figure since March 2023 and well below forecasts of 110,000. Trump criticised Fed Chair Jerome Powell on Truth Social, citing Europe’s recent rate reductions as a benchmark. Analysts say the disappointing employment figures, coupled with business unease over tariffs, could lead to monetary easing as soon as the Federal Open Market Committee’s next meeting on 17–18 June, as per Reuters. What lies ahead? With tariff pressures mounting, policy clarity lacking, and economic activity softening, the Fed’s next steps will be crucial. The Beige Book has laid bare the fragility beneath surface-level indicators. The central bank must now navigate a narrow path between easing inflation and avoiding a recession , all while under political scrutiny and global uncertainty. (With inputs from the agencies)

Amid tariff pressure, the &nbsp;Federal Reserve's Beige Book indicates declining economic activity, with businesses citing rising costs and weaker demand.

US economic growth falters as Fed flags tariff burdens and rising uncertainty

US President Donald Trump claimed his tariffs are driving strong economic growth. But just hours after his latest boast on Truth Social, the Organisation for Economic Co-operation and Development (OECD) released a bleak forecast pointing to a global slowdown, blaming, in part, the very trade policies Trump continues to defend.“Because of Tariffs, our Economy is BOOMING!” Trump wrote early Tuesday. However, the OECD report paints a different picture.Also read: <a href="https://www.wionews.com/world/-i-applied-there-and-didn-t-get-in-journalist-reveals-why-trump-is-beating-up-harvard-us-president-responds-1748948035479">'I applied there, and didn’t get in': Journalist reveals why Trump is ‘beating up’ Harvard, US president responds</a><h2>Global and US growth both projected to decline</h2>The OECD, based in Paris, said global economic growth is expected to drop to 2.9 per cent in 2025, down from 3.3 per cent in 2024. The US economy is predicted to slow even more sharply, from 2.8 per cent this year to just 1.6 per cent in 2025, according to Bloomberg.Economists at the OECD cited trade disruptions, rising uncertainty, and inflationary pressure as key reasons for the weaker outlook. “Lower growth and less trade will hit incomes and slow job growth,” said Alvaro Pereira, the OECD’s chief economist.The report also noted that a shrinking federal workforce in the US is contributing to the economic slowdown.<h2>OECD flags Trump’s tariffs as major threat</h2>The OECD directly linked the gloomy forecast to Trump’s aggressive trade policies. Since his April 2 “Liberation Day” announcement, which included 145 per cent tariffs on Chinese goods, global markets have been in turmoil.China responded with its own 125 per cent tax on US imports, sparking a full-blown trade war. Though both sides agreed to de-escalate in mid-May, with the US lowering tariffs to 30 per cent and China dropping its own to 10 per cent, tensions have quickly returned.Over the weekend, Trump claimed China had “TOTALLY VIOLATED” the agreement, while Beijing accused the US of repeatedly provoking “new trade frictions.”Also Read: <a href="https://www.wionews.com/world/illegal-immigrants-able-bodied-non-workers-7-6-million-in-us-may-lose-medicaid-but-trump-admin-says-they-didn-t-deserve-it-1748950718358">Illegal immigrants, ‘able-bodied’ non-workers: 7.6 million in US may lose Medicaid, but Trump admin says they ‘didn't deserve it’</a><h2>OECD trade ministers gather in Paris amid growing concerns</h2>As the trade war deepens, OECD trade ministers from 38 countries are meeting in Paris this week. Officials include US trade representative Jamieson Greer, EU commissioner Maros Sefcovic, and Lin Feng from China’s Ministry of Commerce.The agenda is clear, lower tariffs, ease global tensions, and restore confidence in trade systems shaken by months of back-and-forth action.But as the world’s largest economies clash, the OECD warned that things could worsen if retaliatory actions continue, investor confidence falls further, or stock markets tumble again.

The OECD, based in Paris, said global economic growth is expected to drop to 2.9 per cent in 2025, down from 3.3 per cent in 2024. The US economy is predicted to slow even more sharply, from 2.8 per cent this year to just 1.6 per cent in 2025, according to Bloomberg.

US President Donald Trump claimed his tariffs are driving strong economic growth. But just hours after his latest boast on Truth Social, the Organisation for Economic Co-operation and Development (OECD) released a bleak forecast pointing to a global slowdown, blaming, in part, the very trade policies Trump continues to defend. “Because of Tariffs, our Economy is BOOMING!” Trump wrote early Tuesday. However, the OECD report paints a different picture. Also read: 'I applied there, and didn’t get in': Journalist reveals why Trump is ‘beating up’ Harvard, US president responds Global and US growth both projected to decline The OECD, based in Paris, said global economic growth is expected to drop to 2.9 per cent in 2025, down from 3.3 per cent in 2024. The US economy is predicted to slow even more sharply, from 2.8 per cent this year to just 1.6 per cent in 2025, according to Bloomberg. Economists at the OECD cited trade disruptions, rising uncertainty, and inflationary pressure as key reasons for the weaker outlook. “Lower growth and less trade will hit incomes and slow job growth,” said Alvaro Pereira, the OECD’s chief economist. The report also noted that a shrinking federal workforce in the US is contributing to the economic slowdown. OECD flags Trump’s tariffs as major threat The OECD directly linked the gloomy forecast to Trump’s aggressive trade policies. Since his April 2 “Liberation Day” announcement, which included 145 per cent tariffs on Chinese goods, global markets have been in turmoil. China responded with its own 125 per cent tax on US imports, sparking a full-blown trade war. Though both sides agreed to de-escalate in mid-May, with the US lowering tariffs to 30 per cent and China dropping its own to 10 per cent, tensions have quickly returned. Over the weekend, Trump claimed China had “TOTALLY VIOLATED” the agreement, while Beijing accused the US of repeatedly provoking “new trade frictions.” Also Read: Illegal immigrants, ‘able-bodied’ non-workers: 7.6 million in US may lose Medicaid, but Trump admin says they ‘didn't deserve it’ OECD trade ministers gather in Paris amid growing concerns As the trade war deepens, OECD trade ministers from 38 countries are meeting in Paris this week. Officials include US trade representative Jamieson Greer, EU commissioner Maros Sefcovic, and Lin Feng from China’s Ministry of Commerce. The agenda is clear, lower tariffs, ease global tensions, and restore confidence in trade systems shaken by months of back-and-forth action. But as the world’s largest economies clash, the OECD warned that things could worsen if retaliatory actions continue, investor confidence falls further, or stock markets tumble again.

The OECD, based in Paris, said global economic growth is expected to drop to 2.9 per cent in 2025, down from 3.3 per cent in 2024. The US economy is predicted to slow even more sharply, from 2.8 per cent this year to just 1.6 per cent in 2025, according to Bloomberg.

Trump claims economy is ‘booming’, but global forecast says his tariffs are dragging growth down

US consumer spending barely rose in April as households tightened their wallets and diverted funds into savings. This reportedly reflects growing unease over the country’s economic trajectory amid erratic tariff policies and legal roadblocks to US President Donald Trump’s sweeping trade duties. According to Reuters, citing data from the US Commerce Department, consumer spending, the backbone of the US economy climbed just 0.2 per cent in April, a steep slowdown from March’s 0.7 per cent gain.&nbsp;&nbsp;The deceleration suggests that Americans, rattled by recent tariff shocks and broader uncertainty, are preparing for leaner times.<h2>Spending weakens as tariff anxiety rises</h2>While services spending held firm—buoyed by housing, utilities, healthcare, and hospitality—goods spending softened considerably.&nbsp; Shoppers cut back on vehicles, apparel, and recreational goods, which had seen a pre-emptive boost in March due to stockpiling before new tariffs, Reuters reported. President Trump’s new import duties, largely targeting Chinese goods, had been slashed to 30 per cent from 145 per cent through mid-August, following a ruling by a US trade court, as per Reuters.&nbsp;&nbsp;The court found that the president had overstepped his authority. However, a federal appeals court temporarily reinstated most of the duties the next day, plunging the economic outlook into further ambiguity.&nbsp;“The Liberation Day tariff shock clearly spooked consumers,” said Scott Anderson, Chief US Economist at BMO Capital Markets, in a statement to Reuters. “They’re now saving for a rainy day.”<h2>Savings jump to one-year high</h2>That caution was reflected in the personal saving rate, which jumped to 4.9 per cent in April, the highest since March 2024, from 4.3 per cent in March, according to the US Commerce Department’s Bureau of Economic Analysis (BEA), as cited by Reuters.&nbsp;Adding to the economic unease, the US economy shrank at an annualised rate of 0.2 per cent in Q1 2025, the first contraction in three years. This decline was mainly attributed to a surge in imports before tariffs kicked in, according to Reuters, referencing official government data.&nbsp;In a separate report, the US Census Bureau stated that the goods trade deficit shrank by 46 per cent to $87.6 billion in April. This was due to a sharp decline in imports, which fell by $68.4 billion to $276.1 billion, while goods exports rose by $6.3 billion to $188.5 billion.<h2>Inflation eases, but Fed remains on edge</h2>Inflation remained subdued in April. The PCE Price Index, the Federal Reserve’s preferred inflation measure, rose 0.1 per cent in April after remaining flat in March, as per the BEA data cited by Reuters.&nbsp;&nbsp;On a yearly basis, overall PCE inflation increased 2.1 per cent, while core PCE, which excludes food and energy, climbed 2.5 per cent, marking the smallest increase since March 2021, as per Reuters.&nbsp;&nbsp;Despite these modest gains, the Federal Reserve remains cautious. According to minutes from its May 6–7 meeting, reviewed by Reuters, Fed officials highlighted concerns about rising short-term inflation expectations.&nbsp;&nbsp;Some policymakers had reportedly warned that these expectations could influence businesses to raise prices and push long-term inflation even higher.<h2>Trade deficit shrinks but sentiment deteriorates</h2>According to the US Census Bureau, the collapse in imports and slight export gains contributed to the shrinking trade deficit.&nbsp; However, economists interviewed by Reuters cautioned that the downturn in imports may be temporary and tied to the unpredictable implementation of trade tariffs.&nbsp;Markets reacted nervously. As per Reuters, US stocks opened lower, Treasury yields rose slightly, and the dollar strengthened against major global currencies on Thursday.<h2>Outlook clouded by policy unpredictability</h2>With Trump’s tariffs caught in a legal tug-of-war and inflation trending downward but unstable, the economic recovery remains fragile.&nbsp;&nbsp;Economists quoted by Reuters suggested that while softer inflation offers some relief, uncertainty surrounding tariff rulings is expected to weigh heavily on both consumer confidence and business investment in the months ahead.

Business & Economy: The Liberation Day tariff shock spooked consumers, who are now saving for a rainy day. 

US consumer spending barely rose in April as households tightened their wallets and diverted funds into savings. This reportedly reflects growing unease over the country’s economic trajectory amid erratic tariff policies and legal roadblocks to US President Donald Trump’s sweeping trade duties. According to Reuters, citing data from the US Commerce Department, consumer spending, the backbone of the US economy climbed just 0.2 per cent in April, a steep slowdown from March’s 0.7 per cent gain. The deceleration suggests that Americans, rattled by recent tariff shocks and broader uncertainty, are preparing for leaner times. Spending weakens as tariff anxiety rises While services spending held firm—buoyed by housing, utilities, healthcare, and hospitality—goods spending softened considerably. Shoppers cut back on vehicles, apparel, and recreational goods, which had seen a pre-emptive boost in March due to stockpiling before new tariffs, Reuters reported. President Trump’s new import duties, largely targeting Chinese goods, had been slashed to 30 per cent from 145 per cent through mid-August, following a ruling by a US trade court, as per Reuters. The court found that the president had overstepped his authority. However, a federal appeals court temporarily reinstated most of the duties the next day, plunging the economic outlook into further ambiguity. “The Liberation Day tariff shock clearly spooked consumers,” said Scott Anderson, Chief US Economist at BMO Capital Markets, in a statement to Reuters. “They’re now saving for a rainy day.” Savings jump to one-year high That caution was reflected in the personal saving rate, which jumped to 4.9 per cent in April, the highest since March 2024, from 4.3 per cent in March, according to the US Commerce Department’s Bureau of Economic Analysis (BEA), as cited by Reuters. Adding to the economic unease, the US economy shrank at an annualised rate of 0.2 per cent in Q1 2025, the first contraction in three years. This decline was mainly attributed to a surge in imports before tariffs kicked in, according to Reuters, referencing official government data. In a separate report, the US Census Bureau stated that the goods trade deficit shrank by 46 per cent to $87.6 billion in April. This was due to a sharp decline in imports, which fell by $68.4 billion to $276.1 billion, while goods exports rose by $6.3 billion to $188.5 billion. Inflation eases, but Fed remains on edge Inflation remained subdued in April. The PCE Price Index, the Federal Reserve’s preferred inflation measure, rose 0.1 per cent in April after remaining flat in March, as per the BEA data cited by Reuters. On a yearly basis, overall PCE inflation increased 2.1 per cent, while core PCE, which excludes food and energy, climbed 2.5 per cent, marking the smallest increase since March 2021, as per Reuters. Despite these modest gains, the Federal Reserve remains cautious. According to minutes from its May 6–7 meeting, reviewed by Reuters, Fed officials highlighted concerns about rising short-term inflation expectations. Some policymakers had reportedly warned that these expectations could influence businesses to raise prices and push long-term inflation even higher. Trade deficit shrinks but sentiment deteriorates According to the US Census Bureau, the collapse in imports and slight export gains contributed to the shrinking trade deficit. However, economists interviewed by Reuters cautioned that the downturn in imports may be temporary and tied to the unpredictable implementation of trade tariffs. Markets reacted nervously. As per Reuters, US stocks opened lower, Treasury yields rose slightly, and the dollar strengthened against major global currencies on Thursday. Outlook clouded by policy unpredictability With Trump’s tariffs caught in a legal tug-of-war and inflation trending downward but unstable, the economic recovery remains fragile. Economists quoted by Reuters suggested that while softer inflation offers some relief, uncertainty surrounding tariff rulings is expected to weigh heavily on both consumer confidence and business investment in the months ahead.

US consumer spending barely increased in April, as households strained their finances and shifted funds into savings.&nbsp;

US consumer spending falters in April as inflation cools and savings rise

In a major blow to Donald Trump, a US federal court on Wednesday (May 28) blocked the majority of the US president's sweeping tariffs, a decision the White House said "unelected judges" have no right to weigh in on.The US federal court, in its ruling, said that Trump, by igniting a global trade war, has overstepped his constitutional authority with across-the-board levies.<h2>Not a blank cheque</h2>The court's ruling comes in two separate cases, which argue that the POTUS violated Congress's power of the purse – brought forward by businesses and a coalition of state governmentsThe three-judge panel at the Court of International Trade also struck down Trump's use of emergency powers to impose across-the-board import duties on countries China, Canada, Mexico, and the European Union. The court ruled that the International Emergency Economic Powers Act (IEEPA) does not give the president a blank cheque to rewrite trade policy."The question in the two cases before the court is whether the International Emergency Economic Powers Act of 1977 ("IEEPA") delegates these powers to the president in the form of authority to impose unlimited tariffs on goods from nearly every country in the world," wrote the three-judge panel in an unsigned opinion."The court does not read IEEPA to confer such unbounded authority and sets aside the challenged tariffs imposed thereunder," it noted, adding that any interpretation that "delegates unlimited tariff authority is unconstitutional".<h2>White House reacts</h2>The White House, as per AFP, has been given 10 days to complete the bureaucratic process and halt the tariffs.Slamming the ruling, the White House argued that "unelected judges" have no right to weigh in on Trump's handling of the issue."President Trump pledged to put America first, and the administration is committed to using every lever of executive power to address this crisis and restore American greatness," said Trump's spokesperson Kush Desai.While the statement did not mention if Trump was seeking legal recourse, multiple US outlets said that his administration has already filed an appeal.The Trump camp also reacted with fury. Stephen Miller, one of Trump's closest White House aides on social media, decried a "judicial coup", which he claimed was out of control.Trump has long justified the tariffs as a response to "national emergencies" like trade deficits and drug trafficking. Critics like Gregory W. Meeks, the top Democrat on the House Foreign Affairs Committee, however, say this was a "bogus" pretext. He said that the court has confirmed that "these tariffs are an illegal abuse of executive power.""Trump's declaration of a bogus national emergency to justify his global trade war was an absurd and unlawful use of IEEPA," he added.

The US federal court, in its ruling, said that Trump, by igniting a global trade war, has overstepped his constitutional authority with across-the-board levies.

In a major blow to Donald Trump, a US federal court on Wednesday (May 28) blocked the majority of the US president's sweeping tariffs, a decision the White House said "unelected judges" have no right to weigh in on. The US federal court, in its ruling, said that Trump, by igniting a global trade war, has overstepped his constitutional authority with across-the-board levies. Not a blank cheque The court's ruling comes in two separate cases, which argue that the POTUS violated Congress's power of the purse – brought forward by businesses and a coalition of state governments The three-judge panel at the Court of International Trade also struck down Trump's use of emergency powers to impose across-the-board import duties on countries China, Canada, Mexico, and the European Union. The court ruled that the International Emergency Economic Powers Act (IEEPA) does not give the president a blank cheque to rewrite trade policy. "The question in the two cases before the court is whether the International Emergency Economic Powers Act of 1977 ("IEEPA") delegates these powers to the president in the form of authority to impose unlimited tariffs on goods from nearly every country in the world," wrote the three-judge panel in an unsigned opinion. "The court does not read IEEPA to confer such unbounded authority and sets aside the challenged tariffs imposed thereunder," it noted, adding that any interpretation that "delegates unlimited tariff authority is unconstitutional". White House reacts The White House, as per AFP, has been given 10 days to complete the bureaucratic process and halt the tariffs. Slamming the ruling, the White House argued that "unelected judges" have no right to weigh in on Trump's handling of the issue. "President Trump pledged to put America first, and the administration is committed to using every lever of executive power to address this crisis and restore American greatness," said Trump's spokesperson Kush Desai. While the statement did not mention if Trump was seeking legal recourse, multiple US outlets said that his administration has already filed an appeal. The Trump camp also reacted with fury. Stephen Miller, one of Trump's closest White House aides on social media, decried a "judicial coup", which he claimed was out of control. Trump has long justified the tariffs as a response to "national emergencies" like trade deficits and drug trafficking. Critics like Gregory W. Meeks, the top Democrat on the House Foreign Affairs Committee, however, say this was a "bogus" pretext. He said that the court has confirmed that "these tariffs are an illegal abuse of executive power." "Trump's declaration of a bogus national emergency to justify his global trade war was an absurd and unlawful use of IEEPA," he added.

The US federal court, in its ruling, said that Trump, by igniting a global trade war, has overstepped his constitutional authority with across-the-board levies.

US court blocks Trump's 'America First' global tariffs, says POTUS overstepped constitutional authority

US President Donald Trump’s flagship budget plan, dubbed the “big, beautiful” bill, faces stiff opposition from within his own party as Republicans remain deeply divided over its provisions. &nbsp;Despite Trump’s personal intervention on Capitol Hill on Tuesday to rally support, significant dissent persists ahead of a crucial House vote reportedly expected later this week.<h2>What is the ‘big, beautiful’ bill?</h2>&nbsp;The sprawling 1,116-page legislation aims to extend and expand the 2017 Trump tax cuts, eliminate taxes on tips and overtime, raise the SALT deduction cap from $10,000 to $30,000 for couples, and introduce new work requirements for Medicaid recipients.&nbsp;&nbsp;It also proposes rescinding green energy subsidies and increasing the child tax credit.&nbsp;The bill includes approximately $4.9 trillion in tax breaks, partially offset by $1.5 trillion in spending cuts over the next decade, according to Reuters.<h2>Four major sticking points</h2>Despite passing the committee stage, the legislation is caught in a tug-of-war between conservative hardliners demanding steeper cuts and moderates protecting their constituents’ interests. These are the four most contentious areas: &nbsp;1. How deep should the cuts go?&nbsp;A central issue is how much to reduce federal spending. The bill’s $4.9 trillion in tax breaks—partly paid for by cutting healthcare and clean energy incentives. It has also alarmed fiscal conservatives who say the reductions don’t go far enough to tackle the US’s $36 trillion national debt.&nbsp;Texas Republican Chip Roy criticised the proposal, saying, “The bill does not yet meet the moment. We can and must do better before we pass the final product,” Bloomberg reported.&nbsp;2. Medicaid work requirements spark sharp debate&nbsp;The bill proposes significant changes to Medicaid, the federal health programme for low-income Americans.&nbsp;&nbsp;Starting in 2029, able-bodied adults would need to work at least 80 hours per month or engage in community service to remain eligible. &nbsp;Hardline Republicans want these requirements to begin immediately. Congressman Ralph Norman of South Carolina and others have called for stricter enforcement and faster implementation.&nbsp;&nbsp;They also seek to bar undocumented immigrants from receiving any Medicaid benefits.&nbsp;But moderates like Missouri Senator Josh Hawley are pushing back. Writing in The New York Times, he called the cuts “morally wrong and politically suicidal,” warning that millions of constituents could lose access to essential healthcare. &nbsp;Representative Andy Harris, chairman of the House Freedom Caucus, also expressed concerns, telling Reuters that “the president, I don’t think, convinced enough people that the bill is adequate the way it is.”&nbsp;President Trump, meanwhile, has warned Republican lawmakers against imposing stricter Medicaid work requirements, stressing the need to cut “waste, fraud, and abuse” rather than benefits, the New York Post reported.&nbsp;3. State and local tax (SALT) deductions divide Republicans&nbsp;The bill raises the cap on state and local tax deductions, commonly known as SALT, from $10,000 to $30,000 for couples. However, lawmakers from high-tax states such as New York, California, and New Jersey say this doesn’t go far enough. &nbsp;In a joint statement, New York Republicans Elise Stefanik, Andrew Garbarino, Nick LaLota, and Mike Lawler called the proposal “insulting.” They are pushing for the cap to be raised to $62,000 for individuals and $124,000 for couples. &nbsp;“While I respect the president, I’m not budging on it,” Lawler told the BBC. “As it stands right now, I do not support the bill.”&nbsp;Congresswoman Nicole Malliotakis, also from New York, who was previously sceptical about the SALT provisions, said she is satisfied with the current compromise. “They’re fighting for their districts, and they should be, but when it comes time to vote for the bill, it’s get the best deal possible and vote for the bill,” she told Reuters.&nbsp;House Republican leaders are reportedly seeking a compromise to raise the SALT cap to $40,000 for individuals and $80,000 for joint filers, though this falls short of the $62,000 some lawmakers demand, Bloomberg reported.&nbsp;4. Food assistance reforms raise humanitarian concerns&nbsp;The legislation also seeks major reforms to the Supplemental Nutrition Assistance Programme (SNAP), which currently supports over 42 million Americans.&nbsp; Under the proposal, states would be required to fund 5 per cent of benefit costs and 75 per cent of administrative expenses or costs they currently do not bear. Work requirements for SNAP recipients would also be expanded, applying to individuals without dependents up to age 64 (currently capped at 54). Republicans argue this will reduce fraud and encourage employment, while Democrats claim it will push millions into food insecurity. Democratic National Committee Chair Ken Martin described the proposal as “a slap in the face” to struggling families, according to Bloomberg.<h2>Trump’s push for unity amid party divisions</h2> On Tuesday, Trump left the White House for Capitol Hill in an effort to mend fractured party support, calling the gathering “a meeting of love” with “great unity in that room” after addressing House Republicans, Reuters reported. Despite his assurances, division remains, especially over Medicaid and SALT deductions. Trump reportedly cautioned Congressman Lawler against pushing for a higher SALT cap, warning it could threaten GOP unity, Reuters added. The bill narrowly passed the House Budget Committee on Sunday with a 17-16 vote but still requires full House approval, expected on Wednesday or Thursday.&nbsp; With a narrow Republican majority and no Democratic support, the bill’s fate remains uncertain, Bloomberg reported. If it clears the House, the bill will head to the Senate, where further amendments are anticipated. Several Republican senators have already voiced concern over Medicaid cuts and the SALT deduction cap, Reuters reported.&nbsp;As the May 26 deadline approaches, President Trump is intensifying efforts to unify his party behind the bill, underscoring the need to prevent tax increases and reduce government spending, Reuters added. &nbsp;

Business & Economy: Trump’s $4.9 trillion tax plan faces backlash from Republicans over healthcare and tax deduction reforms as the House prepares for a critical vote.

US President Donald Trump’s flagship budget plan, dubbed the “big, beautiful” bill, faces stiff opposition from within his own party as Republicans remain deeply divided over its provisions. Despite Trump’s personal intervention on Capitol Hill on Tuesday to rally support, significant dissent persists ahead of a crucial House vote reportedly expected later this week. What is the ‘big, beautiful’ bill? The sprawling 1,116-page legislation aims to extend and expand the 2017 Trump tax cuts, eliminate taxes on tips and overtime, raise the SALT deduction cap from $10,000 to $30,000 for couples, and introduce new work requirements for Medicaid recipients. It also proposes rescinding green energy subsidies and increasing the child tax credit. The bill includes approximately $4.9 trillion in tax breaks, partially offset by $1.5 trillion in spending cuts over the next decade, according to Reuters. Four major sticking points Despite passing the committee stage, the legislation is caught in a tug-of-war between conservative hardliners demanding steeper cuts and moderates protecting their constituents’ interests. These are the four most contentious areas: 1. How deep should the cuts go? A central issue is how much to reduce federal spending. The bill’s $4.9 trillion in tax breaks—partly paid for by cutting healthcare and clean energy incentives. It has also alarmed fiscal conservatives who say the reductions don’t go far enough to tackle the US’s $36 trillion national debt. Texas Republican Chip Roy criticised the proposal, saying, “The bill does not yet meet the moment. We can and must do better before we pass the final product,” Bloomberg reported. 2. Medicaid work requirements spark sharp debate The bill proposes significant changes to Medicaid, the federal health programme for low-income Americans. Starting in 2029, able-bodied adults would need to work at least 80 hours per month or engage in community service to remain eligible. Hardline Republicans want these requirements to begin immediately. Congressman Ralph Norman of South Carolina and others have called for stricter enforcement and faster implementation. They also seek to bar undocumented immigrants from receiving any Medicaid benefits. But moderates like Missouri Senator Josh Hawley are pushing back. Writing in The New York Times, he called the cuts “morally wrong and politically suicidal,” warning that millions of constituents could lose access to essential healthcare. Representative Andy Harris, chairman of the House Freedom Caucus, also expressed concerns, telling Reuters that “the president, I don’t think, convinced enough people that the bill is adequate the way it is.” President Trump, meanwhile, has warned Republican lawmakers against imposing stricter Medicaid work requirements, stressing the need to cut “waste, fraud, and abuse” rather than benefits, the New York Post reported. 3. State and local tax (SALT) deductions divide Republicans The bill raises the cap on state and local tax deductions, commonly known as SALT, from $10,000 to $30,000 for couples. However, lawmakers from high-tax states such as New York, California, and New Jersey say this doesn’t go far enough. In a joint statement, New York Republicans Elise Stefanik, Andrew Garbarino, Nick LaLota, and Mike Lawler called the proposal “insulting.” They are pushing for the cap to be raised to $62,000 for individuals and $124,000 for couples. “While I respect the president, I’m not budging on it,” Lawler told the BBC. “As it stands right now, I do not support the bill.” Congresswoman Nicole Malliotakis, also from New York, who was previously sceptical about the SALT provisions, said she is satisfied with the current compromise. “They’re fighting for their districts, and they should be, but when it comes time to vote for the bill, it’s get the best deal possible and vote for the bill,” she told Reuters. House Republican leaders are reportedly seeking a compromise to raise the SALT cap to $40,000 for individuals and $80,000 for joint filers, though this falls short of the $62,000 some lawmakers demand, Bloomberg reported. 4. Food assistance reforms raise humanitarian concerns The legislation also seeks major reforms to the Supplemental Nutrition Assistance Programme (SNAP), which currently supports over 42 million Americans. Under the proposal, states would be required to fund 5 per cent of benefit costs and 75 per cent of administrative expenses or costs they currently do not bear. Work requirements for SNAP recipients would also be expanded, applying to individuals without dependents up to age 64 (currently capped at 54). Republicans argue this will reduce fraud and encourage employment, while Democrats claim it will push millions into food insecurity. Democratic National Committee Chair Ken Martin described the proposal as “a slap in the face” to struggling families, according to Bloomberg. Trump’s push for unity amid party divisions On Tuesday, Trump left the White House for Capitol Hill in an effort to mend fractured party support, calling the gathering “a meeting of love” with “great unity in that room” after addressing House Republicans, Reuters reported. Despite his assurances, division remains, especially over Medicaid and SALT deductions. Trump reportedly cautioned Congressman Lawler against pushing for a higher SALT cap, warning it could threaten GOP unity, Reuters added. The bill narrowly passed the House Budget Committee on Sunday with a 17-16 vote but still requires full House approval, expected on Wednesday or Thursday. With a narrow Republican majority and no Democratic support, the bill’s fate remains uncertain, Bloomberg reported. If it clears the House, the bill will head to the Senate, where further amendments are anticipated. Several Republican senators have already voiced concern over Medicaid cuts and the SALT deduction cap, Reuters reported. As the May 26 deadline approaches, President Trump is intensifying efforts to unify his party behind the bill, underscoring the need to prevent tax increases and reduce government spending, Reuters added.

US President Donald Trump’s massive 1,100-page ‘big beautiful’ bill aims to revive his 2017 tax agenda but has exposed sharp divides within the GOP over Medicaid work rules, SALT caps, and food aid reforms.

What is Trump’s ‘big beautiful’ bill that’s dividing Republicans?

Amid tariff wars, the US trade deficit soared to a record 140.5 billion dollars in march, its highest monthly gap on record. The deficit was fuelled by a historic spike in imports ahead of sweeping tariffs announced by Donald Trump. &nbsp;<o:p></o:p>
According to the commerce department data, imports rose 4.4 per cent to an all-time high, while exports remained nearly flat. The biggest driver: A jump in consumer goods, led by pharmaceutical imports, most of which came from Ireland. &nbsp;<o:p></o:p>
The surge reflects businesses rushing to stockpile goods before tariffs kicked in on April 2, dubbed &ldquo;liberation day&rdquo; by the white house.<o:p></o:p>
<h2 class="MsoNormal">Economic impact &amp; tariff fallout<o:p></o:p></h2>
The trade imbalance had real consequences. The US economy contracted 0.3 per cent in the first quarter, marking the first decline in three years. Imports grew at their fastest pace since 2020&mdash;up 41 per cent over the quarter&mdash;cutting 5 percentage points from GDP growth. &nbsp;<o:p></o:p>
Imports of capital goods rose $3.7 billion, driven by demand for computer accessories. Auto imports climbed $2.6 billion, while industrial supply imports fell $10.7 billion, due to lower shipments of gold and silver. &nbsp;<o:p></o:p>
Economists warn that the front-loading of imports may reverse in the coming months, potentially shifting pressure back onto domestic production and prices.<o:p></o:p>
Meanwhile, the US dollar has weakened against key global currencies since the start of 2025. From December through march, 92.5 billion dollars in US savings moved into offshore gold and silver, signalling growing concern over economic policy. &nbsp;<o:p></o:p>
Imports from China fell to their lowest level in five years, impacted by a 145 per cent tariff that took effect in April. With no new trade deals announced and reciprocal tariffs from key partners on hold for just 90 days, economists warn that the worst effects of the trade war may still be ahead.<o:p></o:p>
(With inputs from the agencies)<o:p></o:p>

Business & Economy: The US trade deficit soared to a record 140.5 billion dollars in march, its highest monthly gap on record. The deficit was fuelled by a historic spike in imports ahead of sweeping tariffs announced by Donald Trump.

Amid tariff wars, the US trade deficit soared to a record 140.5 billion dollars in march, its highest monthly gap on record. The deficit was fuelled by a historic spike in imports ahead of sweeping tariffs announced by Donald Trump. According to the commerce department data, imports rose 4.4 per cent to an all-time high, while exports remained nearly flat. The biggest driver: A jump in consumer goods, led by pharmaceutical imports, most of which came from Ireland. The surge reflects businesses rushing to stockpile goods before tariffs kicked in on April 2, dubbed “liberation day” by the white house. Economic impact & tariff fallout The trade imbalance had real consequences. The US economy contracted 0.3 per cent in the first quarter, marking the first decline in three years. Imports grew at their fastest pace since 2020—up 41 per cent over the quarter—cutting 5 percentage points from GDP growth. Imports of capital goods rose $3.7 billion, driven by demand for computer accessories. Auto imports climbed $2.6 billion, while industrial supply imports fell $10.7 billion, due to lower shipments of gold and silver. Economists warn that the front-loading of imports may reverse in the coming months, potentially shifting pressure back onto domestic production and prices. Meanwhile, the US dollar has weakened against key global currencies since the start of 2025. From December through march, 92.5 billion dollars in US savings moved into offshore gold and silver, signalling growing concern over economic policy. Imports from China fell to their lowest level in five years, impacted by a 145 per cent tariff that took effect in April. With no new trade deals announced and reciprocal tariffs from key partners on hold for just 90 days, economists warn that the worst effects of the trade war may still be ahead. (With inputs from the agencies)

US trade deficit soars to $140.5 billion in march, hits a record high

US manufacturing activity shrank in April by the most in five months. This was driven by lean order books, and the repercussions from tariffs prompted the steepest output contraction since 2020. The institute for supply management's factory gauge pointed to a contraction. However, prices paid for raw materials accelerated slightly.
The latest data shows that the industrial sector has trouble getting off the ground due to US tariffs and overall trade policy uncertainties. Backlogs decreased more quickly, and orders declined for a third consecutive month. Both of those are indicators of weak demand.
Eleven industries expanded, led by apparel, petroleum, plastics and rubber, while six contracted. The report also showed the strategy of rushing in imports ahead of tariffs is drawing to a close.
The ISM imports index declined at the fastest pace since the end of 2023. In addition to the headwinds posed by sluggish demand, producers are also contending with higher costs.
<h2 class="MsoNormal">US factories struggle for traction</h2>
A measure of prices paid for materials increased to the highest level since June 2022 despite cheaper energy costs. Weak orders, slower production and declining backlogs help explain a third straight month of decreasing manufacturing employment. Manufacturing activity data clearly suggests stagflation at play.
Economists warn that the US may already be in recession, with uncertainty around Trump's tariffs weighing further on economic activity. The US economy contracted at the start of 2025, and hard data so far in this quarter suggests a recession reading is imminent.
(With inputs from the agencies)<o:p></o:p>

Business & Economy: US manufacturing activity shrank in April by the most in five months. This was driven by lean order books, and the repercussions from tariffs prompted the steepest output contraction since 2020.

US manufacturing activity shrank in April by the most in five months. This was driven by lean order books, and the repercussions from tariffs prompted the steepest output contraction since 2020. The institute for supply management's factory gauge pointed to a contraction. However, prices paid for raw materials accelerated slightly. The latest data shows that the industrial sector has trouble getting off the ground due to US tariffs and overall trade policy uncertainties. Backlogs decreased more quickly, and orders declined for a third consecutive month. Both of those are indicators of weak demand. Eleven industries expanded, led by apparel, petroleum, plastics and rubber, while six contracted. The report also showed the strategy of rushing in imports ahead of tariffs is drawing to a close. The ISM imports index declined at the fastest pace since the end of 2023. In addition to the headwinds posed by sluggish demand, producers are also contending with higher costs. US factories struggle for traction A measure of prices paid for materials increased to the highest level since June 2022 despite cheaper energy costs. Weak orders, slower production and declining backlogs help explain a third straight month of decreasing manufacturing employment. Manufacturing activity data clearly suggests stagflation at play. Economists warn that the US may already be in recession, with uncertainty around Trump's tariffs weighing further on economic activity. The US economy contracted at the start of 2025, and hard data so far in this quarter suggests a recession reading is imminent. (With inputs from the agencies)

US manufacturing activity shrinks by most since November

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