ExclusiveUS Tariffs on Chinese Imports Could Raise Prices on Everyday Items | Business Matters (Feb. 5)

And in today's business matters, oil prices fell 2% today, and this comes as a large buildup of U.S. crude and gas stockpiles signal weaker demand. So the latest data from the U.S. Energy Information Administration revealed a colossal buildup last week. Crude oil inventories in the U.S. rose by 8.7 million barrels. Production picked up, and the buildup has extended to almost three months. Gas inventory grew for a 12th consecutive week. With the rising inventories, crude oil prices are down week over week. Meanwhile, Canadian Prime Minister Justin Trudeau announced a U.S.-Canada Economic Summit set for Friday. The newly established Council on Canada-U.S. Relations will hold the event in Toronto. The announcement came after President Trump paused his proposed 25% tariff on Canada for 30 days. The summit will look at ways to grow Canada's economy and expand trade within the country, as well diversify export markets and address productivity, but also seek to increase coordination between partners. Trudeau's statement said the economic summit is, quote, our ambition in action, the next stride in fully unlocking our economic growth. An expanded espionage and theft charges. A former Google engineer is accused of stealing artificial intelligence trade secrets for Chinese companies. U.S. prosecutors unveiled an expanded indictment against Lin Wei-Ding. He faces seven counts each of economic espionage and theft of trade secrets. Google is not charged and has said it cooperated with law enforcement. The case was part of an interagency strike force created by the Biden administration to stop advanced technology from being shared with countries like China and Russia, for example. Meanwhile, uncertainty over tariffs could lead to fewer interest rate cuts this year. Morgan Stanley now forecasts only one rate cut for all of 2025 at the Federal Reserve's June meeting, instead of the two cuts that were previously expected. In a note to clients Tuesday, the Wall Street Bank blamed the volatile trade environment. Morgan Stanley, economist, said tariff uncertainty could raise the hurdle for Fed cuts. After keeping interest rates steady last week, Fed Chairman Jerome Powell said it remains unclear how the trade situation will play out. The next Fed meeting will be held in March. Harley-Davidson has been hit with some road rash. The iconic brand is forecasting profit and motorcycle revenue to be between flat and down 5 percent this year. The storied motorcycle maker is struggling to gain traction with younger riders and has seen demand dip for leisure vehicles since the pandemic. Retail sales in its top market, North America, fell 13 percent in the fourth quarter. Harley is planning to update its lineup this year to include more higher-margin touring bikes and sharpen its focus on customer vehicle operations, custom, that is, to target wealthier customers. And investors could be selling their AstraZeneca shares, even though the drug company posted a strong set of quarterly results. That's because they want more information about an investigation of a top executive in China. The company said Liang Wang had been detained in October, but said that it did not know what the probe was about. Investors and analysts told Reuters that some investors are likely to resume selling stock even though the company's drug pipeline is viewed as strong. That's if the company does not disclose fresh information about the probe and arrests with the release of its fourth quarter results. President Trump's additional 10 percent tariffs on all Chinese goods took effect yesterday. People may soon start to feel the price increases. And that's from the ultra-cheap apparel sold online on shopping platforms to toys and electronic devices like computers and cell phones. These items could soon see their price tick higher. The latest data from 2020 shows nearly four-fifths of the smartphones and laptops Americans use are assembled by Chinese manufacturers, including Apple's products. And third-party sellers on Amazon that import products from China will also be affected by the tariff. As well as the viral Chinese e-commerce sites Xi'an, Timu and AliExpress. President Trump suspended a trade exemption policy called De Minimis, which allows shipments worth less than $800 to enter the U.S. duty-free. Now analysts say all company shipments from China are subject to U.S. tariffs. The U.S. Postal Service said today it would accept parcels from China and Hong Kong, marking a U-turn after a brief suspension yesterday. So in a statement, the post office said it was working with Customs and Border Protection to implement a collection mechanism for the new China tariffs. The agency did not give a reason for the change, though. It's unclear whether the previous suspension is related to an executive order President Trump signed last week. That order terminated a long-standing rule that allowed anyone to ship packages worth less than $800 to the U.S. without duties or inspections. This change could affect e-commerce sites like Xi'an and Timu. And Toyota is expressing confidence as it raises its full-year operating profit forecast. This is a sign that the world's top-selling automaker believes it can ride out the impact of any potential U.S. tariffs. Toyota made the upgrade despite weaker-than-expected earnings for the third quarter. It recorded a second straight quarterly profit decline. The carmaker also unveiled plans for a wholly-owned subsidiary in Shanghai, where it plans to develop and produce electric vehicles and batteries for its Lexus brand's production. It's set to start in 2027. A bigger, better Francis Scott Key Bridge is in the works almost a year after it collapsed. Maryland officials have unveiled their design for the new bridge. Officials say it will be taller. And on top of that, it's going to be better protected against ship strikes. In March last year, a container ship lost power and struck one of old bridge's supporting columns. Six people were killed when the bridge collapsed. Governor Wes Moore said yesterday that Maryland is the bridge between America and the rest of the world and that it will be the place where the country will remember what resilience and economic growth looks like. The project could be completed in 2028 with a price tag of almost $2 billion. The original Key Bridge took five years to construct and was completed in 1977. Disney has sailed past earnings estimates with Moana 2 at the helm. The entertainment giant sharply outperformed Wall Street's quarterly estimates. It rode the wave of the Moana sequel with a strong holiday box office. The movie topped $1 billion in box office proceeds over the Martin Luther King Jr. Day weekend. Moana 2 is the fourth Disney animation film to reach this milestone. The company also shared higher profits from streaming. These strengths in entertainment helped offset a decline in domestic theme parks. Profits dipped at domestic parks because of Hurricanes Milton and Helene in Florida and cruise ship costs. Hundreds of Walmart employees are about to lose their jobs. The nation's largest private employer said it's eliminating rules and closing an office in North Carolina. This is based on an internal memo seen by Fox Business. In the note, Chief People Officer Donna Morris said that the retailer was cutting roles and asking office-based employees in New Jersey and some smaller offices to relocate. The options are Sunnyvale, California, and its new headquarter office in Bentonville, Arkansas. Employees have at least a month to inform the company if they plan to move. House Speaker Mike Johnson has renewed the Select Committee on the Chinese Communist Party for a second term. Johnson called its work crucial to national security. Congressman John Muellner leads the committee. He will continue efforts to counter Beijing's growing influence, targeting issues like forced labor, critical mineral supply chains, and Chinese military-linked investments. Lawmakers have also reintroduced a bill to revoke China's trade status, citing economic and security threats. Johnson says the CCP remains the greatest global threat and vowed to strengthen U.S. defenses against its aggression. More European luxury brands are considering making their items here in the U.S. A trade deficit with Europe has President Trump contemplating more tariffs. On Tuesday, the European Union said they want to engage swiftly with the U.S. to avoid that possibility. Luxury label LVMH has already hinted at manufacturing in the United States. NTD's Sean Marshall has more on the prospect of European luxury brands made in the U.S.A. LVMH CEO Bernard Arnault has sparked a debate over France's attractiveness for business. In post-earnings remarks late on Tuesday, the billionaire said his company, known for its high-end products made in France and Italy, has been seriously considering bulking up its production capacities in the United States. Retail strategist and CEO of Retail Boss Janelle Alvarado shared with me her thoughts about luxury American-made items possibly becoming more of a trend. So we're going to continue to see this. And is it something that luxury brands should or should not do? I think it's always been something that has been maybe not in the forefront as a lot of their products are made and known for being produced internationally in Italy and Paris, right, known for their high craftsmanship. The perceptions have been changing where Americans do see that brands could be a premium product made in U.S. It doesn't have to just be an overseas made product to have quality. The LVMH CEO cited a wind of optimism in the U.S. that contrasted with a cold shower of potentially higher corporate taxes in France. But any move to production on the other side of the Atlantic would likely be limited in scope, said LVMH investors. But how might Americans feel about luxury brands traditionally produced in Italy and France being made in America? Customers are a little bit changing in their mindset of what luxury really means. And I feel like the U.S., especially made in America products, is starting to catch on as something that can be a place where premium product is made. And also that customer has more peace of mind that it's being crafted in a more sustainable as well as fair way. LVMH already has two sites in California, opened in 1990 and 2011, and a factory in Texas opened in 2019. It also acquired jewelry workshops with the company's $16 billion purchase of American label Tiffany & Company in 2021. The LVMH CFO told reporters on Tuesday American clients accept made in the U.S. so we can consider the United States. European Union trade chief Maros Shevkovich also said on Tuesday, quote, we are ready to engage immediately and we hope that through this early engagement we can avoid the measures which would bring a lot of disturbance to the most important trade and investment relationship on this planet. Sean Marshall, NTD News. And U.S. private sector job growth surged last month. That's according to the latest data from payroll company ADP. Private sector employment rose by roughly 183,000 jobs in January, beating expectations. It marks a slightly faster pace of hiring compared to December. January's job gains were attributed to businesses in the service sector, especially those in trade and transportation, as well as leisure and hospitality. ADP's tabulations are sometimes seen as a proxy for overall hiring, but they don't always correlate with the government's monthly jobs report. The January jobs report is due out this Friday. Nissan says it is still in discussions with Honda despite reports the two car makers are set to scrap merger talks. The two Japanese companies announced in December they would conduct negotiations for six months on a possible merger. The deal will create the world's third largest automaker and give them more resources to compete with the growing threat from Chinese car makers. In a statement on its website, Nissan said it has withdrawn the basic agreement for the merger with Honda. But Nissan also said that it and Honda are advancing various discussions and plan to decide on a direction and make an announcement around mid-February. Spain's government has approved a plan to reduce the legal work week from 40 to 37.5 hours without salary cuts. The Labor minister says the move will boost productivity and improve workers' lives. However, business leaders warn it could raise costs and hurt competition. The proposal still needs parliamentary approval, where the prime minister faces opposition from key allies. Employers' groups argue that the change should come through negotiations, not legislation. With economic growth strong and unemployment at a 16-year low, the debate over Spain's work week is far from over. And DeepSeek may be sending user data to China's government. That's what cybersecurity experts found. And not just their AI prompts, but even all web activity. Here's the story. Cybersecurity experts have found that DeepSeek's code can transfer user data to the Chinese government. DeepSeek is a Chinese AI firm that made an AI chatbot. This isn't just data from chatting with DeepSeek's AI, but all web activity, from Google searches to most visited websites. They even collect keystroke information, which means that if someone is maybe logging into a website, keystroke information could allow them to extract credentials, login credentials. Cybersecurity expert Star Cashman says there's good reason to be concerned about DeepSeek's security. Ontario-based cybersecurity firm FairRoot Security says it decrypted parts of DeepSeek's code, finding what looked like hidden programming. The code sends user data to Chinese website cmpassport.com, which is owned by China Mobile, a firm the FCC banned in 2019. DeepSeek also creates a digital fingerprint for every user, which can track web activity. FairRoot Security's findings have been deemed true by multiple cybersecurity experts. 100% accurate from our experience in counterintelligence. Same with other apps from China, TikTok, Timu, Sheen, other apps. There's literally hundreds of those. They are weaponized to send all of your data back to the CCP. Cybersecurity expert Casey Fleming says DeepSeek should be banned. The U.S. Navy banned DeepSeek late January. Senator Josh Hawley has introduced a bill that may ban DeepSeek nationwide. And Google has updated its AI ethics policy, and it removes a promise not to use the technology to pursue weapons and surveillance. In a previous version of the principles seen by CNN, the company included AI applications it won't pursue, and one of those included weapons or other technology intended to injure people, another technology used for surveillance beyond international norms. That language now is gone from the updated policy page. Google first published its AI principles in 2018, years before the technology became almost ubiquitous. This update is a sharp reversal in values from those original published principles. Google leaders in a blog post Tuesday said the company's policy update leans on AI frameworks published by democratic countries. Google leaders say they have a deeper understanding of AI's potential and risks. The day after Super Bowl Sunday, you can recover from late-night game watching with a free coffee from Starbucks. And that's because Starbucks says it's offering one free tall hot or ice brewed coffee to its reward members anytime on Monday. If you're not a member, rewards member, you can sign up Monday and still get a freebie. The move comes as the company rebrands after disappointing sales last quarter. Last week, Starbucks announced it will now be known as Starbucks Coffee Company. This is an attempt to bring back a coffeehouse vibe. It also announced the return of milk and sweetener stations in addition to free refills on some orders. And the head of Anheuser-Busch wants the beer world to ditch the word domestic and use American instead. CEO Brandon Whitworth sent a letter to distributors and partners saying domestic is used too often at places that beer is sold and he would like them to swap the word. Whitworth admitted that domestic is an accurate term but says it gives him a negative and less patriotic feel. Analysts aren't sure if this plea from Whitworth will sway the industry or if consumers would even notice the difference. Some Budweiser labels already use the phrase great American lager and that they're brewed and bottled in the USA. Beer Business Daily says the change might be made at some places where Anheuser-Busch has a strong influence. And Crayola is bringing back eight retired crayon colors in a limited edition collection. It's the first time the company's 120-year history that this is done. The returning colors are dandelion, blizzard blue, magic mint, mulberry, orange red, violet blue, lemon yellow, and raw umber. For some of them, it will be the first time they've been in stores in 35 years. Fans will also be able to get the colors in a limited edition colored pencil pack and marker pack. They hit store shelves this spring and will be available throughout 2025. Now on to Wall Street. All three major stock indexes closed higher today and that's rebounding from declines earlier in the session today and coming as investors brushed off disappointing alphabet earnings and weighed the prospect of future interest rate cuts from the U.S. central bank. So some AI-related stocks showed signs of recovery and this is coming after being rocked last week following the soaring popularity of DeepSeek, the low-cost Chinese artificial intelligence model. So Nvidia, which registered one of the biggest losses, also rose today. And with that, that's all happening in today's Business Matters.