Risk Channel delivers the latest, most relevant and useful business intelligence to key decision makers and influencers, each weekday morning.

President Trump’s Office of the U.S. Trade Representative (USTR) is proposing new tariffs of up to 12.5% on 59 countries and the European Union based on an investigation into forced labor under Section 301 of the Trade Act of 1974. The USTR claims there has been widespread failure to restrict the importation of goods produced by forced labor, a practice that affects an estimated 27.6 million men, women, and children victims of the practice daily, and which generates $236bn in illegal profits annually. Legal experts say the unilateral imposition of tariffs against 60 economies at once is unprecedented, and CNBC reports that trade and labor authorities say the USTR's investigation was executed in short order, and is likely to meet significant legal challenges - including that the U.S. has itself struggled like most countries to crack down on the pervasive issue.

 

CNBC

A Milan court judge has upheld a decision to place the Italian unit of U.S. builder Caddell Construction under ‌judicial control, as it faces a probe into alleged worker abuse at the Italian city's new U.S. consulate site. The judge said that, based on available evidence, the Italian arm of ⁠the U.S. firm had recruited workers in India through an intermediary and put them to work "on ​exhausting shifts, underpaid, without safety protections and under the constant threat of dismissal." Reuters observes that the judge's ruling is the latest indication of a broader crackdown ​on labor exploitation over the past three years.

 

Reuters

The union representing food and beverage workers at SoFi Stadium in Inglewood, California has announced a tentative agreement that includes wage hikes and labor protections. The stadium is set to host eight World Cup matches including the U.S. versus Paraguay on Friday. USA Today observes that although the approximately 2,000 workers represented by Unite Here Local 11 and stadium operator Legends Global have reached an agreement, an issue hangs over the deal. "Notably, it includes an explicit right to strike if ICE or Border Patrol activity at the worksite threatens worker safety - a provision legal experts say is unprecedented in modern American labor history,'' Unite Here Local 11 stated in a press release, which also said: "Workers have the contractual right to walk off the job if the Union determines in good faith that federal immigration agency actions threaten worker safety during a World Cup match."

 

USA Today

Reuters

A U.S. federal judge has granted preliminary approval to a revised $38bn settlement between Visa, Mastercard and merchants, marking a significant step towards resolving a long-running antitrust dispute over card processing fees that began in 2005. Under the proposed agreement, Visa and Mastercard will reduce interchange, or “swipe”, fees by 0.1 percentage points for five years, while standard consumer card rates will be capped at 1.25% for eight years. The settlement also gives merchants greater flexibility to apply surcharges and allows them to choose whether to accept certain categories of cards, including premium rewards cards. A key change is the effective removal of the long-standing “Honor All Cards” rule, which previously required merchants to accept all Visa or Mastercard cards if they accepted any card from those networks. Retail groups including the National Retail Federation opposed the deal, arguing it does not go far enough to address anti-competitive practices and still leaves merchants with limited ability to reject specific issuers’ cards.

 

Bloomberg

Reuters

Kroger has agreed to pay $1.25m to settle a California lawsuit alleging it misrepresented the calorie content of several store-branded Carbmaster bread products, which were marketed to consumers seeking low-calorie and speciality diet options. The lawsuit, brought by district attorneys from Santa Barbara, Ventura and Riverside counties, claimed Kroger violated California’s False Advertising and Unfair Competition laws by publishing inaccurate calorie information on product packaging and online listings. Prosecutors alleged the issue dated back to the products’ launch in 2021 and that incorrect calorie claims continued to be displayed for months after consumer complaints were raised. According to the complaint, some discrepancies were significant, with Carbmaster Hamburger Buns advertised as containing 50 calories when they allegedly contained 100 calories. 

 

Cincinnati Enquirer

The European Commission has ordered Meta to restore access to WhatsApp for competing artificial intelligence (AI) assistant providers, using emergency powers to prevent potential harm to competition while a broader antitrust investigation continues. The move represents one of Brussels’ first major interventions in the rapidly evolving market for AI-powered autonomous agents. EU Competition Commissioner Teresa Ribera said the action was necessary because competition in fast-moving AI markets can be irreversibly damaged before traditional antitrust cases are concluded, and that consumers should be free to choose which AI assistants they use within WhatsApp. The decision comes shortly after Meta launched a new AI business agent for WhatsApp enterprise customers, a product viewed as a significant future revenue opportunity. Meta has said it will appeal the decision.

 

France24

Financial Times

Politico

Reuters

Airlines are increasingly frustrated that the latest generation of fuel-efficient aircraft engines has failed to meet reliability expectations, forcing carriers to remove engines for maintenance earlier than planned and eroding the fuel savings they were designed to deliver. Speaking at the International Air Transport Association’s annual meeting in Rio de Janeiro, airline executives said newer engines from manufacturers including GE Aerospace, Pratt & Whitney, and Rolls-Royce require more frequent unscheduled maintenance, resulting in higher operating costs and reduced aircraft availability at a time of strong travel demand and elevated fuel prices. WestJet chief executive Alexis von Hoensbroech described the engines as “engineering marvels” but said their reliability has fallen short of previous generations. While the engines can reduce fuel consumption by around 15% or more, airlines say those benefits are often offset by unexpected maintenance expenses and aircraft downtime.

 

CNBC

U.S. wholesale inventories increased 0.6% in April, slightly above the initial estimate of 0.5%, marking the third straight month of growth as businesses continued building stockpiles amid supply concerns and higher commodity prices linked to the ongoing conflict with Iran. The Commerce Department said the increase was driven primarily by a 0.9% rise in durable goods inventories, including professional equipment and electrical products, while nondurable goods inventories edged up 0.2%, supported by gains in groceries and petroleum products. Wholesale sales climbed 2% in April, following a 3.0% increase in March, indicating solid demand despite higher inventory levels. On a year-over-year basis, inventories were up 3.6%. At the current sales pace, it would take wholesalers 1.19 months to clear inventory, the lowest level since December 2013, highlighting continued strength in sales relative to stock levels.

 

Reuters

The IRS is restructuring its long-running Security Summit public-private partnership to strengthen defenses against tax-related identity theft and fraud, introducing five new work groups and expanding collaboration with payroll providers, whose wage and withholding data has become an increasingly attractive target for cybercriminals. The updated framework is designed to improve information sharing, enhance data protection practices, and identify suspicious activity earlier in the tax filing process. The Security Summit, which brings together the IRS, state tax agencies, tax software companies, and tax professional organizations, is adapting to a shift in fraud tactics as criminals increasingly steal legitimate taxpayer and business information to file convincing fraudulent returns.

 

Accounting Today

Indian garment factories supplying retailers are experiencing productivity losses of up to 10% during peak summer months as extreme heat affects worker attendance, product quality and delivery reliability, according to a report by the NYU Stern Center for Business and Human Rights. The study of 10 factories found temperatures exceeding 45°C are causing operational disruptions including stitching errors, fabric damage, dust contamination and production stoppages, with suppliers increasingly relying on temporary measures to cope with worsening conditions. India’s apparel export sector is worth $39bn and employs around 45m people, 70% of whom are women. The report also highlighted limited oversight from global brands, with only 35% of customers requiring suppliers to monitor factory temperatures and half not asking whether extreme heat has disrupted production. 

 

Bloomberg

Bolivia's President Rodrigo Paz has promulgated legislation that eases the state’s ability to impose emergency measures amid escalating anti-government protests, led by the national labor union (COB) and former president Evo Morales, that have caused unrest and led to an estimated 10 deaths and 37 injured. Bolivia has witnessed episodes of violence in the past “but none has ever been so prolonged and indefinite, and this has been one of the most violent,” observed Bolivian human rights lawyer Ramiro Orias, program director at the Due Process of Law Foundation in Bolivia. Protesting groups are angry at their exclusion from the government’s decision-making process, among other grievances.

 

Bloomberg