This is the web version of the WSJ’s economic newsletter. You can sign up for daily delivery here. Good morning! Today we look at the mounting economic cost of U.S. tariffs, the steady-as-she-goes U.S. economy, and why now is one of the best times to be a high-school dropout. U.S. IMPOSES TARIFFS, ALLIES RETALIATE The Trump administration’s tariffs on steel and aluminum prompted swift pledges of retaliation and raised the prospect of a global trade war. Canada, Mexico and the European Union are all planning to hit back against U.S.-made metals, farm products and other goods. Stocks tumbled after the tariff announcement, though the immediate economic impact will be muted. Things start to add up when you pile on tariffs aimed at China ($50 billion related to intellectual property abuses and another $100 billion in penalties on the way). Barclays’s Tomasz Wieladek estimates the steel tariffs and retaliation reduce global growth by 0.1 percentage point and raise inflation by 0.1 point. Add on $150 billion against China and a tit-for-tat response, and growth would fall by 0.9 percentage point and inflation rise 1.1 point. “Our approach may underestimate the impact of a rapid tariff rise,” Mr. Wieladek said. U.S. JOBS THREATENED? Some businesses were more alarmed than economists. The head of the U.S. Chamber of Commerce said the administration’s overall trade policies, including the possibility of pulling out of Nafta, will hamstring U.S. economic growth and threaten as many as 2.6 million U.S. jobs. Farmers are worried they’ll be targets of any retaliation, and companies that use metal to make machinery, structures or other products complained of unpredictable markets and rising prices. Of course, some companies stand to gain, notably domestic steelmakers. Nucor said the duties are reducing the flow of cheap foreign steel into the U.S. and allowing American steel companies to increase production as steel prices rise, Patrick McGroarty, Bob Tita and William Mauldin report. Will the Trump administration’s policies win the U.S. concessions or spark a global trade war? Write to Jeffrey Sparshott at email@example.com, tweet to @WSJecon and visit wsj.com/economy for the latest. WHAT TO WATCH TODAY The U.S. employment report for May is out at 8:30 a.m. ET. Economists expect a net gain of 190,000 jobs and an unemployment rate unchanged at 3.9%. The Minneapolis Fed’s Neel Kashkari speaks on the workforce at 8:55 a.m. ET. The Institute for Supply Management manufacturing index for May, out at 10 a.m. ET, is expected to tick up to 58.1 from 57.3, well into expansion territory for the sector. U.S. auto sales for May are expected to slip to an annual pace of 16.8 million from 17.15 million. TOP STORIES CONSUMERS BOUNCE BACK While trade policy is grabbing headlines, the U.S. economy appears to be chugging along just fine. Americans’ spending gathered further momentum in April as incomes continued to rise, a sign consumers could drive stronger economic growth in the second quarter. Personal-consumption expenditures, a measure of household spending on everything from health care to magazines, posted its largest increase in five months, Harriet Torry reports. The spending data “help the case for a pickup” in economic growth in the second quarter after a modest slowing in the first, said High Frequency Economics’s Jim O’Sullivan. RIGHT ON TARGET Inflation, meanwhile, held steady at the Federal Reserve’s target for a second straight month. The personal-consumption expenditures price index, the Fed’s preferred inflation gauge, was up 2% from a year earlier in April, Paul Kiernan reports. The latest data are likely to reinforce central bankers’ view that inflation is finally consolidating at the target after remaining stubbornly low for years despite steady economic growth. This, in turn, could further convince policy makers to stick to their plan of gradually increasing interest rates over the next couple of years. SCHOOL’S OUT FOREVER The U.S. jobs report is out Friday at 8:30 a.m. ET. Hiring is expected to remain robust. Under the surface, the data show employers searching deeper and deeper into the labor market. Eric Morath writes that it’s never been a better time to be a dropout. The unemployment rate for those without a high-school diploma touched a 25-year record low late last year, and has held below 6% this year. That’s a sharp drop from 8.5% in September 2016. Meanwhile the rate for college grads has held nearly flat during that time, though at a much lower level. ITALY DIALS DOWN THE SPICE Two large antiestablishment parties, Italy’s League and the 5 Star Movement, struck a deal on a coalition government, resolving a political crisis and putting a euroskeptic administration into power in the eurozone’s third-largest economy, Giovanni Legorano reports. Italian President Sergio Mattarella on Sunday had rejected the coalition’s choice for economy minister. Together with anti-euro rhetoric out of the 5 Star Movement and the nativist, hard-right League, markets were badly shaken. QUOTE OF THE DAY “Americans remain our partners, friends and allies. This is not about the American people. We have to believe that at some point their common sense will prevail. But we see no sign of that in this action today by the U.S. administration.” – Canadian Prime Minister Justin Trudeau, responding to U.S. steel and aluminum tariffs TWEET OF THE DAY [wsj-responsive-sandbox id = "0" ] WHAT ELSE WE’RE READING Will steel and aluminum tariffs lift prospects low- and moderate-income families? White House trade adviser Peter Navarro says yes: The tariffs will spur new investment in manufacturing and create jobs. “There can be no better way to make America—and American manufacturing—great again than to start to rebuild those communities of America most harmed by the forces of globalization,” he writes in USA Today. What will it take to really start improving wages for the average American worker? “Stronger unions, better training and more housing in expensive cities might all help,” The Economist writes. The unemployment rate may be historically low, but HR departments still have certain preferences. “First, among applicants across a broad age range, we find that applicants with 52 weeks of unemployment have a lower callback rate than do applicants with shorter unemployment spells,” Henry Farber, Chris Herbst, Dan Silverman and Till von Wachter write in a National Bureau of Economic Research working paper. Other findings: Younger and older applicants having a lower probability of callback than prime-aged (25-54) applicants. And applicants with an existing job have a lower callback rate than applicants without a job.