Trump plans 250% pharma tariffs, rules out Bessent for Fed

Good morning. Here's what happened overnight and what you need to know today.

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1.

Trump moves: Donald Trump said the US will announce tariffs on semiconductor and pharmaceutical imports “within the next week or so.” In a CNBC interview, he said pharmaceutical tariffs would start “small” but rise to 150%, then 250% within 18 months “because we want pharmaceuticals made in our country.” On semiconductors, he added “We’re going to be announcing on semiconductors and chips, which is a separate category.” Trump said tariffs on Indian goods could rise “very substantially” within 24 hours, up from a previously imposed 25%, and threatened 35% on the EU if they don’t make good on promised investments. Separately, Trump said Treasury Secretary Scott Bessent is no longer being considered for Federal Reserve chair. “I asked him just last night, ‘Is this something you want?’ ‘No, I want to stay where I am.’ He actually said ‘I want to work with you,’” Trump said. Instead, “the two Kevins” — Kevin Hassett and Kevin Warsh — are among four candidates. Trump also said he would “shortly” nominate a replacement for Fed Governor Adriana Kugler, who resigned early, potentially choosing his next chair from that pick. (Capital Brief)(CNBC)(Bloomberg)(WSJ)(CNN)(Reuters)

2.

Conservative credit: The Wall Street Journal is reporting Trump is preparing an executive order to crack down on banks that deny services to customers over political or religious beliefs, escalating conservative claims of being unfairly debanked, which he said he also experienced when JPMorgan and Bank of America rejected him. A draft of the order, seen by the Journal, directs regulators to investigate potential violations of credit, antitrust and consumer protection laws, with penalties including fines and legal referrals. It also instructs agencies to scrap policies that may have contributed to customer removals and orders the Small Business Administration to review banks involved in loan guarantees. The draft order also criticises the role that some banks played in an investigation into the 6 January riots at the US Capitol, according to the paper. The move follows pressure from crypto firms, Trump allies and religious groups. (WSJ)(FT)(CNBC)

3.

Bad service: The US services sector effectively stagnated in July, with the ISM index slipping to 50.1, below all estimates and just above the threshold for growth. Economists polled by Reuters and the Wall Street Journal had forecast a rise to 51.5 and 51.2, respectively. Employment contracted for the fourth time in five months, falling to 46.4, as firms slowed hiring and left roles unfilled. Prices paid jumped to 69.9, the highest since October 2022, driven by rising tariffs. New orders edged down to 50.3, while export orders contracted. Nine industries expanded (two fewer than in June), including transportation, wholesale trade and finance. Backlogs shrank for a fifth straight month, and inventories grew at a slower pace. Markets fell after the data release and after comments by President Trump, who flagged new sector tariffs and criticised JPMorgan and Bank of America for rejecting him as a customer in the past. (Capital Brief)(ISM)(Bloomberg)(WSJ)

4.

Without invite: Swiss President Karin Keller-Sutter travelled to Washington in a hastily arranged, last-ditch effort to head off a 39% US tariff on Swiss exports imposed by Donald Trump. The trip, announced after an emergency government meeting, is to “facilitate meetings with the US authorities at short notice and hold talks,” according to the Swiss government. Keller-Sutter, joined by Economy Minister Guy Parmelin, flew without a formal White House invitation. In the same CNBC interview, Trump referred to what he said was a USD41 billion trade deficit with the country and referred to a recent call with Keller-Sutter. “The woman was nice, but she didn’t want to listen,” Trump said. The Swiss government said it is ready to present “a more attractive offer,” with possible concessions in agriculture, gold, energy, planes and pharmaceuticals. Economists and business leaders have warned the 39% tariff could be a major blow to Switzerland’s export-oriented economy. (WSJ)(Bloomberg)(AP)

5.

Runaway tactics: Republican Texas Senator John Cornyn asked the FBI to help locate and arrest more than 50 Democratic lawmakers who may have fled the state to block a Republican redistricting plan, as Attorney General Ken Paxton warned their seats could be declared vacant if they don’t return by Friday. Texas House Speaker Dustin Burrows said he has asked state troopers to locate and return the absent members, while Governor Greg Abbott ordered their arrest. The warrants, however, are likely unenforceable outside Texas. Meanwhile, the House Oversight Committee subpoenaed the Justice Department for Jeffrey Epstein files and issued deposition subpoenas to Bill and Hillary Clinton and eight former senior law enforcement officials. The subpoenas demand the full, unredacted Epstein files by 19 August and include requests for testimony from former FBI directors and attorneys general. Meanwhile, Rupert Murdoch agreed to provide regular health updates to Trump in order to delay his deposition in his USD10 billion defamation case, Axios reported citing court documents. (Axios)(The Guardian)(AP)

6.

Online safety: Australia’s online safety regulator accused tech giants including Apple, Google and Meta of failing to deploy detection tools across enough of their services to combat child sexual exploitation and abuse (CSEA). The eSafety Commissioner’s latest transparency report found minimal progress since 2022, with key safety gaps still unaddressed. Detection tools are still not being used on services like FaceTime, Google Meet, Messenger or Xbox Party Chats. Apple, Google and WhatsApp also failed to block links to known CSEA content. However, Discord, Microsoft and WhatsApp have expanded use of hash-matching technology, with Discord adding language analysis and Snap and Microsoft introducing new tools. eSafety also criticised Apple and YouTube for not answering questions about user reports or staffing levels. The companies are required to report biannually on how they’re meeting the Basic Online Safety Expectations. (Capital Brief)

7.

Economic reform: The Productivity Commission has warned the government that cracking down too heavily on artificial intelligence could stifle its uptake and cost the economy up to $116 billion in potential activity gains over the next decade. In an interim report released ahead of Treasurer Jim Chalmers’ Economic Reform Roundtable, the commission said Australian governments should avoid economy-wide AI-specific regulation and instead refine existing rules to address risks. It also suggested not proceeding with a “right to be forgotten” in privacy law, citing compliance burdens and unclear benefits, and called for reforms to data access, digital financial reporting and copyright rules. The report, which estimates AI could lift labour productivity by 4.3% and multifactor productivity above 2.3%, has added to tensions ahead of the summit, with BHP, Australia’s biggest corporate taxpayer, rejecting the commission’s proposed 5% cash-flow tax on large firms. (Capital Brief)

8.

Gaza stakes: Norway ordered a review of its USD2 trillion ($3.1 trillion) sovereign wealth fund’s investments in Israeli companies after complaints about its ties to companies linked to the war in Gaza. Finance Minister Jens Stoltenberg instructed the central bank and the fund’s ethics council to conduct the review, citing the “worsened situation” in Gaza and the West Bank. The move follows mounting criticism and a report by Aftenposten that the fund had increased its stake in Bet Shemesh Engines, an Israeli jet engine company that services Israel’s armed forces. Prime Minister Jonas Gahr Støre said he was “very concerned” and wanted “good answers”. Stoltenberg said the goal of the review was to “make sure that the fund is not invested in companies that are contributing to the illegal occupation of the West Bank and the war in Gaza that violates international law.” The fund holds 22 billion Norwegian kroner in 65 Israeli companies. (Capital Brief)(FT)(Reuters)