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$99 for your first yearFT newspaper delivered Monday-Saturday, plus FT Digital Edition delivered to your device Monday-Saturday.What’s included Weekday Print EditionFT WeekendFT Digital EditionGlobal news & analysisExpert opinionSpecial featuresExclusive FT analysis More
$99 for your first yearFT newspaper delivered Monday-Saturday, plus FT Digital Edition delivered to your device Monday-Saturday.What’s included Weekday Print EditionFT WeekendFT Digital EditionGlobal news & analysisExpert opinionSpecial featuresExclusive FT analysis More
Donald Trump’s threat to impose big tariffs on steel and aluminium is rippling across US industry, with companies ranging from manufacturers to oil and gas drillers facing increasing costs for the metals.Many executives are rushing to find ways to mitigate the political tumult and fallout from rising prices, even though the 25 per cent tariffs will not come into effect for another month.“So far what we’re seeing is a lot of cost and a lot of chaos,” said Ford chief Jim Farley at an automotive conference on Tuesday.He added that he would return to Washington on Wednesday to lobby policymakers for the second time in three weeks.“They need to understand that there’s a lot of policy uncertainty here,” he said. “But in the meantime we’re scrambling to manage the company as professionals.”The push to shore up supplies of crucial inputs comes after the White House on Monday said the US would impose tariffs of 25 per cent on all steel and aluminium imports from March 12, part of a sweeping programme of protectionist trade policies that have unsettled many American businesses.The US is a net importer of steel and aluminium, meaning the tariffs are expected to push up prices across the country’s market. The extra amount that plants in the Midwest pay for aluminium, compared with those on offer in London, has surged in recent days.Futures tracking the Midwest premium — a vital benchmark for prices paid by US companies, which includes transport, tax and other costs — for settlement next month have jumped 25 per cent since the end of January, according to LSEG data.For steel, even businesses that do not import the metal will feel the tariffs’ impact as domestic mills increase prices.Rye Druzin, head of steel pricing in the Americas at Argus Media, said prices had begun rising in the US in the past three weeks after Trump first threatened broad tariffs against Canada and Mexico, two of the biggest sources of US steel imports. Steelmakers have in turn pushed for higher prices. Futures tracking the price of hot-rolled coil — a widely traded product often considered a benchmark for steel prices — have risen about $70 to $850 a short tonne since the end of January in the US, according to FactSet data. “Mills are taking full advantage of the uncertainty around the current situation,” said Druzin.At Coca-Cola, aluminium and steel used in cans and bottles make up 26 per cent of drinks packaging worldwide. Chief executive James Quincey said new tariffs on aluminium imports could force the company to use more plastic bottles.But he added that the tariffs’ cost would probably be limited to North America, leaving 2025’s global sales volumes untouched.“It’s a cost,” said Quincey. “It would be better not to have it relative to the US business, but we are going to manage our way through.” Trade groups and analysts in the power sector warned that Trump’s tariff plans could clash with his goal of boosting domestic energy production, lowering prices for consumers and strengthening domestic manufacturing.The industry relies heavily on steel and aluminium for oil and gas drilling, pipelines, grid infrastructure and clean energy components such as wind turbines and racks for solar panels.“Unleashing American energy requires access to materials not readily available in the US,” said Dustin Meyer, American Petroleum Institute’s senior vice-president of policy, economics and regulatory affairs.“We are committed to working with the Trump administration on approaches that avoid unintended consequences.”Imports made up 40 per cent of US demand for pipes and other rolled metal goods, used by producers to drill wells, according to energy consultancy Wood Mackenzie. Canada and Mexico made up 16 per cent of US imports of those products last month.Aluminium ingots at a stockyard in Wuxi, China More
$99 for your first yearFT newspaper delivered Monday-Saturday, plus FT Digital Edition delivered to your device Monday-Saturday.What’s included Weekday Print EditionFT WeekendFT Digital EditionGlobal news & analysisExpert opinionSpecial featuresExclusive FT analysis More
Unlock the White House Watch newsletter for freeYour guide to what the 2024 US election means for Washington and the worldJay Powell has defended the Federal Reserve’s authority over US monetary policy, as he vowed to “focus on the data” and avoid wading into politics despite calls from the White House and some lawmakers to cut borrowing costs.The Fed is facing the fiercest challenge to its independence to set interest rates since the 1980s, with Donald Trump claiming during his first week back in the White House that he understood monetary policy better than the central bank. Trump has also said borrowing costs should be lower. Fed chair Powell told lawmakers on the Senate’s banking committee on Tuesday that the central bank stood a better chance of keeping prices under control if it remained above the fray — and was in turn left to get on with its job of setting interest rates free from political interference. “We’ll make better policy, we’ll keep inflation lower, if we just focus on doing our job and stay out of politics, stay out of elections and don’t try to favour or hurt any political party, or any political filter and just try to focus on the data,” Powell said in his first appearance before the influential committee since Trump returned to the presidency. “If we start putting up political filters, we’ll be less effective at our already quite difficult job.” Powell was adamant that any decision by Trump to sack one of the seven members of the Fed’s board of governors was “pretty clearly not allowed under the law”. The remarks come as some Democrats are concerned that the Fed is already responding to Republican pressure. Democratic senators at the hearing cited the Fed’s plans to revisit rules on so-called stress tests for the country’s biggest banks, the departure of its chief supervisor Michael Barr from that role and its decision to quit the Network for the Greening of the Financial System as evidence that it was succumbing to Republican attacks. However, Powell made clear on Tuesday that when it came to monetary policy, the Fed would not respond to pressure from the new administration and lawmakers on both sides of the aisle to cut interest rates fast. Show video infoThe Fed chair reiterated that strong growth meant rate-setters were “not in a hurry” to reduce borrowing costs lower than their current level of between 4.25 per cent and 4.5 per cent. In a hearing dominated by Democrats’ concerns over the Trump administration’s gutting of the Consumer Financial Protection Bureau and Republican claims that many right-leaning Americans are being debanked owing to their political leanings, Powell refused to be drawn on what the economic consequences of the president’s actions might be. “It really does remain to be seen what tariff policies would be implemented. It would be unwise to speculate when we really don’t know. We see proposals, but it’s so hard to say what will happen,” said Powell. “It’s really not just tariffs. It’s tariffs, immigration, fiscal policy and regulatory policy. We’ll try to make sense of it and do what’s right for monetary policy.” John Williams, president of the New York Fed, also on Tuesday signalled rate-setters would need to wait and see how economic conditions evolved before deciding whether to cut rates. While borrowing costs were still “modestly restrictive”, Williams said the outlook was “highly uncertain, particularly around potential fiscal, trade, immigration and regulatory policies”. More
Unlock the Editor’s Digest for freeRoula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.It is disgusting to read the boast of the world’s richest man that “we spent the weekend feeding USAID into the wood chipper”. That this raises constitutional and legal issues for the US republic is quite clear. Indeed, it is evident that those now in charge would be quite happy to dispose of such tiresome constraints altogether. But there are also moral issues. Should the US effort to succour the world’s poorest have been fed into a “woodchipper” at all? The answer is “no”.As Paul Krugman notes in an exceptional recent piece on his Substack, the US made a huge effort after the second world war to be a new and different sort of great power: it sought to create allies, not tributaries; economic development, not predation; global institutions, not imperial rule; and international law, not the old idea of “might makes right”. There was, inevitably, much backsliding. But in all, the US has indeed been a strikingly benign and successful hegemon.The explosive growth of world trade, the rise of once-impoverished China and India, the peaceful fall of the Soviet Union and, not least, the decline in the proportion of human beings living in extreme poverty — from 59 per cent in 1950 to 8.5 per cent in 2024, despite a tripling of the world population — are proof of its success. The US should be hugely proud of its achievements as world leader, and not seek to imitate the bullying of Vladimir Putin’s Russia, instead. (See charts.)The US Agency for International Development, then, is part of something far bigger. The US also played a decisive role in the creation of the World Bank, the IMF, the UN, the General Agreement on Tariffs and Trade, the International Development Association and Nato — unambiguously, both then and now, a defensive alliance.The underlying idea was that the world would be a better place if we recognised our shared interest in peaceful co-operation. Why would anyone wish to sacrifice this ideal for a return to the 19th-century competition among imperialist great powers that culminated in two world wars, Stalinism and fascism? Do pathogens or the climate recognise international borders? Is war among nuclear powers even thinkable? Can any country truly be an island? Can humanity, having trashed this planet, really find rescue on the barren planet of Mars?The onslaught on USAID is a token of the madness now overwhelming the US. But it is revealing. Its budget was 0.7 per cent of federal spending and 0.15 per cent of GDP in the 2023 fiscal year. Its destruction is above all symbolic. According to Musk, USAID is a “viper’s nest of radical-left marxists who hate America”. USAID spends on things like Aids relief and family planning in the world’s poorest countries. So, what radical-left Marxist launched the President’s Emergency Plan for Aids Relief? George W Bush, that’s who. Even if this onslaught proves just an interruption, it will do much damage.Unfortunately, this comes at a bad time for economic development. As the World Bank’s latest Global Economic Prospects notes, not only is global economic growth slowing, but the performance of low-income developing countries has become particularly worrying.“Catch-up toward advanced economy income levels has steadily weakened across [emerging market and developing economies] over the first quarter of the 21st century,” the report argues. This is the result of successive shocks, slowing reforms and a more adverse external environment, characterised in large part by “heightened policy uncertainty and adverse trade policy shifts”.“Rapid growth underpinned by domestic reforms and a benign global environment allowed many low-income countries . . . to attain middle-income rank in the first decade of this century. Since then, the rate at which low-income countries are graduating to middle-income status has slowed markedly.” Growth in real incomes per head in these countries has simply become anaemic. That is partly because of internal conflict and partly because of adverse external developments, including the global financial crisis, the pandemic, unexpected jumps in prices of essential commodities and higher interest rates.As a result, argues the report, across a wide array of development metrics, today’s low-income countries are behind where the ones that subsequently became middle-income were in 2000. They are also now more susceptible to shocks related to climate change.In considering the plight of the poorest countries it is necessary to understand the constraints upon them. They lack the resources to provide healthcare or needed education. Thus, according to the World Bank, spending on health per person in high-income countries is more than 50 times as big as it is in low-income ones, in real terms, and spending on education is more than 150 times as big. Moreover, the cost of interest on debt has climbed to more than 10 per cent of government revenues in low-income countries, partly because of the need to borrow in crises and partly because of the elevated interest rates.A world with more prosperous, healthier and more stable countries is a better one to live in, not just morally, but practically. The main instruments for achieving these ends remain multilateral institutions. If the US is going to turn away from its past wisdom, it is up to the rest of us to create a multilateral way forward, while hoping that the US will at last find a way back into the light.Minouche Shafik has argued persuasively for some serious rethinking. There are indeed many global challenges ahead, as she notes. But there is one glorious opportunity. Eliminating the scourge of extreme poverty from our planet is now tantalisingly near. But we are failing. We must try harder. This long-sought goal is far too close to be [email protected] Martin Wolf with myFT and on X More
Unlock the Editor’s Digest for freeRoula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.The Bank of England’s decision to cut interest rates by 25 basis points last week was widely anticipated, but it still stunned some economists. That’s because Catherine Mann, the Monetary Policy Committee’s arch-hawk, suddenly switched from calling for the cost of credit to stay where it is, to voting for a jumbo half-point cut. Her argument, outlined in an interview in the Financial Times on Tuesday, was that Britain’s economic outlook had weakened substantively, putting rate-setters on the back foot. As things stand, she is not wrong.At 4.5 per cent, the bank rate is well above most estimates of the so-called neutral rate, the point at which monetary policy is neither expansionary nor contractionary. Inflation is close to target, at 2.5 per cent, and with the UK economy treading water, weak demand should keep a lid on further price pressures.On Thursday, data from the Office for National Statistics is expected to show that the UK economy barely grew in the second half of 2024. Business and consumer confidence has wilted since the Labour party took charge last summer. The chancellor Rachel Reeves’ decision to raise employers’ national insurance contributions in the Autumn Budget has pushed up companies’ costs and triggered a slowdown in hiring. A survey on Monday showed UK recruiters were reporting the toughest conditions in the jobs market since the Covid-19 pandemic. Weak economic activity tends to make it harder for businesses to pass on higher costs to consumers, restraining inflation.This all suggests current interest rates are too restrictive. Financial markets are pricing in around three further 25bp cuts before the end of the year. But, given sluggish economic activity, the BoE may need to go further, faster. Indeed, with most UK mortgages agreed at a fixed rate, it will take time for any rate cuts to improve consumers’ cash flow.There are reasons for caution, though. First, the BoE’s latest inflation forecasts showed price growth actually rising in the near term. A number of price shocks, including from higher energy prices and the NICs increase — which will take effect in April — are expected to push UK inflation up to 3.7 per cent later this year. Though central banks often look through temporary bumps in prices, there is a risk that this one becomes entrenched particularly as inflation has been above target for so long. Businesses could react to a range of higher costs by pushing up retail prices. If so, Britain could face a nasty dose of stagflation.Second, economic uncertainty is high. It is unclear what impact trade wars might have on the UK economy. The ONS’ labour market data is also currently unreliable, due to falling response rates to its surveys. Together, these factors make it harder for the BoE to judge how much of the economic slowdown is driven by falling demand or supply. This strengthens the case for proceeding with gradual rate cuts, in quarter-point steps, and then accelerating cuts should this year’s inflation rise indeed prove to be temporary. Central banking is about balancing risks, and though the case for cutting rates faster now is strong, gradualism gives the BoE more flexibility when economic clarity is particularly lacking. Mann’s diagnosis is right, but her choice of medicine, a chunky 50bp cut, would not be prudent at this point.More importantly, though lower rates would prop up Britain’s sagging economy — and reduce government borrowing costs — it would only soften the symptoms of a deeper malaise. The onus remains on Labour, not the BoE, to reignite animal spirits and outline a fiscally credible path to higher long-term growth. More
