Wholesale prices unexpectedly fall amid Trump’s tariffs
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(NEW YORK) — Wholesale prices unexpectedly dropped in August, clocking in lower than economists expected and defying concerns about a tariff-induced spike in costs suffered by suppliers.
Producer prices fell 0.1% in August, rolling back some of a sharp increase in wholesale prices that took hold in the previous month, the U.S. Bureau of Labor Statistics said on Wednesday.
Since President Donald Trump began escalating tariffs earlier this year, the monthly wholesale-price measure has drawn close attention as an indicator of a potential pass through to consumer prices.
In July, producer prices rose 0.9%, exceeding economists’ expectations and stoking fear of an eventual hike in prices paid by shoppers. The downshift in wholesale prices last month could ease some of those worries, though analysts will gain further clarity from consumer price data scheduled to be released on Thursday.
The wholesale price data on Wednesday held some cause for concern, however. A measure of core producer prices – which strips out volatile prices for food and energy – jumped 0.3% in August, which marked the fourth consecutive month of increases for that measure.
Overall, wholesale prices climbed 2.8% over a year ending in August, which marked the largest one-year jump in the index since March.
The fresh data arrives at a challenging time for the nation’s economy. In recent months, inflation has picked up while hiring has slowed, posing a risk of an economic double-whammy known as “stagflation.”
Fed Chair Jerome Powell recently hinted at the possibility of an interest rate cut, appearing to indicate greater concern for flagging employment growth than for rising prices. Investors widely expect a quarter-point interest rate cut when Fed policymakers meet later this month.
(WASHINGTON) — AI chipmakers Nvidia and Advanced Micro Devices struck an extraordinary accord to pay the United States government 15% of the revenue the two companies are set to make from products sold in China, a White House official confirmed to ABC News.
In exchange for the payment, the Trump administration will grant the companies export licenses for the AI chips, allowing the firms to tap into a large market in China.
The quid quo pro agreement between major corporations and the president holds little or no precedent. The Financial Times first reported the deal.
Speaking to reporters at the White House on Monday, Trump recounted the agreement with Nvidia. “I said, ‘If I’m going to do that, I want you to pay us as a country something, because I’m giving you a release,'” Trump said.
Here’s what to know about the deal reached between Nvidia, AMD and the Trump administration.
Trump green-lights AI chip exports to China
In recent years, Santa Clara, Calif.-based Nvidia has grown into one of the world’s largest companies as its advanced chips have fueled the rapid development of chatbots and other AI tools.
The company said last month that the Trump administration had granted the company permission to sell its H20 chip, a product specifically designed for sale to China. Nvidia developed the chip in compliance with export restrictions put in place by the Biden administration beginning in 2022.
Despite the Trump administration’s apparent green light last month, Nvidia did not receive licenses for chip exports to China over the ensuing weeks.
The deal recently struck between the Trump administration and Nvidia will allow the company to obtain the export licenses and begin the sale of chips in China, a White House official said. AMD, which offers an MI308 chip for Chinese customers, will also receive permission for such sales, the official added.
Some observers have opposed the sale of advanced AI chips in China, saying the technology would help the country keep up with the U.S. in the fast-growing AI industry. The Trump administration has previously challenged the view, describing Nvidia’s H20 chip as inferior to similar products sold in the U.S.
“We don’t sell them our best stuff, not our second best stuff, not even our third best,” Commerce Secretary Howard Lutnick told CNBC last month, referring to Nvidia’s H20 chip as its “fourth best.”
In a statement to ABC News, Nvidia did not directly comment on the terms of the agreement.
“We follow rules the U.S. government sets for our participation in worldwide markets,” Nvidia said. “While we haven’t shipped H20 to China for months, we hope export control rules will let America compete in China and worldwide. America cannot repeat 5G and lose telecommunication leadership. America’s AI tech stack can be the world’s standard if we race.”
AMD did not immediately respond to ABC News’ request for comment.
Chipmakers pay share of revenue to U.S. government
In exchange for approval of chip sales in China, Nvidia and AMD have agreed to pay the U.S. 15% of revenue derived from such business.
The move marks the Trump administration’s latest intervention in the affairs of an individual company. When Japan-based Nippon Steel acquired U.S. Steel in June, the Trump administration received a “golden share” that affords the White House significant influence over the company. The golden share allows the Trump administration to influence the makeup of the company’s board and assert veto power over a host of major decisions, though the White House does not retain a financial stake in the firm.
More recently, Trump last week called on the CEO of Intel, Lip-Bu Tan, to resign. In a message posted on social media, Trump accused Tan of being “HIGHLY conflicted.”
Trump did not explain why Tan should resign, nor did he provide evidence for his allegation of a conflict of interest. But the post came after Republican Sen. Tom Cotton raised concerns about Tan’s alleged ties to China. Tan is still the company’s CEO.
ABC News’ Michelle Stoddart contributed to this report.
(NEW YORK) — Consumer confidence soured in June, erasing some of the boost in shopper attitudes that took hold last month as President Donald Trump rolled back tariffs, Conference Board data on Tuesday showed. The reading fell short of economists’ expectations.
The fresh data resumes a trend of worsening consumer confidence that stretches back to the outset of 2025. Last month, a burst of enthusiasm appeared to snap the malaise but fresh data suggests shoppers remain concerned about the path of the U.S. economy.
The decline in consumer confidence took hold across all age, income demographics and political affiliations, the Conference Board said, noting an especially large dropoff among Republicans.
“Consumer confidence weakened in June, erasing almost half of May’s sharp gains,” Stephanie Guichard, senior economist for global indicators at the Conference Board, said in a statement.
In recent weeks, Trump has dialed back some of his steepest levies, easing costs imposed upon companies and alleviating concern about a sharp surge of inflation. Importers typically pass along a share of the higher tax burden in the form of price hikes.
A trade agreement last month between the U.S. and China slashed tit-for-tat tariffs between the world’s two largest economies and triggered a surge in the stock market. Within days, Wall Street firms softened their forecasts of a downturn.
Still, an across-the-board 10% tariff applies to nearly all imports, except for semiconductors, pharmaceuticals and some other items. Those tariffs stand in legal limbo, however, after a pair of federal court rulings late last month.
Warning signs point to the possibility of elevated prices over the coming months, however.
Nationwide retailers like Walmart and Best Buy have voiced alarm about the possibility they may raise prices as a result of the levies.
The Organization for Economic Co-operation and Development, or OECD, said this month it expects U.S. inflation to reach 4% by the end of 2025, which would mark a sharp increase from current levels.
Federal Chair Jerome Powell, in recent months, has warned about the possibility that tariffs may cause what economists call “stagflation,” which is when inflation rises and the economy slows.
Stagflation could put the central bank in a difficult position. If the Fed were to raise interest rates, it could help ease inflation, but it may risk an economic downturn. If the Fed were to cut rates in an effort to spur economic growth, the move could unleash faster price increases.
The Federal Reserve held its benchmark interest rate steady last week, continuing a wait-and-see approach adopted by the central bank in recent months as it observes the potential effects of tariffs.
Speaking at a press conference in Washington, D.C., Powell said tariffs would likely “push up prices and weigh on economic activity” over the course of this year. But, he added, the effects would depend on the “ultimate level” of tariffs, which have frequently fluctuated.
“For the time being, we are well positioned to wait to learn more about the likely course of the economy before considering any adjustments to our policy stance,” Powell said.
(NEW YORK) — President Donald Trump’s tariffs are costing Jeep maker Stellantis hundreds of millions of dollars, the company said Monday.
The giant carmaker expects to have suffered nearly $350 million in losses over the first half of 2025 due to direct tariff payments as well as a loss of planned production on account of the company’s response to the policy, preliminary data showed.
In all, the company expects to have lost as much as $2.7 billion over the first half of 2025 as a result of costly efforts to improve profitability and tariff-related expenses. The losses also include compliance charges with Trump’s suspension of financial penalties tied to fuel emissions standards.
Sales in North America plummeted by one-quarter over a three month period ending in June, when compared to the same period a year earlier. The steep decline owed in part to the “reduced manufacture and shipments of imported vehicles, most impacted by tariffs,” Stellantis said.
Tariffs of 25% on vehicles imported into the United States went into effect on April 2. The auto tariffs, which apply to cars and auto parts, threaten to raise costs for carmakers that often oversee an intricate supply chain snaked between the U.S., Mexico, Canada and beyond.
In a memo in March, the White House touted auto tariffs as a means of bolstering domestic car manufacturers and protecting an industry viewed as important to U.S. national security.
The policy, the White House said, will “protect and strengthen the U.S. automotive sector.”
A day after the tariffs took effect, Stellantis announced it would temporarily pause production at two plants: one in Windsor, Canada, and another in Toluca, Mexico. As a result, the company laid off 900 employees across several U.S. facilities in Michigan and Indiana.
Weeks later, Trump eased the auto tariffs, saying the levies would not stack on top of other sector-specific tariffs, such as those on steel and aluminum.
Still, tariffs appear to have weighed on Stellantis over the first half of this year. A press announcement of preliminary earnings data on Monday mentioned the tariff policy six times.
The preliminary figures arrived without company guidance, which Stellantis paused on April 30. The company released the preliminary data in an effort to address the gap between the consensus forecast among analysts and the company’s performance, Stellantis said.
The company had already anticipated challenges this year as it adjusted offerings, slashed U.S. inventory and sought to mend relationships with car dealers.
CEO Antonio Filosa took the helm of the company last month. In a statement on LinkedIn, he issued a company motto attributed to a previous CEO Sergio Marchionne, saying, “Mediocrity is not worth the trip.”
