The Metals Lobby’s Big Steal Americans now pay 75% more for aluminum than the rest of the world, and 64% more for steel.

The U.S.-Canada trade war escalated again Tuesday as Prime Minister Mark Carney announced new tariffs on some $20 billion in U.S. goods. That includes doubling Canada’s tariff rate on U.S. steel and aluminum to 50% to match Mr. Trump’s, and the political back story here is worth more attention. (…)

Call it a case study in how a narrow special interest calls the tune for the rest of the American economy. The current U.S. tariffs on metals date to Mr. Trump’s first term, originally set at 25% for steel and 10% for aluminum, in the name of national security. But his first Administration exempted Canada and Mexico to mitigate the damage to downstream U.S. users in manufacturing and construction.

Soon after taking office for a second time, Mr. Trump removed these exemptions, later raising the tariffs to 50%. After U.S. manufacturers that use steel and aluminum complained that the taxes made them less globally competitive, he imposed a 25% tariff on so-called derivative imports that contain the metals. Who knew stainless steel pots were a national-security threat? (…)

Americans are now paying roughly 75% more for aluminum than the rest of the world. Steel prices in the U.S. are also about 64% higher than in northern Europe. One reason these differential are larger than 50% is because the metal tariffs are stacked on top of other tariffs on China, which is the world’s largest producer of steel and aluminum.

The metal tariffs (including copper) have raised some $46.9 billion in revenue for the government during the current fiscal year through June, plus $21.8 billion in 2025. That’s good for politicians but a nearly $70 billion tax on Americans.

The higher prices have also been great for the share prices of aluminum and steel producers. (…) That’s nice for their investors, but U.S. businesses that use steel and aluminum—and their customers—are paying tens of billions of dollars more as a result. Whether they know it or not, they’re drinking it in every can of soda.

Protectionists say jobs in fabricated and primary metal manufacturing have increased 22,100 since Mr. Trump took office. But overall U.S. employment in manufacturing has declined 62,000. The metals tariffs help a few favored companies in two industries at the expense of everyone else. This is how tariffs work in practice, and once in place they are difficult to repeal as lobbies form to defend them.

By the way, President Trump admitted Monday that the U.S. needs aluminum from Canada—contrary to his social-media post the same day. “This country desperately needs aluminum,” Mr. Trump said during a telephone rally for a GOP candidate in Oklahoma. “We don’t have it. We get it all from Canada for the most part, and we need it badly.”

Thanks to his latest tariffs, we’ll now be paying much more for it after Mr. Carney’s decision to double Canada’s tariffs on U.S. steel and aluminum.

This may cause Mr. Trump to dig in further on his trade war. But it will also impose a cost on the industry groups egging on his protectionism and maybe teach them that their tariff border wall isn’t free.

 

(Yardeni Research)

• How Will the New Canadian Tariffs Affect the U.S. Economy? Levies to take aim at big industries, like aluminum and steel, in addition to smaller ones located in states with closely watched midterm elections

Canada on Tuesday announced tariffs on roughly $20 billion of U.S. goods, days after the U.S. escalated trade tension by enacting new levies on $20 billion of Canadian goods. (…) Trade experts and economists said Canada’s levies would exert pressure on Republican candidates running in key races in the U.S. midterm elections. (…)

Canada said levies of 50% will affect steel and aluminum products that were previously subject to a 25% tariff, along with furniture and clothing. Goods facing 25% tariffs include appliances, dairy products and seafood. (…)

Half of the lobster caught in Maine goes to Canada, he said, and Maine has an important election this fall that will help determine control of the Senate.

“The states that are most reliant on Canada as an export market are often the northern-tier states—Maine, Michigan, Minnesota, Wisconsin, New Hampshire,” Gresser said. Canada is “trying to show the Republican party that there’s a systemic cost to doing this sort of thing.” 

Cheese and other dairy items Canada is targeting are produced in Wisconsin, New England and other states.

Other targeted goods include motorcycles, farm equipment and appliances. Milwaukee-based Harley-Davidson sold 6,400 motorcycles in Canada last year, about 5% of its worldwide total. John Deere and other manufacturers produce farming equipment throughout the Midwest, including in Illinois, Iowa and Wisconsin. Appliance production is concentrated in Ohio and Kentucky. (…)

The Canadian measures don’t take effect until Sept. 8, and an even more punishing tariff response that Trump threatened on Monday—imposing 50% tariffs on automobiles and parts from Canada—wouldn’t take effect until January. So there is time for both sides to “gauge what the costs are and maybe find alternative solutions,” said Jeff Schott, a trade expert at the Peterson Institute for International Economics. (…)

One legal avenue for the U.S. to justify escalation: the clause Trump used to impose his Aug. 22 tariffs on Canada—section 338 of the Trade Act of 1930—allows the U.S. to ban goods from countries that retaliate against such tariffs, according to Barry Appleton, co-director of the Center for International Law at New York Law School.

• US Weighs More Trade Measures Against Canada After Retaliation The already-tense relationship has plunged into outright acrimony.

• Honda warns U.S.-Canada trade fight may raise prices

Like most other automakers, Honda relies heavily on the North American supply chain to make the vehicles it sells here. The automaker had five of the top 10 vehicles on Cars.com’s annual American-Made Index this year. (…)

For now, “we are trying to absorb the cost by ourselves or together with our suppliers,” Kaihara said at the event tied to the Freedom 250 Grand Prix in Washington, D.C. (…)

• Honda currently assembles the Civic sedan at a facility in Canada, where it’s the second-largest vehicle manufacturer by volume.
• Honda said in January that it expects to sell 1.43 million vehicles in the U.S. in 2026.

Kaihara, whose comments came before Trump’s auto tariff announcement, made it clear that the automaker’s plans to build an eighth assembly plant in North America hang in the balance.

“If there’s no USMCA agreement in the future, then we may have to change our direction,” he said. (…)

Huawei AI Data Center Bid in Egypt Spurs US to Mull Counter

Huawei Technologies Co. has bid to build AI data centers for the Egyptian government, demonstrating its global chip ambitions and drawing alarm in Washington — where officials are working to assemble a counteroffer. (…)

If successful, the project would mark early progress for China’s campaign to challenge American dominance in global AI infrastructure. It would make Huawei a key AI provider to Africa’s second-largest economy and lend a foothold in the Middle East, where the US has aggressively invested in the more lucrative AI data center markets of the United Arab Emirates and Saudi Arabia. It also could be the first known export of Huawei’s Ascend accelerators after more than a year of attempts.

When President Donald Trump’s administration learned of the pitch, the State Department reached out to companies including Nvidia, Advanced Micro Devices Inc. and Microsoft Corp. about pulling together a US consortium to counter Huawei’s AI chip bid (…).

Trump’s team has also warned the world that using certain Huawei accelerators without Washington’s approval could result in legal penalty, though it’s unclear whether officials have invoked that guidance in conversations with Cairo. (…)

The tender process may be the first time the US and China have directly competed for the same government AI data center project. How it unfolds will be a test of Huawei’s chip capabilities, Trump’s nascent efforts at emerging-market semiconductor diplomacy, and Egypt’s ability to navigate diverging ecosystems while maintaining control over its AI future. (…)

Huawei’s bid builds on a decades-long presence in Egypt, a north African nation of more than 100 million people that has steadily deepened its cooperation with China in recent years, from trade to military drills. Winning the data center contract would boost Huawei’s presence in a region key to its global vision — and demonstrate that there is indeed foreign demand for its AI chips, which significantly trail Nvidia’s in volume and capability.

American AI infrastructure companies, meanwhile, haven’t historically viewed Egypt as a target market, nor has the country been a top priority for Trump’s AI diplomacy efforts.

Next week, Chinese leader Xi Jinping is set to make his first Egypt trip in more than a decade.

U.S. Says Oil Is Pouring Through Hormuz. Trackers Can’t Find It. Industry firms that count ships, oil output and imports aren’t able to verify the full volume of oil the U.S. claims is getting through Iran’s chokehold

Energy Secretary Chris Wright said last week the U.S. military had helped ship over 15 million barrels of crude and oil products out of the waterway last Tuesday. He put the average oil exports through the strait over a seven-day period at more than 8 million barrels a day. Earlier this month, Wright said the seven-day average stood at around 9 million barrels a day.

The count from commercial ship trackers tells a different story, with estimates ranging from roughly 2 million to 6 million barrels a day. Industry figures on the amount of crude oil and oil products being loaded onto ships in the Persian Gulf and delivered to buyers don’t corroborate the U.S. claims.

There are lots of reasons the numbers can diverge. Many ships are crossing the strait at night with their transponders off, making them hard to track by radio signal or satellite imagery. Big tankers can carry 2 million barrels apiece, so missing one or two can make all the difference. Measurement periods also make a big difference, as do assumptions about how full ships are when they cross.

Wright has said private data firms are undercounting ships that move covertly through the waterway. Still, a persistent gap remains between Washington’s estimates and what the market can independently verify.

“What’s remarkable is how similar tanker trackers’ numbers are. You’d expect someone to have figured out a way to validate the White House numbers if there was a way,” said Rory Johnston, founder of Commodity Context, an oil-market research firm. “As of yet, I haven’t seen anyone do it.” (…)

“Commercial traffic through the Strait of Hormuz remained at reduced levels,” UKMTO said in its report. “Independent tracking data indicated suppression with single-digit numbers transiting in both directions.” (…)

So far, markets are relatively relaxed, with benchmark Brent crude futures elevated around $90 a barrel but well off their wartime highs, indicating the market isn’t desperate for supplies.

Earlier in the war, a yawning gap emerged with physical market cargoes priced well above Brent futures, signaling immediate supply pressure and traders’ optimism that the war would be over soon. That gap—once as large as $36 a barrel—has narrowed to less than $6 in recent months, according to Argus Media, a price-reporting agency. (…)

The United Arab Emirates and Saudi Arabia have also managed to route millions of barrels a day around the blockade by piping them across the desert to the Gulf of Oman or the Red Sea. Mohsen Rezaei, a top Iranian official, said late Sunday that those routes will be threatened if the U.S. continues its campaign of squeezing Iran’s economy.

Kuwaiti, Iraqi and Emirati officials said some tankers are getting through under separate arrangements with Iran, meaning not all of the traffic is moving under U.S. protection. Ship trackers say roughly a third of the vessels that have transited the strait during August have used the Iranian-administered route along the northern reaches of the waterway. (…)

Kpler, a ship-tracking firm, estimates that exports of crude and oil products through Hormuz have run at about 2.3 million barrels a day so far in August, down from 4.9 million barrels a day in July. Huax, another tracker, puts a current range for crude and refined products at 2 million to 5 million barrels a day.

Johnston’s latest seven-day average of confirmed transits is about 4 million barrels a day, though he expects that to be raised to 5 million to 6 million as ships that made dark crossings turn their transponders back on after they clear the strait and their voyages can be reconstructed.

Data from Vortexa, another tanker tracker, runs closer to the administration’s numbers but only across a short window. It says its seven-day average recently peaked at 9.2 million barrels a day. But its 28-day moving average, which the company says is more representative because it smooths out short-term spikes and volatility, remains at around 6 million barrels a day, underscoring how dramatically the picture can change depending on the dates selected. (…)

There is another way to check: Oil can’t move through the strait if it isn’t first put on tankers somewhere in the Persian Gulf. Those figures also don’t line up with the U.S. transit claims.

LSEG puts crude and product loadings inside the Persian Gulf at about 4.4 million barrels a day in July and 1.9 million so far in August.

The data provider says Iraq, which lacks a major bypass route, loaded just 1.1 million barrels a day so far this month, less than a third of prewar levels, while Kuwait loaded 0.5 million, one-fifth of its prewar rate. Kuwaiti officials say they are exporting more, around 1 million barrels a day.

The ultimate check on Washington’s numbers is whether the barrels ultimately surface somewhere. Even if tankers disappear while crossing Hormuz, much of that oil should eventually show up in data on barrels unloaded to buyers or middlemen.

So far, the U.S. government’s claimed volumes aren’t fully showing up in other countries’ import volumes. According to LSEG data, an average of 11.6 million barrels per day of Middle Eastern crude and refined products have been or are scheduled to be discharged in Asia.

That number includes oil exports routed around Hormuz by pipeline, not just barrels escorted through the chokepoint.

• Oil stocks in US Strategic Petroleum Reserve fall by 3.7 million barrels to lowest level since 1982 

SPR barrels are down 16% since June 5 (5.6M bbls/day), 7.3% in the last 4 weeks (4.0M bbls/d).

U.S. crude oil exports recently rebounded to over 4 million barrels per day in August 2026 after hitting an eight-month low in July. In effect, the SPR releases are exported, helping keep prices (artificially) low.

The US Energy Information Administration on Aug. 11:

We expect U.S. commercial crude oil inventories to remain below the five-year (2021–2025) low through the end of 2026. Increased crude oil exports, reduced imports, and high refinery runs since mid-April have led to consistent weekly declines in crude oil stocks. Net imports are forecast to remain below average through 2027 due to strong international demand for U.S. crude oil exports.

China Defends Cooperation With Iran, Warns Against Disrupting It

Beijing threatened to retaliate against the US and signaled it won’t back away from its cooperation with Iran after the Trump administration’s latest sanctions targeted businesses in China and Hong Kong.

Speaking on Tuesday at a regular press briefing in Beijing, Foreign Ministry spokesman Lin Jian gave China’s first official reaction to measures announced by Washington, saying it opposes unilateral sanctions and warning they risk worsening conflicts. The most urgent task is to de-escalate tensions and return to negotiations, he said.

When asked about Beijing’s response to the steps taken by the US against Iran and threats made against its trading partners, Lin reiterated that China would act to protect itself.

“China’s cooperation with Iran has always been conducted within the international framework and should not be interfered with or undermined,” he said. “China is closely monitoring relevant developments and will take all necessary measures to firmly safeguard its own interests.” (…)

Despite the inclusion of Hong Kong-based entities, the US avoided targeting major Chinese financial institutions. The measures suggest Washington is seeking to raise the costs of doing business with Tehran without yet confronting the broader economic and diplomatic fallout that could come from sanctioning large Chinese banks.

China buys the bulk of Iran’s oil and was its second-largest trading partner in 2025, behind the United Arab Emirates, which has said it cut all economic ties with Tehran after accusing it of firing ballistic missiles at its territory.

Also in Bloomberg:

Trump has previously said the US would impose secondary sanctions on any nation or company buying Iranian oil — and never followed through.

A campaign that excludes China isn’t likely to have a substantial impact on Iran, but focusing on Chinese firms could prompt retaliation — and potentially more pain for the global economy.

That’s partly because blacklisting Chinese companies risks opening a new economic confrontation with Beijing. Doing so now would fracture US-China ties just weeks before Trump and Chinese President Xi Jinping are set to meet in September. Asked directly about hitting China with new economic measures on Monday, Bessent said “no one is above the reach of US sanctions” but that he preferred “quiet diplomacy,” adding “we’re not going to name names.” (…)

In May, China ordered domestic companies not to comply with US sanctions on five refiners, while its biggest banks were caught between Beijing’s directive and the risk of losing access to the US financial system.

If the US were to hit China meaningfully — say, by targeting a Chinese bank — Beijing would view it “not only as destabilizing and as insulting, but also as a breach of” the trade truce previously agreed by Trump and Xi, said Michael Sobolik, a senior fellow at Hudson Institute. That could spur China to retaliate in ways that could hit the US hard, including with further export restrictions on critical minerals crucial to global manufacturing or limiting crucial pharmaceutical exports to the US, he said. (…)

Bessent acknowledged the risks of moving too aggressively, suggesting the administration would first give countries and companies a chance to cut their ties with Iran before imposing penalties that could reverberate through global markets.

“We are giving everyone the opportunity to remedy bad behavior,” he said. “Why would I want to blow up the global financial system?” (…)

Secondary sanctions on countries doing business with Tehran would greatly expand the conflict with economic damage not just to China but also India, Turkey and nations across the Gulf, according to Vali Nasr, a professor at the Johns Hopkins School of Advanced International Studies and a former adviser to the US State Department.

“The US is essentially expanding its war in the Gulf to a much greater war between itself and other global actors around the world,” Nasr said.

Bah! A war here, a war there… Why not also rename the Department of the Treasury the War Treasury?

On Monday, the US Treasury Department unveiled a package targeting dozens of individuals and entities as part of what Treasury Secretary Scott Bessent described as Operation Economic Outcast, a broader campaign aimed at severing Iran’s remaining financial lifelines. (…)

“Sanctions against specific entities are meaningless as entity-specific sanctions can’t be applied quickly enough to match the speed at which substitute entities can be created,” said Derek Scissors, a senior fellow at the American Enterprise Institute who tracks Chinese overseas investment.

Some firms could start out as shell companies and then handle more activity if they survive, Scissors said, adding that the dozens of entities the US named “exist in a universe of tens of thousands.” (…)

The other Bessent war:

• Bessent’s Mentor Druckenmiller Calls Bond Buying a Mistake

(…) Druckenmiller argued in a Wall Street Journal opinion column that policymakers should let the bond market do its job, recalling the lessons he learned during his time as a hedge fund manager. (…)

It was an unusually public pushback from Druckenmiller, who worked alongside Bessent and George Soros and remains one of the most influential voices on Wall Street. (…)

Druck’s experience and wisdom::

Consider what the machine was pricing. Inflation is 3% to 4% and has been above the Fed’s target since 2021. Unemployment is 4.1%, full employment by any definition. The deficit is running near 6% of gross domestic product, a number America has never before produced in peacetime at full employment. The national debt crossed $40 trillion the same week Treasury intervened. Net interest will exceed $1.1 trillion this fiscal year, more than the defense budget. The 10-year yield, even after the summer selloff, sits at or below the economy’s nominal growth rate. That means a borrower (federal government) running 6% deficits at full employment, with above-target inflation, still funds itself at roughly the rate its economy grows.

Historically, that configuration is accommodative, not restrictive, of financial conditions. The bond market wasn’t being a vigilante, as some would argue. It was being a pushover that had finally begun to clear its throat, and Treasury moved to quiet even that. (…)

Democracies don’t repair their finances because a budget office publishes a table. They repair them only when the cost of inaction becomes visible and immediate, when mortgage rates bite, when auctions tail, when the political price of a rising long bond finally exceeds the political price of touching spending.

Every basis point of artificial yield suppression is a subsidy to procrastination. Suppressed long rates sugarcoat the interest-cost projections, shrink the apparent urgency, and let incumbents assure voters the debt is someone else’s problem. If Congress and the administration are unlikely to touch entitlements even with the market’s signal, they are certain not to touch them without one. Whatever this operation saves in basis points, it will cost multiples in delay.

Yield management always begins as a technical operation and ends as a policy commitment. (…)

Once markets believe Treasury is defending a price, every rise in yields becomes a test of official resolve, and the operations must grow to survive the tests.

There is a quieter cost, too. Buying back long bonds while funding the purchases with bills shifts duration, or long-term interest-rate risk, out of public hands—economically, a small dose of quantitative easing run out of the Treasury rather than the Fed, easing financial conditions while inflation sits above target. These enlarged operations happen to run through the final stretch of a midterm campaign. Debt management that even appears to follow the political calendar spends the one asset that took two centuries to accumulate: the credibility of the Treasury market. That asset doesn’t regain its value so easily. (…)

In 2023, (…) I called Secretary Janet Yellen’s failure to term out the debt at generational-low rates the biggest blunder in Treasury history. Every household and corporation in America locked in low rates, and the one borrower that needed to most, didn’t.

At prevailing rates, interest expense reaches 4.5% of GDP by 2033 and 144% of all discretionary spending by 2043. We are tracking those markers early. Anyone who tells you entitlements won’t be cut is lying—not about the outcome but about who decides it. Either we restructure the promises deliberately, on our terms, protecting those who most need them, or the bond market restructures them for us, all at once, on its terms. (…)

You can’t buy your way out of a solvency conversation with liquidity tools. You can only postpone the conversation and raise the eventual price. (…)

If the 30-year must trade at 5.5% to clear, that isn’t a crisis. It is an invoice. Then do the only thing that durably lowers long-term yields: address the primary deficit. Reform entitlements gradually and honestly, through means testing, indexing changes, eligibility adjustments phased in over decades—so that the burden is shared across generations instead of dumped on the youngest.

The reward is enormous: A credible fiscal package would do more for the long end of the curve than a buyback program 1,000 times this size.

Governments defending prices against fundamentals always lose. The only variable is how much they spend before conceding. The U.S. shouldn’t put itself on the wrong side of that trade, not with the most important price in the world, and not when that price is trying to say the one thing Washington most needs to hear: Let the bond market speak.

Trump Threatens 50% Tariff on Vehicles and Parts From Canada The move, which would take effect in January, is the latest in the rapidly escalating trade war between the two neighbors

(…) “On January First, 2027, Tariffs on all Cars, Trucks, both large and small, Automotive Parts, and Steel, will be increased to 50%,” Trump said Monday on Truth Social. U.S. tariffs on Canadian automobiles now stand at 25%, with discounts for the U.S. content in cars, while steel tariffs are at 50%. (…)

The new levies also cast further doubt over the future of the U.S.-Mexico-Canada Agreement, the trilateral deal that replaced the North American Free Trade Agreement. (…)

If the tariffs are implemented, a 50% levy could drive automakers to close factories in Canada, particularly if the U.S. eliminates tariff-rebate programs based on automakers’ use of U.S.-made parts. Auto parts regularly cross the U.S., Mexico and Canada borders multiple times before being put in a vehicle. Commerce Secretary Howard Lutnick, whose agency administers the tariffs, has said he wants to bring many of those supply chains to the U.S. (…)

Among the 11th-hour U.S. demands that Carney said derailed negotiations concerned the treatment of medium- and heavy-duty vehicles. He said that U.S. officials sought to deny tariff relief to those vehicles, calling it “a big change, obviously” that would make the Canadian auto industry uneconomic over time. Ford is retooling an automotive assembly plant in a Toronto suburb so that it can manufacture its F-Series Super Duty trucks. (…)

The same day, or the same week:

Trump Laments Lack of US Aluminum Amid Trade Row With Canada

President Donald Trump, who has argued that the US does not need Canada, lamented Monday that his northern neighbor did have something he wants: aluminum.

“This country desperately needs aluminum,” Trump said during a telephone rally for Mike Mazzei, a Republican candidate for governor in Oklahoma. “Selfishly, we need aluminum in this country. We don’t have it. We get it all from Canada for the most part, and we need it badly.”

In a social media post later Monday, Trump also pitched a “desperately needed” aluminum plant in Inola, Oklahoma while endorsing Mazzei. “You can’t get Aluminum in the United States, and this Plant will go elsewhere if it’s not approved,” he wrote on Truth Social. (…)

More than half of the aluminum that Americans consume each year is produced in Canada, making the country essential for multiple products including automobiles and washing machines manufactured in Michigan — a key political battleground state.

The US and Canada were on the verge of a deal last week that would have halved the aluminum levy. But the Trump administration faced pushback from the US steel and aluminum sectors, which urged it to avoid ceding too much to the Canadian market. (…)

What happened last week?

But as Greer haggled with the Canadians this week, a split emerged over the U.S. trade representative’s willingness to reduce an existing 50 percent tariff on aluminum derivatives to 25 percent in return for Canadian concessions.

At a White House meeting, White House trade adviser Peter Navarro and Commerce Secretary Howard Lutnick, whose department administers the national security tariffs, clashed with Greer, representing industry views that the higher aluminum tariffs were needed to encourage domestic manufacturing.

“Navarro and Lutnick were both yelling at Greer saying: ‘What are you doing? This is stupid. You know, we’re not giving these things away,’” said one industry representative, who spoke on the condition of anonymity to describe the confidential talks. (WSJ)

FYI: Trump:

• August 24: “They feel entitled, and yet, we don’t need Canada, they need us!”
• August 23: “We don’t need anything they have.”
• June 10: “We don’t need anything that Canada has.”

Must be true!

BTW:

Mr. Trump’s complaint about the U.S. trade deficit with Canada is particularly ironic since the latter owes entirely to imports of heavy crude oil that is especially well-suited for U.S. refineries. Exclude Canadian oil, and the U.S. would have a trade surplus. But U.S. refineries would also operate at lower capacity. (WSJ)

US grain farmers face worst crisis in decades as Iran war sends costs spiralling Middle East conflict adds to strains in America’s heartland months ahead of midterm elections

Farmers in America’s Corn Belt say they are facing their worst crisis in 40 years, as an explosion in diesel and fertiliser costs triggered by Donald Trump’s Iran war pushes grain producers to the brink. (…)

The huge uptick in prices for fuel and crop nutrients since the US launched its attack on Iran in February came with American farmers already struggling after years of low grain prices and falling incomes.

Many also see themselves as casualties of Trump’s trade wars, which they say have hurt US agricultural exports, particularly soyabean sales to China.

“This is the worst financial downturn in the sector since the 1980s,” said John Hansen, president of Nebraska Farmers Union.

A recent study by the American Farm Bureau Federation, an industry group, found that, without government assistance, farmers growing nine principal crops — including corn — will lose $31bn this year and $32bn in 2027. (…)

Trump has vowed to support farmers, saying in June that “we’re never going to let you down”. In the same month his administration requested an $11bn funding package for farmers that would provide emergency assistance to row crop and speciality crop producers. But farming groups say it is not enough.

Some of his attempts to tackle rising food prices have triggered a backlash from the agricultural sector. Last week he enraged cattle farmers by announcing a 90-day waiver of tariffs on up to 300,000 tonnes of beef imports, a move some ranchers called a “betrayal”.

But many farmers say it is Trump’s war in Iran that has had the most sweeping effect on their businesses. The sharp slowdown in traffic through the Strait of Hormuz has pushed up the price of diesel and disrupted the global supply of fertiliser, which had already surged in 2022 following Russia’s full-scale invasion of Ukraine. (…)

The average cost for diesel — widely used to power agricultural equipment — has shot up to $5.45 a gallon nationwide, compared with $3.81 before the war, according to the US Energy Information Administration.

Interest payments, labour costs and the price of farm machinery had also increased, said Brad Lubben, a professor of agricultural economics at the University of Nebraska-Lincoln.

“If you look at all the components of the production budget, most of them have gone up substantially over the past few years,” he said. (…)

It’s not limited to farming as Ed Yardeni illustrates:

Even excluding energy and food, costs are rising 5-6%:

US Eyes China Overcapacity Tariffs of 7.5% Before Xi Visits

The US is set to impose a 7.5% tariff on Chinese goods over allegations of excess manufacturing capacity before a planned summit between Xi Jinping and Donald Trump next month, according to people familiar with the matter.

The move would restore Trump’s second-term duties on China to around 20%, a level Beijing has previously said is consistent with its trade truce with Washington. Those come on top of other levies imposed during Trump’s first term and extended during the Biden administration.

It would mark the latest step by Trump to resurrect his protectionist trade agenda after the Supreme Court struck down his previous import taxes on products from China and dozens of other economies, while stopping short of escalating the trade conflict with Beijing beyond the agreed-upon threshold. (…)

Beijing and Washington are also looking to extend their so-called trade pact, which established a one-year truce that’s set to expire on Nov. 10, they said. (…)

The administration is justifying its new global duties under the findings of its investigations into forced labor and industrial overcapacity in the economies of dozens of trading partners. (…)

Nomura’s Chip Shortage Index is near a record high, signaling a deep, AI-driven semiconductor shortage. (Daily Shot)