Financial Markets

US Vice President JD Vance hit the road on August 21 to promote President Donald Trump’s legislative accomplishment, the One Big Beautiful Bill Act tax and spending bill.

The law permanently extended tax cuts from a 2017 law Trump signed, which would have expired at the end of 2025 had Congress not reauthorised them. The law also included some new tax cuts, including for tips, overtime and Americans 65 and older.

Speaking in Peachtree City near Atlanta, Vance said, “We had the biggest tax cut for families that this country has ever seen.”

The tax cuts were significant, but they weren’t the biggest in US history, which was a phrase Trump has often used to inaccurately describe his 2017 tax cut law. The 2025 tax cuts rank either third-biggest since 1980 or tied for seventh, depending on the yardstick.

At the same time, many Americans could see relatively modest changes to the taxes they owe starting in 2026, because the 2025 law mostly extended existing tax cuts.

The White House did not provide a response before publication.

Comparing historical tax cut laws

We examined the tax revenue decreases from major laws passed since 1980. (On balance, most tax laws prior to 1980 either raised taxes or cut them modestly.)

Tax bill dollar amounts tend to rise over time because of inflation, so we looked at tax cuts as a percentage of gross domestic product (GDP), which evens out the differences over time. And because some early laws have tax cut data available only for the first five or six years of the law’s life, we compared laws by looking at the cumulative tax savings during a law’s first five years in effect.

We found that the law with the biggest tax savings was 1981 legislation passed by the Democratic Congress and signed by President Ronald Reagan, who won office promising large tax cuts. That law cut taxes by 3.5 percent of the nation’s cumulative five-year GDP.

A 2012 bill passed by the Republican Congress and signed by President Barack Obama ranked second. That bill, which cut taxes by 1.7 percent of GDP, extended the tax cuts passed in 2003 under President George W Bush.

Based on current projections, Trump’s 2025 law ranks third, at 1.4 percent of GDP when factoring in Trump’s 2017 cuts.

Trump’s 2017 law ranks fourth at 1 percent, tied with a 2010 law Obama signed that extended Bush’s 2001 tax cuts. Bush’s 2001 and 2003 tax cuts ranked sixth and seventh, with 0.7 percent and 0.5 percent, respectively.

If considering only new tax cuts and not the re-upped 2017 tax cuts, then Trump’s 2025 law would tie for seventh at 0.5 percent of GDP.

Joseph Rosenberg, a senior fellow at the Urban Institute-Brookings Institution Tax Policy Center, said that it’s legitimate to measure the scale of the cuts in the 2025 tax law either way.

What will Americans see in their taxes starting in 2026?

There could be a disconnect between the historical scale of Trump’s 2025 bill and the impact that Americans will notice when filing 2026 taxes.

Because Americans are already paying the lower rates that began in 2017 and that the 2025 law extended, they won’t necessarily notice a sizeable reduction in taxes owed.

“For most families, they are going to see a child tax credit that increases by a maximum of $200 per child, from $2,000 to $2,200,” said Margot Crandall-Hollick, principal research associate at the Urban-Brookings Tax Policy Center. “Some are going to pay a little less because of the tips and overtime provisions and a slightly higher standard deduction.”

The law preserves a more generous standard deduction that had been set to expire and increases it slightly to $15,750 for single filers and $31,500 for joint filers in 2025, to be indexed to inflation annually.

At the same time, Crandall-Hollick said, some families, especially those with lower incomes, will pay higher taxes because of the expiration of health insurance premium tax credits, which were not extended by the Big Beautiful Bill.

The extraordinary development follows a meeting between CEO Lip-Bu Tan and Trump after he called for Tan’s removal.

The United States government will take a 10 percent stake in Intel under an agreement with the struggling chipmaker, President Donald Trump has said, marking the latest extraordinary intervention in corporate affairs.

Trump made the announcement on Friday. Intel, whose shares rose more than 6 percent, declined to comment.

The development follows a meeting between CEO Lip-Bu Tan and Trump earlier this month that was sparked by Trump’s demand for the Intel chief’s resignation over his ties to Chinese firms.

“He walked in wanting to keep his job and he ended up giving us $10bn for the United States,” Trump said on Friday.

The move marks a clear change of direction and also follows a $2bn capital injection from SoftBank Group in what was a major vote of confidence for the troubled US chipmaker in the middle of a turnaround.

Federal backing could give Intel more breathing room to revive its loss-making foundry business, analysts said, but it still suffers from a weak product roadmap and challenges in attracting customers to its new factories.

Trump, who met Tan on August 11, has taken an unprecedented approach to national security.

The US president has pushed for multibillion-dollar government tie-ups in semiconductors and rare earths, such as a pay-for-play deal with Nvidia and an arrangement with rare-earth producer MP Materials to secure critical minerals.

Tan, who took the top job at Intel in March, has been tasked to turn around the US chipmaking icon, which recorded an annual loss of $18.8bn in 2024 — its first such loss since 1986. The company’s last fiscal year of positive adjusted free cash flow was 2021.

Earlier this week, US Senator Bernie Sanders supported the plan. He and Senator Elizabeth Warren had previously said that the US Treasury Department should receive a warrant, equity stake or senior debt instrument from any company that receives government grants like Intel had under the 2022 CHIPS and Science Act, which sought to lure chip production away from Asia and boost US domestic semiconductor output with $39bn in subsidies.

A formal announcement of the investment is expected later on Friday.

Cook, who has been accused of mortgage fraud, has said she will not be bullied by Trump into resigning.

The United States Department of Justice plans to investigate Federal Reserve Governor Lisa Cook, with a top official informing Federal Reserve Chair Jerome Powell of the probe and encouraging him to remove her, Bloomberg News has reported.

A letter to Powell from Ed Martin, a Department of Justice (DOJ) official who has led similar investigations into Senator Adam Schiff of California and New York Attorney General Letitia James, said Cook’s case “requires further examination”, Bloomberg reported on Thursday.

“At this time, I encourage you to remove Ms Cook from your Board,” Martin wrote, according to Bloomberg. “Do it today before it is too late! After all, no American thinks it is appropriate that she serve during this time with a cloud hanging over her.”

The DOJ did not immediately reply to a request for comment.

Asked about the report, a Fed spokesperson referred to Cook’s statement on Wednesday, when she said she had no intention of being “bullied” into resigning after President Donald Trump called for her to step down on the basis of allegations made by a member of his administration about mortgages she holds in Michigan and Georgia.

The Federal Reserve Act provides no authority for a Fed chair to remove another member of the Board of Governors.

Cook, the first Black woman to be a Fed governor, is serving a 14-year term that began after her second Senate confirmation in 2023.

The effort to remove Cook comes as the administration has unleashed a campaign against diversity, equity and inclusion (DEI), and intensifies Trump’s ongoing effort to gain influence over the US central bank and push it to lower interest rates.

Fed under pressure

Central bankers from around the world gathered on Thursday in Grand Teton National Park for the opening of the Kansas City Fed’s annual Jackson Hole symposium, where Powell will give a keynote speech on Friday, sketching out his view of the economy and, investors hope, where rates are headed.

“I would just say that I know her to be an outstanding economist and a person of high integrity,” Cleveland Fed President Beth Hammack told Yahoo Finance at the event.

US Federal Housing Finance Agency director William Pulte, who referred the allegations of Cook’s wrongdoing to the Department of Justice this week, said they arose as part of regular investigations into mortgage fraud by his agency and were not a “witch-hunt”.

“Defrauding people is nothing new,” Pulte told Bloomberg Television. “I believe that she committed mortgage fraud.”  He said that public records clearly show fraud and that a special exemption should not be made for the powerful. He said the fraud is “self-evident”.

Cook has yet to expressly address Pulte’s accusation, saying only in Wednesday’s statement: “I do intend to take any questions about my financial history seriously as a member of the Federal Reserve, and so I am gathering the accurate information to answer any legitimate questions and provide the facts.”

The Fed has held borrowing costs steady all year in the 4.25 percent to 4.5 percent range out of concern that Trump’s tariffs could reignite inflation that is still running above the Fed’s 2 percent goal. Recent weaker labour market data – including a report showing job gains averaged a paltry 35,000 from May to July – has increased Fed policymaker concern that borrowing costs may be a bit too high, and financial markets are priced for the likelihood of a quarter-point interest-rate cut at the Fed’s September meeting.

That would be far short of the several percentage points that Trump has called for.

Trump can name a new chair when Powell’s term ends in May. US Treasury Secretary Scott Bessent, who is leading the search, has nearly a dozen candidates, and all have voiced their support for big rate cuts and big changes to the central bank. Traditionally, Fed chairs resign when their leadership term ends, but there is some speculation that Powell would stay on until his term as governor ends in 2028, denying Trump the chance to install more loyalists to consolidate his control over the central bank.

Trump has nominated Council of Economic Advisers Chairman Stephen Miran, a Fed critic and enthusiastic supporter of Trump’s tariffs and other policies, to serve at the Fed in the seat vacated by the surprise resignation this month of Adriana Kugler.

Walmart’s second-quarter results are showing that United States consumers across the spectrum are still flocking to the retailer’s stores despite economic headwinds, but its shares have dipped as the company’s margins ebbed and inventory costs rose.

The world’s largest retailer has scooped up market share from rivals as wealthier consumers frequent the store more often, worried about the effects of tariffs on prices, the company’s results on Thursday showed.

That has fueled an 85 percent surge in the stock over the last year-and-a-half that some analysts say has made its valuation too lofty.

Shares were down 4 percent in midday trading in New York, as its second-quarter profit was lower than expected, registering Walmart’s first earnings miss in more than three years.

Investors also focused on Walmart’s gross margins for the quarter, which fell short of their expectations, even though the company raised its fiscal year sales and profit forecasts.

Overall gross margins were about flat at 24.5 percent versus 24.4 percent last quarter, missing consensus estimates of 24.9 percent, according to brokerage DA Davidson.

“Expectations were high for a margin beat and we didn’t get that, so we’re getting a little bit of a pullback on the stock,” said Steven Shemesh, RBC Capital Markets analyst.

Still, the Bentonville, Arkansas-based chain’s results showed it has continued to benefit from growing price sensitivity among Americans, earning revenue of $177.4bn in the second quarter. Analysts on average were expecting $176.16bn, according to LSEG data. Adjusted earnings per share of 68 cents in the second quarter fell short of analyst expectations of 74 cents.

Consumer sentiment has weakened due to fears of tariffs fueling higher inflation, hitting the bottom lines of some retail chains, but Walmart’s sales have remained resilient. Companies have been able to withstand paying those import levies through front-running of inventories, but as those products are sold, the next shipments are pricier, Walmart CEO Doug McMillon said.

“As we replenish inventory at post-tariff price levels, we’ve continued to see our cost increase each week,” he said on a call with analysts, noting those costs will continue rising in the second half of the year. The effects of tariffs have so been gradual enough for consumer habits to change only modestly.

Walmart had warned it would increase prices this summer to offset tariff-related costs on certain goods imported to the US, a move that drew criticism from President Donald Trump. Consumer-level inflation is increasing modestly, while wholesale inflation spiked in July to its fastest rate in more than three years.

According to an S&P Global survey released on Thursday, input prices paid by businesses hit a three-month high in July, with companies citing tariffs as the key driver. Prices charged by businesses for goods and services hit a three-year high, as companies passed along costs to consumers. A day earlier, rival Target warned of tariff-induced cost pressures.

Walmart got a boost from a sharper online strategy as more customers relied on home deliveries. Its global e-commerce sales jumped 25 percent during the second quarter, and Walmart said one-third of deliveries from stores took three hours or less.

Shoppers adjust to higher prices

McMillon expects current shopping habits to persist through the third and fourth quarters. He noted middle- and lower-income households are making noticeable adjustments in response to rising prices, either by reducing the number of items in their baskets or by opting for private-label brands. This shift has not been seen among higher-income households, which Walmart defines as those earning over $100,000 annually.

Walmart expects annual sales to grow in the range of 3.75 percent to 4.75 percent, compared to its prior forecast of a 3 percent to 4 percent increase. Adjusted earnings per share are expected in the range of $2.52 to $2.62, compared to its previous range of $2.50 to $2.60.

Chief Financial Officer John David Rainey said the company is looking at more possible financial outcomes than before because of trade policy talks, uncertain demand, and the need to stay flexible for future growth. Based on what it saw in the second quarter, Walmart expects the impact on margins and earnings from the higher cost of goods to be smaller in the current quarter than it previously thought, Rainey said.

“Broad consumer and macro trends remain favourable to Walmart, especially in the shape of consumers wanting to maximise bang for their buck,” said Neil Saunders, managing director of retail consultancy GlobalData.

Walmart’s total US comparable sales rose 4.6 percent, beating analysts’ estimates of a 3.8 percent increase. The company noted strong customer response to over 7,400 “rollbacks,” its term for discounted prices, with 30 percent more rollbacks on grocery items.

Average spending at the till rose 3.1 percent from an increase of 0.6 percent last year, but growth in customer visits fell to 1.5 percent from 3.6 percent in the year-earlier period. Walmart logged 40 percent growth in marketplace sales, including electronics, automotive, toys, and media and gaming.

Two-thirds of what Walmart sells in the US is domestically sourced, executives had said last quarter, which gave it some insulation from tariffs compared to competitors.

Officials in US President Donald Trump’s administration made comments saying the equity stake was not to run the firm.

United States Commerce Secretary Howard Lutnick has said the US government wants an equity stake in Intel in exchange for cash grants approved during the administration of former President Joe Biden.

Separately, also on Tuesday, Treasury Secretary Scott Bessent said any US investment in Intel would be aimed at helping the troubled chipmaker stabilise.

Asked about reports that the US was considering taking a 10 percent stake in Intel, Bessent told CNBC’s “Squawk Box” programme: “The stake would be a conversion of the grants and maybe increase the investment into Intel to help stabilise the company for chip production here in the US.”

Bessent gave no details about the size or timing of any US stake in Intel, but said any investment would not be aimed at forcing US companies to buy chips from Intel.

Bessent’s comments were the first official response from the Trump administration after Bloomberg News reported on Monday that the US government is in talks to take a 10 percent Intel stake in exchange for $7.9bn in grants that were approved for the US chip company during the Biden administration.

‘Not governance’

“We should get an equity stake for our money,” Lutnick told CNBC. “We’ll get equity in return for that … instead of just giving grants away.”

Lutnick said the US does not want control of the company.

“It’s not governance, we are just converting what was a grant under Biden into equity for the Trump administration for the American people.” He suggested any stake would be “non-voting,” meaning it would not enable the US government to tell the company how to run its business.

He made his comments a day after SoftBank Group agreed to invest $2bn into the chipmaker, which has struggled to compete after years of management blunders.

“The Biden administration literally was giving Intel money for free and giving TSMC money for free, and all these companies just giving the money for free, and Donald Trump turned it into saying, ‘Hey, we want equity for the money. If we’re going to give you the money, we want a piece of the action for the American taxpayer,’” Lutnick said.

Intel and TSMC, a Taiwan-based chipmaker, did not immediately comment.

Intel helped launch Silicon Valley, but has fallen behind rivals like Nvidia Corp and Advanced Micro Devices Inc and is shedding thousands of workers and slashing costs under its new CEO, Lip-Bu Tan. It recorded an annual loss of $18.8bn in 2024, its first such loss since 1986.

Intel plans to end the year with 75,000 “core” workers, excluding subsidiaries, through layoffs and attrition, down from 99,500 core employees at the end of 2024. The company previously announced a 15 percent workforce reduction.

Trump recently said Tan, who was made CEO in March, should resign. But after meeting with him last week, Trump relented, saying Tan had an “amazing story”.

Asian stock markets see big gains amid growing expectations of an interest rate cut by the US Federal Reserve.

Japan’s benchmark stock market index has topped its all-time high for a second straight day amid expectations of an interest rate cut in the United States and easing trade tensions between Washington and Beijing.

The Nikkei 225 rose above 43,421 points on Wednesday after better-than-expected US inflation data bolstered the case for a rate cut by the US Federal Reserve at its next committee meeting in September.

The milestone came after the Nikkei on Tuesday breached the 42,999-point mark for the first time.

In the US, the benchmark S&P 500 and tech-heavy Nasdaq Composite also closed at record highs on Tuesday after rising 1.13 percent and 1.39 percent respectively, as investors cheered the latest inflation data release, which showed consumer prices rising a lower-than-expected 2.7 percent in July.

The inflation data added to a positive turn in investor sentiment following US President Donald Trump’s announcement on Monday of a 90-day extension of his pause on crippling tariffs on Chinese goods.

Other Asian stock markets also racked up big gains on Wednesday, with Hong Kong’s Hang Seng Index and South Korea’s KOSPI rising about 2.50 percent and 1 percent, respectively.

The Fed and its chair, Jerome Powell, have for months been under intense pressure from Trump to lower interest rates.

A cut in the benchmark rate would deliver a boost to the US economy, the biggest driver of global growth, by lowering borrowing costs for American households and businesses.

But the Fed has been reluctant to cut the rate due to concerns it could stoke inflation at a time when Trump’s sweeping tariffs are already putting pressure on prices.

“Jerome ‘Too Late’ Powell must NOW lower the rate,” Trump said in a post on Truth Social on Tuesday, claiming that the Fed chair had done “incalculable” damage to the economy by not lowering borrowing costs.

On Tuesday, CME Group’s FedWatch tool raised the likelihood of a September rate cut to 96.4 percent, up from 85.9 percent the previous day.

This is the second major offer the AI startup has made this year to buy a major asset. In January, it offered to buy TikTok.

Perplexity AI said it has made a $34.5bn unsolicited all-cash offer for Alphabet’s Google Chrome browser.

The deal, if Alphabet agreed to it, would also require financing above the startup’s most recently reported valuation of $18bn.

The nearly three-year-old startup’s purchase of Chrome, if approved, would give the company access to its more than three billion users as regulatory pressure weighs on Google’s control over the tech industry.

Perplexity did not disclose on Tuesday how it plans to fund the offer, but has raised $1bn in funding from investors including SoftBank and the semiconductor chip giant Nvidia.

Several funds have said they would finance the deal in full if Alphabet accepts, the Reuters news agency reported citing unnamed sources familiar with the matter.

Alphabet has not offered to sell Chrome and has planned to appeal a United States court ruling that said Google held an unlawful monopoly over the online search marketplace. The US Department of Justice has said that divestiture of Chrome would help remedy that case. A federal judge is expected to rule on remedies for the case later this month.

Web browsers as vital gateways

As a new generation of users turns to chatbots such as ChatGPT and Perplexity for answers, web browsers are regaining prominence as vital gateways to search traffic and prized user data, making them central to Big Tech’s AI ambitions.

Perplexity already has an AI browser, Comet, that can perform certain tasks on a user’s behalf. Buying Chrome would allow it to tap the browser’s more than three billion users, giving it the heft to better compete with bigger rivals such as OpenAI. The ChatGPT parent is also working on its own AI browser.

Perplexity, run by CEO Aravind Srinivas, has said it will keep the browser’s code open source and make no changes to the default search engine, according to Reuters.

The San Francisco-based startup is far from the only company to express interest in Google Chrome. ChatGPT owner OpenAI has also expressed interest, as has Yahoo and New York-based private equity firm Apollo Global Management.

It is not the first eye-catching bid from the AI startup this year. In January, Perplexity AI offered to buy TikTok after regulators called for the Chinese-owned app to be sold to a US company. The White House has delayed the ban several times. The most recent delay was announced in late June.

Neither Google nor Perplexity immediately responded to Al Jazeera’s request for comment.

On Wall Street, Alphabet’s share price surged up 1.4 percent since the market opened. Potential funder Nvidia is relatively flat, only up about 0.1 percent. However, SoftBank is surging up more than 6.9 percent as of 1pm in New York (17:00 GMT). Perplexity is not a publicly traded company.

Cannabis stocks soar after US president says he is ‘looking at’ reclassification.

United States President Donald Trump has said his administration is “looking at” reclassifying cannabis as a less dangerous drug.

Speaking to reporters at the White House on Monday, Trump said he would make a determination on the legal classification of the drug over the next few weeks.

“That determination hopefully will be the right one,” Trump said. “It’s a very complicated subject.”

Trump said that while he had heard “great things” about medical-use cannabis, he had heard bad things about “just about everything else” to do with the drug.

“Some people like it, some people hate it,” he said. “Some people hate the whole concept of marijuana because if it does bad for the children, it does bad for people that are older than children.”

Stocks in cannabis-related businesses soared following Trump’s remarks.

New York-based Tilray Brands jumped nearly 42 percent, with Canada’s Village Farms International and Canopy Growth Corp closing up about 34 percent and 26 percent, respectively.

Trump made his comments after The Wall Street Journal reported last week that he told attendees at a recent fundraising dinner that he was interested in reclassifying the drug.

While cannabis is fully legal, including for recreational use, in 24 US states, the use and possession of the drug is illegal at the federal level.

Cannabis is currently classified as a Schedule I drug, putting it in the same category as heroin, LSD and ecstasy.

Under the Drug Enforcement Administration’s classification system, Schedule I drugs are defined as those with “no currently accepted medical use and a high potential for abuse”.

Former US President Joe Biden proposed reclassifying cannabis as a Schedule III drug – defined as those with a “moderate to low potential for physical and psychological dependence” – but failed to enact the change before leaving office in January.

Trump’s sectoral tariffs on steel, aluminium and autos have hit the manufacturing sector hard and reduced hiring.

The Canadian economy lost tens of thousands of jobs in July, sending the share of people employed to an eight-month low as the labour market gave back the gains seen in the prior month.

The economy shed 40,800 jobs in July, compared with a net addition of 83,000 jobs in June, taking the employment rate, or the percentage of people employed out of the total working-age population, to 60.7 percent, Statistics Canada said on Friday.

The unemployment rate, however, remained steady at a multiyear high of 6.9 percent.

Analysts polled by Reuters had forecast the economy would add 13,500 jobs and the unemployment rate would tick up to 7 percent.

“Canada’s labour market snapped back to reality in July,” Michael Davenport, senior economist at Oxford Economics, wrote in a note.

United States President Donald Trump’s sectoral tariffs on steel, aluminium and cars have hit the manufacturing sector hard and reduced the hiring intentions of companies, the Bank of Canada has previously said.

The number of people employed in manufacturing shrank by close to 10,000 in July on a yearly basis as sectors linked to steel, aluminium and carmaking curtailed hiring and experienced layoffs.

Marty Warren, the United Steelworkers’ national director for Canada, told Reuters that about 1,000 members have been laid off.

Oxford Economics’s Davenport predicts more layoffs in the coming months, forecasting about 140,000 lost jobs and an unemployment rate rising to the mid-7 percent range later this year.

Employment in some areas has held up well despite tariffs, the data showed.

Overall, there has been little net employment growth since the beginning of the year, StatsCan said. The layoff rate was virtually unchanged at 1.1 percent in July compared with 12 months earlier.

The bulk of the job losses in July occurred among workers aged between 15 and 24 – that group’s unemployment rate edged up to 14.6 percent, the highest since September 2010, excluding the pandemic years of 2020 and 2021.

Policy rate

The youth unemployment rate is usually higher than the country’s average.

The employment rate for this group, which accounts for about 15 percent of the total working-age population, sank to 53.6 percent, the lowest level since November 1998 if the pandemic years are excluded.

The Bank of Canada kept its key policy rate unchanged last week, partly due to a strong labour market, but indicated it might reduce lending rates if inflation stays under control and economic growth weakens.

“We are now a bit more confident in our view that the Bank of Canada will resume cutting next month, although a surprisingly strong CPI [Consumer Price Index] print next week could prompt another pause,” said Alexandra Brown, North America economist at Capital Economics.

Money market bets show the odds of a rate cut at the next monetary policy meeting on September 17 at 38 percent, up 11 percentage points from Thursday.

The information, culture and recreation sector lost 29,000 jobs last month, marking the biggest decline, followed by 22,000 lost jobs in construction and 19,000 in business, building and other support services.

The average hourly wage of permanent employees – a gauge closely tracked by the Bank of Canada to ascertain inflationary trends – grew by 3.5 percent in July to 37.66 Canadian dollars ($27.4) per hour, against a 3.2 percent increase in the prior month.

India is signaling it may seek to rebalance its global partnerships after Trump’s salvo of tariffs on Indian goods.

Indian Prime Minister Narendra Modi and Brazil’s President Luiz Inacio “Lula” da Silva have spoken by phone, their offices said, discussing a broad range of topics that included tariffs imposed by the United States on goods from both countries.

Lula confirmed a state visit to India in early 2026 during the call on Thursday, which occurred a day after the Brazilian leader told the news agency Reuters that he would initiate a conversation among the BRICS group of countries on tackling US President Donald Trump’s levies, which are the highest on Brazil and India.

The group of major emerging economies also includes China, Russia and South Africa.

“The leaders discussed the international economic scenario and the imposition of unilateral tariffs. Brazil and India are, to date, the two countries most affected,” Lula’s office said in a statement.

Trump announced an additional 25 percent tariff on Indian goods on Wednesday, raising the total duty to 50 percent. The additional tariff, effective August 28, is meant to penalise India for continuing to buy Russian oil, Trump has said.

Trump has also slapped a 50 percent tariff on goods from Brazil, with lower levels for sectors such as aircraft, energy and orange juice, tying the move to what he called a “witch hunt” against former President Jair Bolsonaro, a right-wing ally on trial for an alleged coup plot to overturn his 2022 election loss.

On their call, Lula and Modi reiterated their goal of boosting bilateral trade to more than $20bn annually by 2030, according to the Brazilian president’s office, up from roughly $12bn last year.

Brasilia said they also agreed to expand the reach of the preferential trade agreement between India and the South American trade bloc Mercosur, and discussed the virtual payment platforms of their countries.

Modi’s office, in its statement, did not explicitly mention Trump or US tariffs, but said “the two leaders exchanged views on various regional and global issues of mutual interest.”

India is already signalling it may seek to rebalance its global partnerships after Trump’s salvo of tariffs on Indian goods.

Modi is preparing for his first visit to China in more than seven years, suggesting a potential diplomatic realignment amid growing tensions with Washington. The Indian leader visited Lula in Brasilia last month.

Even as the United States slaps India with a 50 percent tariff, the highest among all countries so far and one that will push their relationship to its lowest moment in years, one thing is clear: US President Donald Trump is more interested in onshoring than friend-shoring, experts say.

On Wednesday, the US announced an additional 25 percent tariff on India over its import of Russian oil, taking the total to 50 percent. The move caught most experts by surprise as New Delhi was one of the first to start trade negotiations with Washington, DC, and Trump and Indian Prime Minister Narendra Modi have repeatedly admired each other in public statements and called each other friends. Brazil is the only other country facing tariffs as high as India’s.

“The breakdown of the trade negotiations was a surprise,” said Vina Nadjibulla, vice president of strategy and research at the Asia Pacific Foundation of Canada.

“This is a very difficult moment, arguably the worst in many, many years in their relationship and puts India in a very small group of countries that find themselves without a deal and with the highest tariff rates. They now need some pragmatic path forward and need to find a way to rebuild trust,” Nadjibulla said.

While the 50 percent tariffs, set to kick in in three weeks, have come as a shock, there has been a series of events in the past few weeks that hinted at disagreements between the two countries.

Just last week, Trump threatened that he would penalise New Delhi for buying Russian oil and arms, venting his frustration over an impasse in trade talks and referred to both countries as “dead economies”.

Negotiations deadlock

Last year, bilateral trade between India and the US stood at approximately $212bn, with a trade gap of about $46bn in India’s favour. Modi has said in the past that he plans to more than double trade between the two countries to $500bn in the next five years.

As part of the tariff negotiations, New Delhi had offered to remove levies from US industrial goods and said it would increase defence and energy purchases, the Reuters news agency reported. It also offered to scale back taxes on cars, despite a strong auto lobby at home pressuring it not to.

But it refused to remove duties from farm and dairy products, two politically sensitive sectors that employ hundreds of millions of predominantly poor Indians, and a stance similar to some other countries like Canada.

There are also geopolitical layers to what was supposed to be a trade conversation, pointed out Farwa Aamer, director of South Asia Initiatives at the Asia Society Policy Institute in New York.

A very public one was the difference in perception on how the latest clash between India and archenemy Pakistan in May was brought to an end. Trump has repeatedly said that he mediated a ceasefire. India has repeatedly said that Trump had no role in bringing about a truce and has said that Modi and Trump never spoke during the conflict.

Pakistan, on the other hand, has said it will nominate Trump for the Nobel Peace Prize and has so far walked away with deals with the US to explore its reserves of critical minerals and oil as its efforts to reset ties with the US play out after years of ambivalence under former US President Joe Biden, said Aamer.

All of this has caused unease for New Delhi, which is now trying to navigate a tough road. “This will test India’s foreign policy,” said Aamer, “and the question is if we will see it grow with the US even as it maintains its ties with Russia,” its longstanding defence and trade partner.

New Delhi has called Wednesday’s tariff “unfair, unjustified and unreasonable” and said its imports of Russian oil are based on its objective of securing the energy needs of its nation of 1.4 billion people.

But beyond that, “India doesn’t want to look weak”, said Aamer. “India has this global standing, and Modi has this global standing, so it has to hold its own. It will maintain its stance that its national security is driving its foreign policy.”

Robert Rogowsky, a professor of international trade at the Middlebury Institute of International Studies at Monterey, said he expected “very creative diplomacy” in the “near term” as India and the US try to reset ties despite tensions.

“Strong-arming individuals like Modi will inevitably lead to shifts and counter-shifts,” he told Al Jazeera.

Adding instability

For now, India can focus on strengthening its bilateral trade agreements, said Aamer, such as the one it signed with the United Kingdom last month and another with the European Union, which is currently in the works.

India is also trying to stabilise relations with China –  just as Australia, Canada and Japan have done in recent months since Trump took office and hit allies with tariffs. Modi is planning to attend the Shanghai Cooperation Organisation summit at the end of the month. It would be his first visit to China since the two countries had a face-off in 2020 in the Galwan River valley.

But the trade blow from the US also comes at a time when India has been trying to position itself as a manufacturing hub and as an option for businesses that were looking to add locations outside China.

In April, Apple, for instance, said all iPhones meant to be sold in the US would be assembled in India by next year. While electronics are exempt for now from the tariffs, a country with a 50 percent tariff tag on it is hardly attractive for business, and this just “adds to the instability and uncertainty that businesses were already feeling” because of all the Trump tariffs, Nadjibulla said.

“Trump has made it clear that he’s interested in onshoring rather than friend-shoring.”

Around the world, countries are scrambling to cope with the latest wave of tariffs imposed by US President Donald Trump.

More than 60 countries are on the list, some with levies as high as 50 percent.

The move has unleashed shock, confusion and financial volatility. The US also stock market took a hit and a jobs report revealed slower than expected economic growth.

Trump didn’t take the news well: He promptly fired the head of the US Labour Statistics agency – accusing her of “manipulating” the data.

But beyond that, how will these tariffs affect the global economy? And will this controversial foreign policy tool backfire on Trump?

Presenter: Adrian Finighan

Guests: 

Harry Broadman – Economist at RAND Corporation and a former US assistant trade representative and chief of staff of the president’s Council of Economic Advisers

Seijiro Takeshita – Professor of management at the University of Shizuoka in Japan

Steve Hanke – Professor at Johns Hopkins University, distinguished senior scholar at the Mises Institute, and a former senior economist on President Ronald Reagan’s Council of Economic Advisers

The White House has launched an aggressive public relations campaign promoting a narrative of economic strength during the first six months of United States President Donald Trump, with claims of his policies fueling “America’s golden age”.

But an Al Jazeera analysis of economic data shows the reality is more mixed.

Trump’s claims of his policies boosting the US economy suffered a blow on Friday when the latest jobs report revealed that the country had added a mere 73,000 jobs last month, well below the 115,000 forecasters had expected. The only additions were in the healthcare sector, which added 55,000 jobs, and the social services sector added 18,000.

US employers also cut 62,075 jobs in July — up 29 percent from cuts in the month before, and 140 percent higher than this time last year, according to the firm Challenger, Gray and Christmas, which tracks monthly job cuts. Government, tech, and retail sectors are the industries that saw the biggest declines so far this year.

It comes as this month’s jobs and labour turnover report showed an economic slowdown. There were 7.4 million open jobs in the US, down from 7.7 million a month before.

The Department of Labour on Friday released downward revisions to both the May and June jobs reports, significantly changing the picture the White House had previously painted.

“For the FOURTH month in a row, jobs numbers have beat market expectations with nearly 150,000 good jobs created in June,” the White House said in a July 3 release following the initial June report.

The Labor Department had reported an addition of 147,000 jobs in June. On Friday, it sharply revised down that number to just 14,000. May’s report also saw a big downgrade from 144,000 to only 19,000 jobs gained. Trump has since fired the head of the agency that produces the monthly jobs data, alleging that the data had been manipulated to make him look bad.

Even before the revisions, June’s report was the first to reflect early signs of economic strain tied to the administration’s tariff threats, as it revealed that job growth was concentrated in areas such as state and local government and healthcare. Sectors more exposed to trade policy – including construction, wholesale trade, and manufacturing – were flat. Meanwhile, leisure and hospitality showed weak growth, even in peak summer, reflecting falling travel demand both at home and abroad.

The administration also claimed that native-born workers accounted for all job gains since January. That assertion is misleading as it implies that no naturalised citizens or legally present foreign workers gained employment.

However, it is true that employment among foreign-born workers has declined – by over half a million jobs – claims that native-born workers are replacing foreign-born labour, are not supported by the jobs data.

Jobs lost in sectors with high foreign-born employment, including tech, have been abundant, driven by tariffs and automation, particularly AI. In fact, recent layoffs in tech have been explicitly attributed to AI advancements, not labour displacement by other groups.

Companies including Recruit Holdings — the parent company of Indeed and Glassdoor, Axel Springer, IBM, Duolingo and others have already made headcount reductions directly attributed to AI advancements.

Wage growth

The pace of rise of wage growth, an indicator of economic success, has slowed in recent months. That is partly due to the Federal Reserve keeping interest rates steady in hopes of keeping inflation stable.

According to the Bureau of Labor Statistics, wages have been outpacing inflation since 2023, after a period of declining real wages following the COVID pandemic.

Wage growth ticked up by 0.3 percent in July from a month prior. Compared with this time last year, wage growth is 3.9 percent, according to Friday’s Labor Department jobs report.

Earlier this year, the White House painted a picture that wage growth differed between the era of former President Joe Biden and now under Trump because of policy.

“Blue-collar workers have seen real wages grow almost two percent in the first five months of President Trump’s second term — a stark contrast from the negative wage growth seen during the first five months of the Biden Administration,” the White House said in a release.

However, Biden and Trump inherited two very different economies when they took office. Biden has to deal with a massive global economic downturn driven by the onset of the COVID-19 pandemic.

Trump, on the other hand, during his second term, inherited “unquestionably the strongest economy” in more than two decades, per the Economic Policy Institute, particularly because of the US economy’s rebound compared with peer nations.

Inflation

Inflation peaked in mid-2022 during Biden’s term at 9 percent, before falling steadily because of the Federal Reserve’s efforts to manage a soft landing.

A July 21 White House statement claimed, “Since President Trump took office, core inflation has tracked at just 2.1 percent.” On Wednesday, Treasury Secretary Scott Bessett said “inflation is cooling” in a post on X.

However, the Consumer Price Index report, which tracks core inflation – a measure that excludes the price of volatile items such as food and energy – was 2.9 percent in the most recent report and overall inflation was at 2.7 percent in June.

Prices

The most recent Consumer Price Index report, published July 15, shows that on a monthly basis, prices on all goods went up in June by 0.3 ,percent which is 2.7 percent higher from this time last year.

Grocery prices in particular are up 2.4 percent from this time last year and 0.3 percent from the prior month. The cost of fruits and vegetables went up 0.9 percent, the price of coffee increased by 2.2 percent and the cost of beef went up 2 percent.

New pending tariffs on Brazil, as Al Jazeera previously reported, could further drive up the cost of beef in the months to come.

Trump has pointed to falling egg prices in particular as evidence of economic success, after Democrats attacked his administration over their price in March. He has even gone so far as to claim that prices are down by 400 percent. That figure is mathematically impossible – a 100 percent decrease would mean eggs are free.

During the first few months of Trump’s term egg prices surged, and then dropped due to an outbreak of, and then recovery from, a severe avian flue outbreak, which had been hindering supply – not because of any specific policy intervention.

In January, when Trump took office egg prices were $4.95 per dozen as supply was constrained by the virus. By March, the average egg price was $6.23.  But outbreak and high prices drove away consumers, allowing farmers with healthier flocks to catch up on the supply side. As a result, prices fell to an average of $3.38. That would be a 32 percent drop since the beginning of his term and a 46 percent drop from their peak price – far from the 400 percent Trump claimed.

Trump also recently said petrol prices are at $1.98 per gallon ($0.52 per litre) in some states. He doubled down on that again on Wednesday. That is untrue. There is not a single state that has those petrol prices.

According to Gasbuddy, a platform that helps consumers find the lowest prices on petrol, Mississippi at $2.70 a gallon ($0.71 per litre) has the cheapest gas, and the cheapest petrol station in that state is currently selling gas at $2.37 ($0.62 per litre).

AAA, which tracks the average petrol price, has it at $3.15 per gallon ($0.83 per litre) nationwide, this is up from the end of January when it was $3.11 ($0.82 per litre).

While petrol prices have gone down since Trump took office, they are nowhere close to the rate he has continually suggested. In July 2024, for instance, the average price for a gallon of petrol nationwide was $3.50 ($0.93 per litre).

GDP

On Wednesday, the White House said that “President Trump has reduced America’s reliance on foreign products, boosted investment in the US”, citing the positive GDP data that had come out that morning.

That is misleading. While the US economy grew at a 3 percent annualised rate in the second quarter, surpassing expectations, that was a combination of a rebound after a weak first quarter, a drop in imports – which boosted GDP, and a modest rise in consumer spending.

The data beneath the headline showed that private sector investment fell sharply by 15.6 percent and inventories of goods and services declined by 3.2 percent, indicating a slowdown.

Manufacturing

The administration recently highlighted gains in industrial production, pointing to a boost in domestic manufacturing. Overall, there was a 0.3 percent increase in US industrial production in June. That was after stagnating for two months.

There have been isolated gains, such as increases in aerospace and petroleum-related sectors—1.6 percent and 2.9 percent, respectively.

But production of durable goods — items that are not necessarily for immediate consumption— remained flat, and auto manufacturing fell by 2.6 percent last month as tariffs dampened demand. Mining output also decreased by 0.3 percent.

According to the Department of Commerce’s gross domestic product report, manufacturing growth among non-durable goods has slowed. While there was a 1.3 percent increase, that’s a decline from 2.3 percent in the previous quarter.

This could change in the future, as several companies across a range of sectors have pledged to increase US production, including carmaker Hyundai and pharmaceutical giant AstraZeneca, which just pledged a $50bn investment over the next five years.

Trade deals and tariffs

In April, the White House replaced country-specific tariffs with a 10-percent blanket tariff while maintaining additional levies on steel, cars, and some other items. It then promised to deliver “90 trade deals in 90 days.” That benchmark was not met. By the deadline, only one loosely fleshed out deal — with the United Kingdom — had been announced. As of 113 days later, the US has announced comparable deals with just a handful more countries and the European Union. The EU deal still needs parliamentary approval.

Contrary to the administration’s claims, tariffs do not pressure foreign exporters — they are paid by US importers and ultimately are likely to be passed on to US consumers. Companies, including big box retailer Walmart and toymaker Mattel, have announced price hikes as a direct result. Ford, for example, raised prices on three Mexico-assembled models due to tariff pressures.

To protect their own economies, many countries have pivoted their trade policies away from the US. Brazil and Mexico recently announced a new trade pact.

The White House and its allies continue to defend tariffs by highlighting the increased revenue they bring to the federal government, which is true. Since Trump took office, the US has brought in more than $100bn in revenue, compared with $77bn in the entire fiscal year 2024. The price of imports for consumers has only risen about 3 percent, but many expect that will change as the import taxes are passed on to consumers.

The White House did not respond to Al Jazeera’s request for comment.

US President Trump alleged that the data had been manipulated to make him look bad.

United States President Donald Trump has removed the head of the agency that produces the monthly jobs figures after a report showed hiring slowed in July and was much weaker in May and June than previously reported.

Trump, in a post on his social media platform on Friday, alleged that the figures were manipulated for political reasons and said that Erika McEntarfer, the director of the Bureau of Labor Statistics (BLS), who was appointed by former President Joe Biden, should be fired. He provided no evidence for the charge.

“I have directed my Team to fire this Biden Political Appointee, IMMEDIATELY,” Trump said on Truth Social. “She will be replaced with someone much more competent and qualified.”

Trump later posted: “In my opinion, today’s Jobs Numbers were RIGGED in order to make the Republicans, and ME, look bad.”

After his initial post, Labor Secretary Lori Chavez-DeRemer said on X that McEntarfer was no longer leading the bureau and that William Wiatrowski, the deputy commissioner, would serve as the acting director.

“I support the President’s decision to replace Biden’s Commissioner and ensure the American People can trust the important and influential data coming from BLS,” Chavez-DeRemer said.

Friday’s jobs report showed that just 73,000 jobs were added last month and that 258,000 fewer jobs were created in May and June than previously estimated. The report suggested that the economy has sharply weakened during Trump’s tenure, a pattern consistent with a slowdown in economic growth during the first half of the year and an increase in inflation during June that appeared to reflect the price pressures created by the president’s tariffs.

“What does a bad leader do when they get bad news? Shoot the messenger,” Democratic Senate Leader Chuck Schumer of New York said in a Friday speech.

Revisions to hiring data

Trump has sought to attack institutions that rely on objective data for assessing the economy, including the Federal Reserve and, now, the BLS. The actions are part of a broader mission to bring the totality of the executive branch – including independent agencies designed to objectively measure the nation’s wellbeing – under the White House’s control.

McEntarfer was nominated by Biden in 2023 and became the commissioner of the BLS in January 2024. Commissioners typically serve four-year terms, but since they are political appointees, they can be fired. The commissioner is the only political appointee of the agency, which has hundreds of career civil servants.

The Senate confirmed McEntarfer to her post 86-8, with now Vice President JD Vance among the yea votes.

Trump focused much of his ire on the revisions the agency made to previous hiring data. Job gains in May were revised down to just 19,000 from 125,000, and for June they were cut to 14,000 from 147,000. In July, only 73,000 positions were added. The unemployment rate ticked up to a still-low 4.2 percent from 4.1 percent.

“No one can be that wrong? We need accurate Jobs Numbers,” Trump wrote. “She will be replaced with someone much more competent and qualified. Important numbers like this must be fair and accurate, they can’t be manipulated for political purposes.”

The monthly employment report is one of the most closely-watched pieces of government economic data and can cause sharp swings in financial markets. The disappointing figure sent US market indexes about 1.5 percent lower on Friday.

While the jobs numbers are often the subject of political spin, economists and Wall Street investors – with millions of dollars at stake – have always accepted US government economic data as free from political manipulation.

The surge comes following announced investments in AI after the company laid off thousands of workers earlier this month.

Microsoft is now the second company ever to surpass $4 trillion in market valuation, following artificial intelligence giant Nvidia.

Microsoft, which is traded under the ticker “MSFT”, is continuing to surge and as of noon in New York City (16:00 GMT) on Thursday, it is up 4.6 percent from the market open.

The technology behemoth said it will spend $30bn in capital spending for the first quarter of the current fiscal year to meet soaring artificial intelligence (AI) demand. Microsoft also reported booming sales in its Azure cloud computing business on Wednesday.

“It is in the process of becoming more of a cloud infrastructure business and a leader in enterprise AI, doing so very profitably and cash generatively despite the heavy AI capital expenditures,” said Gerrit Smit, lead portfolio manager, Stonehage Fleming Global Best Ideas Equity Fund.

Redmond, Washington-headquartered Microsoft first cracked the $1 trillion mark in April 2019.

Its move to $3 trillion was more measured than that of technology giants Nvidia and Apple, with AI-bellwether Nvidia tripling its value in just about a year and clinching the $4 trillion milestone before any other company on July 9.

In its earnings report, revenue topped $76.4bn.

‘Slam-dunk’

“This was a slam-dunk quarter for MSFT [Microsoft] with cloud and AI driving significant business transformation across every sector and industry as the company continues to capitalize on the AI Revolution unfolding front and center,” Dan Ives, senior analyst at Wedbush Securities, said in a note provided to Al Jazeera.

Microsoft’s multibillion-dollar bet on OpenAI is proving to be a game-changer, powering its Office Suite and Azure offerings with cutting-edge AI and fuelling the stock to more than double its value since ChatGPT’s late-2022 debut.

Its capital expenditure forecast, its largest ever for a single quarter, has put it on track to potentially outspend its rivals over the next year.

“We closed out the fiscal year with a strong quarter, highlighted by Microsoft Cloud revenue reaching $46.7bn, up 27 percent [up 25 percent in constant currency] year-over-year,” Amy Hood, executive vice president and chief financial officer of Microsoft, said in a statement.

However, Microsoft’s surge in market value is overshadowed by a wave of layoffs at the tech giant. Earlier this month, the company laid off 9,000 people, representing 4 percent of its global workforce, while doubling down on AI.

Lately, breakthroughs in trade talks between the United States and its trading partners ahead of US President Donald Trump’s August 1 tariff deadline have buoyed stocks, propelling the S&P 500 and the Nasdaq to record highs.

Meta Platforms also doubled down on its AI ambitions, forecasting third-quarter revenue that blew past Wall Street estimates as artificial intelligence supercharged its core advertising business.

The social media giant upped the lower end of its annual capital spending by $2bn – just days after Alphabet made a similar move – signalling that Silicon Valley’s race to dominate the artificial-intelligence frontier is only accelerating.

The International Monetary Fund has raised its global growth forecasts for 2025 and 2026 slightly, citing stronger-than-expected purchases in advance of an August 1 jump in tariffs imposed by the United States and a drop in the effective US tariff rate to 17.3 percent from 24.4 percent.

In its forecast on Tuesday, it warned, however, that the global economy faced major risks including a potential rebound in tariff rates, geopolitical tensions and larger fiscal deficits that could drive up interest rates and tighten global financial conditions.

“The world economy is still hurting, and it’s going to continue hurting with tariffs at that level, even though it’s not as bad as it could have been,” said Pierre-Olivier Gourinchas, IMF chief economist.

In an update to its World Economic Outlook from April, the IMF raised its global growth forecast by 0.2 percentage point to 3 percent for 2025 and by 0.1 percentage point to 3.1 percent for 2026. However, that is still below the 3.3 percent growth it had projected for both years in January and the pre-pandemic historical average of 3.7 percent.

It said global headline inflation was expected to fall to 4.2 percent in 2025 and 3.6 percent in 2026, but noted that inflation would likely remain above target in the US as tariffs passed through to consumers in the second half of the year.

The US effective tariff rate – measured by import duty revenue as a proportion of goods imports – has dropped since April, but remains far higher than its estimated level of 2.5 percent in early January. The corresponding tariff rate for the rest of the world is 3.5 percent, compared with 4.1 percent in April, the IMF said.

US President Donald Trump has upended global trade by imposing a universal tariff of 10 percent on nearly all countries since April and threatening even higher duties to kick in on Friday. Far higher tit-for-tat tariffs imposed by the US and China were put on hold until August 12, with talks in Stockholm this week potentially leading to a further extension.

The US has also announced steep duties ranging from 25 percent to 50 percent on automobiles, steel and other metals, with higher duties soon to be announced on pharmaceuticals, lumber, and semiconductor chips.

Such future tariff increases are not reflected in the IMF numbers, and could raise effective tariff rates further, creating bottlenecks and amplifying the effect of higher tariffs, the IMF said.

Shifting tariffs

Gourinchas said the IMF was evaluating new 15-percent tariff deals reached by the US with the European Union and Japan over the past week, which came too late to factor into the July forecast, but said the tariff rates were similar to the 17.3 percent rate underlying the IMF’s forecast.

“Right now, we are not seeing a major change compared to the effective tariff rate that the US is imposing on other countries,” he said, adding it was not yet clear if these agreements would last.

“We’ll have to see whether these deals are sticking, whether they’re unravelled, whether they’re followed by other changes in trade policy,” he said.

Staff simulations showed that global growth in 2025 would be roughly 0.2 percentage point lower if the maximum tariff rates announced in April and July were implemented, the IMF said.

The IMF said the global economy was proving resilient for now, but uncertainty remained high and current economic activity suggested “distortions from trade, rather than underlying robustness”.

Gourinchas said the 2025 outlook had been helped by what he called “a tremendous amount” of front-loading as businesses tried to get ahead of the tariffs, but he warned that the stockpiling boost would not last.

“That is going to fade away,” he said, adding, “That’s going to be a drag on economic activity in the second half of the year and into 2026. There is going to be pay back for that front loading, and that’s one of the risks we face.”

Tariffs were expected to remain high, he said, pointing to signs that US consumer prices were starting to edge higher.

“The underlying tariff is much higher than it was back in January, February. If that stays … that will weigh on growth going forward, contributing to a really lackluster global performance.”

One unusual factor has been a depreciation of the dollar, not seen during previous trade tensions, Gourinchas said, noting that the lower dollar was adding to the tariff shock for other countries, while also helping ease financial conditions.

US growth was expected to reach 1.9 percent in 2025, up 0.1 percentage point from April’s outlook, edging up to 2 percent in 2026. A new US tax cut and spending law was expected to increase the US fiscal deficit by 1.5 percentage points, with tariff revenues offsetting that by about half, the IMF said.

It lifted its forecast for the euro area by 0.2 percentage point to 1 percent in 2025, and left the 2026 forecast unchanged at 1.2 percent. The IMF said the upward revision reflected a historically large surge in Irish pharmaceutical exports to the US; without it, the revision would have been half as big.

China’s outlook got a bigger upgrade of 0.8 percentage point, reflecting stronger-than-expected activity in the first half of the year, and the significant reduction in US-China tariffs after Washington and Beijing declared a temporary truce.

The IMF increased its forecast for Chinese growth in 2026 by 0.2 percentage point to 4.2 percent.

Overall, growth is expected to reach 4.1 percent in emerging markets and developing economies in 2025, edging lower to 4 percent in 2026, it said.

The IMF revised its forecast for world trade up by 0.9 percentage point to 2.6 percent, but cut its forecast for 2026 by 0.6 percentage point to 1.9 percent.

Union Pacific has announced its intentions to buy its smaller rival, Norfolk Southern, which would create the first coast-to-coast freight rail operator in the United States and reshape the movement of goods from grains to autos across the US.

The Omaha, Nebraska-based railroad giant announced the proposed $85bn deal on Tuesday.

If the merger is approved, the transaction would be the largest-ever buyout in the railroad sector.

Union Pacific has a stronghold in the western two-thirds of the US, with Norfolk’s 31,382 km (19,500-mile) network that primarily spans 22 eastern states.

The two railroads are expected to have a combined enterprise value of $250bn and would unlock about $2.75bn in annualised synergies, the companies said.

The $320 per share price implies a premium of 18.6 percent for Norfolk from its close on July 17, when reports of the merger first emerged.

The companies said last week on Thursday that they were in advanced discussions for a possible merger.

The deal will face lengthy regulatory scrutiny amid union concerns about potential rate increases, service disruptions and job losses. The 1996 merger of Union Pacific and Southern Pacific had temporarily led to severe congestion and delays across the Southwest.

The deal reflects a shift in antitrust enforcement under US President Donald Trump’s administration. Executive orders aimed at removing barriers to consolidation have opened the door to mergers that were previously considered unlikely.

Surface Transportation Board Chairman Patrick Fuchs, appointed in January, has advocated for faster preliminary reviews and a more flexible approach to merger conditions.

Even under an expedited process, the review could take from 19 to 22 months, according to a person involved in the discussions.

Major railroad unions have long opposed consolidation, arguing that such mergers threaten jobs and risk disrupting rail service.

“We will weigh in with the STB [regulator] and with the Trump administration in every way possible,” said Jeremy Ferguson, president of the SMART-TD union’s transport division, after the two companies said they were in advanced talks last week.

“This merger is not good for labour, the rail shipper/customer or the public at large,” he said.

The companies said they expect to file their application with the STB within six months.

The SMART-TD union’s transport division is North America’s largest railroad operating union with more than 1,800 railroad yardmasters.

The North American rail industry has been grappling with volatile freight volumes, rising labour and fuel costs and growing pressure from shippers over service reliability, factors that could further complicate the merger.

Industry consolidation

The proposed deal has also prompted competitors BNSF, owned by Berkshire Hathaway, and CSX, to explore merger options, people familiar with the matter said.

Agents at the STB are already conducting preparatory work, anticipating they could soon receive not just one, but two megamerger proposals, a person close to the discussions told Reuters on Thursday.

If both mergers are approved, the number of Class I railroads in North America would shrink to four from six, consolidating major freight routes and boosting pricing power for the industry.

The last major deal in the industry was the $31bn merger of Canadian Pacific and Kansas City Southern that created the first and only single-line rail network connecting Canada, the US and Mexico.

That deal, finalised in 2023, faced heavy regulatory resistance over fears it would curb competition, cut jobs and disrupt service, but was ultimately approved.

Union Pacific is valued at nearly $136bn, while Norfolk Southern has a market capitalisation of about $65bn, according to data from LSEG.

As of 12:15pm in New York (16:15 GMT), Union Pacific’s stock is down 3.9 percent, and Norfolk Southern is down 3.2 percent. Competitor CSX is also trending down. The stock has fallen 1.6 percent since the market opened this morning.

GM’s profit tumble in second quarter comes a day after Jeep maker Stellantis says it expected a $2.7bn loss in the first six months of the year.

Auto giant General Motors has reported a 35 percent drop in second-quarter profits, including a $1.1bn hit from United States-imposed tariffs but confirmed its full-year forecast.

GM’s results released on Tuesday still topped analyst estimates, but the US carmaker cautioned that profits in the second half of 2025 would be lower than in the first.

The company pointed to sales growth in North America, where new and revamped trucks and sport utility vehicles sold briskly with solid pricing. GM was among the carmakers that benefitted from a surge in demand this spring from consumers who wanted to beat the US tariffs and their higher prices.

Profits overall fell 35.4 percent to $1.9bn year-on-year while revenues dipped 1.8 percent to $47.1bn.

The US imposed 25 percent tariffs on imported finished cars in early April, a move that affected major GM manufacturing operations in Mexico, Canada and South Korea. Car companies have also faced tariffs on imported steel, aluminium and auto parts.

The tariff hit in the second quarter reflected that there were “minimal mitigation offsets”, GM said in a slide presentation.

The Detroit, Michigan-based company’s outlook for a weaker second half of 2025 reflects “seasonally lower” volumes, increased spending on vehicle launches and the presence of two quarters with a tariff hit compared with just one in the first half of the year.

GM expected annual operating income of $10bn to $12.5bn after notching $6.5bn in the first half of the year.

Chief Financial Officer Paul Jacobson described the hit to profitability in the first quarter as “the peak of the tariff impact for us”, telling CNBC in an interview that mitigation efforts should enable a partial recovery in profit margins later in the year.

Shifting manufacturing

GM expected to mitigate “at least” 30 percent of the tariff hit through “manufacturing adjustments, targeted cost initiatives and consistent pricing”, according to a slide.

Jacobson said it would take 18 to 24 months to implement capital projects to adjust GM’s manufacturing footprint.

In June, GM announced spending of $4bn over two years to expand production at plants in Michigan, Kansas and Tennessee, making use of unused capacity in its home market as President Donald Trump’s tariffs penalise imports of finished vehicles.

The June announcement included steps to produce the Chevrolet Equinox and Chevrolet Blazer in the US. The two vehicles are currently assembled in Mexico.

GM has so far not shifted manufacturing from South Korea, home to production for the Chevrolet Trax, a popular compact SUV that is priced affordably.

Jacobson told CNBC the Trax has stayed profitable even with the hit from the tariff on imported autos.

“We haven’t made any long-term decisions about Korea yet, mainly because there is a lot of uncertainty about that,” Jacobson said.

Trump has set an August 1 deadline to reach broad trade deals with numerous countries, including South Korea, which faces a 25 percent tariff if there is no deal.

“We’re optimistic that the US and Korea can find common ground,” Jacobson said. “We know the auto industry is important to both sides in those conversations.”

GM’s stock tumbled on the lacklustre earnings report. It is down 6.6 percent for the day as of 11:30am in New York (15:30 GMT).

GM’s newly reported hit comes a day after carmaker Stellantis announced it expected a $2.7bn loss in the first six months of the year because of Trump’s imposed tariffs. Stellantis, the owner of brands including Fiat and Jeep, will disclose its final results for the first half of the year on July 29.

Stellantis stock is down 0.3 percent since the market opened on Tuesday and had increased more than 2.4 percent over the past five days.

Indian tax authorities and market regulator are considering widening their probe of United States trading giant Jane Street Group to investigate it for tax evasion in addition to an earlier charge of price rigging in the Bombay Stock Exchange’s benchmark Sensex, according to media reports.

The tax evasion charge comes on the heels of market regulator, the Securities and Exchange Board of India (SEBI), seizing 48.43 billion rupees ($570m) and banning four Jane Street-related entities from operating in the market for alleged price manipulation in the National Stock Exchange (NSE).

SEBI’s order has roiled the Indian markets, raising questions about regulator surveillance and investor protection in the world’s largest options trading market. Trading in India’s weekly equity index options has slumped by a third on the ban on Jane Street, the Reuters news agency reported on Thursday.

Trading of equity options lets investors buy or sell a stock at a predetermined price and date. As the Indian market rapidly grew to handle more than half of all global options trades, retail investors entered the market too.

Questions of price manipulation have dogged this rapid rise but remained vacuous until a New York court case in April 2024, where Jane Street alleged that its rival, Millennium Partners, had stolen its algorithms that helped it make in the Indian options market. A whistleblower, Mayank Bansal, then made presentations to SEBI showing Jane Street’s trading patterns. Bansal had agreed to speak to Al Jazeera about his interaction with SEBI on the matter, but then backtracked.

On July 3, in a detailed interim order, the regulator said that “by preponderance of probability, there is no economic rationale that can account for this sudden burst of large and aggressive activity … other than the intent to manipulate the price of securities and index benchmark”.

SEBI has alleged that Jane Street accumulated large long positions in stocks that are a part of the NSE’s Bank Index and built large short positions in index options at the start of trade. Around market closing time, it would reverse its trades in the cash and futures segments, pushing down the index and earning large profits in the options segment.

This activity was blurred by its offshore entities making some of these trades.

“Lawyers [can] push back with SEBI on jurisdiction-related issues, but when underlying [Indian] securities are issued, SEBI can take action,” Joby Mathew, managing partner at the law firm Joby Mathew and Associates and a former legal officer at SEBI, told Al Jazeera.

Jane Street has disputed SEBI’s findings and has hired lawyers to represent it before SEBI in the case. It has deposited the 48.43 billion rupees ($563m) of allegedly ill-gotten gains in an account pending the investigation and final report.

“Such processes typically take eight to 24 months,” especially in “complex manipulation cases”, Sumit Agarwal, a former SEBI officer and cofounder of Regstreet Law Advisors, told Al Jazeera in an emailed response.

But the investigation can only be part of a broader questioning of Jane Street and the regulator’s role in identifying and curbing such trades sooner and protecting retail investors.

‘Highly speculative and volatile’

As India’s options market grew, retail investors were drawn to it, enticed by the growing volumes, the prospect of quick gains and less fettered trades than the equities market, where a rapidly rising stock could hit circuit breakers, leading to a halt in trading to prevent manipulation.

Mathew says his clients from the options trading segment range from students to award-winning cardiologists who may not have a refined knowledge of the market but were sold on the idea by traders or social media influencers. Most ended up losing money.

Deven Choksey, managing director at the Mumbai-based stock brokerage KR Choksey Shares and Securities, says retail investors form nearly half the Indian options market, while Jane Street and other sophisticated institutions form a little more. “It’s like a bullock cart facing a race car. Their meeting is bound to cause accidents.”

If Jane Street is found to have manipulated the market, its earnings would have come through losses for retail investors.

Bhargavi Zaveri, a financial regulations researcher formerly at the National Institute of Public Finance and Policy and currently a doctoral researcher at the National University of Singapore, says retail investors have made losses in the options segment, but the total amount is not clear.

Identifying and compensating investors can be hard in such cases. So even if the final order goes against Jane Street and the 48.43 billion rupees fine goes into an investor protection fund, it may be hard to distribute it onwards to retail investors who incurred losses. The best protection may be to stem irregular trades early, experts say.

“SEBI has a surveillance system and they can well monitor the markets in a timely way.,” says Choksey.

SEBI’s interim order is based on trades made by Jane Street between January 1, 2023 and March 31, 2025, a period in which retail investors may have incurred substantial losses, going by SEBI’s estimates.

Regstreet’s Agarwal says, “SEBI’s own 2024 consultations flagged expiry day options as highly speculative and volatile.”

India has fortnightly expiry dates for options, which is when they have to be settled. That is when Jane Street allegedly manipulated prices.

In a February 6 letter, SEBI told Jane Street, “The above trading activity prima facie appears to be fraudulent and manipulative.” But it did not issue its order curbing Jane Street until July 3.

SEBI’s recent measures limiting weekly expiries, tightening spreads and higher margins “reflect a push for greater protection” for retail investors, Agarwal says.

But the best way to protect retail investors would be to have them trade separately from proprietary trading firms in the options segment, Choksey points out.

“India is unique … and in no market will you see so many retail investors. So, SEBI must create product differentiation by customer segment.” to protect retail investors Chiksey says.

Challenges in proving manipulation

In an internal email, Jane Street reportedly told employees it was using “basic index arbitrage trading” and called SEBI’s allegations “extremely inflammatory”. It has hired Mumbai-based law firm, Khaitan and Co, to represent it before SEBI.

Proving price manipulation involves showing intent, which can be hard, and experts are divided on whether a SEBI investigation will be able to demonstrate that. “Trading to incur losses makes no sense, and so it indicates manipulation,” says Mathew, the former legal officer.

But NUS’s Zaveri says it is not so clear. “I think three problems are being conflated here. One, the size of the options segment being manifold the underlying cash segment. Two, that retail investors have made losses on the options segment, which I’m not sure have been quantified. Three, Jane Street arbitraged between an illiquid cash and highly liquid options segment.”

According to her, the three occurrences may not prove the intent to manipulate.

Under Indian law, proving manipulation is challenging and “Jane Street can argue its expiry day trades were legitimate index arbitrage recognised by regulators, making a manipulation finding difficult without clear intent evidence,” Regstreet’s Agarwal says.

Any action by SEBI could affect Jane Street’s reputation. Last month, an investigation by Bloomberg found that Jane Street cofounder Robert Granieri was duped into funding weapons for an attempted coup to overthrow the government in South Sudan.

If SEBI’s final order lays out any action against Jane Street, “they may well have to disclose it in their filings, which will affect them elsewhere in the world”, says Mathew.

An $8bn trial, pitting Meta Platforms shareholders against Mark Zuckerberg and other current and former company leaders, over claims they illegally harvested the data of Facebook users in violation of a 2012 agreement with the United States Federal Trade Commission, is under way.

The trial kicked off on Wednesday with a privacy expert for the plaintiffs, Neil Richards of Washington University Law School, who testified about Facebook’s data policies.

“Facebook’s privacy disclosures were misleading,” he told the court.

Jeffrey Zients, White House chief of staff under former President Joe Biden and a Meta director for two years starting in May 2018, is expected to take the stand later on Wednesday in the non-jury trial before Kathaleen McCormick, chief judge of the Delaware Chancery Court.

The case will feature testimony from Zuckerberg and other billionaire defendants, including former Chief Operating Officer Sheryl Sandberg, venture capitalist and board member Marc Andreessen, as well as former board members Peter Thiel, Palantir Technologies cofounder, and Reed Hastings, cofounder of Netflix.

A lawyer for the defendants, who have denied the allegations, declined to comment.

McCormick, the judge who rescinded Elon Musk’s $56bn Tesla pay package last year, is expected to rule on liability and damages months after the trial concludes.

Cambridge Analytica scandal

The case began in 2018, following revelations that data from millions of Facebook users was accessed by Cambridge Analytica, a now-defunct political consulting firm that worked for Donald Trump’s successful US presidential campaign in 2016.

The FTC fined Facebook $5bn in the wake of the Cambridge Analytica scandal, saying the company had violated a 2012 agreement with the FTC to protect user data.

Shareholders want the defendants to reimburse Meta for the FTC fine and other legal costs, which the plaintiffs estimate total more than $8bn.

In court filings, the defendants described the allegations as “extreme” and said the evidence at trial will show Facebook hired an outside consulting firm to ensure compliance with the FTC agreement and that Facebook was a victim of Cambridge Analytica’s deceit.

Meta, which is not a defendant, declined to comment. On its website, the company has said it has invested billions of dollars into protecting user privacy since 2019.

The lawsuit is considered the first of its kind to go to trial that alleges that board members consciously failed to oversee their company. Known as a Caremark claim, such lawsuits are often described as the hardest to prove in Delaware corporate law. However, in recent years, Delaware courts have allowed a growing number of these claims to proceed.

Boeing’s current and former board members settled a case with similar claims in 2021 for $237.5m, the largest ever in an alleged breach of oversight lawsuit. The Boeing directors did not admit to wrongdoing.

The Meta trial comes four months after Delaware lawmakers overhauled the state’s corporate law to make it harder for shareholders to challenge deals struck with controlling shareholders like Zuckerberg. The bill, which did not address Caremark claims, was drafted after the state’s governor met with representatives of Meta.

Most publicly traded companies are incorporated in the state, which generates more than a quarter of the state’s budget revenue. Meta, which was reportedly considering leaving Delaware earlier this year, is still incorporated in the state.

Andreessen Horowitz, the venture capital fund co-founded by Andreessen, said earlier this month that it was reincorporating in Nevada from Delaware and encouraged other companies to do the same. The company cited the uncertainty of the state’s courts and referenced the Musk pay ruling.

Andreessen is expected to testify on Thursday.

In addition to privacy claims at the heart of the Meta case, plaintiffs allege that Zuckerberg anticipated that the Cambridge Analytica scandal would send the company’s stock lower and sold his Facebook shares as a result, pocketing at least $1bn.

Defendants said evidence will show that Zuckerberg did not trade on inside information and that he used a stock-trading plan that removes his control over sales and is designed to guard against insider trading.