The US Trade Representative (USTR) is pursuing Section 301 of the Trade Act of 1974 to impose tariffs on so-called "60 economies". The list includes the European Union, so in effect, more than 80 countries are affected. Trump's previous and far broader tariff policy was struck down by the Supreme Court in February. This renewed tariffs push might push countries further away from the US.

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Tariffs and energy shocks have had limited inflation impact, goods prices remain soft, Chinese deflation is a structural drag, and shelter inflation is expected to resume its downtrend. We expect the Warsh Fed to reduce reliance on forward guidance, with labor-market softness becoming the larger policy concern than inflation.

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Since sweeping import duties were introduced in early 2025, construction has absorbed sharpest input cost increases in a generation. Steel and aluminum face a staggering 50% tariffs, copper at an all-time high, and lumber from Canada at 45%. As of April 2026, current tariff rates are estimated to have increased construction materials costs by 6%, with total project costs rising 3%. Residential projects have taken the worst hit, with tariffs adding $17,500 to the cost of a new home. Commercial construction, already softened by tighter lending, saw significant project abandonment and delays through 2025. The same tariff policy designed to incentivize domestic production is making the factories themselves more expensive to build. Preconst

U.S. industrial production rose 0.1 percent in May after a 0.9 percent gain in April. The strength was concentrated in sectors tied to business investment, artificial intelligence infrastructure, and defense production. Durable-goods manufacturing increased 0.8 percent, with output increasing in nearly every major category. Consumer goods were the main weak spot, down 0.5 percent.

President Trump has been in office for 16 months. He has secured over two dozen new trade deals, reformed the Adverse Effect Wage Rate and led efforts to drive down the cost of key inputs, including fertilizer. Last week in Arizona, he announced the Great American Cotton Plan, which consists of four key pillars: promoting domestic consumption, increasing domestic production, opening up new global markets for American cotton and revitalizing export finance opportunities.

Adam Smith wrote about the relationship between economic inequality and political intervention in the economy in The Wealth of Nations. Adam Smith opposed most government interventions in economy. Modern government intervention sabotages efficiency through the same three channels as Adam Smith excoriated: supply restrictions, state-sponsored overproduction, and laws penalizing poor workers.