Key news:
1. Trump's 50% steel and aluminum tariffs take effect today
Trump signed an order on Tuesday to raise the tariffs on steel and aluminum from 25% to 50% starting June 4, calling this move necessary for national security.
The White House stated that raising tariffs will support related industries and reduce the threat of imported products to national security.
Currently, the United States is negotiating with trade partners regarding the so-called reciprocal tariffs before the July 9 deadline. The Trump administration has urged countries to submit their best trade negotiation proposals by this Wednesday, escalating trade tensions.
Insider: The US has presented a 'long and stringent' list of demands to Vietnam in tariff negotiations;
Insider: The EU has not received a letter from the US requesting to provide 'best trade offers';
Brazil's President: If no agreement is reached with the US on tariffs, they will turn to the WTO and may take reciprocal measures;
India-EU free trade agreement is accelerating, with nearly half of the topics reaching consensus.
2. There is a significant divide between hawks and doves within the Federal Reserve, with officials in disagreement over whether to maintain interest rates unchanged for a period or cut rates later this year, which primarily depends on their judgment of whether the inflation triggered by Trump's tariff policy is persistent.
Federal Reserve Governor Waller clearly supports ignoring the short-term impact of tariffs on inflation, arguing that the inflation caused by tariffs will not be persistent, and that inflation expectations are stable, aligning with the White House's view that 'price increases are temporary' and echoing Trump's call for rate cuts.
However, officials like Minneapolis Fed President Kashkari and Dallas Fed President Logan prefer to keep interest rates unchanged. Logan emphasized focusing on achieving the 2% inflation target, while Atlanta Fed President Bostic insists that there may be one rate cut this year.
In addition, the US April job market data showed mixed results, with job vacancies unexpectedly surging, while factory orders saw the largest monthly decline since January 2024. The US Labor Department will revise the April employment report, but most indicators will remain unaffected.
3. Due to market expectations pressured by Trump's tariff policy, the Organisation for Economic Co-operation and Development (OECD) has lowered the growth forecasts for the US and global economy. The growth outlook for the US this year has been revised down to 1.6%, and 1.5% for 2026, significantly lower than the 2.2% growth projected in March for 2025. The global growth outlook has also been revised down from previous forecasts, with the slowdown primarily concentrated in the US, Canada, and Mexico, while other economies have seen smaller downgrades.
The OECD points out that the global outlook is increasingly grim, with rising trade barriers and tightening financial conditions continuing to significantly impact growth. In recent weeks, Trump's fluctuating tariff policy has exacerbated uncertainty in global markets and economies.
However, the OECD has raised its US inflation forecast from 2.8% to 3.2%, predicting it could approach 4% by the end of 2025. It also expects the Fed to keep rates unchanged this year, and if inflation is close to target, some central banks may continue to cut rates.
Today's focus:
12:00, President Trump of the United States raised the import steel tariff from 25% to 50%;
15:50-16:30, France/Germany/Eurozone/UK May Services PMI final value;
20:15, US May ADP employment figures;
20:30, 2027 FOMC voting member, Atlanta Fed President Bostic, and Federal Reserve Governor Lisa Cook attend the 'Fed Listens' event;
21:45, Bank of Canada announces interest rate decision;
22:00, US May ISM Non-Manufacturing PMI;
22:30, US EIA crude oil inventory for the week ending May 30;
Next day at 2:00, the Federal Reserve releases the Beige Book on economic conditions.
