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Unlock the White House Watch newsletter for freeYour guide to what the 2024 US election means for Washington and the worldDonald Trump has described his first phone call with Mark Carney as “extremely productive” amid escalating trade war tensions between the US and Canada.The US president posted on Truth Social that their conversation on Friday “was an extremely productive call, we agree on many things”, with the Canadian prime minister telling Trump that his government would implement retaliatory tariffs “to protect Canadian workers and our economy”.The call took place following Trump’s announcement this week that he would place additional 25 per cent levies on imports of foreign-made cars in a move he said was intended to boost the US car industry.The pair had “a very constructive conversation” and agreed to “begin comprehensive negotiations” about a new economic and security relationship and would meet after Canada’s April 28 election, according to a statement from the prime minister’s office.Relations between the two allies and trading partners have been rocked by the tariffs announcement despite the USMCA free trade deal that the US president negotiated during his first term, along with his threats to make Canada the 51st state.On Thursday evening, Carney said that Canada’s old relationship with the US was “over” and vowed that there would be a “broad renegotiation” of the trade agreement between the countries.He added that Ottawa would fight American tariffs with retaliatory trade actions “that will have maximum impact in the US and minimum impacts in Canada”.Since March 13, the Canadian government has put a 25 per cent tariff on products imported from the US worth C$29.8bn as part of its retaliation.In his post on Friday, Trump said he and Carney had agreed to “work on elements of Politics, Business, and all other factors, that will end up being great for both the United States of America and Canada”.Carney said they also agreed that talks between Canadian ministers and the US secretary of commerce Howard Lutnick “will intensify to address immediate concerns”.Carney, a former Bank of England and Bank of Canada central bank governor, became leader of the Liberal party on March 9 after former prime minister Justin Trudeau resigned due to widespread national dissatisfaction with the party and his leadership.Trump repeatedly referred to Trudeau as “governor” and threatened to annexe Canada. The succession of Carney as prime minister has been touted as a potential reset for US-Canada relations.The US’s hostile stance towards its northern neighbour has led to a surge in support for the Liberal party, with some polls showing it could win the election — a remarkable turnaround after several years of trailing in the polls.The Angus Reid Institute reported on Thursday that 56 per cent of voters who have switched to the party since the beginning of the year say it is because of the new leader.“About the same number also say US president Trump’s threats have pushed them to support the incumbents,” the report stated.While USMCA-compliant components are temporarily exempt from the car tariff Trump announced this week, the levy could have a big impact on the Canadian economy.Trade between the two countries is worth about C$1tn a year, according to the Canadian Chamber of Commerce trade tracker. More

Unlock the Editor’s Digest for freeRoula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.Show video infoXi Jinping has urged global business leaders to work together to protect supply chains at a meeting with a group of executives including Rajesh Subramaniam of FedEx, Ola Källenius of Mercedes-Benz and Georges Elhedery of HSBC.Amid a deepening trade war with the US, the Chinese leader told the group of more than 40 business leaders, which also included Pascal Soriot of AstraZeneca, Miguel Ángel López Borrego of Thyssenkrupp and Amin Nasser of Saudi Aramco, that foreign business leaders should resist behaviours that “turn back the clock” on history.“We hope everyone can take a broad and long-term view . . . and not blindly follow actions that disrupt the security and stability of global industrial chains and supply chains, but instead contribute more positive energy and certainty to global development,” Xi told the gathering in Beijing on Friday.The event at the Great Hall of the People marked the second consecutive year that Xi held a carefully staged meeting with foreign chief executives in the Chinese capital. Last year’s event was held exclusively with US business leaders.The meeting came at the conclusion of a busy week for Chinese policymakers, who are trying to strengthen relations with international business amid rising tensions with US President Donald Trump’s administration.China’s premier annual CEO conference, the China Development Forum, was held in Beijing this week, followed by the Boao Forum for Asia in the tropical resort island of Hainan. Beijing is seeking to promote itself as a bastion of stability in global trade in contrast to the US, where Trump has launched successive waves of tariffs on products from aluminium to cars. The president has vowed widespread, reciprocal duties on US trading partners on April 2, threatening further disruption to international trade.“A few countries are building ‘small yards with high walls’, setting up tariff barriers, and politicising, instrumentalising, weaponising, and over-securitising economic and trade issues,” said Xi, who was accompanied by his foreign, commerce and finance ministers.He said these actions were forcing companies “to take sides and make choices that go against economic principles”. “This runs counter to the overarching trend of open markets,” he said.He added that foreign enterprises, especially multinational corporations, had “considerable international influence”. “We hope everyone will . . . resist regressive moves that turn back the clock,” Xi said. “Together, we must safeguard the stability of global industrial and supply chains.“Decoupling and severing ties harms others without benefiting oneself; it leads nowhere.”While Beijing is trying to present itself as a champion of globalisation, trading partners including the EU as well as the US have accused it of running huge surpluses while not doing enough to stimulate lagging domestic demand. They have also alleged China supports its domestic companies with favourable industrial policies, deep subsidies and cheap financing. Foreign companies operating in the country have long complained of formal and informal barriers that protect the domestic market from international competitors.Xi promised better conditions for international companies, saying products made by groups with foreign investment in China — which has plummeted in recent years — would receive equal treatment in government procurement.“We believe that foreign-invested enterprises in China should be guaranteed national treatment, which means consistency in the application of laws and equal status and treatment,” he said. More

Unlock the White House Watch newsletter for freeYour guide to what the 2024 US election means for Washington and the worldBritain’s carmakers have backed a decision by Prime Minister Keir Starmer not to retaliate against President Donald Trump’s 25 per cent tariffs on foreign-made cars imported to the US, as hopes fade of a transatlantic trade deal before they hit on April 2.Instead, manufacturers demanded that ministers develop a “holistic approach” to supporting the UK auto industry, including through lower energy costs, increased training and better regulation.Sarah Jones, industry minister, held talks with UK-based auto groups on Friday, including Jaguar Land Rover, Ford and Vauxhall owner Stellantis Friday, where the industry underlined the damage the tariffs would cause.Three people briefed on the meeting said the industry did not want retaliation against the Trump tariffs but rather a “holistic approach” to boost Britain’s competitiveness.While the UK’s car industry is overwhelmingly reliant on exports to Europe, the US accounts for one in six models shipped abroad and is the largest market for high-end manufacturers such as JLR, Bentley and McLaren.Starmer and his team — including the UK’s ambassador in Washington Lord Peter Mandelson — are trying to take what Downing Street calls a “cool headed” approach to the Trump’s escalating trade offensive.British officials privately admit that a UK-US economic deal may not be in finalised before April 2, when Trump’s auto tariffs and global reciprocal measures are due to be announced. But they remain hopeful that a deal can soon be reached to soften the impact of tariffs on the UK. A draft “term sheet” for a deal is being negotiated by Mandelson, according to a person briefed on the talks. The deal would set out areas for future agreement in sectors such as technology, artificial intelligence and space, but in the short term Washington wants Britain to cut taxes affecting US companies.One US official said the UK would definitely be hit with lower tariffs than the EU, mainly because Starmer was considering cutting or dropping Britain’s digital services tax that targets US tech firms.Trump has said he will announce “reciprocal” tariffs on trading partners who had taken advantage of low US trade barriers while maintaining higher tariffs and taxes on American goods.One person familiar with the talks between the US and UK said a deal between the two sides would be unlikely to emerge by next Wednesday, given the complication of making changes to the UK’s digital services tax, which raises about £800mn a year.In talks with foreign officials more broadly, Trump’s commerce secretary Howard Lutnick has said the US will be announcing steep tariffs on its major trading partners on April 2.Earlier this week, the EU’s top trade negotiator told other European officials that he expected the US to issue tariffs “in the realm of 20 per cent” against all 27 member states, according to two people familiar with his briefing.The UK government said it was “disappointed by the US decision to impose global tariffs on the auto industry”, but added: “We continue to have productive discussions on securing a wider economic deal.” More

The final version of the University of Michigan’s closely watched Survey of Consumers showed a reading of 57.0 for the month, down 11.9% from February and 28.2% from a year ago.
Inflation fears drove much of the downturn.
Respondents expect inflation a year from now to run at a 5% rate, up 0.1 percentage point from the mid-month reading, and a 0.7 percentage point acceleration from February.

A shopper pays with a credit card at the farmer’s market in San Francisco on March 27, 2025.
Bloomberg | Bloomberg | Getty Images

The deterioration in consumer sentiment was even worse than anticipated in March as worries over inflation intensified, according to a University of Michigan survey released Friday.
The final version of the university’s closely watched Survey of Consumers showed a reading of 57.0 for the month, down 11.9% from February and 28.2% from a year ago. Economists surveyed by Dow Jones had been expecting 57.9, which was the mid-month level.

It was the third consecutive decrease and stretched across party lines and income groups, survey director Joanne Hsu said.
“Consumers continue to worry about the potential for pain amid ongoing economic policy developments,” she said.
In addition to worries about the current state of affairs, the survey’s index of consumer expectations tumbled to 52.6, down 17.8% from a month ago and 32% for the same period in 2024.
Inflation fears drove much of the downturn. Respondents expect inflation a year from now to run at a 5% rate, up 0.1 percentage point from the mid-month reading, and a 0.7 percentage point acceleration from February. At the five-year horizon, the outlook now is for 4.1%, the first time the survey has had a reading above 4% since February 1993.
Economists worry President Donald Trump’s tariff plans will spur more inflation, possibly curtailing the Federal Reserve from further interest rate cuts.

The report came the same day the Commerce Department said the core inflation rate increased to 2.8% in February, after a 0.4% monthly gain that was the biggest move since January 2024.
The latest results also reflect worries over the labor market, with the level of consumers expecting the unemployment rate to rise at the highest level since 2009.
Stocks took a hit after the university’s survey was released, with the Dow Jones Industrial Average trading more than 500 points lower.
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The core personal consumption expenditures price index, a key Fed inflation measure showed a 0.4% increase in February, putting the 12-month inflation rate at 2.8%, both higher than expected.
Consumer spending accelerated 0.4% for the month, below the 0.5% forecast. That came as personal income posted a 0.8% rise, against the estimate for 0.4%.

The Federal Reserve’s key inflation measure rose more than expected in February while consumer spending also posted a smaller than projected increase, the Commerce Department reported Friday.
The core personal consumption expenditures price index showed a 0.4% increase for the month, the biggest monthly gain since January 2024, putting the 12-month inflation rate at 2.8%. Economists surveyed by Dow Jones had been looking for respective numbers of 0.3% and and 2.7%.

Core inflation excludes volatile food and energy prices and is generally considered a better indicator of long-term inflation trends.
In the all-items measure, the price index rose 0.3% on the month and 2.5% from a year ago, both in line with forecasts.
At the same time, the Bureau of Economic Analysis report showed that consumer spending accelerated 0.4% for the month, below the 0.5% forecast. That came as personal income posted a 0.8% rise, against the estimate for 0.4%.
Stock market futures moved lower following the release as did Treasury yields.
Federal Reserve officials focus on the PCE inflation reading as they consider it a broader measure that also adjusts for changes in consumer behavior and places less of an emphasis on housing than the Labor Department’s consumer price index. Shelter costs have been one of the stickier elements of inflation and rose 0.3% in the PCE measure.

“It looks like a ‘wait-and-see’ Fed still has more waiting to do,” said Ellen Zentner, chief economic strategist at Morgan Stanley Wealth Management. “Today’s higher-than-expected inflation reading wasn’t exceptionally hot, but it isn’t going to speed up the Fed’s timeline for cutting interest rates, especially given the uncertainty surrounding tariffs.”
Good prices increased 0.2%, led by recreational goods and vehicles, which increased 0.5%. Gasoline offset some of the increase, with the category falling by 0.8%. Services prices were up 0.4%.
Households also grew more cautious with their money, as the personal saving rate increased to 4.6%, the highest since June 2024.
The report comes with markets on edge that President Donald Trump’s tariff intentions will aggravate inflation at a time when the data was making slow but steady progress back to the Fed’s 2% goal.
After cutting rates a full percentage point in 2024, the central bank has been on hold this year, with officials of late expressing concern over the impact the import duties will have on prices. Economists tends to consider tariffs as one-off events that don’t feed through to longer-lasting inflation pressures, but the encompassing scope of Trump’s tariffs and the potential for an aggressive global trade war are changing the stakes.
Correction: Consumer spending increased 0.4% in February. An earlier headline misstated the number.
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Mexico’s economy is slowing sharply and will soon fall into recession, several economists predict, as Donald Trump’s changing tariff plans cast uncertainty over the relationship with its largest trading partner.Mexico is one of the countries most vulnerable to the US president’s drive to reshore investment and close trade deficits. The country’s economy was already fragile, with the government cutting spending due to a gaping budget deficit and investors spooked by its radical judicial reforms.Mexico’s GDP shrank 0.6 per cent in the fourth quarter of last year from the previous three months, while economic activity fell 0.2 per cent in January.The central bank cut its key interest rate by 50 basis points on Thursday, warning that the economy would show weakness in the first quarter and that trade tensions posed “significant downward risks”.Deputy central bank governor Jonathan Heath said fourth-quarter data showed a broad-based downturn. “All the components of the internal economy are in negative territory,” he told the Financial Times. “It’s broad enough to say it’s a generalised fall.”Five economists from global banks said it was very likely that Mexico’s GDP would shrink for the second straight quarter in the three months to March.“It is also increasingly likely that growth for the full year will also be negative, and there is not much the authorities can do about it,” said Alberto Ramos, chief Latin America economist at Goldman Sachs. The Mexican peso had weakened significantly against the dollar long before Trump’s victory in November, as President Claudia Sheinbaum’s party embarked on a sweeping overhaul of the economic and political system. Her government is introducing elections for judges, dissolving independent regulators and reforming the electoral institute.The combination of Trump’s tariffs and controversial domestic reforms had inflicted a double blow on investor confidence, said Ernesto Revilla, chief Latin America economist at Citi.“This near-certain recession for Mexico is not only due to tariff uncertainty, but also to the negative domestic confidence shock associated [with] the deep constitutional reform,” said Revilla, former chief economist at Mexico’s finance ministry. Sheinbaum says the reforms will encourage investment by eliminating corruption in the courts and simplifying regulations. “The economy is strong,” she insisted last week. “That’s something we should all be proud of because it’s not just an achievement of the Mexican government but an achievement of all Mexicans.”Claudia Sheinbaum’s government is introducing elections for judges, dissolving independent regulators and reforming the electoral institute More