US reduces China tariffs; Data center demand escalates; Consumer credit access slows

Stock markets and business leaders were cheered Monday after the White House announced an agreement pausing certain U.S.-imposed trade tariffs on China for 90 days. Talks were slated to continue as the U.S. tentatively agreed to reduce its tariff on imported Chinese goods from 145% to 30%, as China scales back its fee on U.S. goods from 125% to 10%.

Full details were yet to be announced, as a base tariff of 10% imposed by the U.S. on all trade partners remains in effect for China, officials said. Depending on the outcome of talks, the current planned 30% tariff on China could “go up substantially higher,” though not back to 145%, President Donald Trump said Monday.

Analysts have warned that the U.S.-China tariff dispute could create bare store shelves and plunge the U.S. economy into a recession. The pause “is a critical first step to provide some short-term relief for retailers and other businesses that are in the midst of ordering merchandise for the winter holiday season,” National Retail Federation CEO Matthew Shay said in a Monday statement from the trade group.

Ryan Sweet, chief U.S. economist at Oxford Economics, said Monday the tariff delay and planned cuts spurred the forecasting firm to drop its projected chance of a U.S. recession this year to 35%, from a previous figure closer to 50%. But the pause won’t immediately alter the Federal Reserve’s calculus on interest rates, “as it is comfortable waiting out the ebbs and flows in tariffs” to gauge implications for inflation and economic growth, Sweet said in a statement.

The Dow Jones Industrial Average closed Monday up more than 1,100 points, or 2.8%, for the day. The S&P 500 gained 184 points, or 3%, and the Nasdaq exchange rose nearly 780 points, or 4%.

Global development of data centers could double from current levels over the next two years, spurred by surging demand for cloud computing and other services relying on artificial intelligence, according to the latest annual report on the category by Cushman & Wakefield. Accelerating development could also bring rising land costs and challenges in obtaining necessary electric power for large projects.

“The industry experienced rapid expansion throughout the past year, a trend we expect to continue into 2025 and 2026,” John McWilliams, head of data center insights at the brokerage, said in a report analyzing 97 regions worldwide. Total data processing capacity across all tracked regions could “at least double,” based on current development pipelines, McWilliams said.

Based on projected electric power consumption of pipeline projects, measured in gigawatts, Cushman researchers said Virginia leads the Americas for overall data center development, followed by Phoenix, Dallas, Atlanta and Oregon. Beijing and Shanghai lead in Asia, with London and Frankfurt topping the list for data center project momentum in Cushman’s Europe-Middle East-Africa category.

Going forward, the brokerage said data center demand will spur increasingly large site acquisitions for phased campus developments, “pushing data center projects away from urban cores into suburban and rural areas.” Virginia, Phoenix and Sydney rank among the top global markets for land availability for such projects. 

Growth in the level of credit deployed by U.S. consumers continued to slow in the first quarter, as lending standards tightened and buyers pulled back in some spending categories, according to the latest Federal Reserve data. Consumer debt balances topped $5 trillion at the end of the quarter.

The government reported that credit access was up 1.5% on an annual basis for the quarter, well below growth levels that reached as high as 5.7% for full-year 2021 and 7.6% for 2022 as the U.S. emerged from the pandemic. Credit balances for all consumer categories, excluding home mortgages, grew just 2% for full-year 2024.

Data showed auto loan balances reached $1.56 trillion in the first quarter, rising just 0.26% from a year earlier and marking the slowest growth since 2010, according to Onnah Dereski, economic services manager at the National Association of Home Builders. This occurred in part because auto loan rates reached a historically elevated level of just over 8%.

Fed data showed revolving credit, consisting primarily of credit card debt, reached $1.3 trillion in the first quarter, up nearly 3% from a year earlier and “marking the weakest growth in revolving credit in several years,” Dereski said in a statement. Credit card interest rates were also elevated by historical standards, averaging around 21.4%, the trade group said.

“It is very likely that the declines in credit card and auto loans pending are related to the fact that many have been forced to use credit cards to pay for routine household expenses and that credit card defaults are high,” Dereski said. “It is also likely that auto loans are hard to get when borrowers have high credit card debt.”