China Trade Negotiations Continue Past US Tariff Deadline, Inflation Rises

China Trade Negotiations Update

• 🇨🇳 China has signaled that trade negotiations with the U.S. will continue beyond the August 12th deadline.
• ⏳ Both sides spoke in Sweden this week, with China announcing a 90-day pause, though the U.S. Treasury Secretary noted the need for presidential confirmation.
• 📌 The situation with China is described as "status quo" with ongoing talks.

Other Outstanding Trade Agreements

• 🇧🇷 A 50% tariff is in place for Brazil.
• 🇮🇳 India faces a 25% tariff, and negotiations with them appear to have stalled.
• 🇲🇽 Canada and Mexico are also in the mix, with potential renegotiations of the existing free trade agreement by 2026, and current discussions complicated by Canada's recognition of Palestine.

Economic Indicators and Inflation

• 📈 The Personal Consumption Expenditures (PCE) data, the Fed's preferred inflation gauge, rose to 2.6%, exceeding the expected 2.5% and the Fed's 2% target.
• 🚗 A significant driver of this inflation is the flow-through of tariffs into goods, particularly impacting the auto sector with a 25% tariff.
• 🛍️ Consumer spending data shows a pullback in autos and auto parts, as people bought cars before the tariff deadline and are now hesitant to repair or purchase them.

Federal Reserve and Interest Rates

• 🏦 The Federal Reserve decided to hold rates steady, but two members dissented, marking the first such dissent since 1993.
• 🗣️ President Trump has publicly criticized Fed Chair Powell, using the word "corrupt" in relation to Fed headquarters renovations, which raises concerns given Powell's protected status.
• 🧐 The tension between the President and the Fed Chair is noted, with past criticisms of renovations and spending.