Aurelia Butler

This article is an on-site version of our Inside Politics newsletter. Subscribers can sign up here to get the newsletter delivered every weekday. If you’re not a subscriber, you can still receive the newsletter free for 30 daysGood morning. The Labour government has reached a limited agreement with Donald Trump on trade, securing reductions in punitive tariffs on car and steel exports, but failing to reverse a 10 per cent levy that applies to most goods. Some thoughts on the broader politics of that below. Inside Politics is edited by Georgina Quach. Follow Stephen on Bluesky and X, and Georgina on Bluesky. Read the previous edition of the newsletter here. Please send gossip, thoughts and feedback to [email protected] coming From the Labour government’s perspective, the biggest and most important thing about the deal the British government has reached with Donald Trump is that it provides considerable relief for Jaguar Land Rover from Trump’s tariffs. Maybe other countries will get a better deal by settling later than the UK, or not at all, but the company most sharply hit has received a reprieve from the extra 25 per cent tariffs on cars and metals that had been previously set by Trump’s administration:British exports of steel and aluminium would now be zero-rated for tariffs, according to the UK government, while the first 100,000 British cars sold in the US annually — the vast majority of the total — would be subject to a reduced 10 per cent levy.The ghost at the feast here is USMCA, the deal that Donald Trump struck with Canada and Mexico in his first term. Now he regards that deal as inadequate and is pursuing an aggressive land-grab against both his immediate neighbours.The biggest problem with this deal from a UK perspective, however, isn’t that Trump may renege on it. It is that success in negotiating with Trump leaves the government ill-equipped to prepare British taxpayers for further tax increases or spending cuts in November, when one or both are essentially guaranteed to follow in this year’s Budget. Equally important, it means that no one is asking whether the British government might be better off holding fire to get a deal that includes relief for pharmaceuticals, or if the government’s changes to the “non-dom” tax regime should be rethought now that so many affluent Americans are looking to escape Trump’s America.Students aged 16-19 are invited to enter FT Schools’ blog competition in partnership with the Political Studies Association and ShoutOut UK by May 25. The winner and two runners up, if UK based, get to go along to a “Have I got fake news for you” parliament event in which I am a panellist. Details here. Now try thisI’m off to the pictures to see Sinners. However you spend it, have a wonderful weekend! Top stories todayGo fund me | Leading fund managers have warned at a Downing Street meeting that sentiment towards the London stock market is at “rock bottom” and urged ministers to consider mandating UK pension funds to allocate at least 5 per cent of their investments to domestic equities.Cars, cows, crops | The leaders of the US and the UK hailed the trade pact signed between the two sides on Thursday as “historic”, but experts warned it still leaves the UK facing higher tariffs on exports to the US than before Donald Trump took office. Here are the winners and losers. Warrington has £1.9bn in debt | Ministers will send in a team of experts to debt-laden Warrington council after government inspectors warned that its high-risk borrowing and investment strategy had been used to avoid making “transformational” savings.‘Colleagues . . . let rip about welfare’ | Keir Starmer will be warned that he faces his biggest rebellion yet as up to a quarter of his parliamentary party raised concerns about cuts to disability benefits, the Times reports. More than 80 Labour MPs have signed a private letter laying out their worries about the scale and pace of welfare cuts.Recommended newsletters for youWhite House Watch — What Trump’s second term means for Washington, business and the world. Sign up hereFT Opinion — Insights and judgments from top commentators. Sign up here More

This article is an on-site version of our Unhedged newsletter. Premium subscribers can sign up here to get the newsletter delivered every weekday. Standard subscribers can upgrade to Premium here, or explore all FT newslettersGood morning. The US and UK struck the first Trump-era trade deal yesterday. It was underwhelming. In return for more buying of US farm goods and removing a tariff on US ethanol, the UK will be exempted from metal levies, and will enjoy lower tariffs on (a few) cars. Other promises and frameworks were laid out, without any timelines. Email us: [email protected] and [email protected].  How Berkshire has changed Earlier this week we presented a sketch of Warren Buffett’s formula for success at Berkshire Hathaway. Buy safe, high-quality assets; fund them with low-cost, long-duration liabilities, many of them provided by a large, sophisticated insurance operation; use leverage but manage it carefully; and stick to your strategy for many decades, building a sterling reputation that acts as a powerful stabiliser for the business.I think that’s a fair, if high-level, picture of Berkshire over the past 40 years or more. But while the model is stable, it is not static. Much has already been written (some of it by Buffett himself) about the change in what sort of companies Berkshire has invested in — from undervalued “cigar butts” in the early years to high-quality, stable franchises at fair prices as Berkshire grew.But what constitutes a stable high-quality franchise has changed over the years, and Berkshire has managed to change with it, by fits and starts. A way to see this is by looking at the biggest stocks in the company’s public equity portfolio. Here are the top five holdings from 1984, 2004 and 2024:Staples (General Foods, Gillette, Coca-Cola) and finance (Geico, Amex, Bank of America) are a continuous theme. But publishing (Washington Post, Time) fell away and tech (Apple) rose. It’s important to note that Berkshire never, that I know of, nailed the timing of these transitions. It hardly left publishing at the top, got into tech too late by Buffett’s own admission, and got back into food in a big way (Kraft/Heinz) just as that industry lost its edge to the retailers and saw a structural decline in profitability. But the proof of the business model is that this didn’t matter, or didn’t as much as getting things right eventually, and continuously strengthening the boring, cash generative, wholly-owned insurance and industrial segments.Another point of change: Berkshire appears to have reduced the amount of leverage it uses over the past 25 years. Here is a crude measure — assets net of cash divided into common equity:Similarly, over the past 20 years or so, cash and short-term Treasuries as a proportion of total assets has risen, and has leapt in the past two years:  The jump in cash like assets is widely understood to reflect the fact that riskless short-term Treasuries now offer a real yield, and that there are few big assets at what Buffett and his team consider acceptable prices. They have been net sellers of stocks, notably Apple, for several years.It is interesting to consider whether Berkshire’s leaders have decided to deleverage the company because their risk appetites have changed — or decided that, in a riskier world, deleveraging Berkshire is necessary to keep risk stable. Taiwanese dollar, et alThis week saw a lot of movement in Asian currencies, particularly the Taiwanese dollar. It appreciated 6.5 per cent in just two days, its largest leap in decades. The Korean won, the Indonesian rupiah, the Thai baht and the Singapore dollar popped, as well:This is a consequence of Donald Trump’s tariffs. The US’s appetite for foreign goods leaves its trade partners flush with dollars, which they invest in the US (though the direction of causality is not always clear; there is something of a “chicken or the egg” problem here). Taiwan, which runs a massive trade surplus with the US, is disproportionately invested in the US, relative to the size of its economy; we recommend reading Alphaville’s great series on this.A large share of Taiwan’s US assets are owned by the island’s life insurance companies, who have taken advantage of the dollar’s strength and the Federal Reserve’s high rates to make what amounts to a carry trade: their assets are in stronger, high-yielding US dollars and Treasuries, and their policy liabilities are in weaker, low-yielding Taiwanese dollars. As the Alphaville pieces lay out, this trade has been under-hedged. The insurers do not own a lot of Taiwanese dollars, and their derivative hedges are too small to cover all the currency risk.This week’s ructions mostly reflected an unwinding of these big dollar positions. The life insurers and other dollar-leveraged investors in Asia dashed for local currencies when it began to look like dollar weakness would be here to stay. Speculation probably played a role, too, particularly in Taiwan. Investors, aware of the mismatched liabilities, likely piled into the local currency. They might have also been inspired by rumours that the Central Bank of the Republic of China, Taiwan’s central bank — which facilitates the insurers currency hedges and is believed to have intervened in the currency in the past — would not intervene to keep the Taiwanese dollar down. The bank’s leadership might see a strong currency as a way to sweeten the Trump administration in trade negotiations, or think the currency will inevitably be stronger in the new tariff regime, and saw no point in getting in its way. The Taiwanese government denied the former, but the latter could be at play.Things have settled down some, but most of the currencies have finished the week up against the dollar. This might be an early sign of a structural shift, which could be solidified by trade deals. From Daleep Singh, chief global economist at PGIM:There are many Asian countries . . . that are eager to strike trade deals with the US. As part of those deals, there might be a greater tolerance of Asian currency appreciation [by those countries’ central banks] . . . Trade wars lead to capital wars. Asian currencies could be allowed to appreciate, while external surpluses in the region are allowed to narrow. That causes the US capital account surplus to decline, as there will be fewer overseas investors showing up at our Treasury auctions.If Asian currencies appreciate meaningfully against the dollar, that has broad implications. US consumers will be poorer in real terms as imports from silicon chips to toys become more expensive. Treasury yields, all else being equal, will be higher. US risk assets could be cheaper, given a higher discount rate.There are still tailwinds behind the dollar, however. As James Athey at Marlborough Group notes, other currency risks could be uncovered as the Asian currencies appreciate, especially if changes come suddenly or drive the currencies above the values that global rate differentials would imply. Companies and central banks might then intervene by buying dollars and Treasuries, or selling domestic currencies. Also, high US rates remain appealing. “The Fed is showing that it is not in a hurry to cut rates . . . and most other central banks are cutting,” said Mark Farrington at Farrington Consulting, an FX consultancy. Trump’s tariffs imply less trade and fewer dollars flowing abroad, and, as a result, stronger foreign currencies and less Treasury purchases. For the time being, the US dollar still has a lot of privilege. But the rotation away from the dollar may have only just begun.(Reiter)One good readNo, globalisation didn’t hollow out the US middle class.FT Unhedged podcastCan’t get enough of Unhedged? Listen to our new podcast, for a 15-minute dive into the latest markets news and financial headlines, twice a week. Catch up on past editions of the newsletter here.Recommended newsletters for youDue Diligence — Top stories from the world of corporate finance. Sign up hereFree Lunch — Your guide to the global economic policy debate. Sign up here More

Show video infoThe UK has clinched the first deal with the US since President Donald Trump ignited a trade war, winning cuts to punitive tariffs on car and steel exports but failing to reverse a flat 10 per cent levy that applies to most goods.The pact was unveiled on Thursday by the US president in the Oval Office, with UK Prime Minister Sir Keir Starmer joining by phone. Both leaders effusively praised the strength of the relationship between their countries.But the scope of the US-UK deal is limited, many of the details have to be ironed out and the end result still leaves Britain facing a tougher trading relationship with America than before Trump introduced sweeping global tariffs last month.US stocks rose after the announcement, with investors encouraged by the prospect of further deals — including with China — to limit the damage of the levies that have choked trade. The S&P 500 rose more than 1 per cent, to its highest intraday level since March 27, before ceding ground and ending the day 0.6 per cent higher.Stocks in much of Asia rose on Friday morning. Japan’s broad Topix climbed 1.3 per cent while Taiwan’s benchmark index was up 1.7 per cent. Chinese markets were flat. The US dollar was flat on Friday against a basket of a half-dozen trading partner currencies.US Treasury secretary Scott Bessent and senior Chinese officials are scheduled to meet in Switzerland this weekend to try to de-escalate the tariff war between the world’s two largest economies. “I will tell you that China very much wants to make a deal. We’ll see how that works out,” Trump said. Asked if he would consider lowering US tariffs on Chinese imports, the US president replied: “Right now, you can’t get any higher. It’s at 145 [per cent], so we know it’s coming down.”The US-UK agreement, described by Trump as “full and comprehensive”, will keep in place the 10 per cent American levies on most British exports that Trump imposed last month.According to the text of the agreement released later on Thursday, the two sides were set to continue negotiating tariff reductions on “sectors of importance”.Show video infoBut it crucially offers the UK a reprieve from the extra 25 per cent tariffs on cars and metals that had been previously set by the Trump administration and were of particular strain to Britain. British exports of steel and aluminium would now be zero-rated for tariffs, according to the UK government, while the first 100,000 British cars sold in the US annually — the vast majority of the total — would be subject to a reduced 10 per cent levy.“This historic deal delivers for British business and British workers, protecting thousands of British jobs in key sectors including car manufacturing and steel,” Starmer said.In exchange, the UK will offer US farmers and ranchers improved market access through a lower-tariff quota system, but without altering its food standards, paving the way for some beef imports. The UK will remove its tariff on up to 1.4bn litres of US ethanol.“Our biggest concern is that . . . agricultural sectors have been singled out to shoulder the heavy burden of the removal of tariffs for other industries in the economy,” said Tom Bradshaw, president of the UK National Farmers’ Union.Trump and Starmer’s teams also agreed to work on a digital trade pact to deepen co-operation and to address US concerns about the UK’s digital services tax targeting Big Tech, which stays in place for now. Both sides agreed to negotiate further on pharmaceutical goods, which US officials have said would have tariffs applied to them in a matter of weeks.“The US and UK have been working for years to try and make a deal, and it never quite got there. It did with this prime minister,” Trump said at the White House, flanked by JD Vance, the vice-president, Howard Lutnick, the US commerce secretary, and Lord Peter Mandelson, the UK ambassador to Washington. Addressing workers at the Jaguar Land Rover factory in the West Midlands, Starmer said the accord was the start of a process. “This is jobs saved, not job done,” he said. “We will continue to build on this agreement.”He said he had also negotiated “preferential treatment” for the UK if Trump decides in future to raise tariffs on pharmaceuticals or other sectors, including films.But Andrew Griffith, Conservative trade spokesperson, said the agreement was disappointing, calling it “a Diet Coke deal, not the real thing”. Tory leader Kemi Badenoch said: “We’ve just been shafted.”The US accord with the UK could provide a template for American negotiations with other countries — with India, Vietnam, Japan and South Korea seen as the closest to reaching agreements with Washington. But Trump warned the US would insist that overall levies on countries with large trade surpluses with America could remain well over 10 per cent. “Some will be much higher,” he said. “The template of 10 is probably the lowest,” he added. The US-UK deal also raised questions among legal and trade experts over whether it was in keeping with World Trade Organization rules that require tariffs to be applied equally.Ignacio García Bercero, a former senior European Commission official now at the Bruegel think-tank, said the UK decision to cut tariffs for US exporters without extending the same deal to other countries risked legal challenges.Under the WTO’s “most favoured nation” concept, countries must offer the same tariffs rates to all countries, unless they are reduced via a bilateral trade deal that covers “substantially all trade”, which the UK-US pact announced on Thursday does not.“It is concerning if the UK has offered preferential tariff concessions to the US. In the absence of any commitment by the US to eliminate tariffs on other countries, this cannot be justified,” Bercero added.But one trade lawyer, who declined to be named, pointed out that WTO rules allow trade deals to be phased in. “They could say it’s the beginning of free trade agreement negotiations and then take 10 to 15 years to ‘conclude’,” they said.Additional reporting by Kate Duguid in New York and Arjun Neil Alim in Hong Kong More

Twenty years ago, economics was cool. Thanks in part to the publication of Freakonomics, economists were regarded as dispensers of brilliant and unexpected solutions to everyday problems. Whether you were trying to catch terrorists or figure out which wine to serve with dinner, all you needed to do was ask an economist.It is striking how popular the contrary position has now become: whatever policy position you might be contemplating, if economists are against it, it can’t be that bad. Brexit? The economists hate it; sign me up. Tariffs? Economists have been against them for centuries; bring on the Tariff Man. (As always, there is an exception to prove the rule. After the recent election in Canada, Prime Minister Mark Carney joked that unlike most politicians who campaigned in poetry and governed in prose, he campaigned in prose and would govern in econometrics.)Against this backdrop, it was intriguing to see Stefanie Stantcheva recently receive the prestigious John Bates Clark Medal, the same award that Steve Levitt, co-author of Freakonomics, won back in 2003. But while Levitt won the award for the clever data-detective work that was later made famous by Freakonomics, Stantcheva won in part for asking the public what they think about areas such as inflation, energy and trade. These are issues on which economists regard themselves as experts.Take inflation, which had seemed to be a solved problem in rich countries until the past few years. Why did it return? Economists broadly agree on the reasons, although not on their relative importance: governments borrowed and spent freely during the pandemic; supply chains were strained; energy prices spiked after Russia’s invasion of Ukraine in 2022; central banks hesitated to respond. But what do the American citizens surveyed by Stantcheva and her colleagues think? Maybe the public and the economists aren’t so far apart after all: they blame action by the Federal Reserve, increases in production costs, and most of all, government spending. If that looks very much like the economic consensus to you, you may be right.It is only on closer scrutiny that public attitudes to the causes of inflation start to look odd. For example, many people think that increases in interest rates cause inflation, whereas economists think the opposite. Perhaps people have confused cause and effect: fire engines are often spotted close to fires, paracetamol goes hand in hand with a headache and whenever interest rates are high, there’s an inflation problem. Or perhaps it is simply that people think of inflation as a reduction in their purchasing power and few things reduce purchasing power more reliably than an increase in your debt payments. Another Stantcheva project investigated “zero-sum thinking”, a topic that seems more abstract, even philosophical, but which perfectly captures the new zeitgeist. There are many ways to describe Donald Trump’s approach to government, or the philosophy of the new Reform party in the UK, but “zero sum” is a useful one.The zero-sum thinker frames the world in terms of winning and losing, us and them. If one person is to get richer, someone else must get poorer. If China is doing well, then the US must logically be doing badly. Jobs go either to the native born, or to foreigners. In contrast, the centrist dads among us see win-win solutions.Stantcheva and her colleagues at Harvard’s Social Economics Lab have been asking: what sort of person tends to see the world as zero sum? There are some surprising findings. For example, there are few clearer refutations of a zero-sum mindset than a thriving city, in which people flock to be with others, and the social, cultural, educational and financial opportunities that result. Yet Stantcheva’s research found that urban areas are more prone to zero-sum thinking than rural ones, perhaps reflecting our failure to build new homes. One puzzle in modern politics has been the rise of populists who grab ideas from both the political left and right. Stantcheva’s work (with Nathan Nunn, Sahil Chinoy and Sandra Sequeira) helps to clarify why this might happen. For example, a zero-sum thinker tends to be in favour of more redistribution and in favour of affirmative action — traditionally leftwing policies — but also in favour of strict immigration rules. Rightwing populists also think affirmative action is important, they just think it’s important and wrong. The old-fashioned win-win thinker tends to like immigration (more opportunities for everybody) and think that affirmative action and redistribution are a sideshow, because a rising tide lifts all boats.My own biases are firmly against zero-sum thinking. I’m always on the lookout for smart ideas that can make life better for everyone. But Stantcheva’s work strongly suggests that zero-sum thinking isn’t some sort of senseless blind spot. When people see the world in dog-eat-dog terms, they usually have a reason.Young people in the US tend to see the world as zero sum, reflecting the fact that they have grown up in a slower-growth economy than those born in the 1940s and 1950s. A similar pattern emerges across countries: the higher the level of economic growth a person grew up with, the less likely they are to see the world in zero-sum terms. People whose ancestors were enslaved, forced on to reservations or sent to concentration camps are more likely to see the world in zero-sum terms. And, intriguingly, while people with little education are often zero-sum thinkers, people with PhDs may be more zero-sum than anyone, which speaks volumes about the scramble for scarce scholarships and research positions in elite education.The world is full of opportunities for mutual benefit, so zero-sum thinking is a tragedy and a trap. But it is not a mystery. If we want to understand why so many people see the world in zero-sum terms, we only have to look at the fact that our dysfunctional politics and our sluggish economies have needlessly produced far too many zero-sum situations. Fix that problem and maybe economics will one day be cool again. Find out about our latest stories first — follow FT Weekend Magazine on X and FT Weekend on Instagram More

Unlock the Editor’s Digest for freeRoula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.Washington and Beijing will this week hold their first trade talks since US President Donald Trump launched a trade war against China that has rattled financial markets and triggered concerns about supply chains.Treasury secretary Scott Bessent and US trade representative Jamieson Greer will meet their Chinese counterparts in Geneva this week. China said vice-premier He Lifeng, its top economy official, would lead its delegation.The meeting will be the first high-level interaction between the two sides since vice-president Han Zheng attended Trump’s inauguration in January.Bessent told Fox News on Tuesday evening that the two teams would meet on Saturday and Sunday. He said they had a “shared interest” in talking because the high level of tariffs “isn’t sustainable”. But he cautioned that the discussions would be an effort to lower tensions rather than negotiations about a broader trade deal.“My sense is that this will be about de-escalation, not about the big trade deal,” Bessent said during the interview. “We’ve got to de-escalate before we can move forward.”The meeting marks the first real effort to tackle the trade war that has seen Washington impose a 145 per cent tariff on imports from China and Beijing slap a retaliatory tariff of 125 per cent on American goods.It is the first positive sign for businesses that have been concerned about the record level of tariffs both sides have placed on each other. It also comes after Trump on multiple occasions said the countries were holding negotiations, which have been contradicted by his own team.“We all knew that the US and China would need to re-engage, but today’s announcement of a face-to-face meeting in Geneva at such a senior level is greater than expected,” said Wendy Cutler, a former US trade official who now serves as vice-president at the Asia Society Policy Institute.Cutler cautioned that it was important to “keep expectations in check”, saying that it was “a lot easier to impose tariffs against each other than work together on a joint plan to re-engage and stabilise relations”.Washington and Beijing had been mired in a stand-off. Trump has wanted to talk directly to his counterpart President Xi Jinping, but China had made clear that it would not hold a leader-level call to start negotiations.Beijing had earlier said the US should cut tariffs as a precondition for negotiations but appeared to soften its position last week when state media said there would be “no harm” in holding talks with Washington.Asked on Fox News which side had requested the meeting, Bessent said: “There isn’t a first call, there are a lot of contact points over time.”Testifying before Congress earlier on Tuesday, the Treasury secretary had told lawmakers that although the administration was negotiating with 17 of its 18 major trading partners, it had not held any talks with Beijing.The Chinese commerce ministry said Beijing decided to hold talks after US officials recently hinted on several occasions about possible tariff relief and sent messages about their desire to have negotiations.“Based on thorough consideration of global expectations, China’s own interests, and calls from US businesses and consumers, China has decided to agree to engage with the US,” the ministry said in a statement.It also warned the US not “use talks as a cover for coercion and blackmail”. Noting that other countries were already negotiating with the Trump administration, the ministry added: “It must be emphasised that appeasement does not bring peace, and compromise does not earn respect.”Last month, Trump triggered a sell-off in global stock markets after imposing “reciprocal” tariffs of up to 50 per cent on almost every US trading partner. He then lowered the levies to a 10 per cent baseline for 90 days.The Trump administration has also indicated it is preparing to announce more tariffs on several sectors that it deems important. In recent weeks, it has launched national security probes that could lead to levies on chips and consumer electronics, lumber, copper, pharmaceuticals and critical minerals. Over the weekend, Trump threatened to put tariffs on foreign motion pictures. More

Unlock the White House Watch newsletter for freeYour guide to what Trump’s second term means for Washington, business and the worldShow video infoCanadian Prime Minister Mark Carney told Donald Trump that his country was “not for sale” as he rejected the US president’s push to make Canada the 51st US state during a meeting at the White House on Tuesday. “As you know from real estate, there are some places that are never for sale,” Carney told Trump in a mostly convivial exchange in the Oval Office. “Having met with the owners of Canada over the course of the campaign . . . it’s not for sale. It won’t be for sale, ever.”But in a sign that tensions are likely to persist between Washington and Ottawa, Trump responded by saying: “Never say never.”“I’ve had many, many things that were not doable, and they ended up being doable, and only doable in a very friendly way,” Trump said, adding: “Over time, we’ll see what happens.” The meeting at the White House was the first in-person encounter since Carney won the Canadian election last month on a staunch anti-Trump platform. The US president’s hostility to his northern neighbour — with repeated threats to annex Canada and the imposition of tariffs in violation of a free trade agreement — dominated the Canadian election campaign and helped propel Carney’s Liberal party to victory.But Trump opened the conversation with a friendly quip about Carney’s victory. “I think I was the greatest thing that happened to him,” he said, adding: “It was probably one of the greatest comebacks in the history of politics, maybe even greater than mine.” He then described the prime minister as a “very talented person, a very good person”. “I have a lot of respect for this man,” he added. Carney, who joked he was on “the edge of my seat” during the meeting, said he was focused on improving defence, strengthening the border and fighting fentanyl trafficking. Both he and Trump said they were open to renegotiating the USMCA trade agreement, which succeeded Nafta during Trump’s first term and is up for review next year.“The USMCA is a good deal for everybody,” Trump said. “It was actually very effective and still very effective but people have to follow it, and that’s been a problem.” Carney said: “[The USMCA] is a basis for a broader negotiation. Some things about it are going to have to change.”But the US president made clear that he remained sceptical of free trade with his Canadian neighbours, especially in the automotive and metals sectors.“We want to make our own cars. We don’t really want cars from Canada,” Trump said. “And we don’t want steel from Canada because we’re making our own steel, and we’re having massive steel plants being built right now as we speak.”Speaking at the Canadian embassy after the meeting, Carney told journalists the talks with Trump were “wide-ranging” and “very constructive”, adding “this is the point at which a serious discussion begins”. “We’re having a very complex negotiation about a wide range of issues and as I said before I came here, I wouldn’t have expected white smoke coming out of this meeting,” he said.The prime minister said he and Trump had discussed how they could enhance the Canadian and US auto industry “versus foreign competition, including from Asia”. He added that while Trump was willing to renegotiate the USMCA trade deal and drop tariffs “that does not presuppose an outcome”. “There’ll be zigs and zags, difficult aspects to it but the prospect is there. We discussed it in more detail and as I said, we’ll be following up . . . between officials, but also he and I in the coming weeks.” More

Unlock the Editor’s Digest for freeRoula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.Britain and India on Tuesday announced a “landmark” trade deal that included concessions to New Delhi on access to UK employment markets in return for big cuts to Indian tariffs on exports of whisky and cars.The deal will exempt the UK operations of Indian employers from paying national insurance on Indian staff relocating to the UK for up to three years, making it cheaper to move people to Britain than previously.The UK’s Labour government hailed the deal as a “bright shining light” at a time when US President Donald Trump’s tariffs have roiled the world economy.But it faced domestic criticism over the national insurance move, just days after the anti-immigration Reform UK party swept local elections in England.Reform leader Nigel Farage claimed that UK Prime Minister Sir Keir Starmer had “betrayed working Britain”.India pushed hard during the three-year long negotiations for the “Double Contribution Convention”, which will give Indian employers in the UK relief from Britain’s 15 per cent national insurance levy paid by companies. The deal to avoid double taxation also covers national insurance contributions paid by employees.New Delhi has agreed to cut whisky and gin tariffs, which will be halved from 150 per cent to 75 per cent before falling to 40 per cent by the tenth year of the deal. Car tariffs will fall from more than 100 per cent to 10 per cent, subject to a quota.Talks on the deal accelerated in the wake of Trump’s imposition of global tariffs last month, with London and New Delhi keen to seal closer trade ties.Indian Prime Minister Narendra Modi posted on X that the deal was “ambitious and mutually beneficial”, adding that Starmer would visit India soon.British ministers hope the India trade deal could be a prelude to the signing of an agreement with Trump in the coming days, ahead of a deal with the EU to start improving bilateral trade links at a summit on May 19.The UK government estimates the India deal will boost Britain’s economy by 0.1 per cent by 2040. Officials insisted it would not involve changes to the British visa system or broader immigration strategy, at a time when Reform and the Conservatives are campaigning hard on the issue.British officials said Indian employees relocating to the UK would still be subject to salary thresholds for visas and have to pay the NHS surcharge for immigrant workers, despite the national insurance exemption.The agreement comes after UK chancellor Rachel Reeves controversially raised national insurance contributions for employers at her first Budget last October.Dame Harriett Baldwin, the Conservative party’s shadow minister for business and trade, said in parliament that the deal “looks like it’s subsidising Indian labour while undercutting British workers”.The centrist Liberal Democrats also questioned the national insurance agreement, saying the move needed careful scrutiny by MPs.Trade minister Douglas Alexander told MPs the national insurance part of the trade deal was “reciprocal” and would “benefit UK workers and their employers as the opportunity within India expands”.The UK government said the national insurance agreement was similar to arrangements it had with countries such as Switzerland, Norway and Canada. Indian employers are among the biggest users of intra-company transfer visas into the UK.Some content could not load. Check your internet connection or browser settings.The UK government said cuts in tariffs on Indian products would help provide British shoppers with “cheaper prices and more choice” in areas including clothes, footwear and food products such as prawns.India will keep tariffs in place for dairy products, while the UK is keeping restrictions in place on some agriculture products such as milled rice.Although full details are not yet available, the trade pact is expected to be one of the most significant new agreements signed by Britain since it left the EU, following accords with Australia and Japan. Based on 2022 trade, the deal would involve India cutting tariffs worth more than £400mn a year when the agreement came into force, rising to about £900mn after 10 years, said the UK government.It added that it expected the deal to increase bilateral trade by £25.5bn and UK GDP by £4.8bn in the long run. Bilateral trade between the UK and India was £42.6bn in 2024 while UK GDP was £2,851bn.The announcement said the deal would bring “market certainty” to UK services exports currently worth £500bn a year. However, the Law Society of England and Wales said the deal had failed to include legal services and was a “missed opportunity”.Sam Lowe, trade lead at consultancy Flint Global, said that being among the first countries to strike a trade deal with India was a win for the UK, but the ultimate benefits would only become clear over time. Additional reporting by Amy Borrett More

Unlock the White House Watch newsletter for freeYour guide to what Trump’s second term means for Washington, business and the worldThe UK and the US are close to agreeing a trade pact that would cushion the impact of Donald Trump’s “liberation day” tariffs by granting lower-tariff quotas for British car and steel exports, according to officials in London and Washington.The deal — set to be signed this week — is due to include quotas that spare some UK exports from the full brunt of the additional 25 per cent tariffs that Trump levied on steel and car imports in February and March.UK trade negotiators returned to Washington this week for the final stages of negotiations, which one senior British official said were continuing “at speed”, while cautioning that disagreements remained over pharmaceuticals.As well as offering quotas for UK exports, Britain is also hoping to secure reductions in the sector specific 25 per cent tariffs that Trump has levied on cars and steel.The UK’s “offers” include concessions to Washington on Britain’s digital services tax levied on international technology companies, cuts on tariffs imposed on US car exports, and a reduction of tariffs on American agricultural products.However, the UK government has said it will not accept US food production standards, such as chlorine-washed chicken and hormone-treated beef, which would make it impossible to conclude a so-called veterinary agreement with the EU, a key plank of Britain’s impending “reset” with the bloc.The expected UK-US deal is one of 17 agreements that the Trump administration has been aiming to sign with its major trading partners as it rows back on the sweeping tariffs imposed on countries around the world on April 2.US Treasury secretary Scott Bessent told a congressional hearing on Tuesday that some of those deals could be announced “perhaps as early as this week”, adding that several countries had made “good offers”, without providing details.Trump administration officials are in talks with multiple countries, including Canada, Mexico, Japan, Vietnam and India, as well as the EU. Some foreign officials have privately expressed frustration that the administration has been unclear about how much tariff relief it will offer to trading partners.If successful, the US-UK deal would follow a full-blown free trade agreement between Britain and India, which was announced on Tuesday. UK Prime Minister Sir Keir Starmer is under growing pressure to deliver a deal with the US after the British car and steel industries warned of potentially “devastating” effects on their sectors from Trump’s tariffs. Mike Hawes, chief executive of the Society of Motor Manufacturers and Traders, a trade body, has warned the new US tariffs were having a “severe, significant and immediate” impact at the top end of the sector.Luxury marques such as Bentley, Jaguar Land Rover and Aston Martin depend heavily on exports to the US. The US is the UK’s second-largest export market for carmakers after the EU, with more than 100,000 vehicles shipped last year, worth more than £7.5bn, according to the SMMT.One senior car industry executive welcomed the news of potential lower-tariff quotas for UK vehicle exports, but warned that the key goal must be reducing the 25 per cent tariff rate.“Quotas are complex to operate and inherently limiting to trade,” the executive added. “The most important thing is cutting the 25 per cent tariff, because above about 10 per cent, it’s just not sustainable.”The UK was previously allowed to export up to 500,000 tonnes of steel a year to the US tariff-free under an agreement struck with the then president Joe Biden. That deal was ripped up by Trump this year as he moved to reimpose tariffs of 25 per cent on all steel and aluminium imports to the US. UK Steel, a trade association, has warned that Trump’s tariffs will stifle exports for an industry that is already under pressure from a global glut of the metal. The US accounted for about 165,000 tonnes of British steel exports in 2023 — worth close to £400mn, and about 8 per cent of the total by value. UK exports to the US have nearly halved since 2017 when Trump imposed tariffs during his first term. Two people with knowledge of the negotiations said the deal was being held up by disagreements over the pharmaceutical sector. Last month the Trump administration launched national security probes into pharmaceuticals and microchips that could pave the way for tariffs on drugs — a UK export to the US worth £6.6bn in 2024. Britain is seeking to avoid the worst of any future tariff impacts, according to UK officials, who described the quotas on offer from the US as “generous”.A second UK official was more cautious, describing the expected deal as “limited”. More