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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 US is eyeing a multibillion-dollar slice of Britain’s pork, poultry, rice and seafood sectors, as it looks to expand its trade agreement with the UK, Donald Trump’s agriculture secretary said on Tuesday. Brooke Rollins said these sectors were “at the front of the line” in ongoing negotiations to build on the trade deal announced last week, which gave US beef and bioethanol producers expanded access to the UK market.Washington has touted the deal as a $5bn opportunity for American farmers, ranchers and producers, but the initial text of the agreement only covers about $950mn of trade in hormone-free US beef and ethanol.“Certainly pork and poultry are at the front of the line, along with rice and seafood,” Rollins said at a press conference in London on Tuesday, when asked about further products under discussion.She added: “Food security is national security. The UK, for example, really relies on China and Russia for your seafood. America has extraordinary best-in-class seafood. Let’s talk about that.”The remarks are likely to stir concern among British farmers and food producers, who have already raised alarms about potentially being undercut by cheaper US imports that may not meet UK or EU production standards.The UK has high tariffs on many agricultural products including up to 72 pence per kilogramme on pork, 107p on poultry, and 18 per cent on shrimp. “We are more than happy to compete on a like-for-like basis,” said Richard Griffiths, chief executive of the British Poultry Council. “But if we allow imports that are produced to standards beneath ours, that’s unfair competition.” Rollins suggested some US exporters would adjust to meet British expectations, in a softening from last week when she said no industry had been “treated more unfairly than our agriculture industry”.While she defended the safety of hormone-treated beef and chlorinated chicken, she said beef producers may be prepared to ditch hormones in order to sell to the UK and stressed “only about 5 per cent” of US chicken is now washed with chlorine.American producers “are constantly watching what the markets look like, and if the markets are calling for a specific type, or they have more opportunity somewhere, then I think that we, potentially, do see some movement in the market”, Rollins added.Griffiths countered that among US producers “it’s standard practice to clean up at the end” with chemical washes — including but not limited to chlorine. In comparison, he said, British poultry farmers have to promote hygiene throughout the whole process, and can only use water. This is much costlier, he added.UK ministers have repeatedly insisted that chlorinated chicken and hormone-treated beef would remain illegal in Britain.Rollins also stressed the reciprocal benefits for UK exporters: “While, in fact, we are excited about getting American beef, ethanol [and] hopefully down the line, rice, seafood, other products are coming into your country, this is also about getting more of your country’s products into ours as well.”Steve Reed, UK environment, food and rural affairs secretary, said the trade deal with the US would “protect Britian’s farmers and secure our food security”.“We have always been clear that this government will protect British farmers and uphold our high animal welfare and environmental standards,” he added.This article has been amended to clarify that the comments were made by the US agriculture secretary More

Unlock the Editor’s Digest for freeRoula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.“Consumption is the sole end and purpose of all production.” Thus taught Adam Smith. It is hard to see what else production is for, now or in future. Consumption must be the goal of international trade, too. But what happens if significant players do not seem to believe this? Then the global system malfunctions.The starting point here needs to be with a proposition fundamental to the economics of John Maynard Keynes: actual spending activates potential savings. Moreover, he argued, there is no reason to believe that the needed spending will happen naturally. He called this “the paradox of thrift”. Sustaining high levels of activity may demand policy action.Today, the structural excess savings of a number of economies, notably China, Germany and Japan, are largely offset (and so activated) by the excess spending of the world’s most creditworthy country, the US, (and, to a lesser extent, the UK). The figures are startling. Just these big three surplus economies ran aggregate current account surpluses of $884bn in 2024. The surpluses of the top 10 countries amounted to $1.568tn. But surpluses are only made possible by deficits. Thus the US ran a current account deficit of $1.134tn, to which the UK added $123bn. (See charts.) Donald Trump’s presidency is, in part, a symptom of this reality.Yet this is also peculiar. The excess savings of surplus countries are not being absorbed, as they were in the late 19th century, by investment in dynamic emerging and developing countries. They are offset instead by borrowing by the world’s richest country. Moreover, at least since the financial crisis of 2008, the domestic counterpart of this borrowing is not funding of the private sector but borrowing by the government.Prior to the 2008 financial crisis, domestic spending had predominantly been driven by credit-fuelled property booms. These phenomena were not unique to the US, though the US has long been the biggest global borrower. In the Eurozone and the UK, too, net borrowing by the countries with huge current account deficits, before the financial crisis, was largely driven by credit-fuelled property bubbles (as in Ireland or Spain) or fiscal deficits (as in Greece). When those property bubbles burst and financial systems crashed, the consequence was also huge fiscal deficits almost everywhere.Some content could not load. Check your internet connection or browser settings.In sum, we now seem unable to turn surplus savings in some countries into productive investment elsewhere. One of the reasons for this is that the countries able to borrow sustainably from abroad have creditworthy currencies. This rules out most emerging and developing countries. It also, it turned out, mostly ruled out deficit members of the Eurozone. In such a world, it is hardly surprising that the dominant borrower and spender is the US government. But is that a good result of the liberalisation of the global capital accounts? Hardly! It is a huge failure that all these surplus savings are frittered away in this way, rather than invested in productive activities, above all in poorer countries.Some content could not load. Check your internet connection or browser settings.Moreover, the deficit countries are quite unhappy with this arrangement. Yes, they can spend more than their aggregate incomes. But they are hardly grateful. Not least, if a country runs a large trade deficit, it will consume more tradeable goods and services than it produces, since its residents cannot import non-tradeables without travelling. So, in deficit countries, manufacturing, a central part of the tradeable sector, is smaller than in surplus countries, where the opposite is true. This point, made by Beijing-based Michael Pettis, helps explain soaring US protectionism and so Trump’s trade war. The latter may be chaotic, indeed irrational, but its origin is not hard to identify: manufacturing matters, politically and economically.Alas, the result is not even that good for countries with surplus savings either: Japan is a salient case. In order to reduce its current account surpluses in the 1980s, under US pressure, it pursued ultra-easy monetary policies, to grow domestic demand. This fuelled an unsustainable property bubble. When that popped in 1990, Japan suffered a financial crisis, feeble private sector demand, prolonged deflation and huge fiscal deficits. Arguably, it has never recovered. Amazingly, but not all that surprisingly, Japan’s net public debt has exploded, from 63 per cent of GDP in 1990 to 255 per cent last year.Some content could not load. Check your internet connection or browser settings.China, not dissimilarly, had to eliminate much of its excess savings after the 2008 financial crisis made the huge US deficits and Chinese surpluses of the early 2000s unsustainable. After 2008, China too blew a huge property bubble and credit and investment boomed. It is now suffering from the aftermath, which includes weak domestic demand, low inflation and large fiscal deficits.Germany was relatively protected by membership of the Eurozone. But the Eurozone financial crisis was also a natural outcome of its huge external surpluses. Since then the Eurozone has solved its post-crisis problems by becoming more like Germany: previously it had roughly balanced external accounts. But today, it, too, has become a sizeable net exporter of capital.The biggest problem with Trump’s international economics is that he focuses on a symptom, the US trade deficit, and seeks to eliminate it through erratic and irrational tariffs. This may have been made a little less damaging by this week’s “deal” with China and resulting decline (perhaps temporary) in bilateral tariffs. But without macroeconomic rebalancing, the US trade deficits will remain. A necessary condition for this is to slash US fiscal deficits, along with policy changes elsewhere, notably China, aimed at lowering excess savings.Saving is a good thing. But one can still have far too much of it [email protected] Martin Wolf with myFT and on X More

Unlock the Editor’s Digest for freeRoula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.Jaguar Land Rover has clocked its strongest full-year profit in a decade as the UK luxury-car maker contends with the impact of US tariffs and the implementation of a controversial overhaul of its most renowned brand. Pre-tax profit for the year to March 31 increased 15 per cent to £2.5bn, the company said on Tuesday, on flat revenues of £29bn. Profit before tax and exceptional items in the final quarter was £875mn, up from £661mn year on year. It also achieved its target to become net cash positive, with £278mn.The strong set of results come despite a widely derided brand redesign for Jaguar that was unveiled in November to address flagging sales. The company dropped the brand’s big cat logo as part of its rebranding and its marketing campaign featured an advert with no cars. Chief executive Adrian Mardell said: “JLR has ended the year with strong annual and quarterly earnings, including delivering our tenth consecutive profitable quarter and our net debt zero target.”However, the company followed some other carmakers including Stellantis and Mercedes-Benz in holding back on issuing forecasts for the coming year. JLR said it was assessing the impact of “global challenges” and would provide an update at an investor day on June 16. The results follow the UK’s trade deal with the US last week. The agreement secured concessions for British carmakers, including a reduction in the US’s import tariff to 10 per cent from the initial 27.5 per cent imposed by President Donald Trump last month. The Coventry-based company said it would “continue to engage with the UK government on the detail of the trade deal”. In an earnings call, Mardell said he welcomed the UK government’s pledge to back the auto sector “to the hilt” in the face of US tariffs and the subsequent agreement that brings “greater certainty” for the sector. However, he added the company was still “waiting for confirmation of the effective date” that the deal would be implemented. The trade deal — announced as Prime Minister Sir Keir Starmer visited a JLR factory — brought relief for the UK’s wider auto industry, which sends roughly one in six of all shipped cars to the US, the largest market for the UK’s luxury car brands. The Tata Motors-owned group, which also produces the Range Rover and Land Rover Defender models, had paused in April shipments of cars to the US for one month as it sought to work out a longer-term response to the tariffs. The company generates almost a quarter of its sales in the US but has no local manufacturing capability in the country. Mardell said on Tuesday the company had “no plans to build cars in the US at this point in time”.JLR followed some other carmakers including Stellantis and Mercedes-Benz in holding back on issuing forecasts for the coming year More

Unlock the Editor’s Digest for freeRoula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.With a headline like that, naturally, El Salvador’s dollar bonds will most likely rally hard from here.But we would note that the ‘One, Big Beautiful Bill‘, released on Monday, proposes a US federal remittances tax.According to the House Ways and Means Committee:This provision imposes a five per cent excise tax on remittance transfers which will be paid for by the sender with respect to such transfers . . . The provision also creates an exception for remittance transfers that are sent by verified U.S. citizens or U.S. nationals by way of qualified remittance transfer providers.Remittances to El Salvador, a small, highly dollarised economy that Bukele is pivoting from a failed bitcoin experiment shut down by the IMF to being an offshore prison for US undesirables, amount to about a quarter of GDP, which would be $8bn this year.Mexico also depends a lot on remittances — the $65bn or so the country received last year more or less balanced its current account — but overall they amount to less than 4 per cent of Mexican GDP by contrast.In El Salvador, remittances drive the private consumption that makes up most of the country’s real GDP growth. One in five Salvadoran households receives them. They pump dollars into circulation, put deposits into banks, and stop the current account deficit from going into double digits.In short, remittances are important enough to paying El Salvador’s debt that its bond prospectuses detail them as a risk factor. (Incidentally, less than two per cent of Salvadoran remittances are in crypto.)How much is a tax going to change these flows? Remittances are of course generally seen as a function of bigger economic factors, such as the health of the US labour market and risk of deportation. (And currency risk, but that’s another story.) On the latter, US remittances to El Salvador and other countries have recently accelerated, a sign that migrants are trying to frontload money movements home before they might have to leave. A similar trend was seen in Trump’s first term. On the other hand, Salvadoran migrants benefited when the previous administration extended Temporary Protected Status for them into next year.As for US unemployment, that’s anyone’s guess in a trade war that blows hot and cold by the day, but in March the IMF acknowledged a “significant downside risk” for El Salvador’s economy if the US construction and manufacturing sectors decline.“A doubling of the Salvadoran migrants’ unemployment rate, to 7 per cent (from 3.5 per cent in 2019), is estimated to reduce real remittances per migrant by 11 per cent, which would lead to a drop in remittances inflows by 6 per cent of GDP,” the fund said.Possibly that also gives a ballpark for what a 5 per cent reduction in flows through a tax might mean if it can’t be avoided. Compared to that tax rate, it cost 2 per cent to remit to El Salvador in 2023, according to World Bank data.Meanwhile, in terms of access to the tax’s envisaged exception, about one-third of the Salvadoran immigrant population were naturalised US citizens as of 2023, according to the Migration Policy Institute.Migrant remittances are hugely sensitive to transaction costs (something you learn covering southern Africa, the region with the highest such costs in the world). There could be informal routes to avoid a tax, which is naturally a risk that money service providers have raised in lobbying against the provision in the House bill.It’s still a risk to consider for an unusually exposed sovereign credit.El Salvador paper won’t blow up tomorrow, and a US remittances tax won’t push it over the edge. On the other hand, you are not paid that much for Salvadoran risk as you were before, even with an IMF bailout as a safety net.The debt’s spread to Treasuries is less than 500 basis points, down from well over 3,000 basis points a few years ago. You could get a 9.4 per cent yield on El Salvador bonds due 2054 — but you can get 9.1 per cent on a Colombian bond due the same year.Portfolio investment flows to the developing world are fickle. Remittance flows are often just as big, stickier, but are less appreciated.If the US had proposed a 5 per cent outbound tax on some other capital flow, it would be getting a lot more attention given the Zeitgeist of Mar-a-Lago Accord chatter and ‘geoeconomics’.But since it’s migrants, no one will particularly care. More

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