Member Briefing February 20, 2025
Trump Suggests 25% Tariffs On Autos, Pharma And Semiconductors That Could Go Even Higher
President Donald Trump said he may broaden the scope of U.S. tariffs on imports to include automobiles, pharmaceuticals and semiconductors. In remarks to reporters Tuesday, Trump said the duties would be around 25% and “go very substantially higher over a course of a year.” The president did not indicate whether the new tariffs would apply to all vehicles coming into the U.S. or be targeted toward certain countries but said they could start as early as April 2.
However, the threat represents a broadening in the administration’s aggressive trade policy that already has included 25% tariffs on steel and aluminum imports set to take effect in March. The nations with the biggest auto exports to the U.S. are Mexico, Japan and Canada. On pharmaceuticals, the nation feeling the biggest impact likely would be Japan and India. The economic impact would be unclear, though the tariffs might aggravate costs and cause shortages initially. Trump said the tariffs already are having the desired effect, with companies domiciled overseas wanting to come back to the U.S.
NY Fed: Service Sector Declines “Modestly” in February
Business activity declined in the New York-Northern New Jersey region, according to the February survey. The headline business activity index fell five points to -10.5, its lowest level since December 2023. Twenty-two percent of respondents reported that conditions improved over the month and 32 percent said that conditions worsened. The business climate index remained negative at -35.6, suggesting the business climate was considerably worse than normal.
- The employment index moved down to -5.7, signaling that employment levels were somewhat lower than last month.
- The wages index rose eight points to 41.8, indicating that wage increases picked up.
- The prices paid index edged up three points to 51.3, a sign that input prices increased at a slightly faster pace than last month.
- The prices received index climbed for a second consecutive month, rising eight points to 27.4, its highest level in nearly a year.
- The supply availability index dropped fifteen points to -10.4, its lowest level since May 2022, suggesting supply availability worsened.
- The index for future business activity fell nine points to 21.6, suggesting firms were less optimistic than last month.
- The index for the future business climate fell seventeen points, dropping into negative territory, a sign that the business climate is expected to be worse than normal in six months.
- The future supply availability index plunged twenty-five points to -20.7, with about a third of firms expecting supply availability to be worse in six months.
Housing Starts Plunge in January As Winter Weather, Mortgage Rates Weigh on Residential Construction
U.S. single-family homebuilding fell sharply in January amid disruptions from snowstorms and freezing temperatures, with a rebound likely to be limited by higher costs from tariffs on imports and elevated mortgage rates. The report from the Commerce Department on Wednesday mirrored similar weather distortions that impacted retail sales and job growth last month, and suggested that economic activity slowed early in the first quarter.
Single-family housing starts, which account for the bulk of homebuilding, dropped 8.4% to a seasonally adjusted annual rate of 993,000 units last month, the Commerce Department's Census Bureau said. Single-family starts declined 1.8% on a year-on-year basis in January. Despite a national housing shortage, rising costs from higher borrowing costs and tariffs on raw materials, including lumber and appliances are a constraint for builders. Data for December was revised higher to show homebuilding increasing to a rate of 1.084 million units from the previously reported pace of 1.050 million units. Snowstorms and frigid temperatures slammed large parts of the country in January
Global Headlines
Middle East
- Hamas Turns Handover of Dead Hostages Into a Spectacle - WSJ
- Hamas Offers Handover Of All Hostages To Israel If Next Phase Of Ceasefire Agreed – The Guardian
- Israel Demolishes West Bank Apartment Buildings As Military Campaign Displaces Tens Of Thousands Of Palestinians - CNN
- Israel's West Bank Crackdown Triggers A Wave Of Displacement Unseen In Decades - ABC
- Iran ‘Behind Everything That Threatens Peace’ In Middle East, Rubio Says - CNN
- EU Set To Suspend Syria Energy, Transport Sanctions, Draft Declaration Shows - Reuters
- The Redheaded Bibas Children, the Youngest Hostages in Gaza, Aren’t Coming Home Alive - WSJ
- UAE Tells U.S.' Rubio It Rejects Displacement Of Palestinians - Reuters
- Interactive Map- Israel’s Operation In Gaza – Institute For The Study Of War
- Map – Tracking Hamas’ Attack On Israel – Live Universal Awareness Map
Ukraine
- Major Risks Loom As Trump Upends US Russia Policy – Reuters
- Europe Flails for Response After Trump Blames Kyiv for Ukraine War - WSJ
- US Envoy In Ukraine For Talks Following US-Russia Meeting - VOA
- Ukraine Updates: Trump And Zelenskiy Exchange Insults - Reuters
- EU Agrees New Sanctions On Russia Amid Donald Trump's Push For Negotiations - Euronews
- Zelenskyy Hits Back At Trump’s Comments, Says Ukraine Is Not For Sale - CNBC
- Zelenskyy's Approval Rating Grows To 57%, Debunking Trump's 4% Support Claim - Euronews
- Hawley Calls For New Inspector General To Investigate Ukraine Spending – The Hill
- Interactive Map: Assessed Control Of Terrain In Ukraine – Institute For The Study Of War
- Map – Tracking Russia’s Invasion Of Ukraine – Live Universal Awareness Map
Other Headlines
- German Election 2025: Five Key Issues Next Chancellor Will Have To Face – Reuters
- Immigration, Cost Of Living Frustrate Voters As German Elections Loom - VOA
- Tensions Laid Bare As Germans Worry About Immigration Ahead Of Election - BBC
- China's Rival Eyes $10 Billion US Arms Deal - Newsweek
- Brazil To Join Major Oil-Exporting Nations In OPEC+ Group - CNN
- Boris Johnson To Europe: Trump’s Just Trying To Shock You - Politico
- Sidelined By Trump, Macron Tries To Rally Europe On Ukraine. But Divisions Run Deep - ABC
- How Dirty Money From Fentanyl Sales Is Flowing Through China - WSJ
- Saudi Prince Proving Crucial To Trump Efforts To End Ukraine, Gaza Wars - VOA
- Pope Francis Has Double Pneumonia, Complicating His Treatment, Vatican Says - Reuters
- European Commission Urges End To Tax Reform Deadlock In Energy Cost-Cutting Plan - Euronews
- EU Pushes ‘Buy European’ Quotas In Major Plan To Revive Industry – Politico
Policy and Politics
Trump Backs House GOP Reconciliation Bill Over Senate Version
President Trump on Wednesday threw his support behind the House GOP’s strategy to pass a single bill that combines his priorities, even as Senate Republicans moved ahead with their own budget resolution. Trump had largely been non-committal on whether he preferred congressional Republicans passing his agenda in one massive reconciliation bill or splitting it up across two bills. He had repeatedly said he liked the idea of “one big, beautiful bill,” but ultimately argued the results were what mattered. Republicans in the House and Senate have been at odds over strategy in recent weeks. Senate Republicans pushed forward with a two-bill approach, while Republicans in the House backed the single bill strategy.
Republicans, led by Senate Budget Committee Chairman Sen. Lindsey Graham (R-S.C.), have outlined a first reconciliation bill that would consist of roughly $325 billion to bolster border operations and allow Trump’s deportation plans to be executed, and to boost defense spending and greenlight energy plans. Senate Republicans are planning to use a second reconciliation bill to extend Trump’s 2017 tax cuts. The House last week advanced a separate budget resolution that would serve as the umbrella for a single bill that combines defense and border spending with an extension of the Trump tax cuts, along with other priorities.
Trump Administration Rescinds Approval Of New York’s Congestion Pricing Plan
The Trump administration rescinded the Biden-era approval of New York’s plan to charge a $9 toll for drivers who want to enter part of Manhattan. The move is a blow to officials in New York City and New York state, including Gov. Kathy Hochul (D), who touted the toll program as reducing both traffic congestion and air pollution. The Trump administration rescinded the Biden-era approval of New York’s plan to charge a $9 toll for drivers who want to enter part of Manhattan. The move is a blow to officials in New York City and New York state, including Gov. Kathy Hochul (D), who touted the toll program as reducing both traffic congestion and air pollution.
“New York State’s congestion pricing plan is a slap in the face to working class Americans and small business owners,” Transportation Secretary Sean Duffy said in a written statement. “Commuters using the highway system to enter New York City have already financed the construction and improvement of these highways through the payment of gas taxes and other taxes. But now the toll program leaves drivers without any free highway alternative, and instead, takes more money from working people to pay for a transit system and not highways,” he added.
Environmentalists Push New York Power Authority To Go Further In Renewables Plan, Hochul Ends NYPA Rate Hike Request
Late last month, the New York Power Authority approved a plan to enact the Build Public Renewables Plan, legislation that requires the authority to build renewable energy projects to meet the climate goals in the Climate Leadership and Community Protection Act. However, environmentalists argue the plan approved by the authority doesn’t go far enough. The New York Power Authority plan is “one critical driver in achieving the state’s 70% by 2030 and 100% by 2040 clean energy goals,” NYPA said in a statement. NYPA supplies municipal electric systems, businesses and residents in the county with low-cost electricity through its hydropower from the Robert Moses Niagara Power Plant and the St. Lawrence-Franklin D. Roosevelt Power Project.
New York Gov. Kathy Hochul called on the New York Power Authority—also known as NYPA—to end its proposal to raise rates for customers who receive hydropower electricity. The power authority was set to nearly triple its rates over the next four years. The proposed increase was its first in 10 years. Hochul told NYPA to “figure out a better way forward.” The initial proposal included going from its current $12.88 per megawatt hour to $33.05 (MWh) by 2028. The power authority is creating a new plan for rate increases that covers maintenance and operation infrastructure costs for hydroelectric facilities.
Trump’s First 100 Days
- Trump's Approval Rating Slips As Americans Worry About The Economy - Reuters
- Trump Signs Order That Seeks White House Control Over Independent Agencies - WSJ
- Trump Administration Trying To Rehire USDA Bird Flu Officials It Fired - BBC
- Senate Confirms Howard Lutnick As Commerce Secretary - VOA
- Lori Chavez-DeRemer, Donald Trump’s Pro-Union Labor Secretary – The New Yorker
- Trump Administration Considers Layoffs At DOD - Bloomberg
- Biden CMS Chief Warns DOGE Is Moving Too Fast - Politico
- WSJ Exclusive: Inspectors General Fired by Trump Speak Out – WSJ
- Trump Orders DOJ to Fire All Remaining Biden-Appointed US Attorneys - Newsweek
- Senate Advances Nomination Of Trump FBI Pick Kash Patel - VOA
- Judge Bars Firing Of Intelligence Officers Working On DEI Issues – The Hill
- The Trump Tracker: Keep Tabs On The Latest Announcements And Executive Orders - WSJ
- Tracking Trump’s Cabinet Confirmations - NYT
Health and Wellness
CDC Report Suggests Bird Flu Is Spreading Undetected to Humans
A new CDC report provides further evidence bird flu is spreading undetected to humans. The latest Morbidity and Mortality Weekly Report, whose publication was delayed, details three cases of highly pathogenic avian influenza H5N1 in US veterinarians who work with cattle, with two of the cases lacking a clear source of exposure. None of the vets experienced any flu-like symptoms, and human-to-human spread is still undetected, but researchers are concerned this ability may only be a few genetic mutations away.
Instead, these cases were detected through antibody tests of 150 veterinarians working across 46 US states in September, revealing bird flu is occurring beyond known zones of infection. One of the veterinarians who tested positive works with livestock in Georgia and South Carolina; neither state has reported bird flu cases in their dairy herds. The first case of human H5N1 in Nevada was reported last week, bringing the total known human cases in the US up to 68. Nevada has also just detected a new H5N1 strain in cows, D1.1, that may be better suited to replicating within mammal cells.
Industry News
Weekly Mortgage Demand Drops 6%, As Homebuyers Remain ‘On The Fence’
Mortgage rates dipped slightly last week, but so did mortgage demand, as housing affordability continues to sideline potential buyers. Total mortgage application volume fell 6.6% for the week, according to the Mortgage Bankers Association’s seasonally adjusted index. The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($766,550 or less) dropped to 6.93% from 6.95%, with points increasing to 0.66 from 0.64 (including the origination fee) for loans with a 20% down payment.
Applications to refinance a home loan, which had been on the rise, dropped 7% for the week but were 39% higher than the same week one year ago. Percentage changes week to week have been large simply because the overall volume of refinancing is so low. The vast majority of borrowers today have mortgages with rates significantly lower than what is now being offered. Applications for a mortgage to buy a home fell 6% for the week but were 7% higher year over year. Housing affordability continues to weigh on potential buyers, and economic uncertainty, especially regarding the effect of potential tariffs, are only adding to the pressure.
Germany’s Economy Is Driving Off A Cliff. The Car Industry Is Behind The Wheel.
The automotive industry fueled Germany’s rise as Europe’s economic powerhouse. Now, that same sector is in crisis — and is taking the country down with it. Automakers are facing a perfect storm: a shift from the combustion engine, which showcased German engineering, to less complex electric vehicles where Germany doesn’t control crucial battery technology. They are also battling slumping demand for electric vehicles in Europe, high energy and labor costs, a collapse of sales in their key market of China, and the arrival of aggressive Chinese rivals on the continent.
A further blow could be on the way from United States President Donald Trump, who is threatening tariffs that would upend the free-trade system underpinning Germany’s export-driven economic success. Layoffs across the sector, anemic economic growth, and the sense that Germany is no longer on the path of prosperity is deepening gloom in the country. That has aided the rise of the far-right Alternative for Germany (AfD) party, now second in the polls (21 percent), ahead of the Feb. 23 election and has provided oxygen to the left-populist Alliance Sahra Wagenknecht (5 percent), known by its German acronym BSW.
Health Care Spending Nationally Reached $4.9 trillion in 2023 – It Varies Dramatically Across U.S. Counties
In 2023, U.S. health expenditures surged by 7.5%, reaching $4.9 trillion, or an average of $14,570 per person, according to the Centers for Medicare & Medicaid Services. Private health insurance spending saw the sharpest increase (11.5%), while Medicare and Medicaid each grew by approximately 8%. Hospital expenditures jumped 10.4%, and prescription drug spending rose 11.4%. Federal funding accounted for the largest share (32%), followed by households (27%) and private businesses (18%).
“In this cross-sectional study, personal health care spending in the United States varied dramatically among counties in 2019, with a more than fivefold difference between the highest and lowest spending rates per capita,” according to a study published in JAMA Health Forum. State-level differences also emerged. Utah’s low per capita spending was driven by a younger population, while New York’s high spending was largely because of elevated hospital and prescription drug costs caused by higher service prices and intensity. Researchers believe understanding these spending variations trends could help policymakers allocate resources more effectively.
CHROs And CFOs Across The U.S. Find The Rising Cost Of Healthcare A Growing Burden On Companies' Profitability.
A stunning 85 percent of CFOs and CHROs participating in a survey conducted by Chief Executive Group say rising healthcare costs are putting significant pressure on their companies’ bottom lines, adding a non-negligible burden to the mounting expenditures they have spent the past five years trying to reduce. “The ongoing high-single, low-double digit increases create an untenable trend that is nearly impossible to address,” says the CFO of a small life sciences company, echoing many others.
While only 20 percent of the 200-plus executives surveyed cite cost-cutting as a top organizational priority this year, 48 percent acknowledge that they are still under pressure to reduce the financial strain caused by healthcare benefits programs. It’s not surprising. Half of all respondents say healthcare costs are one of the largest SG&A expenses, and 99 percent say it is their responsibility as finance and people chiefs to ensure that the employer’s healthcare spending is well-managed. Three-quarters of CHROs participating in our survey say their workforce is expressing a desire for better coverage—and 80 percent of both CHROs and CFOs polled say balancing rising healthcare costs with the benefits expansion employees seek is a constant battle.
Microsoft Reveals Mojarana 1 Quantum Chip As Quantum Computing Wars Heat Up
Microsoft on Wednesday announced a new kind of quantum computer chip that it says will make quantum computers useful in years, rather than decades in the future. The chip, called Majorana 1, uses what Microsoft says is a new type of material called a topoconductor, which the company claims takes advantage of a new state of matter that is not solid, liquid, or gas, but a topological state. The upshot is that Microsoft says its approach will help lead to chips that can perform complex tasks needed to research topics including material sciences and healthcare.
Quantum computers are specialized machines that can handle calculations that would take classic computers, like the smartphone or laptop you're reading this on, hundreds or even thousands of years to complete. They do this by using what are called qubits. Qubits are similar to the bits used in standard computers, represented as 0s and 1s, that chips translate into the programs we use each day. But thanks to the quirks of quantum mechanics, qubits can exist as both 0 and 1 at the same time. Microsoft's advancement comes a little more than two months after Google (GOOG, GOOGL) announced its own quantum computing chip called Willow.
Regeneron Among Companies Researching New Weight Loss Drugs That Aim To Save Muscle
About a dozen drugmakers are developing new weight-loss treatments aimed at preserving muscle, and industry analysts, clinical trial experts and doctors say they may also need to demonstrate additional health benefits beyond the numbers on a scale to get approved. The drugs are being tested to complement or replace the wildly popular Wegovy from Novo Nordisk and Eli Lilly's Zepbound, which in trials helped patients lose 15% to 20% of their weight, but also caused a decline in muscle that some doctors find concerning. In trials of Wegovy, up to 40% of weight loss was from a decrease in lean or fat-free mass, rather than excess fat.
These experimental medicines are still a few years from possible approval. The dozen new drugs, including those furthest along in development from Eli Lilly, Regeneron, Scholar Rock and Veru, target proteins tied to muscle preservation or growth. Wegovy and Zepbound target the GLP-1 protein to help control appetite. Veru was first with results in January from a 168-person trial, showing its enobosarm helped older patients lose 71% less muscle when taken with Wegovy. Data on Lilly's muscle mass-preserving drug, bimagrumab, is due this year.
This New Airbus Jet Is Bad News for Boeing
Airbus AIR has a new jet that’s winning over some of Boeing’s best customers. It also raises the specter of more trouble ahead for the U.S. plane maker. The European company started delivering the new aircraft—the A321XLR—late last year against a backdrop of manufacturing upheaval and financial strain at its American rival. So far the XLR has racked up more than 500 orders, many from airlines looking to replace older Boeing planes.
The jet’s success is one of the starkest signs yet of the diverging fortunes of the two companies, with Boeing’s troubles leading to gaps in its product lineup that are now being exploited by Airbus. It is also a warning of a bigger threat looming: While Boeing is strapped for cash, Airbus is increasingly investing in an entirely new generation of aircraft that could shape the duopoly for decades to come. American Airlines and United Airlines have chosen Airbus’s XLR to replace their aging Boeing 757 fleets. Other airlines including Australia’s Qantas have also purchased the XLR—the first time that carrier has ordered one of Airbus’s smaller, narrow-body jets.
Embattled EV Maker Nikola Files For Chapter 11 Bankruptcy Protection
Nikola Corp. — an auto startup that was once a favorite of Wall Street analysts and retail investors — filed for bankruptcy protection after failing to secure a buyer or raise additional funds to maintain operations. Nikola said Wednesday that it plans to pursue an auction and sale process of its assets, pending court approval. The company said it has approximately $47 million in cash to fund its bankruptcy activities, implement the sale process, and exit Chapter 11.
The proposed bidding procedures, if approved by the court, would allow interested parties to submit binding offers to acquire Nikola’s assets, purchased free and clear of Nikola’s indebtedness and certain liabilities. The filing marks the finale of the Phoenix-based company’s yearslong fall from grace. At its peak in 2020, Nikola was valued more than Ford Motor at $30 billion, inked a multibillion-dollar deal with General Motors and was considered the pinnacle of auto startups to go public through reverse mergers and special purpose acquisition companies.