The sigh of relief from benign inflation data was short lived. And for good reason.

It looks like tariffs aren't having a meaningful impact on end prices, for the moment, May data showed yesterday. The cost of clothes and cars, expected to bear the brunt of the levies on imports, actually fell from a month earlier. On top of that, President Donald Trump said trade talks with China were on track -- more good news.

To be sure, the inflation figures are unlikely to change the Federal Reserve's thinking that it's still too soon to lower interest rates -- despite more pressure from Trump to start cutting next week. Traders have only slightly increased the odds of a September reduction.

But of course, the tariff drama is far from over. The report that China is only extending rare earths contracts for six months at a time illustrates that negotiations may be protracted.

In the longer term, it's important to understand what the trade wars are doing. They're the latest sign that globalization -- a dominant force that kept inflation low for three decades -- is going into reverse.

Deglobalization is bigger than just tariffs. Security concerns about sharing Nvidia's most advanced artificial intelligence chips are an important consideration.

Ultimately, if the Fed is going to stop these price gains from getting out of hand, it will have to keep rates higher and economic growth slower. That's a tough ask when the fundamental inflationary forces are powerful and not rooted in economic strength -- especially when policymakers have a twin responsibility to maximize employment.

Globalization -- in particular low or no tariffs -- makes things cheaper, while deglobalization makes them more expensive.

May was a good month for inflation, but -- take a sharp breath -- it could be the last for a while.

-- Brian Swint

***

Trump Pivots to Trade Ahead of G-7 Summit in Canada

After announcing the outlines of a tentative trade deal with China, U.S. officials were racing to seal up agreements with 18 other major trading partners. Treasury Secretary Scott Bessent said some countries may get extensions from the July 9 deadline the Trump administration has set for negotiating deals.

   -- Bessent told a House committee on Wednesday that the administration was 
      working on deals for those 18 countries, and it will roll the date 
      forward to continue good faith negotiations, adding the final word is up 
      to President Donald Trump. 
 
   -- July 9 is when a 90-day pause on Trump's so-called reciprocal tariffs 
      ends. Apart from the framework for a China deal, hammered out in London 
      Monday and Tuesday, the U.S. has announced just one other deal, with the 
      United Kingdom. A Canadian agreement could be close, according to 
      Canadian media reports. 
 
   -- The U.S. will keep 55% tariffs on imported Chinese goods, and China will 
      keep a 10% levy on imported U.S. goods. The framework provides for China 
      to ship magnets and rare earth minerals to the U.S. and for Chinese 
      students to use U.S. colleges and universities. 
 
   -- Henrietta Treyz, director of economic policy research at Veda Partners, 
      said the developments seem more like "treading water, not gaining 
      ground." She noted that hefty tariffs remain on Chinese goods, including 
      levies on steel, aluminum, vehicles, and auto parts, with more expected. 

What's Next: Trade talks could continue at the Group of Seven meeting in Canada on June 15-17, where Trump will join leaders from Canada, France, Germany, Italy, Japan, and the United Kingdom. White House press secretary Karoline Leavitt said there could be "quite a few bilateral meetings" during the summit.

-- Anita Hamilton, Reshma Kapadia, and Janet H. Cho

***

President Raises Pressure on Fed After Mild Inflation Numbers

A softer-than-expected uptick in the May consumer price index spurred President Trump to renew calls for the Federal Reserve to cut interest rates -- he suggests by a full point. But economists and businesses believe the effects of higher tariffs are on their way.

   -- Trump said lower rates would lower the amount the government pays on the 
      national debt, which he called an important economic factor. Vice 
      President JD Vance piled on with his own pressure on the Fed to cut, but 
      the futures market sees a nearly 0% probability of that next week. 
 
   -- Excluding volatile food and energy prices, core inflation in May rose 
      2.8% from a year ago and 0.1% from April, both lower than expected. 
      Grocery prices were largely to blame for the gains, surging 0.3% in May 
      after dropping 0.4% in April. Housing prices rose 3.9% from last year. 
 
   -- Prices for household furnishings, personal care items, major appliances, 
      and toys all increased. Companies are using existing inventories or 
      slowly adjusting prices because of uncertain demand, wrote Alexandra 
      Wilson-Elizondo, global co-CIO of multiasset solutions at Goldman Sachs 
      Asset Management. 
 
   -- Apparel costs, which are expected to bear the brunt of higher tariffs, 
      fell 0.4% in May from April. Prices for cars declined, too, despite 
      tariffs on foreign-made vehicles. But it might not last, says Inflation 
      Insights' Omair Sharif, who points out that new car prices have started 
      to rise. 

What's Next: Fed officials have said they will wait to adjust rate policy until they see how higher tariffs affect inflation and the wider U.S. economy. Despite that, ING's chief international economist James Knightley still sees "an excellent chance" of inflation getting down to 2% in late 2026.

-- Megan Leonhardt and Janet H. Cho

***

Administration Wants More Nuclear Capacity. Will Another 'Warp Speed' Happen?

One big obstacle standing in the way of America's nuclear renaissance is cold, hard cash. Although President Trump has signed a half-dozen executive orders aimed at boosting nuclear energy in the U.S., the federal government hasn't provided the money or guarantees needed.

   -- Three Columbia University researchers called on the Trump administration 
      to undertake an "Nuclear Operation Warp Speed," a nod to the 
      public-private partnership Trump employed to speed the development of 
      Covid-19 vaccines. The target could be building 20 gigawatts worth of new 
      nuclear capacity by 2035. 
 
   -- A key component of the Columbia proposal includes putting much more 
      federal money behind the project, similar to how NASA funded companies 
      like SpaceX. But the House-passed Republican tax-and-spending bill could 
      gut the main funding mechanism for nuclear reactors, the Energy 
      Department's Loan Programs Office. 
 
   -- Energy Secretary Chris Wright is negotiating to get Congress to restore 
      money for nuclear energy. But the industry has a history of cost overruns, 
      including two nuclear reactors that recently came in about $20 billion 
      over budget, leading to billions of dollars in rate hikes for electricity 
      customers. 
 
   -- California nuclear power start-up Oklo has been conditionally selected to 
      provide power to Eielson Air Force Base in Alaska after a nearly two-year 
      delay. Oklo will design, construct, own, and operate the power plant. The 
      company also announced a $400 million secondary stock sale. 

What's Next: Separately, the Environmental Protection Agency proposed rolling back mercury air-pollution standards and carbon dioxide rules on power plants to align with Trump's goals to expand coal mining. EPA Administrator Lee Zeldin said the move would save $1 billion a year, but changes will likely face legal challenges.

-- Avi Salzman, Mackenzie Tatananni, and Janet H. Cho

***

Fintech Chime Joins IPO Surge Above Targeted Range

The fintech firm Chime will test investors' appetite for newly public shares, after launching its initial public offering above the targeted range Wednesday night for a market valuation of $9.8 billion. The high-profile stock, riding the coattails of last week's Circle IPO, will start trading today at the Nasdaq.

   -- Chime priced its stock sale of 32 million shares on Wednesday night at 
      $27 a share. It is selling just under 26 million shares in the offering 
      while other existing shareholders are selling a little more than six 
      million. The deal raised a total of $864 million in proceeds. 
 
   -- Chime generates a lot of revenue from interchange fees paid by card 
      networks like Visa when people use Chime-branded debit or credit cards. 
      Sales rose more than 30% in 2024 and were up another 32% in this year's 
      first quarter. 
 
   -- It followed other closely watched IPOs in recent days. Voyager 
      Technologies, a defense and space tech company that counts Palantir, NASA, 
      and Lockheed Martin as customers, jumped 82% in its trading debut on 
      Wednesday. Its IPO raised $382 million for a $3.8 billion valuation. 

What's Next: The back-to-back IPOs signal a bit of a rebound in the market after a choppy spring, when some deals got postponed because of uncertainty over the effects of trade and other policies. Two more IPOs are expected next week before a summer lull: Caris Life Sciences and Slide Insurance Holdings.

-- Paul R. La Monica and Liz Moyer

***

Nvidia CEO Changes Tune on Quantum Computing

After initially dismissing quantum computing as nothing more than speculative technology with a deployment date decades in the future, Nvidia CEO Jensen Huang seems to have done an about-face.

   -- During an appearance at Nvidia GTC Paris on Wednesday, Huang said quantum 
      was reaching a so-called inflection point. "We are within reach of being 
      able to apply quantum computing in areas that can solve some interesting 
      problems in the coming years," he added. 
 
   -- His optimism marked a departure from his attitude in January, when Huang 
      asserted that "very useful" quantum computers were 15 to 30 years away, 
      triggering a selloff in pure-play quantum stocks. The Nvidia boss has 
      since walked back those remarks. 
 
   -- His comments had the opposite effect this time as some quantum shares 
      surged. Rigetti Computing jumped 11%, Quantum Computing soared 25%, 
      although IonQ was down 0.1% and D-Wave Quantum fell 2.4% Wednesday. 
 
   -- Earlier this week, International Business Machines released a road map 
      for the world's first "large-scale, fault-tolerant quantum 
      supercomputer." That came on the heels of an announcement from IonQ after 
      the company agreed to acquire British start-up Oxford Ionics for $1.075 
      billion. 

What's Next: Huang previously said he was wrong to assume that quantum was a thing of the distant future and had declined to offer an updated timeline, so Wednesday's promise of helpful applications in "the coming years" is especially significant.

-- Mackenzie Tatananni

***

There could be big changes coming for student loan borrowers. Right now, the government accounts for about 92% of the student-loan market -- but if the Republican tax and spending bill becomes law, it could usher in an era of increased privatization of student lending.

MarketWatch asked around about what that could mean for people trying to finance an education.

For more on this, read here.

-- Jillian Berman

***

-- Newsletter edited by Liz Moyer, Rupert Steiner

This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.

(END) Dow Jones Newswires

June 12, 2025 06:52 ET (10:52 GMT)

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