DUBLIN — The US-China deal to lower the most aggressive import tariffs between the world’s two largest economies could lessen the impact of their trade war, though the levies left in place are still steep and will leave a mark on the economy, Federal Reserve officials said on Monday.

Federal Reserve Governor Adriana Kugler said the 90-day pause on import levies at levels that threatened to shut down bilateral trade reduces chances that the US central bank will need to lower interest rates in response to an economic slowdown.

The outcome of the weekend meetings between Chinese and US officials “obviously… is an improvement as far as trade between the two countries” is concerned, Ms. Kugler said at a Central Bank of Ireland symposium in Dublin.

She said the tariff rates, now 30% on Chinese imports for the next 90 days, were still “pretty high” and she expected “definitely an increase in prices and a slowdown in the economy” as a result.

But Ms. Kugler expects those impacts to be more muted. “My basic outlook, in some sense, may have changed in terms of the extent to which we need to use our tools, and the magnitude,” she said.

In separate comments to the New York Times, Chicago Fed President Austan Goolsbee agreed the weekend deal would lower the impact tariffs have on the economy — for now.

“It is definitely less impactful stagflationarily than the path they were on,” Mr. Goolsbee told the paper. Still, that tariff rate is “three to five times higher than what it was before, so it is going to have a stagflationary impulse on the economy. It’s going to make growth slower and make prices rise.”

Investors decreased their bets on Monday that the Fed would cut rates early this summer, with an initial quarter-percentage-point rate cut now not expected until September and only a half-percentage-point reduction in total anticipated by the end of 2025. Prior to the tariff pause agreed over the weekend, Fed rate cuts were expected to begin in July.

But as the Trump administration has seemed to back off its most aggressive tariff strategies, US stocks and market interest rates have risen, and the threat of a tariff-driven recession has diminished.

REPUTATIONAL HIT
The Fed’s policy-setting Federal Open Market Committee (FOMC) last week kept its benchmark interest rate in the 4.25%-4.50% range where it had been since December. Policymakers said they were unlikely to make a change until it was clear whether tariffs would lead to a new inflation problem, or undercut growth and pose risks to the job market that warranted a reduction in borrowing costs.

A third possibility — of a negotiated resolution that leads to a more limited jump in inflation and keeps growth largely on track — was highlighted by the trade war detente announced over the weekend.

“Even with this reprieve, tariffs are much higher than they were, so the outlook still involves tariff raising near-term inflation well above 2%,” offering a reason for the Fed to stay on hold, economists with the consulting firm of former Fed Governor Larry Meyers said.

“What this reprieve does is reduce the likelihood that we’ll see a deterioration in the labor market severe enough for the FOMC to ease despite concerns about elevated inflation.”

Ms. Kugler said the trade conflict still could have deep implications for the US, including a reputational hit that could drive investors elsewhere.

“In the medium term, if this was long-lasting, I think the one issue that I would be looking to is how supply chains get rearranged… if in the rest of the world, some start feeling that they don’t find a reliable partner at the other end,” she said.

It is also posing immediate problems for the Fed in even knowing the pace at which the economy is growing, or not, because recent data have been so distorted by firms and households rushing to beat import tariffs.

Output contracted in the first quarter, but that was largely attributed to a record surge in imports.

“It is currently hard to judge the underlying pace of growth of the US economy,” Ms. Kugler said. — Reuters

HANOI — Vietnam is stepping up its fight against counterfeits and digital piracy after the United States accused the country of being a major hub for these illegal activities and threatened crippling tariffs, documents reviewed by Reuters show.

Among products that are subject to increased inspections at borders to ascertain their authenticity are luxury goods from Prada and Gucci owner Kering, electronic devices made by Google and Samsung, and toys from Mattel and Lego, according to a document dated April 1 from the customs department of the finance ministry.

Consumer goods such as shampoos and razors sold by Procter & Gamble and Johnson and Johnson products are also included in the list, the document showed.

The crackdown focuses on imported counterfeits, not those that could be made in Vietnam, which are also of concern to the administration of US President Donald J. Trump.

A clampdown on the use of counterfeit software is also underway, according to a warning from inspectors at the Ministry of Culture sent on April 14 to a local company, whose name was redacted from the document seen by Reuters.

The letter, it says, followed a complaint from the Business Software Alliance (BSA), the industry’s global trade association, whose members include Microsoft, Oracle and Adobe.

A person familiar with the matter said similar letters have been sent to dozens of companies since the start of April.

Vietnam’s finance and culture ministries and the customs department did not reply to requests for comment, nor did any of the mentioned companies.

A spokesperson for BSA said it has for years urged Vietnam to monitor and take action against the unauthorized use of software.

Vietnam’s recent moves are part of an array of measures taken or pledged by the Southeast Asian export-reliant industrial hub to persuade the Trump administration to reconsider punitive tariffs. Vietnam faces duties of 46% on exports to the US, its largest market, if confirmed in July after a global pause.

Vietnam and the US began informal talks to avoid tariffs well before Mr. Trump announced global “reciprocal” duties on April 2.

Enhanced protection of intellectual property, including the fight against counterfeits and digital piracy, is among the issues being discussed with the US in ongoing tariff talks.

Also under discussion are the reduction of Vietnam’s big trade surplus, the fight against trade fraud such as illegal transshipment, and lowering tariff and non-tariff barriers for US businesses, according to a person briefed on the matter.

Prime Minister Pham Minh Chinh last month instructed officials to strengthen the fight against trade fraud, “especially regarding the origin of goods, counterfeit goods.”

The measures are meant to please Washington but some may irk China, which is the main source of Vietnam’s imports.

‘NOTORIOUS MARKETS’
Despite enhanced controls on imported counterfeits, fake luxury goods targeted by the authorities were on display last week at Saigon Square Shopping Mall in Vietnam’s business hub Ho Chi Minh City.

The mall is on the list of “notorious markets for counterfeiting” published in January by the US Trade Representative (USTR).

“They are not authentic and are made in China,” said an attendant in one of the stalls in the market, referring to Prada wallets and bags she’s selling.

She noted counterfeit Prada belts, also available at her stall, were made in Vietnam. The person declined to be named due to the sensitivity of the subject.

Calls to Saigon Square went unanswered. Its website says the mall offers “imitations of famous brands at low prices.”

The USTR removed a Vietnamese marketplace at the border with China from its latest watchlist published in January after a crackdown by local authorities. It praised Vietnam’s efforts to combat illegal practices, but also expressed concerns over continuing online sales of counterfeit products and Vietnam’s role in producing fakes.

The Vietnamese platform of Singapore-based e-commerce giant Shopee remained a major hub for the sale of counterfeits, the USTR said.

“As more brands have shifted production from China to Vietnam, stakeholders report that Vietnam has become a key manufacturer of counterfeit products,” the USTR said in a separate report published in April.

The USTR and Shopee did not reply to requests for comment.

To improve copyright protection Vietnam is planning to set up specialized courts “to fulfil Vietnam’s commitment… to strictly enforce intellectual property rights” and attract foreign investment, according to a draft law reviewed by Reuters scheduled to be approved by parliament in June. — Reuters