Aurelia Butler

This article is an on-site version of our Swamp Notes newsletter. Premium subscribers can sign up here to get the newsletter delivered every Monday and Friday. Standard subscribers can upgrade to Premium here, or explore all FT newslettersAs I wrote in my column today, we won’t know for sure what will happen on April 2 until Donald Trump’s so-called “liberation day” is here. But since my respondent today is London-based Tej Parikh, the FT’s economics leader writer, I thought I’d plunge into the topic of tariffs, and the transatlantic divide in how people tend to view them.In the US, public opinion around tariffs really depends on how you ask the question, as this New York Times’ graphic points out. If you ask whether Americans support tariffs “even if prices increase”, only about a third are in favour. But if you start calling out specific countries, like China, and pointing out specific unfair trade practices or differences in the rates charged by the US versus other countries, then suddenly the number who are in favour can rise above half the population.This is an important point to understand, not only because is it at the heart of the Trump administration’s economic thinking, but also because it resonates with average Americans. If it’s about “fairness” rather than “inflation”, views shift.As Stephen Miran, head of the President’s Council of Economic Advisers, wrote in his much talked about report, “A Users Guide to Restructuring the Global Trading System”, the current administration believes that it is unfairly locked into a system of tariff rates that are “designed for a different economic age”. As he points out, the US’s share of global GDP halved from 40 per cent in the 1960s to 21 per cent in 2012, and has recovered slightly to 26 per cent today — but the tariff and trade system is stuck in a postwar paradigm.According to Miran’s report, the US effective tariff on imports is the lowest of any nation in the world, at about 3 per cent. The EU’s effective rate is about 5 per cent and China’s is 10 per cent. Bilateral discrepancies can be larger. As Miran writes: “The US imposes only 2.5 per cent tariffs on auto imports from the EU, while Europe imposes a 10 per cent duty on American auto imports.”OK, so how to explain Trump’s 25 per cent across the board auto tariffs? How do they address the US-Europe discrepancy in particular?If you add in the fact that European companies — like carmakers — don’t pay VAT on goods for export, then you end up with a situation in which “a potential US tariff of 25 per cent on goods from Europe is not arbitrary, punitive, or merely a negotiating tactic”, as Jason Cummins, the chief US economist at Brevan Howard wrote in the FT last week, but rather “logically addresses inherent differences between tariff and VAT systems”. Cummins argues that 25 per cent is what it would take to level the playing field with Europe. Now, of course, none of this reflects all the challenges and potential inflation through complex supply chains that might result from tariffs (witness how all the carmakers, including the US ones, are complaining about that). But large industrial supply chains used to be vertically integrated (remember Henry Ford’s River Rouge plan, which had steel going in one side and cars coming out the other?)My bet is that they will be more so again in the future, for reasons that have little to do with geopolitics (additive manufacturing that allows complex products to be made locally is coming to scale, and a global price on carbon will argue for more regionalised hubs of production and consumption, since logistics is the second largest polluter after China).Meanwhile, if you put up on a white board the effective tariff rates of the US (3 per cent), EU (5 per cent) and China (10 per cent), and ask Americans if they think that’s fair, I’d wager they’d say no. I haven’t seen polling on this, but it follows the general trend that opinions on tariffs are reliant on how questions are posed. So, my question to you, Tej, as a European is, what would you say to that? Is there anything in this position that you can sympathise with? What would an average Briton say to such an argument? And if you were going to make the case about tariffs from the point of view of an average Briton to an American, how would you frame it?Recommended readingTej Parikh responds The use, and effects, of protectionism are so wide-ranging that it makes sense that support for it varies depending on which element is being emphasised — whether in America or Europe.In this case, it is difficult for individuals to assess the direct cost of import duties on themselves with the value they place on fairness. They don’t want to face higher prices. But they also think trade should be a level playing field.The questions will also have salience with different households. For instance, workers with experience of the economic disruption caused by globalisation — such as job losses and factory closures, triggered by competition from abroad — might find the fairness argument for raising tariffs more compelling. (Even perhaps to the extent that they’re willing to experience some short-term economic pain if it brings retribution.)This is what makes tariffs such a useful political tool. Their rationale can be targeted. And, politicians can get away with it, if the costs are manageable and not immediate. That’s where I think Trump’s April 2 bonanza will trip him up. High and wide tariffs will hit Americans’ pockets quickly.In Britain, controlling immigration rather than protecting certain jobs and industries with tariffs has been the more salient aspect of globalisation. But I imagine one could still garner support for import duties in parts of the country that have faced rapid deindustrialisation. (The same may be true in parts of Europe too, although the idea of open trade is more central to the European project).In coastal, rural and northern parts of England, the argument that tariffs would help block cheap competition from abroad, protect jobs and nurture industries, would land to some extent. But, in London, which has boomed, partly because of globalisation, it probably wouldn’t.The broader point here is that free trade is being made a scapegoat for deeper issues governments have failed to address, such as reskilling and investment support. But some of these “left behind” regions feel that promises to regenerate local areas always fall flat, and so if tariffs help at least some “old economy” jobs stay put, then some may think it is worth the punt.Your feedbackWe’d love to hear from you. You can email the team on [email protected], contact Ed on [email protected] and Rana on [email protected], and follow them on X at @RanaForoohar and @EdwardGLuce. We may feature an excerpt of your response in the next newsletterRecommended 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 White House Watch newsletter for freeYour guide to what the 2024 US election means for Washington and the worldSir Keir Starmer is braced for Donald Trump to hit Britain with new import taxes this week as part of his promised round of global reciprocal tariffs, in spite of “constructive” talks between the two leaders on Sunday.Downing Street conceded that British efforts to avoid punitive tariffs had not yet yielded results and that it expected “the UK to be impacted alongside other countries”.A spokesman for Starmer signalled that Britain would not immediately retaliate but would instead continue with a “calm and pragmatic approach” aimed at securing a new economic deal, covering tariffs.The spokesman said the talks were “likely to continue beyond Wednesday”, adding: “We will continue to have these talks for as long as there’s a chance of a deal with the US.”Starmer on Sunday held what Downing Street called “productive” trade negotiations with Trump, as he tries to put together “a UK/US economic prosperity deal”. The talks have been going on for several weeks and Downing Street said they would “continue at pace this week”.Trump on Sunday told reporters the tariffs he is expected to announce on April 2 would apply globally. “You’d start with all countries, so let’s see what happens,” he said. The US president has dubbed Wednesday “liberation day”.Asked whether Britain would hit back with its own tariffs, Starmer’s spokesman said the prime minister was “ruling nothing out” but that the emphasis was on talking and trying to secure a deal.“A trade war with the US is not in anyone’s interest,” Starmer’s spokesman said. “British industry wants to see the British government continue a dialogue with the US.”Starmer, who has had regular phone calls with Trump in recent weeks, has said that Britain will be “pragmatic and clear eyed” in its response if exports of UK-made cars and other goods are hit by US tariffs.Lord Peter Mandelson, Britain’s ambassador to Washington, is seeking to engineer an economic deal that would lead to Britain being given a carve-out from Trump’s threatened reciprocal global tariffs.British officials have spoken to the Trump team about scaling back or axing the UK’s digital services tax, which is set to raise £800mn this year and particularly affects big US tech companies.But the UK car industry told Sarah Jones, industry minister, on Friday that it did not want to see immediate UK retaliation if Trump pressed ahead with his threat of 25 per cent tariffs on foreign-made cars entering the US.“The industry does not want a trade war, but it’s important that we keep all options on the table,” Starmer said last week.Carmakers have instead demanded that ministers develop a “holistic approach” to supporting the UK auto industry, including through lower energy costs, increased training and better regulation. The independent Office for Budget Responsibility, the fiscal watchdog, has warned that Britain’s GDP will be 1 per cent lower next year in the event of the most “severe” global trade war.That would almost eliminate UK chancellor Rachel Reeves’ £9.9bn of headroom against her fiscal rules, announced last week in the Spring Statement, and increase the likelihood that she would have to raise taxes in an autumn Budget. More

Donald Trump has spent his first months in the White House railing against the US’s largest trading partners, accusing them of cheating America and taking advantage of the world’s largest economy.“For DECADES we have been ripped off and abused by every nation in the World, both friend and foe. Now it is finally time for the Good Ol’ USA to get some of that MONEY, and RESPECT, BACK. GOD BLESS AMERICA!!!” the president wrote on social media this month. Trump has declared that April 2 will be “Liberation Day”, when he plans a sweeping escalation of his trade policy, potentially hitting the US’s largest trading partners with steep tariffs as he upends decades of global trading norms. What will Trump do on “Liberation Day”? There are three main elements — and a lot of uncertainty.Firstly, the reports will land. On inauguration day, Trump followed up his election campaign pledges for immediate tariffs on all US imports by ordering a series of investigations into the country’s trading relationships. These studies will be returned to him on April 1.The second element is the centrepiece on April 2: the expected announcement of so-called reciprocal tariffs. These are supposed to counter what his administration views as unbalanced trade relationships and unfair taxes, subsidies and regulations.In parallel, the White House is looking at a whole host of sectoral levies to unveil on that date. Trump somewhat jumped the gun on Wednesday by setting out 25 per cent tariffs on cars.The president has said other tariffs may follow on chips and pharmaceuticals, but has also signalled that those would be announced at a later date. It has all added to the unpredictability that has been a hallmark of his leadership.April 2 is also the day Trump has suggested tariffs of 25 per cent on all imports from Canada and Mexico will reapply. Earlier this month, he offered a temporary exemption from those levies to goods complying with the terms of the 2020 trade deal between the three countries.Some content could not load. Check your internet connection or browser settings.What does Trump mean by a reciprocal tariff?The Trump administration has said it wants to impose tariffs on a “country by country” basis, hitting any trading partners that have higher levies on the US than it imposes back.What makes this more novel is the US saying it will also retaliate against trading partners with so-called non-tariff trade barriers, such as rules, regulations, subsidies or taxes.US officials have repeatedly singled out the EU’s value added tax as an example of an unfair trade practice. Digital services taxes are also under attack from Trump officials who say they discriminate against US companies. Trade experts say it is notoriously difficult and time-consuming to calculate a specific tariff rate to counter another country’s taxes or regulations.Lori Wallach, director of the think-tank Rethink Trade, said the US balancing trade with its partners “could mean some logical combination of sectoral tariffs applying to all countries for particular goods the US thinks are important, and some application of country-specific tariffs on countries that have the highest chronic surpluses in their global trade”.Some content could not load. Check your internet connection or browser settings.How will the measures be applied? If Trump were to apply immediate tariffs to trading partners on Wednesday, he would need to use emergency powers, instead of the trade measures he has relied on previously to impose levies following months of investigation. These measures could include the US’s International Emergency Economic Powers Act, or a little-known trade law, Section 338 of the Tariff Act of 1930, to potentially apply tariffs of up to 50 per cent.Trade lawyers say tariffs applied under emergency powers could kick in immediately. “If he does it under IEEPA, I think our experience from the Mexico and Canada and China tariffs says it could happen almost instantaneously,” said Lynn Fischer Fox, a partner at Arnold & Porter and former US trade official. What tariffs has Trump already imposed?Trump has already imposed additional tariffs on all imports from China of 20 per cent, and levies of 25 per cent on all US imports of steel and aluminium — plus a large list of products made with those metals.Earlier this month, he initially imposed tariffs of 25 per cent on all imports from Mexico and Canada in what he said was a drive to force them to reduce illegal immigration across their borders and stem the flow of the deadly opioid fentanyl.Hours later, the president softened the tariffs by offering a temporary exemption for goods that comply with the terms of the 2020 North American trade deal between the three countries.On March 24 Trump also signed an executive order issuing unprecedented “secondary tariffs” on all countries that buy any oil and gas from Venezuela, taking effect on April 2. Those tariffs will apply for one year after a country’s most recent purchase of fuel from Venezuela, unless senior US officials waive them earlier than that. Most trade experts expect the various tariffs placed on US trading partners to be cumulative. For example, China would potentially face the 20 per cent tariff on all imports, in addition to a 25 per cent levy in response to its purchases of Venezuelan oil, to give its imports an overall 45 per cent duty. The reciprocal tariff could be added on top. Trump has opened trade investigations that could use national security grounds to apply tariffs to copper and lumber. The so-called Section 232 investigations were successfully used to apply levies to steel and aluminium by Trump in 2018, and recently again on cars this month. How might affected countries respond?Under the last Trump administration, US trading partners retaliated with their own levies on US goods, escalating a trade war.Typically the targets are goods that are important to Republican lawmakers, who might then think twice about the president’s aggressive trade policy. This time around, some US trading partners are following the same playbook. The EU has said it would counter US steel and aluminium tariffs with its own duties affecting up to $28bn of assorted American goods. If approved by EU member states, these are set to take effect on April 12.China has also put tariffs on $22bn of US agricultural exports, targeting Trump’s rural base with new duties of 10 per cent on soyabeans, pork, beef and seafood. Cotton, chicken and corn face additional 15 per cent levies.  Canada applied tariffs to about $21bn of US goods ranging from alcohol to peanut butter in early March. That was followed by another tranche of around $21bn on US steel and aluminium products among other items. Several countries — including Mexico and the UK — have so far not responded. The UK has opted to try to negotiate a trade deal rather than inflaming relations with the president.Stephen Moore, visiting fellow in economics at the rightwing Heritage Foundation, said retaliating against the US was “exactly the wrong response” from its trading partners. “It’s so counter-productive, and all that’s doing is further agitating Trump,” Moore said.Which countries are most at risk?The extent of the reciprocal tariffs remains unclear. Last month, US officials indicated that Japan, India, the EU and Brazil would be the biggest targets.However, when asking American exporters to file complaints about their trading partners, the US Trade Representative’s office said it was interested in all G20 countries, plus countries that have “the largest trade deficits in goods with the United States”. Its list included Argentina, Australia, Brazil, Canada, China, the EU, India, Indonesia, Japan, Korea, Malaysia, Mexico, Russia, Saudi Arabia, South Africa, Switzerland, Taiwan, Thailand, Turkey, the UK and Vietnam.Some content could not load. Check your internet connection or browser settings.Will it be inflationary? Federal Reserve officials are on guard for signs that the tariffs will trigger broad and persistent inflationary pressures.Previous rounds of trade levies, imposed during Trump’s first term, did not have a persistent impact on prices, but rate-setters are acutely aware that this time may be different.Not only are the current round of tariffs potentially much more disruptive, they also come at a time when businesses and households are still struggling to recover from the worst bout of US inflation since the 1980s.Additional reporting by Claire Jones in London; data visualisation by Alan Smith and Ray Douglas More

Earlier this month, more than 100 Pizza Hut delivery drivers for Scotland’s biggest takeaway franchisee were called to an emergency meeting and offered an unwelcome choice. Managers of the Glenshire Group, which runs delivery outlets across Scotland, told workers they had a choice: take an effective pay cut, move to an in-store role or switch into self-employment. The changes, bosses said, were needed to cope with increases to national insurance contributions (NICs) and minimum wage rates that take effect this week — sharply raising labour costs for employers of low-wage workers.Bryan Simpson, lead organiser for hospitality at the union Unite, who relayed the details of the Glenshire exchange, said the changes set a “dangerous precedent” in a sector where many employers were moving workers to shorter or zero-hour contracts to cut costs.  “This is not a small business — it’s the largest franchisee in all fast food [in Scotland] moving to a self-employed model,” he said. “That really worries me for the message it could send to the rest of the sector.” Glenshire said it had not changed workers’ contractual terms and was “engaging directly with our colleagues to understand their concerns”. But the row reflects the pressures employers across the UK are dealing with against a backdrop of weak growth and consumer spending. The Unite union protests outside a Pizza Hut store in Leith More

Unlock the Editor’s Digest for freeRoula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.The problem for European investors in disentangling themselves from the US is that, deliberately or otherwise, they are in deep. Portfolios everywhere, retail and institutional, are stuffed to the gills with US stocks.This can lead you to one of two conclusions: First, that the outperformance in European stocks now under way is fun but ultimately a blip, and therefore the great disentanglement won’t happen. Or second, that we are at the start of a long and painful process for the US. I lean heavily towards the latter.By now we all know the score: The widespread, almost universal belief among institutional investors that the US would dominate global stocks in 2025 has proven to be badly misplaced. The pro-growth, low-tax, anti-red-tape narrative of Donald Trump’s second presidency has collapsed under its own weight and given way to fears of a recession or stagflation. On-again-off-again trade tariffs and widespread federal jobs cuts are gnawing away at corporate and consumer confidence. And the depth of the administration’s loathing for supposed allies in Europe has shocked investors there deeply. Fund managers at global investment houses recognise that vice-president JD Vance’s speech in Munich was problematic, but European investors were offended in a way that Americans perhaps have not recognised.Markets are reacting as you might expect. The dollar is sliding, and European markets are streaking ahead of the US. It’s important to understand just how unusual this is. Germany’s Dax stocks index has outperformed the US S&P 500 in just two of the past 12 years. Analysts at Deutsche Bank point out that at the current pace — and yes, it is still early in the year — this is shaping up to be the best year for outperformance in the Dax in any year since 1960. Similarly, the dollar’s woes are for the history books. It has fallen further by this point in the year only six times since 1969.Some content could not load. Check your internet connection or browser settings.Barclays is among those warning against getting overexcited. The rush of money in to Europe-focused funds is substantial, its analysts say, but it will struggle to keep running at this pace. Similarly, Germany’s announcement of fiscal stimulus does point to higher European growth, but Trump’s trade tariffs are likely to pull in the opposite direction — a “tug of war” that means “reports of the end of US exceptionalism may well prove greatly exaggerated”.What we do know is that European exceptionalism is still a very young investment theme, and US dominance is hard-baked in to the financial system. Data from the US Federal Reserve shows that European investors held about $9tn in US stocks at the end of last year — around 17 per cent of the overall value of the US market and not far off the market capitalisation of all the equities in Europe.Some content could not load. Check your internet connection or browser settings.This gigantic overallocation to the US has not happened by magic. It has just made financial sense over the long term. Paul Marsh of the London Business School, one of the authors of UBS’s Investment Returns Yearbook — a sacred text for markets nerds — points out that one dollar invested in the US at the start of 1900 was worth $899 by the end of the century in real terms. The same dollar invested in the rest of the world was worth just $119.The first quarter of the 21st century shows a similar gap. A dollar invested in the US at the start of 2000 was worth $3.28 by the end of 2024, again, after inflation. For the rest of the world, you end up at a rather humdrum $1.63. As a rule, non-US investors who have failed to make a significant allocation to the US have not been doing their jobs properly.The US has been hard to avoid, in fact. By the end of last year, 10 stocks made up nearly a quarter of the global total of market capitalisation in public equities. Nine of them are from the US. The US makes up 64 per cent of the value of all global stocks, or nearly 73 per cent of developed markets. Any investor tracking a global stocks index such as the MSCI Global may think this is a neutral strategy — a nice, easy way to achieve diversification. It’s not — it’s a nice, easy way to run a massive positive bet on the US. “We have argued over time that the merits of the US must be fully discounted,” Marsh said at the launch of his latest yearbook earlier this month. “It’s not that the US will stop being a dominant market or the US will stop being a hugely entrepreneurial country. It’s just that all has to be in the price at some point.”Investors everywhere are hugely overexposed to the US. That was uncomfortable enough before Trump began his second presidency, and it feels rather more reckless now. It is hard for global investors to shake off more than a century of evidence that buying US assets is simply in the best financial interests of themselves or their clients, but lighter allocations to Trump’s America represent basic risk management at this point.Trillions of investment dollars can leave the US if the rest of the world chooses to get back towards a neutral position. The question is how easily the rest of the world’s markets can absorb that money. As Trump said in a social media post outlining one of his many sets of trade tariffs: “Have fun!”[email protected] More

Unlock the Editor’s Digest for freeRoula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.France, Ireland and Europe’s powerful farming unions are pushing Brussels to drop many food and drink products from its proposed retaliation against US tariffs.The European Commission has received floods of objections from business and member states to its list of measures, underlining how the 27 member block might struggle to respond collectively to US pressure.Jack Chambers, Ireland’s public expenditure minister, warned against “retaliatory and tit-for-tat measures that could worsen a trade dispute” on Friday while Italian prime minister Giorgia Meloni told the FT the EU should negotiate over its high duties on some items. “There are big differences on the single goods,” she said. “That’s what we have to work on to find a good, common solution.”Her agriculture minister Francesco Lollobrigida also called for talks, saying: “We fear any further burden that will create more difficult conditions [for wine exports]. But we aren’t terrified.” France, Italy and Ireland were spooked after the commission announced tariffs of 50 per cent on bourbon whiskey in response to US levies of 25 per cent on steel and aluminium. Donald Trump threatened to hit back with 200 per cent tariffs on European drinks including wine, champagne and whiskey.In response Paris requested Brussels delay the measures from April 1 until mid-April to create space for talks. However, EU officials say that attempts to negotiate have made little progress. Rather than heed overtures, this week Trump went further with 25 per cent tariffs on cars. He also confirmed that April 2 would be “Liberation Day” with sweeping levies on all goods, on top of existing tariffs. The EU’s top negotiator told colleagues he expects to have to pay at least 20 per cent.  The package of tariffs on €26bn of US imports will be put to member states for approval to take effect on April 12. With its proposals the commission published a 99 page list of possible targets — from soyabeans to beauty products and underwear — with companies and governments able to object until March 26 before the final list is produced. Peter Burke, Irish trade minister, told parliament this week that the “government has made our concerns clearly known to the EU including in relation to the dairy and spirit drinks sectors”.He said the EU was “open to fine-tuning its rebalancing measures so that they strike the right balance of products, taking into account the interests of EU producers, exporters, and consumers”. The spirits industry has also called for bourbon to be exempted, while the EU timber industry wants wood taken off the list for fear of retaliation, one industry figure said. It exports about three times more than it imports.Copa-Cogeca, which represents farmers, is pushing to remove soyabeans, which are vital to feed animals. “Agrifood sector should be kept out of the scope of the retaliation or any disputes that don’t concern it,” a spokesperson said.“Many EU countries have a deficiency in production of raw materials for animal feed and therefore any imposition of additional tariffs on key products such as: maize, soyabeans and distillers dried grains with solubles would seriously hinder the livestock production and create market disruption and price increases for consumers.” Diplomats say the commission has considerable sway on such trade proposals as it would take a weighted majority of member states to block its plan in a vote.“It’s not surprising that governments are doing this — they are standing up for their interests,” said one European diplomat.“But I am confident that there is going to be a strong package from the commission that will be approved. If we block this then we are screwed — and member states know that.” More

Capping a week of courting the world’s top CEOs, China’s President Xi Jinping on Friday made one of his most impassioned defences yet of international trade, as the system of globalised supply chains that helped catapult China to economic superpower status teeters on the brink.Just days before Donald Trump’s self-declared “liberation day” on April 2, when the US president is set to unleash a new wave of tariffs on America’s trading partners, a smiling Xi led a group of more than 40 global business leaders into an ornate room in Beijing’s Great Hall of the People.Without naming the US, Xi told his guests, who ranged from HSBC’s Georges Elhedery and Mercedes-Benz’s Ola Källenius to Saudi Aramco’s Amin Nasser and Toyota’s Akio Toyoda, that some countries were “weaponising” trade and “forcing companies to take sides and make choices that go against economic principles”. “We must jointly maintain the multilateral trading system, jointly maintain the stability of the global industrial chain,” he said. The meeting with the business leaders followed a week in which China hosted its most important annual business summits: the China Development Forum in Beijing and the Boao Forum for Asia in the tropical resort island of Hainan. The message at both was that, compared with Trump’s chaotic policymaking, Beijing was a bastion of stability and a champion of the global trading system from which it — arguably more than any other country — had benefited and upon which it was still heavily reliant. Show video infoTrump has threatened to impose sweeping “reciprocal” tariffs on America’s trading partners on Wednesday. The US is due on Tuesday to conclude extensive investigations into its trade with China as well as Beijing’s industrial policy, subsidies and diversion of trade through other countries.Analysts said many foreign trading partners have soured on China in recent years, accusing it of running up huge surpluses while erecting barriers to its domestic market. But Trump’s threats to globalisation have made international business more receptive to Beijing’s message.“China after all is quite stable — there are no surprises in policymaking,” said Denis Depoux, global managing director at consultancy Roland Berger, who attended the Beijing and Bo’ao forums. “Maybe because the rest of the world has become chaotic, so China looks better than before.”At the annual meeting of China’s rubber stamp parliament this month, leaders sought to shore up that image of stability with an ambitious GDP annual growth target of 5 per cent, backed by plans for a record central government budget deficit.“If you’re wanting to ask about China and its place in the globe, in the world, what I’m witnessing is a quiet resoluteness, that they believe they’re on the right path,” said Andrew Forrest, the Australian mining billionaire who also attended both forums. “No matter the changes in the external environment, China will open wider to the world,” vice-premier Ding Xuexiang, a member of the elite standing committee of the Communist party’s governing politburo, assured those gathered in Bo’ao.Some content could not load. Check your internet connection or browser settings.China’s relative stability and recent successes with advanced technology — such as the emergence of its DeepSeek artificial intelligence software — have emboldened some scholars to proclaim its party-led, state-driven development is a superior model for the so-called “global south” of non-aligned developing countries. “Western modernisation . . . is very exclusive,” Zheng Yongnian of the Chinese University of Hong Kong, Shenzhen told a panel discussion on the global south in Bo’ao. “The west doesn’t help other countries, poor countries, to develop.”Zheng said that the west instead put pressure on poor countries over issues such as human rights. “Chinese modernisation, I give it a name, I call it . . . open source modernisation,” he said. “When you get rich, you help other countries to get rich.”But China also has its own urgent reason for defending the global trading system: its acute dependence on exports for growth. It is a reliance that critics argue is partly to blame for the US trade backlash. Although now the world’s second-largest economy, China’s chronic lack of domestic demand contributed to a record trade surplus of almost $1tn with the rest of the world last year, which alarmed not only the US but also the EU and some large developing countries. ‘China will open wider to the world,’ Ding Xuexiang told the Boao Forum More

Unlock the White House Watch newsletter for freeYour guide to what the 2024 US election means for Washington and the worldThe Trump administration has sent a letter to some large French companies warning them to comply with an executive order banning diversity, equity and inclusion programmes.The letter, sent by the American embassy in Paris, stated that Trump’s executive order applied to companies outside the US if they were a supplier or service provider to the American government, according to a person familiar with the matter.The embassy also sent a questionnaire that ordered the companies to attest to their compliance. The document, which the Financial Times has seen, is titled “certification regarding compliance with applicable federal anti-discrimination law”. The document says “Department of State contractors must certify that they do not operate any programs promoting DEI that violate any applicable anti-discrimination laws and agree that such certification is material for purposes of the government’s payment decision and therefore subject to the False Claims Act.”The documents appear to signal that the Trump administration is widening its campaign against DEI to foreign companies after launching a crackdown against US media groups such as Disney. A senior banker in Paris said he was shocked by the letter. “It’s crazy . . . but everything is now possible. The rule of the strongest now prevails.”The French finance ministry expressed concerns after some of the companies involved notified it about the move. “This practice reflects the values of the new US government. They are not the same as ours,” said a person close to France’s economy minister Eric Lombard. “The ministry will remind his counterparts in the US government of that.”The existence of the letter was first reported by Les Échos newspaper.The extraterritorial move by the US comes amid heightening tensions between the Trump administration and Europe over economic and security policy as nation pivots away from its traditional allies, especially on trade and Russia’s full-scale invasion of Ukraine. Trump this week imposed an additional 25 per cent levy on auto sector imports into the US and has increased tariffs on European steel and aluminium imports. The EU is working on reciprocal tariffs in response, but has not yet decided which products to target.Top Trump officials’ attitude towards Europe was cast into stark relief this week when messages about US attack plans in Yemen were leaked to American media. “I just hate bailing Europe out again,” vice-president JD Vance wrote in a Signal chat group. “It’s PATHETIC,” responded defence secretary Pete Hegseth.France has not traditionally been a place where DEI programmes have taken root because of legal limitations on the collection of racial and ethnic data. Employers are not allowed to factor people’s origins into hiring or promotion decisions. But French companies that are potentially exposed to the US demands include aviation and defence groups, consulting providers and infrastructure companies. The FT could not immediately determine which companies had received the letter.According to Les Échos, the letter concluded: “If you do not agree to sign this document, we would be grateful if you could kindly provide us with detailed reasons, which we will forward to our legal department.” More