Credit applications spike to a five-year high as Trump readies more tariffs
Households applying for credit hit highest level in nearly five years.
The New York Federal Reserve on Monday flagged what may be the most telling household signal of the summer.
Its June Survey of Consumer Expectations found the credit application rate — the share of households that applied for any credit over the previous 12 months — climbed to 47.8 percent, the highest reading in nearly five years, Reuters reported. Application rates rose for auto loans, credit-card limit increases and mortgage refinancing. Rejection rates also ticked higher.
The combination is a classic late-cycle warning sign. Households leaning harder on credit to smooth the Iran-driven fuel and food shocks are meeting tighter lender standards even as the labor market remains strong. Consumers who reported they would probably not be able to come up with $2,000 unexpectedly in the next month stayed near the highest levels of the past year.
Bank of America Chief Executive Brian Moynihan told CBS "Face the Nation" over the weekend that mortgage rates "aren't going to move much in the near term" and that consumers will need to keep adjusting to "the newer, higher rates that have been in place for three years now," CBS reported.
Barclays and Samsung together announced a new U.S. credit card Monday, Reuters reported, a signal that lenders still see growth in unsecured credit even as delinquency rates climb.
Trump readies another tariff wave
The Trump administration is preparing a fresh round of tariffs on dozens of countries, Reuters reported citing the Financial Times. The 25 percent tariff on most Brazilian imports announced last week takes effect Wednesday, July 22, The Associated Press reported in its ongoing tariff coverage — set to reprice sugar, ethanol, beef and coffee for U.S. consumers. Sugar and ethanol producers in Brazil have called the new duties "a bitter pill."
Canada took a fresh hit late Monday when the Trump administration imposed an additional 50 percent tariff on certain Canadian goods, The Wall Street Journal reported. The move layers on top of ongoing negotiations over USMCA renewal — the Journal reported over the weekend that the administration will not renew the trade deal.
For consumers, the practical impact is likely to show up first in appliance and auto prices dependent on North American supply chains, then in produce and dairy as the fall harvest season begins.
The administration's simultaneous push to preserve tariff revenue after February's Supreme Court ruling struck down the biggest of Trump's earlier tariffs suggests policymakers see the current wave as filling a fiscal hole as much as a trade-policy one.
