Economy

Chinese censors appeared to be carefully curating public discussion about the U.S. tariffs that took effect on Wednesday. They promoted criticism of the United States, while seemingly playing down the specifics of how President Trump’s move would effectively increase import taxes on Chinese goods to 104 percent.On Weibo, a popular social media platform, several hashtags that used the number 104 — such as “104 tariff rate” or “America to impose 104 percent tariff on Chinese goods” — returned an error message that said: “Sorry, the content of this topic is not displayed.”But other hashtags that focused more squarely on mocking the United States, or on touting China’s strengths, were allowed to trend — and in fact were explicitly initiated by state media. “America is fighting a trade war while begging for eggs” was one popular hashtag started by CCTV, China’s state broadcaster. “China does not provoke trouble but is never afraid of it” was another.State media outlets adopted a similarly swaggering tone in their coverage. Several opinion pieces in the People’s Daily, the Chinese Communist Party’s official mouthpiece, declared that China had learned from years of trade frictions to diversify and shore up its economy. “In Chinese people’s genes, we never fear any risks, challenges, difficulties or contradictions, and can regard all kinds of external pressure as the driving force for our own progress,” one piece said.Other pieces did not directly reference the tariffs but still touted the strengths of the Chinese economy. A front-page article in the People’s Daily laid out steps that the government would take to promote employment for fresh graduates.Mr. Xi himself has not publicly addressed the new tariffs. But on Wednesday afternoon, Chinese state media published his first public remarks since the latest escalation in the trade war, saying that he had met with his innermost circle of top officials on Tuesday and Wednesday.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

President Trump’s next round of punishing tariffs on some of America’s largest trading partners was set to go into effect just after midnight on Wednesday, including stiff new levies that will increase import taxes on Chinese goods by at least 104 percent.Mr. Trump acknowledged on Tuesday that his tariffs had been “somewhat explosive.” But throughout the day he continued to defend his approach, saying that it was encouraging countries with what he calls “unfair” trade practices to offer concessions.“We have a lot of countries coming in to make deals,” he said during remarks at the White House on Tuesday afternoon. At a dinner with Congressional Republicans in Washington later that evening, he said other countries wanted to make a deal with the United States but he was happy just collecting the revenue from tariffs, which he claimed would reach $2 billion a day.“I know what the hell I’m doing,” he said, adding that he would be announcing “a major tariff on pharmaceuticals” very shortly.The president and top administration officials signaled on Tuesday that the White House was ready to negotiate deals, saying that 70 governments had approached the United States to try to roll the levies back. Mr. Trump said officials would begin talks with Japan, South Korea and other nations.The president, whose punitive and successive tariffs on China have triggered a potentially economically damaging trade war, also said he was open to talking to Beijing about a deal.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

Unlock the White House Watch newsletter for freeYour guide to what the 2024 US election means for Washington and the worldDonald Trump rattled global investors again as he pressed ahead with his plan for aggressive tariffs on America’s largest trading partners even as he touted potential deals with some US allies.Equity markets fell sharply as Trump failed to soothe traders’ nerves just hours before he was set to hit countries from the EU to China with steep new levies, tilting the world into a full-blown trade war. White House officials, including Treasury secretary Scott Bessent, had sought on Tuesday to talk up possible trade negotiations with South Korea, Japan and other countries — a message that gave hope to investors that Trump could soften his stance after pressure from billionaire allies, trading partners and Republicans in Congress. But any relief was shortlived as it became clear that Trump was pushing ahead with his plan to unload an arsenal of tariffs against trading partners, ushering in a new era of global trade conflict.The new blitz of Trump tariffs from Wednesday will include additional levies on China, despite Beijing’s warning that it would “fight to the end” in a fast-developing trade conflict.The US’s extra 50 per cent tariff on China, the world’s second-largest economy, would “be going into effect at 12.01am” eastern time on Wednesday, according to White House press secretary Karoline Leavitt. “Everyone keeps hoping, keeps waiting for a pause in tariffs,” said Peter Tchir, head of macro strategy at Academy Securities. “But we’ve just slapped on the extra increased tariffs on China. We’re slowly losing this optimism that this is a negotiating tactic. That’s why trading has been so volatile today.”The benchmark S&P 500 index was up as much as 4.1 per cent early in the trading session, but ended with a loss of 1.6 per cent after Leavitt’s remarks — marking a fourth consecutive day of intense turbulence in Wall Street equities. Apple, which is heavily exposed to China through its supply chains, has dropped more than 8 per cent this week alone as investors worry about its margins. The $29tn US Treasury market has also come under rising selling pressure in the past two days, sending long-term borrowing costs jumping as volatility prompts hedge funds to sharply scale back on risk. “Market price action has been dramatic,” Wall Street bank Goldman Sachs said in a note to clients, adding that “our estimates of ‘shocks’ to market views using the joint movements of US equities and bonds are consistent with a large downgrade to US growth views”. The additional levies on China mean its exports to the US will face duties of more than 104 per cent — a level that will be seen as a provocation by Beijing, which has already retaliated with its own 34 per cent tax on US imports and moved to devalue its currency.Alongside the new China duties, the US will also impose taxes on almost all other imports from Wednesday — the “reciprocal” tariffs announced by Trump during his “liberation day” last week. That announcement has convulsed financial markets since then, wiping $6.2tn in market value from the S&P and sparking warnings of spiralling inflation in the US and a slowdown in the global economy. Oil markets have also slumped in reaction to expectations for a sharp slowdown in global trade, with the US benchmark West Texas Intermediate trading at less than $60 on Tuesday — a level that drillers have said will thwart Trump’s ambitions to increase American crude supply. The US president’s determination to follow through with his ultra-protectionist tariff policies has drawn a fierce backlash from Wall Street, business leaders and some Republican lawmakers.The looming trade war and economic disruption has also opened divisions within Trump’s own circle. While Bessent on Monday described his plan to launch talks with Japan over a new trade deal, Trump’s trade tsar Peter Navarro wrote in the Financial Times that the president’s position was “not a negotiation”. On Tuesday, Elon Musk, the technology billionaire and Trump adviser, attacked Navarro as a “moron” and “dumber than a sack of bricks” after Navarro suggested the Tesla boss’s opposition to tariffs was self-interested. More

US stocks closed sharply lower, reversing an early rally after the White House said Donald Trump would push forward with his threat to hit China with duties exceeding 100 per cent.The benchmark S&P 500 index closed down 1.6 per cent, a significant pull back from a gain of as much as 4.1 per cent earlier in the trading day. The Nasdaq Composite lost more than 2 per cent.Tuesday’s swings were the latest bout of turbulence in US stocks after Trump last week announced a plan to impose steep tariffs on dozens of countries, threatening to ignite an all-out trade war.The White House said on Tuesday that additional 50 per cent tariffs on Chinese goods would go into effect on Wednesday just after midnight in Washington. That would come on top of “reciprocal” measures announced last week, and other levies, bringing the total duties above 104 per cent.Earlier on Tuesday, the White House had signalled an increased willingness to negotiate with US trading partners over reducing their levies, but there were mixed signals as the day went on.Washington agreed to open talks with Japan, with US Treasury secretary Scott Bessent saying on Monday that Tokyo “would get top priority as they came forward very quickly”.Trump posted on his Truth Social platform that he had also spoken to the acting president of South Korea, adding that “we have the confines and probability of a great DEAL for both countries”.By contrast, tensions between the US and China ratcheted up on Tuesday as Beijing vowed to “fight to the end” if the US pressed ahead with steep tariffs on the country.A day earlier, Trump threatened to hit China with a 50 per cent additional tariff, after Beijing last week said it would match his “reciprocal” duty of 34 per cent.The region-wide Stoxx Europe 600, the FTSE 100 and Germany’s Dax were all up about 2.3 per cent on Tuesday.In currency markets, the US dollar was down 0.3 per cent against a basket of trading partners. Oil prices fell, with the international benchmark Brent trading down 3.8 per cent to below $62 a barrel in the New York afternoon, while WTI, the US marker, dropped 3.7 per cent to $58.46 a barrel.US oil prices are now below the level many American producers need to break even on their wells. More

An upbeat Scott Bessent walked into the US Treasury department on Tuesday, optimistic that the tensions between America and some of its allies in the wake of last week’s “liberation day” tariff announcement would soon be eased. “I think you’re going to see a couple of big trading partners do deals very quickly,” he told reporters. In the days before and after President Donald Trump announced steep tariffs on much of the world last week, the Treasury secretary was upstaged by boisterous hardliners such as Peter Navarro, the White House trade tsar, and Howard Lutnick, the commerce secretary.But this week Bessent has burst into the fray as the president has opened the door to negotiations with some allies in the face of the brutal sell-off in equities that triggered a backlash from Wall Street to Capitol Hill. Trump has designated Bessent to lead talks with Japan and South Korea, the first big US trading partners in line for an accord to potentially reduce the levies, alongside Jamieson Greer, the US trade representative. Meanwhile, Navarro, who has been deeply sceptical of negotiations over the tariffs, has been relegated to the sidelines — for now — along with Lutnick, who has been the main interlocutor for foreign trade officials. In recent days, two foreign officials have said the commerce secretary has made clear that he lacks the mandate from Trump to enter into trade talks with them.Commerce secretary Howard Lutnick, right, has been relegated to the sidelines — for now More

Elon Musk slammed President Trump’s top trade adviser as “dumber than a sack of bricks” on Tuesday, exposing a remarkable rift in the president’s inner circle over the wide-ranging tariffs that have upended the global economy.The feud between Mr. Musk and Peter Navarro, who has been the architect of many of Mr. Trump’s trade plans, has been simmering for days as the administration’s new tariffs have caused huge losses across global financial markets.So far, Mr. Trump has not weighed in on the clash between his top aides, both of whom he claims to hold in high regard. But Mr. Musk’s words — though aimed at Mr. Navarro — were a rare criticism of Mr. Trump’s policies from one of his most influential advisers.Mr. Musk, the world’s richest man, is estimated to have lost roughly $31 billion since Mr. Trump announced sweeping tariffs on foreign countries on April 2, according to the Bloomberg Billionaires Index.The squabble escalated on Monday when Mr. Navarro said on CNBC that Mr. Musk was not a “car manufacturer” but a “car assembler” because Tesla, Mr. Musk’s electric vehicle company, relied on parts from around the world.Mr. Musk fired back on Tuesday, calling Mr. Navarro a “moron” and “dumber than a sack of bricks” in a post on X, the social media site he owns. Later in the day, Mr. Musk doubled down, posting that he wanted to “apologize to bricks.”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

Unlock the Editor’s Digest for freeRoula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.US government debt fell sharply for the second straight day after a $58bn short-term Treasury auction drew weak demand and hedge funds continued to rapidly unwind popular trades.The benchmark 10-year Treasury yield, which underpins trillions of dollars in assets worldwide, jumped 0.11 percentage points to 4.3 per cent on Tuesday. It has risen almost 0.3 percentage points over the past two days — a large jump for an asset that typically moves in small increments. Tuesday’s sell-off is the latest sign of how some investors are ditching even very low-risk assets in a dash for cash, as President Donald Trump’s tariffs on major trading partners spark intense volatility in markets. Hedge funds have been critical players in the decline as they have sought to reduce risk in their portfolios and cut back on widespread trades in the Treasury market. The sense of gloom worsened on Tuesday after a US Treasury department auction for three-year notes attracted the weakest demand since 2023. The auction drew a higher than expected yield, and dealers — banks that are obliged to buy up any supply not absorbed by other investors — sopped up 20.7 per cent of the offering, the highest percentage since December 2023, according to Vail Hartman at BMO Capital Markets. That disappointing deal will cast a shadow over upcoming auctions this week, including the $39bn of 10-year notes on offer on Wednesday and the $22bn of 30-year bonds on Thursday. The weak auction will also add to fears that foreign investors are shifting away from US government debt at a time of rising concern over America’s high debt levels and the Trump administration’s targeting of government institutions such as independent regulators. “The poor three-year auction today will definitely feed the rumours about foreign investors pulling back from the Treasury market,” said Matthew Scott, head of core fixed income and multi-asset trading at AllianceBernstein.“People don’t want Treasuries right now, they’re in ‘get me out’ mode,” said one hedge fund manager who asked not to be named. The person added that the auction had been so “ill-received” that it might have weighed on equity markets. The S&P 500 had been up as much as 4.1 per cent on Tuesday but closed down 1.6 per cent in volatile trading. “Post-auction, the [equity] market tanked,” the person said, though others attributed the afternoon sell-off to broader tariff concerns.Hedge funds also continued scaling back risk in their portfolios on Tuesday. Traders and analysts homed in on several strategies that were being unwound, including the “basis trade” in which funds use huge amounts of borrowing to take advantage of differences in prices for Treasuries and associated futures. Hedge funds this year also placed big bets on the likelihood that the Trump administration would cut banking regulation. One rule in particular — the standard leverage ratio — makes it more expensive for banks to hold debt such as Treasuries. Hedge funds were expecting Treasuries to outperform interest rate swaps — derivatives that allow traders to speculate on moves in the debt market — because without these regulations in place, banks would buy more bonds.But as tariffs roiled markets, bond yields have risen with investors, including banks, selling their Treasuries. As a result, interest rate swaps have outperformed Treasuries, upending the popular trade and forcing investors to exit their positions.“It’s a proper, full-on hedge fund deleveraging,” said one trader at a Wall Street bank. More

This article is an on-site version of our FirstFT newsletter. Subscribers can sign up to our Asia, Europe/Africa or Americas edition to get the newsletter delivered every weekday morning. Explore all of our newsletters hereGood morning and welcome back to FirstFT Asia. In today’s newsletter:Trump to proceed with extra 50% tariff on ChinaZelenskyy says Ukraine captured Chinese men fighting for RussiaCan Nintendo’s Switch 2 revive the gaming industry?Donald Trump is pushing ahead with another 50 per cent tariff on Chinese goods, escalating his trade war with Beijing in a move that will cascade across supply chains between the world’s two biggest economies.What’s happening: Chinese goods entering the US will now face duties of more than 104 per cent — a level that will be seen as a provocation by Beijing. The US president is moving ahead with the new taxes after Beijing rebuffed his call to rescind the 34 per cent tariff it imposed on American goods in retaliation for the “reciprocal” duties he announced last week. The extra tariffs make China, the world’s largest exporter, the most penalised country in Trump’s global trade war.Karoline Leavitt, White House press secretary, said the new tariffs would “be going into effect at 12.01am” eastern time on Wednesday. She added: “The president also wanted me to tell all of you that if China reaches out to make a deal, he’ll be incredibly gracious, but he’s going to do what’s best for the American people. China has to call first.”A spokesperson for China’s commerce ministry warned against Trump’s step yesterday, saying Beijing would “resolutely take countermeasures to safeguard its own rights and interests. If the US insists on going its own way, China will fight to the end.” Can we talk?: Washington and Beijing have had no serious communication on their trade tensions, and US trade representative Jamieson Greer said China had not signalled any willingness to engage in talks. Meanwhile Japan emerged yesterday as the first major economy to secure priority tariff negotiations with Trump, highlighting its status as Washington’s biggest creditor and investor. Trump said he had also spoken with the acting president of South Korea and that a delegation from Seoul was “on a plane” to the US.Market reaction: US stocks closed sharply lower, reversing an early rally after the White House said Trump would proceed with the extra 50 per cent tariffs on Chinese goods. The benchmark S&P 500 index closed down 1.6 per cent, a significant pull back from a gain of as much as 4.1 per cent earlier in the trading day. The Nasdaq Composite lost more than 2 per cent. Follow our live blog for more updates.Interview: Singapore fears Trump’s tariffs will trigger a global trade war that will be “very hostile” for trade-dependent small nations, the city-state’s foreign minister told the FT.EU-China relations: Brussels and Beijing should work to reach a “negotiated resolution” in the face of US tariffs, European Commission president Ursula von der Leyen said after a call with China’s Premier Li Qiang.Gaming the system: Companies, in theory, could exploit the differences between Trump’s tariff rates. Here’s how.FT View: Forced to choose between the US and China, south-east Asian countries may opt for Beijing, our editorial board writes.For more analysis on the tariffs, sign up for our Trade Secrets newsletter if you’re a premium subscriber, or upgrade your subscription. Here’s what else we’re keeping tabs on today:Trade war: The US’s “reciprocal tariffs” are due to take effect. Here’s what to know about the new measures.Monetary policy: India and New Zealand announce their interest rate decisions.UK-India Economic and Financial Dialogue: Government officials from both countries will hold talks in London.Seven & i Holdings: The Japanese owner of 7-Eleven reports FY 2024 results, as it faces a takeover attempt by Canada’s Alimentation Couche-Tard.Five more top stories1. Volodymyr Zelenskyy has said his forces have captured fighters from China who were supporting Russian troops in eastern Ukraine, marking the first time Chinese citizens have been taken captive during the war. The two Chinese fighters had both been recruited by Russian military officials to sign up as contract soldiers, according to Ukrainian officials familiar with the matter.2. The US Department of Justice is scaling back cryptocurrency enforcement, the Trump administration’s latest move that is set to benefit an industry the president has championed. US law enforcement will no longer target crypto exchanges, mixing and tumbling services as well as wallets “for the acts of their end users or unwitting violations of regulations”. Here are more details.3. Investors lost $25.7bn in leveraged exchange traded funds late last week, in the biggest ever meltdown for risky funds that have drawn huge inflows in recent years from retail traders seeking quick returns. The high-octane funds, which magnify the daily returns of individual stocks or indices by up to five times, lost almost a quarter of their value as they were hit by the market fallout from Trump’s trade war, according to calculations by FactSet.4. The cost of insuring against debt defaults in Europe’s car industry has soared, as investors ditch bonds in the sector in response to Trump’s tariffs. The auto sector’s slump in response to punitive tariffs, which includes a 25 per cent levy on vehicle imports, means that it now stands out as Europe’s biggest debt market casualty.5. Mexico’s government is talking to the private sector about expanding fracking as Trump’s trade threats heighten fears over the country’s dependence on US gas. President Claudia Sheinbaum, a former climate scientist, directed officials to explore fracking to help deliver energy independence, executives with knowledge of the conversations have said.The Big Read© FT montage/Getty/DreamstimeHopes are high that Nintendo’s Switch 2 console unveiled last week can revitalise the gaming industry, which has struggled with stagnant revenues. But the Japanese company has already been thrust into the centre of an escalating trade war — and risks becoming ones of its earliest victims.We’re also reading . . . No way out: Even if Trump backs down, he will have succeeded in building uncertainty, which is itself a sort of tariff, writes Harvard University’s Jason Furman.New digs: Former Google chief Eric Schmidt bought a London mansion for almost £42mn, the latest high-profile property deal by an American buyer in the city. Fox News: As rightwing critics slam Trump’s tariffs, the conservative news network has other priorities.Chart of the dayThe implicit assumption of Trump’s “reciprocal” tariffs is that in a fair world, trade would balance with every single partner. “This is utter lunacy”, writes FT columnist Martin Wolf. Some content could not load. Check your internet connection or browser settings.Take a break from the news . . . With the boom in all things Korean — K-pop, kimchi, Korean skincare, Squid Game — soju is popping up in cocktail bars and supermarkets the world over. Could this be the drink’s breakthrough year? At Brooklyn bar Orion samgyetang soju is infused with herbs and roots More