This article is an on-site version of our FirstFT newsletter. Subscribers can sign up to our Asia, Europe/Africa or Americas edition to get the newsletter delivered every weekday morning. Explore all of our newsletters here
Good morning and welcome back to FirstFT Americas, your early morning business briefing. We are planning a reader Q&A to mark the first 100 days of Donald Trump’s second term in the White House and need your help. Email your questions to [email protected]. Now, on with today’s newsletter:
US-China tensions rise
Peter Navarro defends Trump’s tariffs
Eric Schmidt buys £42mn London mansion
And the dilemma facing the Fed
China has vowed to “fight to the end” if the US introduces threatened tariff increases, escalating trade tensions between the world’s two biggest economies. Here’s what you need to know.
What did China say? The commerce ministry today said it would further retaliate if Donald Trump carries through on his threat to impose an additional 50 per cent tariff on Chinese goods. Beijing’s warning follows a threat from the US president yesterday that he would introduce the additional tariff unless China dropped its threat to impose a 34 per cent levy on US imports. The proposed tariffs from Washington would take US duties on Chinese imports to more than 120 per cent, according to some estimates.
Has China taken any other measures? Beijing backed up the threat of retaliation by fixing the exchange rate of its currency, the renminbi, at Rmb7.20 per dollar — the lowest since September 2023. The fixing rate is the centre point of the band in which the currency is allowed to trade and is set by the People’s Bank of China. A weaker renminbi makes Chinese goods cheaper abroad but risks capital outflows and undermining economic stability at home.
What has been the reaction of other countries to Trump’s trade threats? National Economic Council director Kevin Hassett yesterday said the White House was in touch with 50 countries that were seeking trade deals with the US. Japan emerged as the first major economy to secure priority tariff negotiations with Trump. The US president said last night on his Truth Social platform that he had spoken to Japan’s Prime Minister Shigeru Ishiba, triggering a 7 per cent surge in Tokyo-listed stocks earlier today. Treasury secretary Scott Bessent and US trade representative Jamieson Greer will lead the negotiations with Tokyo. Israel’s Prime Minister Benjamin Netanyahu and US commerce secretary Howard Lutnick discussed the Trump tariffs on Israel on Sunday, it was revealed yesterday.
Billionaires lambast Trump: In an FT interview, Ken Langone, the co-founder of Home Depot, has become the latest wealthy backer of the Republican party to criticise Trump’s trade policy.
For more analysis on the tariffs, sign up for our Trade Secrets newsletter if you’re a premium subscriber, or upgrade your subscription. Here’s what else we’re keeping tabs on today:
Congress: US trade representative Jamieson Greer testifies before the Senate finance committee on Trump’s trade policy.
Companies: Walgreens is expected to report second-quarter results after it agreed to be taken private by Sycamore in a $10bn deal. Walmart holds its annual investment community meeting in Dallas, and Boeing will release order and delivery numbers for March.
US interest rates: Federal Reserve Bank of San Francisco president Mary Daly speaks at an event at Brigham Young University Marriott School of Business, in Provo, Utah.
Five more top stories
1. Global stock markets regained some ground today after three sessions of steep declines and acute volatility. European stocks rose in morning trading and Asian markets ended in positive territory. Futures contracts suggest the S&P 500 and Nasdaq Composite will both open higher. For the latest market moves go to our live blog.
Treasuries drop: US government debt sold off sharply yesterday as hedge funds cut down on risk in their strategies.
Unhedged: For investors who are rational and lucky enough to be sitting on cash or short-term bonds, the prospect of further declines will have them thinking of buying, not selling. When do you buy the dip?
2. Wall Street traders are expected to report their best quarter in more than a decade after choppy markets during the Trump administration’s first months helped salvage an underwhelming performance by investment bankers. Market volatility in the first quarter has boosted traders but hampered corporate mergers and new stock market listings. Here’s more on what to expect when banks report earnings later this month.
3. Trump has announced that the US would hold direct talks with Iran on curtailing Tehran’s nuclear programme, in a sign of possible progress in one of the Middle East’s most intractable problems. The US president said the “very high level” talks would take place on Saturday. Here’s more on what to expect from the talks.
4. Eric Schmidt bought a double-fronted, stuccoed Holland Park mansion for almost £42mn last May, according to UK property records and people familiar with the matter. The former Google chief is the latest to join a surge of US buyers at the top end of the London property market. Read why Americans are investing in the capital’s prime residences.
5. Mexico’s government is talking to the private sector about expanding fracking as Trump’s trade threats heighten fears over the country’s dependence on US gas. President Claudia Sheinbaum, a former climate scientist, directed officials to explore fracking to help deliver energy independence, executives with knowledge of the conversations have said.
Today’s big read
Trump’s decision to impose different tariff rates on countries around the world has created huge uncertainty for companies exporting goods to the US. To reduce the burden, companies will be seeking to reorder their supply chains to reduce the impact of so-called rules of origin regulations. Peter Foster explains how the rules work.
We’re also reading . . .
Peter Navarro: “A trade system where [the US] faces higher tariffs, steeper non-tariff barriers and no viable path to resolution is nothing more than an ‘honour system’,” argues Trump’s senior counsellor for trade and manufacturing.
No way out: Even if Trump backs down, he will have succeeded in building uncertainty, which is itself a sort of tariff, writes Harvard University’s Jason Furman.
Fox News: As rightwing critics slam Trump’s tariffs, the conservative news network has other priorities.
Nintendo: The new Switch 2, due for release later this year, carries the hope of a company and a sector but has been thrust into a growing trade war.
Chart of the day
Some content could not load. Check your internet connection or browser settings.
The US Federal Reserve faces a dilemma: cut interest rates to prevent an economic slowdown or keep them high to stave off inflation. “The Fed is in an exceptionally difficult position right now,” said one economist the FT spoke to for this article on the outlook for US interest rates.
Take a break from the news . . .
Children of Radium, the novelist and poet Joe Dunthorne’s family memoir, is an interrogation of his great-grandfather’s life story, taking in Nazi Germany, 1930s Turkey and the world of chemical weapons.
