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$75 per monthComplete digital access to quality FT journalism with expert analysis from industry leaders. Pay a year upfront and save 20%.What’s included Global news & analysisExpert opinionFT App on Android & iOSFT Edit appFirstFT: the day’s biggest stories20+ curated newslettersFollow topics & set alerts with myFTFT Videos & Podcasts20 monthly gift articles to shareLex: FT’s flagship investment column15+ Premium newsletters by leading expertsFT Digital Edition: our digitised print edition More

$75 per monthComplete digital access to quality FT journalism with expert analysis from industry leaders. Pay a year upfront and save 20%.What’s included Global news & analysisExpert opinionFT App on Android & iOSFT Edit appFirstFT: the day’s biggest stories20+ curated newslettersFollow topics & set alerts with myFTFT Videos & Podcasts20 monthly gift articles to shareLex: FT’s flagship investment column15+ Premium newsletters by leading expertsFT Digital Edition: our digitised print edition More

$75 per monthComplete digital access to quality FT journalism with expert analysis from industry leaders. Pay a year upfront and save 20%.What’s included Global news & analysisExpert opinionFT App on Android & iOSFT Edit appFirstFT: the day’s biggest stories20+ curated newslettersFollow topics & set alerts with myFTFT Videos & Podcasts20 monthly gift articles to shareLex: FT’s flagship investment column15+ Premium newsletters by leading expertsFT Digital Edition: our digitised print edition More

Unlock the Editor’s Digest for freeRoula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.Britain’s balanced trade with the US should reduce the risk that Donald Trump slaps fresh tariffs on its products, business secretary Jonathan Reynolds has claimed. The incoming US president has threatened to impose higher tariffs on all imports, leaving its trading partners across the world to consider how they would respond if hit. Even if Trump did hit the UK with fresh tariffs, the government would think very carefully about retaliating, Reynolds added: “In this country there’s no political constituency for protectionism.” In an interview for the FT’s Global Boardroom to be broadcast on Friday, the business secretary also played down the prospects of a traditional free trade agreement between the UK and US, admitting that Britain’s food standards rules would remain an obstacle to such an accord. Reynolds admitted that Britain would be affected by a trade war among western countries but said he hoped the UK would not be directly targeted with additional tariffs by Trump. The “political philosophy” behind Trump’s call for a global tariff was the president-elect’s concern about US trade deficits in manufactured goods, which “don’t apply to the relationship between the UK and US”, he said. The US had a trade surplus with the UK, including an $8.2bn goods trade surplus in the January-September period, according to official US figures. Partly because of difference in accounting for exports from the Channel Islands, the UK also reports a trade surplus with the US. The vast majority of trade is, however, in services.Conservative leader Kemi Badenoch has suggested Britain should strike a formal trade agreement with the US, but Reynolds cautioned that the two countries had “very different regulatory regimes for agriculture and food”.Previous attempts to forge a UK-US trade deal foundered on Britain’s refusal to accept imports of American hormone-treated beef or chicken dipped in chlorine.But the business secretary said he hoped there were many other areas where the two sides could negotiate better trading terms, including working more closely in areas such as professional services and technology.Reynolds said there were always cases where retaliatory measures would be considered if Britain was targeted with tariffs by a third country. But he warned: “Increasing costs of goods or food for your constituents is not attractive.”Treasury officials say that chancellor Rachel Reeves also believes tariffs hurt the country that imposes them and will make the case for free trade. “A trade war doesn’t benefit anyone,” one ally of Reeves said.Lord Kim Darroch, Britain’s US ambassador during the first Trump presidency, said this week that it might be better to respond to any US tariffs by “sucking it up”.Mel Stride, shadow chancellor, told Westminster journalists on Thursday: “Tariffs will be inflationary, we are a very open economy and if there are tariffs, certainly if there’s anything that tips into what you might call a trade war, then that will be difficult for world growth.”Meanwhile, Reynolds accepted that many business leaders were angry over Reeves’ Budget and the £25bn increase in employer national insurance contributions, but he insisted they understood why it had happened.“Business leaders normally come in to correct a difficult situation,” he said. “They do understand that.”While he said Reeves had not completely ruled out future tax rises in this parliament, he said: “The idea that we can always borrow more money and raise more tax — I honestly think we’re at the limit of that.”Reynolds said he hoped Britain would secure a “very ambitious” improvement to EU trade relations, adding that the UK should seek to be on good terms with Brussels, Washington and Beijing. “That’s an excellent spot for the UK to be in.” More

Unlock the Editor’s Digest for freeRoula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.South Korea’s export-oriented economy is in greater jeopardy from Donald Trump’s trade policies than from the political crisis unfolding at home, the country’s central bank governor has said.In an interview with the Financial Times, Bank of Korea governor Rhee Chang-yong acknowledged that “critical structural reforms” to the South Korean economy and financial markets would be delayed as a result of the fallout from President Yoon Suk Yeol’s failed attempt this week to impose martial law.But he said the economic impact of the political crisis in Seoul would be “limited” when compared with the potential consequences for Korean exporters of intensifying Chinese competition and the hefty tariffs Trump is expected to impose on leading trade partners of the US.“There is a lot of uncertainty,” Rhee said. “But compared with domestic factors, the external factors are giving us a lot more uncertainty at the moment.“[Trump’s tariff threat] is one of the main reasons why we downgraded our growth forecast for this year and next year,” Rhee added.“Export growth was performing well this year, but now we have revised our export growth [projections] downwards for two reasons,” he said. “One is possible tariffs, and the other is that we find that China’s competitiveness is really growing fast, and China’s oversupply of goods within China as well as outside of China is growing very fast.”Even before this week’s political drama, South Korea’s economy, Asia’s fourth largest, was wrestling with weak domestic demand and high household debt in addition to increased competition from Chinese exporters. Last week, the central bank cut interest rates unexpectedly, with the governor citing concerns over the ‘red sweep’ in the US, referring to Trump’s victory and Republican gains. But Rhee stressed that the impact of Yoon’s martial law gambit on the country’s financial markets had been “shortlived and relatively muted”.After Yoon announced his decree on Tuesday evening, the offshore South Korean equity market index dropped more than 6 per cent, while the won weakened almost 3 per cent against the dollar.But after an emergency late-night meeting with the finance minister and chief financial regulators, Rhee pledged to deploy “unlimited” liquidity in the country’s financial markets if necessary.By the time trading opened the following morning in Seoul, Yoon had announced his intention to revoke his martial law order. Investors have remained relatively calm despite the turmoil, with the country’s Kospi stock benchmark down 6 per cent by close of trading on Thursday from Tuesday’s close.“[Our] swift and comprehensive prevention measures calmed and stabilised the financial market with rapid speed,” Rhee said.South Korea is bracing itself for prolonged political turmoil, with Yoon facing an impeachment vote in the country’s National Assembly on Saturday. But Rhee noted the South Korean economy had ridden out two presidential impeachment dramas in recent memory, in 2004 and 2017.The governor said he had been “excited” by an emerging political consensus on the need to strengthen protections for minority shareholders in listed Korean companies, although he conceded the government’s corporate governance drive would be delayed by the political crisis.But he rejected the argument made by some observers this week that Yoon’s decree and the resulting crisis had vindicated index-makers such as MSCI, which have resisted calls in South Korea for the country to be upgraded to developed market status.“I can understand if you say [South Korea’s developing market status] is because of the North Korea problem, or because of our capital controls. But I have never heard the people from MSCI say: ‘This is because your democracy is not mature enough,’” Rhee said. More

Exporters normally do not welcome news of tariffs. But in the southern Chinese manufacturing heartland of Foshan, Donald Trump’s threat late last month to impose an additional 10 per cent tax on imports from China was greeted with relief. Trump had vowed earlier in his re-election campaign to levy 60 per cent tariffs on Chinese imports, a level that would have hit Foshan’s manufacturers of home appliances and fittings hard. “If it really was going to be 60 per cent on top of the previous tariffs, then that would be really disastrous for made-in-China products going to the US,” says Ken Huo, supervisor at Foshan Foreign Trade Association. But 10 per cent, even if it is imposed as soon as Trump takes office on January 20, looks manageable by comparison.Trump’s return to the White House will pose one of the sternest tests yet for China’s manufacturing and export sector, which in just two decades has become the world’s most formidable industrial machine.As domestic demand suffers from a deep property slump, Beijing is increasingly dependent on export industries to prop up the world’s second-largest economy.Some content could not load. Check your internet connection or browser settings.Advanced manufacturing is also at the core of President Xi Jinping’s longer-term strategy for China. His vision of “national rejuvenation” — restoring China to what the Communist party sees as its rightful global pre-eminence — depends on ending its reliance on western technology and manufacturing. Xi’s government is redirecting investments away from real estate and infrastructure into advanced industries. As domestic wages and profits stagnate, this is supercharging the price competitiveness of the country’s exports on international markets and scaring those — including the US — that are already running large trade deficits with China.“It is a level of dominance that we have rarely seen in history,” says Arvind Subramanian, a senior fellow at the Peterson Institute for International Economics, of China’s manufacturing prowess. “And of course, the problem is, it’s getting stronger.”But some believe Beijing risks becoming overly dependent on manufacturing. Alicia Garcia-Herrero, chief economist for Asia-Pacific at Natixis, says China accounts for only 15 per cent of global consumption, less than its 18 per cent share of world GDP and far below its 30 per cent share of manufacturing. That made it reliant on demand in other countries to absorb its enormous excess production. “The protectionism that China will face in the future will certainly not stop in the western world . . . and it’s only going to accelerate,” says Garcia-Herrero. “At some point, China will need to rethink industrialisation as the only growth strategy available.”Most scholars agree that China’s rapid rise in manufacturing has no parallel since the US overtook Britain early in the 20th century. It is now the world’s “sole manufacturing superpower”, according to Richard Baldwin, professor of international economics at IMD Business School in Lausanne, who estimated in January that China’s share of global gross production had risen from 5 per cent in 1995 to 35 per cent by 2020 — three times that of the US and more than the next nine countries combined.Its share of global manufactured exports was 20 per cent in 2020, up from 3 per cent in 1995 and dwarfing the US, Japan and Germany. Out of a total of about 5,000 products, China held a dominant position in exports for almost 600 in 2019, at least six times greater than for the US or Japan and more than double that of the EU, a paper by economists Sébastien Jean, Ariell Reshef, Gianluca Santoni and Vincent Vicard last year showed.Some content could not load. Check your internet connection or browser settings.Since then, China’s exports have roared further ahead and are expected to rise by 12 per cent in volume terms this year, according to Goldman Sachs. China’s obsession with production stems partly from its historical scarcity of goods and partly from Marxist philosophy, which stresses production and eschews consumption. Manufacturing is also an integral part of Xi’s comprehensive view of geopolitical security.“For a lot of reasons — for security purposes or whatever — you can see the government really emphasises the production side, the supply side, the manufacturing side,” says Tu Xinquan, dean of the China Institute for WTO Studies at the University of International Business and Economics in Beijing.Beijing has complemented China’s natural advantages — a large population, a big economy and market, and talented private entrepreneurs — with policies such as Made in China 2025, which set targets for market share in areas ranging from electric vehicles and robotics to aerospace.   Manufacturers in China benefit from state investment in infrastructure, cheap government bank credit and investment from state-backed venture funds. Central and local governments also offer subsidies for factories and other support for favoured industries.Cars waiting to be exported at a shipping terminal in Shanghai. China’s commanding position in green industries such as electric vehicles has already led to trade restrictions from the EU and the US More

The reduction is the eighth since libertarian President Javier Milei assumed office in December 2023 and continues a series of cuts since a high of 133% in October last year.The central bank said it based its decision on “the observed consolidation of expectations for a lower inflation rate.”Milei has presided over tough spending cuts. Inflation has slowed but poverty has climbed sharply and industrial activity has slipped as the economy entered recession.The rate decision came shortly after the bank published a market expectations survey which showed analysts had lowered forecasts for inflation this year. On average, they now expect a rate of 118.8% at year-end rather than 120% forecast last month.Rent and utility costs pushed annualized inflation to 193% in October, dipping below 200% for the first time in almost a year, showed data from statistics agency INDEC.As well as high inflation rates, Argentines are being squeezed by a reduction in social services spending and increased public-sector layoffs. More