Aurelia Butler

Unlock the Editor’s Digest for freeRoula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.The euro has a “clear path” to bolster its position as a global reserve currency to rival the US dollar and must take advantage of the huge opportunities it now faces, according to the president of the Eurogroup.Paschal Donohoe, who is Ireland’s finance minister as well as chief of the group of Eurozone finance ministers, said on Thursday there was a “heightened level of urgency” behind efforts to expand EU capital markets and adopt a digital euro.“I believe that offers a clear path to strengthening the role of the euro on the global currency stage,” he told an EY summit for chief financial officers in Dublin, held in partnership with the Financial Times.Donohoe’s comments come at a time of increased speculation over whether US President Donald Trump’s protectionist economic policies could affect the dollar’s central role in the global financial system.Trump’s apparent retreat from transatlantic alliances has also spurred European leaders to borrow more to fund increased military spending. Germany on Wednesday announced a historic €500bn debt deal to fund investment in defence and infrastructure. The relative scarcity of German government bonds — the eurozone’s de facto haven — has in the past been seen as a barrier to wider adoption of the euro in central bank reserves around the globe.The European single currency makes up 20 per cent of global reserves, roughly the same level as five years ago, according to the most recent IMF data. The dollar’s share has slipped to 57 per cent from 61 per cent over that time.George Saravelos, at Deutsche Bank, said this week that Trump’s imposition of tariffs on trading partners had unexpectedly piled pressure on the dollar — something that partly reflected “the potential loss of the dollar’s safe-haven status”. “We do not write this lightly, but the speed and scale of global shifts is so rapid that this needs to be acknowledged as a possibility,” Saravelos wrote.Global investors have long questioned the ability of other currencies, including the euro, to rival the dollar’s long-standing role as the primary reserve asset, not least because of the vast $28tn scale of the US Treasury market, which dwarfs the €1.8tn market for German government bonds.“Until you have a credible alternative [to the dollar], what can you do?” said Sonal Desai, chief investment officer at Franklin Templeton Fixed Income. “You need vast pools of deep liquid capital markets” to be seen as a haven region, “and at the current point in time, the crown sits with the US”. More

This is an on-site version of the White House Watch newsletter. You can read the previous edition here. Sign up for free here to get it on Tuesdays and Thursdays. Email us at whitehousewatch@ft.comWelcome back to White House Watch. Treasury secretary Scott Bessent will speak at the Economic Club of New York today. For now, let’s get into:The US stopping intelligence sharing with Ukraine Trump giving carmakers a tariff reprieve Why farmers are so frustrated The Trump administration has furthered its break with Ukraine by announcing that it will stop sharing intelligence with Kyiv, just days after halting military aid to the war-torn nation. “[Donald] Trump had a real question about whether [Ukrainian] President [Volodymyr] Zelenskyy was committed to the peace process, and he said let’s pause,” John Ratcliffe, director of the CIA, said of the decision. He added that there was hope that the support could be restored. “I want to give a chance to think about that, and you saw the response that President Zelenskyy put out,” Ratcliffe said. “So I think on the military front and the intelligence front, the pause that allowed that to happen, I think will go away.”US intelligence has been essential in helping Ukraine to identify and strike Russian military targets. “If they don’t reverse it soon, it will become really difficult for the Ukrainians because it takes away their battlefield advantage,” said a senior western official.After Trump’s heated Oval Office clash with Zelenskyy last week, relations between Washington and Kyiv deteriorated before more recent signs of repair. Zelenskyy made a show of contrition on Tuesday, saying the meeting was “regrettable” and Ukraine was “ready to come to the negotiating table as soon as possible”. He expressed readiness to sign a deal with Trump “at any time” that would give the US the rights to profit from exploiting Ukraine’s natural resources. (Our commodities correspondent breaks down why rare earths have been in the spotlight.) Amid halting efforts to stop the fighting in Ukraine, UK defence secretary John Healey flew to Washington yesterday for talks with his US counterpart Pete Hegseth on the “parameters” of a European peace plan for Ukraine.Healey will aim to convince Hegseth that the US needs to offer a security guarantees in order for the plan to work. “That’s a work in progress,” admitted one British official, with studied understatement.The latest headlinesSome content could not load. Check your internet connection or browser settings.What we’re hearingFarmers across the US are already struggling because of depressed commodity prices. With Trump’s tariffs on Mexico and Canada — and follow-on retaliatory levies — rural America is bracing for impact. [Free to read] “Contrary to what the president thinks, this means nothing but pain,” said Aaron Lehman, head of the Iowa Farmers Union. “Our domestic markets aren’t prepared to pick up the slack and that means lower prices for what we grow.”While farmers supported Trump’s goal of ensuring fair trade with other nations, his current plans were going to hurt, said Zippy Duvall, head of the American Farm Bureau Federation.“For the third straight year, farmers are losing money on almost every major crop planted,” said Duvall. “Adding even more costs and reducing markets for American agricultural goods could create an economic burden some farmers may not be able to bear.”After Washington hit most Canadian and Mexican imports with 25 per cent tariffs this week and outlined plans to double levies on Chinese products, Beijing responded by threatening 10 per cent to 15 per cent tariffs on US agricultural goods from March 10. Canada has imposed levies on US imports, and Mexico said it would follow suit.Some content could not load. Check your internet connection or browser settings.“Farmers are frustrated,” said Caleb Ragland, president of the American Soybean Association. “Tariffs are not something to take lightly and ‘have fun’ with.” “Not only do they hit our family businesses squarely in the wallet, but they rock a core tenet on which our trading relationships are built, and that is reliability,” he added.Meanwhile, other nations are well positioned to step in if trade tensions prompt importers to turn their backs on the US. Brazil and other soyabean producers were expecting abundant crops this year, Ragland said, and “are primed to meet any demand stemming from a renewed US-China trade war”.ViewpointsEconomics commentator Chris Giles has a useful primer on the 10 things you should know about Trump’s tariffs but were afraid to ask.Trump’s address to Congress on Tuesday night is more likely to be remembered as a spectacle than for the content of what he said, writes Edward Luce. Elon Musk is the fox in the henhouse of science, argues Anjana Ahuja, as critics within the UK’s Royal Society protest against fellow member Musk’s role in threatening scientific research. The Washington strategy team at Jefferies sought to find out whether there’s any truth to Doge’s claim to have saved $105bn. The takeaway: no, writes Bryce Elder in Alphaville.Recommended newsletters for youFT Exclusive — Be the first to see exclusive FT scoops, features, analysis and investigations. 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Unlock the Editor’s Digest for freeRoula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.The writer is the author of ‘Chip War’“I’m a little bit nervous,” admitted CC Wei, the CEO of Taiwanese chipmaker TSMC, taking the podium at the White House this week as he announced the largest foreign investment in American history. The entire chip industry has been nervous while watching President Donald Trump’s tariff escalation. Trump has threatened retaliation against Taiwan for having “stolen” US business. Yet TSMC is doubling down on its US manufacturing footprint with a new $100bn commitment.What exactly is TSMC planning to build? In addition to the chip plants — called fabs — already on their Arizona campus, TSMC will add three more. The company will also build two advanced packaging plants and an R&D facility. The timeline, capacity, and technology capabilities of these plants is not clear, but TSMC says they will produce AI chips. Even if the new plants have a similar volume to TSMC’s current facility, the US operations would still be a small share of the company’s overall production, though a higher share of its advanced manufacturing.This investment cements America’s position as a significant player in advanced chipmaking, behind only Taiwan and South Korea. TSMC’s customers — mostly big US chip designers like Nvidia, Apple, and AMD — will welcome the further geographic diversification of its manufacturing operations. Yet they will also ask about the cost. TSMC has learnt efficiencies during its time in the US, but its manufacturing there is still more expensive than in Taiwan. Both TSMC and its customers may now avoid tariffs, but they will find themselves with higher manufacturing costs instead.Still this announcement poses tough questions for Samsung and Intel, the two other primary manufacturers of advanced processors, who have pitched themselves as reliable suppliers with less exposure to China-related risk. As TSMC’s US footprint grows, this argument gets harder to make. Has this investment addressed America’s fears of being cut off from Taiwan’s chipmaking capabilities? Standing alongside Wei, Trump noted pointedly that TSMC’s new plants would be built in a “very safe place”. Yet even $100bn only goes so far in the capital intensive semiconductor supply chain. Products like smartphones and consumer electronics will probably remain entrenched in Taiwan and China.For AI chips, however, the new investment may represent a more significant shift. TSMC has reportedly been discussing manufacturing Nvidia’s advanced Blackwell AI chips in Arizona. If the company’s new facilities include its advanced packaging technology, then AI accelerators could be fully produced in the US. Other Taiwanese firms such as Foxconn are also planning new US plants to assemble these AI chips into servers, though some key inputs would still be sourced from Japan or Korea. After these new investments, the US still won’t have an end-to-end AI supply chain, but it will be less dependent on production in Taiwan.What do TSMC and Taiwan get from the announcement? Relief from tariff threats, they hope. Trump warned Taiwan it could face levies of “25 per cent or 30 per cent or 50 per cent” in the future. As the industry’s dominant supplier, TSMC could no doubt pass some tariff-induced price increases on to customers. But if these new plants prevent tariffs in the first place, the investment may prove to be money well spent.    A second concern for TSMC is, as Trump put it, “Taiwan pretty much has a monopoly” over high-end processors. From AT&T to IBM, Microsoft to Alphabet, tangles with antitrust authorities have historically been common for tech companies with 90 per cent market share, as TSMC has in advanced chipmaking. This is another rationale for solidifying ties with an administration that has talked tough on tech antitrust.A final explanation is less about TSMC and more about Taiwan. Some in the country worry that TSMC’s international expansion undermines the “silicon shield” they believe has helped to deter Chinese escalation. However, even with these new plants, the majority of TSMC’s production will remain onshore. Taiwan’s leaders hope that by investing in the US economy they can keep Trump invested in their security. So TSMC is betting its future on being even more deeply bound to the US.   More

Unlock the Editor’s Digest for freeRoula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.Turkey has cut interest rates for a third consecutive month as a fall in annual inflation to the lowest level in almost two years bolstered policymakers’ case to bring down borrowing costs.The central bank’s monetary policy committee on Thursday lowered the benchmark one-week repo rate by 2.5 percentage points to 42.5 per cent, in line with forecasts by economists surveyed by Bloomberg and Reuters.The latest cut brings the total reduction to 7.5 percentage points since December, when the bank ended an 18-month period of raising or keeping rates high to slow runaway inflation driven by ultra-low interest rates favoured by President Recep Tayyip Erdoğan.That had sparked a painful cost of living crisis that has battered households, especially pensioners and the third of Turks who earn the minimum wage. Erdoğan pivoted sharply after winning re-election in May 2023, allowing the central bank to use high interest rates to bring down inflation that peaked at 86 per cent in October 2022. Official data released this week showed inflation in Turkey had declined to 39.1 per cent in February, the lowest level since June 2023, and the central bank said in a statement accompanying the rate cut that it saw “disinflationary” domestic demand continuing in the first quarter.It reiterated pledges to maintain tight monetary conditions to adhere to a disinflation programme and that the policy rate would be set “on a meeting-by-meeting basis”. “Going forward, increased co-ordination of fiscal policy will also contribute significantly to this process,” the statement also said.However, pressure on the government to maintain popular spending programmes may increase as opinion polls showed approval for Erdoğan’s ruling party had fallen over the state of the economy, according to Wolfango Piccoli, co-president of consulting group Teneo. “Such co-ordination is unlikely to materialise,” he said.Another risk may arise from the disconnect between the central bank’s outlook of year-end inflation of 24 per cent with businesses’ expectation of 28 per cent, according to the bank’s latest survey.“Inflation expectations from households and businesses exceed the central bank’s projections, posing a risk to the disinflation process,” Piccoli said.Turkish depositors continue to save in foreign currencies to hedge against concerns that the lira could depreciate. That has helped contribute to a decline of about 3 per cent in the currency against the US dollar this year. More

Unlock the Editor’s Digest for freeRoula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.US grain prices have fallen sharply in recent weeks as retaliatory tariffs on the country’s agricultural exports fuel fears that a trade war will create a supply glut on global markets.Corn, wheat and soyabean prices in Chicago have dropped since mid-February, coming under further pressure this week after China and Canada said they would impose a range of tariffs on US foodstuffs.Traders have been forced to rapidly rethink their outlooks as the major trading partners threaten tariffs on some of their main exports. On Thursday, US President Donald Trump said he would postpone tariffs on most goods from Mexico for a month. Howard Lutnick, US commerce secretary, said the reprieve would probably also be extended to Canada. However, Canadian Prime Minister Justin Trudeau warned his country would be in a trade war with the US for the “foreseeable future”. Futures rebounded on Thursday although still remain far below their mid-February highs. Wheat, which has slumped more than 17 per cent in three weeks, rebounded 2.1 per cent to $5.60 per bushel following Trump’s decision. Contracts tracking corn, which have fallen 9 per cent in the last month, rose 2.8 per cent to $4.52 a bushel. Soyabeans, which had fallen 8 per cent since mid-February, added 1.5 per cent to 1,017 cents a bushel.China announced on Tuesday that it would impose a 10 per cent tariff on imports of soyabeans, sorghum, pork and beef from the US, alongside a 15 per cent levy on chicken, wheat, corn and cotton.As the world’s biggest pork producer, China accounts for more than 40 per cent of US soyabean sales. Both soyabeans and corn are primarily used for livestock feed. Canada also set 25 per cent levies on US-imported grains, meat and dairy products on expectations of an influx of US supply.Mexico, the biggest market for US corn, said it planned to announce its own countermeasures this weekend. “If Mexico stops buying US corn, there will be a surplus, creating more availability for other countries,” said Carlos Mera, head of agricultural commodities at Rabobank, “That will push down prices.”The retaliatory tariffs come in response to Trump saying he would impose 25 per cent duties on imports from Canada and Mexico and raise tariffs on China to 20 per cent, as the US agriculture trade deficit heads towards a record $49bn this year.Mexico is a big buyer of US wheat, which it uses mainly for milling to make flour. Prices have also retreated on speculation over a peace deal between Ukraine and Russia, brokered by Trump. Ukraine is one of the world’s biggest grain producers. The trade war has prompted a backlash from US farmers, whose income has plummeted over the past three years as prices tumble and the cost of inputs, such as fertiliser and seeds, has gone up. They have also been hit by Trump’s freeze on funding from the Inflation Reduction Act, which supported sustainable agriculture projects.“Farmers are facing a troubling economic landscape due to rising input costs and declining corn prices,” said Kenneth Hartman Jr, president of the National Corn Growers Association. “We ask President Trump to quickly negotiate agreements with Mexico, Canada and China that will benefit American farmers.”The US agriculture department last week reported an increase in the projected corn planting area to 94mn acres, exceeding market expectations.The larger than expected acreage prompted speculative funds, which had built near-record long positions in corn, to unwind their bets. Adverse weather in Brazil and Argentina, coupled with Mexico accelerating corn imports ahead of tariffs, had previously drawn hedge funds into the market.Andrey Sizov, managing director of grain consultancy SovEcon, expressed scepticism about a surge in wheat supply, but said reduced freight costs for Ukrainian grain could lower prices. “The insurance premium currently factored into shipping costs is substantial,” he said. More

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Unlock the Editor’s Digest for freeRoula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.Taiwan Semiconductor Manufacturing Company said it was “not afraid” of losing Washington’s subsidies for its massive US investments, as the chief of the world’s largest chipmaker sought to reassure investors following US President Donald Trump’s call to kill the $52bn chips act. “Even if we don’t get any subsidies at all, we are not afraid of that,” TSMC chair and chief executive CC Wei said on Thursday at a joint press conference with Taiwan’s president Lai Ching-te. “Honestly, I only demand fairness. We are not afraid to compete,” he added. His comments come just days after TSMC pledged an additional $100bn investment in the US, boosting capacity in the country in a move designed to placate Trump and head off threatened tariffs on chip imports.A day later, Trump called on Congress to eliminate the US Chips Act, under which the Biden administration agreed to support TSMC’s previously pledged $65bn investments with $6.6bn in public funds.In his Tuesday night State of the Union address, Trump said about TSMC that “all that was important to them was they didn’t want to pay the tariffs”. He added: “So they came and they’re building . . . We don’t have to give them money.”On Thursday, the TSMC chief evaded the question whether the company had received a guarantee from Trump that the subsidies would remain in place in exchange for its additional commitment. He added that TSMC’s “grand alliance” with all other parts of the chip supply chain and its single-minded focus on the needs of its customers, rather than government support, were the reasons that it surpassed its rivals.The joint press conference with Taiwan’s president was aimed at allaying fears that TSMC’s additional US investments would undermine the company’s commitment to Taiwan.Back home, TSMC is widely referred to as the “sacred mountain that protects the nation”, reflecting the belief that other democracies will be more willing to defend Taiwan against a potential Chinese attack as long as they remain highly dependent on chip supplies from the country. TSMC produces more than 90 per cent of the world’s most advanced semiconductors.So far all of those are made in fabrication plants, or fabs, in its home country, but it plans to start offering the most advanced process technology in the US from 2028.Under the new deal announced with Trump on Monday, the company has sharply increased its capacity expansion plans for the US and even pledged to set up a research and development unit there, which it previously resisted.In contrast to competitors Samsung and Intel, TSMC only manufactures chips to the designs of other companies. This model has enabled other chipmakers to exit manufacturing and focus on design, in turn giving TSMC a continuously growing market share.Wei said TSMC’s new US investment would not come at the expense of its home country. The company is building 11 new fabs in Taiwan, compared with five new factories over the next four years promised to Trump. The TSMC chief clarified that the R&D unit in the US would be focused on improving process technology that has already entered production. The “real R&D” of developing next-generation manufacturing technology would remain at the global R&D centre in Taiwan, 10 times the size of the US unit with 10,000 engineers. More

This article is an on-site version of our Energy Source newsletter. Premium subscribers can sign up here to get the newsletter delivered every Tuesday and Thursday. Standard subscribers can upgrade to Premium here, or explore all FT newslettersHello and welcome to Energy Source, coming to you from New York.US President Donald Trump has made adjustments to his tariffs on imports from Canada and Mexico, as he gave a one-month reprieve for carmakers. US commerce secretary Howard Lutnick said the president would “consider” relief for certain other sectors.But the fallout from an escalating trade war already caused oil prices on Wednesday to drop for the third day in a row, falling 3 per cent to its lowest level in three years. My colleague Jamie Smyth interviewed the chief executive of TC Energy, one of the largest pipeline companies in North America, who said Trump’s tariffs on Canadian and Mexican oil and gas would fuel inflation, particularly on US petrol prices, and threaten energy security. Our first item today features a warning from Switzerland’s industrial giant ABB that tariffs will trigger inflation and reduce investment in the US’s top trade partners. Our second item takes a closer look at a new study that found more than half of the world’s greenhouse gas emissions in 2023 were linked to just 36 fossil fuel and cement producers.Thanks for reading — Alexandra Swiss industrial giant warns Trump tariffs will create an ‘inflationary environment’US President Donald Trump’s sweeping tariffs on Canada and Mexico will create an “inflationary environment” and reduce investment in the country’s top trade partners, Switzerland’s industrial giant ABB has warned. Morten Wierod, the chief executive of ABB, told Energy Source that the tariffs would increase the price of “everything” and that free trade was the “most efficient” way to operate. “It will lead to a more inflationary environment because these tariffs will be paid by the people that are going to buy these products. There’s nobody else to pay for it,” said Wierod. Wierod added that the tariffs would result in the reduction of ABB’s employment and investments in Mexico and Canada. Eighty per cent of the goods the Swiss giant sells in the US are produced in the country and it plans to boost the percentage higher. Earlier this week, it announced a $120mn investment to expand electrical equipment production in the US. The warning from Wierod arrives amid mounting concern from businesses and consumers that Trump’s decision to impose 25 per cent tariffs on Canada and Mexico will trigger massive disruptions in the world’s largest economy. The US relies on Canada and Mexico for grid equipment and crude imports to produce petrol and diesel in its refineries. The US Midwest and north-east also consume significant amounts of hydropower from Canada. Earlier this week, Canadian politicians threatened to issue retaliatory tariffs on exports to the US or cut off supplies of electricity. The US imported more than $110bn in fossil fuel, electricity and clean tech from Canada last year, according to BloombergNEF. The tariffs on electricity and grid equipment arrive as the US witnesses historic growth in electricity demand driven by the race to lead in artificial intelligence, the onshoring of manufacturing, and electric vehicle adoption. “Tariffs are bad for all American manufacturing . . . They’re a pressure on the economy that’s really hard to ignore,” said a top official at an energy trade association.Analysts warned that the tariffs would raise prices for ratepayers and complicate the president’s goals to slash electricity costs by 50 per cent early in his second term. “He seems to be basically doing the opposite of what would be required to bring energy prices down,” said Antoine Vagneur-Jones, head of trade and supply chains at BloombergNEF. (Amanda Chu)Only 36 companies account for half of global emissions in 2023More than half of the world’s greenhouse gas emissions in 2023 can be linked to just 36 fossil fuel and cement producers, according to a report from the Carbon Majors database. The climate watchdog found that emissions from the world’s largest oil, gas, coal and cement producers increased in 2023, with state-owned companies making up 16 of the top 20 emitters.The top five state-owned emitters — Saudi Aramco, Coal India, CHN Energy, National Iranian Oil Company and Jinneng Group — accounted for nearly a fifth of all global emissions in 2023. The top five investor-owned emitters — ExxonMobil, Chevron, Shell, TotalEnergies and BP — made up 5 per cent of emissions. Emmett Connaire, senior analyst at Carbon Majors, said many climate accountability cases worldwide were being brought against investor-owned companies.“For state-owned companies, it’s not like western governments can sue them for their emissions as they’re under direct control of nation states,” said Connaire. The group’s report arrives as countries backpedal on their climate commitments and oil and gas producers double down on fossil fuels almost 10 years after the Paris climate agreement. The report’s findings are based on a database that traces the emissions from production and combustion of products from 180 of the largest oil, gas, coal and cement producers from 1854 to 2023. The organisation’s data has been used by activists in litigation against fossil fuel producers and has helped shape climate legislation. Vermont, which became the first US state to charge oil companies for climate change damages, used data from the Carbon Majors database in its “climate superfund” law. Chinese companies contributed more to emissions than any other country. The group also found that eight Chinese companies were responsible for 17 per cent of global emissions in 2023, largely because of coal, which is the largest source of emissions. Although emissions from coal and cement producers increased in 2023, natural gas emissions declined by nearly 4 per cent while emissions from oil companies remained steady.Emissions increased the most in Australia, Asia and North America, growing 11 per cent, 6 per cent and 3 per cent, respectively, from 2022. In comparison, emissions declined 4 per cent in Europe and increased less than 1 per cent in the Middle East. (Alexandra White)Job movesGianluca Bacchiocchi has rejoined law firm Clifford Chance as a partner in its global financial markets team as the firm expands its energy and infrastructure financing capabilities. The Center for International Environmental Law has appointed Rebecca Brown as president and chief executive. Most recently Brown served as vice-president of global advocacy at the Center For Reproductive Rights. The American Clean Power Association named Tara McGee as senior director of federal affairs for tax and trade. McGee recently served as tax and trade policy adviser to US Senator Shelley Moore Capito. BP plans to hire two new directors as part of its pivot back to oil and gas. The move suggests the company will have significantly more directors than the average 10-person FTSE 100 board.Power PointsEnergy Source is written and edited by Jamie Smyth, Myles McCormick, Amanda Chu, Tom Wilson and Malcolm Moore, with support from the FT’s global team of reporters. Reach us at energy.source@ft.com and follow us on X at @FTEnergy. Catch up on past editions of the newsletter here.Recommended newsletters for youMoral Money — Our unmissable newsletter on socially responsible business, sustainable finance and more. Sign up hereThe Climate Graphic: Explained — Understanding the most important climate data of the week. Sign up here More