Economy

Unlock the Editor’s Digest for freeRoula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.UK entrepreneurs have sounded the alarm that Washington’s trade tariffs pose a direct threat to profits, prompting some to signal that they plan to halt operating in the US altogether, a new survey reveals.The research, conducted by entrepreneur network Helm, showed that 64 per cent of its members believe the recent tariffs imposed by President Donald Trump will affect their bottom lines, with one in five considering reducing or ceasing their operations in the US. According to the survey, 13 per cent said they were “extremely likely” to withdraw from the US market, signalling a potentially significant shift in how small businesses operate there.Entrepreneurs cited supply chain costs, the impact on direct product exports and distribution partnerships as key concerns in the changing trade landscape.“These tariffs are creating ripples that could become waves across the Atlantic trade relationship,” said Andreas Adamides, chief executive of Helm. “We’re seeing UK entrepreneurs at a crossroads — some standing firm, others charting new courses away from American shores.”He added: “While many are adapting their strategies — adjusting price points, exploring new territories, or developing different products — the terrain of UK-US trade is shifting beneath our feet.”The findings come days after a survey by the global bank HSBC, which polled 2,000 UK companies ranging from small businesses to large corporates. It found that 66 per cent of businesses would face some impact in response to the tariffs. Tina McKenzie, policy chair of the Federation of Small Businesses, said confidence among small businesses is “already fragile, so tariff hikes on UK-US trade will hit small firms hard”. The US is the leading market for 59 per cent of small exporters, she added, so adding costs to that threatens a vital source of income for thousands of businesses.“Exporting is one of the few ways small firms can strengthen their position during uncertain times, which is why negotiations to promote free trade with the US, EU and other countries must continue,” said McKenzie.The disruption to international shipping between China and the US caused by the tariffs is already affecting Hunter Luxury, said the chief executive of the packaging manufacturing company. Mike Banister said production jobs in Chinese factories had stalled and shipments were sitting in warehouses indefinitely. Goods that were being shipped, meanwhile, faced delays as congestion built at US ports. “In the medium to long term,” he said, “plans are having to be completely reassessed.” Banister added that the uncertainty around possible further tariff announcements “is, if anything, even worse”.The ongoing market volatility has caused 28 per cent of Helm members to begin exploring alternative markets, with just under 10 per cent of the 400 respondents already securing new partnerships outside of the US, the survey found.“We have been actively exploring other supply routes from countries that we believe won’t be so impacted, such as India, Malaysia, Cambodia and Turkey,” said Mark McCormack, co-chief executive of Talking Tables, a party supplies business, on finding options other than China.While some look elsewhere, nearly a quarter of respondents remain committed to their place in the US market, implementing mitigation strategies to ride out the tariff-led uncertainty.A third said they planned to continue to do business there in much the same way as before the tariff announcement, adopting a “wait-and-see approach”.On Wednesday, the US president said he planned to exempt carmakers from some tariffs; last week, his administration said it would exempt consumer electronics from the “reciprocal” tariffs placed on Chinese imports. Businesses of all sizes will be closely watching any outcome from Friday’s meeting in Washington DC between UK chancellor Rachel Reeves and her US counterpart Scott Bessent to discuss a potential UK-US trade deal. More

For the past seven years, Zhoushan airport near Shanghai has been the delivery point and completion centre for new Boeing jets in China. But on Monday, against the darkening skies of a trade war, one 737 aircraft was heading back to where it came from.Beijing has suspended orders for new jets after tariffs spiralled and Boeing chief executive Kelly Ortberg this week confirmed the company had taken back two planes that were in China due for delivery and is in the process of bringing back a third. The returned planes illustrate how Donald Trump’s escalating trade war has disrupted US business in one of the world’s biggest markets. For many well-known American companies, the prospect of a sharper break between the US and China threatens a vast corporate infrastructure that ranges from the factory floor to the end consumer, which has been central to the growth prospects that they have sold to their investors. Even though Washington has for years encouraged US companies to “de-risk” their presence, many still have a deep reliance on Chinese supply chains or, like Boeing, sell products into the mainland. Others have ambitions to tap into China’s fast-evolving consumer market even as growth slows and political tensions mount.A woman walks past a McDonald’s in Shanghai. The fast-food group aims to have more than 10,000 outlets in China by 2028 More

Unlock the Editor’s Digest for freeRoula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.Japanese trade negotiators trying to spare their country from Donald Trump’s tariffs are preparing to do battle over an issue where neither side can easily back down: a car safety test that does not exist.Trump has perplexed officials in Tokyo with a reference to a Japanese “bowling-ball” test — dropping a bowling ball on to a car and failing any vehicle if its bonnet dents under the impact. The US president first referred to the test in 2018. “They take a bowling ball from 20 feet up in the air and they drop it on the hood of the car. And if the hood dents, then the car doesn’t qualify,” he said. “It’s horrible, the way we’re treated.”On Sunday he again cited the test on his Truth Social platform as an example of “protective technical standards”.Japan does not carry out such tests on its cars, although one carried out in the country and elsewhere does entail hitting a car with a rounded object at a speed of 35kph, to simulate an impact with a pedestrian. In the test, a dent in the bonnet typically indicates good shock absorption and a potentially less deadly impact.It is part of a UN-formulated safety regime that closely resembles Europe’s and puts new car models through tests on 43 items. The US has its own proprietary car safety testing regime that diverges from UN standards.Japan has lots at stake in the trade negotiations with the US, which Tokyo’s chief negotiator, Ryosei Akazawa, will resume in Washington next week. Trump has threatened its export-oriented economy with 24 per cent “reciprocal tariffs” on top of levies on cars and metals, and has previously suggested that cars will be high on the agenda.“94 per cent of the cars in Japan are made in Japan. Toyota sells one million foreign made automobiles into the United States and General Motors sells almost none,” said Trump on the day that reciprocal tariffs were announced in early April.US complaints about imbalances with Japan in car exports are not new. “There are many Japanese cars in America. I want to see more American cars in Japan, as well,” Barack Obama said on a visit to Japan as president in 2015.Some US brands such as Jeep and Tesla have made inroads in Japan but 2024 fiscal year sales of up to 17,207 units for US brands were a small fraction of the 4.57mn passenger cars sold in Japan, according to official data.Some US carmakers admit that has little to do with non-tariff barriers.“There are little quirks but they are remnants of a bureaucracy of a system that has been changing slowly. Are they non tariff barriers? Yes, they are as it takes more time and money to comply,” said Pontus Häggström, who led Fiat Chrysler in Japan for more than a decade and is now regional director of Alpine, Renault’s sports car brand. “Is this the reason why US cars are not selling in Japan? The answer is completely not.”One senior advertising executive in Tokyo, who worked on marketing US car brands in Tokyo during the 1990s and early 2000s, said selling American cars to Japan was a challenge because they are “too big, consume too much gas, and lack the little design details that the customer here looks for”.While Japan remains in search of compromises that might appeal to Trump, any compromise on safety standards might not be accepted by prime minister Shigeru Ishiba, who is trying to shore up his popularity and has repeatedly referred to Trump’s tariffs as having precipitated a “national crisis”. “Be it cars or agricultural products, we will not do anything that will affect safety,” he told a parliamentary session this week.Some content could not load. Check your internet connection or browser settings.But Japan might have ground to cede on other non-tariff barriers for imported vehicles, including subsidies that favour local producers such as Toyota and Japan’s unique fast-charging standards for electric vehicles, according to auto executives.“If Japan wants to offer something, then they can do it on the EV front as there are some barriers there,” said Ludwig Kanzler, chief executive of Hanegi Solutions, a consulting firm that has advised South Korea’s Hyundai on market entry to Japan. More

Unlock the White House Watch newsletter for freeYour guide to what Trump’s second term means for Washington, business and the worldUK chancellor Rachel Reeves on Friday held her first formal talks with US Treasury secretary Scott Bessent, with both finance ministers agreeing that there was a “landing zone” for a bilateral trade deal, according to British officials.Reeves has opened the door to Britain cutting its tariffs on imports of US-made cars, along with agricultural and seafood products, as she tries to persuade the Trump administration to cut its levies on UK exports.Bessent is seen inside the Starmer government as a relatively dovish figure on tariffs, but there is an acknowledgment that trade decisions are ultimately taken in the Oval Office. The US has imposed a 10 per cent baseline tariff on UK exports and a 25 per cent levy on cars and steel.UK officials said Reeves — who had not met Bessent before her trip to Washington this week — had held a “good discussion” with her US counterpart.One person briefed on the talks said: “Both feel there is a landing zone for a trade deal but we’re not there yet. The discussion has become more intense, so that’s positive. Discussion will continue.”In a readout released on Friday evening, the Treasury said Bessent “noted the need for progress on fair and reciprocal trade” between the US and the UK.Reeves, in Washington for the spring meetings of the World Bank and IMF, has been lauded by some of the world’s financial elite for her commitment to free trade and supply side reforms. Kristalina Georgieva, IMF managing director, said: “She is tackling very tough issues, getting reprioritisation of spending, getting the regulatory environment to be more rational and then taking on the battle to get it done. And it’s really impressive.”But Reeves is far less popular at home, with opinion polls showing her dire approval rating has fallen further in recent weeks.YouGov reported this month that only 14 per cent of those surveyed said they had a positive view of the chancellor, with 62 per cent holding a negative view. The score of -48 represents Reeves’ lowest rating yet.Reeves has this week sought to build relations with the Trump administration by signalling that some of its concerns about the global trading system were well founded. Speaking at an event at the British embassy in Washington on Thursday evening, Reeves argued the US was right to be concerned about excessive trade imbalances — highlighting “challenges” associated with the rise of China’s economy as well as benefits.“The challenges that Donald Trump’s administration has spoken about, about the global trade imbalances, are very real, and we should address them,” she said at an event hosted by Britain’s ambassador to the US, Lord Peter Mandelson.Reeves added those trade imbalances were not always associated with “transparent policies”. But she stressed in her meetings in Washington that the UK continued to believe in multilateral dialogue and institutions, and not in tariffs, emphasising the undesirability of trade wars.  More

Unlock the White House Watch newsletter for freeYour guide to what Trump’s second term means for Washington, business and the worldA top candidate to succeed Jay Powell as the next Federal Reserve chair has blamed the US central bank for committing “systematic errors” and failing to control the worst inflationary surge in a generation. Kevin Warsh, a former Fed governor and ally of President Donald Trump, accused the US central bank of acting “more as a general-purpose agency of government than a narrow central bank”, saying the “drift” had stopped it from keeping inflation at its 2 per cent goal. “Since the panic of 2008, central bank dominance has become a new feature of American governance,” Warsh said at a Group of 30 event in Washington on Friday. “Forays far afield — for all seasons and all reasons — have led to systematic errors in the conduct of macroeconomic policy.”He added the Fed’s $7tn balance sheet had also enabled rampant federal government spending that had left the US’s fiscal position on a “dangerous trajectory”.  “Fiscal policymakers — that is, elected members of Congress — found it considerably easier appropriating money knowing that government’s financing costs would be subsidised by the central bank,” Warsh said, referring to the central bank’s Treasury debt purchases under quantitative easing.The comments from Warsh, who Trump considered as a possible Treasury secretary, come at an acute moment of tension between the Fed and the president, who last week said he could not wait for Powell’s “termination” as central bank chair. Trump partly walked back his comments, saying he had no intention of firing Powell, triggering relief in global markets. Warsh, who was at the Fed when it began QE, was a critic on central bank policies last year, but his remarks were his first statements on its monetary policy in months. Warsh also attacked the Fed’s involvement in issues such as climate change and inclusion — though he acknowledged the central bank had now “changed its tune” by leaving the Network for Greening the Financial System in January. Powell’s current term as Fed chair ends in May 2026, with Treasury secretary Scott Bessent saying earlier this month that a search for his replacement would get under way in the autumn. Warsh and National Economic Council head Kevin Hassett are considered the favourites to succeed him. Trump’s recent criticism of Powell for refusing to cut interest rates, coupled with suggestions that the White House believed it had the authority to fire the Fed chair, have sparked fears for the central bank’s independence — leading to a sharp sell-off in equities and the dollar. Warsh said that while he strongly believed in “the operational independence” for the Fed to set interest rates free of political pressure, that did not mean central bankers should be treated as “pampered princes”. “When the monetary outcomes are poor, the Fed should be subjected to serious questioning,” he said.  More

President Trump said that “we’re meeting with China” on tariffs, comments aimed at soothing jittery financial markets. But Chinese officials say no talks have taken place.President Trump, whose trade war with China has rattled financial markets and threatened to disrupt huge swaths of trade, suggested on Friday that he had been in touch with Xi Jinping, China’s president, even as Chinese officials insisted that no negotiations were occurring.In an interview with Time on Tuesday, Mr. Trump said Mr. Xi had called him, though he declined to say when, and asserted that his team was in active talks with China on a trade deal. Asked about the interview outside the White House on Friday morning, the president reiterated that he had spoken with the Chinese president “numerous times,” but he refused to answer when pressed on whether any call had happened after he imposed tariffs this month.Mr. Trump’s comments appeared aimed at creating the impression of progress with China to soothe jittery financial markets, which have fallen amid signs that the world’s largest economies are in a standoff. The S&P 500 is down 10 percent since Mr. Trump’s Jan. 20 inauguration.But the president’s claims of talks have been rejected by Chinese officials, who have repeatedly denied this week that they are actively negotiating with the United States.“China and the U.S. have not held consultations or negotiations on the issue of tariffs,” Guo Jiakun, the spokesman for China’s foreign ministry, said in a news conference on Friday. “The United States should not confuse the public.”Chinese officials have repeatedly said the United States should stop threatening China and engage in dialogue on the basis of equality and respect. On Thursday, He Yadong, a spokesman for China’s Commerce Ministry, said there were “no economic and trade negotiations between China and the United States.”We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More

Stay informed with free updatesSimply sign up to the More

Sitting in a bland conference hall in Washington on Wednesday evening, Scott Bessent presented an unabashed defence of America’s trade policies in his first face-to-face meetings with G20 counterparts. According to those present at the dinner, on the sidelines of the IMF and World Bank spring meetings, the Treasury secretary portrayed President Donald Trump’s approach as part of a clear and masterful blueprint to rebalance the global economy — and by no means the chaotic muddle of U-turns that officials elsewhere in the world perceive. Trump had taken “strong action” to address the imbalances of an “unfair trading system”, Bessent said at an event the same day. More than 100 countries had responded “openly and positively”, he added. But the spring meetings of the IMF and the World Bank were marked by further reversals by Trump, which left US allies even more bewildered at what the administration is trying to achieve with its trade agenda — and more concerned at what the ongoing uncertainty is doing to their economies.Share prices rallied after weeks of turbulence after Trump said he was ready to substantially curb tariffs of 145 per cent on China, with gains helped further by a declaration that he did not — contrary to earlier hints — plan to fire Federal Reserve chair Jay Powell.  However, the IMF’s latest World Economic Outlook, released on Tuesday, warned that the instability hammering international trade would inevitably clobber global growth. “Simply put, the world economy is facing a new and major test,” said Kristalina Georgieva, the managing director at the IMF, at a press conference.Some content could not load. Check your internet connection or browser settings.Officials and policymakers attending the meeting warned that they had no visibility as to whether the Trump administration would stick with its efforts to de-escalate its conflicts with trading partners, or resume its assault on the global marketplace. In an acute irony, it was China’s delegates who, at the G20 dinner, presented a full-throated defence of the multilateral rules-based order that America itself originally designed, according to people briefed on the discussions. Ministers and central bankers warned that the pervasive cloud of uncertainty emanating from the capital of the world’s most important economy was near impossible to navigate. “What does this administration exactly want? Do they want a new trade deal? Do they want tariffs? We just don’t know,” says Eelco Heinen, the finance minister of the Netherlands. “Right now we are going through a fog.” After weeks of hostility, the Trump administration signalled this week it was actively seeking ways of cooling down trade conflicts with partners.  Bessent offered an olive branch to US partners at a meeting of the Institute for International Finance lobby group on Wednesday, saying “America First does not mean America alone”, and that the slogan is “a call for deeper collaboration and mutual respect among trade partners”. This was coupled with reassuring words on the fate of the IMF and World Bank themselves. While Bessent called for them to step back from what he termed “sprawling and unfocused agendas”, he also insisted the institutions had “enduring value”. Some content could not load. Check your internet connection or browser settings.That came as a relief to countries fretting about the prospect of outright US withdrawal from the postwar Bretton Woods institutions that have underpinned eight decades of economic multilateralism. “The mood here is one of détente,” says one European official, noting that in meetings during the week US officials were stressing their eagerness to do deals with key US trading partners. Bessent sought to strike a conciliatory tone in meetings with his counterparts, say some officials, with the Swiss finance minister Karin Keller-Sutter praising her meeting with the Treasury secretary as “constructive”. His deeper involvement within the administration on trade policies, as the influence has waned of Commerce Secretary Howard Lutnick and trade adviser Peter Navarro, has also helped soothe officials’ and investors’ jitters. But actually achieving tangible progress on trade relations will not be easy, officials stress. Frictions between the US and its closest partners were never far from the surface, with the official noting a “hubristic air” from the administration. In a meeting of the G7, Bessent bridled at a question from the governor of the French central bank, François Villeroy de Galhau, about America’s yawning federal deficit, according to people briefed on the exchange. The spring meetings of the IMF and the World Bank took place in Washington this week following a tumultuous first three months of the new Trump administration More