US jobless claims fell last week, returning to a level that suggests an upbeat outlook for the labor market. New filings for unemployment benefits fell to 221,000, holding into the 200,000-250,000 range that’s prevailed in recent history.
Trump paused tariffs for Canadian and Mexican goods covered by the North American trade agreement (USMCA) until April 2. Trump’s tariffs will still apply to roughly 50% of Mexican imports and 60%-plus of Canadian goods.
The US trade deficit reached record high in January as imports surge. The trade gap surged 34.0% to an all-time high of $131.4 billion from a revised $98.1 billion in December. Key drivers of the increase in import: industrial supplies and consumer goods. The jump in demand may be related to front-loading purchases ahead of tariffs.
Trump’s dramatic policy changes are raising uncertainty about the business environment. For businesses, “it’s not just the broad fear of tariffs; it’s not knowing if they’ll be affected, how they’ll be affected or when they’ll be affected,” said Gregory Daco, chief economist at the global consulting firm EY Parthenon. “That’s the gist of the conversations we have with clients across multiple sectors: They don’t know how to best position themselves with regard to the latent uncertainty about tariffs moving forward.”
The changes in US foreign policy and higher tariffs may trigger a global shift away from American markets. “The world now sees the U.S. model is changing, and saying – we need to adapt to that, the U.S. is no longer as reliable as a trade partner, we have to take care of our own needs on defence,” said Tim Graf, head of macro strategy for EMEA at State Street Global Markets.
US job cuts in February rose to the highest level in almost five years, according to outplacement firm Challenger, Gray & Christmas. In contrast with last week’s upbeat profile in government-reported new filings for unemployment benefits, US employers announced a sharp increase in layoffs last month. More than a third of the layoffs were linked to Elon Musk’s efforts to reduce the number of federal workers.
