Economy

Unlock the Editor’s Digest for freeRoula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.France, Ireland and Europe’s powerful farming unions are pushing Brussels to drop many food and drink products from its proposed retaliation against US tariffs.The European Commission has received floods of objections from business and member states to its list of measures, underlining how the 27 member block might struggle to respond collectively to US pressure.Jack Chambers, Ireland’s public expenditure minister, warned against “retaliatory and tit-for-tat measures that could worsen a trade dispute” on Friday while Italian prime minister Giorgia Meloni told the FT the EU should negotiate over its high duties on some items. “There are big differences on the single goods,” she said. “That’s what we have to work on to find a good, common solution.”Her agriculture minister Francesco Lollobrigida also called for talks, saying: “We fear any further burden that will create more difficult conditions [for wine exports]. But we aren’t terrified.” France, Italy and Ireland were spooked after the commission announced tariffs of 50 per cent on bourbon whiskey in response to US levies of 25 per cent on steel and aluminium. Donald Trump threatened to hit back with 200 per cent tariffs on European drinks including wine, champagne and whiskey.In response Paris requested Brussels delay the measures from April 1 until mid-April to create space for talks. However, EU officials say that attempts to negotiate have made little progress. Rather than heed overtures, this week Trump went further with 25 per cent tariffs on cars. He also confirmed that April 2 would be “Liberation Day” with sweeping levies on all goods, on top of existing tariffs. The EU’s top negotiator told colleagues he expects to have to pay at least 20 per cent.  The package of tariffs on €26bn of US imports will be put to member states for approval to take effect on April 12. With its proposals the commission published a 99 page list of possible targets — from soyabeans to beauty products and underwear — with companies and governments able to object until March 26 before the final list is produced. Peter Burke, Irish trade minister, told parliament this week that the “government has made our concerns clearly known to the EU including in relation to the dairy and spirit drinks sectors”.He said the EU was “open to fine-tuning its rebalancing measures so that they strike the right balance of products, taking into account the interests of EU producers, exporters, and consumers”. The spirits industry has also called for bourbon to be exempted, while the EU timber industry wants wood taken off the list for fear of retaliation, one industry figure said. It exports about three times more than it imports.Copa-Cogeca, which represents farmers, is pushing to remove soyabeans, which are vital to feed animals. “Agrifood sector should be kept out of the scope of the retaliation or any disputes that don’t concern it,” a spokesperson said.“Many EU countries have a deficiency in production of raw materials for animal feed and therefore any imposition of additional tariffs on key products such as: maize, soyabeans and distillers dried grains with solubles would seriously hinder the livestock production and create market disruption and price increases for consumers.” Diplomats say the commission has considerable sway on such trade proposals as it would take a weighted majority of member states to block its plan in a vote.“It’s not surprising that governments are doing this — they are standing up for their interests,” said one European diplomat.“But I am confident that there is going to be a strong package from the commission that will be approved. If we block this then we are screwed — and member states know that.” More

Capping a week of courting the world’s top CEOs, China’s President Xi Jinping on Friday made one of his most impassioned defences yet of international trade, as the system of globalised supply chains that helped catapult China to economic superpower status teeters on the brink.Just days before Donald Trump’s self-declared “liberation day” on April 2, when the US president is set to unleash a new wave of tariffs on America’s trading partners, a smiling Xi led a group of more than 40 global business leaders into an ornate room in Beijing’s Great Hall of the People.Without naming the US, Xi told his guests, who ranged from HSBC’s Georges Elhedery and Mercedes-Benz’s Ola Källenius to Saudi Aramco’s Amin Nasser and Toyota’s Akio Toyoda, that some countries were “weaponising” trade and “forcing companies to take sides and make choices that go against economic principles”. “We must jointly maintain the multilateral trading system, jointly maintain the stability of the global industrial chain,” he said. The meeting with the business leaders followed a week in which China hosted its most important annual business summits: the China Development Forum in Beijing and the Boao Forum for Asia in the tropical resort island of Hainan. The message at both was that, compared with Trump’s chaotic policymaking, Beijing was a bastion of stability and a champion of the global trading system from which it — arguably more than any other country — had benefited and upon which it was still heavily reliant. Show video infoTrump has threatened to impose sweeping “reciprocal” tariffs on America’s trading partners on Wednesday. The US is due on Tuesday to conclude extensive investigations into its trade with China as well as Beijing’s industrial policy, subsidies and diversion of trade through other countries.Analysts said many foreign trading partners have soured on China in recent years, accusing it of running up huge surpluses while erecting barriers to its domestic market. But Trump’s threats to globalisation have made international business more receptive to Beijing’s message.“China after all is quite stable — there are no surprises in policymaking,” said Denis Depoux, global managing director at consultancy Roland Berger, who attended the Beijing and Bo’ao forums. “Maybe because the rest of the world has become chaotic, so China looks better than before.”At the annual meeting of China’s rubber stamp parliament this month, leaders sought to shore up that image of stability with an ambitious GDP annual growth target of 5 per cent, backed by plans for a record central government budget deficit.“If you’re wanting to ask about China and its place in the globe, in the world, what I’m witnessing is a quiet resoluteness, that they believe they’re on the right path,” said Andrew Forrest, the Australian mining billionaire who also attended both forums. “No matter the changes in the external environment, China will open wider to the world,” vice-premier Ding Xuexiang, a member of the elite standing committee of the Communist party’s governing politburo, assured those gathered in Bo’ao.Some content could not load. Check your internet connection or browser settings.China’s relative stability and recent successes with advanced technology — such as the emergence of its DeepSeek artificial intelligence software — have emboldened some scholars to proclaim its party-led, state-driven development is a superior model for the so-called “global south” of non-aligned developing countries. “Western modernisation . . . is very exclusive,” Zheng Yongnian of the Chinese University of Hong Kong, Shenzhen told a panel discussion on the global south in Bo’ao. “The west doesn’t help other countries, poor countries, to develop.”Zheng said that the west instead put pressure on poor countries over issues such as human rights. “Chinese modernisation, I give it a name, I call it . . . open source modernisation,” he said. “When you get rich, you help other countries to get rich.”But China also has its own urgent reason for defending the global trading system: its acute dependence on exports for growth. It is a reliance that critics argue is partly to blame for the US trade backlash. Although now the world’s second-largest economy, China’s chronic lack of domestic demand contributed to a record trade surplus of almost $1tn with the rest of the world last year, which alarmed not only the US but also the EU and some large developing countries. ‘China will open wider to the world,’ Ding Xuexiang told the Boao Forum More

Unlock the White House Watch newsletter for freeYour guide to what the 2024 US election means for Washington and the worldThe Trump administration has sent a letter to some large French companies warning them to comply with an executive order banning diversity, equity and inclusion programmes.The letter, sent by the American embassy in Paris, stated that Trump’s executive order applied to companies outside the US if they were a supplier or service provider to the American government, according to a person familiar with the matter.The embassy also sent a questionnaire that ordered the companies to attest to their compliance. The document, which the Financial Times has seen, is titled “certification regarding compliance with applicable federal anti-discrimination law”. The document says “Department of State contractors must certify that they do not operate any programs promoting DEI that violate any applicable anti-discrimination laws and agree that such certification is material for purposes of the government’s payment decision and therefore subject to the False Claims Act.”The documents appear to signal that the Trump administration is widening its campaign against DEI to foreign companies after launching a crackdown against US media groups such as Disney. A senior banker in Paris said he was shocked by the letter. “It’s crazy . . . but everything is now possible. The rule of the strongest now prevails.”The French finance ministry expressed concerns after some of the companies involved notified it about the move. “This practice reflects the values of the new US government. They are not the same as ours,” said a person close to France’s economy minister Eric Lombard. “The ministry will remind his counterparts in the US government of that.”The existence of the letter was first reported by Les Échos newspaper.The extraterritorial move by the US comes amid heightening tensions between the Trump administration and Europe over economic and security policy as nation pivots away from its traditional allies, especially on trade and Russia’s full-scale invasion of Ukraine. Trump this week imposed an additional 25 per cent levy on auto sector imports into the US and has increased tariffs on European steel and aluminium imports. The EU is working on reciprocal tariffs in response, but has not yet decided which products to target.Top Trump officials’ attitude towards Europe was cast into stark relief this week when messages about US attack plans in Yemen were leaked to American media. “I just hate bailing Europe out again,” vice-president JD Vance wrote in a Signal chat group. “It’s PATHETIC,” responded defence secretary Pete Hegseth.France has not traditionally been a place where DEI programmes have taken root because of legal limitations on the collection of racial and ethnic data. Employers are not allowed to factor people’s origins into hiring or promotion decisions. But French companies that are potentially exposed to the US demands include aviation and defence groups, consulting providers and infrastructure companies. The FT could not immediately determine which companies had received the letter.According to Les Échos, the letter concluded: “If you do not agree to sign this document, we would be grateful if you could kindly provide us with detailed reasons, which we will forward to our legal department.” More

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

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

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

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

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

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

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

The report came the same day the Commerce Department said the core inflation rate increased to 2.8% in February, after a 0.4% monthly gain that was the biggest move since January 2024.
The latest results also reflect worries over the labor market, with the level of consumers expecting the unemployment rate to rise at the highest level since 2009.
Stocks took a hit after the university’s survey was released, with the Dow Jones Industrial Average trading more than 500 points lower.
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