“U.S. Treasury Secretary Scott Bessent arrived here to host global economic officials in the Blue Ridge Mountains, fresh off the breakdown of trade talks with Canada, currency and bond-market interventions, and President Trump’s renewed economic threats against Iran,” the Wall Street Journal reports.
“Two days later, the G-20 finance ministers’ gathering comes to a close amid a global bond-market selloff, spats over tariffs, public insults and fighting over a group photo.”
“The G20 finance ministers failed to agree on a joint statement after China objected to several provisions, including language addressing huge trade surpluses and countries’ reliance on exports for growth,” Axios reports.
“China was the lone holdout, with the other 19 members backing the language — a sign of widening concern over the pressure that Chinese exports are putting on industries around the world.”
“Iran’s economy was already under strain before the U.S. and Israel launched their war on the Islamic Republic, grappling with negative growth, soaring inflation and a currency crisis. Those problems were compounded by strikes on the nation’s civilian and industrial infrastructure and the U.S. naval blockade of Iranian ports,” Bloomberg reports.
“Even so, Iran has endured six months of conflict without its economy collapsing. As the war drags on, the Trump administration is seeking to crank up the economic pressure to force Iran to capitulate and release its chokehold on the Strait of Hormuz. It has threatened economic punishment against any country that continues to do business with Iran.”
“Whether this strategy will succeed is an open question. Iran has a high tolerance for pain thanks to decades of experience withstanding multiple layers of international sanctions, and countries with ties to Tehran have so far shrugged off U.S. warnings.”
“President Donald Trump said Monday that the U.S. economy could grow at rates as high as 20%, while arguing that even such rapid growth should not prompt the Federal Reserve to raise interest rates,” CNBC reports.
Said Trump: “We could have a GDP of 14, 15, 16 and 20. Success in growth does not cause inflation.”
“Central bankers’ great fear is that we’re entering a new era of ‘fiscal dominance,’ in which the money supply is being managed not to achieve low and stable inflation, but to help elected politicians avoid hard choices around taxes and spending,” Axios reports.
“It comes as inflation has already been elevated in much of the world for years and as longer-term interest rates are climbing.”
“At the same time, elected governments are under intense political pressure not to enact the tax increases or public benefit cuts that would improve their debt outlooks.”
“Fuel price increases in the first six months of the Iran conflict are costing U.S. drivers far more than the same stretch after Russia’s invasion of Ukraine pushed up costs,” Axios reports.
“Trump administration officials have emphasized — correctly — that gasoline hit an all-time high under Biden of over $5 per gallon, well above May’s $4.56 high during the Iran war.”
“But the price elevation since attacks on Iran began Feb. 28 has been more persistent.”
“Treasury Secretary Scott Bessent took a snarky swipe Monday at Canada’s military preparedness after the trade war between the two neighbors deepened in recent days,” the New York Post reports.
Said Bessent: “What are they going to do — take their two submarines from the Edmonton Mall and sic them on us?”
“Top economic policymakers from many of the world’s wealthiest nations begin two days of meetings on Monday in Asheville, N.C. at an incredibly challenging moment. Global inflation is high, growth is choked by war in the Middle East, and rising borrowing costs are straining government budgets,” the New York Times reports.
“But on the eve of the summit of finance ministers and central bankers from the Group of 20 nations, those questions were clouded by a series of controversies around participation, including whether the Trump administration would let Russia attend while refusing to allow South Africa’s delegation to join.”
John Cassidy: “In principle, it’s easier to estimate the economic costs of the war; in practice, the task is far from straightforward. Even if the calculation is restricted to the United States, you first have to count the military outlays on things such as munitions, additional troop deployments, and repairing the extensive damage that Iranian counterstrikes have done to American bases in the Middle East.”
“Then there are the financial costs that higher energy prices have imposed on American households and businesses. Plus, there are more indirect costs, such as the penalties that Americans have paid in terms of higher inflation and rising interest rates. Only by putting all these things together is it possible to estimate the total cost.”
“Profits are booming at America’s biggest companies—and their leaders say that likely won’t change soon,” the Wall Street Journal reports.
“Chalk the good times up to a confluence of fortunate events: red-hot artificial-intelligence spending, federal spending and the windfall companies are getting in the form of refunds of some of their past tariff payments. Plus, a booming stock market and high home values are helping many shoppers keep spending, even as plenty of others struggle to absorb rising prices.”
“America’s grocery squeeze has thus far been most painfully felt in a few expensive categories, like beef, coffee and chocolate,” Axios reports.
“Now, the forces pushing up food prices are starting to pile up: expensive grain, soaring fertilizer and fuel, plus unpredictable weather and raging wars.”
”The next grocery price shock could hit much harder — and much wider.”
“President Donald Trump escalated his trade war with Canada on Sunday by declaring he wants the USA to reject all products coming from North of the border — unless those companies are willing to relocate from Canada to the States,” Mediaite reports.
Said Trump: “I don’t want Canadian cars, I don’t want Canadian parts, I don’t want Canadian anything.”
He added: “They’ve been ripping us off for decades, and it’s going to stop. This should have happened long ago with other Presidents, just as stopping Iran should have happened long ago. They want to be treated like a State, but they aren’t one. I deal with the Leadership of many Countries, but I find Canada to be the worst.”
“Ontario Premier Doug Ford expressed firm opposition to President Donald Trump’s tariffs on Canada this weekend, saying that the result of a trade war could be harmful to both countries,” ABC News reports.
Said Ford: “Everyone’s feeling bullied by President Trump, and this is the worst thing you could do for the American economy. I just don’t see the purpose. It’s absolutely backwards.”
“Treasury Secretary Scott Bessent faces a major test of his economic diplomacy skills this week as he presses finance leaders from the G20 major economies to shrink global trade imbalances, boost growth and sever business ties to Iran, while trying to calm worries about rising U.S. debt and bond yields,” Reuters reports.
“After shunning the Group of 20 process last year in South Africa, Bessent is seeking to revamp it under U.S. leadership to push the Trump administration’s worldview in the Blue Ridge Mountains city of Asheville, North Carolina.”
“Kevin Warsh cleared a crucial hurdle at his first appearance as the Federal Reserve’s chairman at its annual conference in Jackson, Wyo,” the New York Times reports.
“He offered his most comprehensive views to date about the state of the economy. He cleared up confusion about the central bank’s commitment to getting inflation down to its 2 percent target after sending mixed messages the month prior. And he acknowledged that the Fed might have ‘work to do’ to make good on that pledge, suggesting a readiness to raise interest rates if price pressures do not ease.”
“But the path ahead for Mr. Warsh is a precarious one. Financial markets now see a quarter-point increase at the central bank’s next meeting on Sept. 15-16 as more likely than not, leaving Mr. Warsh with a tough decision whether to follow through with action.”
Financial Times: Warsh puts Fed on collision course with Trump ahead of midterms.
New York Magazine: “In terms of their relations with the U.S. Canada, and Iran have very little in common. One is America’s closest neighbor and second-largest trade partner, sharing the world’s longest international border, extensive economic and cultural ties, and a long history of friendly cooperation. The other has been a U.S. adversary for nearly five decades, including a new war that has now lasted more than six months.”
”What Canada and Iran do have in common is an enemy: they’re both targets of new economic offensives by President Trump — and they’re both equally unlikely to capitulate to them.”
“Consumer sentiment among Republicans and independents is ‘starting to fade’ ahead of the midterm elections,” Semafor reports.
“The Conference Board said last week that its overall consumer confidence index had dropped to its lowest level since January. Economists had predicted it would remain higher.”
“With markets wobbling and the world watching, Federal Reserve chairman Kevin Warsh went back to basics yesterday morning: He affirmed that the Fed is determined to get inflation down and may have to raise interest rates to accomplish it,” Axios reports.
“If the Warsh Fed follows through with rate hikes, it would increase borrowing costs for Americans and potentially put him in the crosshairs of the rate-cut loving president who appointed him.”
Taegan Goddard is the founder of Political Wire, one of the earliest and most influential political web sites. He also runs Political Job Hunt, Electoral Vote Map and the Political Dictionary.
Goddard spent more than a decade as managing director and chief operating officer of a prominent investment firm in New York City. Previously, he was a policy adviser to a U.S. Senator and Governor.
Goddard is also co-author of You Won - Now What? (Scribner, 1998), a political management book hailed by prominent journalists and politicians from both parties. In addition, Goddard's essays on politics and public policy have appeared in dozens of newspapers across the country.
Goddard earned degrees from Vassar College and Harvard University. He lives in New York with his wife and three sons.
Goddard is the owner of Goddard Media LLC.
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