Aurelia Butler

Unlock the Editor’s Digest for freeRoula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.The pound has climbed above $1.30 for the first time since early November, helped by persistent UK inflation and a broad weakening in the dollar.Sterling rose above the level on Tuesday for the first time since the days after the US election. It has climbed around 3 per cent so far this month, helped by a decline in the dollar as investors worry that President Donald Trump’s stop-start trade war is harming the US economy. Sterling’s gains mark a reversal since January, when concerns over the outlook for the UK’s public finances knocked the currency and UK government bonds. Since then, higher than expected inflation has prompted bets that the Bank of England would be slower to cut interest rates than previously thought.“The pound is along for the ride, as it has better interest rates support . . . UK fiscal concerns are still out there but on the back burner for now,” said Brad Bechtel, a global head of FX at Jefferies. After hitting a two-year high following the US election, as investors bet that Trump’s tariffs and other economic policies would boost inflation, the dollar has fallen sharply since January as investors focus more on the potential economic damage from erratic policymaking in the White House.“It sends another reminder that market participants are no longer confident that President Trump’s policies will boost US growth and strengthen the US dollar,” said Lee Hardman, senior currency analyst at MUFG. Craig Inches, head of rates and cash at Royal London Asset Management, said sterling’s strength was a combination of a “fear of US slowdown leading to more Fed cuts” versus an expected uptick in UK inflation data that will make it harder for the BoE to cut borrowing costs. In January, inflation rose more than expected to 3 per cent.The BoE is widely expected to hold interest rates steady at 4.5 per cent at its meeting on Thursday. Levels in swap markets suggest traders believe the BoE and the Federal Reserve will make two further quarter-point cuts this year, with the Fed more likely to make a third.The upward move for sterling comes despite the OECD this week lowering its growth forecast for the UK, as countries around the world are hit by the fallout from US tariffs. The Paris-based body now expects UK GDP growth for 2025 to be 1.4 per cent, a 0.3 percentage point reduction from its previous calculation.But the pound has weathered trade concerns this year, as investors bet the UK is less exposed to tariffs than some other economies. Last week, UK Prime Minister Sir Keir Starmer said he was “disappointed” by the US’s latest tariff salvo on steel and aluminium, but that the country would keep “all options on table” in terms of a response to the US administration. More

Unlock the White House Watch newsletter for freeYour guide to what the 2024 US election means for Washington and the worldDonald Trump’s chaotic trade policy can only lead to economic chaos. So, might the Trump administration stumble upon something both more coherent and less damaging, yet still meet the president’s protectionist aims? Perhaps. Some members, including Scott Bessent, Treasury secretary, and Stephen Miran, chair of the Council of Economic Advisers, believe so. If one is to understand this more sophisticated approach, one should read Miran’s “A User’s Guide to Restructuring the Global Trading System”, published in November 2024. The author states that “this essay is not policy advocacy”. But if it quacks like a duck, it is a duck. From a man in his current position, this must now be read as advocacy.Underpinning Miran’s argument is a proposition made by the Belgian economist Robert Triffin in the early 1960s. Triffin argued that the growing demand for dollars as a reserve asset could only be supplied by persistent US current account deficits. This in turn meant that the dollar was persistently overvalued relative to the requirements of equilibrium in the balance of payments.Over time, he argued, this weak trade performance would undermine confidence in the fixed dollar price of gold. So, indeed, it proved. In August 1971, in response to a run on the dollar, President Richard Nixon suspended gold convertibility. After hard bargaining, an agreement was reached on new sets of parities of the dollar against other major currencies. These did not last. Soon, these new parities collapsed. The old Bretton Woods system of fixed, but adjustable, exchange rates was replaced by today’s floating exchange rates.Miran applies this perspective to the current predicament of the US. That is why one should view what happened in the 1960s and 1970s as a better parallel to what is being discussed today than the Plaza and Louvre Accords of the 1980s. The latter were aimed at managing a floating exchange rate regime at a time of disequilibrium among the dollar and other currencies, especially the Japanese yen and German mark. What is proposed now is recreating a global system of exchange rate management.Some content could not load. Check your internet connection or browser settings.The justification for this, argues Miran, is that, as in the 1960s, the desire of most other countries to hold the dollar as a reserve currency is driving up its value and so opening a huge current account deficit. This squeezes output of tradeable goods, notably manufactures. That creates a trade-off for the US between possibilities for cheaper finance and international leverage, on the one hand, and the social and fundamental security costs of a weaker manufacturing sector, on the other. Yet Trump wants both to protect domestic manufacturing and maintain the dollar’s global role. Thus, policy has to achieve both aims.One possibility might be unilateral action by the US to weaken the dollar. An option here would be fiscal tightening combined with a monetary loosening. But that would get in the way of Trump’s desire to extend his 2017 tax cuts. Another possibility would be to force the Federal Reserve to drive down the dollar. But that might have devastating effects on inflation and the dollar, as happened in the 1970s.Some content could not load. Check your internet connection or browser settings.Yet another possibility would be tariffs alone. But, other things equal, that would lead to appreciation of the dollar, which would damage the US export sector. Therefore, implies Miran, tariffs should also be used as a weapon in bargaining for a global deal or, if deemed necessary, be complemented by such a deal.Thus, the aim of a stronger manufacturing sector, to be delivered by a combination of tariffs and a weak dollar, needs global co-operation. My colleague, Gillian Tett, has described possible details of such a “Mar-a-Lago accord”.It has two key aspects. The economic aspect is to release the constraints discussed above. The way to do so, suggests Miran, is to turn short-term borrowing into ultra-long-term borrowing, by “persuading” foreign holders to switch their holdings into perpetual dollar bonds. This would allow the US greater room to pursue its desired combination of loose fiscal and loose monetary policy. The political aspect is to point out that accepting such a deal would be the price of being viewed as a friend. Otherwise, a country would be viewed as a foe, or at best as floating in between. In a precise sense, this might be viewed as a “protection racket”.Some content could not load. Check your internet connection or browser settings.This proposal raises four questions. The first is whether Miran’s analysis of the links between the dollar’s role as a reserve currency, the chronic US current account deficit and the weakness of manufacturing employment and output is correct. One must doubt it, because the US is far from the only high-income country with falling shares of employment in manufacturing.A second is whether the proposed new currency accord would in fact allow the US to combine issuance of a reserve currency with its sectoral aims better than any plausible alternatives. A third is whether there is any likelihood of agreement with Trump on the complex set of objectives and instruments in this proposal. A final question is whether Trump is capable of sticking to any deal he has reached. He has, after all, abandoned Ukraine, put the commitment to Nato into doubt and mounted an assault on Canada. The last two points are evidently the most important. Is this administration capable of making a deal any sane person or country should trust? I think not. Yet the analysis of the economic aspects is also important. I plan to look at these next [email protected] Martin Wolf with myFT and on X More

Donald Trump has spared the car industry from his tariff war against Mexico and Canada for 30 days. But for European, Japanese and South Korean car executives, it is hardly a reprieve.The US president has warned that “reciprocal” tariffs on America’s trading partners will come into effect on April 2 — the same day that the 30-day delay on 25 per cent tariffs on imports from its North American neighbours is set to expire.Trump has said he will raise tariffs to retaliate against taxes, levies, regulations and subsidies that Washington considers unfair. But the lack of detail on how reciprocal tariffs will work has made car industry executives nervous. Recent US trade negotiations with Mexico and Canada have placed car parts under the spotlight, raising the prospect that new rules or levies could also be imposed on core components that non-US carmakers bring in from Europe and Asia. “We are relieved for now [with the extension],” said an executive at a European carmaker. “But we don’t know what will be targeted tomorrow.” How has the 30-day extension on Mexico and Canada tariffs helped the industry?Washington’s latest tariff exemption applies to cars assembled in Mexico and Canada that are compliant with the terms of Trump’s 2020 free trade deal. For a vehicle to qualify as duty-free under the USMCA agreement, the proportion of a car’s components coming from North America needs to be at least 75 per cent of the total value. The vehicle’s production must also meet other conditions, including on materials used and wages.Since the 2020 agreement, the US and other international carmakers have invested in their North American manufacturing capabilities, shoring up their supply chains as well as their workforce.As a result, half of the parts for vehicles built in Canada by the Big Three — General Motors, Ford and Chrysler-maker Stellantis — on average come from the US. The share for cars assembled in Mexico is 35 per cent, according to lobbying group American Automotive Policy Council.If Washington decides to retain the USMCA rules, the majority of the car models produced in Canada and Mexico would meet the threshold for tariff-free trade. The exceptions are mostly smaller volume, high-end cars. Among international carmakers, Toyota and Honda have said almost all vehicles produced in North America are USMCA compliant, while Germany’s Volkswagen’s VW brand vehicles are compliant. BMW’s cars will not be part of the exemption as they fail to meet the 75 per cent threshold. Mercedes-Benz declined to comment, but its models are also likely to be non-compliant, according to S&P Global Mobility.What are the Big Three lobbying for? The latest delay to tariffs came after the Big Three carmakers lobbied hard to spare companies that had invested in North American manufacturing to meet the USMCA regulations.John Elkann, chair of Stellantis, has publicly urged the Trump administration to concentrate instead on car imports from countries such as South Korea, Japan and the EU — rather than vehicles coming from Mexico and Canada.“The real opportunity set for the administration in order to really boost jobs in America and manufacturing opportunities and investments is by closing the loophole that currently allows approximately 4mn of vehicles into the country”, Elkann told Stellantis investors in February. Imports from South Korea are at present tariff free, while duties are charged at 2.5 per cent on those from Japan and the EU. Moreover, these vehicles are not subject to US content rules, requiring a proportion of their parts to be made in America.Some content could not load. Check your internet connection or browser settings.Will car parts be included in Trump’s reciprocal tariffs? US officials have said they would impose reciprocal tariffs on a “country by country” basis, retaliating against non-tariff barriers as well. If they were to match US import tariffs to those imposed on US goods by other countries, car parts could be included in the case of the EU, which levies 10 per cent on vehicle imports and 3 to 4.5 per cent on imports of automotive parts. The US only charges EU exporters 2.5 per cent on vehicle imports. But Mark Wakefield, global automotive market lead at AlixPartners, said going after foreign-made components would be “complex and administratively expensive” to pursue. Still, industry executives remain nervous. Michael Robinet, executive director of automotive consulting at S&P Global, said 25 per cent tariffs against Japan, South Korea, EU and other countries that imported either vehicles or parts into the US were “very possible”.“With Covid, we knew there would be an end to the chip crisis,” he added, “but with this we do not know what the end looks like.”A prototype Toyota Tacoma pick-up truck on display at the Los Angeles Auto Show in 2021 More

Unlock the Editor’s Digest for freeRoula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.Hong Kong has long been the world’s busiest air cargo hub, handling more than 4.3mn tonnes of cargo last year. The city’s airport plays a critical role in the global supply chain, connecting China’s industrial base with the rest of the world. But its strategic position also makes it increasingly vulnerable to escalating geopolitical tensions between the US and China, as well as the impact of US President Donald Trump-era tariffs.Multinational companies rely on Hong Kong for warehousing and distribution, while global logistics providers such as UPS and all-cargo airlines like Air Hong Kong use the city as a key trans-shipment hub. Cathay Pacific, the city’s flagship carrier, has been one of the biggest beneficiaries of this cargo volume, with cargo services accounting for more than a quarter of its total revenue.Cathay’s cargo revenue has been growing steadily, driven by higher freight rates and strong demand from ecommerce and expanding trade, particularly in electronics. Overall, the group’s cargo tonnage increased 11 per cent last year. Between Europe and Asia, pharmaceutical products and perishables — including China-bound shipments from markets like the UK, France and Belgium — are driving growth in its special cargo business. Escalating tariffs levied by Trump’s administration and renewed scrutiny on Chinese exports leave Hong Kong’s air cargo sector increasingly vulnerable to external shocks. Tariffs drive up the cost of cross-border trade, squeezing company margins and making air freight less affordable. Businesses looking to protect their bottom lines may begin shifting cargo to cheaper, albeit slower, alternatives such as maritime or land transport.If multinational corporations diversify their supply chains in response to geopolitical risks, such as relocating production to the US or south-east Asia, supply chains will become more fragmented, reducing cargo volumes through Hong Kong as demand for alternative re-export hubs grows.The long-term impact extends beyond freight. Economic uncertainty can also weaken demand for business travel, a key revenue driver for carriers operating US-China routes.Hong Kong remains indispensable to global logistics, and Cathay Pacific continues to reap the rewards. Its revenues rose more than a tenth last year to HK$104.4bn ($13.3bn) while its shares are up a third in the past six months, reflecting strong growth.But the forces at play now are larger than any single airline or airport. The resilience of Hong Kong’s cargo sector depends not just on freight demand, but also on broader geopolitical dynamics. On that front, the most important air traffic controller is the one who sits in the Oval Office. [email protected] More

This is an on-site version of the White House Watch newsletter. You can read the previous edition here. Sign up for free here to get it on Tuesdays and Thursdays. Email us at [email protected] morning and welcome to White House Watch!Donald Trump and Vladimir Putin are due to speak on the phone today about a ceasefire in the Russia-Ukraine war, with “land” and “power plants” on the list of concessions the US president wants from his Russian counterpart.In the meantime, let’s talk about:US economic growth slowdownTrump threat to Iran over Houthi attacks The man behind Meta’s rightward pivotThe US economy is losing its aura of invincibility.Tarnishing its lustre are Trump’s sweeping tariffs and his administration’s assault on government institutions, which leading economists have warned will slow US economic growth and accelerate inflation.Uncertainty around Trump’s economic policy will dent growth, according to almost all 49 economists polled by the FT and Chicago Booth. The polled economists expect the economy to expand 1.6 per cent in 2025, down sharply from 2.3 per cent in the December survey.Some content could not load. Check your internet connection or browser settings.The warning signs are becoming clear: consumers and businesses are pulling back on spending, and sentiment is sliding.Meanwhile, the OECD has warned that Trump’s trade war is taking a “significant” toll on the global economy, with growth projected to slow in both 2025 and 2026. Growth forecasts were slashed for a dozen G20 nations.As Robert Barbera, an economist at Johns Hopkins University, told the FT:Tariffs, tax cuts, government employment and expenditure cuts, assaults on education funding, and [Federal Reserve] independence all are in play. Nothing of the sort has been in play in my 50 years of forecasting.Weighing on the uncertainty is the fact that we don’t know which policies — including the cost-cutting craze from Elon Musk’s so-called Department of Government Efficiency (Doge) — will survive court challenges.The FT-Booth poll also found that economists anticipate that Trump’s policies will push inflation up. They forecast that the annual rate of the core personal consumption expenditures price index — a crucial metric for the Fed — will rise to 2.8 per cent by the end of 2025, up from a December prediction of 2.5 per cent.Some content could not load. Check your internet connection or browser settings.The Fed is all but sure to hold rates steady when policymakers meet tomorrow, but the bank’s overall message will be under scrutiny.The vast majority of polled economists are also worried about the reliability of the country’s economic data, which is vital for both the Fed and investors to have an accurate picture of the US economy.The latest headlinesWhat we’re hearingLet me introduce you to Joel Kaplan, the mastermind behind Meta’s pivot to Trump and CEO Mark Zuckerberg’s most trusted political fixer.He is a Republican lobbyist, newly promoted to the role of head of global affairs at the $1.7tn social media giant. Meta’s unexpected shift right — and its loosening of moderation policies — was the result of months of Kaplan’s careful planning. “He has Mark’s ear in a way that nobody does,” one person who has worked closely with Kaplan told the FT’s Hannah Murphy.Multiple former staffers claim that over the past 10 years, Kaplan has interfered in policy decisions, including about content staying online. They told Hannah that in some cases he’s overridden the company’s typical policy rationale or other senior decision makers so that right-wing figures wouldn’t complain about being censored.To some insiders, Kaplan is the powerbroker Zuckerberg needs to navigate the Trump administration and not become a target of the president’s retribution. But to critics, Kaplan’s focus on optics has come at the expense of online safety and alienating employees.His reputation has also taken a hit.Kaplan was in the news this week after an explosive new memoir by former Meta executive Sarah Wynn-Williams accused him of sexual harassment, including inappropriate comments (Wynn-Williams is married to an FT editor).ViewpointsRecommended newsletters for youFT Exclusive — Be the first to see exclusive FT scoops, features, analysis and investigations. Sign up hereBreaking News — Be alerted to the latest stories as soon as they’re published. Sign up here More

This article is an on-site version of our Chris Giles on Central Banks newsletter. Premium subscribers can sign up here to get the newsletter delivered every Tuesday. Standard subscribers can upgrade to Premium here, or explore all FT newslettersEuropean Central Bank President Christine Lagarde is drawing inspiration from the French poet Paul Valéry. “The trouble with our times is that the future is not what it used to be,” she said at the annual conference in Frankfurt for the ECB and its watchers. The “exceptionally high” uncertainty unleashed by US President Donald Trump would prevent the central bank achieving its 2 per cent inflation mandate in the short term, she said. But it would set monetary policy to ensure inflation was “always converging back towards 2 per cent over the medium term”. Agility and clarity were her watchwords. What she and others did last Wednesday, however, was a Swot analysis of Eurozone economic management, identifying strengths, weakness, opportunities and threats.Most agreed on the Eurozone’s strengths. It is a large economy with sensible economic management and broadly succeeded in returning inflation to target after the 2021-22 shocks. Unlike the US Federal Reserve, the ECB faces no threats to its independence and does not have to deal with what Professor Klaus Adam of University College London described as “lunatic” domestic policy ideas, such as creating a strategic reserve of cryptocurrencies when the dollar is already a reserve currency. The Eurozone’s weaknesses are also well known. There is still a tendency to think of the bloc as a loose amalgamation of 20 individual economies with their own structural economic deficiencies undermining growth and prosperity. There is also an open question as to what extent the ECB failed to address the inflation issue promptly in 2021-22. ECB chief economist Philip Lane was pessimistic that the dismal science would be able to answer this question in 100 years. This left the opportunities and threats to be the main focus of attention both in the main hall and in the corridors of the conference. Three dominated discussions.Trade barriersWith 25 per cent steel and aluminium tariffs having been imposed by the US on the day of the conference, no one thought the EU would escape further trade restrictions coming from the Trump administration. April 2 is the next date to watch, when the US promises to impose “reciprocal” tariffs. If truly reciprocal, these would include a reduction in US tariffs on SUVs from the EU from 25 per cent to 10 per cent. No, I am not holding my breath. In the US, the tariff announcements have spooked households, as shown in the latest inflation expectations published by the University of Michigan last Friday. There is not much comfort yet to be had from the New York Fed’s less timely data and this will worry Federal Reserve officials when they meet this week. Some content could not load. Check your internet connection or browser settings.Compared with the US, where tariffs will create at least a one-off rise in US prices, the European picture is more ambiguous. Inflationary effects will stem from EU retaliation and the supply shock of trade fragmentation. Disinflationary pressures will be fostered by lower US demand for EU exports, a large rise in uncertainty and lower Chinese import prices if it redirects goods to Europe. François Villeroy de Galhau, governor of the Banque de France, said the new world was one of uncertainty, unpredictability and irrationality. “We are aware [the] environment can change tweet by tweet from one day to the next.” The implication for the ECB is unpleasant. Because it cannot act ahead of Trump’s latest wheeze, however agile the central bank is, it will be behind the curve. European security and public spendingGermany’s Green party has now joined the Christian Democrats and Social Democrats in a bid to revolutionise the country’s fiscal straitjacket, with the nation’s Federal Constitutional Court rejecting initial attempts to block the move. If successful, the country’s fiscal policy will shift from limiting public investment and defence spending through the debt brake to providing a huge boost, although the scale and timing of the additional spending is still uncertain. The market reaction has been clear. As the chart shows, German government borrowing costs in nominal and real terms have jumped, with inflation expectations rising too, providing the ECB with a clear incentive to persuade financial markets it has a grip on inflation. Some content could not load. Check your internet connection or browser settings.Once the money flows, the most important public policy question is how much additional security is bought per euro spent. For the ECB, the questions are simpler. It needs to assess the inflationary consequences of additional public spending, which depend on the levels of slack in the economy, the speed of purchases and whether they are directed to foreign or domestic suppliers. That is for the future. So far, the results have created a disinflationary problem for the ECB. It is now dealing with tighter financial conditions without any fiscal spending and companies cannot be expected to invest in production lines until they are sure government contracts will flow. The upshot is that the monetary policy should wait until the new defence strategy emerges. This will also force the ECB behind the curve. With the inflationary consequences again uncertain, Professor Refet Gürkaynak of Bilkent University said the ECB should examine what was the worst possible way Europe’s new security strategy could evolve. I wasn’t going to let him say that without specifying his view. So I asked him. His answer was good and depressingly plausible.Fiscal policy in Europe turns into tariff policy in the US. There is continuous talking about it. ‘We’re going to do this; we’re going to do that; we are going to do it tomorrow; we decided not to do it today but the month after.’ Whatever. But nothing actually is being done, so that you get all of the uncertainty of fiscal policy and none of the defence benefits or the spending benefits. The euro as the world’s reserve currencyAcademics and policymakers alike said the best opportunity for Europe was the possibility that the euro could become the world’s most important international reserve currency. While Wall Street fantasists imagine a Mar-a-Lago Accord, depreciating the dollar, funding the US government for nothing and other countries accepting some vague promises on security, the reality is that Europe is more interested in promoting itself as a safe haven, distantly removed from crazy Americans. On hearing talk of the euro as a reserve currency, French central bank governor Villeroy de Galhau said the ECB needed to accelerate plans for its central bank digital currency at both retail and wholesale levels to make the offer more concrete. “I really believe that they are much more relevant after the executive order of January 23,” he said.Before we got carried away heading to the airport singing “Ode to Joy”, the limits of European integration and harmony were on display at a later session of the conference. Professor Athanasios Orphanides, of MIT and a former Bank of Cyprus governor, highlighted the “crazy framework” of the ECB which undermines investor confidence that it stands as a backstop to Eurozone governments. This results in France, Italy and Spain, for example, paying much higher premiums to cover default and liquidity risks than the US, Japan, the UK and Canada even though their fiscal positions are no worse. Orphanides’ chart below is compelling. Some content could not load. Check your internet connection or browser settings.This chart should be sufficient to temper any enthusiasm you might have been feeling about the euro becoming the international reserve currency. Its case for Europe was not helped when Joachim Nagel, the Bundesbank president, shot Orphanides down, saying these were political questions and the ECB was not operating in a fiscal or political union. This left me thinking that the US might well trash the dollar’s reserve currency status without the euro necessarily benefiting. What I’ve been reading and watchingThe FT’s guide to Trump’s economic team is a must-read. Something useful to bookmarkHow inflation is changing Japan in many ways from vegetable boycotts to thrifty consumersAs the Fed examines the US economy, it cannot have failed to notice the sour mood of US consumers. It is notable, however, that this is nearly all coming from DemocratsAs far as the UK is concerned, this week’s Bank of England Monetary Policy Committee meeting is likely to be significant. More important are the big issues facing the government, concisely laid out by Martin WolfA chart that mattersIf there is one thing that Donald Trump has managed to achieve, it is to make people nervous. This might impede the long-term performance of the US economy, requiring higher interest rates. Financial markets have taken the view over the past month, however, that it will just make households and companies spend less, raising the likelihood of Fed rate cuts to give them a nudge. The Fed’s summary of economic projections on Wednesday will allow us to see to what extent officials concur. Some content could not load. Check your internet connection or browser settings.Recommended newsletters for you Free Lunch — Your guide to the global economic policy debate. Sign up hereThe Lex Newsletter — Lex, our investment column, breaks down the week’s key themes, with analysis by award-winning writers. Sign up here 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 your morning briefing. Here’s what’s we’re covering today: Gaza ceasefire breaks downEconomists warn of US slowdownShort sellers make profits on Tesla ‘One of the most important cases in American history’A two-month ceasefire between Hamas and Israel has collapsed after Israeli Prime Minister Benjamin Netanyahu authorised “extensive strikes” against the militant group in the Gaza strip and promised to expand the military operation. Health authorities in the Hamas-controlled enclave said at least 326 people were killed this morning and another 440 injured in the air strikes. Netanyahu’s office said the strikes were launched in response to the Palestinian militant group’s “repeated refusal to release our hostages” and its rejection of mediators’ proposals in talks to prolong the ceasefire.Israel’s military urged Gaza residents in the cities of Gaza City and Khan Younis to evacuate shelters close to the border. The new offensive is the most intense military action since the ceasefire was agreed in January. Israel’s campaign against Hamas has killed more than 48,000 people in Gaza, according to Palestinian officials. It was a response to Hamas’s October 7 2023 attack on Israel which killed 1,200 people and saw another 250 taken hostage.The first stage of the ceasefire between Israel and Hamas — which involved the return of more than 30 Israeli hostages in Gaza in exchange for Israel’s release of about 1,500 Palestinian prisoners — ended on March 1. There are still believed to be 59 Israeli hostages in captivity, less than half of them are thought to be alive. Read more on the latest developments in Gaza.Here’s what else we’re keeping tabs on today:Trump-Putin call: Ahead of talks with his US counterpart today, Russia’s president allowed a group of western investors to offload Russian securities left in limbo by Moscow’s invasion of Ukraine.UK-US trade: Britain’s trade secretary, Jonathan Reynolds, will hold talks in Washington in a bid to win an exemption from Washington’s tariffs.German debt brake: Incoming chancellor Friedrich Merz has expressed “confidence” about today’s make-or-break vote in parliament over his plans to unlock up to €1tn.Chips: Nvidia chief Jensen Huang will address the company’s AI conference in San Jose California, while Lip-Bu Tan takes the helm as Intel’s chief executive.Back to Earth: US astronauts Butch Wilmore and Suni Williams are expected to return to earth after being stranded on the International Space Station for nine months.Five more top stories1. Donald Trump’s sweeping tariffs and rush to downsize the federal government will slow US economic growth and accelerate inflation, leading academic economists have warned in a survey by the Financial Times. Economists also flagged up concerns about the quality of the country’s economic statistics in the FT-Chicago Booth poll.2. Hedge fund short sellers have made $16.2bn betting against Tesla’s shares as the value of Elon Musk’s electric car company has halved over the past three months. JPMorgan last week lowered its end-of-year target price for Tesla from $135 to $120, while one hedge fund manager said: “[Musk] is on the wrong side of his buyership. It’s not people with cowboy boots who buy Teslas.”3. Indonesia’s main stock index fell as much as 7 per cent, to its lowest level since 2021, as concerns mount over weakening consumer spending in south-east Asia’s largest economy and President Prabowo Subianto’s costly spending plans. The Jakarta Composite index is down 14.2 per cent this year and the rupiah has fallen 2 per cent against the dollar. Read more on Indonesia’s struggling economy. 4. Science institutions in Europe and beyond are racing to hire researchers from the US looking to flee the Donald Trump administration’s crackdown on research agencies. Cambridge university is among a clutch of top research institutions seeking to entice experts in fields from biomedicine to artificial intelligence. 5. Google parent Alphabet is in talks to buy cyber security start-up Wiz for about $30bn, setting the stage for the biggest acquisition in the search group’s history, according to people familiar with the matter. Founded by alumni of Israel’s elite cyber intelligence unit in 2020 and now based in the US, Wiz provides cyber security services for the cloud. Read more on what would be one of the biggest deals of the year.Today’s big readThe courthouse in Mandan, a prairie town of less than 25,000 in North Dakota’s oil country, is hearing a case that has become one of the first judicial showdowns over free speech and protest in the second term of Donald Trump. On trial is the environmental campaign organisation Greenpeace, which is being sued over its role in the Dakota Access pipeline protests by the company that developed the project. “This is one of the most important cases in American history,” said a renowned civil rights lawyer.We’re also reading . . . US politics: For now, Trump can do what he wants. The problem is that what he wants is likely to be very damaging to America, writes Gideon Rachman.European defence: France’s president has opened the debate over using country’s atomic arsenal as a deterrent against Russia if US scales back its presence.AI ‘brain’: Microsoft has joined forces with a Swiss start-up to deploy a new model that can learn from real-world experiences by simulating mammal brains’ reasoning powers.Consumer psychology: Sarah O’Connor’s gratitude at finally finding a printer that works tells us something about capitalism, she writes.Chart of the dayThe pound climbed above $1.30 today for the first time since early November, as persistent UK inflation combines with a broad weakening in the dollar to lift sterling. The UK currency has climbed 3 per cent this month against its US counterpart amid worries among investors that President Donald Trump’s stop-start trade war is harming the US economy.Take a break from the news . . . A growing number of companies are offering affordable imitations of luxury fragrances known as dupes (or, as the companies who make them call them, “inspired-by perfumes”), taking advantage of a social media-fuelled craze and the accessibility of ecommerce. Annachiara Biondi tested some. Recommended newsletters for youOne Must-Read — Remarkable journalism you won’t want to miss. Sign up hereNewswrap — Our business and economics round-up. Sign up here More

Unlock the White House Watch newsletter for freeYour guide to what the 2024 US election means for Washington and the worldCostco is pressuring suppliers in mainland China to cut prices in response to US tariffs, adding to the risk of scrutiny from Beijing as political tensions mount over an escalating trade war.The US warehouse retailer, which relies heavily on imports from China, requested the price cuts, according to two suppliers. Walmart and other top retailers have made similar requests, they and other exporters said.“The big ones, they have the muscle to do it,” one supplier said. “What do you do if you’re us? You’re screwed or you’re screwed.”President Donald Trump’s administration imposed an additional tariff of 10 per cent on Chinese goods in February 2024, which was subsequently raised to 20 per cent this month, pressuring US companies to try to minimise the impact on their bottom line.The fallout is increasingly sensitive in mainland China, where many suppliers have weathered years of tariffs, operate on thin margins and are bracing for the prospect of more levies.Walmart last week was summoned by China’s Ministry of Commerce to discuss reports of the retailer’s requests. As well as relying heavily on imports from China, the company has expanded in the mainland under its popular Sam’s Club membership model, with a presence in more than 100 cities.Costco has since 2019 opened seven warehouses on the mainland. “They will be very careful,” the supplier said, in light of the Walmart meeting.Costco declined to comment.Walmart said it sourced products from 70 countries globally, helping to “spur job creation, promote supplier development and fuel local economies”.He Yongqian, a spokesperson for China’s Ministry of Commerce, said in a press conference last week that the Walmart discussions were prompted by media reports as well as “feedback from companies”, and that Walmart “explained the situation”. One person familiar with the conversation said it was not a “dressing down”.But the state media response reflected an environment increasingly framed by national lines. “China should not bear the blame for US tariffs,” said Yuyuantantian, affiliated with state broadcaster CCTV in a social media post. The post used the image of a finger pointing through a broken saucepan, a word that means “scapegoat” in Chinese.China has also shown a growing willingness to act against US companies with local operations in response to US trade measures. It added PVH, the owner of Calvin Klein and Tommy Hilfiger, to a blacklist earlier this year.An import-export specialist in China said there was “always pressure to reduce product cost”, but there were questions over whether demands were reasonable and concerns that they could lead to lower manufacturing standards.As well as requesting price cuts, large US retailers have also sought to diversify away from China to de-risk their businesses, especially after Russia’s 2022 full-scale invasion of Ukraine prompted fears over a further deterioration in geopolitical ties and the breakdown of supply chains. Discount retailer Target said the company had reduced production of its own brands in China from roughly 60 per cent in 2017 to 30 per cent today, and that it would reach 25 per cent by the end of next year, “four years ahead of schedule”. “While half of what we sell is made in America, our scale, multi-category portfolio and investments across our supply chain will help us navigate tariff pressures as we have before,” the company said.In its report for the quarter ended February 16, published last week, Costco said tariffs “affect the costs of some of our merchandise”, pointing to “government actions” relating to China, Canada, Mexico and the US.“Higher tariffs are more likely to adversely impact rather than improve our results,” the company said.Additional reporting by Wang Xueqiao in Shanghai More