Aurelia Butler

Unlock the White House Watch newsletter for freeYour guide to what Trump’s second term means for Washington, business and the worldDonald Trump’s top economic adviser Stephen Miran struggled to reassure leading bond investors in a meeting last week that followed a bout of intense tumult on Wall Street triggered by the president’s tariffs. Miran, chair of the Council of Economic Advisers, met representatives from top hedge funds and other major investors at the White House’s Eisenhower Executive Office building on Friday, said people with direct knowledge of the matter. Some participants found Friday’s meeting counter-productive, with two people describing Miran’s comments around tariffs and markets as “incoherent” or incomplete, and one of them saying Miran was “out of his depth”. “[Miran] got questions and that’s when it fell apart,” said one person familiar with the meeting. “When you’re with an audience that knows a lot, the talking points are taken apart pretty quickly.”Another person familiar with the meeting was more encouraged by the administration’s approach to deregulation and tax cuts.The roughly 15 attendees included representatives of hedge funds Balyasny, Tudor and Citadel, as well as asset managers PGIM and BlackRock. The event, convened by Citigroup, was timed to coincide with the IMF’s spring meeting. “Administration officials maintain regular contact with business leaders and industry groups about our trade and economic policies. The only interest guiding the administration and President Trump’s decision-making, however, is the best interest of the American people,” the White House said when asked about the meeting.Citi, BlackRock, PGIM, Balyasny, Citadel and Tudor declined to comment.Trump’s policies have triggered intense volatility in US equity and debt markets. US government bonds sold off sharply after the president’s April 2 announcement of steep “reciprocal” tariffs. They stabilised after he paused the levies for 90 days, but many investors remain on edge. The US 10-year Treasury yield traded at 4.17 per cent on Tuesday, down from a high of 4.59 per cent on April 11. Yields move inversely to prices. Treasury secretary Scott Bessent also addressed investors at a closed-door meeting last week. Bessent’s comments indicating he expected the US and China to reach a trade deal in the “very near future” helped lift US stocks. But attendees of the meeting with Miran said he did little to assuage the participants about the tumult in markets and maintained the administration’s line that tariffs would hurt the US’s trading partners more than American consumers. Miran also stated the primary aim of tariffs was not to generate revenue, though additional revenue could be a benefit.The Council of Economic Advisers was established after the second world war to provide advice on domestic and international economic policy to the president. However, the National Economic Council is responsible for co-ordinating policy. Before joining the administration, Miran wrote about the merits of a so-called Mar-a-Lago Accord to align global markets more firmly around US interests in trade and geopolitics. Elements of his thinking, pinned on the notion that the US dollar’s dominant reserve currency status represents a “burden”, were outlined in a widely read note in November. They include weakening the dollar and tying holders of US government bonds in to arrangements to fund defence spending, in return for an American security guarantee. Early this month, Miran delivered a speech at the Hudson Institute think-tank that did not specifically call for a new global currency pact, but did say currency markets were “distorted” and there were “unfortunate side effects of providing reserve assets”. Among his solutions were that countries should accept tariffs on exports to the US without retaliation, or simply “write cheques to Treasury that help us finance global public goods”. Bond investors have balked both at this and at the rollout of Trump’s tariffs. Sinking long-term bond prices and a falling dollar suggest the US’s role as a market haven is under strain, investors say. One person familiar with the situation said Miran had been increasingly distancing himself from the ideas in the 2024 paper in recent meetings with investors. “He is in full-scale retreat,” said the person familiar with the matter. Additional reporting by James Politi More

Unlock the White House Watch newsletter for freeYour guide to what Trump’s second term means for Washington, business and the worldDonald Trump visited the US industrial heartland on Tuesday to tout another step back from his trade war, as he offers more tariff relief for some of the world’s biggest carmakers. The president is sparing the manufacturers from some of his steepest duties and offering those that make their vehicles in the US small rebates to offset the cost of the levies. Carmakers importing parts will also avoid the administration’s tariffs on steel and aluminium. “I’m giving them a little bit of a break,” Trump told a crowd of supporters in Michigan on Tuesday evening. “I want them to make their parts here. But I gave them a little bit of time.”“We give them a little time before we slaughter them if they don’t do this right,” he added, to cheers from the crowd.Show video infoTrump’s moves were formalised in an executive order on Tuesday that the president signed ahead of his trip to Michigan, a hub of US auto manufacturing, where he celebrated his 100th day in office. The relief comes just four days before the administration was due to impose a 25 per cent tariff on imported car parts. A separate 25 per cent tariff on all imports of foreign-made cars was imposed earlier this month and included some exemptions for Mexico and Canada.A senior commerce department official said the alterations to Trump’s tariffs on cars were “designed to allow all of the domestic auto manufacturers to grow their plan, to grow their employment and to build more factories in America”.The Financial Times first reported Trump’s new car tariff relief plan last week. The president’s trade war has caused alarm across the car industry about the extra costs it faces to increase production in the US.Although Trump’s executive order simplifies his tariff regime for car parts, manufacturers will still be subject to a 20 per cent tariff that he has applied to all imports from China.Parts from Mexico and Canada that are compliant with the rules of the 2020 USMCA trade agreement will remain tariff-free. Non-compliant vehicles will face a maximum tariff of 25 per cent.The tariff rebate in the executive order allows carmakers that assemble their vehicles in the US to reclaim up to 3.75 per cent of its value for the next year, according to a senior commerce department official. It will drop to 2.5 per cent from May 1 2026 and be phased out completely on April 30 2027. The softening of the tariffs follows lobbying by industry to mitigate their costs and policy uncertainty. Carmakers including General Motors, Volvo Cars and Porsche have pulled or drastically lowered their profit guidance.The heads of Ford, GM and Stellantis all welcomed the relief measures, although some executives complained that the tariff structure remained too complex. “We look forward to our continued collaboration with the US administration to strengthen a competitive American auto industry and stimulate exports,” Stellantis chair John Elkann said. GM chief executive Mary Barra said: “We believe the president’s leadership is helping level the playing field for companies like GM and allowing us to invest more in the US economy.” Ford said Trump’s decisions would “help mitigate the impact of tariffs on automakers, suppliers and consumers”.Earlier on Tuesday, GM abandoned its previous profit guidance and temporarily halted share buybacks, blaming tariff uncertainty. Additional reporting by Myles McCormick in Washington More

This article is an on-site version of our FirstFT newsletter. Subscribers can sign up to our Asia, Europe/Africa or Americas edition to get the newsletter delivered every weekday morning. Explore all of our newsletters hereGood morning and welcome back to FirstFT Asia. In today’s newsletter: China’s global propaganda pushHow Trump’s honeymoon turned sour so quickly Martin Wolf argues why the US will lose against ChinaWe start today with China’s international propaganda campaign against the US trade war, featuring slick videos portraying itself as standing up against American “bullying” on behalf of the rest of the world.‘Never Kneel Down’: That’s the title of the latest video posted yesterday by China’s ministry of foreign affairs on social media. It warns countries not to make deals with the US, which “slaps its allies in the face”. The video reflects concerns in Beijing that President Donald Trump is using tariffs to force other countries to join America in isolating China. “Bullying will be stopped . . . when the rest of the world stands together in solidarity, the US is just a small stranded boat,” the video said.The propaganda videos contrast dark scenes of Wall Street chaos and angry American protesters with a bright and futuristic China.Charm offensive: The propaganda push comes after Xi toured Vietnam, Malaysia and Cambodia this month to strengthen ties as part of what analysts have described as China’s trade war charm offensive that also includes Europe and Latin America. Beijing wants “to try and shore up its support in western and non-western capitals to prevent Trump forming an anti-China trade bloc”, said Neil Thomas, a fellow at the Asia Society Policy Institute’s Center for China Analysis. Read the full story.More trade war news: Wall Street economists forecast that GDP shrank in the first quarter after the US trade deficit in goods surged to a record high in March.China’s European auto ambitions: Chinese carmakers expanding into Europe are being forced to readjust their short-term ambitions as EU tariff roadblocks have slowed product launches and made their electric vehicles less affordable.Here’s what else we’re keeping tabs on today:Economic data: Australia reports CPI inflation figures, China publishes March PMI and Japan releases industrial production data. First-quarter GDP data is due from Taiwan, the US and the EU.Monetary policy: The Bank of Thailand is expected to cut its policy rate amid slower economic growth. (Bangkok Post)Results: Earning season continues with Samsung, Hong Kong Exchanges & Clearing, Barclays, Microsoft and Volkswagen reporting. Vietnam: Today is the 50th anniversary of the end of the Vietnam war, with commemorations planned across the country.Five more top stories1. Mark Carney has won Canada’s election after a campaign dominated by the country’s relationship with the US under Trump. Carney’s Liberal party was on track to win the largest number of seats and the right to form a minority government. Read more about the pivotal vote.2. Trump is set to announce another step back from his trade war and unveil more tariff relief for some of the world’s biggest carmakers. The president will use a visit to the US industrial heartlands on Tuesday evening (local time) to announce that he is sparing the manufacturers from some of his steepest duties and offer those that make their vehicles in the US small rebates to offset the cost of the levies.More US news: The White House lashed out at what it called a “hostile and political act by Amazon” after a report alleged the tech giant was planning to display price increases caused by Trump’s tariffs on its products.Trump’s first 100 days: These 10 charts map the tumultuous start of his second term.3. China’s copper stockpiles are set to run out in just a few months, as the market suffers “one of the greatest tightening shocks” in its history on fears of US tariffs, according to senior executives at commodities trading house Mercuria. Kostas Bintas, the company’s head of metals and mining, said the US was for the “first time” competing with China for supplies of copper, which was likely to supercharge prices.A blow to nickel producers: Miners in Indonesia are warning of lower profits and output cuts after the government increased the royalties it levies on one of the country’s biggest export industries.4. Starbucks’ profits fell by half in its latest quarter amid mounting costs of the coffeehouse chain’s turnaround effort. Under chief executive Brian Niccol, who took charge in September, has sought to reduce customers’ wait times, simplify menus and restore the welcoming feel that was lost as more business moved online during the Covid-19 pandemic. Here’s the latest on Starbucks’ revival campaign.5. Spain’s electricity grid operator has ruled out a cyber attack as the cause of this week’s huge power outage as authorities rushed to get transport networks and infrastructure running again. As recriminations flew, Spanish Prime Minister Pedro Sánchez vowed private sector energy companies would be held accountable for any shortcomings. News in-depthPolitical analysts say Donald Trump’s lack of support on his handling of the economy is particularly troubling Trump launched his second presidency in January riding the political high of his 2024 election victory with a promise to deliver a new “golden age” to Americans. But 100 days later, after a blizzard of actions to gut the federal government and remake the global economy through sweeping tariffs, Trump is back to being the unpopular and polarising president that he was during most of his first term in office. Here’s how his honeymoon turned sour so quickly.We’re also reading and listening to . . . Sinking feeling: Iran suffers from some of the worst land subsidence in the world, threatening heritage sites and spurring suggestions to move the capital.‘Core’ GDP: Against an uncertain policy outlook, we need to utilise durable economic statistics that tell the real story, writes Harvard professor Jason Furman.Tech Tonic 🎧: John Thornhill explores the Israel Defense Forces’ use of AI in the war against Hamas and what the country’s defence tech ecosystem tells us about the future of warfare.Chart of the dayMartin Wolf’s latest column argues that the US will lose its trade war against China, which has powerful cards to play in the dispute. Many significant powers already do more of their trade with China than with the US, including Australia, Brazil, India, Indonesia, Japan and South Korea.Some content could not load. Check your internet connection or browser settings.Take a break from the newsAhead of the FT Weekend Festival’s US edition on May 10, our DC bureau shares its selection of the restaurants, museums, running routes — and more — to make your visit to Washington a memorable one.© Zach Gibson/Bloomberg 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 worldThe White House has lashed out at what it called a “hostile and political act by Amazon” after a report alleged the tech giant was planning to display price increases caused by Donald Trump’s tariffs on its products.The story originally reported by Punchbowl News on Tuesday said the ecommerce group would “soon” display the impact of the levies on “the price of each product” it sold.Trump spoke with Amazon founder Jeff Bezos to complain about the company’s plans, and the company swiftly walked back the proposal. “Jeff Bezos was very nice,” Trump later said. “He was terrific. He solved the problem very quickly and he did the right thing. He’s a good guy.”The Seattle-based group said such a move had only been considered for goods sold via its low-cost Haul platform.“The team that runs our ultra low-cost Amazon Haul store has considered the idea of listing import charges on certain products,” Amazon said. “This was never a consideration for the main Amazon site and nothing has been implemented on any Amazon properties.”“This was never approved and is not going to happen,” the company added.Earlier in the day, White House press secretary Karoline Leavitt had sharply criticised the company saying it was “not a surprise” that Amazon would take such a step. “Why didn’t Amazon do this when the Biden administration hiked inflation to the highest level in 40 years?” she added.Bezos has repaired ties with Trump, whom he had once criticised as a “threat to democracy” but whose second inauguration as US president he attended this year.During his first term, Trump frequently lashed out at Bezos, calling him “Jeff Bozo” and accusing the billionaire of buying The Washington Post to secure “political influence so that Amazon will benefit”.But the relationship between the two men has since warmed, with Bezos meeting Trump multiple times in the past year.Amazon donated $1mn to Trump’s inauguration fund and paid $40mn for a documentary on Melania Trump, the president’s wife. Roughly $28mn of that sum would go directly to the first lady, said multiple people familiar with the matter.Leavitt’s denunciation of Amazon’s “hostile” act comes after Trump said of Bezos in an interview with The Atlantic published this week: “He’s 100 per cent. He’s been great.”Amazon’s Haul platform sells cheap consumer goods directly shipped from Chinese warehouses to take advantage of duty exemptions known as de minimis rules, a loophole that the White House will close from May 2.Trump this month announced steep “reciprocal” tariffs on dozens of US trading partners, sending global markets plummeting. However, he has subsequently begun negotiations with many countries with a view to lowering their rates.Additional reporting by Alex Rogers More

Unlock the White House Watch newsletter for freeYour guide to what Trump’s second term means for Washington, business and the worldMexico has reached a deal to deliver more water to the US under a decades-old treaty, calming a dispute that had threatened trade relations between the neighbouring nations.Under a 1940s border accord, the US sends Mexico water from the Colorado River each year, while Mexico sends water north from the Rio Grande, with any shortfalls addressed under a special mechanism. But Mexico had fallen behind on deliveries in the past few years amid a severe drought, angering farmers and businesses in parts of southern Texas that relied on the resource.The US state department said on Monday that Mexico had agreed to an immediate transfer of water and a long-term plan to meet future requirements, hailing it as a victory for US President Donald Trump. The agreement comes as the two countries are locked in talks on tariffs that Trump has imposed on US imports from Mexico.Mexico’s leftwing President Claudia Sheinbaum said on Tuesday that she had co-ordinated with governors in the border states of Coahuila, Chihuahua and Tamaulipas to agree on an unspecified quantity to send north.“We’re delivering what we can,” she said. “It was several weeks of work to find a scheme that can give the US the water we owed without putting us at risk.”Sheinbaum said the details of the agreement would be laid out in a statement. High levels of domestic water stress mean it is a politically sensitive issue.Last month Trump halted water shipments to Tijuana until Mexico complied with the treaty, also threatening tariffs and sanctions.“This is very unfair and is hurting South Texas Farmers very badly,” he wrote on Truth Social.Hikers walk by the Rio Grande, which divides Texas and Mexico, both of which face high levels of water stress More

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The US trade deficit in goods surged to a record high in March as companies rushed to stockpile imports ahead of Donald Trump’s sweeping tariffs, prompting Wall Street economists to forecast that GDP shrank in the first quarter.After the publication of official data showing a $162bn gap between imports and exports last month, Morgan Stanley, Goldman Sachs and JPMorgan predicted a contraction in output in the first three months of the year. The balance between imports and exports is an important factor in calculating GDP.The US Census Bureau figure was the highest goods deficit on records stretching back to the early 1990s and compared with $92.8bn for March 2024. The data reflected stockpiling by businesses in anticipation of Trump’s “liberation day” tariffs, and came out a day before Wednesday’s first-quarter GDP figures.“The import surge ahead of tariffs was even larger than we expected, and inventories did not offset it,” economists at Morgan Stanley said. They added that as a result they slashed their first-quarter GDP forecast from zero to an annualised rate of -1.4 per cent.Goldman Sachs cut its forecast from -0.2 per cent to -0.8 per cent, with economists at JPMorgan reducing their prediction from 0 per cent to -1.75 per cent. Some content could not load. Check your internet connection or browser settings.The rise in the trade deficit was almost entirely down to a surge in imports — especially those with a long shelf life, such as cars, industrial materials and consumer goods. “The picture for [the first quarter of 2025] overall remains that President Trump’s tariff threats set off a rush to buy goods now rather than face higher prices later, prompting a startling surge in imports,” said Oliver Allen, senior US economist at Pantheon Macroeconomics.Analysts had already anticipated a slump in growth, even ahead of the Tuesday’s trade figures, with a Reuters survey predicting an annualised quarterly rate of 0.3 per cent — down from 2.4 per cent for the last three months of last year. However, many analysts say Wednesday’s growth figures will be skewed by the extraordinary period before the tariffs took effect, when many businesses focused on stockpiling, and are likely to overstate the damage to the US economy.“The GDP number will tell us very little,” Isabelle Mateos y Lago, chief economist at BNP Paribas, said. “It’s going to be full of noise, and reflecting to a very large extent, the sum of imports.” She added: “You’re going to need to look really under the hood to see what’s really happening.” “The data will be extremely noisy, both because reality is noisy and how we measure reality is noisy,” said Jason Furman, economist at Harvard University, adding he thought the data would still show “a pretty positive story” for US consumption, which has driven growth in recent years. GDP can be calculated as the sum of the trade balance, plus consumption, investment and government spending.Trump unveiled a series of so-called reciprocal tariffs on April 2, sparking a sharp sell-off in equities markets and an increase in the government’s financing costs as investors priced in the risk that high levies would drive the US economy into recession and stunt global growth. In recent weeks, concerns have mounted that high tariffs on Chinese imports will trigger goods shortages in important sectors such as construction and industrial production. Scott Bessent, US Treasury secretary, on Tuesday rejected fears of supply chain shocks, claiming in a media briefing that American retailers had “planned accordingly”. He said the “aperture of uncertainty” would soon be “narrowing”, with Washington closing in on a trade deal with India.The US also had the “contours” of an agreement with South Korea and was making good progress in talks with Japan, Bessent added. While the introduction of many “reciprocal” tariffs was paused by Trump for 90 days on April 4, a 10 per cent baseline tariff remains in place, as does a levy of 145 per cent on most Chinese imports.Economists say that, even without the April 2 tariffs in place, the current scenario leaves US trade levies at their highest effective rate for more than a century. Bessent said on Tuesday the trade war was unsustainable for China and the “onus” was on Beijing to lower trade barriers. Economists expect a partial turnaround in the second quarter as imports fall and push up GDP. West coast ports such as Los Angeles have reported a sharp drop in cargo volumes in recent weeks, amid signs vessels carrying products from China’s east coast are turning back. “Today’s [trade] numbers do really highlight the risk that it may well be a negative GDP print and that is obviously setting us up for a very weak 2025,” James Knightley, chief international economist at ING Bank, said.“This is a big stockpiling effort to get ahead of tariffs . . . but we expect this to unwind pretty soon: ports data is already slowing.”Additional reporting by George Steer in New York More