Aurelia Butler

Stay informed with free updatesSimply sign up to the More

Unlock the Editor’s Digest for freeRoula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.Almost two-thirds of the arms imported by European members of Nato over the past five years were produced by the US, according to new research that underlined the continent’s deep reliance on American-made weapons. Arms imports by the European nations more than doubled between 2020 and 2024 compared with the previous five years, as the region responded to Russia’s full-scale invasion of Ukraine in 2022, according to data from the Stockholm International Peace Research Institute (Sipri). The US supplied 64 per cent of these arms, up from 52 per cent between 2015-2019. Mathew George, director of the Sipri Arms Transfers Programme, said states moved forward with decisions to buy US arms despite public calls “to take steps to reduce their dependence on arms imports and to strengthen the arms industry in Europe”. The figures emphasise the scale of the challenge facing European leaders as they seek to reduce their military dependence on the US, as President Donald Trump has demanded that Europe become more responsible for its own security.Although the continent’s Nato allies have been looking to bolster their national capabilities since Russia’s invasion three years ago, Trump’s return to the White House has added fresh momentum.Some content could not load. Check your internet connection or browser settings.Leaders from the EU’s 27 members last week endorsed new defence funding initiatives proposed by Brussels, including an instrument that would provide €150bn in loans to capitals to spend on military capabilities.European Commission President Ursula von der Leyen said on Sunday that she wanted to use the loans to reduce reliance on arms bought outside the bloc. She said it was “very important” that the injection was used to deliver “on research, development and good jobs here in Europe”. The €150bn fund has become a new flashpoint in a long-standing battle between France and Germany over the continent’s rearmament drive and whether it should include countries outside the bloc. The commission chief believed it was important to be “smart” and keep good connections with Norway and the UK. Industry executives have echoed calls that the region needed to reduce dependency on non-European suppliers in order to boost its resilience. There are growing concerns that the US could even decide to withhold critical support for key weapon systems, such as the advanced F-35 fighter jet.Pieter Wezeman, senior researcher at Sipri, said that faced with an “increasingly belligerent Russia and transatlantic stress during the first Trump presidency, European Nato states had taken steps to rescue their dependence on arms imports and to strengthen the European arms industry”. Some content could not load. Check your internet connection or browser settings.But he also stressed the “deep roots” of Europe’s arms relationship with Washington, noting how European Nato capitals had “almost 500 combat aircraft and many other weapons still on order from the US”.Throughout the postwar era, European governments spent lavishly on expensive American weapons, seeing this as the price of keeping Washington committed to the continent’s security. Władysław Kosiniak-Kamysz, Poland’s defence minister, told journalists last month: “Europe should invest more in security to retain the presence of the Americans in Europe, and not to replace them.” He added that this “insurance policy” would show the new administration that they were meeting the two conditions that Trump frequently underlines as the quid pro quo for US support — higher defence spending and “mutual economic relations for American business”. Sipri’s annual analysis of global arms transfers also underlined how the US had cemented its position as the world’s top arms exporter, increasing its share of exports from 35 per cent to 43 per cent over the five-year period.Some content could not load. Check your internet connection or browser settings.Ukraine, meanwhile, became the world’s largest importer of major arms over that timeframe, with imports rising nearly 100 times as the country sought to fight off Russia’s forces. For the first time in two decades, the largest share of US arms went to Europe rather than the Middle East, although Saudi Arabia was the top single recipient of US weapons.The US remained the supplier of choice for advanced long-range strike capabilities like combat aircraft, Sipri said. The data also showed that the top 10 arms exporters in the past five years were the same as those in the previous period, but that Russia fell to third place behind France as exports slid. Italy jumped from tenth to sixth place. Russian arms exports fell by 64 per cent between 2015 and 2019, and 2020 and 2024, as the Ukraine war “accelerated” the decline in Moscow’s ability to export weaponry.Wezeman said this was because Russia needed to keep more of its domestic production to use on the battlefield, as well as the challenge of sanctions and western pressure on other countries not to buy from Moscow.Two-thirds of Russian arms exports went to India, China and Kazakhstan, according to the research. China’s imports of arms shrunk by 64 per cent between the two periods as the country increasingly substituted imports — mainly from Russia — with locally designed and produced weapon systems. China’s arms imports are likely to keep falling as the capacity of its domestic arms industry grows, according to Sipri. Additional reporting by Henry Foy in Brussels More

This article is an on-site version of our The Week Ahead newsletter. Subscribers can sign up here to get the newsletter delivered every Sunday. Explore all of our newsletters hereHello and welcome to the working week.In economic wars, as in military ones, an initial onslaught is followed by return fire. This is the position in which we find ourselves as we head into another rollercoaster seven days. On Monday China imposes tariffs of up to 15 per cent on the US, covering cotton and agricultural goods including chicken, corn and soyabeans. These are a direct response to the opening salvo tariffs by US President Donald Trump, who will add a 25 per cent levy on aluminium imports to his protectionist roster on Wednesday. Unlike the on-again-off-again battle with neighbours Mexico and Canada, these tariffs look likely to stick.Trump’s claims that his trade wars will only cause a “little disturbance” looks optimistic to say the least because the usual factors that contain such outbreaks do not appear to be playing out this time, as the Financial Times columnist and Trade Secrets writer Alan Beattie explains.While all of this tit-for-tat economic skirmishing plays out, Britain will host a church service on Monday at Westminster Abbey, the annual gathering to celebrate trade and mutual co-operation among the 56 member nations of the Commonwealth. Of course, this post Empire club is a far from easy coalition, so there may be the kind of fireworks the hosts would prefer to do without.Greenland’s 41,126 registered voters go to the polls for a general election on Tuesday. This would not normally be headline global news had the sparsely populated Arctic island not been added to Trump’s overseas territory shopping list. But it has — and you can find out exactly why by reading my colleague Richard Milne’s report from the fjords of Nuuk. The big issue for voters is Greenland’s (pre-Trump) independence aspirations — the biggest dividing line between the main parties is how quickly, not whether this can take place. There is also concern about relations between its current owner Denmark and the US, as well as the local concerns about the fragile economy, which is highly dependent on fishing and Danish grants.And so to corporate news, where the results rush turns to a trickle, but with notable examples in the consumer goods and retail spaces. Brick behemoth Lego reports full-year results on Tuesday with the main question being how can the plastic toy manufacturer sustain the recent sparkling form that has now even branched into Formula 1 racing. On Thursday British retailing stalwart John Lewis unveils its first set of annual results under chair Jason Tarry, a veteran of UK supermarket doyen Tesco, who took over from Dame Sharon White last year. Its 65,000 employees, who together own the John Lewis and Waitrose brands, will find out if they will receive an annual bonus (hopes are not high) after a three-year hiatus as the group attempts to turn itself round.Thames Water will be back in the news (is it ever out of it?) with a High Court hearing due to begin on Tuesday over the £3bn restructuring plan proposed by parent company Thames Water Utilities Holdings. The utility, which has faced long-term struggles over infrastructure costs, has a debt of £19bn and is likely to default on this soon. If you’ve not read it already I recommend my colleague John Gapper’s analysis, arguing that the only way forward may be to borrow more.There is a steady run of economic news. The headline events will be US inflation, watched for any signs of a tariff-induced uptick, as well as UK and Japanese GDP estimates plus EU employment data. More details about these and other items below.One more thing . . . The youngest Moules turns 16 this week. When I was his age — also the youngest of my siblings — my parents allowed me to have a house party, which turned out to be a little, er, wild. We didn’t need TikTok to turn things viral, just some mouthy mates and a garden that backed on to a public park. It is why I am forever thankful that none of my children have shown the slightest interest in such gatherings at our London home, but according to this House & Home piece it’s another Zoomer generational shift.Any ideas about the best way to toast a boy’s coming of age, or indeed how to deal with the bigger global crises? Email me at jonathan.moules@ft.com or, if your reading this in your inbox, hit reply.Key economic and company reportsHere is a more complete list of what to expect in terms of company reports and economic data this week.MondayDirect Line general meeting of shareholders to vote on the proposed acquisition of the company by AvivaGermany: January industrial production dataUK: KPMG/REC UK Report on Jobs and BDO Business Trends reportResults: Clarkson FY, HgCapital Trust FY, Jardine Matheson FY, Oracle Q3TuesdayHigh Court hearing begins after last month’s approval of a £3bn restructure plan for the parent company of Thames Water, which has debts of about £19bn Japan: revised Q4 GDP estimate (AM local time)UK: BRC-KPMG Retail Sales Monitor plus Manpower UK Employment Outlook SurveyUS: January Job Openings and Labor Turnover Survey (JOLTS) dataResults: Costain FY, Domino’s Pizza Group FY, Ferguson Enterprises FY, Henkel FY, Kier HY, Lego FY, Persimmon FY, Rotork FY, STV FY, TP ICAP FY, Volkswagen FYWednesdayOPEC monthly Oil Market ReportCanada: Bank of Canada interest rate announcementEU: February consumer price index (CPI) inflation rate dataUS: February CPI inflation rate dataResults: Adobe Q1, Balfour Beatty FY, Brenntag FY, Crown Castle Q4, Ferrexpo FY, Forterra FY, Gym Group FY, Hill & Smith FY, Hochschild Mining FY, Inditex FY, Legal & General FY, Mercedes-Benz FY, PensionBee FY, Porsche FY, Puma FYThursdayFT Live Wealth Management Summit Asia, both in-person in Singapore and online. Register here for a placeIEA Oil Market ReportEU: January industrial production figuresUK: RICS Residential Market SurveyUS: February producer price index (PPI) inflation rate dataResults: Bridgepoint FY, C&C Group pre-close trading update for FY, Deliveroo FY, Deutsche Bank FY, DFS Furniture HY, Dollar General Q4, Helios Towers FY, HelloFresh FY, IG Group Q3, John Lewis Partnership FY, OSB Group FY, Restore FY, Savills FY, Trainline trading update for FY, Volution Group HYFridayEU: Q4 labour market figuresGermany: February CPI and harmonised index of consumer prices (HICP) inflation rate dataUK: January GDP estimate. Also, Bank of England February inflation attitudes surveyResults: AIA Group FY, Allianz FY, Berkeley Group trading update, BMW FY, Daimler Truck FY, Foxconn Q4, Swiss Life FY, Vanquis Banking Group FYWorld eventsFinally, here is a rundown of other events and milestones this week. MondayChina: US import tariffs of up to 15 per cent come into force in response to Trump’s levies on Chinese exports to America. It is also the last day of this year’s National Committee of the Chinese People’s Political Consultative Conference annual session, for China’s top political advisory body. The National People’s Congress annual session is under way and runs until TuesdaySaudi Arabia: Ukraine President Volodymyr Zelenskyy arrives for peace talks, picking up on a postponed visit that was due to happen in mid-FebruaryUK: Service at Westminster Abbey in London marking Commonwealth Day, the annual celebration of the Commonwealth of NationsUS: 69th session of the Commission on the Status of Women begins at UN headquarters in New York, running until March 21TuesdayFifth anniversary of the World Health Organization declaring the coronavirus (Covid-19) outbreak a pandemic as cases surged in Italy, Iran, South Korea and Japan. The virus was first identified in ChinaBelgium: Economic and Financial Affairs Council (Ecofin) meeting of EU finance ministers in BrusselsGreenland: parliamentary electionsUK: MPs on the Environment, Food and Rural Affairs committee question executives from Northumbrian Water and Dwr Cymru Welsh Water as part of the inquiry on reform of the water sectorWednesdayBelize: parliamentary electionsCanada: G7 foreign ministers meeting in the Charlevoix region of Quebec.US: Trump imposes 25 per cent tariffs on steel and aluminium imports. He will also host Irish Taoiseach Micheál Martin for a bilateral meeting as part of the latter’s annual St Patrick’s visit to WashingtonUS: SpaceX Crew-10 mission, a Dragon spacecraft on a Falcon 9 rocket, launches from the Kennedy Space Center in Florida on a voyage to the International Space StationVietnam: AI-Semiconductor conference begins in Hanoi, running until Friday. Attendees expected to include executives from Google DeepMind, IBM, Intel, TSMC, Samsung, MediaTek, Tokyo Electron, Panasonic, Qorvo and MarvellThursdayHoli, the two-day Hindu festival of colours, celebrating the arrival of spring and the triumph of good over evil, beginsSouth Africa: President Cyril Ramaphosa plays host to European Council President António Costa and European Commission President Ursula von der Leyen for the eighth EU-South Africa SummitUS: Association for Asian Studies annual conference begins in Columbus, Ohio, running until SundayFridayUK: Gold Cup Day at the Cheltenham Festival, the grand finale of a four-day event, hailed as the world’s most significant horseracing jump eventUS: deadline to extend funding for parts of the federal government and avoid a shutdown, following a last-gasp resolution in December, which provided aid for natural disaster relief and farmers but did not change the debt ceilingSaturdaySundayLatvia: Legion Day, commemorating soldiers of the Latvian Legion that served in Nazi Germany’s Waffen-SS branch during the second world warUK: St Patrick’s Day parade in London ahead of the Irish patron saint’s feast day tomorrowRecommended newsletters for youInside Politics — What you need to know in UK politics. Sign up hereWhite House Watch — What Trump’s second term means for Washington, business and the world. Sign up here More

Unlock the White House Watch newsletter for freeYour guide to what the 2024 US election means for Washington and the worldDonald Trump has declined to rule out either a recession or higher inflation while dismissing the concerns of business over a lack of clarity on tariffs, after a tumultuous week in which he watered down elements of his aggressive trade agenda. The president insisted industry had “plenty of clarity” and lashed out at “soundbite[s]” from companies expressing confusion over his plans. “They always say that — that’s like almost a soundbite — they always say that: ‘we want clarity’,” Trump said in an interview aired on Fox News on Sunday. “It sounds good to say, but for years, the globalists, the big globalists, have been ripping off the United States. They’ve been taking money away from the United States, and all we’re doing is getting some of it back.”The president declined to rule out a recession hitting the US economy this year after the Atlanta Fed warned of an economic contraction in the first quarter of the year. “I hate to predict things like that. There is a period of transition, because what we’re doing is very big. We’re bringing wealth back to America. That’s a big thing, and there are always periods, it takes a little time.”Asked whether tariffs could fuel inflation again, Trump said: “You may get it. In the meantime, guess what? Interest rates are down.”The comments come after a week of about-turns and an equity market sell-off as markets scrambled for clarity over Trump’s brewing trade war and companies warned of rising prices. The president imposed 25 per cent tariffs across the board on imports from Canada and Mexico on Tuesday before backtracking later in the week.On Wednesday he granted carmakers a carve-out from the levies and on Thursday extended that to all goods that met the rules of the 2020 USMCA free-trade deal. Separate 25 per cent tariffs on steel and aluminium imports are set to take effect this week. The levies have already caused significant upheaval in the market as companies stockpile materials, review operations and prepare to raise prices. Trump reiterated that the tariffs could rise in future. “The tariffs could go up as time goes by. They may go up, I don’t know if it’s predictability,” he said. Trump said in the interview that he had “wanted to help the American carmakers” this week but insisted that no such leeway would be shown on reciprocal tariffs set to be imposed next month. “I gave them a little bit of a break for a short period of time . . . It’s a transition into April, and after that I’m not doing this . . . I told them, I said: Look, I’m going to do it this one time but, after that, I’m not doing it.”Separately on Sunday, Howard Lutnick, Trump’s commerce secretary, conceded some of the tariffs would cause inflationary pressures, echoing Trump’s warnings of “a little disturbance” when he addressed Congress on Tuesday.“So, will there be distortions? Of course, foreign goods may get a little more expensive, but American goods are going to get cheaper,” Lutnick told NBC’s Meet the Press. More

Stay informed with free updatesSimply sign up to the More

This article is an on-site version of Free Lunch newsletter. Premium subscribers can sign up here to get the newsletter delivered every Thursday and Sunday. Standard subscribers can upgrade to Premium here, or explore all FT newslettersHappy Sunday. This week I return to the US economy. The odds of a recession in America rose this week. Still, it is not most analysts’ base case for this year. So, sticking with Free Lunch on Sunday’s contrarian tradition, here’s why the world’s largest economy will succumb to a downturn in 2025.The argument has two components. First, even before US President Donald Trump’s inauguration, the US economy was weaker than many appreciated. I outlined why in an opinion column in August and in an earlier edition of this newsletter, “Debunking American exceptionalism”. Second, “Trumponomics” has damped the outlook further by introducing stagflationary forces and financial market risks. That is the focus of today’s newsletter.Let’s begin with consumers. A reminder: high spending has been propped up by debt and expenditure on essentials such as food, housing and healthcare. Serious delinquencies on credit card balances hit a 13-year high at the end of last year, with steep interest rates increasingly squeezing households.The White House’s agenda will add insult to injury by lumping taxes on top. The proposed duties on Mexico and Canada (now on pause), plus those already on China, will raise the US effective tariff rate to its highest since 1943, according to the Budget Lab at Yale. It reckons higher price levels could cost households up to $2,000.Some content could not load. Check your internet connection or browser settings.This is only a taster; further tariffs are expected. And though the president has a knack for pushing back deadlines, the impact on sentiment is already stark.Confidence has plunged. Consumers’ inflation and unemployment expectations have spiked. That is an ominous trifecta. Households are still trying to stomach a 20 per cent, post-pandemic rise in the price level. Notably, real consumption fell in January for the first time in nearly two years. Cautious spending behaviour is now more likely.Some content could not load. Check your internet connection or browser settings.Next, business. On-and-off tariff and customs rules, broader capriciousness in policymaking and troubled consumers are a potent mix. Import duties are set to raise costs and retaliatory measures will stifle international sales. But the radical uncertainty also impedes businesses’ ability to plan and adapt.The effects are already showing up in business activity indicators. The Goldman Sachs Analyst Index pointed to a contraction in sales, new orders, exports and employment across manufacturing and services companies in February. Manufacturing construction spending — which surged under the Inflation Reduction Act and the Chips Act — has also slowed, with the schemes’ statuses unclear under the new administration.Some content could not load. Check your internet connection or browser settings.Corporate outlooks have also dimmed. BCA Research’s capex intentions indicator has fallen into contractionary territory. Historically, that has signalled a slowdown. Small businesses’ hiring plans are thinning too, according to the latest NFIB survey. The Challenger tracker of planned job cuts jumped a staggering 245 per cent in February. Some content could not load. Check your internet connection or browser settings.A reminder: before Trump came in, many overestimated the extent to which America’s “strong” labour market was underpinned by private sector dynamism. Government, healthcare and social assistance account for two-thirds of new jobs created since the start of 2023 (and half of the 151,000 non-farm payrolls added in February). Immigration has also bolstered employment growth since the pandemic.Then comes the new administration’s objectives. Beyond the impact of policy uncertainty on the private sector, Evercore ISI estimates that Elon Musk’s public sector cost-cutting efforts could shave off a total of half a million US jobs this year. In an extreme scenario, that could reach over 1.4mn.A planned crackdown on undocumented immigrants, who account for at least 5 per cent of the workforce, will add to the job losses.Some content could not load. Check your internet connection or browser settings.Next, this administration has pushed stock market risks higher.Before Trump came in, the S&P 500 was already at both historically high valuation multiples and concentration levels — with the market capitalisation of the largest 10 companies at a multi-decade high.But markets had also under-priced just how far the president would go with his policy agenda, as exemplified by the recent correction in the US stock market back to pre-election levels.In the past year, analysts had suggested the stretched valuations of the S&P 500 were not overly concerning, as they reflected higher earnings estimates and the promise of artificial intelligence. But optimism around earnings will now subside. Sales and investment plans have been clouded by uncertainty, in AI and otherwise. Many US companies earn significant sums abroad, in nations Trump might wage trade wars against. In other words, stock prices have room to fall.If the president is really “just getting started” on his plans, his tolerance for further stock market weakness might be quite high. Yet the threat of a falling market has real economic implications: the equity holdings of households as a proportion of their total assets are at a record.Some content could not load. Check your internet connection or browser settings.Finally, broader financial risks appear more probable (even if their probability is still low) and could drive a tightening in financial conditions.Matt King, Satori Insights founder, points to potential triggers that could reverse America’s “safe haven” status (in which flights-to-safety are associated with a stronger dollar and lower Treasury yields). “A combination of concerns around fiscal irresponsibility, Fed independence and some of the more extreme proposals . . . as part of a Mar-a-Lago accord might just do the trick,” he said.The administration’s plans to plug the deficit with tariff revenues (particularly if they are stop-start) and the so-called Department of Government Efficiency are highly questionable. US borrowing costs are already high; fiscal laxity adds to yields. US Treasury demand faces other potential headwinds, such as the forthcoming increase in German Bund issuance. It is easier now to imagine the US becoming caught in a vicious cycle of higher yields and larger debt projections.Some content could not load. Check your internet connection or browser settings.Then there are the risks that Trump’s plans lean into: the institutionalisation of crypto, haphazard financial deregulation and potential manipulation of the dollar.Markets don’t know how to price the uncertainty, just like when Trump was last in office. A rapid re-pricing of political risks could drive sell-off dynamics in bond and equity markets. That may then trigger liquidity problems.How the Fed will react is also unclear. Given the underappreciated signs of a cooling economy last year, interest rates were too restrictive coming into Trump’s second term.Now, rates are in a holding pattern. The weakening growth outlook is raising expectations for cuts. But with inflation expectations rising and recent memories of sky-high price growth, the Fed might lean to the cautious side and keep rates high. In that case, the growth outlook would dim further. Indeed, the inflation-growth trade-off is harder for the Fed to assess, raising the risk of an error.Some content could not load. Check your internet connection or browser settings.The upshot? Many analysts are cutting their GDP forecasts for this quarter, driven by businesses stockpiling imports in anticipation of tariffs. Most expect this to unwind in the second quarter (although Trump’s stop-start tariffs will continue to incentivise stockpiling). Even then, with slowing activity and sentiment, rising financial risks and an already less-than-dynamic economy, it’s hard to see what could lift the mood and spur growth.Perhaps Trump’s pro-growth tax cut and deregulation measures? First, they are yet to begin. Second, they will be offset by the anti-growth elements of his policy agenda. Tax cuts will boost profits, but companies’ ability to do anything with the gains will be limited by uncertainty and higher import costs. Slashing red tape can support investment, but monitoring various new tariff regimes and carve-outs is itself a huge additional regulatory burden.It’s possible that a downturn can be avoided. But that would require Trump to significantly pare back his import duty plans and curb his shoot-from-the-hip style. How likely is that?Rebuttals? Thoughts? Message me at freelunch@ft.com or on X @tejparikh90.Food for thoughtHere’s a reminder of why Free Lunch on Sunday’s counter-consensus analysis is valuable. Recent calls made on European stock markets, the German economy and China appear to be hitting the mark.Recommended newsletters for youTrade Secrets — A must-read on the changing face of international trade and globalisation. Sign up hereUnhedged — Robert Armstrong dissects the most important market trends and discusses how Wall Street’s best minds respond to them. Sign up here More

Unlock the White House Watch newsletter for freeYour guide to what the 2024 US election means for Washington and the worldUS lumber futures have fallen from their all-time highs after president Trump’s delay to tariffs on Canada this week halted a surge in prices.Contracts tracking a truckload of lumber hit the highest point in their 30-month history this week on fears that Trump would impose sweeping tariffs on goods from Canada, its largest exporter.The country supplies 30 per cent of the softwood lumber used in the US for housing and furniture, and the uncertainty of supply adds to an already fragile housing sector in the US.Trump initially planned to impose 25 per cent tariffs on critical Canadian imports, boosting prices, but Thursday’s pause for a month pushed prices for delivery in May down more than 6 per cent over two days, to $651 per thousand board feet.Even so, prices remain elevated as Trump also ordered a federal investigation into Canadian companies potentially dumping excess supplies into the US market. The Department of Commerce proposed to almost triple anti-dumping duties on Canadian softwood lumber. Together with potential tariffs, the total duty on Canadian imports could rise from 14.5 per cent to 52 per cent.“This is going to be devastating for Canadian producers,” said Dustin Jalbert, senior economist for wood products at price reporting agency Fastmarkets. “No Canadian producer is making the margin to be able to absorb that.”Jalbert added that the US housing market is already constrained by high interest rates and labour shortages, which could be worsened by Trump’s crackdown on undocumented migrants. “[Builders] are getting hit from all angles right now,” he said.The skirmishes step up the long-running dispute between the US and Canada over softwood lumber. The US argues that Canadian lumber producers, who often harvest timber from publicly owned lands at regulated prices, receive unfair government subsidies and sell lumber into the US market at prices below production costs.“The United States faces significant vulnerabilities in the wood supply chain from imported timber, lumber, and derivative products being dumped on to the US market,” Trump said in his executive order.The probe follows similar investigations into copper, steel, and aluminium, reflecting the administration’s broader push to curb foreign competition and strengthen domestic industries.Canada’s forest product industry is one of the country’s largest employers — providing 200,000 direct jobs, operating in hundreds of communities and generating more than $87bn in revenues.Derek Nighbor, Forest Products Association of Canada president, urged the US to avoid imposing tariffs. They will damage a long and well-functioning integrated forest products supply chain that runs two ways and benefits Americans and Canadians alike, he said in a statement.“It will create business uncertainty on both sides of the border and will drive up costs for building materials and everyday household products for Americans,” he said. More

Unlock the White House Watch newsletter for freeYour guide to what the 2024 US election means for Washington and the worldJapan’s trade minister is heading to Washington in a last-minute attempt to seek tariff exemptions after President Donald Trump openly questioned a long-standing security pact between the US and one of its closest allies.Yoji Muto, minister of economy, trade and industry, is scheduled to meet his American counterpart Howard Lutnick on Monday, just two days before the US is set to impose a 25 per cent tariff on all steel and aluminium imports.People close to the commerce secretary have described Lutnick as favouring the use of tariffs to convince foreign governments to adopt more US-friendly policies.The trip comes after Trump on Thursday said while the US had a great relationship with Japan, “we have an interesting deal with Japan that we have to protect them, but they don’t have to protect us”.In response, Prime Minister Shigeru Ishiba told parliament on Friday that the security treaty was reciprocal. Japan hosts more than a dozen US bases and roughly 60,000 US military personnel under a mutual defence pact signed by Republican president Dwight Eisenhower in 1960.Ishiba is also overseeing a rapid expansion of military spending towards a target of 2 per cent of GDP.The trade minister is expected to discuss exemptions from the metals tariffs, as well as a reprieve from a possible 25 per cent levy on car imports, which Trump threatened in February could come as soon as April.Automobile duties would hurt Japan’s big carmakers, which directly export to the US and have complex production networks that rely on the free movement of parts between the US, Mexico and Canada. Cars were Japan’s biggest export last year, with roughly a third bound for the US.The on-off nature of Trump’s tariff threats has triggered market volatility, with Japan’s exporter-heavy Nikkei 225 stock index falling more than 2 per cent on Friday.As he departed Tokyo on Sunday, Muto told reporters that he would use his first meeting with Lutnick to “build human relations” and offer suggestions that were “win-win for both the US and Japanese economies”, but did not elaborate.His visit was announced last week amid rising consternation in Japan over whether its long-standing friendship with the US would protect it from a president who has pointed to the existence of trade deficits with other countries as evidence of unfairness. The US trade deficit in goods with Japan was the seventh largest by country, at $68.5bn, last year, according to the US Bureau of Economic Analysis. But Japan was also the largest provider of foreign direct investment to the US in terms of ultimate beneficial owner, with $783.3bn in 2023.Tokyo’s concerns also include accusations of currency manipulation. Trump last Monday cited Japan and China as countries that had been reducing the value of their currency in a way that was unfair to the US.In response, former Bank of Japan governor Haruhiko Kuroda noted that the country had undertaken huge efforts last year to prop up the falling yen and that current monetary policy, which has been focused on raising interest rates, was not aimed at cheapening the yen.“If there’s any misunderstanding on that point, it needs to be addressed,” he said on Friday in his first televised interview since stepping down as governor in April 2023. More