GNI POLITICS

By Francesco Canepa FRANKFURT (Reuters) -For all the drama surrounding U.S. President Donald Trump's trade tariffs, the world economy is holding up better than many had expected. The latest data from the United States, China and, to a lesser extent, Europe are showing resilience and the global economy as a whole is still expected to grow modestly this year. This is in part due to U.S. buyers and foreign sellers bringing forward business while many of the import duties unveiled by U.S. President Donald Trump remain suspended. While that effect may prove short-lived, Trump's decision to pause tariffs and some glimpses of progress in trade talks, particularly between the United States and the European Union, have fuelled cautious optimism. "We are seeing a bit of a sugar rush in industry, with manufacturers bringing forward production and trade," said Holger Schmieding, an economist at investment bank Berenberg. "The other thing is that we have evidence that Trump pedalled back on tariffs. The bet in markets and to some extent in the economy is that he barks but doesn't bite." Investment banks and institutions generally expect the United States to avoid a recession this year and the global economy to keep growing. The International Monetary Fund downgraded its global GDP growth forecast by just 0.5 percentage points last month to 2.8%. This is roughly in line with the trend over the past decade and a far cry from the downturns experienced during the COVID-19 pandemic, the 2008 financial crisis or even the turmoil that followed the 9/11 terror attacks in 2001. No one is venturing a prediction on where the trade negotiations will eventually settle, particularly with a U.S. president who sees himself as unstoppable. This week alone, separate U.S. courts first blocked and then reinstated Trump's tariffs - creating a degree of legal uncertainty that will do little to facilitate trade deals between the United States and those threatened with the levies. While the EU celebrated "new impetus" in its trade talks with the United States, negotiations with China were "a bit stalled" according to U.S. Treasury Secretary Scott Bessent. Companies are counting the cost of the ongoing impasse. A Reuters analysis of corporate disclosures shows Trump's trade war had cost companies more than $34 billion in lost sales and higher costs, a toll that is expected to rise as ongoing uncertainty over tariffs paralyses decision making at some of the world's largest companies. Car-makers from Japan's Toyota to Germany's Porsche and Mercedes-Benz are bracing for lower, or lower-than-previously expected profits if they have not given up making predictions altogether, like Volvo Cars and Dutch-based Stellantis. This is likely to result in a hit especially for Japan. The United States is Japan's biggest export destination, accounting for 21 trillion yen ($146.16 billion) worth of goods, with automobiles representing roughly 28% of the total. "While the worst shocks may be over, there's still a lot up in the air," Xingchen Yu, a strategist at UBS's Chief Investment Office, said. "We don't really know what a new normal for tariffs would look like, unfortunately." PAYBACK But so far the global economy has held up pretty well. China's output and exports are resilient as its companies re-route trade to the United States via third countries. Even in Europe, manufacturing activity was at a 33-month high in May, rebounding from a slump induced by more expensive fuel following Russia's invasion of Ukraine. Confidence was also buttressed by the prospect of greater fiscal spending in Germany, a missing ingredient for European growth for the past couple of decades. The robustness of the world economy has surprised even professional forecasters. A measure produced by U.S. bank Citi that tracks the degree to which global economic data has surprised to the upside is now at its highest in more than a year.    Some of that strength circles back to the tariffs themselves and the attempts by U.S. households and businesses to front-load purchases to beat anticipated price increases later this year. U.S. imports were up around 30% in March from where they were in October. The risk to the upbeat outlook comes from the expected "payback" of those advance purchases, which are unlikely to be repeated and will mean slower activity - in the U.S. and elsewhere - later. Economists still fear a triple whammy in which the front-loaded boost to the goods sector is unwound while U.S. household purchasing power is squeezed by higher prices and companies put off investment and hiring. At the margin, however, this scenario is starting to appear a little less likely after Trump's pause on tariffs. "The balance has slightly shifted towards more optimism, albeit with uncertainty and volatility," ING's global head of macro Carsten Brzeski said. ($1 = 143.6800 yen) (Additional reporting by Dan Burns in Washington, Claire Fu in Singapore, Ellen Zhang in Beijing and Leika Kihara in Tokyo; Editing by Mark John and Jane Merriman)

President Donald Trumpaccused China of violating a tariff agreement with the United States in a social media post on May 30, after his Treasury Secretary said negotiations had "stalled." "Everybody was happy! That is the good news!!! The bad news is that China, perhaps not surprisingly to some, HAS TOTALLY VIOLATED ITS AGREEMENT WITH US. So much for being Mr. NICE GUY!"he said in the poston his social media platform Truth Social. Two weeks ago, the United States and China agreed to dial back triple-digittariffsfor 90 days while they negotiated an agreement. Treasury Secretary Scott Bessent told Fox News on Thursday that talks "are a bit stalled" but they continue. U.S. Trade Representative Jamieson Greer declined to respond to reporters' questions at the White House about the progress of trade negotiations with China or whether tariffs would return to 145%. The temporary truce was reached after Trumpslapped sky-high tariffs on importsfrom China into the U.S., and China retaliated in kind. In the post, Trump inaccurately claimed that he saved China from "grave economic danger" caused by his tariffs by agreeing to trade discussions. "We went, in effect, COLD TURKEY with China, and it was devastating for them. Many factories closed and there was, to put it mildly, "civil unrest," Trump claimedin the Truth Social post. Reporter Bart Jansen contributed This article originally appeared on USA TODAY:Trump lashes out at China, says country 'totally violated' tariff deal

DAMASCUS (AP) — The lifting of economic sanctions onSyriawill allow the government to begin work on daunting tasks that include fighting corruption and bringing millions of refugees home, Hind Kabawat, the minister of social affairs and labor, told The Associated Press on Friday. Kabawat is the only woman and the only Christian in the 23-membercabinet formedin March to steer the country during a transitional period after the ouster of former PresidentBashar Assadin a rebel offensive in December. Her portfolio will be one of the most important as the country begins rebuilding after nearly 14 years of civil war. She saidmoves by the U.S. and the European Unionin the past week to at least temporarily lift most of the sanctions that had been imposed on Syria over decades will allow that work to get started. Before, she said, "we would talk, we would make plans, but nothing could happen on the ground because sanctions were holding everything up and restricting our work." With the lifting of sanctions they can now move to "implementation." One of the first programs the new government is planning to launch is "temporary schools" for the children of refugees and internally displaced people returning to their home areas. Kabawat said that it will take time for the easing of sanctions to show effects on the ground, particularly since unwinding some of the financial restrictions will involve complicated bureaucracy. "We are going step by step," she said. "We are not saying that anything is easy -- we have many challenges — but we can't be pessimistic. We need to be optimistic." The new government's vision is "that we don't want either food baskets or tents after five years," Kabawat said, referring to the country's dependence on humanitarian aid and many displacement camps. That may be an ambitious target, given that 90% of the country's population currently lives below the poverty line, according to theUnited Nations. Thecivil warthat began in 2011 also displaced half the country's pre-war population of 23 million people. The U.N.'s refugee agency, UNHCR, estimates that about half a million havereturned to Syriasince Assad was ousted. But the dire economic situation and battered infrastructure have also dissuaded many refugees from coming back. The widespread poverty also fed into a culture of public corruption that developed in the Assad era, including solicitation of bribes by public employees and shakedowns by security forces at checkpoints. Syria's new rulers have pledged to end the corruption, but they face an uphill battle. Public employees make salaries far below the cost of living, and the new government has so far been unable to make good on a promise to hike public sector wages by 400%. "How can I fight corruption if the monthly salary is $40 and that is not enough to buy food for 10 days?" Kabawat asked. Women and minorities The country's new rulers, led by PresidentAhmad al-Sharaa— the former head of Hayat Tahrir al-Sham, or HTS, a Sunni Islamist insurgent group that spearheaded the offensive against Assad — have been under scrutiny by western countries over the treatment of Syrian women and religious minorities. In March, clashes between government security forces and pro-Assad armed groups spiraled into sectarian revenge attacks onmembers of the Alawite sectto which Assad belongs. Hundreds ofcivilians were killed. The government formed a committee to investigate the attacks, which has not yet reported its findings. Many also criticized the transitional government as giving only token representation to women and minorities. Apart from Kabawat, the cabinet includes only one member each from the Druze and Alawite sects and one Kurd. "Everywhere I travel… the first and last question is, 'What is the situation of the minorities?'" Kabawat said. "I can understand the worries of the West about the minorities, but they should also be worried about Syrian men and women as a whole." She said the international community's priority should be to help Syria to build its economy and avoid the country falling into "chaos." 'Rebuilding our institutions' Despite being the only woman in the cabinet, Kabawat said "now there is a greater opportunity for women" than under Assad and that "today there is no committee being formed that does not have women in it." "Syrian women have suffered a lot in these 14 years and worked in all areas," she said. "All Syrian men and women need to have a role in rebuilding our institutions." She called for those wary of al-Sharaa to give him a chance. While the West has warmed to the new president -- particularly after his recenthigh-profile meetingwith U.S.President Donald Trump— others have not forgotten that he fought against U.S. forces in Iraq after the invasion of 2003 or that his HTS group was formed as an offshoot of al-Qaida, although it later cut ties. "People used to call (Nelson) Mandela a terrorist, and then he became the first leader among those who freed South Africa, and after that suddenly he was no longer a terrorist," Kabawat said. She urged skeptics to "give us the same chance that you gave to South Africa."

By Brad Heath, Jason Lange, Andy Sullivan, Grant Smith WASHINGTON (Reuters) -Elon Musk once famously wielded a chainsaw on stage in a theatrical demonstration of his effort to drastically cut U.S. federal spending under President Donald Trump. As he leaves government, official data shows he achieved something closer to a trim with scissors. In the four months since Musk's Department of Government Efficiency began slashing federal spending and staffing, a handful of the agencies he has targeted trimmed their combined spending by about $19 billion compared with the same period last year, according to U.S. Treasury Department summaries reviewed by Reuters. That is far below Musk's initial goal of $2 trillion in savings and amounts to about a half of 1% of total spending by the federal government. Musk said on Wednesday he is leaving the administration but that its cost-cutting work will "only strengthen over time." It remains to be seen, however, how enthusiastically Trump's cabinet secretaries will continue to downsize their departments. DOGE says it pulled the plug on more than 26,000 federal grants and contracts that are worth about $73 billion, while more than 260,000 government workers have been bought out, taken early retirement or been fired. But the DOGE tallies have been riddled with errors, according to reviews by numerous budget experts and media outlets, including Reuters. That has made them difficult to verify, and some of the announced cuts are not saving the government any money because judges have reversed or stalled them. That leaves the Treasury Department's daily reports on how much the government is spending as the clearest window into the scope of the administration's cost-cutting. The view they offer so far is modest: The government has spent about $250 billion more during the first months of Trump's administration than it did during the same period of time last year, a 10% increase. And even some parts of the government Trump has cut the most deeply are, for now at least, spending more money than they did last year. One big factor driving costs is largely outside Trump's immediate control: interest payments on the United States' growing pile of debt, which amount to about $1 in every $7 the federal government spends. Debt interest payments are up about 22% from a year ago. Spending on Social Security, the safety-net program for the elderly and disabled, totaled about $500 billion since Trump's inauguration, up 10% from a year earlier. To be sure, the view offered by the Treasury Department's daily reports is incomplete. Many of the cuts DOGE has made to the federal workforce, grants and contracting will reduce what the government will spend in the future but do not show up in its checkbook today. For example, while thousands of workers have taken buyouts, the government will continue to pay their wages until October. So far, the Labor Department has estimated there were only about 26,000 fewer people on federal payrolls in April than were on the books in January, after adjusting the figures for typical seasonal swings. Tallying savings from future cuts, however, is seldom straightforward. "It could be that in the future we never replace these workers and we save billions of dollars, or it could be that they come back and it's even more expensive than before," said Martha Gimbel, executive director of the Budget Lab at Yale, a nonpartisan budget analysis organization at Yale University. The White House declined to offer an explanation for DOGE's figures. Spokesman Harrison Fields said in a statement that "DOGE is working at record speed to cut waste, fraud, and abuse, producing historic savings for the American people." Reuters estimated the administration's impact by tallying outlays at agencies that had been targeted for cuts and whose spending had dropped from the same time last year. Among the agencies hardest hit are the Department of Education, State Department, U.S. Agency for International Development, National Institutes of Health, the Centers for Disease Control and Prevention and other independent agencies. Rachel Snyderman, an expert on fiscal policy at the Bipartisan Policy Center, said the spending declines at agencies could be reversed if the Trump administration doesn't get congressional approval to cancel outlays from this year's federal budget, as required by law. AN $11 BILLION EDUCATION CUT The most obvious sign that the Trump administration is making a dent in federal spending is in the Education Department, which Trump has ordered shut down. The administration cut the department's staff by about half in March. DOGE's website lists 311 Education Department grants and contracts it says it has eliminated for a savings of about $1.6 billion, though it is not clear how it arrived at those figures. Some cuts have not stuck. A federal judge in March ordered the administration to restore some of the grants it had cut, and another judge this month ordered it to rehire 1,400 workers. Still, the Education Department under Trump has spent close to $11 billion less than it did over the same period last year, the Treasury reports show, far more than what DOGE says it has cut. One reason could be that layoffs have made it harder for the government to process payments for special education and low-income schools. School districts that have sued over the cuts alleged that states were already experiencing slowdowns in receiving money. Another factor for the reduced outlays: The department has stopped handing out the $4.4 billion that remains to be distributed from the hundreds of billions of dollars approved in previous years to help schools weather the COVID-19 crisis. The Education Department did not respond to a request for comment. OTHER AREAS DOGE HAS CUT Other agencies targeted in Trump's overhaul are also starting to show declines in their spending compared with the same time last year. Spending is down about $350 million at the CDC and about $1 billion at the National Institutes of Health. The Trump administration has moved to slash spending across those agencies, cancelling grants and ending leases for office space. The Department of Health and Human Services has reported terminating close to 2,000 grants that planned to disperse more than $20 billion. Many of the grants were to boost labs that fight new infectious diseases, or to fund state mental health programs. Some $14 billion of the grant money had already been spent prior to the termination, with roughly $7 billion effectively frozen, according to a Reuters analysis of the government's tallies. The administration has effectively dismantled USAID, which handled most U.S. foreign assistance, firing nearly all of the agency's employees and cancelling most of its humanitarian aid and health programs, though federal courts have forced the government to continue making some payments. USAID spending is down about 40%, to about $4.6 billion, from last year. Spending at the State Department – where DOGE says it has cut nearly $1 billion in grants and contracts – is also down about 20% from 2024. WHY WE CAN'T KNOW MORE Measuring the impact of the administration's actions is difficult because many cuts will not yield savings for months or years even as spending elsewhere increases. Spending on federal employee salaries, for example, is up by more than $3 billion under Trump. Some of the grants and contracts DOGE cut were due to be paid out over several years, and many remain the subject of lawsuits that will determine whether they can be cut at all. DOGE says it has saved taxpayers $175 billion, but the details it has posted on its website, where it gives the only public accounting of those changes, add up to less than half of that figure. It says the figure includes workforce cuts, interest savings and other measures it has not itemized. It is also hard to know exactly how much the government would have spent if the administration had not started cutting. (Reporting by Brad Heath, Jason Lange and Andy Sullivan in Washington and Grant Smith in New York, Editing by Ross Colvin and Matthew Lewis)

WASHINGTON (Reuters) -U.S. President Donald Trump on Friday said China had violated an agreement on tariffs with the United States. "China, perhaps not surprisingly to some, HAS TOTALLY VIOLATED ITS AGREEMENT WITH US. So much for being Mr. NICE GUY!," Trump said in a post on his Truth Social platform. U.S. trade talks with China were "a bit stalled" and getting a deal over the finish line will likely need the direct involvement of President Donald Trump and Chinese President Xi Jinping, U.S. Treasury Secretary Scott Bessent told Fox News on Thursday. Two weeks after breakthrough negotiations that resulted in a temporary truce in the trade war between the world's two biggest economies, Bessent said progress since then has been slow, but said he expects more talks in the next few weeks. The U.S.-China agreement to dial back triple-digit tariffs for 90 days prompted a massive relief rally in global stocks. But it did nothing to address the underlying reasons for Trump's tariffs on Chinese goods, mainly longstanding U.S. complaints about China's state-dominated, export-driven economic model, leaving those issues for future talks. (Reporting by Susan Heavey, Katharine Jackson; Editing by Sharon Singleton)

President Donald Trumpis holding a rally in Pennsylvania on Friday to celebrate a details-to-come deal for Japan-based Nippon Steel to invest in U.S. Steel, which he says will keepthe iconic American steelmaker under U.S.-control.ICE, the agencytasked with carrying out Trump's mass deportation campaign is undergoing a major staff reorganization.The White House says its fixing errorsin a much-anticipated federal reportled by Health and Human Services SecretaryRobert F. Kennedy Jr.decrying America's food supply, pesticides and prescription drugs. And billionaireElon Muskfaces big challenges as he leaves Washington after an Oval Office appearance Friday afternoon. Each of his numerous businesses havetheir own set of issues. Here's the Latest: Trump's big plans on trade and more run up against laws of political gravity, separation of powers On Wednesday, an obscure but powerful court in New Yorkrejected the legal foundation of Trump's most sweeping tariffs, finding that Trump could not use a 1977 law to declare a national emergency on trade imbalances and fentanyl smuggling to justify a series ofimport taxesthat have unsettled the world. Reordering the global economy by executive fiat was an unconstitutional end-run around Congress' powers, the three-judge panel of Trump, Obama and Reagan appointees ruled in a scathing rebuke of Trump's action. The setbacks fit a broader pattern for a president who has advanced an extraordinarily expansive view of executive power. The laws of political gravity, the separation of powers and geopolitical realities are proving to be tougher to conquer than Trump will publicly admit. As various legal skirmishes play out, he may have to choose between bowing to the limits of his power or trying to ignore the judicial system. ▶ Read more onreality checks on Trump's assertions of authority Trump's latest pardons benefit an array of political allies and public figures A governor who resigned amid a corruption scandaland served two stints in federal prison. A New York Republican whoresigned from Congress after a tax fraud convictionand who made headlines for threatening to throw a reporter off a Capitol balcony over a question he didn't like.Reality TV stars convicted of cheating banksand evading taxes. FILE - Todd Chrisley, left, and his wife, Julie Chrisley, pose for photos at the 52nd annual Academy of Country Music Awards on April 2, 2017, in Las Vegas. Todd and Julie Chrisley, who are in prison after being convicted on federal charges of bank fraud and tax evasion, are challenging aspects of their convictions and sentences in a federal appeals court.(Photo by Jordan Strauss/Invision/AP, File) All were unlikely beneficiaries this week of pardons, with Trump flexing his executive power to bestow clemency on political allies, prominent public figures and others convicted of defrauding the public. The moves not only take aim at criminal cases once touted as just by the Justice Department but also come amid a continuing Trump administration erosion of public integrity guardrails, including thefiring of the department's pardon attorneyand thenear-dismantling of a prosecution unitestablished to hold public officials accountable for abusing the public trust. ▶ Read moreabout Trump's pardons Trump has long warned of a 'deep state.' Now in power, he's under pressure to expose it Four months into his second term, Trump has continued to stoke dark theories involving his predecessors and other powerful politicians and attorneys — most recently raising the specter of nefarious intent behind former President Joe Biden's use of an autopen to sign papers. The administration has pledged to reopen investigations and has taken steps to declassify certain documents, including releasingmore than 63,000 pages of recordsrelated to the assassination of President John F. Kennedy. Yet many of Trump's supporters say it's not enough. Some who take him at his word are beginning to get restless as they ask why his administration, which holds the keys to chasing down these alleged government secrets, is denying them the evidence and retribution they expected. His Justice Department has not yet arrested hordes of "deep state" actors as some of his supporters had hoped it would, even as the president has been posting cryptic videos and memes about Democratic politicians. ▶ Read moreabout Trump and the "deep state" Trump holding Pennsylvania rally to promote deal for Japan-based Nippon to 'partner' with US Steel Trump is holding a rally in Pennsylvania on Friday to celebrate a details-to-come deal for Japan-based Nippon Steel to invest in U.S. Steel, which he says will keepthe iconic American steelmaker under U.S.-control. Though Trump initially vowed to block the Japanese steelmaker's bid to buy Pittsburgh-based U.S. Steel, he changed course andannounced an agreement last weekfor what he described as "partial ownership" by Nippon. It's not clear, though, if the deal his administration helped broker has been finalized or how ownership would be structured. Trump stressed the deal would maintain American control of the storied company, which is seen as both a political symbol and an important matter for the country's supply chain, industries like auto manufacturing and national security. U.S. Steel has not publicly communicated any details of a revamped deal to investors. Nippon Steel issued a statement approving of the proposed "partnership" but also has not disclosed terms of the arrangement. ▶ Read moreabout the deal

WASHINGTON (AP) — A key U.S. inflation gauge slowed last month as President Donald Trump's tariffs have yet to noticeably push up prices, while American incomes jumped. Friday'sreportfrom the Commerce Department showed that consumer prices rose just 2.1% in April compared with a year earlier, down from 2.3% in March and the lowest since September. Excluding the volatile food and energy categories, core prices rose 2.5% from a year earlier, below the March figure of 2.6%. Economists track core prices because they typically provide a better read on where inflation is headed. The figures show inflation is still declining from its post-pandemic spike, which reached the highest level in four decades in July 2022. Economists andsome business executiveshave warned that prices will likely head higher as Trump's widespread tariffs take effect, though the timing and impact of those duties are now in doubt after they werestruck down late Wednesdayincourt. The inflation-fighters at the Federal Reservesaid at their most recent meetingMay 6-7 that inflation is still elevated, compared to their target of 2%. Fed officials, who focus more on core prices, broadly support keeping their key interest rate steady while they evaluate the impact of the tariffs on inflation and jobs. Thecourt rulinglast Wednesday said that most of Trump's tariffs were unlawful, including his duties on imports from Canada, Mexico, and China, as well as those on more than 50 other countries. Tariffs on steel, aluminum, and cars were implemented under different laws and remain in place. But the duties were allowed to remain in effect while the Trump administration appeals the ruling against them. And administration officials say they will find other legal authorities, if needed, to implement the tariffs. As a result, what tariffs will end up in place and for how long remains highly uncertain.