US President Donald Trump signaled a more assertive trade stance during his August 5 CNBC interview, proposing steep tariffs targeting China, India, and the European Union. The remarks have sparked fresh debate among economists and business leaders about potential impacts on inflation, global trade, and monetary policy.

Trade policy in focus

Trump confirmed new "reciprocal" tariffs will take effect August 7, with additional duties on Indian goods imposed within 24 hours. He revealed plans to announce semiconductor tariffs "within the next week or so," while pharmaceutical imports will face gradually increasing tariffs potentially reaching 250 percent over 18 months.

Concerns are growing that these measures could disrupt supply chains and increase costs.

"I've had retailers telling me their prices will have to change this fall as contracts renew," US Senator Rand Paul told The Hill. "When input prices rise, consumer goods follow. The proof will come in the next few months."

Trump also mentioned the possibility of meeting with China if progress is made toward a new trade deal.

"We're getting very close to a deal. We're getting along with China very well," Trump said.

Labor market shows signs of cooling

The latest jobs report, released just days before Trump's interview, showed the US economy added 187,000 new jobs in July, slightly below expectations. Wage growth slowed to 3.9 percent year-on-year, and the unemployment rate remained at 4.2 percent. 

Trump raised doubts about the credibility of the data, suggesting it may be politically influenced. However, labor market researchers say the numbers reflect a gradual normalization of the post-pandemic economy.

 "We're finally in the eye of the hurricane," said Daniel Zhao, chief economist at career site Glassdoor, in a note cited by CNBC. 

"After months of warning signs, the July jobs report confirms that the slowdown isn't just approaching — it's here," Zhao added.

Federal Reserve leadership in the spotlight

Trump also touched on future leadership at the US Federal Reserve, ruling out current Treasury Secretary Scott Bessent as a potential Fed chair. He indicated interest in former Governor Kevin Warsh and Kevin Hassett, the National Economic Council director. 

Jerome Powell, the current Fed Chair whose term expires in May 2026, has often faced criticism from Trump. Trump commonly refers to Powell as "too late," "a numbskull" and "a complete moron."

Markets react cautiously

Markets have responded with mild volatility. The Nasdaq fell 0.7 percent, while the Dow and S&P 500 posted smaller losses. A weaker-than-expected US services sector reading also weighed on sentiment. The ISM Services PMI came in at 50.1, while the prices-paid index jumped to 69.8 — its highest level since early 2023.

(Cover via VCG)