Kiplinger Economic Outlooks are written by the staff of our weekly Kiplinger Letter and are unavailable elsewhere. Click here for a free issue of The Kiplinger Letter or subscribe for the latest trends and forecasts from our highly experienced Kiplinger Letter team.
Measures of business uncertainty have begun to ease recently, with tariff deals being announced with Japan and the European Union. The National Federation of Independent Business (NFIB) Uncertainty Index declined in June and will likely come down further in July. When uncertainty declines, businesses tend to be more willing to invest and expand. Perhaps related to the decline in uncertainty is that bank lending for commercial and industrial purposes has bumped up in June and July after staying flat for two years. However, businesses are still showing their caution by limiting their hiring plans.
Labor costs continue to ease slowly at the mid-year mark. Annual wage growth has dipped from 3.9% at the beginning of the year to 3.7% now, and should hit 3.5% by the end of 2025. However, production worker/blue collar wage growth should stay a bit higher, at 3.7%, as slowing immigration reduces labor supply for these jobs. Of course, the construction, agriculture, retail, leisure and hospitality industries will be most affected by possible labor shortages because of their reliance on immigrants.
From just $107.88 $24.99 for Kiplinger Personal Finance
Be a smarter, better informed investor.
Sign up for Kiplinger’s Free Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
Tariffs will add about 15% to the cost of most imports, on average. Businesses will face the decision of whether to pass that cost along to end-users or customers. Some will accept reduced profit margins in order to maintain current customer relationships. As more trade deals are made and the future landscape turns more predictable, businesses can project pricing decisions better. But the prices of raw materials like steel, aluminum, copper and graphite could jump, given special tariff rates of 50% or more. Commerce Department investigations are continuing for semiconductors, pharmaceuticals and lumber. A lumber import tariff of 35% is expected when that investigation concludes in the next month or two.
Other tariffs that have been implemented include an additional 20% on imports from China, bringing the rate to 30%; 25% on imported motor vehicles; 25% on imports from Canada and Mexico that were not covered under the previous USMCA agreement (which is up for renegotiation in July 2026); and 10% on energy imports from Canada. Recent trade agreements include 15% tariffs on Japan and the European Union, and 10% on the United Kingdom. Important for foreign automakers is that these trade deals mean a reduction from the original tariff of 25% imposed on auto imports back in April.
The cost of shipping by truck will follow the seasonal pattern of the past two years. Rates have fluctuated in a narrow band for a while, and won’t pick up appreciably until demand for manufactured goods and home construction improves. However, UPS and FedEx rates have spiked this year as earlier surcharges appear to be permanent. As a result, shippers are looking to slower, cheaper services like FedEx Ground Economy, UPS Ground Saver and, of course, the U.S. Postal Service.
Related Stories
-
I'm a Government Employee and Need to Get By Until the Shutdown Ends. What Can I Do?The second-longest shutdown in history is leaving many federal workers with bills due and no paycheck to cover them. Here's what you can do to get by.
-
Grant Cardone Tells Us the Biggest Retirement Mistake You Can MakeThe entrepreneur, real estate investor and motivational speaker tells us why people should never stop working.
-
I'm a CPA: Control These Three Levers to Keep Your Retirement on TrackThink of investing in terms of time, savings and risk. By carefully monitoring all three, you'll keep your retirement plans heading in the right direction.
-
Stocks Hit Fresh Highs Ahead of the Fed As Earnings Pump Optimism: Stock Market TodaySHW and UNH were two of the best Dow Jones stocks Tuesday, thanks to solid earnings reports, and MSFT closed with a $4 trillion market cap.
-
Targa Resources, Take-Two Interactive, Boston Scientific: Why Experts Rate These Stocks at Strong BuyWall Street is highly bullish on these three high-quality stocks.
-
Debunking Three Myths About Defined Outcome ETFs (aka Buffered ETFs)Defined outcome ETFs offer a middle ground between traditional equity and fixed-income investments, helping provide downside protection and upside participation.
-
This Is Why Judge Judy Says Details Are Important in Contracts: This Contract Had HolesA couple's disastrous experience with reclaimed wood flooring led to safety hazards and a lesson in the critical importance of detailed contracts.
-
US-China Trade Hopes Send Stocks to New Highs: Stock Market TodayApple and Microsoft are on track to join Nvidia in the $4 trillion market cap club.
-
A Lesson From the School of Rock (and a Financial Adviser) as the Markets Go Around and AroundIt's hard to hold your nerve during a downturn, but next time the markets take a tumble, remember this quick rock 'n' roll tutorial and aim to stay invested.
-
I'm a Financial Pro: This Is How You Can Guide Your Heirs Through the Great Wealth TransferFocus on creating a clear estate plan, communicating your wishes early to avoid family conflict, leaving an ethical will with your values and wisdom and preparing them practically and emotionally.
