The daily business briefing: July 6, 2018

A 100 yuan note and a newspaper with Trump on it

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1. U.S., China hit each other with tariffs in trade war
2. June job gains of 213,000 exceed expectations
3. Fed minutes: Economy is strong, but recession threat looms
4. EPA chief Scott Pruitt resigns after ethics scandals
5. Boeing reaches deal on $4.75 billion joint venture with Embraer

published 6 July 2018

1. U.S., China hit each other with tariffs in trade war

The Trump administration's new 25 percent tariffs on $34 billion worth of Chinese goods took effect on Friday, marking the start of a trade war between the world's two biggest economies. China immediately retaliated with tariffs on a group of selected imported U.S. goods, including pork, soybeans, and automobiles, with roughly the same value. The levies transformed President Trump's threatened trade war from words to actions. Trump on Thursday said he was prepared to impose tariffs on up to $450 billion worth of Chinese goods if Beijing doesn't make its trade policies more fair. "At the moment, I don't see how this ends," said Edward Alden, a senior fellow at the Council on Foreign Relations. Asian stocks closed higher after the tariffs kicked in, but U.S. stock futures edged down.

The Labor Department reported Friday that U.S. employers added 213,000 jobs in June, exceeding economists' expectations in the latest sign of accelerating economic growth. Economists surveyed by MarketWatch had predicted a gain of 200,000 non-farm jobs, on average. The strong report represented an expected drop from a surge in May. The government on Friday revised May's gains up to 244,000 from the initially reported 223,000. Just 120,000 new jobs are enough to keep up with growth in the working-age population. The unemployment rate rose from 3.8 percent, the lowest since 2000, to 4 percent, as more people entered the work force and students grabbed summer jobs. Average hourly wages rose by 5 cents, or 0.2 percent, to $26.98.

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Federal Reserve policy makers expressed optimism about the economy at their June meeting, but discussed the possibility that there could be a recession around the corner, according to minutes of the two-day gathering released on Thursday. The central bank raised interest rates at the meeting for the second time this year. Some Fed leaders expressed concerns that global trade tensions could hurt the economy despite positive data. "Most [Fed policy makers] noted that uncertainty and risks associated with trade policy had intensified and were concerned that such uncertainty and risks eventually could have negative effects," according to the minutes.

EPA Administrator Scott Pruitt, facing at least 11 federal investigations, has resigned, President Trump announced Thursday. "Within the agency, Scott has done an outstanding job, and I will always be thankful to him for this," Trump tweeted. Pruitt was believed to have kept in Trump's good graces despite mounting ethics scandals thanks to his record pursuing Trump's promise to unravel EPA regulations, and his reputation as an outspoken Trump booster. Pruitt was criticized for allegedly using his staff to find his wife a job, spending thousands to fly first class and buy a spy-proof phone booth, and paying a lobbyist's wife a below-market rent of $50 a night to stay in her condo. Pruitt's deputy, Andrew Wheeler, will start as acting administrator of the EPA on Monday.

Boeing Co. has struck a deal to take control over Embraer's commercial aircraft and services businesses in a joint venture valued at $4.75 billion. Boeing will pay $3.8 billion for its 80 percent stake in the business. Adding the Brazilian aircraft manufacturer's E-Jet family to its portfolio strengthens Boeing in its intensifying battle against European rival Airbus over the market for smaller passenger jets. The deal also bolsters the Boeing-Airbus duopoly against rising threats from companies in Russia, Japan, and China. Boeing and Embraer expect to finalize terms for the joint venture over the next few months.

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Harold Maass is a contributing editor at The Week. He has been writing for The Week since the 2001 debut of the U.S. print edition and served as editor of TheWeek.com when it launched in 2008. Harold started his career as a newspaper reporter in South Florida and Haiti. He has previously worked for a variety of news outlets, including The Miami Herald, ABC News and Fox News, and for several years wrote a daily roundup of financial news for The Week and Yahoo Finance.