Economy

Unlock the White House Watch newsletter for freeYour guide to what Trump’s second term means for Washington, business and the worldDonald Trump said Chinese President Xi Jinping had “called” him, despite denials from Beijing that talks to ease trade tensions between the world’s two largest economies had started. The US president also made the claim that he had sealed “200 deals” on trade, even though no such pacts have been announced. “You have to understand, I’m dealing with all the companies, very friendly countries. We’re meeting with China. We’re doing fine with everybody. But ultimately, I’ve made all the deals,” Trump said in an interview with Time Magazine published on Friday.Trump said of the Chinese president: “He’s called. And I don’t think that’s a sign of weakness on his behalf.” However, several people familiar with the situation in Washington and Beijing said Xi had not called Trump. The Chinese embassy in Washington did not comment.The White House did not respond to a request for comment about Trump’s claims. In his Time interview, the US president also insisted that “100 per cent” he had done 200 trade deals with countries across the globe, even though none have been announced. But he also suggested that they could be unveiled in the next month. “Over the next three to four weeks . . . we’re finished, by the way,” he said.On Friday morning, as he left Washington for Rome to attend the funeral of Pope Francis, Trump was asked to clarify whether he had spoken to Xi since the US imposed bruising tariffs of up to 145 per cent on Chinese imports, triggering a trade war that has rattled financial markets. “I don’t want to comment on that, but I’ve spoken to him many times,” Trump said.Since returning to the White House in January, Trump has made multiple claims about contacts between the US and China that have later been questioned.Trump said last month that Xi was planning to visit the US and would be “coming in the not too distant future”. But people familiar with the matter said there had been no conversations between Washington and Beijing about a summit.On multiple occasions Trump has also referred to trade talks between the countries, even though these are yet to take place, according to people in Washington and Beijing. “China and the US are NOT having any consultation or negotiation on #tariffs. The US should stop creating confusion,” the Chinese foreign ministry posted on X on Friday. Chinese officials have also stressed that any trade negotiations in the future would have to be held at the working level and that the two countries would have to reach some kind of tentative agreement before Beijing would agree to set up a phone call or meeting with Xi. When asked what Xi had told him in the conversation that Trump claims happened, the US president referred to the power he had as gatekeeper for the US consumer market. “It’s a giant, beautiful store, and everybody wants to go shopping there. And on behalf of the American people, I own the store, and I set prices, and I’ll say, if you want to shop here, this is what you have to pay,” Trump told Time. Video: Jamie Dimon urges US to engage with China More

Unlock the White House Watch newsletter for freeYour guide to what Trump’s second term means for Washington, business and the worldGauges of the market mood typically pick a point between fear and greed. What we have now is not quite either of those. It is a universe where muddling through and imminent disaster exist side by side at all times and investors have no clue which way to jump. It’s exhausting and infuriating, it litters markets with opportunities to lose money, and it’s here to stay.“He’s behind you! Oh no he isn’t!” as the analysts at Rabobank rather deftly put it this week. No prizes for guessing the identity of the pantomime villain here, of course. It’s Donald Trump, whose rethinks on high-stakes economic policy are almost too speedy and too numerous to count.To take one of the biggies, just over a week ago the US president declared on his Truth Social platform that the “termination” of “too slow” Federal Reserve chair Jay Powell could not come fast enough — a grotesque and reckless assault on the most important position in global finance. Later, a reporter asked Trump if he was trying to remove Powell from office. “Yeah,” he replied. “If I want him out, he’ll be out of there real fast. Believe me.”Set aside for a moment that this is, right now, not true. Trump cannot defenestrate Powell before his time is up a year from now, unless and until the administration can find a legal loophole. In any case, now we are suddenly encouraged not to worry. By Tuesday, Trump was telling reporters he had “no intention” of firing the Fed chief, as if the idea had never occurred to him. (“We have always been at war with Eastasia” springs to mind.)So, no harm done, right? Not quite. For one thing, the cat is out of the bag. The Fed’s independence has been undermined. We now know with even more certainty than before that Trump wants a Fed chair who will cut interest rates in an effort to fix the economic mess he is making, even despite the risk that inflation bubbles up again.Some content could not load. Check your internet connection or browser settings.In addition, this whole sorry tale introduced a completely pointless and unnecessary bout of volatility to already jittery markets. This is how market accidents happen. The broadside against the Fed first gave investors the heebeejeebies, making a bad run for the dollar, stocks and US government bonds even worse. The climbdown had the opposite effect, with stocks and the dollar picking up. This is, of course, not the only sphere in which the signals from Trump and his administration are far from clear. Just in the past few days, markets jumped after Treasury secretary Scott Bessent said the trade war with China was “unsustainable” — a hint that progress towards de-escalation was at hand. But Chinese officials later said no negotiations were taking place at all. Again, this is all goosing markets higher and lower without any certainty that anything has changed. Hedge fund and trading big cheese Ken Griffin put it well this week when he remarked that tariff talks have entered a “nonsensical place”.The nonsense is not all bad for everyone. Trading firms, including big investment banks and Griffin’s Citadel Securities, stand to gain from hefty trading volumes, whatever the overall direction. Hedge funds are at least trying to enjoy the ride.But fund managers with longer time horizons tell me their nerves are shot. The only way to cope is to try to be nimble, and not to overreact to anything, positive or negative. The constant headline-driven market movements suggest this effort at serenity is not going well. Burn-out risk for the professionals here is real.To try to alleviate the mood, let’s focus on the positives. In particular, it seems markets do impose a little discipline on the US president after all. It is hard to believe it is a coincidence that Trump paused his “reciprocal” tariffs shortly after an auction of three-year US government debt proved to be a dud — a buyers’ strike, as some market watchers put it, by foreign investors. Similarly, it appears the president learnt quickly that if you turn up the heat on the Fed, investors head for the exit. He denies it, but investors know: he blinked, and blinked again.Still, investors who seize on every positive-ish headline are playing a very strange game. It is not “good” news that the president is holding back from trying to oust Powell right now. It is the absolute minimum that any investor holding US assets should be able to expect. Similarly, global tariffs are still high by any sensible measure, and much higher than investors had expected, despite the step back. A US recession is a serious risk, and the ability of the Fed to respond is rather limited.It is important to remember that a president prone to changing his mind in a positive direction can do the opposite again at the drop of a hat. “The president has retreated in battle but he could go on the front foot again!” as Mark Dowding at BlueBay Asset Management put it. The point of greatest danger to investors may well be when markets are relatively calm, calm enough to encourage the president to believe he can push the boundaries yet again. Fund managers will have no rest for as long as he is in office. Just around 1,360 days of this left, [email protected] More

The Trump administration has been saying that the two countries are engaged in talks to resolve the dispute, but Beijing asserts that no such discussions are happening.If the trade war between China and the United States is a game of high-stakes brinkmanship, it is currently a game that Beijing is not willing to play.Faced with growing claims by President Trump and administration officials that the two countries are engaged in talks and that a deal could be reached in a matter of weeks, China’s Foreign Ministry pushed back forcefully on Friday by posting on X: “China and the U.S. are NOT having any consultation or negotiation. The U.S. should stop creating confusion.”The post came hours after a foreign ministry spokesman, Guo Jiakun, said the United States was “misleading the public.” A day earlier, Mr. Guo called the rumors of talks “fake news.”The response was the latest sign that China’s top leader, Xi Jinping, intends to hold firm in his standoff with Mr. Trump, sensing that his position is strengthening. Beijing is betting that it can stomach the pain of a trade war better than the Trump administration can because of U.S. political pressure and volatility on Wall Street, analysts say.“The Chinese are not eager to climb down the ladder,” said Yun Sun, the director of the China program at the Stimson Center in Washington. “They see Trump as wanting to climb down and are happy to let him stew in his own juice.”Ms. Sun said Beijing will not come to the negotiation table without any U.S. concessions or a good-will gesture. That could include scaling back tariffs, or making clear that Mr. Trump is reaching out to Mr. Xi first.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

Rachel Reeves has declared Britain’s trading relationship with Europe to be “arguably even more important” than its one with the US, as she sought to shift Britain’s focus away from its trade spat with the Trump administration to a crucial upcoming summit with the EU.The chancellor is pushing for an ambitious “reset” of relations with the EU, including opening up a youth travel scheme and aligning the UK with Brussels’ rules in an attempt to reduce barriers to trade.“I understand why there’s so much focus on our trading relationship with the US, but actually our trading relationship with Europe is arguably even more important,” she told the BBC.“It is so important that we rebuild those trading relationships with our nearest neighbours in Europe, and we’re going to do that in a way that is good for British jobs and British consumers.”Sir Keir Starmer has insisted he will not “choose” between Europe and America as he tries to balance the UK’s two key global relationships.Reeves is set to discuss trade issues with Scott Bessent, her US counterpart, in Washington on Friday, as the two countries move towards striking a possible trade deal.Downing Street on Friday attempted to clarify Reeves’ remarks, conscious of Donald Trump’s antipathy to the EU, which he has claimed was set up to “screw” the US. “The EU is our largest trading partner,” Number 10 said. “It is factually a matter of public record. Both have incredible importance to us. And we treat both with enormous respect.”The US accounted for 21.2 per cent of British exports in 2023, compared with 41.2 per cent for the EU, according to UK government figures.Reeves has made it clear in Washington this week that she is open to cutting British tariffs on US goods — including cars and agricultural products — to help secure a deal.But she is also pushing for an ambitious deal with the EU, including creating a youth visa scheme to promote travel and aligning with EU rules in areas such as agriculture to reduce trade barriers.Reeves and Starmer also want to negotiate more mutual recognition of professional qualifications, improved access to the EU for British touring musicians and a new energy partnership.Downing Street is softening up public opinion for the inclusion of a youth mobility visa scheme — which critics have said amounts to a form of free movement — to be included in the communique to be issued after the May 19 EU-UK summit in London.Starmer’s spokesman declined to rule out such a scheme, although he has ruled out a return to free movement. “We will not be defined by the debates and arguments of the past,” he said, adding that details would be hammered out over many months of negotiation.“The prime minister is clear that he will seize any opportunity to improve the lives of working people in the UK, drive growth and keep people safe,” Downing Street added.EU diplomats speak in glowing terms about Starmer’s 45-minute meeting with Ursula von der Leyen, European Commission president, on Thursday at which the summit was discussed. “Outstanding warmth, great body language, genuine pleasure of being together, full alignment of intents,” said one diplomat briefed on the encounter. “I think everything is gaining momentum.”In a sign of the shifting mood, Kristalina Georgieva, the IMF managing director, praised the improved dialogue between the UK and EU on Thursday.The former EU commissioner said: “When the divorcees — the EU and UK — are dating again, we are in a great place.”This prompted Reeves, who was speaking on the same IMF panel, to high-five her German counterpart Jörg Kukies, who was sitting next to her.The May 19 summit will see the agreement of a new EU-UK defence and security pact and will be accompanied by a communique setting out areas for further negotiation later in the year.People briefed on the plan say there will be a “package” of measures to be negotiated, including on youth mobility, food trade, energy, professional qualifications and arrangements for touring musicians.Both sides expect the existing fishing deal between Britain and the EU, due to be renewed next year, to be rolled over — perhaps for another two years — in order to head off a row with France and other coastal states.May 19 is seen by both sides as a “starting point” for haggling over the details of the package, including the structure of a youth mobility scheme and future fish quotas, with many trade-offs to be made along the way.Meanwhile, the National Farmers’ Union president Tom Bradshaw said the UK could not compromise its access to the EU market for the sake of a US trade deal. “If you look at the financial value of an EU deal, food exports to the EU are worth six or seven times what our food exports to the US are worth,” he told the Financial Times. Bradshaw said he had received assurances from the government that it would not sacrifice animal health and welfare standards for the sake of a deal with the US — echoing something Reeves said publicly earlier this week. “The ongoing EU negotiation helps us with that,” he said. “Because I think they are very concerned about the jeopardy that any US trade deal could bring to EU accessibility and an SPS [veterinary] agreement.” More

CNBC has spoken to numerous European Central Bank policymakers this week, who have stressed progress on inflation but risks to the outlook from tariffs.
The “disinflationary process is so much on track that we are nearing completion,” ECB President Christine Lagarde said, but the impact from tariffs “will depend on what countermeasures are eventually taken by Europe.”
“In the short run, we will have lower growth. We will probably also have lower inflation,” president of the Netherlands Bank Klaas Knot said.

Guests and attendeess mingle and walk through the atrium during the IMF/World Bank Group Spring Meetings at the IMF headquarters in Washington, DC, on April 24, 2025.
Jim Watson | Afp | Getty Images

After years dominated by the pandemic, supply chains, energy and inflation, there was a new topic topping the agenda at the World Bank and International Monetary Fund’s Spring Meetings this year: tariffs.
The IMF set the tone by kicking off the week with the release of its latest economic forecasts, which cut growth outlooks for the U.S., U.K. and many Asian countries. While economists, central bankers and politicians have been engaged in panels and behind-the-scenes talks, many are attempting to work out whether trade tensions between China and the U.S. are — or perhaps are not — cooling.

Policymakers from the European Central Bank that CNBC spoke to this week broadly stuck a dovish-leaning tone, indicating they saw interest rates continuing to fall and few upside risks to euro zone inflation. However, all stressed the current high levels of uncertainty, the need to keep monitoring data, and the high risks to the growth outlook — sentiments also echoed by Bank of England Governor Andrew Bailey in his interview with CNBC on Thursday.
These were some of the main messages from ECB members this week.

Christine Lagarde, European Central Bank president

On inflation and monetary policy:
“We’re heading towards our [inflation] target in the course of 2025, so that disinflationary process is so much on track that we are nearing completion. But we have the shocks, you know, and the shocks will be a dampen on GDP. It’s a negative shock to demand.”
“The net impact on inflation will depend on what countermeasures are eventually taken by Europe. Then we have to take into account the [German] fiscal push by the defense investments, by the infrastructure fund.”

“We have seen successive movements, you know, announcement [of U.S. tariffs], and then a pause, and then some exemptions. So we have to be very attentive… Either we cut, either we pause, but we will be data dependent to the extreme.”

On market moves:
“When we had done our projections, we anticipated that… the dollar would appreciate, the euro would depreciate. It’s not what we saw. And there have been some counter-intuitive movements in various categories.”
“The German market has obviously been shocked in a positive way by the program soon to be put in place by the German government, with a commitment to defense, with a commitment to a big fund for infrastructure development.”

Klaas Knot, The Netherlands Bank president

On tariff uncertainty:
“If I look back over the last 14 years, in the initial days of the pandemic I think that was comparable uncertainty to what we have now.”
“In the short run, it’s crystal clear that the uncertainty that is created by the unpredictability of the tariff actions by the U.S. government works as a strong negative factor for growth. Basically, uncertainty is like a tax without revenue.”
On the inflation impact:
“In the short run, we will have lower growth. We will probably also have lower inflation. As we also see, the euro is appreciating as energy prices have also come down. So together with the sort of negative factor uncertainty in the short run, it’s crystal clear that it will accelerate the disinflation.”

“But in the medium term, the inflation outlook is not all that clear. I think there are still these negative factors. But in the medium term, you might get retaliation. You might get the disruption of global value chains, which might also be inflationary in other parts of the world than the U.S. only. And then, of course, we have the fiscal policy coming in in Europe. So this is actually a time in which you need projections.”
On a June rate cut and market pricing for two more ECB rate cuts in 2025:
“I’m fully open minded. I think it’s way too early to already take a position on June, whether it would be another cut. It will fully depend on these projections.”
“I would need to see a more structured analysis of the impact on the inflation profile ahead of us, and only then can I say whether the market is pricing fair or whether I don’t.”

Robert Holzmann, Austrian National Bank governor

On the need to wait for more data and news on tariffs:
“We have not seen this uncertainty now for years… unless the uncertainty subsides, by the right decisions, we will have to hold back a number of our decisions, and hence, we don’t know yet in what direction monetary policy should be best moved.”
“Before looking at data in detail, the question is, what kind of political decisions will be taken? Is it that we will have some tariff increases? Is it that we will have strong tariff increases? Is it that we will have retribution by high counter tariffs?”

On the ECB’s April rate cut:
“I think there’s a broad consensus [on rates]. But of course, at the margin, people differ.”
“My assessment is that at this time, it wasn’t clear yet to what extent [tariff] countermeasures were being taken. Because with countermeasures in Europe, prices may have increased. Without countermeasures, quite likely the price pressure is downward. And for the time being, we don’t know yet the direction.”
On the direction of interest rates:
“I think if the recent noises about an arrangement [on trade] were to be true, in this case, quite likely it is more towards the downside than the upside with regard to prices. But this can be changed with different decisions and the result of which, we may even imagine in [the] other direction. For the time being, no, it will be down.”
“There may be further cuts this year, but the number is still outstanding.”

Mārtiņš Kazāks, Bank of Latvia governor

On opportunity from tariffs:
“With all this uncertainty and vulnerability, this is also the time of opportunities for Europe.”
“It’s a time for Europe to grasp all the aspects of being an economic superpower and becoming a really fully-fledged political and geopolitical superpower, and this requires doing all the decisions that in the past, were not carried out fully.”
“This requires political will, political guts to make those decisions, and to strengthen the European economy and assert its place in a global world.”

On market reaction to tariffs:
“So far it seems to be relatively orderly … but if one looks at the spillovers to Europe, the financial markets are working more or less fine, we haven’t seen spreads exploding or anything like that.”
“But in terms, however, of the macro scenarios, this uncertainty is extremely elevated in the sense that, given the possible outcomes, the multiple scenarios and their probabilities are very similar with the baseline [tariff] scenario.” More

President Donald Trump denied that an aggressive bond market sell-off influenced his decision earlier this month to hold off on aggressive “reciprocal” tariffs against U.S. trading partners.
“No, it wasn’t for that reason,” Trump told Time magazine. “I’m doing that until we come up with the numbers that I want to come up with.”

US President Donald Trump speaks during a bilateral meeting with Prime Minister of Norway Jonas Gahr Store in the Oval Office of the White House in Washington, DC, on April 24, 2025.
Saul Loeb | Afp | Getty Images

President Donald Trump denied that an aggressive bond market sell-off influenced his decision earlier this month to hold off on aggressive “reciprocal” tariffs against U.S. trading partners.
“I wasn’t worried,” Trump said in a Time magazine interview during which he was asked about financial market tumult after his April 2 “liberation day” announcement.

In the decree, Trump slapped 10% across-the-board duties against all U.S. imports and released list of tariffs against dozens of other nations. The extra levies were based on trade deficits the U.S. had against the respective countries and raised fears about inflation, a potential recession and disruption of long-held trade agreements.
Markets recoiled following the release. Treasury yields initially headed lower but quickly snapped higher. The 10-year yield rose half a percentage point in just a few days, one of its quickest moves ever, as investors also ditched stocks and the U.S. dollar.
Ultimately, Trump issued a 90-day stay on the reciprocal tariffs to allow time for negotiation. But he said it wasn’t because of the market tumult.

“No, it wasn’t for that reason,” Trump told Time in the interview from Tuesday that was published Friday. “I’m doing that until we come up with the numbers that I want to come up with. I’ve met with a lot of countries. I’ve talked on the telephone. I don’t even want them to come in.”
Yields have since moved lower, with the 10-year most recently around 4.28%, about a quarter percentage point higher than its recent low. Trump had said when he made the decision to hold off that the bond market had gotten the “yips.”

“The bond market was getting the yips, but I wasn’t. Because I know what we have,” he said. “I know what we have, but I also know we won’t have it for long if we allowed four more years of the gross incompetence. This thing was just running — it was running as a free spirit. This was — this was the most incompetent president in history.”
Though negotiations over tariffs are ongoing, Trump added that he would consider it a “total victory” even if the U.S. has levies as high as 50% still in place a year from now.
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Unlock the Editor’s Digest for freeRoula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.If this week’s World Bank and IMF spring meetings were distilled into three core messages, they would probably be: low growth, high debt and unprecedented global upheaval. That is a difficult trio to overcome. Stimulating growth often requires a jolt of public investment or tax cuts. But the coffers of many advanced and developing economies are already stretched. With trade wars brewing, aid budgets shrinking and debt-restructuring talks stalling, global catalysts for growth and financing are also dwindling. Among the levers that remain for policymakers to boost economic activity and cut costs are some useful domestic reforms that also happen to be deeply unpopular. This includes rowing back government subsidies, raising state pension ages and enacting land and tax reforms. In the past, the IMF has been accused of being too “neoliberal” in recommending these remedies for member states struggling with weak growth and rising debt. They are, after all, easier said than done. Emerging and low-income countries spend 1.5 per cent of GDP on average on energy subsidies. Reducing these payments can free funds for investment and growth. But as protests in Kenya and Nigeria over recent years have demonstrated, removing them is not easy. Pension spending will also become unsustainable as life expectancies increase. That is unless legal retirement ages also go up. Tell that to middle-aged workers. Cutting red tape in planning systems can support a building boom, but new developments irk environmentalists and existing homeowners. What to do? An analysis of successful reforms in the IMF’s Fiscal Monitor, released on Wednesday, offers some clues. First, governments should avoid shock therapy: this can stoke mistrust and is harder for households and businesses to adjust to. Colombia, for instance, successfully managed to phase out petrol subsidies over a two-year schedule. Carefully targeted compensation mechanisms are also effective. In Australia, reforms in 2009 involving a phased increase in the pension age were balanced with a rise in old-age benefits, particularly for low-income retirees. The UK government is implementing a scheme for households near new or upgraded electricity grids to receive discounts on their energy bills.Beyond creatively designed policies, timing and communication matters. High-growth periods are good opportunities to pass difficult reforms, as they help to cushion their effects. Clarity over the trade-offs, and efforts to garner support across opposition groups and civil society organisations, also help. For instance, Uruguay has been able to steadily raise its retirement age, in part, by framing the adjustment as a way to sustain other benefits and finances. Last year Uruguayans even voted to reject a proposal to reduce the retirement age and raise pension payments. Alluding to wannabe reformist politicians in 2007, then prime minister of Luxembourg Jean-Claude Juncker is quoted saying: “We all know what to do, but we don’t know how to get re-elected once we have done it.” It is easy to empathise with the so-called “Juncker curse”. Enacting tough reforms is particularly difficult when governments lack political majorities. But it is, after all, their job to find a way. It is easier to find recent examples of politicians snubbing hard, long-term policies for low-hanging fruits, or denying trade-offs and engaging in political “cakeism”. But when governments have been bold, innovative and honest, growth-enhancing and debt-reducing reforms have been possible. Right now, for many economies, that is also looking like the surest path to prosperity. More

Unlock the Editor’s Digest for freeRoula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.French jet engine maker Safran said China had granted tariff exemptions for imports of some aerospace parts, even as it warned that the constantly shifting tariff landscape made it difficult to measure the impact on its business.Chief executive Olivier Andriès said China had exempted “any deliveries of engines, nacelles [engine casings], landing gears or parts” from import taxes, adding that it was a sign of the fluidity of the situation. Safran was taking measures to mitigate tariffs, he said, but would “not be shy” about passing on some of the extra costs to customers. “This tariff situation is creating inflation, so we’re going to impose a surcharge to our customers,” he told reporters and analysts on Friday. Shares in the company rose almost 5 per cent on Friday morning after it posted better than expected results despite the tariff threat and as signs emerged that China and the US were weighing exemptions on some imports.The decision by China to exempt some parts is a sign of a possible easing of tension between the two countries. The aerospace industry relies on integrated global supply chains and is particularly exposed to the trade war launched by US President Donald Trump. Boeing this week said China had stopped taking deliveries of its jets as buyers balked at the higher costs from the country’s retaliatory tariffs of 125 per cent on US imports. Olivier Andriès said the tariff exemptions were ‘changing every week, sometimes every day’ More