Aurelia Butler

Unlock the White House Watch newsletter for freeYour guide to what Trump’s second term means for Washington, business and the worldThe US Federal Reserve is widely expected to keep interest rates at their present level when it meets next week, with chair Jay Powell’s press conference likely to be investors’ main focus following a volatile month for financial markets.Donald Trump’s erratic tariff announcements have buffeted US stocks, Treasuries and the dollar in recent weeks while fanning concerns about slower growth and higher inflation in the world’s biggest economy. The president has repeatedly signalled that he thinks interest rates should be lowered to stimulate the economy. Yet data released on Friday showing the US added 177,000 jobs in April, more than economists had expected, bolstered investors’ conviction that the Fed will remain on hold. Traders in swaps markets are currently pricing in close to a 97 per cent chance that rates will remain between 4.25 and 4.5 per cent.Wednesday’s central bank meeting “looks like a placeholder: policy rates on hold and no change in Chair Powell’s tone from his recent speeches,” said Bank of America strategists led by Aditya Bhave.“We think the bar for a June cut is high, but Powell is unlikely to rule it out at this stage,” he added.Trump last month renewed his criticism of the Fed chair, claiming he has the right to fire Powell, who he has lambasted for being “too slow” to lower rates. Asked whether he would sack the central banker, Trump said: “If I want him out, he’ll be out real fast, believe me.”   US stocks and the dollar sold off sharply on the comments as investors worried that the central bank’s independence was under threat only to rebound after Trump rowed back. Powell is likely to sidestep any questions about his relationship with Trump, but his views on the potential impact of the president’s tariffs on inflation and employment will be scrutinised. George SteerWill the Bank of England signal more cuts?Traders are fully expecting the UK’s central bank to reduce its policy rate by a quarter point to 4.25 per cent at its meeting on Thursday, according to levels implied by swaps markets. Most expect three more cuts of the same magnitude to follow before the end of the year.What the Bank of England signals on the inflationary outlook will be crucial to whether those expectations hold. Analysts at Barclays are expecting the bank to cut its inflation forecast, “signalling that the balance of risks has shifted to a less inflationary outlook”. That will “open the door to a June cut without explicitly referencing it, to retain optionality”, they argue.Like other major central banks, the BoE is caught between the growth impacts and inflationary effects of Donald Trump’s stop-start trade war, making any decision to adjust monetary policy in response fraught with difficulty. Recent UK economic data has been mixed, with better than expected retail sales in March but weak readings of business activity.BoE governor Andrew Bailey has warned that the central bank must “take seriously” the risks to growth from the tariff surge. The hawkish rate setter Megan Greene, has said that the effect of global tariffs will probably be disinflationary for the UK.JPMorgan’s Allan Monks is expecting a “dovish shift” from the BoE on the impact of tariffs. “While potential supply chain impacts remain one consideration, weaker growth and an excess supply of Chinese goods may prove more dominant,” he argues, saying currency moves have not added to the inflationary pressures as would have been expected. But he expects the bank to be “cautious” in putting much weight on this disinflationary view. Ian Smith and Valentina RomeiHave stocks passed peak anxiety over tariffs?This week’s rally in global stocks saw Wall Street’s blue-chip S&P 500 recoup all of its sharp losses since Donald Trump’s April 2 announcement of so-called “reciprocal” tariffs roiled markets. After a dramatic 9 per cent drop in the first week of April, US stocks started to regain ground after the president announced a 90-day tariff pause on April 9. David Lefkowitz, Head US Equities at UBS Global Wealth Management said the U-turn “gave us the confidence to re-upgrade equities”.Last week, investors were further cheered by progress towards US-China trade talks, as well strong earnings reports from US tech giants, and encouraging data on the American economy. But the policy environment remains far from certain, with little tangible progress towards trade deals secured. That leaves many analysts feeling nervous about piling back into a market that saw such dramatic falls so recently. The question for equity investors is: is the worst over, or is it still yet to come?The rally is “quite astonishing considering the big shake up of global trade that has happened in the span of four weeks,” said Elyas Galou, senior investment strategist at Bank of America, adding that it “shows that investors remain fundamentally bullish on the outlook for US equities, rates and the dollar”.“The strategy of the Trump administration was to frontload the bad news,” he said “Now the market is frontloading the next 100 days. I think this period will focus on lower taxes, lower tariff rates,” he explained.Others are more cautious. “We think the rally off the lows is more a function of position capitulation than an ‘all clear’ signal for risk,” read a BNP Paribas analysis note, adding that earnings downgrades “could see equities re-test year-to-date low”. Emily Herbert 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 newslettersWelcome back. Two themes are shaping market sentiment right now. First, Donald Trump’s policy agenda is compromising US economic, financial and institutional superiority. Second, relative stability and political developments are improving the outlook in Europe.Reflecting this, in March, Bank of America’s fund manager survey showed the sharpest rotation out of US stocks and into European equities on record.One theory now being floated as a result of these trends is whether America’s long-term economic growth advantage over the continent has also entered its twilight. For all my recent bearish US and bullish Europe analyses, I think this notion is overstated. Here’s why Europe will not take America’s economic mantle any time soon.First, when it comes to underlying growth rates, the size of the US’s lead over Europe is significant.Fitch Ratings has calculated that over the past 5 to 10 years, America’s potential supply side annual growth rate — factoring in capital, labour and technology — averaged around 2.5 per cent. For the Eurozone it has been closer to 1 per cent. That’s before assessing the impact of policy decisions on both sides of the Atlantic this year.Some content could not load. Check your internet connection or browser settings.Trump’s agenda will crimp US productivity. Tariffs will create inefficiencies. Uncertainty will dent capital investment and research and development. A clampdown on immigration and a possible brain drain would also weaken labour supply.Still, the damage caused by the president would need to be quite extraordinary to permanently erode America’s structural economic growth advantages over Europe, says Andrew Kenningham, chief Europe economist at Capital Economics:“The US has a larger and more unified internal market for scaling, a stronger venture capital ecosystem, more world-class universities and lighter touch regulation.”Indeed, in terms of total inputs, the EU has an advantage in workers, and the US has a lead in physical and financial capital. But America’s growth advantage largely emanates from its higher “total factor productivity”, or how productively its inputs are used.Some content could not load. Check your internet connection or browser settings.In Europe, a growth boost from capital inflows is possible if investors see the continent as an alternative safe haven. But the effect may be limited, not least by investment opportunities.“Whether the rotation into European assets can persist is questionable. Trump’s craziness can accelerate the dollar’s decline as a reserve currency, but the US’s vast capital markets and liquidity mean it will be slow,” says Kenningham.Some content could not load. Check your internet connection or browser settings.So, can Trump do significant — and permanent — damage to this advantage in economic dynamism? That depends on how one expects the remainder of his second term to pan out.There are checks on the administration. The president has already softened his most extreme tariff plans and attacks on the US Federal Reserve’s independence, amid rapidly rising long-term bond yields. Some content could not load. Check your internet connection or browser settings.Broader political pressure will also increase. Year-ahead inflation and unemployment expectations have shot up. Republican consumer confidence, which tends to track approval ratings when Trump is in power, appears to be plateauing.The impact of existing duties, particularly on China, will also soon filter through. “Price increases and shortages in stores will probably be felt from mid-June onwards,” says Paul Donovan, global chief economist for UBS global wealth management. “This will weaken sentiment among more Republican voters.”Some content could not load. Check your internet connection or browser settings.In the coming 12 months, the market expectation is for the US effective tariff rate to ultimately land between a still painful 10 and 20 per cent — from well above 20 per cent now. Business activity will be stymied by ongoing uncertainty. Wall Street now sees a close to 50-50 chance of recession.The Republican party has thin majorities in the House of Representatives and the Senate. “Often the midterms render a second-term president a lame duck. But with higher prices and unemployment likely to be felt by then, that vote may be particularly bad for the Republicans,” notes Matt Gertken, a chief strategist at BCA Research.Some content could not load. Check your internet connection or browser settings.This does not preclude significant damage to the trajectory of US economic growth. Trump might lean on his executive powers even more. Political risk strategists highlight four main threats: undermining Fed independence, a Treasury market crash, capital controls, and somehow legalising a third term (which would enable sustained damage from policy). These could each significantly impair the US economy, and sap its ability to channel inputs as productively over time.But most experts reckon all of these — except threats to the Fed — are low probability events, given financial market, political and legal obstacles. And even if Trump replaces Fed chair Jay Powell with a more pliant central bank chief, Cedric Chehab, chief economist at BMI, notes that other Fed board members and the requisite approval of any new chair by Congress will limit the risk of a significant deviation in monetary policy approach.In all, Capital Economics does not expect the US or Eurozone potential growth rates to change notably from Fitch’s historic estimates in the long run post-Trump. This assumes tariffs settle at 10 per cent on the rest of the world and 60 per cent on China in his term, and that the president’s trade and immigration policies are eventually unwound after he leaves office. It also reflects greater benefits of artificial intelligence accruing to the US relative to Europe. (Deregulation efforts, such as leaner planning rules under Trump, would also be supportive.)How likely is this? Given the trajectory of economic sentiment (and limits to offsetting the negative income effects of import duties with tax cuts, as I assessed in the April 6 edition), a non-Maga presidential election victory is likely in 2028 (though not guaranteed). The past half century of survey data suggests party power tends to change hands when voters feel significantly worse off at the end of a president’s term than they did at the beginning. Barring a more notable tariff climbdown, that seems plausible under Trump.In that case, much of his agenda could be unwound. Uncertainty would lift. Business investment would pick up. And capital would probably flow back to America.Though import levies might be sticky, the economic price of a high tariff wall will probably undermine the policy case for duties over time (as analysed in the March 30 newsletter).Some content could not load. Check your internet connection or browser settings.This does not mean the US economy will spring back to its original growth rate immediately after Trump. Permanent reputational damage is possible (particularly if Maga politics endures). Not all policies might be reversed. But the hit to the US’s underlying growth rate won’t be as strong as perhaps expected.What about Europe’s ability to catch up? “Slow-moving structural factors — such as weak population growth — are difficult to overcome,” says Charles Seville, a senior director at Fitch Ratings. “This puts the onus on investment, productivity growth, and active labour market policies.”Recent shifts in EU economic policy are genuine but should not be overstated. Germany’s defence and infrastructure stimulus will boost growth in the EU’s largest economy, but region-wide capital expenditure is also required. The bloc’s wider rearmament push could boost demand rather than lifting trend productivity growth, particularly if less is spent on cutting-edge tech.Implementing Mario Draghi’s blueprint to raise European productivity — from expediting capital and fiscal union efforts to aligning red tape — will also face hurdles, notes Lorenzo Codogno, a former chief economist at the Italian Treasury department. “The reform process is incremental in normal times. Negotiating across 27 member states remains a battle.”Europe’s near-term growth outlook is itself dented by Trump’s agenda, with the US exporting uncertainty and trade disruption. This risks sapping political bandwidth for reform efforts too. All this suggests the continent won’t be able to make significant inroads on the US’s growth advantage, particularly by the time the president’s term ends.Some content could not load. Check your internet connection or browser settings.So, factoring in America’s current economic lead, Trump’s ability to damage it and European reform efforts, it’s difficult to envisage the US’s growth advantage coming under threat from Europe in the medium term. This may seem counterintuitive given the current newsflow. But recency bias is common when watching the markets. Obvious risks to my outlook include Trump’s unpredictability and the 2028 election.Still, my baseline is for US economic exceptionalism to emerge from Trump 2.0 dented, maybe with permanent reputational damage as investors take a more diversified approach to safe havens and reserve currencies. The EU may look more promising. Nonetheless, the delta between America and Europe’s trend growth rates may be surprisingly little changed. Where do your assumptions differ? Let me know: [email protected] or on X @tejparikh90.Food for thoughtHow much should governments be spending to reduce existential threats from artificial intelligence? This paper does the maths.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 Editor’s Digest for freeRoula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.Abu Dhabi artificial intelligence group G42 is set to expand in the US, as the oil-rich Gulf state plans to invest tens of billions of dollars in the country and position itself as a global leader in the emerging technology.The AI firm has recently established a US company as part of a move to increase its presence in the country, according to corporate filings.The AI group, which is backed by Abu Dhabi sovereign investor Mubadala, confirmed to the Financial Times that it was “committed to the USA market expansion and has established a legal entity towards that strategy”. People familiar with the matter added that some of G42’s subsidiaries — which include AI applications, cloud computing and data centre companies — are expected to make announcements about US business plans in the coming months. The expansion comes as the United Arab Emirates is betting big on AI, putting the technology at the heart of its economic diversification plans and even lawmaking. This has driven even greater investments into the US as part of a push to deepen collaboration over the powerful technology.G42 is chaired by the UAE’s powerful national security adviser Sheikh Tahnoon bin Zayed al-Nahyan, who has spearheaded Abu Dhabi’s AI efforts with Washington and made clear it views the US as the most important source of AI technology. Greater US presence will help Abu Dhabi companies get those investments done, the people said. Sheikh Tahnoon met with President Donald Trump at the White House in March, in a trip aimed at strengthening bilateral co-operation. The White House said after the visit that the UAE was committed to a $1.4tn, 10-year “investment framework” in the US, eclipsing the $600bn pledged to be invested over four years by regional rival Saudi Arabia. Filings show that a company called G42 USA was incorporated in Delaware in January. Its cloud and enterprise subsidiary Core42 has already opened companies in the US and announced plans to launch its services in the country.G42 last year moved to invest $335mn in US chipmaker Cerebras, a deal that was cleared by Committee on Foreign Investment in the US (Cfius) last month — although it was only permitted to purchase non-voting shares. The Abu Dhabi group’s move to accelerate its expansion under the Trump administration comes after Peng Xiao — G42’s China-born chief executive who has become a UAE citizen — sought to cut ties with Chinese hardware suppliers including Huawei following scrutiny by US lawmakers. Last year Microsoft invested $1.5bn for a minority stake in G42. It also has other US investors, including Ray Dalio’s family office and private equity firm Silver Lake. Further details of G42’s expansion in the US remain unclear. The group’s data centre company Khazna told the FT it did not have plans to immediately start work in the US.“While we’re currently focused on opportunities across Apac and other priority regions, we’re closely observing developments through G42’s expansion in the US and will look to support and grow alongside that initiative when the time is right,” said Hassan Alnaqbi, Khazna’s chief executive. Amid President Donald Trump’s tariff blitz, UAE officials have been keen to highlight the Gulf state’s willingness to bet on America for the long term, as well as its favourable trade surplus with the US. “UAE investment institutions are probably one of the largest foreign direct investors into the US economy for the last 20 years,” Mubadala chief executive Khaldoon al Mubarak said at a conference in Washington last month.Additional reporting by Tim Bradshaw in London and George Hammond in San Francisco More

Donald Trump’s return to the White House is reviving a stalled plan to forge a strategic partnership between the EU and a key Indo-Pacific trade bloc, according to EU officials and senior diplomats.Plans to build stronger links between Brussels and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership — a group of 12 countries that includes Canada, Japan and Mexico — have gained momentum following Trump’s “liberation day” tariffs announcement in April. A European Commission official said that while it is “still very early days”, the two sides have “moved into a space where we’re willing to look at some sort of structured co-operation with [the] CPTPP”. European Commission president Ursula von der Leyen told the FT in April that the two sides wanted to co-operate on “rules about how fair trade around the world is functioning to the better of mankind”.Both blocs wanted to use the current turmoil to look into what had to be improved at the World Trade Organization “and how can we work closer together to make this happen”, von der Leyen said.© Kai Fosterling/EPA-EFE/ShutterstockThe renewed openness in Brussels to a partnership, which could potentially include closer ties on both digital and goods trade, marks a step-change in attitude at the highest levels of the EU.The idea would throw an umbrella over national economies accounting for roughly 30 per cent of global GDP, and would send a signal that the majority of the global trading system is committed to preserving the rules-based order now threatened by Trump tariffs, officials on both sides said.A previous attempt to deepen ties in 2023 did not gain diplomatic traction, but a report at the time by Sweden’s National board of Trade, an independent government agency, argued that a deal between the blocs could make them “the centre of gravity in world trade”.The CPTPP was founded in 2018 and includes Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, the UK and Vietnam. It offers equal treatment for investors and more deeply integrated goods trade. The EU already has bilateral deals with nine CPTPP members.Among CPTPP countries, the most vocal backing for closer EU ties has come from New Zealand, Canada and Singapore, but diplomats said that Japan was also quietly supportive.© Claudio Reyes/AFP/Getty ImagesCanada’s foreign ministry said the country was committed to strengthening its trade relations with Europe and the Indo-Pacific region, although a spokesperson insisted “no decisions or agreements have been made”.The prime ministers of both New Zealand and Singapore have also endorsed the idea of deeper co-operation between the two blocs in recent weeks. A mechanism for converting such warm sentiments into a formal dialogue process has yet to be established, diplomats said, partly because Australia currently holds the rotating presidency of the CPTPP and held a general election this weekend.The formation of a new Australian government is expected to lead to a resumption of stalled EU-Australia bilateral trade deal talks, which could also provide a political forum to open a wider EU-CPTPP dialogue, EU diplomats said.Another CPTPP diplomat said that the mechanisms for improved EU co-operation could be raised at a meeting of trade ministers at the Asia-Pacific Economic Cooperation (APEC) meeting in South Korea this month.Supporters of a rapid deal include Cecilia Malmström, a former EU trade commissioner now at the Peterson Institute for International Economics, who said there was clearly “renewed momentum” behind the idea.“If this happens, it needs to happen rather quickly — this year,” she added. “The EU is a slow-moving animal, but just look at the last three months, there is a real urgency around really trying to defend rules-based trade,” she told the FT.The parameters of any arrangement are also still to be agreed. Von der Leyen said there were no plans for the EU to join the CPTPP. One CPTPP official said a possible framework could involve a “twin track” process comprising a “new code of conduct” in which ministers jointly affirmed their commitment to WTO rules, alongside a separate dialogue to discuss harmonising rules in key areas such as digital trade and sustainability.At the same time, in an effort not to be presented as an anti-US bloc and in acknowledgment that some of Washington’s trade grievances were justified, an agreement could also look to engage with reforms to the WTO.The most ambitious proposals for a deal between the two blocs have also raised the possibility of the two sides agreeing to “cumulation” of the so-called rules of origin, which are used in Free Trade Agreements to determine whether a product has sufficient local content to qualify for preferential lower-tariff access to a market. Supporters of this idea say it would enable EU and CPTPP companies to more easily integrate their supply chains, and allow them to more easily import goods into each others’ countries. The idea was floated by the Board of Trade in Sweden and again in a recent report by the Brussels-based Bruegel think-tank, but Commission officials were clear that this was not currently an option for the EU.Additional reporting Nic Fildes in Sydney and Leo Lewis in Tokyo More

Unlock the White House Watch newsletter for freeYour guide to what Trump’s second term means for Washington, business and the worldThe writer is the author of ‘Gomorrah’ and ‘ZeroZeroZero’. For over 20 years, he has lived under police protection due to threats received from the Neapolitan mafiaMafia leaders know that every economic decision that results in higher prices opens up a thriving smuggling market. The so-called “reciprocal tariffs” ordered by US President Donald Trump in April will see many more turn to smuggling. Mexican cartels, Italian criminal organisations, the Russian mafia and other groups already capable of trafficking illegal items into the US will now just as easily be able to smuggle legal ones. An immense new market — potentially comparable to Prohibition-era bootlegging — is appearing and organised crime stands ready to capitalise. US history shows us what might happen. Take the Embargo Act of 1807 when Thomas Jefferson imposed a total embargo on foreign trade to put pressure on Britain and France. This brought a massive increase in smuggling, especially in border regions such as Vermont and Maine. When the Smoot-Hawley Tariff Act of 1930 increased tariffs on more than 20,000 imported products, Italian-American mafia organisations began to structure themselves as middlemen as many small traders turned to illegal routes to maintain profit margins.Every tariff creates an appetite in the market that criminality steps in to satisfy. As price increases hit everything from game consoles to French wine to the textiles that already lie at the heart of smuggling operations, Trump’s tariffs will create more opportunities.     And when smuggling routes multiply, we know how goods will move: for example through the Mexican cartel Jalisco Nueva Generación, which is already accustomed to illegal fuel trafficking. In Utah in April, an American family was indicted for partnering with Mexican criminal organisations to smuggle nearly 2,900 shipments of stolen crude oil into the US. In 2024, a US company pleaded guilty to smuggling porcelain tiles from China and falsifying the origin as “Made in Malaysia” to avoid antidumping and countervailing duties.Before Trump’s tariffs, the smuggling market was almost all about counterfeit products from Asia. US Customs and Border Protection data tells us of seizures of $2.8bn of counterfeit goods in 2023 and $5.4bn in 2024, due to demand for more affordable fashion products. Most of the goods come from China and Hong Kong, which together accounted for about 90 per cent of the total seized for intellectual property rights violations in 2024. These routes will now also be used for legal products and dutiable goods. Increasing controls at ports is one solution but this will mean slowing down customs clearance. Criminal organisations choose ports not according to the level of corruption but according to speed; the faster a port, the more goods can be brought in without controls. The ports of Savannah, Georgia, Houston, Texas, and Long Beach, California, seem likely to be targeted by smugglers precisely because they are very fast in customs clearance. If they were to increase controls, they would slow down the efficiency of cargo transit. And labelling will no longer be sufficient in proving that production of an item of clothing takes place in a specific country. It seems likely that China, which already manages around 40 ports in Latin America, will use them to bring Chinese goods into the US that appear to be produced in South America. Is it possible that Trump really doesn’t know that tariffs will be a golden opportunity for smugglers? It may be that it doesn’t worry him because he is aware US companies need goods at pre-tariff prices in order to remain competitive. Smuggling could also provide him with a reason to keep up political pressure on foreign governments. While tariffs are his political move, smuggling will provide an illegal correction. This would not be Trump’s first exposure to such thinking. His mentor Roy Cohn in the 1970s represented mafia bosses such as Carmine Galante, Carlo Gambino and Nicholas “Cockeyed Nick” Rattenni, and advised the Genovese crime family. Cohn knew there are legal and illegal ways to get things done. For criminal organisations, there are the laws followed by businesses and then there are the “rules” — standard procedures to make a profit. Trump’s formal tariffs are the laws. Meanwhile, an informal black market will follow the rules. Smuggling will now become systemic. It will no longer be a strategy to obtain cheap or counterfeit products but a necessary method to stay competitive. And criminal organisations understand that the more the market demands smuggled goods, the harder it will be for customs to fight it. Eventually we will reach an equilibrium where smuggling in America becomes tolerated once again. More

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Unlock the White House Watch newsletter for freeYour guide to what Trump’s second term means for Washington, business and the worldCanada’s Prime Minister Mark Carney will meet Donald Trump in Washington on Tuesday in an effort to revive a crucial trading relationship with the US that Ottawa’s leader recently described as “over”.It will be Carney’s first foreign visit since his Liberal party won a general election on Monday after a campaign overshadowed by the US president’s taunts about Canada and his tariffs on some of its exports. Carney in Ottawa on Friday said he had held a “very constructive call” with Trump and the two leaders had agreed to meet next week in the US capital. “Our focus will be on both the immediate trade pressures, and the broader future economic and security relationship between our two sovereign nations,” he said. Carney also announced King Charles would deliver a speech to open the new parliament in Ottawa later this month. “This historic honour matches the weight of our times,” Carney said of the visit by the king, who is also Canada’s sovereign. It will be the first time in nearly 50 years that the monarch takes part in parliament’s opening. Carney was speaking at his first press conference since his Liberals defeated Pierre Poilievre’s Conservative party after a campaign dominated by the debate about Trump and Canada’s relationship with its most important trading partner. Trump’s mockery of Canada and its former prime minister Justin Trudeau, as well as the president’s threats to annex the country — which he described as a potential “51st state” — propelled the Liberal party from a distant second in polls last year to victory this week. Relations between the two allies and trading partners have been rocked by the tariffs announcement despite the US-Mexico-Canada free trade deal that the president negotiated during his first term.Carney vowed in a speech after his win on Monday that Trump would “never break” Canada, and said Ottawa would look to forge new trading alliances with countries in Europe and elsewhere. The prime minister on Friday said his meeting in the White House would address “complex” US tariffs affecting Canada’s automotive, steel and aluminium industries. “I go there with the expectation of difficult but constructive conversations,” he said.Carney, who was previously the governor of the Bank of England, said Trump had made no reference to Canada becoming a US state on their telephone all. “This will never, ever happen,” the prime minister said. Carney, who will lead a minority government after his party narrowly missed winning a majority of seats in parliament, outlined his vision to “advance the nation-building investments that will transform our economy”.US tariffs are affecting Canada’s economy.General Motors on Friday said it would cut production at a plant in Ontario that the union said would result in more than 2,000 job losses. In April, carmaker Stellantis announced it was “temporarily pausing production” for two weeks.“We are fighting hard for our auto sector, all our sectors, in these negotiations with the Americans,” Carney said.Goldy Hyder, chief executive of the Business Council of Canada, on Tuesday said the USMCA remained the best framework “to restore the certainty, stability and predictability” of the countries’ commercial relationship. Carney said Canada’s new cabinet would be sworn in during the week of May 12 and parliament would be recalled for the King’s speech on May 27. More

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