Crypto News: Higher inflation is 'inevitable'

Good morning. The evolving tariff campaign creates more inflation concern. A powerful quake hits Southeast Asia. And why DOGE's cost-cutting campaign may tempt Americans to cheat on their taxes. Listen to the day's top stories.

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Donald Trump's tariff campaign is creating more inflation worries. With Americans already stressed about rising car prices, the Fed's Susan Collins weighed in to say it's "inevitable" the new levies will boost inflation. In other signs of trouble ahead, Prime Minister Mark Carney said Canada will have "a fundamentally different relationship with the United States" as a result of the tariff action, though he declined to specify new retaliatory moves. And the evolving trade war is freezing Chinese investment in Mexico.

Powerful Quake Hits Myanmar, Shaking Parts of Thailand and Vietnam

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Elon Musk told Fox he believes DOGE can slash $1 trillion in government spending by the end of May. That would require cutting more than half of the $1.8 trillion the US spent on non-defense discretionary programs in 2024—and doing so in the first 130 days of Trump's second term. Here's a reminder of how DOGE is reshaping the government.

Philippine President Ferdinand Marcos Jr. meets Defense Secretary Pete Hegseth.Photographer: Basilio Sepe/AFP/Getty

The disclosure of Houthi attack plans in a Signal chat gave foreign adversaries priceless insight into US spycraft, according to intelligence experts. Pete Hegseth, facing calls to resign over the Signal furore, is on a trip to Asia to reassure US allies worried about China's expansionism in the region. The defense secretary and other officials were ordered by a federal judge to preserve all Signal app communications from a five-day period in a civil suit over the controversy.

A global selloff in equities extended into a third day and gold topped a fresh record as investors turned risk averse ahead of next week's tariff deadline. Money managers around the world are keeping cash at the ready to pounce on any opportunities from the trade tensions. And value stocks are facing an earnings test after shining in the recent market selloff.

Hong Kong's most famous tycoon Li Ka-shing won't go ahead with the expected signing next week of a deal to sell his Panama Canal ports to a consortium including BlackRock, according to media reports. The proposed transaction has put him in the middle of US-China tiff over the strategic waterway. In corporate signs of risk aversion, cloud-computing provider CoreWeave raised $1.5 billion in a downsized IPO that showed how market volatility is hurting demand. And Lululemon delivered a disappointing outlook, voicing concerns about consumer spending.

The Big Take

A view of Mayan archaeological ruins located in the upper part of Tulum. Photographer: Hector Guerrero/Bloomberg

Paradise lost. In Tulum, Mexico's real estate boom had a dark side—dead developers, unfinished condos and millions in missing cash. Home buyers thought they were getting a piece of beachside heaven, but for some, they ended up losing their life savings.

The Dark Side of a Mexican Real Estate Boom

Deep Dive: Tempted to Cheat?

IRS headquarters in Washington, DC. Photographer: Stefani Reynolds/Bloomberg

There's a costly downside to Trump's assault on the IRS—Americans may feel emboldened to cheat on their taxes, leaving the US Treasury short billions of dollars each year.

The unmistakable signal from Washington that the IRS is on the president's bad side already has some taxpayers asking whether the government will notice, or care, if they get a little creative with their filings this year—or simply decide not to send them in at all.
The new administration moved quickly to scale back the IRS, firing 6,700 of the agency's new hires and promising deeper cuts to come. One of Trump's first pledges after retaking office was to pause the hiring of any new IRS agents.
Trump's plans to extend his 2017 tax cuts and expand those breaks by, for example, exempting workers' tips, are expected to result in a loss of government revenue of $4.6 trillion over 10 years. That's part of the motivation for the tariff campaign, with the administration hoping it can make up some of the that from income taxes.

Opinion

It was a sudden spike in used car prices in 2021 that first set off the inflation scare, John Authers writes. Given the political disaster that eventually inflicted on the Democrats, the new administration ought to take great care not to stage a repeat. But tariffs on imported new cars might do just that.

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