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Donald Trump’s first criminal trial will be both momentous and tawdry

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Manhattanites once rolled their eyes at Donald Trump. Then they came to revile him. Soon 12 will decide if he is a felon. Jury selection in his first criminal trial, expected to last up to eight weeks in a shabby courtroom, has sped along; prosecutors will set out their case in a matter of days. One prospective juror confessed that the weight of the task at hand had kept her up at night: “This is, like, a big deal in the grand scheme of things.”

Yes and no. Manhattan’s district attorney, Alvin Bragg, has brought the first criminal indictment against a former president, who also happens to be running again. But the felony charges are low-level and the details tawdry. The case is about sex, money and blackmail. Mr Trump’s former lawyer and fixer, who will testify against him, once described the conduct at issue as the “filth and muck of politics” and, less delicately, a “shit sandwich”.

The charges centre on Mr Trump’s efforts to buy the silence of Stephanie Clifford, a former porn star better known as Stormy Daniels, before the 2016 election. Prosecutors allege that the payment was made to protect his candidacy and thus amounted to an undeclared campaign expense. Mr Trump is accused of falsifying business records to hide the pay-off. He denies any such scheme.

Early in his first campaign Mr Trump met his lawyer, Michael Cohen, and his friend David Pecker, then the boss of a tabloid publishing company. Mr Pecker agreed to be Mr Trump’s “eyes and ears”—to look out for damaging stories and alert the campaign to them. When a former Trump Tower doorman tried to sell a bogus story to tabloids about how Mr Trump had fathered an illegitimate child, Mr Pecker warned team Trump, which directed him to buy exclusive rights to the story and bury it, a practice known as “catch and kill”. A similar deal was struck when Karen McDougal, a former Playboy model, emerged from the woodwork to allege an affair with Mr Trump starting in 2006.

About a month before the election Ms Daniels surfaced, shopping around her story about a sexual encounter with Mr Trump, also in 2006. The “Access Hollywood” tape, in which Mr Trump bragged about grabbing women’s genitals, had just appeared in the press and nearly sunk his candidacy. The campaign could ill-afford headlines about how he had slept with a porn star while his wife was nursing their newborn son. This time Mr Cohen paid Ms Clifford $130,000 from his own pocket.

To reimburse Mr Cohen, Mr Trump allegedly agreed to pay him in monthly instalments and mislabel them as legal expenses in the company’s accounts. Hence the 34 felonies alleged by Mr Bragg: 11 related to invoices, 12 to ledger entries and 11 to cheques. Normally these would be misdemeanours. To upgrade them, prosecutors must show that the records were falsified to commit or conceal another crime. They have suggested a few: that the hush money violated federal campaign-finance rules, and that tax wasn’t properly paid on the reimbursements.

A parade of witnesses should bolster the prosecutors’ case. Mr Cohen and Mr Pecker will testify to Mr Trump’s alleged involvement in the scheme. There is an ample paper trail, including cheques that Mr Trump personally signed, and a recording of him discussing the payment for Ms McDougal’s silence.

Mr Trump’s lawyers, for their part, will contend that there was nothing illegal about the hush money: that it was paid purely to protect his personal reputation and spare his wife embarrassment, not to influence the vote or skirt campaign-finance rules. John Edwards, a former Democratic candidate for president, successfully made that argument and was acquitted of breaking campaign-finance laws to hide an affair and a child out of wedlock during the 2008 election. But it will not help that Mr Cohen has admitted in court that it was a crime. In 2018 he pleaded guilty to making an undeclared campaign contribution (among other charges) and spent just over a year in prison.

Mr Trump’s principal strategy, then, will be to impugn Mr Cohen’s credibility and paint him as a fabulist. Indeed Mr Cohen has an impressive record of lying under oath and a well-documented animus towards his former boss, who reportedly relished treating him like garbage. If Mr Trump is convicted, sentencing will be decided by the judge, Juan Merchan. Jail time seems unlikely for a first-time, white-collar felon. There is no mandatory minimum sentence. Each count carries a maximum of four years in prison.

Would a conviction sway voters? That Mr Trump wanted his philandering kept quiet is neither surprising nor news; Americans are inured to his sex scandals by now. Compared with his other indictments this is small bore. Voters consider it the least serious of the four and a plurality thinks a guilty verdict will have no bearing on his political career, according to polling by YouGov. An acquittal would vindicate Mr Trump’s claim to be the victim of a political crusade by Mr Bragg, an elected district attorney who is a Democrat.

The indictment has come in for heavy criticism, even among lawyers on the left. There was doubt about whether state prosecutors could bring a case that rests on a federal campaign-finance violation, since that is the domain of federal prosecutors. Those questions might arise on appeal, but for now they are academic: judges have refused to toss the case out. Of the four indictments against Mr Trump, it may be the only one to produce a verdict before the election in November. The other, weightier charges, about alleged election interference and the mishandling of classified documents, are beset by delays.

Stay on top of American politics with The US in brief, our daily newsletter with fast analysis of the most important electoral stories, and Checks and Balance, a weekly note from our Lexington columnist that examines the state of American democracy and the issues that matter to voters.

Economics

Trump tariffs’ effect on consumer prices debated by economists

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The U.S. government is set to increase tariff rates on several categories of imported products. Some economists tracking these trade proposals say the higher tariff rates could lead to higher consumer prices.

One model constructed by the Federal Reserve Bank of Boston suggests that in an “extreme” scenario, heightened taxes on U.S. imports could result in a 1.4 percentage point to 2.2 percentage point increase to core inflation. This scenario assumes 60% tariff rates on Chinese imports and 10% tariff rates on imports from all other countries.

The researchers note that many other tariff proposals have surfaced since they published their findings in February 2025. 

Price increases could come across many categories, including new housing and automobiles, alongside consumer services such as nursing, public transportation and finance. 

“People might think, ‘Oh, tariffs can only affect the goods that I buy. It can’t affect the services,'” said Hillary Stein, an economist at the Boston Fed. “Those hospitals are buying inputs that might be, for example, … medical equipment that comes from abroad.” 

White House economists say tariffs will not meaningfully contribute to inflation. In a statement to CNBC, Stephen Miran, chair of the Council of Economic Advisers, said that “as the world’s largest source of consumer demand, the U.S. holds all the leverage, which means foreign suppliers will have to eat the economic burden or ‘incidence’ of the tariffs.” 

Assessing the impact of the administration’s full economic agenda has been a challenge for central bank leaders. The Federal Open Market Committee decided to leave its target for the federal funds rate unchanged at the meeting in March. 

The Fed targets its overnight borrowing rate at between 4.25% and 4.5%, with the effective federal funds rate at 4.33% on March 31, according to the New York Fed. The core personal consumption expenditures price index inflation rate rose to 2.8% in February, according to the Commerce Department. Forecasts of U.S. gross domestic product suggest that the economy will continue to grow at a 1.7% rate in 2025, albeit at a slower pace than what was forecast in January.  

Consumers in the U.S. and businesses around the world are bracing for impact. 
 
“There is a reason why companies went outside of the U.S.,” said Gregor Hirt, chief investment officer at Allianz Global Investors. “Most of the time it was because it was cheaper and more productive.” 

Watch the video above to learn how much inflation tariffs may cause.

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Economics

Trump’s tariff gambit will raise the stakes for an economy already looking fragile

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U.S. President Donald Trump speaks alongside entertainer Kid Rock before signing an executive order in the Oval Office of the White House on March 31, 2025 in Washington, DC. 

Andrew Harnik | Getty Images

President Donald Trump is set Wednesday to begin the biggest gamble of his nascent second term, wagering that broad-based tariffs on imports will jumpstart a new era for the U.S. economy.

The stakes couldn’t be higher.

As the president prepares his “liberation day” announcement, household sentiment is at multi-year lows. Consumers worry that the duties will spark another round of painful inflation, and investors are fretting that higher prices will mean lower profits and a tougher slog for the battered stock market.

What Trump is promising is a new economy not dependent on deficit spending, where Canada, Mexico, China and Europe no longer take advantage of the U.S. consumer’s desire for ever-cheaper products.

The big problem right now is no one outside the administration knows quite how those goals will be achieved, and what will be the price to pay.

“People always want everything to be done immediately and have to know exactly what’s going on,” said Joseph LaVorgna, who served as a senior economic advisor during Trump’s first term in office. “Negotiations themselves don’t work that way. Good things take time.”

For his part, LaVorgna, who is now chief economist at SMBC Nikko Securities, is optimistic Trump can pull it off, but understands why markets are rattled by the uncertainty of it all.

“This is a negotiation, and it needs to be judged in the fullness of time,” he said. “Eventually we’re going to get some details and some clarity, and to me, everything will fit together. But right now, we’re at that point where it’s just too soon to know exactly what the implementation is likely to look like.”

Here’s what we do know: The White House intends to implement “reciprocal” tariffs against its trading partners. In other words, the U.S. is going to match what other countries charge to import American goods into their countries. Most recently, a figure of 20% blanket tariffs has been bandied around, though LaVorgna said he expects the number to be around 10%, but something like 60% for China.

What is likely to emerge, though, will be far more nuanced as Trump seeks to reduce a record $131.4 billion U.S. trade deficit. Trump professes his ability to make deals, and the saber-rattling of draconian levies on other countries is all part of the strategy to get the best arrangement possible where more goods are manufactured domestically, boosting American jobs and providing a fairer landscape for trade.

The consequences, though, could be rough in the near term.

Potential inflation impact

On their surface, tariffs are a tax on imports and, theoretically, are inflationary. In practice, though, it doesn’t always work that way.

During his first term, Trump imposed heavy tariffs with nary a sign of longer-term inflation outside of isolated price increases. That’s how Federal Reserve economists generally view tariffs — a one-time “transitory” blip but rarely a generator of fundamental inflation.

This time, though, could be different as Trump attempts something on a scale not seen since the disastrous Smoot-Hawley tariffs in 1930 that kicked off a global trade war and would be the worst-case scenario of the president’s ambitions.

“This could be a major rewiring of the domestic economy and of the global economy, a la Thatcher, a la Reagan, where you get a more enabled private sector, streamlined government, a fair trading system,” Mohamed El-Erian, the Allianz chief economic advisor, said Tuesday on CNBC. “Alternatively, if we get tit-for-tat tariffs, we slip into stagflation, and that stagflation becomes well anchored, and that becomes problematic.”

Tariffs could be a major rewiring of the domestic and global economy, says Mohamed El-Erian

The U.S. economy already is showing signs of a stagflationary impulse, perhaps not along the lines of the 1970s and early ’80s but nevertheless one where growth is slowing and inflation is proving stickier than expected.

Goldman Sachs has lowered its projection for economic growth this year to barely positive. The firm is citing the “the sharp recent deterioration in household and business confidence” and second-order impacts of tariffs as administration officials are willing to trade lower growth in the near term for their longer-term trade goals.

Federal Reserve officials last month indicated an expectation of 1.7% gross domestic product growth this year; using the same metric, Goldman projects GDP to rise at just a 1% rate.

In addition, Goldman raised its recession risk to 35% this year, though it sees growth holding positive in the most-likely scenario.

Broader economic questions

However, Luke Tilley, chief economist at Wilmington Trust, thinks the recession risk is even higher at 40%, and not just because of tariff impacts.

“We were already on the pessimistic side of the spectrum,” he said. “A lot of that is coming from the fact that we didn’t think the consumer was strong enough heading into the year, and we see growth slowing because of the tariffs.”

Tilley also sees the labor market weakening as companies hold off on hiring as well as other decisions such as capital expenditure-type investments in their businesses.

That view on business hesitation was backed up Tuesday in an Institute for Supply Management survey in which respondents cited the uncertain climate as an obstacle to growth.

“Customers are pausing on new orders as a result of uncertainty regarding tariffs,” said a manager in the transportation equipment industry. “There is no clear direction from the administration on how they will be implemented, so it’s harder to project how they will affect business.”

While Tilley thinks the concern over tariffs causing long-term inflation is misplaced — Smoot-Hawley, for instance, actually ended up being deflationary — he does see them as a danger to an already-fragile consumer and economy as they could tend to weaken activity further.

“We think of the tariffs as just being such a weight on growth. It would drive up prices in the initial couple [inflation] readings, but it would create so much economic weakness that they would end up being net deflationary,” he said. “They’re a tax hike, they’re contractionary, they’re going to weigh on the economy.”

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Economics

Euro zone inflation, March 2025

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A man pushes his shopping cart filled with food shopping and walks in front of an aisle of canned vegetables with “Down price” labels in an Auchan supermarket in Guilherand Granges, France, March 8, 2025.

Nicolas Guyonnet | Afp | Getty Images

Annual Euro zone inflation dipped as expected to 2.2% in March, according to flash data from statistics agency Eurostat published Tuesday.

The Tuesday print sits just below the 2.3% final reading of February.

So called core-inflation, which excludes more volatile food, energy, alcohol and tobacco prices, edged lower to 2.4% in March from 2.6% in February. The closely watched services inflation print, which had long been sticky around the 4% mark, also fell to 3.4% in March from 3.7% in the preceding month.

Recent preliminary data had showed that March inflation came in lower than forecast in several major euro zone economies. Last month’s inflation hit 2.3% in Germany and fell to 2.2% in Spain, while staying unchanged at 0.9% in France.

The figures, which are harmonized across the euro area for comparability, boosted expectations for a further 25-basis-point interest rate cut from the European Central Bank during its upcoming meeting on April 17. Markets were pricing in an around 76% chance of such a reduction ahead of the release of the euro zone inflation data on Tuesday, according to LSEG data.

The European Union is set to be slapped with tariffs due in effect later this week from the U.S. administration of Donald Trump — including a 25% levy on imported cars.

While the exact impact of the tariffs and retaliatory measures remains uncertain, many economists have warned for months that their effect could be inflationary.

This is a breaking news story, please check back for updates.

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