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The new American imperialism

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5 months ago

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THE TRADITIONAL point of an inaugural address is to transcend the politics of the campaign and draw the country together. Donald Trump’s second inaugural was not that. But it stuck with tradition in other ways—it’s just that the traditions in question were much older.

The only one of his predecessors President Trump spent any discussing—other than excoriating the administration of the outgoing Joe Biden—was William McKinley, in his telling “a great president”, though he is not one many Americans would put in their pantheon. The reference came in a passage about restoring the 25th president’s name to Mount Denali, an idea that combines two Trump obsessions. America’s tallest mountain was officially given its koyukon (native Alaskan) name in 2015—which he considers a rewriting of history in deference to liberal sensibilities that is evidence of a woke mind virus. And the president who signed that change into law was Barack Obama, so reversing it undoes an Obama achievement too. But Mr Trump’s homage to McKinley, a fellow Republican, did not end there.

McKinley, who was inaugurated in 1897, presided over the negotiations that created the Panama Canal. He loved tariffs, both as a way to fund the government and to protect domestic industry. And he courted, and was courted by, robber barons of the Gilded Age.

President Trump has a thing about the Panama Canal. He thinks the terms of the treaty signing it over to its host country have been broken, and that it is controlled by China (it is not, though the Chinese government has gained influence in Panama). The single most attention-grabbing line in the speech, at least for those who are used to having an American president who respects other countries’ sovereignty, was: “we are taking it back.”

The treaty ceding the Panama canal was drawn up during Jimmy Carter’s presidency in 1977. Even back then this was opposed by conservatives as an unpatriotic betrayal by naive liberals, a perennial theme of Mr Trump’s (it is not just his taste in music that regularly defaults to the era of the Village People). To Panama, where the 82nd Airborne Division dropped in a decade later, when Mr Trump was in his 40s, this line sounds more menacing than many Americans realise.

So does the talk of territorial expansion, a theme no president has pursued seriously in over a century. The last president who increased America’s acreage substantially, as it happens, was William McKinley. Territories including Cuba, Hawaii and the Philippines were added to America in his first term, the latter as a consequence of a victory over Spain. “The truth is I didn’t want the Philippines,” McKinley said, “and when they came to us, as a gift from the gods, I did not know what to do with them.” America got bogged down fighting an insurrection there. For Mr Trump the point of territorial expansion is clear. (And extraterrestrial too—he thinks it is the country’s manifest destiny to plant its flag on Mars.) America must be “a growing nation” once again.

Back in the present day, America’s greatest foreign-policy challenges are managing the competition with China, conflict and instability in the Middle East and Russia’s occupation of Ukraine–not the fees paid by American warships to sail through the canal. But Mr Trump mentioned China only in the context of the canal. The Middle East made an appearance in a self-congratulatory passage about hostages. He did not mention Ukraine at all, except to allude to America providing “unlimited funding” to protect foreign borders while refusing to defend its own (claiming that “millions” of criminal migrants were crossing into the country). Even what he means by taking “back” the canal is uncertain. Would he actually settle for lower transit fees? Mr Trump has been president for four years, has been campaigning for the past four, has a reputation for blunt speaking—and on the biggest questions he is opaque.

The same applies to tariffs, where his worldview overlaps with McKinley’s. The 25th president signed the Dingley Act in 1897, which sent tariffs above 50%. In his first inaugural address McKinley said that this was to preserve the domestic market for American manufacturers, among other things. In an address to a joint session of Congress that he convened to pass tariffs, he presented them as a prudent act to fund the government without raising tax. Mr Trump thinks the same way. “We will tariff and tax foreign countries to enrich our citizens,” he said. “It will be massive amounts of money pouring into our treasury, coming from foreign sources.” Here too, it is not yet clear what Mr Trump will actually do.

After McKinley was assassinated by an anarchist, that approach to protecting manufacturing became associated with the Democratic Party. The McKinley formula combined what is now seen as a left-leaning policy with a closeness to big business associated with the right. Mr Trump, like McKinley, brings them back together in his Republican Party. McKinley’s 1896 campaign received a $250,000 donation from J.P. Morgan and the same amount from Standard Oil (approaching $10m apiece in 2025 money). Mr Trump’s inauguration reserved prominent seats for Jeff Bezos, Elon Musk and Mark Zuckerberg, all of whom gave money to the inaugural committee. The president announced the arrival of a new “golden age”. But on tariffs, territorial expansion and a fixation with Panama what he seems to want is a return to the gilded one.■

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World could be facing another ‘China shock,’ but there’s a silver-lining

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June 6, 2025

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Singapore-based online grocery retailer Webuy staff is offloading containers filled with goods shipped from China.

SINGAPORE — Vincent Xue runs an online grocery retail business, offering fresh produce, canned food, packaged easy-to-cook ingredients to cost-conscious local consumers in Singapore.

Xue’s Nasdaq-listed Webuy Global sources primarily from suppliers in China. Since late last year, one third of his suppliers, saddled with excess inventory in China, have offered steep discounts of up to 70%.

“Chinese domestic markets are too competitive, some larger F&B manufacturers were struggling to destock their inventories as weak consumer demand drags,” he said in Mandarin, translated by CNBC.

Xue has also gotten busier this year after sealing a partnership with Chinese e-commerce platform Pinduoduo that has been making inroads into the Southeast Asian country.

“There will be about 5-6 containers loaded with Pinduoduo’s orders coming in every week,” Xue said, and Webuy Global will support the last-mile delivery to customers.

At a time when steep tariffs are deterring Chinese exports to the U.S., while domestic consumption remains a worry, overcapacity has led Chinese producer prices to stay in deflationary territory for more than two years. Consumer inflation has remained near zero.

Still, the country is doubling down on manufacturing, and this production overdrive is rippling through global markets, stirring anxiety in Asia that a flood of cheap imports could squeeze local industries, experts said.

“Every economy around the world is concerned about being swamped by Chinese exports … many of them [have] started to put up barriers to importing from China,” said Eswar Prasad, senior professor of trade policy and economics at Cornell University.

But for inflation-worn economies, economists say the influx of low-cost Chinese goods comes with a silver-lining: lower costs for consumers. That in turn could offer central banks some relief as they juggle lowering living costs while reviving growth on the back of rising trade tensions.

For markets with limited manufacturing bases, such as Australia, cheap Chinese imports could ease the cost-of-living crisis and help bring down inflationary pressure, said Nick Marro, principal economist at Economist Intelligence Unit.

Emerging growth risks and subdued inflation may pave the way for more rate cuts across Asia, according to Nomura, which expects central banks in the region to further decouple from the Fed and deliver additional easing.

The investment bank predicts Reserve Bank of India to deliver additional rate cuts of 100 basis points during rest of the year, central banks in Philippines and Thailand to cut rates by 75 basis points each, while Australia and Indonesia could lower rates by 50 basis points, and South Korea by a quarter-percentage-point.

‘China shock’

In Singapore, the rise in costs of living was among the hot-button issues during the city-state’s election campaigning in the lead up to the polls held last month.

Core inflation in the country could surprise at the lower end of the MAS forecast range, economists at Nomura said, citing the impact of influx of cheap Chinese imports.

The city-state is not alone in witnessing the disinflationary impact as low-cost Chinese goods flood in.

Countries are balancing US tariff threats with Chinese overcapacity: Eswar Prasad

“Disinflationary forces are likely to permeate across Asia,” added Nomura economists, anticipating Asian nations to feel the impact from “China shock” accelerating in the coming months.

Asian economies were already wary of China’s excess capacity, with several countries imposing anti-dumping duties to safeguard local manufacturing production, even before the roll-out of Trump’s sweeping tariffs.

In the late 1990s and early 2000s, the world economy experienced the so-called “China shock,” when a surge in cheap China-made imports helped keep inflation low while costing local manufacturing jobs.

A sequel of sorts appears to be under way as Beijing focuses on exports to offset the drag in domestic consumption.

Chinese exports to the ASEAN bloc rose 11.5% year on year in the first four months this year, as shipments to the U.S. shrank 2.5%, according to China’s official customs data. In April alone, China’s shipments to ASEAN surged 20.8%, as exports to U.S. plunged over 21% year on year.

These goods often arrive at a discount. Economists at Goldman Sachs estimate Chinese products imported by Japan in the past two years to have become about 15% cheaper compared to products from other countries.

India, Vietnam and Indonesia have imposed various protectionist measures to provide some relief for domestic producers from intense price competition, particularly in sectors facing overcapacity and cheap imports.

While for a large number of countries an influx of Chinese goods is a trade-off between lower inflation and the adverse impact on local production, countries such as Thailand could be facing a double-edged sword.

Thailand will likely be the hardest-hit by “China shock,” even sliding into a deflation this year, Nomura economists predict, while India, Indonesia and the Philippines will also see inflation falling below central banks’ targets.

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Friday’s jobs report likely will show hiring cooled in May. What to expect

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11 hours ago

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June 5, 2025

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There seems little doubt now that hiring slowed considerably in May as companies and consumers braced for higher tariffs and elevated economic uncertainty. The main question is by how much.

A small dip from the recent trend likely wouldn’t be viewed as worrisome. But anything beyond that could set off a fresh round of fears about the labor market and broader economy, possibly pushing the Federal Reserve into a quicker-than-expected interest rate action.

Economists expect that when the Bureau of Labor Statistics reports the May nonfarm payroll numbers (NFP) Friday at 8:30 a.m. ET, they will show a gain of just 125,000, down from an initial tally of 177,000 in April and the year-to-date monthly average of 144,000. That represents a slide but not a collapse, and markets will hinge on the degree of decline.

“Going into the NFP print, expectations have been reset lower and a reading of around 100,000 (vs. the 125,000 expected by the consensus) could fall in the ‘not-as-bad-as-feared'” camp, wrote Julien Lefargue, chief market strategist at Barclays Private Bank. “Anything below the 100,000 mark could reignite recession fears, while a stronger-than-expected print could perversely be negative for risk assets as it would likely put upward pressure on [Treasury] yields.”

Consequently, the report will be a balancing act between competing concerns of a slowing labor market and rising inflation.

Data tell different stories

A broad range of sentiment indicators, including manufacturing and services surveys as well as gauges of small business sentiment, indicate flagging optimism toward the economy, led by worries over tariffs and the inflation they could ignite.

Moreover, hard data this week from ADP showed that private payrolls essentially were flat last month, growing by just 37,000 in May, a two-year low. Jobless claims also have also recently been edging higher, with last week hitting the highest since October.

Friday’s payroll report, then, could be a key arbiter in determining just how much worry there is in the economy where it counts, namely the labor market, which in turn provides clues about the strength of consumers who drive nearly 70% of all U.S. economic activity.

“We do think it’s going to slow down. We do think that tariffs are going to start biting a little bit,” said Dan North, senior economist at Allianz Trade North America. “Everybody hates the economy, but if you look at the hard data, it’s not so bad.”

North expects it will still take several months before the sentiment surveys — “soft” data — take their toll on other economic readings, such as payrolls.

Tariff impacts are key

In the interim, markets will be watching further developments on the trade front as President Donald Trump continues in a 90-day negotiating window that investors hope will ease some of the “Liberation Day” tariffs that are on pause.

“We don’t expect to see a crash this month, probably not the month after this, but certainly a weight on the economy, not just from the tariffs but also from uncertainty. It’s as if tariff policy is a specter in the mist,” North said.

There are a variety of views on Wall Street, from Goldman Sachs, which expects a below-consensus 110,000 growth in payrolls, to Bank of America, which is looking more for a number around 150,000.

From there, investors will try to figure out whether the latest numbers move the needle on Fed policy, with markets currently not expecting further interest rate cuts until September. Most policymakers of late have been focusing on tariff-induced inflation impacts, with the caveat that they are watching the jobs numbers as well.

“One encouraging sign about economic activity is the resilience of the labor market,” Fed Governor Adriana Kugler said Thursday in New York. “We will get the May employment report tomorrow, but the data in hand indicate that employment has continued to grow and that labor supply and demand remain in relative balance.”

The consensus estimate also sees the unemployment rate holding at 4.2%, while average hourly earnings are projected to show a 0.3% monthly gain and 3.7% annual increase.

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Here are the companies making job cuts

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12 hours ago

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June 5, 2025

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Layoffs are illustrated by an oversized pair of scissors, that looms over seven workers sitting in office chairs suspended by strings.

Mathisworks | Digitalvision Vectors | Getty Images

While Elon Musk has ended his government cost-cutting initiative that resulted in thousands of federal job cuts, mass layoffs are still roiling corporate America.

Companies are under increasing pressure to trim costs against the backdrop of global economic uncertainty brought on by President Donald Trump‘s tariff policies. Several companies have announced price hikes. Layoffs mark another way to pull back.

Trade tensions have also raised concerns about the general health of the U.S. economy and the job market. While the April jobs reading was better than expected, a separate reading from ADP this week showed private sector hiring hit its lowest level in more than two years.

Though many companies declined to provide specific reasoning for announced workforce reductions — instead lumping the layoffs in with larger cost-cutting strategies or growth plans — tech leaders are starting to cite artificial intelligence as a clear consideration in hiring and headcount adjustments.

Klarna CEO Sebastian Siemiatkowski told CNBC last month the fintech company has shrunk its headcount by 40%, in part due to investments in AI. Likewise, Shopify CEO Tobias Lütke told employees in April that they will have to prove why tasks can’t be performed by AI before asking for more headcount and resources.

Here are some of the companies that have announced layoffs in recent weeks:

Procter & Gamble

Pampers and Tide maker Procter & Gamble said on Thursday it will cut 7,000 jobs, or about 15% of its non-manufacturing workforce, over the next two years as part of a restructuring program.

CFO Andre Schulten said during a presentation that the company is planning a broader effort to implement changes across the company’s portfolio, supply chain and corporate organization.

The company did not specify the regions or divisions that would be impacted.

Microsoft

Microsoft said last month it would reduce its workforce by about 6,000 staffers, totaling about 3% of employees across all teams, levels and geographies.

A Microsoft spokesperson told CNBC at the time one objective of the cuts was to reduce layers of management. The company announced a smaller round of layoffs in January that were performance-based. The spokesperson said the May cuts were not related to performance.

Citigroup

People walk by a Citibank location in Manhattan, New York City, on March 1, 2024.

Spencer Platt | Getty Images

Citigroup said in a statement Thursday it plans to reduce its staff by around 3,500 positions in China.

The cuts mostly affect the information technology services unit, which provides software development, testing and maintenance. Some of the impacted roles will be moved to Citi’s technology centers elsewhere, the bank said.

Under the leadership of CEO Jane Fraser, Citi has undertaken a large-scale reorganization with an eye toward profitability and stock performance. The bank consistently underperformed its major bank peers in recent years.

Citi announced a broader plan last year to reduce its workforce by 10%, or about 20,000 employees globally.

Walmart

Last month, Reuters reported Walmart was planning to slash about 1,500 jobs in an effort to simplify operations. The teams affected include global technology, operations and U.S.-based e-commerce fulfillment as well as Walmart Connect, the company’s advertising business.

Walmart employs around 1.6 million employees, making it the largest U.S. private employer. CFO John David Rainey told CNBC during an interview last month that Walmart shoppers would likely see price increases at the start of the summer in response to tariffs.

Klarna

Klarna’s Siemiatkowski told employees last month that the Swedish buy now, pay later firm would lay off 10% of its global workforce.

“When we set our business plans for 2022 in the autumn of last year, it was a very different world than the one we are in today,” Siemiatkowski told employees.

The week before that announcement, he told CNBC that Klarna has shrunk its workforce by about 40% due to investments in AI and natural attrition in its workforce.

CrowdStrike

Cybersecurity software maker CrowdStrike announced plans last month to cut 500 employees, or about 5% of its staff.

CEO George Kurtz in a securities filing attributed the move largely to artificial intelligence.

“We’re operating in a market and technology inflection point, with AI reshaping every industry, accelerating threats, and evolving customer needs,” he said, adding that the move was part of the company’s “evolving operating model.”

Disney

A water tower stands at Walt Disney Studios on June 3, 2025 in Burbank, California.

Mario Tama | Getty Images

The Walt Disney Company said earlier this week it plans to cut several hundred employees worldwide across several divisions. The layoffs impact teams in film and TV marketing, TV publicity and casting and development.

The cuts are part of a larger effort to operate more efficiently, a Disney spokesperson said.

Chegg

Online education firm Chegg said last month it would lay off 248 employees, or about 22% of its workforce. The cuts come as AI-powered tools like OpenAI’s ChatGPT take over education.

CEO Nathan Schultz said on the company’s May earnings call that the layoffs are part of a cost reduction plan and he expects cost savings of between $45 million and $55 million this year, followed by a further $100 million to $110 million next year.

Amazon

Amazon said in May it would eliminate about 100 jobs in its devices and services division, which includes the Alexa voice assistant, Echo hardware, Ring doorbells and Zoox robotaxis.

A spokesperson for Amazon told CNBC at the time the decision was part of an ongoing effort to “make our teams and programs operate more efficiently.”

The cuts come as CEO Andy Jassy has sought out cost-trimming efforts at the company. Since the beginning of 2022, Amazon has laid off roughly 27,000 employees.

Warner Bros. Discovery

Warner Bros. Discovery will lay off fewer than 100 employees, according to multiple media reports this week.

No particular network or channel would be affected more than others, according to the reports.

The WBD cuts follow the company’s move to reorganize into two divisions: a global linear networks division and a streaming and studios unit. That process was completed during the first quarter.

— CNBC’s Amelia Lucas, Jordan Novet, Anniek Bao, Melissa Repko, Ryan Browne, Annie Palmer, and Reuters contributed to this report.

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