If President Joe Biden rolls back tariffs on Chinese exports, it could have bigger implications than the impact on inflation.
The U.S. is considering dropping the levies started by Donald Trump in 2018. The main argument in favor is that it will relieve the pressure on U.S. consumer prices as gasoline prices hold at around $5 per gallon.
Economists see it bringing down the headline inflation rate by about 0.3 percentage points. That isn’t much when the starting point is north of 8%, the highest in 40 years.
But it must be good news that Treasury Secretary Janet Yellen spoke to Chinese Vice Premier Liu He on Tuesday. Not least for the companies that were hit by the tariffs in the first place.
U.S. auto makers with factories or parts suppliers in China, including
will be hoping for any sign of easier conditions for trade. Years of lockdowns haven’t helped, either. Reducing the continuing risks of a trade war between the two countries is an added boost as factories get back to full capacity.
Technology stocks, battered by a brutal year on the stock market, also stand to gain. Chip makers such as
all reliant on China for sales, were always vulnerable to trade tensions. These are also companies with international supply chains that are being squeezed by the dollar’s strength, so any good news helps.
To be sure, nothing has been agreed yet, and the gesture may prove to be more symbolic than substantial. None of the companies mentioned above have been crippled by the tariffs, either. But investors should welcome the change.
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100s of Flights Canceled or Delayed Over Holiday Weekend
Independence Day weekend was full of headaches for travelers, especially those traveling by air. Airlines had canceled more than 700 flights and delayed more than 10,000 flights within the U.S. on Saturday and Sunday, real-time flight-tracking site FlightAware.com reported. There were 254 cancellations on holiday Monday and 3,616 delays.
- The 7.1 million travelers who passed through U.S. airport security checkpoints from Thursday through Saturday was 476,000 higher than the number of travelers on those dates in 2019, according to the Transportation Security Administration data.
- The combination of higher demand, fewer flights, and not enough workers has rippled through airports worldwide. Major U.S. airlines canceled about 2.9% of their domestic flights in June, according to aviation data provider Cirium, compared with about 2% during June 2019.
Delta Air Lines
waived change fees for passengers traveling over the weekend, to rebook flights by Friday, July 8, saying, “We expect to carry customer volumes over the weekend not seen since before the pandemic.”
What’s Next: Retail gas prices, which have declined from a record average of $5.034 a gallon on June 16, could still climb higher this summer, said GasBuddy’s head of petroleum analysis Patrick De Haan. The Atlantic hurricane season could disrupt refineries, oil production, and transportation in the Gulf of Mexico.
—Janet H. Cho
Sanctions Hurt Russia, but Putin Also Threatens Food Supplies
German Chancellor Olaf Scholz told CBS’ Face the Nation that the West’s sanctions are really hurting Russia’s Vladimir Putin, because Russia needs the world’s technologies to maintain its standard of living and to grow its economy, even if Putin won’t admit it.
- Russia has claimed control over Lysychansk, a key Ukrainian stronghold in the eastern Luhansk province, which along with neighboring Donetsk comprises the Donbas area Russia wants. Ukraine’s military said on Sunday that Ukrainian forces had withdrawn from the city to avoid being surrounded.
- Blocking Ukraine’s ports with warships, destroying its grain infrastructure, and seizing farmland and Ukrainian wheat are part of Russia’s strategy to use “food as a weapon” to negotiate for sanctions relief and wield influence, said Cary Fowler, the U.S. special envoy for global food security.
- Scholz said the food shortages and rising energy prices worldwide are the direct consequence of “Russia’s aggression against Ukraine and the war he is imposing.” He also said Putin has the means and the will to continue the war “a long time.”
- The United Nations World Food Program’s Adeyinka Badejo said the organization had to suspend aid to nearly two million people in South Sudan because of higher food and fuel costs from the Russia-Ukraine war. “We’re having to take from the hungry to feed the starving,” she told CBS News.
What’s Next: Scholz said Germany and other countries are collecting money to deliver food to the poorest countries. The Group of 7 leaders have pledged $4.5 billion—including $2.76 billion from the U.S.—to battle food insecurity among more than 47 countries and regional organizations.
—Janet H. Cho
Tesla Is No Longer the World’s Largest EV Seller
has overtaken Tesla to become the world’s biggest electric-vehicle producer by sales, even as Covid-19 lockdowns in China disrupted some supply chains.
- Shenzhen-based BYD sold 641,000 new energy vehicles in the first half of 2022, the company said on June 3. That represents an increase of almost 315% year-over-year covering the same period. In June, BYD sold 134,036 new energy vehicles, a year-on-year increase of 162.7%.
- By comparison, Tesla delivered 564,000 electric vehicles in the first half of the year. In the second quarter, Tesla delivered 254,695 EVs, a drop of 18% compared with first-quarter deliveries of 310,048.
- That result isn’t so bad given what has gone on. Tesla’s most productive plant in China was hamstrung for months because of Covid restrictions implemented to help Chinese officials control rising infections. But June was the highest vehicle production month in Tesla’s history, according to the company.
What’s Next: As for the second half of 2022, production is expected to continue to ramp higher in the second half of 2022. Wall Street expects roughly 390,000 deliveries in the third quarter and 445,000 deliveries in the fourth quarter, putting the full-year 2022 number at around 1.4 million units. That is up about 50% from the roughly 936,000 vehicles delivered in 2021.
—Al Root and Lina Saigol
Zuckerberg Warns Meta Will Scale Back Hiring, Resources
CEO Mark Zuckerberg issued a chilling message to
employees, telling 77,800 workers at an internal meeting last Thursday that Facebook’s parent faces one of the “worst downturns that we’ve seen in recent history” that will require scaling back hiring and resources.
- He told employees they would be expected to do more with fewer resources and that their performance would be more intensely graded, the New York Times reported. Meta plans to hire 6,000 to 7,000 engineers this year, rather than its earlier goal of 10,000, the Times said.
- “I think some of you might decide that this place isn’t for you, and that self-selection is OK with me,” Zuckerberg said, adding that there are “probably a bunch of people at the company who shouldn’t be here,” according to the Times.
Facebook’s Meta Platforms stock has plunged more than 52% this year, as it grapples with
Other tech companies that have recently announced job cuts include:
are among the employers that have imposed hiring freezes.
What’s Next: Zuckerberg noted during Meta’s most recent earnings call that a downturn could slow its aggressive, multibillion-dollar development of the metaverse, and that the Russia-Ukraine war has “introduced further volatility into an already uncertain macroeconomic landscape for advertisers.”
—Janet H. Cho
Summer Cookout Costs Jump 17% as Food Prices Rise
The cost of hosting a traditional summer cookout has soared. The average cost of feeding 10 people has jumped 17% this year, to $69.68, according to a survey from the American Farm Bureau Federation, an advocacy group that represents farmers.
- Prices for favorites such as hamburgers, pork chops, potato salad, and ice cream all increased: Ground beef is up 36%, as are pork and beans (33%), pork chops (31%), potato salad (19%), hamburger buns (16%), and vanilla ice cream (10%), The Wall Street Journal reported.
- The AFBF attributes the spike to supply-chain snarls, rising inflation, and the war in Ukraine, which have not only increased prices for grocers, but for farmers and growers. “The cost of fuel is up and fertilizer prices have tripled,” said AFBF chief economist Roger Cryan.
- Beer prices have risen nearly 25% year-to-date, although the domestic super premium beer category is up only 15%, and wine prices are up almost 6%, according to an analysis by Wells Fargo.
- U.S. consumer inflation rose by 8.6% year-over-year in May, including a 34.6% increase in energy prices and an 11.9% spike in grocery items, the biggest increase since 1979, the Labor Department said. Every single grocery category rose, most by double digits.
What’s Next: Some of the nation’s largest food companies—including
—have said they expect to keep raising prices due to higher labor, packaging, ingredients, and transportation costs, The Wall Street Journal reported.
—Janet H. Cho
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