–Trump Fires Head of the Bureau of Labor Statistics because of alleged manipulation
By Denny Gulino
WASHINGTON (MaceNews) – With new reciprocal levies raising America’s average tariff rate to above 18% and the latest jobs and ISM reports raising stagflation fears, the overall era of uncertainty seems to have intensified, not diminished.
The environment of chronic uncertainty about Trump economic policy seemed increasingly tangled by the president’s bombshell announcement in midafternoon that he has ordered the firing of the head of the Bureau of Labor Statistics, thus placing the independence of not only the Federal Reserve but also of the nation’s data mills in play. In the wake of severe downward revisions to previous months of jobs figures, Trump posted, “Important numbers like this must be fair and accurate, they can’t be manipulated for political purposes.”
The so-called reciprocal tariff list released at midnight mostly covered countries whose trade with the U.S. is minor or even minuscule. The week’s delay in implementation, to allow Customs enforcement to catch up, means any economic effects will take longer.
Meanwhile President Trump has undercut the efforts of his top negotiators to frame the tariffs regime as economic remedies, a net positive overall, by muddying the waters.
Brazil, with which the U.S. runs a trade surplus, gets a 50% rate because of what Trump calls an unjustified prosecution of its past president. Canada gets 35% immediately because it’s recognizing Palestinian statehood. India gets 25% because it buys oil from Russia. In fact, India’s status as a promising counterweight to China seems to have vastly deteriorated in Trump’s eyes.
All the while the status of three of America’s major trading partners – Canada, China and Mexico – remains unsettled. In Japan’s case, the details of the $550 billion investment fund that supposedly bought down the tariff rate is being disputed. China, the least accommodative of tariff demands, and Mexico have additional months to talk.
Sunday’s tentative trade deal with the EU has prompted increasing disgruntlement among member states like France and questions about the viability of its $650 billion investment and $750 billion energy purchase promises.
The contradictions within Trump’s economic policies remain unresolved. As Stephen Miran, the chair of the president’s Council of Economy advisers, conceded to CNBC earlier in the day the deletion of migrants from the work force and the general atmosphere of uncertainty may have injected some of the pronounced weakness in the morning’s July jobs report.
In addition, after Thursday’s oral arguments in the federal Appeals Court in which most of the nation’s judicial expertise in international trade law resides, corporate America as well as Embassy Row awakened to the tenuous legal framework for the entire Trump tariffs regime.
Many legal experts think the administration will lose not only in Appeals Court but in the Supreme Court, after both expedite their rulings in the weeks ahead. Some of the 11 Appeals Court justices hearing the case seemed skeptical of the administrations claim to have an unrestricted legal basis for the reciprocal tariffs. Negative rulings could collapse the reciprocal tariffs and force refunds of tariff revenues while emasculating much of Trumps’ tariff powers.
While alternative tariff authorities to the International Emergency Economic Powers Act of 1977 – which does not mention tariffs – are available, like those being used for 50% sectoral across-the-board tariffs on steel and aluminum imports and, as of Wednesday, copper, they are encumbered with restrictive conditions and time limits.
Geopolitical risks were heightened at midday when President Trump posted on Truth Social about Russia, “I have ordered two Nuclear Submarines, to be positioned in the appropriate regions, just in case these foolish and inflammatory statements are more than just that.”
A weaker jobs picture, continuing murkiness about threatened and accomplished trade deals, exacerbated geopolitical risks and the ongoing unpredictable nature of the drama-seeking Trump presidency are fueling countercurrents for Federal Reserve policy, both introducing rationales for rate cuts as well as for further delays for rate cuts.
Yale economists Friday estimated the effects of all U.S. tariffs and foreign retaliation amount to an overall effective tariff rate of 18.3%, the highest since 1934. That works out, they say, to a household income loss of $2,400. The disproportionate impact on shoe and apparel prices is increase of about 40%.
The insight about Trump offered to CNBC earlier in the week by a fellow mega New York real estate developer, Richard LeFrak, was that the president has always been prone to throwing “a grenade” into the room to see what settles out. That argues for unending surprises, unending uncertainty and profits, prices and market outcomes under unending pressure. So seemingly in line with LeFrak’s observation, in midafternoon Trump posted that he is firing the head of the Bureau of Labor Statistics because she is a Biden appointee and because of allegedly manipulated data, so putting the independence of both government data mills as well as the Federal Reserve in play.