The end of an exemption on tariff duties for low-value packages coming into the United States is causing multiple international postal services to pause shipping as they await more clarity on the rule.

The exemption, known as the “de minimis” exemption, allows packages worth less than $800 to come into the U.S. duty free. A total of 1.36 billion packages were sent in 2024 under this exemption, for goods worth $64.6 billion, according to data from the U.S. Customs and Border Patrol Agency.

It is set to expire on Friday. On Saturday, postal services around Europe announced that they are suspending the shipment of many packages to the United States amid confusion over new import duties.

Postal services in Germany, Denmark, Sweden and Italy said they will stop shipping most merchandise to the U.S. effective immediately. France and Austria will follow on Monday.

The U.K.’s Royal Mail said it would halt shipments to the U.S. on Tuesday to allow time for those packages to arrive before duties kick in. Items originating in the United Kingdom worth over $100 — including gifts to friends and family — will incur a 10% duty, it said.

“Key questions remain unresolved, particularly regarding how and by whom customs duties will be collected in the future, what additional data will be required, and how the data transmission to the U.S. Customs and Border Protection will be carried out,” DHL, the largest shipping provider in Europe, said in a statement.

The company said starting Saturday it “will no longer be able to accept and transport parcels and postal items containing goods from business customers destined for the US.”

A trade framework agreed on by the U.S. and the European Union last month set a 15% tariff on the vast majority of products shipped from the EU. Packages under $800 will now also be subject to the tariff.

The U.S. duty-free exemption for goods originating from China ended in May as part of the Trump administration’s efforts to curb American shoppers from ordering low-value Chinese goods. The exemption is being extended to shipments from around the world.

Many European postal services say they are pausing deliveries now because they cannot guarantee the goods will enter the U.S. before Aug. 29. They cite ambiguity about what kind of goods are covered by the new rules, and the lack of time to process their implications.

Postnord, the Nordic logistics company, and Italy’s postal service announced similar suspensions effective Saturday.

“In the absence of different instructions from US authorities … Poste Italiane will be forced, like other European postal operators, to temporarily suspend acceptance of all shipments containing goods destined for the United States, starting August 23. Mail shipments not containing merchandise will continue to be accepted,” Poste Italiane said Friday.

Shipping by services such as DHL Express remains possible, it added.

Björn Bergman, head of PostNord’s Group Brand and Communication, said the pause was “unfortunate but necessary to ensure full compliance of the newly implemented rules.”

In the Netherlands, PostNL spokesperson Wout Witteveen said the Trump administration is pressing ahead with the new duties despite U.S. authorities lacking a system to collect them. He said that PostNL is working closely with its U.S. counterparts to find a solution.

“If you have something to send to America, you should do it today,” Witteveen told The Associated Press.

Austrian Post, Austria’s leading logistics and postal service provider, stated that the last acceptance of commercial shipments to the U.S., including Puerto Rico, will take place Tuesday.

France’s national postal service, La Poste, said the U.S. did not provide full details or allow enough time for the French postal service to prepare for new customs procedures.

″Despite discussions with U.S. customs services, no time was provided to postal operators to re-organize and assure the necessary computer updates to conform to the new rules,″ it said in a statement.

PostEurop, an association of 51 European public postal operators, said that if no solution can be found by Aug. 29 all its members will likely follow suit.

U.S. Treasury Secretary Scott Bessent believes stablecoins will buoy the market for U.S. Treasuries, and the government will sell more short-term debt to meet that demand, according to the Financial Times. “Bessent has signaled to Wall Street that he expects stablecoins, digital tokens that are backed by high-quality securities such as Treasuries, to become an important source of demand for U.S. government bonds,” the FT reported.

The FT’s sources asked for anonymity, but there was no need for them to be coy: Bessent said in a press statement back in July that he expected demand for cryptocurrencies—backed 1 to 1 with U.S. dollar instruments—to support the price of bonds:

“This groundbreaking technology will buttress the dollar’s status as the global reserve currency, expand access to the dollar economy for billions across the globe, and lead to a surge in demand for U.S. Treasuries, which back stablecoins. The GENIUS Act provides the fast-growing stablecoin market with the regulatory clarity it needs to grow into a multitrillion-dollar industry,” he said at the time.

The GENIUS Act, announced last month, “aligns State and Federal stablecoin frameworks, ensuring fair and consistent regulation throughout the country,” the White House said at the time.

So how big a deal will this be?

Goldman Sachs thinks we’re at the beginning of a stablecoin gold rush, according to a research paper published today by the bank’s Will Nance and others.

“Stablecoins are a $271bn global market, and we believe USDC [the stablecoin issued by Circle] benefits from market share gains on and off of partner Binance’s platform, as ongoing stablecoin legislation legitimizes the ecosystem, and the crypto ecosystem expands, also potentially catalyzed by legislation. Based on current trends and announced initiatives, we see $77bn of growth in USDC, or a 40% CAGR, from 2024-27E,” they wrote.

The potential total market for stablecoins is in the trillions, Goldman says. “Visa sizes the addressable market for payments at ~$240 trillion in annual payment volume, with consumer payments representing ~$40 trillion of annual spending. B2B payments comprise roughly ~$60bn while P2P payments and disbursements comprise the remainder.

“As such, payments are the most obvious source of (total accessible market) expansion for stablecoins over the longer term. This opportunity is largely untapped so far, with the majority of stablecoin activity being driven by crypto trading activity and demand for dollar exposure outside of the U.S.”

Because stablecoins in the U.S. must be backed 1 to 1 with dollars or U.S. bonds, each stablecoin issued increases the demand for the bonds that back them. Some people think this will alter the bond market, especially for short-dated bonds with low interest yields.

A research paper by the Bank for International Settlements (an international organization that fosters cooperation among central banks), says it will. “A 2-standard deviation inflow into stablecoins lowers 3-month Treasury yields by 2-2.5 basis points within 10 days,” the BIS paper estimated. But the effect is “asymmetric”: “Stablecoin outflows raise yields by two to three times as much as inflows lower them,” the paper said.

UBS’s Paul Donovan is more skeptical: “U.S. Treasury Secretary Bessent is reportedly getting excited that stablecoins might increase demand for short-dated U.S. Treasuries, helping finance the unsustainable U.S. fiscal position. However, stablecoins are more about redistributing money supply. Someone selling Treasury bills to buy stablecoins, which invest the money in Treasury bills, does not change demand for U.S. debt instruments,” he told clients this morning.

Here’s a snapshot of the markets prior to the opening bell in New York:

Wall Street was laser-focused on the Federal Reserve’s monetary policy this past week, but minutes from the central bank’s last meeting revealed concern among some policymakers about the housing market.

As the sector’s slump drags on, it has triggered more alarm bells because activity in housing, such as residential investment and construction, has often served as a leading indicator on the overall economy.

Minutes from the Fed’s earlier meetings didn’t include such concerns. But that changed during the July 29-30 gathering.

“Participants observed that growth of economic activity slowed in the first half of the year, driven in large part by slower consumption growth and a decline in residential investment,” the minutes, which were released on Wednesday, said.

To be sure, housing was just one of several concerns that policymakers raised. Others included the labor market, the effect of tariffs on inflation, real income growth, elevated asset valuations, and low crop prices.

But Fed officials were also specific about their housing market worries, suggesting they were starting to pay more attention to the data.

“A few participants noted a weakening in housing demand, with increased availability of homes for sale and falling house prices,” the minutes said.

And not only did housing show up on the Fed’s radar, policymakers flagged it as a potential risk to jobs, along with artificial intelligence technology.

“In addition to tariff-induced risks, potential downside risks to employment mentioned by participants included a possible tightening of financial conditions due to a rise in risk premiums, a more substantial deterioration in the housing market, and the risk that the increased use of AI in the workplace may lower employment,” the minutes added.

Housing market data

The fact that the housing market is emerging as a worry at the Fed means that it could also weigh more on rate decisions, which influence mortgage rates.

In his Jackson Hole speech on Friday, Chairman Jerome Powell opened the door to a rate cut at the central bank’s meeting in September after months of maintaining a more hawkish stance, stoking a furious rally on Wall Street and sending the 10-year Treasury yield down sharply.

But in the meantime, fresh data show that the housing market remains stuck as elevated borrowing costs have kept would-be buyers on the sidelines.

Sales of existing homes rose in July but have largely been flat for most of the year, even as the number of listings has climbed, suggesting demand is weak. That’s suppressed home prices, with a gauge of median prices falling in all but one month this year.

“Weekly data suggests home prices may remain subdued in coming months, close to flat on the year or rising only very modestly,” analysts at Citi Research wrote on Thursday. “Home price declines are rare outside of hiking cycles or recessions.”

In addition, construction of new single-family homes remains lethargic, and data for July showed that building permits have declined in six out of seven months this year. In fact, permits—a volatile but leading indicator of future activity—fell to the lowest level since 2019, excluding the pandemic.

That was reflected in the NAHB homebuilder confidence index, which fell in August to reverse a modest uptick earlier. It also showed that the share of homebuilders offering sales incentives hit a post-pandemic high.

“As housing demand remains weak with high mortgage rates and high home prices, we expect further softening in housing activity this year,” Citi said in a separate note on Tuesday.

WASHINGTON (AP) — Most Federal Reserve officials said last month that the threat of higher inflation was a greater concern than the potential for job losses, leading the central bank to keep its key rate unchanged.

According to the minutes of the July 29-30 meeting, released Wednesday, members of the Fed’s interest-rate setting committee “assessed that the effects of higher tariffs had become more apparent in the prices of some goods but that their overall effects on economic activity and inflation remained to be seen.”

The minutes underscored the reluctance among the majority of the Fed’s 19 policymakers to reduce the central bank’s short-term interest rate until they get a clearer sense of the impact of President Donald Trump’s sweeping tariffs on inflation. So far inflation has crept up in the past couple of months but hasn’t risen as much as many economists feared when Trump unveiled some of his duties.

The Fed left its key interest rate unchanged last month at about 4.3%, though two members of its governing board dissented in favor of a rate cut. Both dissenters — Christopher Waller and Michelle Bowman — were appointed to the board during Trump’s first term.

At a news conference after the meeting, Chair Jerome Powell signaled that it might take significant additional time for the Fed to determine whether Trump’s sweeping tariffs are boosting inflation.

When the Fed changes its rate, it often — though not always — affects borrowing costs for mortgages, auto loans, and credit cards.

The Fed typically keeps its rate high, or raises it, to cool borrowing and spending and combat inflation. It often cuts its rate to bolster the economy and hiring when growth is cooling.

The late plays by William Shakespeare are alternately called his “romances” or his “problem plays,” because of their ambiguity in tone, as they alternate from passages of magical realism to stark scenes that grapple with complex social issues. At times, they point the way toward the prestige TV of the early 21st century where, for instance, The Sopranos could range from broad comedy to intense violence to avant-garde dream sequences, all in one episode. It’s from the romances that we get phrases that stick with us today, like the description from The Tempest of a “sea change into something rich and strange.”

Full disclosure: The author’s brother is an eminent Shakespearean scholar, often quoted in The New York Times, although never previously in Fortune, and so I asked him to explain what this particular term means. “Toward the end of his career,” Drew Lichtenberg of the Shakespeare Theatre Company in Washington DC, said in a statement to Fortune, “Shakespeare started writing genre-defying plays with sudden and miraculous changes of fortune.” Shakespeare used the phrase “sea change” to describe a “magical storm at sea that has the power to snuff out life or restore it in less than a second.”

What do Shakespeare’s plays of miraculous changes of fortune have to do with, well, Fortune? Bank of America Institute has projected a “sea change” in the economy. It sees a pivotal transformation in worker productivity at America’s largest companies, driven by lessons from post-pandemic inflation and supercharged by a wave of artificial intelligence and automation. The institute worked hand in hand with projections from Bank of America Research to project a rewiring of the fundamental valuation landscape of the S&P 500, with profound implications for investors and the “quality premium” that U.S. stocks traditionally command.

Fortune talked to BofA Research’s Head of US Equity & Quantitative Strategy, Savita Subramanian, to dig into this change, potentially to something rich and strange. It’s not quite that mystical, she said, but she still thinks it’s a big deal.

Finally, a productivity surge?

Subramanian explained that what her team has projected isn’t as exciting or dramatic as having actual wizards working at the gears of the economy. The more prosaic insight, she says, is that the combination of AI technology and lessons learned from the inflation wave of the 2020s mean that worker productivity is finally showing signs of increasing. That’s the sea change taking place.

At its heart, her work is all about the famous “productivity paradox” identified by Nobel prize-winning economist Robert Solow. “You can see the computer age everywhere but in the productivity statistics,” he said in 1987, long before the productivity crisis of the 21st century set in. As Fortune‘s Jeremy Kahn has discussed, workers still don’t seem to be getting more productive despite the bevy of new technologies at their disposal. In fact, McKinsey’s Chris White and Olivia White argued in 2024 that productivity has been dismal for nearly a generation, hovering around 1% a year, with a dip after the Great Financial Crisis. Subramanian agrees, telling Fortune that if you look at productivity measures, “they haven’t really improved all that much since 2001.”

Subramanian wrote on Aug. 8 that the end goal of the massive AI spending that’s rippling through the economy is a “sea-change” in the scale and scope of efficiency gains—and this productivity cycle is already under way. Post-pandemic wage inflation forced companies “to do more with fewer people,” she added, and now AI tools are due to kick that up a notch.

But the official stats don’t show a complete understanding of how productivity really functions, Subramanian explained. So BofA took sales, adjusted for inflation, and then divided sales by the number of people working at S&P 500 companies, showing real sales growth versus number of people, what she called a “decent proxy” for productivity, “because if you’re productive, you are doing things more efficiently, you need less labor. And this is more labor efficiency than anything else.”

Look at what she found.

This means companies are learning to do more with less, and that is kind of magical. Companies have had to do harder work to generate earnings and keep margins healthy, often by replacing their people with processes. “A process is almost free and it’s replicable for eternity,” she said, adding that she thinks this is why the companies exercising efficiency gains have tended to outperform. It’s not only about AI displacing workers, but a fundamental shift in how business is being done.

‘It feels like sorcery’

This discussion may seem on its face to be more boring than a tempest and a wizard, she said, but there is something supernatural about the current moment. “I think people love this AI technology because it feels like sorcery,” she said, before adding, “the truth is it hasn’t really changed the world that much yet, but I don’t think it’s something to be dismissed.”

Overall, Subramanian finds the S&P 500 has shifted from its 1980s model of asset- and labor-intensive manufacturing to asset- and labor-light innovation, namely tech and health care firms. Showing her work, she calculates that the S&P 500 firms with a focus on innovation, measured through high research and development expenditures, trade at structurally higher multiples of 29x forward earnings per share. More capital-intensive manufacturers, on the other hand, trade at a 21x multiple. The current AI boom is actually a bit risky, she wrote, because the massive data center investments represent a shift from an asset-light to an asset-heavier focus.

To be sure, BofA finds that the S&P 500 is now statistically expensive on 19 out of the 20 metrics that they track, including P/E, price to book, price to cash flow, and market cap/GDP. That’s where the sea change matters, because if the shift from manufacturing to innovation is real, then valuations have to shift as well. Hence the “innovation premium” from BofA’s research.

Excluding Tesla, Subramanian talks about the other members of the “Magnificent Seven” as evidence of firms losing some of their innovation premium as a result of a shift toward asset-heaviness. As a basket of stocks, Microsoft, Google, Amazon, Meta, Nvidia and Apple’s average shareholder yield (i.e., dividends plus net buybacks) has dropped by over 1% since 2015.

There are other shifts afoot as well, she told Fortune. “We seem to be at least pausing on this globalization theme,” she said, citing China’s admission to the World Trade Organization in 2001 as a big driver of margin expansion, enabling cost-cutting as a huge lever to keep margins expanding. (It was also the year when worker productivity froze in its tracks.)

In the globalization regime, “you didn’t have to think too hard to make money and expand your margins,” she said. It was “very easy and fungible and frictionless” for companies to buy things from different places and contain costs. She also cited the low-interest-rate environment that persisted for much of the past few decades, enabling lots of “financial engineering.”

For example, Subramanian said it was common to see companies that knew they would miss their earnings estimates borrowing money and buying back stock to hit their targets, adding the caveat that “there are good reasons to do share buybacks and bad reasons to do share buybacks.” This all “really created a lot of bizarre behavior.”

Warren Buffett’s long-time fondness for stock buybacks has even come under fire from other investors, with Jeremy Grantham writing in 2023 that it facilitates stock manipulation and should be illegal. BofA Research found in July 2025, however, that stock buybacks had decelerated a bit, albeit they remained high by historical standards.

The situation now is harder in many ways, but companies aren’t able to financially engineer their way to earnings growth, she added. Now that’s a sea change.

One final note on the Shakespearean romances, from Drew Lichtenberg: that appellation came about in the late 1700s, nearly two centuries after Shakespeare’s lifetime, with the birth of the romantic movement. The word “romantic” had previously existed, but it didn’t have its current meaning until Samuel Taylor Coleridge elevated it to mean something that connects back directly to nature and the divine genius of humanity’s self-expression. This was largely a response to the Enlightenment’s elevation of reason and logic and its ultimate achievement: the Industrial Revolution that unleashed modern capitalism on the world. A sea change, indeed.