US retailers receive a summer boost
The June US retail sales report is certainly stronger than expected although headline sales on the month were still only flat on the month. The consensus was for a 0.3% month-on-month drop and the May figure was revised up two tenths of a percentage point to 0.3% MoM growth. The details show motor vehicle sales fell 2% MoM, which was broadly in line with the auto volume sales, which we already knew. Gasoline station sales fell 3% MoM due primarily to lower prices while sporting goods saw sales dip 0.1%.
However, all other areas were strong. Non-store (largely internet) saw sales rise 1.9% MoM, building materials jumped 1.4%, clothing and furniture both increased 0.6% with health and personal care up 0.9%. (…)
Retail sales stalled in June, but that was actually a lot better than expected. For starters, the consensus expectation was for 0.3% decline, and on top of that, last month’s modest 0.1% increase was revised up to a 0.3% increase which should have set up a more difficult base for the June change.
The rationale for such low expectations was rooted in expectation for some distortions this month. For starters, some softness is price related, particularly in gas prices which were down about 14¢ from May. There was also further price declines in the auto sector, but remember that dealers were also contending with a major cyber-attack on a software firm that supports auto dealers across the country. Ex-autos and gas, retail sales were up 0.8%. That is the biggest monthly gain since January 2023.
In stripping out a few more components, like restaurants and building materials, the control group measure of sales came in even stronger, rising 0.9% last month. Recall that this measure feeds directly into the BEA’s calculation of real goods spending in the GDP accounts, and while retail growth has outpaced broader goods spending recently (chart), the better-than-expected outturn positions for a rebound in Q2 goods consumption after a weak first quarter. Real goods spending slipped at a 2.3% annualized rate in Q1, and today’s data present some upside to our estimate for total real personal consumption expenditures to rise at a 1.6% annualized rate in Q2. (…)
When the May retail sales report came in weak, I argued that real sales were stronger than many said and that the consumer was far from retrenching.
My estimate of retail inflation (35% CPI-Durables + 65% CPI-Nondurables) is –0.5% MoM in June and –0.6% YoY.
Nominal Control Sales rose 0.9% MoM in June after +0.4% in May. Last 4 months: +4.3% annualized with negative inflation.
Top Official Suggests Fed Is Closer—But Not Yet Ready—to Cut
Nick Timiraos had a very long conversation with John Williams. Some extracts:
Timiraos: How do you see the economy right now?
Williams: Well, I think we’re seeing a continuation of some trends that we’ve been watching for the past year. We’re seeing the imbalances between supply and demand recede both in the labor market and I think the overall economy. Pretty much every indicator that was telling us that the labor market was extraordinarily tight a couple years ago has moved back to levels consistent with a strong labor market of around the years 2018 to 2019. So I think that’s really, really great progress and it’s been consistent across a wide range of indicators. And that’s a part of what we need to see in terms of bringing inflation sustainably back to our 2% inflation goal.
On the inflation front, we’ve seen continued progress towards 2%. It’s been an uneven process where inflation readings late last year were very low and then the first three months of the year, they were high and the past two months, and based on what we’re seeing in the CPI and the PPI, it looks like June would be another reasonably good reading on inflation.
So I would say that the underlying trend in inflation is now more back on track towards moving to that 2% goal, but the inflation data have been moving one way or the other. So really got to keep watching how that trend continues to progress. That’s the big picture. The labor market remains strong, the economy continues to grow, and we’re seeing two important indicators, at least for monetary policy, moving in the right direction. One is the imbalances between supply and demand. The other is inflation moving towards our 2% longer run goal. (…)
I would like to see more data to gain further confidence inflation is moving sustainably towards our 2% goal. We’ve got a few good months now. We had some months that weren’t good on inflation. So I definitely want to see the data continue to show signs that we’re moving sustainably to 2% to have greater confidence in that. (…)
Timiraos: (…) Given all of that, why keep interest rates where they are right now?
Williams: I think the current stance of monetary policy is accomplishing what we need to see, which is this process of restoring balance between supply and demand to continue for some time and to see inflation move from its current level of around 2.5% on the PCE price index that we focus on down sustainably to 2%. So I think a restrictive stance of policy that we have in place is appropriate as I see more data and get that greater confidence that inflation is moving toward sustainably toward our 2% goal.
I do think there is a decision ahead of us at some point to decide, not to get out of a restrictive sense of policy, but to lower interest rates in a way that lessens how restrictive policy is [to] move it over time to more normal interest rates, reflecting the fact that inflation is coming down to 2% and the economy is getting into balance right now.
I think we’ve had a few months of encouraging data. It’s the kind of data I would like to see more of in coming months. But I feel like the stance of policy right now is working well and if we get more data like this, I think that I would find myself finding that greater confidence that we’re on inflation is moving sustainably to 2%. (…)
One thing to keep in mind is the economy is actually growing quite nicely. Last year the economy grew over 3%. GDP grew over 3%. We added something like 3 million jobs last year. Job growth has continued to be pretty strong over the first half of this year. Although the unemployment rate has edged up, as you said, by roughly a half a percentage point over the last year or year and a half, it’s still relatively low.
So we’re still in a strong labor market. So what we’ve seen is even with this restrictive stance of policy that we have in place, we haven’t seen the economy weaken significantly. We haven’t seen the labor market become weak. What we’ve seen is a process of getting it to a better balance.
So obviously we don’t need to see that continue forever of rebalancing the economy because when we have that good balance, we’ll want to maintain that. I just think that the stance of monetary policy today is working well to continue to get us to that point and then we can, when we have that greater confidence in the inflation is moving sustainably to 2% and taking into account what’s happening in the real side of the economy and in entirety of the picture adjust policy at that point. (…)
Timiraos: (…) If the case for a rate cut is clear, why wait another seven weeks before delivering it? (…)
Williams: (…) So we’re actually going to learn a lot between July and September. We’ll get two months of inflation data. We’ll get quite a bit of information on the labor market, get a lot of information on things like consumer spending, business spending and what’s happening, also what’s happening around the world and how that factors into what’s happening in the U.S. economy. So there’s a lot of data we’ve got.
I go back to the inflation data. We’ve got low readings in the last half of last year, high readings in the first three months, some lower or good readings in the second three months of this year…. I will get a better understanding of how to read the tea leaves about some of the mixed signals we’ve had on that. I think equally importantly is to see how the labor market is continuing to progress in terms of what we’ve seen in the past—still a very strong labor market, but one where the imbalances are receding, and looking also at the indicators of growth.
So I think we will learn a lot about the two things that I highlighted about the imbalances in the economy and how they are evolving and hopefully getting into better balance and seeing that on inflation. So there’s a lot we’re learning. (…)
But I do think that based on the evidence we’ve seen in the labor market, the analysis our economists have done, and also just the experience of having very low inflation while we had unemployment below 4% during the latter parts of the last expansion, in 2018-19, tells me that there is a sustainable level of unemployment in that ballpark around 4% or a little bit below. So that’s how I think about it. I go back to the economy of 2018, 2019.
It does seem like a long time ago to me, but that was an economy where inflation was running at or below 2%. Unemployment was around 3.5%, and the economy was growing nicely. So when I watch all the data and analysis that we’ve done since that point, a lot has happened, the pandemic and everything since then. But some of these factors like demographics and educational attainment, other things like that, haven’t fundamentally shifted in major ways.
We’ve seen labor-force participation come back to where it was before the pandemic, at least for the 25- to 54-year-old group. I think we’ve seen productivity trends go back to where they were before the pandemic or maybe even a little bit better. Surprisingly, we’ve seen a lot of fundamental factors that were true of a very strong low inflation economy that we saw in 2018, 2019 having re-emerged despite the enormous disruption in shocks of the past 4 1⁄2 years.
And so when I think about the unemployment rate with the understanding that this is very uncertain about this, I feel like there’s a good chance that it is probably about where I thought it was before the pandemic with the adjustments for demographic factors and things. So that’s where I get to the 3.8%. (…)
Indeed Job Postings through last Friday suggest that job openings have stopped declining.
US Floats Tougher Trade Curbs in Chip Crackdown on China Restrictions would hit technology from Tokyo Electron and ASML
The Biden administration, facing pushback to its chip crackdown on China, has told allies that it’s considering using the most severe trade restrictions available if companies such as Tokyo Electron Ltd. and ASML Holding NV continue giving the country access to advanced semiconductor technology.
Seeking leverage with allies, the US is mulling whether to impose a measure called the foreign direct product rule, or FDPR, said people familiar with recent discussions. The rule lets the country impose controls on foreign-made products that use even the tiniest amount of American technology.
Such a step — seen by allies as draconian — would be used to clamp down on business in China by Japan’s Tokyo Electron and the Netherlands’ ASML, which make chipmaking machinery that’s vital to the industry. The US is presenting the idea to officials in Tokyo and the Hague as an increasingly likely outcome if the countries don’t tighten their own China measures, according to the people, who asked not to be identified because the deliberations are private. (…)
The goal is to persuade allies, who have already restricted some shipments of key equipment, to limit their companies’ ability to service and repair restricted gear that’s already in China — which US firms are barred from doing. The US is also weighing additional sanctions on specific Chinese chip companies, Bloomberg reported earlier. (…)
The prospect of stricter trade rules would suggest that attempts to form a unified front against China’s chip ambitions have fallen short. The US imposed sweeping restrictions on the sale of advanced chips and manufacturing gear to China in October 2022 — and tightened those measures one year later — as part of a campaign to prevent Beijing from gaining cutting-edge technology that could boost its military. (…)
But the policies have also cost American companies billions of dollars in revenue. The US chip industry argues that it has shouldered an unfairly large part of the burden, and that there needs to be more allied cooperation to prevent China from finding ways around the existing controls.
Applied Materials Inc., Lam Research Corp. and KLA Corp. — the three biggest American makers of chip equipment — have been pressing their case in a series of recent meetings with US officials, according to people familiar with the situation. They have argued that current trade policies are backfiring, damaging American semiconductor companies while failing to halt Chinese progress as much as the US government hoped.
But the companies don’t want the administration to use FDPR. They fear it will provoke Japan and the Netherlands to become defiant and stop cooperating. Businesses around the world also would have greater incentive to scrub American products from their supply chains in order to avoid the new restrictions.
Government officials in Tokyo have already said they wouldn’t enforce such an effort, according to some of the people. (…)
People familiar with ASML’s thinking said the policy could spark a diplomatic crisis between the Hague and Washington. Tokyo Electron, meanwhile, asked Japanese officials to preemptively push back against the plan, another person said. And the company wants assurances that ASML would also be covered by any decision.
But there’s a growing clamor in the US for more action. In a bill that recently cleared the House Appropriations Committee, lawmakers directed the Bureau of Industry and Security to take up the unverified list idea. “The committee is concerned by reports that foreign entities in allied nations continue to take advantage of US export controls and US efforts to counter malign acquisition of advanced technology,” the proposal reads.
That allegation — that foreign businesses have taken advantage of US rules — is exactly the complaint that Lam, KLA and Applied Materials have put before officials at BIS and the NSC. They argue that Chinese chipmakers have been getting around the need for US machinery by relying on equipment and engineers from other countries, according to people familiar with the meetings.
Case in point, the companies say, is Yangtze Memory Technologies Co., China’s most advanced maker of memory chips. YMTC was blacklisted by the US in 2022 after intense lobbying from American memory-chip maker Micron Technology Inc. The Chinese company felt an immediate blow and was forced to lay off 10% of its workforce within two months of the controls taking effect.
But the chipmaker is still making progress on advancing its technology, the US companies say. Huawei’s latest flagship smartphone uses YMTC chips, Bloomberg has reported, in a step toward a fully Chinese supply chain. (…)
Fresh Tariffs Could See Interest Rates Stay Higher for Even Longer, IMF Warns The Fund left its forecast for world economic growth this year unchanged at 3.2%, and raised its forecast for next year to 3.3% from 3.2%.
In its latest report on the outlook for the global economy, the Fund said borrowing costs could also be pushed higher by a series of elections that may lead to a surge in already high levels of government borrowing.
The Fund left its forecast for world economic growth this year unchanged at 3.2%, and raised its forecast for next year to 3.3% from 3.2%. It slightly lowered its growth forecast for the U.S. this year, and slightly raised its forecast for the eurozone.
The Fund said that inflation rates are likely to continue to fall around the world, but are declining at a slower pace than had been expected as prices of services and wages continue to increase rapidly. However, it warned that a fresh round of tariffs and other barriers to trade could push inflation rates higher, forcing central banks to maintain their key rates at currently high levels.
“Upside risks to inflation have thus increased, raising the prospect of higher-for-even-longer interest rates, in the context of escalating trade tensions and increased policy uncertainty,” the IMF said. (…)
“The potential for significant swings in economic policy as a result of elections this year, with negative spillovers to the rest of the world, has increased the uncertainty,” the IMF said.
“These potential shifts entail fiscal profligacy risks that will worsen debt dynamics, adversely affecting long-term yields.” (…)
“It is concerning that a country like the United States, at full employment, maintains a fiscal stance that pushes its debt-to-GDP ratio steadily higher, with risks to both the domestic and global economy,” said Pierre-Olivier Gourinchas, the IMF’s chief economist. (…)
Canada: June’s CPI report argues for a July rate cut
Monthly core inflation (average of CPI-Trim and CPI-Median) eased from 0.34% in May to 0.24% in June. Some may argue that June’s pace is still too high (2.9% annualized) to reach the 2.0% target. Given that the recent trend is far from eyebrow-raising, we would be surprised if the Bank of Canada is concerned.
Indeed, over the last six months, core inflation has been running at a rate of only 2.2%, barely above the central bank’s target, while a very small number of components are rising at a rate above the target. We’ve been arguing for some time that Canada’s widespread inflation problem has long been solved and is limited to the shelter component. All we have to do is remove the mortgage interest component, whose rise is largely attributable to the Bank of Canada itself, and annual inflation is only 1.9%, compared with 2.7% for the basket as a whole.
And it’s not as if there’s any indication that inflation will accelerate in the coming months, quite the contrary. The labour market is deteriorating rapidly, as evidenced by the rising unemployment rate in recent months, while hiring is failing to keep pace with population growth. Yesterday’s Business Outlook Survey confirms our view that most industries are currently overstaffed, which is hardly reassuring for the future. In fact, the proportion of firms reporting labour shortages fell to 15%, a level seen only in previous recessions. What’s more, a large majority of companies are planning to give smaller pay rises than last year, which will help to bring down inflation excluding housing.
All in all, this morning’s data is consistent with our view that the Canadian economy is in great need of oxygen and we still expect a rate cut in July.
The Trump Economy, Past and Future Deregulation and tax reform were pro-growth, but tariffs hurt the common man. What would a second term bring?
Today’s WSJ editorial:
(…) The reality is that most Americans benefited from the rising Trump tide before Covid, but they also would have fared better without his tariffs. This heralds the fight over the next phase of Trumponomics if he wins a second term.
The centerpiece of the Trump economic agenda was his 2017 tax reform and deregulation. Mr. Trump and the GOP Congress slashed the corporate tax rate to 21% from 35% and adopted a territorial system that doesn’t tax foreign income. This eliminated a large incentive for relocating offshore and the penalty for bringing overseas cash back to the U.S. (…)
Mr. Trump’s tax and regulatory policies lifted investment and the economy, which had slowed in the last two years of the Obama presidency. Business investment during Mr. Trump’s first three years more than doubled while average annual GDP growth increased 0.7 percentage points. Stronger growth produced a tighter labor market and higher wages that benefited lower-income workers.
Real average hourly wages adjusted for inflation climbed 2.9% between January 2017 and 2020, a sharp contrast to the 1.9% decline since January 2021. While higher earners did well, so did the poor. The share of Americans earning more than $200,000 (adjusted for inflation) increased by roughly a quarter while the proportion making less than $35,000 fell by about 10%.
Alas, the Trump mini-boom was tempered by the economic uncertainty and costs of his tariffs that hit friendly nations and adversaries alike. These included 25% duties on steel and 10% on aluminum, as well as levies on washing machines, solar panels and an array of Chinese goods that raised costs for U.S. businesses and consumers. “Tariff man” forgot about the common man.
The Tax Foundation estimated that the Trump tariffs cost American households more than $625 annually. A 2019 study by Fed economists looked at two waves of trade policy “shock,” first in 2018 and then in the first half of 2019, and estimated the impact reduced GDP growth by about one percentage point. Tariffs contributed to the slowing economy and business investment late in 2019, which then plunged at the onset of the pandemic.
Mr. Trump and Congress responded to Covid with a $2 trillion relief bill, which was perhaps understandable given the panic in March 2020. But after shutting down the economy on the advice of Anthony Fauci, Mr. Trump too easily went along with Democratic spending priorities, including enhanced unemployment benefits that paid workers more not to work.
He also unilaterally extended Congress’s short-term student loan payment pause and eviction moratorium on dubious legal authority, which set the stage for Mr. Biden to do so repeatedly. In December Mr. Trump prodded Congress to spend another $900 billion, which was counterproductive as the economy was fast recovering. Mr. Trump is no fiscal conservative, and one risk during a second term is that Democrats cajole him into expanding entitlements, especially if there’s a recession.
Mr. Trump’s plans for the second term are unclear and sometimes contradictory. On the one hand, he wants to extend the 2017 tax rates that expire at the end of 2025. This is a big advantage over President Biden. But Mr. Trump is also proposing a 10% tariff on all imports that the Tax Foundation says would shrink the economy by 1.1% and threaten more than 825,000 U.S. jobs.
He’s also promising more deregulation and a rollback of Mr. Biden’s green new deal, which would address the Biden-era’s gross misallocation of capital. But his new running mate J.D. Vance has said he doesn’t mind raising taxes on business and has endorsed Biden’s hyper-regulator Lina Khan.
Another wild card is monetary policy. A victorious Mr. Trump would have a mandate to reduce inflation. But as a real-estate baron, Mr. Trump has always favored low interest rates. This makes his choice of a strong-willed and independent Federal Reserve Chair crucial.
In 2017 Mr. Trump came to office with a GOP Congress that had a well-developed policy agenda on taxes and deregulation. Mr. Trump went along and it paid off. But the current GOP Congress is an intellectual mess on economics.
This means Mr. Trump will put his own stamp on policy from day one. His White House will be an almost daily jump ball between free-market advisers and the new GOP statists and protectionists. A second Trump term promises to be better than what Bidenomics has wrought, but it isn’t risk-free.
- Trump on Taxes, Tariffs, Jerome Powell and More Bloomberg Businessweek sat down with the ex-president at Mar-a-Lago for an exclusive interview.
(…) In a wide-ranging interview on business and the global economy, he says that, if he wins, he’ll allow Jerome Powell to serve out his term as chair of the Federal Reserve, which runs through May 2026. Trump wants to bring the corporate tax rate to as low as 15%, and he no longer plans to ban TikTok. He’d consider Jamie Dimon, chairman and chief executive officer of JPMorgan Chase & Co., to serve as secretary of the Department of the Treasury.
Trump is cool to the idea of protecting Taiwan from Chinese aggression and to US efforts to punish Putin for invading Ukraine. “I don’t love sanctions,” he says. He keeps circling back to William McKinley, who he says raised enough revenue through tariffs during his turn-of-the-20th-century presidency to avoid instituting a federal income tax yet never got the appropriate credit. (…)
The broad strokes of Trumponomics might not be different from what they were during his first term. What’s new is the speed and efficiency with which he intends to enact them. He believes he understands the levers of power much more deeply now, including the importance of selecting the right people for the right jobs. “We had great people, but I had some people that I would not have chosen for a second time,” he says. “Now, I know everybody. Now, I am truly experienced.” (…)
If one thing stands out from Businessweek’s interview with Trump, it’s that he’s fully aware of this power—and he has every intention of using it. (…)
At Mar-a-Lago, Trump makes it clear he’s fed up with the unauthorized freelancing. “There’s a lot of false information,” he complains. He’s eager to set the record straight on several topics.
First, there’s Powell. He told Fox News in February that he wouldn’t reappoint the Fed chair; now he states unequivocally that he’ll let Powell finish his term, which would last well into a second Trump administration.
“I would let him serve it out,” Trump says, “especially if I thought he was doing the right thing.”
Even so, Trump has thoughts on interest-rate policy, at least in the near term. The Fed, he warns, should abstain from cutting rates before the November election and giving the economy, and Biden, a boost. Wall Street fully expects two interest-rate cuts before the end of the year, including one, crucially, before the election. “It’s something that they know they shouldn’t be doing,” he says. (…)
Trump says he’ll bring down prices by opening up the US to more oil and gas drilling. “We have more liquid gold than anybody,” he says. (…)
He believes harsh [immigration] restrictions are key to boosting domestic wages and employment. He characterizes immigration restrictions as “the biggest [factor] of all” in how he’d reshape the economy, with particular benefits for the minorities he’s eager to win over. “The Black people are going to be decimated by the millions of people that are coming into the country,” he says. “They’re already feeling it. Their wages have gone way down. Their jobs are being taken by the migrants coming in illegally into the country.” (According to the US Bureau of Labor Statistics, the majority of employment gains since 2018 have been for naturalized US citizens and legal residents—not migrants.)
Trump’s language turns apocalyptic. “The Black population in this country is going to die because of what’s happened, what’s going to happen to their jobs—their jobs, their housing, everything,” he continues. “I want to stop that.” (…)
He adds that he wants to cut the [corporate tax] rate even lower than that [20%]: “I would like to get it down to 15.” (…)
As president, Trump shattered the long-standing Republican orthodoxy of favoring free trade. He says he’ll go further if reelected. At Mar-a-Lago he offers an impassioned defense of US tariffs—he’s been studying McKinley, dubbing him “the Tariff King”—to make it clear he intends to ratchet up levies not just on China but on the European Union, too. (…)
In addition to targeting China for new tariffs of anywhere from 60% to 100%, he says he’d impose a 10% across-the-board tariff on imports from other countries, citing a familiar litany of complaints about foreign countries not buying enough US goods.
“The ‘European Union’ sounds so lovely,” Trump says. “We love Scotland and Germany. We love all these places. But once you get past that, they treat us violently.” He mentions reluctance in Europe to import US automobiles and agricultural products as key drivers of the more than $200 billion trade deficit, a statistic he considers a critical measure of economic fairness. (…)
Trump’s transactional view of foreign policy and his desire to “win” every deal could have ramifications around the globe—and even rupture US alliances. Asked about America’s commitment to defending Taiwan from China, which views the Asian democracy as a breakaway province, Trump makes it clear that, despite recent bipartisan support for Taiwan, he’s at best lukewarm about standing up to Chinese aggression. Part of his skepticism is grounded in economic resentment. “Taiwan took our chip business from us,” he says. “I mean, how stupid are we? They took all of our chip business. They’re immensely wealthy.” What he wants is for Taiwan to pay the US for protection. “I don’t think we’re any different from an insurance policy. Why? Why are we doing this?” he asks.
Another factor driving his skepticism is what he regards as the practical difficulty of defending a small island on the other side of the globe. “Taiwan is 9,500 miles away,” he says. “It’s 68 miles away from China.” Abandoning the commitment to Taiwan would represent a dramatic shift in US foreign policy—as significant as halting support for Ukraine. But Trump sounds ready to radically alter the terms of these relationships.
His views about Saudi Arabia, by contrast, are more amicable. He says he’s spoken to Crown Prince Mohammed bin Salman Al Saud within the past six months, though he declines to elaborate on the nature and frequency of their talks. Asked if he worries that increasing US oil and gas production would upset the Saudis, who wish to maintain their primacy in energy, Trump replies that he doesn’t think so, pointing once more to a personal relationship. “He likes me, I like him,” he says of the crown prince. “They’re always going to need protection … they’re not naturally protected.” He adds: “I’ll always protect them.”
Trump blames Biden and former President Barack Obama for eroding US relations with Saudi Arabia, saying they pushed the country toward a key adversary. “They’re not with us anymore,” he says. “They’re with China. But they don’t want to be with China. They want to be with us.” (…)
Today, Trump’s focus is on a more broadly appealing charge: that out-of-control tech companies are harming children—to the point, even, of causing a nationwide epidemic of suicides. “They have become too big, too powerful,” he argues. “They’re having a huge negative impact on, especially, young people.”
(…) “I don’t want them destroying our youth,” he says of the social media companies. “You see what they’re doing—including, even, suicides.”
Moments later, however, he’s defending many of these same platforms as vital bulwarks against Chinese technological supremacy. Trump wants to personally dominate the US companies, but he doesn’t want foreign competitors replacing them. “I respect them greatly,” he insists of the companies he was just bashing. “If you go after them very violently, you can destroy them. I don’t want to destroy them.”
At Mar-a-Lago, the one exception to his claim to not want to harm US tech companies, and to privilege domestic ones over foreign ones, is TikTok. Discussing his recent embrace of the Chinese-owned social media platform, where he’s already quite popular, Trump mentions that banning it in the US would benefit a company and a CEO he has no desire to reward. “Now [that] I’m thinking about it, I’m for TikTok, because you need competition,” he says. “If you don’t have TikTok, you have Facebook and Instagram—and that’s, you know, that’s Zuckerberg.” It’s an outcome he won’t abide. He’s still stung by Facebook’s decision to bar him indefinitely in the wake of the Jan. 6 attacks. “All of a sudden,” Trump grouses, “I went from No. 1 to having nobody.” (…)
Not long ago he criticized Bitcoin as a “scam” and a “disaster waiting to happen.” Now he says it and other cryptocurrencies should be “made in the USA.” He frames this about-face as a practical necessity. “If we don’t do it, China is going to figure it out, and China’s going to have it—or somebody else,” he says. (…)
Allow me to repost this link to a recent Bloomberg podcast with Stephen Roach that provides a deeper perspective on U.S.-China relationships.
Stephen Roach Warns of Disaster From Our ‘Sinophobic’ China Policy The former chairman of Morgan Stanley Asia warns of an accidental conflict.
One of the rare areas of bipartisan consensus in the US right now is taking a tough line on China. We saw President Trump put tariffs on Chinese goods, and the Biden administration has only added to them. A second Trump administration may add to them even further. Meanwhile, we’re increasingly placing export restrictions on various technologies, such as semiconductors. Stephen Roach, the former chairman of Morgan Stanley Asia and now a fellow at Yale Law School, foresees disaster from this. He sees an explosion of Sinophobia, with policymakers misreading China and ushering us into a new Cold War, where the risk of some kind of accidental conflict will inevitably rise. In this episode of the podcast, we talk about the current tensions, how they compare to the US-Japan trade tensions in the 1980s, and how things could go bad.
There is also a need to discuss the wisdom of a technology cold war with a country that can “out-tech” the West and achieve significant cost advantages on some of the most critical technologies going forward.
FYI: Corporate tax rates across the G20 (The Daily Shot)
Source: Visual Capitalist Read full article