Economy

Unlock the Editor’s Digest for freeRoula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.Turkey has a chance to outperform other emerging markets hit by Donald Trump’s tariffs “once the dust settles” thanks to manageable US trade exposure and lower oil prices, the country’s finance minister said.Mehmet Şimşek told the Financial Times that the collapse in oil prices would narrow the current account deficit of energy-importing Turkey and thus help rebuild international reserves, a closely watched metric of the macroeconomic reforms he launched around 18 months ago.Slowing global growth and tight domestic money policies were also “disinflationary”, which would help get Turkish inflation down — a central aim of Şimşek’s stabilisation programme.On US tariffs, Şimşek argued Turkey’s $1.3tn economy was relatively insulated as 80 per cent of its trade is with countries with which it has a free trade agreement, such as its customs union with the EU, or with “friendly neighbours” in the Middle East, central Asia and north Africa.Trump, who has good relations with Turkey’s President Recep Tayyip Erdoğan, placed the baseline 10 per cent tariff on Turkish exports to the US.“All of this is relatively constructive,” Şimşek said. “When the dust settles, we hope and believe Turkey could positively decouple” in investors’ eyes from more troubled emerging economies in Asia and elsewhere.Last year, bilateral trade with the US totalled $32bn, about 5 per cent of Turkey’s overall trade in goods, with a $1.5bn surplus in Turkey’s favour, according to US data.Şimşek’s economic programme faced its harshest test yet last month following the arrest of Istanbul mayor Ekrem İmamoğlu, the country’s star opposition politician and biggest rival to Erdoğan, sending Turkish financial markets plummeting.“There was a large but brief impact from domestic political-driven turbulence. Now [the turbulence] is tariff-driven,” Şimşek said in an interview.“In relative terms, our vulnerability is not so bad. We may have to live with softer growth. But what is, is: you have to live with external shocks such as these [US tariffs],” he said.İmamoğlu’s detention led to Turkey’s largest street protests in over a decade and forced the central bank to raise interest rates and spend billions to support the currency.İmamoğlu denies the corruption charges, with critics decrying his arrest as evidence of Erdoğan’s increasing authoritarianism. Government officials have said it shows that nobody is above the law.The lira has since stabilised and most analysts concur the country has got through the worst of that bout of market instability, although at the price of keeping interest rates high. Inflation fell to 38.1 per cent in March, compared to its peak of 75 per cent last May. Interest rates are currently 42.5 per cent.Although expected to hold rates this month, Turkey’s central bank is benefiting from “normalisation in domestic dollarisation and non-resident outflows following strong pressure on reserves in the first three days” following İmamoğlu’s arrest, Barclays analysts said in a note.Şimşek conceded that a slowing Turkish economy would mean lower tax revenues and this “could lead to wider budget deficit” than forecast. But, Şimşek stressed, the main point of a small fiscal deficit was to help the central bank get inflation down and not to stop Turkish debt rising, which is only around 25 per cent of GDP. The budget deficit had been forecast to fall to 3.1 per cent of GDP this year, from 4.9 per cent in 2024.“We will maintain spending discipline regardless,” he said. “Big picture, we can live with this.”Şimşek is viewed as a cornerstone of Turkey’s return to economic orthodoxy after the cheap credit policies previously favoured by Erdoğan brought runaway inflation and a balance of payments crisis.Many investors and analysts also believe that the recent market ructions have strengthened the position of Şimşek and other reformers in government, as their programme provides Erdoğan with an economic bedrock.“As long as Şimşek stays I think the market should provide an anchor against political instability,” Tim Ash, a long time Turkey watcher and sovereign strategist at RBC Bluebay Asset Management, wrote in a recent blog.Longer term, however, there are concerns that weak rule of law and continuing political instability could weigh on Turkey’s economy.Şimşek declined to talk about politics but said he was “all in favour of the rule of law, achieving price stability, enhancing predictability [and] improving the investment climate. Those are music to my ears.”Additional reporting by Joseph Cotterill in London 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 Americas, your early morning business briefing. We are planning a reader Q&A to mark the first 100 days of Donald Trump’s second term in the White House and need your help. Email your questions to [email protected]. Now, on with today’s newsletter:US-China tensions risePeter Navarro defends Trump’s tariffsEric Schmidt buys £42mn London mansionAnd the dilemma facing the FedChina has vowed to “fight to the end” if the US introduces threatened tariff increases, escalating trade tensions between the world’s two biggest economies. Here’s what you need to know. What did China say? The commerce ministry today said it would further retaliate if Donald Trump carries through on his threat to impose an additional 50 per cent tariff on Chinese goods. Beijing’s warning follows a threat from the US president yesterday that he would introduce the additional tariff unless China dropped its threat to impose a 34 per cent levy on US imports. The proposed tariffs from Washington would take US duties on Chinese imports to more than 120 per cent, according to some estimates. Has China taken any other measures? Beijing backed up the threat of retaliation by fixing the exchange rate of its currency, the renminbi, at Rmb7.20 per dollar — the lowest since September 2023. The fixing rate is the centre point of the band in which the currency is allowed to trade and is set by the People’s Bank of China. A weaker renminbi makes Chinese goods cheaper abroad but risks capital outflows and undermining economic stability at home.What has been the reaction of other countries to Trump’s trade threats? National Economic Council director Kevin Hassett yesterday said the White House was in touch with 50 countries that were seeking trade deals with the US. Japan emerged as the first major economy to secure priority tariff negotiations with Trump. The US president said last night on his Truth Social platform that he had spoken to Japan’s Prime Minister Shigeru Ishiba, triggering a 7 per cent surge in Tokyo-listed stocks earlier today. Treasury secretary Scott Bessent and US trade representative Jamieson Greer will lead the negotiations with Tokyo. Israel’s Prime Minister Benjamin Netanyahu and US commerce secretary Howard Lutnick discussed the Trump tariffs on Israel on Sunday, it was revealed yesterday.Billionaires lambast Trump: In an FT interview, Ken Langone, the co-founder of Home Depot, has become the latest wealthy backer of the Republican party to criticise Trump’s trade policy. 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:Congress: US trade representative Jamieson Greer testifies before the Senate finance committee on Trump’s trade policy.Companies: Walgreens is expected to report second-quarter results after it agreed to be taken private by Sycamore in a $10bn deal. Walmart holds its annual investment community meeting in Dallas, and Boeing will release order and delivery numbers for March.US interest rates: Federal Reserve Bank of San Francisco president Mary Daly speaks at an event at Brigham Young University Marriott School of Business, in Provo, Utah.Five more top stories1. Global stock markets regained some ground today after three sessions of steep declines and acute volatility. European stocks rose in morning trading and Asian markets ended in positive territory. Futures contracts suggest the S&P 500 and Nasdaq Composite will both open higher. For the latest market moves go to our live blog. Treasuries drop: US government debt sold off sharply yesterday as hedge funds cut down on risk in their strategies.Unhedged: For investors who are rational and lucky enough to be sitting on cash or short-term bonds, the prospect of further declines will have them thinking of buying, not selling. When do you buy the dip?2. Wall Street traders are expected to report their best quarter in more than a decade after choppy markets during the Trump administration’s first months helped salvage an underwhelming performance by investment bankers. Market volatility in the first quarter has boosted traders but hampered corporate mergers and new stock market listings. Here’s more on what to expect when banks report earnings later this month.3. Trump has announced that the US would hold direct talks with Iran on curtailing Tehran’s nuclear programme, in a sign of possible progress in one of the Middle East’s most intractable problems. The US president said the “very high level” talks would take place on Saturday. Here’s more on what to expect from the talks.4. Eric Schmidt bought a double-fronted, stuccoed Holland Park mansion for almost £42mn last May, according to UK property records and people familiar with the matter. The former Google chief is the latest to join a surge of US buyers at the top end of the London property market. Read why Americans are investing in the capital’s prime residences.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.Today’s big read© FT montage; Dreamstime; Getty ImagesTrump’s decision to impose different tariff rates on countries around the world has created huge uncertainty for companies exporting goods to the US. To reduce the burden, companies will be seeking to reorder their supply chains to reduce the impact of so-called rules of origin regulations. Peter Foster explains how the rules work.We’re also reading . . . Peter Navarro: “A trade system where [the US] faces higher tariffs, steeper non-tariff barriers and no viable path to resolution is nothing more than an ‘honour system’,” argues Trump’s senior counsellor for trade and manufacturing.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.Fox News: As rightwing critics slam Trump’s tariffs, the conservative news network has other priorities. Nintendo: The new Switch 2, due for release later this year, carries the hope of a company and a sector but has been thrust into a growing trade war.Chart of the daySome content could not load. Check your internet connection or browser settings.The US Federal Reserve faces a dilemma: cut interest rates to prevent an economic slowdown or keep them high to stave off inflation. “The Fed is in an exceptionally difficult position right now,” said one economist the FT spoke to for this article on the outlook for US interest rates. Take a break from the news . . . Children of Radium, the novelist and poet Joe Dunthorne’s family memoir, is an interrogation of his great-grandfather’s life story, taking in Nazi Germany, 1930s Turkey and the world of chemical weapons.The memorial at the site of the Sachsenhausen concentration camp in Oranienburg, north of Berlin More

Unlock the Editor’s Digest for freeRoula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.Some content could not load. Check your internet connection or browser settings.MarketsThe stock market has dipped sharply in the early days of Donald Trump’s second term as president, the deepest sell-off since the early days of Barack Obama’s first term, at the height of the global financial crisis.Some content could not load. Check your internet connection or browser settings.The Vix index is a measure of investor expectations for volatility in the US stock market over the next 30 days. The index’s long-term average is slightly below 20. Levels above 25 point to expectations of heightened turbulence, implying daily swings of more than 1.5 per cent in the S&P 500. A rise in the Vix above 30 is typically associated with extreme volatility and has only happened a handful times in the past few years.Some content could not load. Check your internet connection or browser settings.The US dollar index is a measure of the value of the currency relative to a basket of other currencies. The index heads upwards when the dollar strengthens against these currencies and downwards when it weakens.Some content could not load. Check your internet connection or browser settings.EconomyThe US has outpaced its G7 peers in economic growth in both the short term and longer term.Some content could not load. Check your internet connection or browser settings.Annual change in US CPI peaked at 9 per cent in 2022, placing it in the middle of the G7 pack, but inflation remains stubbornly sticky.Some content could not load. Check your internet connection or browser settings.Industrial production has been sluggish and sentiment in the industry has vacillated in recent years.Some content could not load. Check your internet connection or browser settings.Federal employment features cyclical jumps due to the decennial census, but still represents a small share of overall employment.Some content could not load. Check your internet connection or browser settings.Additional development by Caroline Nevitt and Eade Hemingway More

A big hit to portfolios would be felt acutely by higher-income Americans, whose spending has recently been the biggest driver of the economy.This time, maybe the stock market is the economy.Financial markets around the world have plummeted in the days since President Trump announced sweeping tariffs, setting off a global trade war. The S&P 500 declined more than 10 percent in two days last week, and it swung wildly on Monday amid news of further tariffs and rumors of delays. Stock indexes in Asia and Europe have fallen sharply as well.Experts often caution that the stock market can be a misleading measure of the broader economy. Share prices can move for a host of reasons — technological developments, shifts in consumer preferences, changes in tax or interest rate policy.Sometimes, though, the markets carry an economic message — and in recent days, they have been speaking unusually clearly. Investors overwhelmingly believe that Mr. Trump’s tariffs, and retaliation from U.S. trading partners, will lead to higher prices, slower growth and possibly a global recession.Plunging stock prices may not just reflect fears of a recession. They may also help cause one, as consumers pull back spending in response to their portfolios’ evaporating value.A few days of turmoil might not matter much, said Ryan Sweet, chief U.S. economist at Oxford Economics, a forecasting firm, “but if the drop in the stock market persists for a few weeks, a couple months, the economic costs begin to quickly mount.”The direct effects of tariffs will fall hardest on low- and moderate-income consumers, who tend to spend more of their money on food, clothing and other goods subject to duties, and who have less savings to insulate them from higher prices. But market declines will be felt most acutely by higher earners, who own a disproportionate share of stocks and other investments.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

<!–> –><!–> [–><!–> –><!–> [–><!–> –><!–> [–><!–>The other was Canada, which last month placed tariffs on a variety of U.S. goods. The European Union, while signalling that it would prefer to negotiate, is said to be working to finalize a list of U.S. goods that it would target.–><!–> –><!–> [–><!–>Other economies — even large ones […] More

Dozens of foreign governments were trying to appeal to the president to have steep tariffs rolled back, but the president and his advisers have indicated negotiations could be difficult.President Trump’s plan to impose sweeping tariffs on most of America’s trading partners has governments across the globe racing to schedule phone calls, send delegations to Washington and offer up proposals to lower their import taxes in order to escape the levies.On Monday, European officials offered to drop tariffs to zero on cars and industrial goods imported from the United States, in return for the same treatment. Israel’s prime minister was expected to personally petition Mr. Trump on Monday in meetings at the White House. Vietnam’s top leader, in a phone call last week, offered to get rid of tariffs on American goods, while Indonesia prepared to send a high-level delegation to Washington, D.C., to “directly negotiate with the U.S. government.”Even Lesotho, the tiny landlocked country in Southern Africa, was assembling a delegation to send to Washington to protest the tariffs on its exports to the United States, which include denim for Calvin Klein and Levi’s.Mr. Trump and his advisers have given mixed signals on whether the United States is willing to negotiate. On Sunday, Mr. Trump said that the tariffs would remain in place until U.S. trade deficits disappeared, meaning the United States is no longer buying more from these countries than it sells to them. But the administration still appeared to be welcoming offers from foreign nations, which are desperate to try to forestall more levies that go into effect on Wednesday.On Monday, as markets recoiled for a third day and Mr. Trump threatened even more punishing tariffs on China, the president said that “negotiations with other countries, which have also requested meetings, will begin taking place immediately.”“Countries from all over the World are talking to us,” the president wrote on Truth Social on Monday morning. “Tough but fair parameters are being set. Spoke to the Japanese Prime Minister this morning. He is sending a top team to negotiate!”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

Peter Navarro, a senior White House trade adviser, on Monday defended the sweeping tariffs President Trump has imposed on foreign nations and indicated that other countries’ offers to drop their own tariffs on American products would be insufficient to convince the president to retreat.Mr. Navarro, who has been the architect of many of President Trump’s trade plans, said on CNBC that the United States was facing a national emergency based on chronic trade deficits, and the only fix would be foreign countries removing trade barriers that had hindered the flow of American goods.The European Union offered Monday to drop its tariffs on American cars and industrial goods to zero if the United States did the same. But Mr. Navarro criticized the bloc for its value-added taxes and restrictions on American meat exports, as well as systematically higher tariffs.“You steal from the American people every which way is possible,” Mr. Navarro said. “So, don’t just say we’re going to lower our tariffs.”Mr. Navarro also targeted Vietnam, which has appealed to the president in recent days to have its tariffs reduced. He accused Vietnam of dumping products into U.S. markets, engaging in intellectual property theft and killing industries like shrimp, kitchen cabinets and others.“When they come to us and say, we’ll go to zero tariffs, that means nothing to us, because it’s the non-tariff cheating that matters,” Mr. Navarro said.But Treasury Secretary Scott Bessent, who, with Jamieson Greer, the United States trade representative, was put in charge of negotiations with Japan, signaled in an interview later in the day that Mr. Trump is ready to negotiate. “President Trump, as you know, is better than anyone at giving himself maximum leverage,” he said. Mr. Bessent said he had suggested that foreign officials “keep your cool, do not escalate and come to us with your offers.” He added: “And at a point, President Trump will be ready to negotiate.”In the CNBC interview in the morning, Mr. Navarro said that tax cuts were forthcoming, as well as other benefits for Americans, like deregulation, lower energy prices, lower interest rates and the restructuring of manufacturing.“We’re going to get to a place where America makes stuff again, real wages are going to be up, profits are going to be up,” he said, adding, “the market’s going to find a bottom.” Stock markets closed slightly lower Monday, following two days of punishing losses last week.He was also asked about Elon Musk’s very public criticism of tariffs and of Mr. Navarro specifically over the weekend. Responding to a social-media post praising Mr. Navarro, Mr. Musk on Saturday mocked Mr. Navarro’s Ivy League degree as useless, and then said Mr. Navarro had not “built” anything.On Monday, Mr. Navarro said that Mr. Musk was “not a car manufacturer” but “a car assembler,” mentioning that Tesla’s plant in Texas imported batteries, electronics, tires and other parts. “He wants the cheap foreign parts, and we understand that,” he said. More

President Trump said on Monday that he does not plan to pause a slate of expansive tariffs set to take effect later this week, as he threatened to subject Chinese imports to a staggering 104 percent tax in a bid to ward off retaliation by Beijing and other powers.Mr. Trump issued his warning on a day when the White House once again found itself on the defensive for its spiraling global trade war. But the president insisted he remained unbowed by the widening range of governments pleading for relief and the markets convulsing anew over the chaos and confusion.“We’re not looking at that,” Mr. Trump said, when asked about a possible pause on his tariffs. “We’re going to have one shot at this and no other president is going to do what I’m doing.”Mr. Trump began the day by drawing new battle lines over his so-called reciprocal tariffs, which he plans to impose on certain countries after midnight on Wednesday. The taxes, which can reach as high as 46 percent for some nations, will snap into effect just days after the president imposed a minimum 10 percent levy on nearly every U.S. trading partner.Mr. Trump specifically targeted China, which announced last week it would match the United States by imposing a retaliatory 34 percent tax on imports from America. In a post on Truth Social, the president demanded that Beijing rescind its retribution or face an additional 50 percent U.S. tariff beginning April 9. He also threatened to halt any further negotiations.The escalation could bring the U.S. tariff on Chinese goods to 104 percent, though for some products, the rate is likely to be much higher because of levies that date back to Mr. Trump’s first term. Taken together, it could prove costly for importers bringing in clothing, cellphones, chemicals and machinery from China. American consumers last year bought $440 billion of goods from China, making it the second-largest source of U.S. imports after Mexico.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