'VERY DISRUPTIVE': China warns US of retaliation over Trump's new tariff threat

Trade Tensions and Economic Impact - The U.S.-China trade tensions are escalating, with President Trump threatening to block Chinese cooking oil imports following China's halt on American soybean purchases [1] - An additional 100% tariff on Chinese goods has been announced, alongside new export controls on critical software, in retaliation for China's restrictions on rare earth exports [2][3] Economic Risks and Monetary Policy - Federal Reserve Governor Steven Myron indicated that trade uncertainty is adding "new tail risks" to the economy, making it urgent for the Fed to consider rate cuts [3][5] - Myron does not foresee a recession but acknowledges that if trade threats materialize, it could negatively impact economic growth [4][5] - The current restrictive monetary policy, combined with potential trade shocks, could exacerbate negative economic consequences [5][6] Inflation and Housing Market - Myron expects inflation to decline, driven by decreases in shelter inflation, which is influenced by migration flows affecting housing prices [13][16] - The recent changes in migration policy are viewed as disinflationary, helping to stabilize the housing market [16] Fed's Rate Cut Expectations - Investors anticipate that the Fed will cut rates again, with expectations of three 25 basis point cuts this year, totaling 75 basis points [8][9] - Myron suggests that a 50 basis point cut would be more appropriate, but expects only a 25 basis point reduction [8][9] Manufacturing and Economic Growth - Increased manufacturing and investment in the U.S. are seen as positive for economic activity, potentially boosting the economic outlook [27][28] - The Fed's recent comments indicate a close approach to ending quantitative tightening, which could stabilize short-term interest rates [30][31] Future Economic Projections - Economic growth is projected to be around 2% for 2025, with various tailwinds and headwinds influencing the outlook [38][40] - The resolution of trade uncertainties with China could significantly impact economic growth in the near future [41][42]