Sunday, Jan 19th
Last update11:50:29 PM GMT
Economic Glance
When the Trump administration imposed tariffs on Chinese imports last year, officials insisted China would pay the cost - implying Chinese firms would have to cut their prices to absorb import “taxes” of up to 25% when the goods hit U.S. shores.
Instead, the prices Chinese firms charge have barely budged, meaning U.S. companies and consumers are paying the tariff costs, estimated at around $40 billion annually, New York Fed Reserve Bank researchers found in a study released on Monday.
The U.S. administration may have to find other means if Trump wants to tax European or Japanese car imports, a key part of the U.S. president’s pledge to make America’s trade relationships more fair, the experts say.
Their argument centers on the Trade Expansion Act of 1962, a U.S. law aimed at protecting America's Cold War-era defense industrial base. Section 232 here of that act lays out how a U.S. president can tax specific imports if the Department of Commerce deems them a threat to national security.
The federal deficit for fiscal 2019 reached close to $1 trillion for the first time since 2012, according to final Treasury Department figures released Friday.
In the final accounting, the deficit came in at $984 billion, more than $200 billion, or 25 percent, higher than last year and the same figure the Congressional Budget Office projected earlier in the month.
The deficit, which is projected to grow in 2020, has only surpassed $1 trillion four times in the nation's history, during the four-year stretch following the 2008 global financial crisis.
While President Trump as a candidate had promised to wipe out the nation's debt altogether, it now stands above $22 trillion. The annual deficit, which adds to the nation's overall debt burden, was $587 billion in the last full fiscal year before Trump took office.
Bed Bath & Beyond will be closing and opening stores this year.
The New Jersey-based home goods retailer, which also operates Buy Buy Baby, Harmon Face Values and World Market, announced mixed results during its fourth-quarter call with financial analysts this week.
"We expect to open approximately 15 new stores in fiscal 2019. This will be offset by a minimum of approximately 40 stores we expect to close," Robyn D'Elia, chief financial officer and treasurer, said during Wednesday's earnings call. "This number will grow unless we are able to negotiate more favorable lease terms with our landlords."
D'Elia said most of the "planned closures are for Bed Bath & Beyond stores."
The federal deficit hit $895 billion in the first 11 months of fiscal 2018, an increase of $222 billion, or 32 percent, over the same period the previous year, according to the Congressional Budget Office (CBO).
The nonpartisan CBO reported that the central drivers of the increasing deficit were the Republican tax law and the bipartisan agreement to increase spending. As a result, revenue only rose 1 percent, failing to keep up with a 7 percent surge in spending, it added.
Revenue from individual and payroll taxes was up some $105 billion, or 4 percent, while corporate taxes fell $71 billion, or 30 percent.
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President Trump seemed excited about the release of Friday morning's job report.
"Looking forward to seeing the employment numbers at 8:30 this morning," he tweeted.
The problem: The president's tweet came before the release of the report by the Bureau of Labor Statistics, which breaks protocol about not commenting on the report before its public release. Trump's tweet hinted a positive report, providing a signal to markets.
Presidents typically get to see the numbers the day before, per a longstanding tradition. Larry Kudlow, director of the National Economic Council, confirmed that he told the president about the numbers on Thursday night aboard Air Force One.
TVNL Comment: Trump broke the law with this move. In the very least, he did his usual dumb thing: whatever he wants without consulting anyone. For the duration of his presidency, Trump should not receive the numbers before the are made public.
Chinese President Xi Jinping promised on Tuesday to open the country’s economy further and lower import tariffs on products like cars, in a speech seen as an attempt to defuse an escalating trade dispute with the United States.
While much of his pledges were reiterations of previously announced reforms that foreign businesses say are long overdue, Xi’s comments sent stock markets and the U.S. dollar higher on hopes of a compromise that could avert a trade war.
Xi said China will widen market access for foreign investors, addressing a chief complaint of its trading partners and a point of contention for U.S. President Donald Trump’s administration, which has threatened billions of dollars in tariffs on Chinese goods.
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