(WASHINGTON) — Some 5 million Americans with defaulted student loan payments will have their loans sent for collections on May 5, the Department of Education announced on Monday.
Next month, for the first time since student loan payments were paused due to the onset of the COVID-19 pandemic, the Education Department will collect the debts from borrowers who had defaulted — which means they hadn’t paid their debts for around nine months or 270 days — before the pandemic.
The announcement comes as scores of Federal Student Aid (FSA) employees have been terminated at the Department of Education as part of President Donald Trump’s efforts to shutter the agency, which creates uncertainty for borrowers and the future of the student loan system, according to former Under Secretary of Education James Kvaal.
“The concern is that the department is, you know, cutting the people who would help borrowers make this transition,” Kvaal told ABC News. “Borrowers who are trying to get help by getting into an affordable repayment plan or by applying for loan forgiveness, if they’re eligible, you know, just don’t have the same resources that they did before the department staff was cut in half.”
The pause — started in 2020 in Trump’s first administration — for all 43 million student loan borrowers was implemented due to the economic hardship and disruption caused by COVID. This will be the first time in five years the repayments have begun.
Kvaal said defaults can be “tragic” for borrowers. In some cases, Kvaal said, defaults can negatively impact credit scores and future student aid, and several states revoke driver’s licenses over defaults.
However, the department emphasized that its effort will protect taxpayers from shouldering the cost of federal student loans that borrowers “willingly” undertook. Secretary of Education Linda McMahon also said taxpayers will no longer be responsible for the “irresponsible student loan policies” of the previous administration.
“The Biden Administration misled borrowers: the executive branch does not have the constitutional authority to wipe debt away, nor do the loan balances simply disappear,” McMahon wrote in a department release. “Hundreds of billions have already been transferred to taxpayers. Going forward, the Department of Education, in conjunction with the Department of Treasury, will shepherd the student loan program responsibly and according to the law, which means helping borrowers return to repayment — both for the sake of their own financial health and our nation’s economic outlook.”
A defaulted loan is a loan that a borrower hasn’t made payments on for 270 days, according to the office of federal student aid. When the loan officially enters default, it becomes eligible for mandatory collections.
The collections on loans are typically done through wage garnishments, a legal procedure in which a person’s earnings are required by court order to be withheld by an employer for the payment of a debt, according to the Department of Labor.
Student debt can also be collected through offsetting tax refunds or other federal benefits, which Kvaal said can include one’s Social Security. The collections process starting in just two weeks is blocking these borrowers’ path out of default, according to Student Borrower Protection Center Executive Director Mike Pierce. Pierce said the Trump administration is feeding them into the “maw of the government debt collection machine.”
“This is cruel, unnecessary and will further fan the flames of economic chaos for working families across this country,” Pierce told ABC News in a statement.
But the administration’s efforts to place borrowers into involuntary collections programs will be paired with a comprehensive communications and outreach campaign to ensure borrowers understand how to return to repayment or get out of default, according to the department release.
The news also comes as the administration is working to rehome the $1.6 trillion student loan portfolio to other agencies. Trump announced the loan system would be moved to the Small Business Administration “immediately” during a White House event last month.
After the announcement, Kvaal, who worked in senior roles in the Obama and Biden administrations, told ABC News his higher education portfolio under Obama included moving some loan functions to the Department of Treasury. But he warned shifting the student loan portfolio again could lead to real world consequences.
“We’re at a point now where millions of borrowers are late on their student loans,” he said. “For the department to be focused on laying off half its staff and going through a fundamental reorganization of how it administers these programs, you know, in really critical weeks for borrowers who are trying to get into repayment plans or get loan forgiveness, I think it’s very dangerous and puts at risk millions of borrowers of going into default on their loans.”
(NEW YORK) — U.S. stocks tumbled in early trading on Monday as President Donald Trump escalated his criticism of the Federal Reserve, urging the central bank to immediately lower interest rates and questioning the policy approach of Fed Chair Jerome Powell.
The comments came days after Trump said he was eager for Powell’s “termination” despite a longstanding norm of political independence at the central bank.
The Dow Jones Industrial Average plunged 1,050 points, or 2.6%, while the S&P 500 fell 2.7%. The tech-heavy Nasdaq declined 3%.
Last week, Powell voiced alarm about Trump’s tariff policy, saying it would likely hike inflation and slow economic growth. Powell indicated that the Fed may approach interest rates with restraint as policymakers observe the economic effects of Trump’s tariffs.
In a social media post on Monday, Trump dubbed Powell “Mr. Too Late” in reference to a policy approach that Trump views as overly cautious.
Trump warned of the possibility of an economic slowdown “unless Mr. Too Late, a major loser, lowers interest rates, NOW.”
In addition, Trump claimed without evidence that interest rate cuts enacted by the Fed last year had stemmed from an effort to “help Sleepy Joe Biden, later Kamala, get elected.”
Since Powell became Fed chair in 2018, he has repeatedly affirmed the Fed’s political independence. The Fed is an independent government agency established by Congress.
In November, days after Trump’s election victory, Powell struck a defiant tone when asked whether he would resign from his position if Trump asked him to.
“No,” Powell said, pausing to let the one-word answer register with the reporters assembled at a press conference at the Fed headquarters, blocks away from the White House.
When asked whether Trump could fire or demote him, Powell responded: “Not permitted under the law.”
Powell last week raised the possibility of what economists call “stagflation,” which is when inflation rises and the economy slows.
If the Fed raises interest rates as a means of protecting against tariff-induced inflation under such a scenario, it risks stifling borrowing and slowing the economy further, experts previously told ABC News.
On the other hand, experts said, if the Fed lowers rates to stimulate the economy in the face of a potential slowdown, it threatens to boost spending and worsen inflation.
(NEW YORK) — President Donald Trump this month slapped tariffs on most products that enter the United States. Economists widely expect the policy to raise prices for U.S. shoppers as importers pass along a share of the tax burden.
An across-the-board 10% tariff applies to nearly all imports, except for semi-conductors, pharmaceuticals and some other items. Those levies come on top of specialized tariffs on steel, aluminum and autos. China, the third-largest U.S. trading partner, faces cumulative tariffs of a whopping 145%.
Plans for price hikes have already taken shape at an array of companies, ranging from fast-fashion retailer Shein to luxury sports car manufacturer Ferrari.
Here are the companies that have announced price increases as a result of Trump’s tariffs:
Shein and Temu
A pair of China-based e-commerce companies, Shein and Temu, released identical statements earlier this month announcing plans to increase prices in response to Trump’s tariffs. The price hikes will take effect on April 25, the companies said.
“Due to recent changes in global trade rules and tariffs, our operating expenses have gone up,” the statements said. “To keep offering the products you love without compromising on quality, we will be making price adjustments.”
When Trump announced so-called “Liberation Day” tariffs on April 2, he also closed what’s known as the “de minimis” loophole, which allowed for duty-free import of goods valued at less than $800. The low-cost shipping had helped fuel bargain shopping online for products made in China.
Nintendo
Nintendo, the Japan-based video game giant, announced on Friday the start date of preorders for its highly anticipated Switch 2, saying the price would remain at the level announced on April 2.
The bulletin came with a caveat, however. “Nintendo Switch 2 accessories will experience price adjustments from those announced on April 2 due to changes in market conditions,” the company said.
“Other adjustments to the price of any Nintendo product are also possible in the future depending on market conditions,” added Nintendo, which hosts much of its manufacturing in China.
The Trump administration last week issued a tariff exemption for China-made smartphones, computers, flat panel TV displays and other electronics. The list left out video game systems, meaning they would remain subject to 145% tariffs on Chinese goods.
Best Buy
Best Buy CEO Corie Barry told analysts to expect price increases as a result of higher tariffs.
“Tariffs at this level will result in price increases,” Barry said on an earnings call in March, before Trump escalated tariffs a month later. “I think it is very difficult to say, given the backdrop that we’re in, exactly, precisely how big that is.”
Best Buy relies on a global supply chain, Barry added, noting the company’s top two sources of goods are Mexico and China. Both of those countries continue to be targeted by Trump’s tariffs.
Hermès
French luxury goods manufacturer Hermès plans to raise prices for U.S. customers on May 1, a company executive said on an earnings call Thursday.
“The price increase that we’re going to implement will be just for the U.S. since it’s aimed at offsetting the tariffs that only apply to the American market, so there won’t be price increases in the other regions,” Eric du Halgouët, Hermès’ executive vice president for finance, told analysts.
The price hikes intend to “fully offset” the across-the-board 10% tariff issued by Trump earlier this month, the company said.
Trump issued a 90-day pause of additional 20% tariffs on goods from the European Union as a part of a wider suspension of so-called “reciprocal tariffs.”
AutoZone and Ferrari
AutoZone CEO Philip Daniele, who runs the Memphis-based car parts retailer, told analysts in September the company would respond to tariffs with price increases.
“We will pass those tariff costs back to the consumer,” Daniele said on an earnings call.
AutoZone did not immediately respond to ABC News’ request for comment regarding its current plans for price increases.
Trump last month announced 25% auto tariffs, which apply to both vehicles and car parts.
Within hours of the policy rollout, Ferrari said it would raise prices by as much as 10% for some models to compensate for the tax burden.
Hyundai vehicles on display at the New York International Auto Show on April 16, 2025 in New York City. (Photo by Adam Gray/Getty Images)
(NEW YORK) — This weekend, consumers and auto enthusiasts will poke, prod and pepper brand specialists with questions about the latest vehicles on display at the Javits Center.
The annual New York International Auto Show, which officially opened to the public on Friday, is smaller and more condensed than previous years. There are still plenty of vehicles to check out up close, such as the 2026 Hyundai Palisade, Kia K4 Hatchback and EV4, plus Genesis, Toyota, Subaru and Volkswagen introduced new vehicles and concepts.
Of course, one overarching theme looms large: Will these new vehicles be subject to the Trump’s administration’s 25% industry tariff? Consumers went out in force last month to scoop up available cars, trucks and SUVs before prices inched higher, helping the industry report record sales. In fact, nearly 1.6 million vehicle units were purchased, marking a month-over-month increase of 29.6% and a year-over-year increase of 10.3%, according to Cox Automotive data.
What will happen to new vehicle prices this summer, when temporary pricing pauses announced by automakers disappear? And as uncertainty dominates, how will automakers — from mainstream to ultra luxe — respond?
ABC News spoke to various auto executives and industry watchers about the future of the industry. The conversations below have been edited for clarity and space.
Sean Gilpin, chief marketing officer, Hyundai Motor America
Hyundai is a very customer-centric brand, a people-centric brand. We just launched a campaign reminding customers that we’re not increasing MSRPs for the next 60 days (ending June 2). What we saw in the some of data and surveys is that customers don’t know how a tariff works but they know things will get more expensive potentially, so we wanted to get the message out there.
The June 2 date could be extended. The best medicine for our business is to keep selling cars. We think this message is resonating with customers. We’ve seen a big uptick in our shopping activity, in customers who are new to the brand and visiting the site for the first time. Dealer traffic is up.
We have a plant in Alabama. The Tucson, our best-selling vehicle, is built there. The Santa Fe is also built in the Alabama plant. We had a grand opening of our Metaplant near Savannah, Georgia, two weeks ago, and 300,000 vehicles will come off the line in phase one. Phase two will bring capacity to 500,000 vehicles. We’re continuing to invest here and grow in terms of our footprint. The U.S. is the No. 1 market for Hyundai. We also recently announced a commitment to build a steel plant in Louisiana.
Tony Quiroga, editor-in-chief, Car and Driver
The tariffs make everything a sort of unknown. I’ve been telling anyone who’s in the market in the next year to start shopping now. Inexpensive cars are going to get more expensive because so many are built outside of the U.S. Nissan builds the Kicks, Versa and Sentra in Mexico. Chevy builds the Trax in South Korea, which would be subject to be a big tariff. A lot people could be priced out of the market. If you’re in that market, you should definitely be considering buying a car now.
The tariff situation is unsettling and weird and everybody is just sort of wondering what’s going to happen and hoping for the best I think.
Vinay Shahani, senior vice president of U.S. marketing and sales, Nissan Americas
The market is healthy right now. There’s a lot of shopping, and a lot of cross-shopping, that’s happening. We feel really good about the activity out there.
We have plenty of on-ground inventory that’s protected from tariffs today. We’re very fortunate as a company that we have a very strong industrial footprint here in the U.S. Between Tennessee and Mississippi we produce a lot of vehicles that we sell here in the U.S. There are six models built in the U.S. between Nissan and Infiniti.
The Rogue is currently built at the Smyrna Assembly Plant in Tennessee as well as in Japan. Now we’re saying we’re going to increase the production of the Rogue in the U.S because it makes sense to do that and we can dial up production to deliver more U.S.-built Rogues. We’re also looking at subsequent new vehicles that we’re going to launch and saying, how can we optimize our footprint and bring as much as we can to the U.S.? It’s already happening — we’re moving production of the Rogue from Japan. The supply and manufacturing teams are already all over it.
Starting at the end of March, we started to see increased activity and it’s carried through for the month of April. We have basically said we’re holding our pricing between April and May. Then we will evaluate the situation after June 2. In this dynamic environment, where things are changing constantly, you can’t plan too far out.
Steven Center, chief operating officer, Kia America
Tariffs are a whole different kettle of fish as they say. Product cycles are long — they’re five, six, seven years or longer. Automakers have long planning horizons and you always want to have a shorter supply line as possible. We learned that during the pandemic. And you always want to build things closer to where you’re selling them.
To build a factory takes years of planning and execution. It’s very difficult to find a location for an auto plant. You need a lot of space, you need suppliers nearby, you need rail heads to bring in the materials. Most importantly you need a labor pool. And this country is in a state of zero unemployment. So where are you going to find people?
Erin Keating, executive analyst, Cox Automotive
Automakers have been fairly mute on tariffs — there haven’t been any big reveals on how they’re going to manage the cost. My advice: if you are in the market, and have been looking to buy a car, go to the dealer and buy one. If you’re just worried cars will get more expensive, wait it out. I wouldn’t rush ahead to make a decision — things could change.
There will be a grand redistribution of market share over the next few months. Whoever can capitalize on the frenzy of the consumer will win the day, at least in the second quarter. We’ve seen increased marketing from automakers and increased shopping behavior on Autotrader and Kelley Blue Book. The lending environment is looser now than in the past. There is still pent-up demand in the market.
We saw a big sales jump in March and will see another in April. Sales though could peter out in May. Automakers are trying to hold pricing right now … though prices will increase to some degree across the board. At the dealer level, floor planning is not cheap. You don’t want to keep inventory on the lot for a long time. If inventory goes quickly, you will have to replenish.
Ford and Honda have relatively low exposure to the tariffs. Toyota also has a lot of strength in the U.S. market in terms of manufacturing.
Vehicle parts are the bigger component of the tariff challenge. It’s so difficult to move production to the U.S. Brands are impacted separately; it really comes down to specific models. Vehicles built in the U.S. will get hit with tariffs because of the componentry. The 25% steel and aluminum tariffs are also hitting automakers.
I stress to consumers that it’s good to be informed of what’s happening. There are things you can do, like vote with your wallet.
Mike Rocco, president and CEO, Bentley Americas
The U.S. is the largest market in the world for Bentley. In the luxury space your world revolves around building an order bank — making sure you have customers in the system. We’ve told our retailers to communicate to their clients that we will price protect all retail orders that are in the system. If you have a car coming — don’t worry about it, you’re protected. We also announced that in the month of April, any new orders that went into the system would be protected, not just the ones prior to the tariff.
We’re looking at pricing on a month-to-month basis. There’s a lot of fluidity and things are changing. We haven’t had any [vehicle order] cancellations. Our No. 1 priority is to protect our clients and to protect our retailers.
I was recently in Palm Beach and Naples, Florida, talking to 70-80 clients. The feeling I got from customers I spoke to was that they’d have to pay whatever the tariff is … everyone recognized that the tariff would eventually be passed on to the customer.
Andrea Soria, general manager, Maserati North America
We live day by day. We keep monitoring. We are currently not shipping cars from Italy. It’s a very fluid situation. Every day you have different news. If nothing changes we will need to make some decision. We cannot absorb the tariffs entirely. We hope there will be some negotiation coming, some solution, something that will be a little bit more reasonable.
I think everyone in the industry is trying to adjust the sales. My colleagues in Italy ask me every day [about the tariffs]. I say, I wish I had a better answer. Everyone is waiting right now. We protected all the orders that were in the system until April 4. We haven’t seen anyone walking away [from an order] so far.
Tyson Jominy, vice president of data & analytics, J.D. Power
The auto industry is probably uniquely positioned to absorb the tariffs because sourcing time frames in the industry are so long. It takes so long to pivot to new ideas.
It’s a completely global industry. Even companies that assemble the majority of their vehicles in the U.S. have parts coming in from overseas. Therefore, no one really is exempt from tariffs. We’ll likely see some vehicles go away and automakers could cut back on marketing and reduce R&D costs to reserve cash. There’s really little they can do in the short term … and they’re holding cards close to their chest. Everyone is super tight-lipped about their plans.
We saw the industry really take off at the end of March, when the tariffs kicked in the last week. March was one of the strongest months we’ve seen in four or five years. Some automakers may even set sales records in the first half of the year. We expect a very strong Q2 but could see volume losses in Q4 — we know we can’t continue at this pace.
The automakers locking in prices have higher inventory levels. An automaker would normally be skewered for having 100 days of supply on the ground, but that’s a huge asset right now and buys you time. The tariffs may go away and you can see what your competitors are doing.
Our analysis says vehicles will have an 11% additional cost on average, or just shy of $5,000 per unit. But only 5% of the cost will be passed on to the consumer on average, or $2,300 per unit. You can’t raise the price of a Hyundai Sonata by $7,000 for example — that would be the equivalent of pulling out of the segment. Automakers may see negative margins on certain vehicles.
Models like the Porsche 911, Mercedes-Benz G-Class and Range Rover have true pricing power — customers won’t care [about a price increase].
I tell consumers not to rush out and buy a car. Ultimately making the right decision at a slightly more expensive purchase price would be the better decision for the long term.
(NEW YORK) — Alphabet’s Google illegally dominated two markets for online advertising technology, according to a federal judge.
Judge Leonie Brinkema of the U.S. District Court for the Eastern District of Virginia said in a ruling Thursday that Google had broken the law to build its dominance over the largely invisible system of technology that places advertisements on pages across the web.
“Plaintiffs have proven that Google has willfully engaged in a series of anticompetitive acts to acquire and maintain monopoly power in the publisher ad server and ad exchange markets for open-web display advertising,” the judge wrote in his ruling. “For over a decade, Google has tied its publisher ad server and ad exchange together through contractual policies and technological integration, which enabled the company to establish and protect its monopoly power in these two markets.”
The Department of Justice had sued Alphabet claiming Google had a monopoly in ad technology that allowed the company to charge higher prices and take a bigger portion of each sale. The Justice Department has said Google should have to sell off at least its Google Ad Manager, which includes the company’s publisher ad server and its ad exchange.
“We won half of this case and we will appeal the other half,” Lee-Anne Mulholland, Google’s vice president for regulatory affairs, said in a statement. “The Court found that our advertiser tools and our acquisitions, such as DoubleClick, don’t harm competition. We disagree with the Court’s decision regarding our publisher tools. Publishers have many options and they choose Google because our ad tech tools are simple, affordable and effective.”
ABC News has reached out to Alphabet for comment.
Google is now facing the possibility of two different U.S. courts ordering it to sell assets or change its business practices. A trial will be held this April in Washington on the DOJ’s request to make Google sell its Chrome browser and take other measures to end its dominance in online search.
This is a developing story. Please check back for updates.
(WASHINGTON) — President Donald Trump on Thursday sharply criticized Federal Reserve Chair Jerome Powell, urging the central bank to lower interest rates and saying Powell’s “termination cannot come soon enough.”
It was not clear whether Trump’s comments indicated a desire to remove Powell from his position or an eagerness for the completion of Powell’s term as Fed chair in 2026. The Fed is an independent government agency established by Congress.
The remarks came a day after Powell voiced alarm about Trump’s tariffs policy, saying it would likely hike inflation and slow economic growth. Powell indicated that the Fed may approach interest rates with restraint as policymakers observe the economic effects of Trump’s tariffs.
“Jerome Powell of the Fed, who is always TOO LATE AND WRONG, yesterday issued a report which was another, and typical, complete “mess!” Trump said Thursday morning in a post on Truth Social.
Powell should “certainly lower” interest rates, Trump added.
Since Trump took office he has criticized Powell on multiple occasions, despite a longstanding norm of political independence at the central bank. The sentiment echoes repeated criticism of Powell that Trump voiced during his first term in office.
On Wednesday, Powell raised the possibility of what economists call “stagflation,” which is when inflation rises and the economy slows.
If the Fed raises interest rates as a means of protecting against tariff-induced inflation under such a scenario, it risks stifling borrowing and slowing the economy further, experts previously told ABC News.
On the other hand, experts said, if the Fed lowers rates to stimulate the economy in the face of a potential slowdown, it threatens to boost spending and worsen inflation.
Last month, Trump urged the central bank to reduce interest rates, hours after it chose to leave borrowing rates unchanged. In January, Trump also advocated for interest-rate cuts in response to what he described as the prospect of lower oil prices.
In November, days after Trump’s election victory, Powell struck a defiant tone when asked whether he would resign from his position if Trump asked him to.
“No,” Powell said, pausing to let the one-word answer register with the reporters assembled at a press conference at the Fed headquarters, blocks away from the White House.
When asked whether Trump could fire or demote him, Powell responded: “Not permitted under the law.”
Powell has repeatedly affirmed the Fed’s political independence. During a press conference at Fed headquarters last month, Powell was asked again about threats to the agency’s political independence.
“I did answer that question in this very room some time ago, and I have no desire to change that answer and have nothing new for you on that today,” Powell said.
The Federal Reserve Act, which founded the central bank in 1913, granted the central bank a measure of independence from the White House.
Federal law allows the president to remove a Federal Reserve governor, including the Fed chair, “for cause.”
Experts who previously spoke to ABC News acknowledged that some legal ambiguity surrounds what type of conduct warrants sufficient cause for removal, but they said a policy dispute is unlikely to meet such a standard.
(WASHINGTON) — Election denier and MyPillow CEO Mike Lindell continues to refuse to pay more than $50,000 in sanctions he has been ordered to pay to voting software company Smartmatic over “frivolous” election claims — alleging he’s left with no money after numerous legal battles.
“I’m in ruins,” a teary Lindell said through a Zoom screen during a motion hearing in the U.S. District Court in Washington on Wednesday, pleading to Judge Carl Nichols to allow him to wait until after the final judgement comes out to make any payment in the case, which he has already lost.
Last month, Smartmatic filed a motion to hold Lindell in contempt, alleging the MyPillow CEO has been dodging his court-ordered payment of $56,369 to Smartmatic for months.
Lindell, however, insisted that he does not have the means to pay the amount due to various financial difficulties he has suffered over the last few years due to what he again claimed was “lawfare” waged against him for trying to “secure the election.”
“I borrowed everything I can. Nobody will lend me any money anymore,” Lindell claimed. “I can’t turn back time … but I will tell you, I don’t have any money.”
Lindell claimed he was recently forced to lay off hundreds of MyPillow employees, lost multiple MyPillow warehouse units over the past two years and even owes millions of dollars to the IRS for what he described as a COVID-era employee retention credit.
He claimed he has “nothing” except for two houses, which he claimed are in the process of being liquidated, and a truck.
He even claimed he can no longer adhere to a previously proposed plan of making monthly installments of $5,000.
After listening through Lindell’s plight, Nichols acknowledged that these claims are “non-verifiable representation” at the moment and gave Lindell until Friday to file under seal financial statements and other documents to prove his claims.
“I have nothing to hide,” Lindell said as he agreed to do so and added he wants Smartmatic to see the financial situation he’s in as well.
Smartmatic’s attorney said his client would prefer to see the payment made in a lump sum as soon as possible but acknowledged he would respect the judge’s ruling.
(WASHINGTON) — Federal Reserve Chair Jerome Powell said Wednesday that he expects President Donald Trump’s tariffs policy to cause higher inflation and slower economic growth, complicating potential central bank efforts to ease the fallout.
“The level of the tariff increases announced so far is significantly larger than anticipated. The same is likely to be true of the economic effects, which will include higher inflation and slower growth,” Powell told the audience at the Economic Club of Chicago.
Powell’s remarks immediately sent stocks lower as investors digested the top central banker’s concern about the tariffs.
Within minutes, the Dow Jones Industrial Average fell 690 points, or 1.7%, more than tripling losses suffered over the course of the day before Powell’s comments. At the close of trading, the Dow dropped 1.7%.
The S&P 500 dropped 2.2% at market close, while the tech-heavy Nasdaq plunged 3%. Both indexes deepened losses suffered earlier in the day.
Stocks had fallen in early trading on Wednesday after chipmaker Nvidia disclosed it was recording a $5.5 billion charge in accordance with a new Trump administration restriction on exports to China.
Wednesday’s address marked Powell’s first public remarks since Trump last week paused his so-called “reciprocal tariffs” on most countries for 90 days. Stocks soared minutes after Trump’s announcement, recovering much of the losses suffered in the aftermath of the “Liberation Day” tariffs start a week earlier. It amounted to one of the most volatile weeks in the history of Wall Street.
“Markets are struggling with a lot of uncertainty and that means volatility,” Powell said on Wednesday. Still, he added, the volatility reflected the significance of the policy changes, rather than abnormal behavior in the markets.
“They’re functioning just about as you’d expect them to function,” Powell said.
At the same time Trump paused some tariffs last week, he also increased tariffs on China, bringing levies on Chinese goods to a cumulative level of 145%. In response, China hiked tariffs on U.S. goods to 125%, escalating a trade war between the world’s two largest economies.
Powell said earlier this month that he expected Trump’s tariff policy would hike prices and slow economic growth, while noting that key indicators “still show a solid economy.”
Policy changes implemented by the White House have contributed to a “highly uncertain outlook,” Powell said.
Last month, the Fed opted to hold interest rates steady, even as the central bank said it expected higher inflation and slower economic growth than it had forecast in December. The Fed will announce its next interest-rate decision on May 7.
Powell on Wednesday indicated that the Fed may approach interest rates with restraint as policymakers observe the economic effects of Trump’s tariffs.
“The U.S. economy is still in a solid position,” Powell said. “For the time being, we are well positioned to wait for greater clarity before considering any adjustments to our policy stance.”
(NEW YORK) — U.S. stocks closed down slightly on Tuesday as investors weathered ongoing uncertainty about President Donald Trump’s tariff plans.
The Dow Jones Industrial Average ticked down 156 points, or 0.3%, at the close of trading. The S&P 500 fell 0.1%, while the tech-heavy Nasdaq declined 0.05%.
The U.S. has received about 15 proposals for trade agreements, White House Press Secretary Karoline Leavitt told reporters on Tuesday. Trump issued a 90-day pause of so-called “reciprocal tariffs” last week, saying he plans to negotiate trade agreements with roughly 75 countries targeted by the levies.
The remarks from Leavitt came a day after Trump signaled a willingness to ease auto tariffs, while saying he plans to impose new tariffs on computer chips and pharmaceuticals
Trump’s administration said on Friday that many consumer electronics would be exempt from his wide-ranging reciprocal tariffs, an announcement that sent global markets higher on Monday.
Trump on Monday also indicated a willingness to further ease tariffs, saying he is looking to “help some of the car companies” in the aftermath of 25% auto levies.
The White House also took steps on Monday that may result in new tariffs on pharmaceuticals and semiconductors, posting notices online about national security investigations into those products.
Markets in Europe also traded higher midday on Tuesday, after European Commission President Ursula von der Leyen’s 90-day pause on planned tariff countermeasures went into effect.
Germany’s DAX climbed about 1.21% midday and Britain’s FTSE 100 traded up about 0.90% midday.
South Korea’s KOSPI index closed up 0.88% on Tuesday, posting its second day of gains. And Tokyo’s Nikkei 225 climbed 0.84%.
Markets in China, where Trump’s reciprocal tariffs are still in place, showed less enthusiasm. Shanghai’s Composite Index rose just 0.15% and Hong Kong’s Hang Seng Index climbed 0.23%.
ABC News’ David Brennan contributed to this report.
(NEW YORK) — U.S. stocks were little changed in early trading on Tuesday, a day after President Donald Trump signaled a willingness to ease some tariffs but also impose new ones.
The Dow Jones Industrial Average ticked up 52 points, or 0.1%. The S&P 500 climbed 0.2%, while the tech-heavy Nasdaq increased 0.05%.
Trump’s administration said on Friday that many consumer electronics would be exempt from his wide-ranging reciprocal tariffs, an announcement that sent global markets higher on Monday.
Trump on Monday also signaled a willingness to further ease tariffs, saying he is looking to “help some of the car companies” in the aftermath of 25% auto levies.
The White House also took steps on Monday that may result in new tariffs on pharmaceuticals and semiconductors, posting notices online about national security investigations into those products.
Markets in Europe also traded higher midday on Tuesday, after European Commission President Ursula von der Leyen’s 90-day pause on planned tariff countermeasures went into effect.
Germany’s DAX climbed about 1.21% midday and Britain’s FTSE 100 traded up about 0.90% midday.
South Korea’s KOSPI index closed up 0.88% on Tuesday, posting its second day of gains. And Tokyo’s Nikkei 225 climbed 0.84%.
Markets in China, where Trump’s reciprocal tariffs are still in place, showed less enthusiasm. Shanghai’s Composite Index rose just 0.15% and Hong Kong’s Hang Seng Index climbed 0.23%.
ABC News’ David Brennan contributed to this report.
