Economy

Sweeping tariffs on imports from Canada, Mexico and China went into effect just after midnight on Tuesday, raising U.S. tariffs to levels not seen in decades and rattling foreign governments and businesses that depend on international trade.As of 12:01 a.m. Tuesday, the Trump administration added a 25 percent tariff on all imports from Canada and Mexico. The administration also added another 10 percent tariff on all imports from China. That comes on top of a 10 percent tariff on Chinese goods put into effect just one month ago and a variety of older levies, including those that remain from the China trade war in Mr. Trump’s first term.The tariffs will make good on President Trump’s campaign promise to rework America’s trade relations, and they are likely to encourage some manufacturers who want to sell to American customers to set up factories in the United States, instead of other countries.But by altering the terms of trade between the United States and its largest economic partners, the tariffs will also probably rattle supply chains, strain some of the country’s most important diplomatic relationships and add significant costs for American consumers and manufacturers.Canada, Mexico and China are the three largest trading partners of the United States, accounting for more than 40 percent of both U.S. imports and exports last year. The three countries supply the bulk of crude oil, beer, copper wire, toilet paper, hot-rolled iron, cucumbers and chocolate imported by the United States, as well as a dizzying array of other products. More

This article is an on-site version of our Trade Secrets newsletter. Premium subscribers can sign up here to get the newsletter delivered every Monday. Standard subscribers can upgrade to Premium here, or explore all FT newslettersAnother week in which we’re on the brink of the biggest trade war since the 1930s and it’s not even in the top two issues facing the world. The US has switched geopolitical sides and is now backing Russia against western Europe on Ukraine. The dismantling of America’s federal government and the country’s guardrails against autocracy continues apace. And you’re telling us the North American auto industry might grind to a halt? Get in line and wait your turn, dude. In today’s newsletter I’ll look at the threats that have returned against Canada and Mexico, and also reflect on a truly boneheaded bit of policymaking, the UK’s decision to savage its aid budget. The Charted Waters section, which looks at the data behind world trade, is on the recent performance of US stock markets.Get in touch. Email me at [email protected] week it’s Mexico and Canada. We think.In case you’ve lost track, let me sum up. Tomorrow (March 4), the suspension of the 25 per cent tariffs on Canada and Mexico a month ago will expire. On March 12, the 25 per cent global tariffs on steel and aluminium imports are due. In early April, the bogus “reciprocal” tariffs will apparently be unveiled. Also Trump says he’ll put 25 per cent tariffs on EU imports, which may or may not be the “reciprocal” ones. And on Saturday he announced a new investigation into the national security implications of relying on timber (known as “softwood lumber”) from Canada, escalating a long-standing US-Canada trade dispute. Trump has previously said he’s looking at tariffs on softwood lumber of — wait for it — 25 per cent, his go-to number.I appreciate all the attempts to analyse these instruments systematically, but that implies a degree of coherence I don’t think the process has. In Trump’s mind they clearly all blur into each other. Last week, he said the Mexico and Canada import taxes would be imposed in April. White House officials subsequently tried to clarify what he meant, but they didn’t seem to know either. I said the Trump presidency would be very hard on news reporters, and kudos to Reuters and Bloomberg for accurately reporting the chaos rather than logic-washing it.Anyway, the idea subsequently emerged from the fog that the Mexico and Canada tariffs are back on for tomorrow, though possibly at less than the original 25 per cent, together with another 10 per cent on China. But the administration has moved on from pretending the levies are merely aimed at fentanyl and immigration. With respect to fentanyl, Reuters quoted commerce secretary Howard Lutnick last week as saying: “They have to prove to the president that they’ve satisfied him in that regard. If they have, he’ll give them a pause, or he won’t.” All clear? Good.On cue, a new potential condition for holding off the tariffs has miraculously appeared. Treasury secretary Scott Bessent has had another bright idea after his wheeze for gradual tariffs was rejected. He now says Canada and Mexico should build a “Fortress North America” — his actual chosen expression, not a pejorative description — by joining the US in putting import taxes on goods from China. Will this forestall the tariffs tomorrow? “We’ll see.”While there’s no reliable logic in all these real and threatened actions, there’s certainly a consistent pathology. Trump trade policy is a stew of multiple flavours of tariff spiced with illogical and shifting rationales and steeped in a simmering broth of protectionism and resentment. Anyone in the administration can try adding something to the pot, though what actually gets served up on any given day is at the whim of the president.So how to respond? Last month, Mexican President Claudia Sheinbaum and Canadian Prime Minister Justin Trudeau did a pretty good job of threatening to retaliate and instead agreeing a symbolic deal on fentanyl. But what Bessent (who claims Mexico is already on board) is asking for is much more dangerous — essentially to copy and paste US tariff policy towards China at the whim of Washington.There is alarming precedent for this. Under pressure from the White House, Canada last year matched the Biden administration’s tariffs (it called them “surtaxes”, which fooled no one) on Chinese electric vehicles, steel and aluminium. While the Biden administration worked in a more logical and predictable way than does Trump, the episode shows the damage it did, normalising coercive protectionism and encouraging the likes of Canada to join the US in showing disdain for WTO rules. Trump’s plans are a progression from Biden’s actions rather than a pure aberration. There’s a temptation to give Trump what he wants provided it’s limited to a few products. But why would Sheinbaum or Trudeau think it would end there? Why imagine that any deal with Trump will stick? The fentanyl deal has lasted just a month. Ironically enough, given the opioid connection, going along with Trump is like joining a drugs gang — there’s the risk you have to keep doing crazier stuff to show your loyalty, and then you’re in too deep to leave. It’s a bit harsh expecting Canada and Mexico to provide a practical demonstration of just how damaging Trump’s tariffs will actually be by simply refusing to go along. But if Trump is really prepared to risk the US economy by imposing high and sweeping tariffs, it’s hard to see that the stress test can infinitely be put off.The UK’s shameful retreat on aidIt’s been a very good week indeed for British Prime Minister Sir Keir Starmer. First, he apparently dodged Trump’s wrath over trade. Then he dealt with the fallout from the Trump-Zelenskyy catastrophe, hosting a summit at which Europe, at least rhetorically, showed itself united behind supporting Ukraine.But given Trade Secrets’ interest in aid and development, I can’t let pass his truly awful decision to cut overseas development assistance (ODA) from 0.5 per cent to 0.3 per cent of gross national income (GNI), ostensibly to fund increasing defence expenditure. Rather than systematically look at defence and development in the forthcoming spending review, it just shifts money from one arbitrary input target to another.It was a plan sprung at the last minute on the UK’s development minister, who quit on principle with one of the better resignation letters in UK politics. Less than three weeks earlier, UK foreign secretary David Lammy was chiding the US for cutting aid.The cynical, performative decision to sacrifice aid is a long way from the Tony Blair and Gordon Brown Labour governments, which assembled a coalition including campaigners, the military, celebrities and faith groups to build the case for ODA reaching 0.7 per cent of GNI. Brown, having also attacked Elon Musk for the US aid cuts, was rather more silent last week on his own party’s actions. The UK’s development campaigner community is currently in shock, not having seen this coming at all.So what happened since the last Labour government? Last week, just before the announcement was made, I talked on the FT’s Economics Show podcast with Minouche Shafik, former permanent secretary at the Department for International Development (also ex-IMF, World Bank, Bank of England, you name it). She was exceedingly gloomy that we could ever get back to the situation of 15-20 years ago, and cited the backlash against globalisation, fiscal pressures and a zero-sum view of international relations.That’s no doubt all true, but I can’t help feeling that the obsession with focusing on the volume of aid was unhelpful from the beginning. It meant huge amounts of effort going into meeting after meeting where ministers would make pledges of uncertain credibility. Brown in particular induced increasing cynicism with endless “bold new initiatives” that usually involved repackaging the same money.There wasn’t enough focus at the top of government on what the aid was doing or its quality. When the Conservatives started to cut ODA as a share of GNI, they began by diluting its definition, a process that has steadily worsened. Almost half of British “foreign aid” will now be spent within the UK, on housing and processing refugees.On this I think Shafik is right — we’re not going back to the days when aid had automatic public and political backing and it was just a question of pumping up the volume. Support for ODA will need to be built up again by showing what it can achieve. But it’s hard to imagine that happening under a government that treats the whole issue with such casual contempt.Charted watersIf it’s true that Trump’s policy is driven by movements in the stock market, he’s likely to be pretty concerned by the fall in US share prices in February. The fact that he’s still threatening tariffs despite this suggests the situation’s a bit more complicated than that.Trade linksThe FT reports that foreign exchange markets are increasingly dismissive of Trump’s threats over tariffs, suggesting possibly dramatic movements if he does impose them on a big scale.China’s ecommerce suppliers are rethinking how they do business after Trump temporarily stopped the tariff-free “de minimis” allowance and is threatening to end it permanently.Columbia University’s Petros Mavroidis argues in a paper for the think-tank Bruegel that Trump’s “reciprocal” tariffs aren’t actually reciprocal and are a terrible idea.Matina Stevis-Gridneff of the New York Times reports from the US-Canada border, where immigrants are increasingly coming out of the US rather than into it.Georgetown University’s Jennifer Hillman argues that the International Emergency Economic Powers Act (IEEPA) that Trump is using to impose most of his tariff plans is illegal, since Congress has not delegated the use of such broad powers to the president.The South China Morning Post looks at China’s new diplomatic strategy to bring the EU closer, arguing to European policymakers that the US has abandoned them.Trade Secrets is edited by Harvey NriapiaRecommended newsletters for youChris Giles on Central Banks — Vital news and views on what central banks are thinking, inflation, interest rates and money. 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Unlock the Editor’s Digest for freeRoula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.Turkish inflation dipped below 40 per cent for the first time in 20 months as higher interest rates curbed consumption, setting the stage for the central bank to continue cutting borrowing costs when it meets this week.  Annual consumer price inflation slowed to 39.1 per cent in February, data from the Turkish Statistical Institute (TÜİK) released on Monday showed, down from 42.12 in January and in line with economists’ forecasts. This was the ninth successive monthly fall and the lowest level since June 2023. A decline in clothing prices and healthcare costs were the main factors in the slower inflation rate, the data showed. Turkey’s benchmark one-week repo rate is 45 per cent, and the central bank is expected to reduce it by 250 basis points when its monetary policy committee meets on Thursday, according to a Bloomberg survey.The bank has already cut the policy rate by 5 percentage points since December, saying that weaker consumer demand and expectations that prices would eventually come down had encouraged policymakers.The bank began sharply raising rates in June 2023 after Recep Tayyip Erdoğan, Turkey’s president, was re-elected and abandoned his policy of ultra-low borrowing costs to spur economic growth. Inflation peaked at 86 per cent in October 2022.But the long-running cost of living crisis is still causing pain in Turkish households, especially those earning the minimum wage, which is a net 22,105 lira ($606) a month.About 60 per cent of workers and pensioners in Turkey earn the minimum wage or within 15 per cent of it, according to Uğur Gürses, an economist and former central banker.“Very high inflation has eroded the disposable income of households [and hit] consumption. It will take more time for people who are still saying ‘our livelihood has not improved,’” Gürses said.  The inflation data follows the release of figures that showed the economy expanded by a faster-than-expected 3.2 per cent in 2024. A rise of 1.7 per cent in GDP in the fourth quarter brought Turkey out of technical recession after contracting in the previous two quarters, according to TÜİK.Mehmet Şimşek, the finance minister who was brought back into Erdoğan’s cabinet following the election, on Friday credited the “predictability” of the government’s policies and falling inflation for the growth uptick, saying investor confidence would continue to boost economic activity.Gürses said the moderate growth and downward inflation trend showed that the central bank’s reach had “strengthened” and that it would “probably” lower rates by 2.5 percentage points this week and again next month. More

Unlock the Editor’s Digest for freeRoula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.Eurozone inflation has fallen for the first time in four months to 2.4 per cent, underpinning European Central Bank rate-setters’ hopes that the recent uptick in price pressures is proving temporary. The February figure, down slightly from the 2.5 per cent rise in prices recorded for the year to January, was slightly worse than economists’ expectations of a fall to 2.3 per cent, according to a Reuters poll. However, two measures of underlying inflation also ticked down, which economists said would bolster the ECB’s confidence in lowering borrowing costs. Core inflation, a measure that excludes changes in food and energy prices, was down to 2.6 per cent in February, from 2.7 per cent — a level it has hovered at since September. Services inflation, a core gauge for domestic price pressures, also fell from 3.9 per cent to 3.7 per cent — the lowest level since April 2024. “The ECB will be relieved to see service price inflation finally easing,” said Diego Iscaro, head of European economics at S&P Global Market Intelligence, adding that he expected weak growth to drag down price pressures further over the coming months. Tomasz Wieladek, an economist at T Rowe Price, argued that despite sticky headline inflation, “the details are better than expected” and provide “the green light for further ECB cuts”.The central bank is set to meet later this week, with rate-setters expected to cut the benchmark deposit rate by a quarter-point to 2.5 per cent. The central bank targets inflation of 2 per cent over the medium term. It has cut interest rates five times since June amid expectations of weaker growth. The region is heavily exposed to tariffs on exports to the US, which US President Donald Trump is set to introduce in the coming weeks. While investors still expect two additional rate cuts by the end of the year, some are bracing for a temporary pause in April after hawkish rate-setters warned that the ECB should not “sleepwalk” into too many cuts.Vincent Stamer, economist at Commerzbank, said lower service price inflation should lead to further declines in core prices, adding that the expected ECB rate cuts were “not in danger”. The euro, which had already been strengthening on the day, was up 0.8 per cent at $1.046.Executive board member Isabel Schnabel said last month that inflation risks were increasingly becoming “skewed to the upside”, while borrowing costs had eased a lot. Schnabel told the Financial Times that the central bank should “now” start to debate a “pause or halt” to rate cuts. 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 the working week. Thanks to all my colleagues who covered for me last week while I took a break. Here’s what’s on the agenda for today: Ukraine peace talks latest An exclusive Deutsche Bank storyCrypto prices jumpThe triumph of Anora at the OscarsAnd Utah’s new members-only ski resortDifferences have emerged between Britain and France over a peace proposal for Ukraine as the European allies try to salvage a diplomatic process that was left in tatters following Friday’s disastrous meeting between Volodymyr Zelenskyy and the US president and vice-president in the Oval Office.European leaders met in London yesterday to discuss ways to “stop the fighting” in Ukraine and build a “coalition of the willing” to secure a ceasefire. French President Emmanuel Macron told the Le Figaro newspaper that he and British Prime Minister Keir Starmer had proposed an initial truce between Russia and Ukraine “in the air, at sea and on energy infrastructure” that would last one month.But UK officials later said the one-month truce was not “a UK plan” and that there were “various options on the table”. Zelenskyy also rejected calls for Ukraine to agree an immediate ceasefire.The French and British leaders are hoping a deal would involve US cover for European troops deployed to secure any ceasefire in Ukraine. Starmer said after Sunday’s summit that while Europe “must do the heavy lifting”, the “effort must have strong US backing”.The European plan would also see Zelenskyy signing a proposed deal to provide the US with a share of revenues from some of Ukraine’s mineral reserves, giving Washington an economic stake in a peace settlement. Trump had wanted Zelenskyy to sign the agreement in Washington on Friday but it was left unsigned after Trump ejected the Ukrainian president from the White House following their dispute in the Oval Office.Vladimir Putin’s spokesman today said western unity was falling apart after Friday’s extraordinary spat. Dmitry Peskov said the argument showed Ukraine’s leader “doesn’t want peace, he wants the war to continue”, according to Interfax. Here’s more on the diplomacy to rebuild relations between Europe and America.More on the war in Ukraine: Shares in European defence companies jumped at the start of trading today as investors bet governments across the continent would have to raise their military spending. Nord Stream 2: An ex-Stasi officer and close friend of Vladimir Putin has been talking to US investors about restarting a gas pipeline linking Russia and Europe. More on that Oval Office meeting: The relationship between Donald Trump and Volodymyr Zelenskyy has been damaged beyond repair, writes Ben Hall.And here’s what else we’re keeping tabs on today:Tariffs: Postponed US tariffs of 25 per cent on imports from Mexico and Canada are due to take effect from midnight but commerce secretary Howard Lutnick said yesterday the president was still deciding on the level. Markets: The euro and European defence stocks were the biggest gainers as trading got under way in Europe and Asia. US stocks were expected to open flat when trading resumes later on today. Economic data: S&P Global releases February Manufacturing Purchasing Managers’ Index data for Canada and the US. The Bank of Mexico releases the results of its poll of private sector analysts’ predictions for growth, inflation and exchange and interest rates. Monetary policy: Federal Reserve Bank of St Louis president Alberto Musalem speaks on the US economy and monetary policy at an event in Washington.Jes Staley: The former Barclays chief executive will begin to try and clear his name and overturn a lifetime ban at a trial starting in London. The FT has been given a copy of Staley’s opening statement. Five more top stories1. Exclusive: Deutsche Bank clashed with the European Central Bank throughout 2024 over concerns the German lender may be underestimating how many loans would sour, people familiar with the matter told the Financial Times. The ECB flagged concerns over Deutsche’s credit risk management and its risk models on multiple occasions last year. Olaf Storbeck and Florian Müller in Frankfurt have more details.2. Eurozone inflation has fallen for the first time in four months to 2.4 per cent. The February inflation number, which is down from 2.5 per cent in the year to January, will underpin European Central Bank rate-setters’ hopes that the recent uptick in price pressures is proving temporary. This is a developing story.3. Anora, an independent film about a brief, ill-fated romance between a sex worker and the son of a Russian oligarch, took home the Best Picture prize along with four others at the 97th Academy Awards last night. Mikey Madison beat favourite Demi Moore to the Best Actress award for her role in the low-budget movie about the sex worker community. Christopher Grimes in LA has more.4. Cryptocurrency prices jumped yesterday after Donald Trump named the tokens that would be included in a US strategic reserve, providing a jolt to an industry that has cosied up to the White House. Crypto traders believe something akin to Fort Knox for gold would offer legitimacy to the asset class. Here’s more on the tokens on Trump’s list.5. Mark Walter, the billionaire chief executive of Guggenheim Partners, and Thomas Tull, the former owner of Legendary Entertainment, have formed a $40bn holding company to make large bets on artificial intelligence. Here’s more on the billionaires’ new venture.Today’s Big Read The Chevrolet Silverado has been one of America’s most popular pick-up trucks since it was launched almost three decades ago. But the General Motors model, which costs roughly $40,000-$70,000, relies on one of the most complex, international and interconnected automotive supply chains, meaning the iconic vehicle could now become one of the biggest victims of Donald Trump’s trade war.We’re also reading . . . US Congress: America’s first branch of government should be acting as a check on Trump’s power grab, writes our editorial board. Instead, it has been missing in action.Premier League: Richard Masters, chief executive of the world’s most-watched football league, speaks to the FT on keeping the peace between its 20 ultra-competitive clubs.Nuclear energy: Countries want to squeeze more electricity from ageing power plants to help meet global demand, but the strategy has its own challenges.Management: Elon Musk isn’t the first boss to ask staff to list top five things at work, writes Pilita Clark, just the worst.Chart of the daySome content could not load. Check your internet connection or browser settings.Wall Street has raced ahead of international rivals over the past decade and a half. But a recent pullback in tech shares has underlined the growing nervousness around soaring valuations in a market that has swallowed an ever larger share of global investors’ allocations. Stephanie Stacey and Mari Novik look back at the rise of the US stock market and assess the concentration risks worrying investors. Take a break from the news . . . Reed Hastings, the billionaire founder of Netflix, has created a members-only ski resort on Utah’s Powder Mountain. He is walking a gentrification tightrope — and a ski industry in flux is watching every step.Some of the homes at Powder Haven, the resort’s private enclave More

Unlock the Editor’s Digest for freeRoula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.There are some things in global finance which you really shouldn’t look at too closely if you value your sanity. Repo and money markets would definitely be one. But even the banking system’s funding arrangements are benign compared to the Lovecraftian horror of their IT outsourcing, because there’s no central bank to guarantee a happy ending. As one senior bank supervisor put it a few years ago, there is no such thing as a database provider of last resort.In other words, Hell is empty, and all the demons are in the ECB Outsourcing Register. The annual “horizontal review” from the ECB’s Banking Supervision committee was published last week. Do you want to know what proportion of “critical functions” are not compliant with basic regulatory guidelines? It’s just under 10 per cent. The average number of “critical” service providers per large bank? Fifty-eight per cent. What’s the average number of subcontractors on the average banking industry outsourcing contract? Four and a bit. What proportion of critical outsourcing providers would be “easy” to replace in the event of a problem? Just 17.7 per cent, although the good news is that the proportion which would be “impossible” to replace is now 8.6 per cent — the remainder are apparently “difficult”.© ECBWhatever the opposite of “setting your mind at rest” might be, that’s what it does to consider the extent to which the European banking system (and it’s unlikely that the US or UK are any better) relies on a complicated web of supply chains for software-as-a-service, offsite data centres and other euphemisms for “other people’s computers”. It’s all driven by the growth of cloud computing, of course — cloud now makes up more than a fifth of the total, having grown 13.5 per cent in the last year (and the ECB’s report is based mainly on data as of the end of 2023, so it is likely to be even more important now).© ECBThe growing role of cloud contracts has meant that European banks are, more than ever, dependent not only on a small number of outsourcing providers (30 firms account for half the total spend), but on non-EU firms. Within these top-30 firms, slightly more than 50 per cent of contracts are with companies whose ultimate parent is a US corporation.© ECBWhich raises a bit of an issue for Europe, as it starts to worry about strategic independence in a world of heightened geopolitical tension. As Henry Farrell and Abe Newman pointed out in their book Underground Empire, the US controls a number of systems of “weaponised interdependence”, of which two of the most important are the global dollar banking system and the internet. However, it seems that the interaction of finance and distributed computing might have created a third; the Euro area banking system (including the payment rails over which any future central bank digital currency will have to run) is highly dependent on server farms which might be physically located in Europe, but whose owners might ultimately answer to a foreign power.If you’re looking for a crumb of comfort, it might be that the regulatory definition of a “critical function” in this context is quite expansive; it doesn’t necessarily mean that an executive order could switch off the whole European financial system. But the trouble with the system as it’s currently set up is that it’s practically impossible to say anything about the true level of risk with any degree of confidence.(* Editorial note to pedants: the FT style guide says data is singular.) More

Euro zone inflation eased to 2.4% in February according to statistic agency Eurostat.
This was lower than January’s 2.5% reading, but higher than expected by economists polled by Reuters.
So-called core inflation, which strips out energy, food, alcohol and tobacco costs, came in at 2.6% in February, also lower than January’s print.

Two parents and their two children walk through a section of sweet cakes, biscuits and jam.
Nicolas Guyonnet | Afp | Getty Images

Euro zone inflation eased to 2.4% in February but came in slightly above analyst expectations, according to flash data from statistics agency Eurostat out on Monday.
Economists surveyed by Reuters had expected inflation to dip to 2.3% in February, down from the 2.5% reading of January.

So-called core inflation, which strips out energy, food, alcohol and tobacco costs, hit 2.6% in February, just below the 2.7% print of the previous month.
The closely watched services inflation reading, which has proven sticky over recent months, also eased, coming in at 3.7% last month, compared to the January reading of 3.9%.
The Monday figures also pointed to a sharp slowdown in energy price hikes, which were up just 0.2% in February, versus 1.9% in the first month of the year.
“February’s decline in headline inflation was encouraging because it was partly due to lower services inflation,” Jack Allen-Reynolds, deputy chief euro zone economist at Capital Economics said in a note on Monday.
“We think February’s decline in services inflation is the start of a trend that will pull the core rate down substantially this year,” he added.

Headline inflation is meanwhile expected to remain around its current levels, Allen-Reynolds noted, as energy prices are expected to rise slightly and food inflation is forecast to stay above the 2% mark.
However, depending on how the current geopolitical situation develops, this could eventually impact inflation, Bert Colijn, chief Netherlands economist at ING, noted Monday.
“Geopolitical developments are making the inflation outlook highly uncertain at the moment. Think, for example, of uncertainty surrounding a trade war and energy prices,” he said.
Repeated threats from U.S. President Donald Trump to impose tariffs on goods imported from Europe have left investors and economists unsure about the outlook for inflation and economic growth. Tariffs are often seen as inflationary, and trade with the U.S. is a key pillar for several major European countries, especially the EU’s largest economy, Germany.
Euro zone inflation re-accelerated in the fourth quarter, but European Central Bank policymakers remain optimistic about its trajectory. Accounts from the central bank’s January meeting last week showed that policymakers believed inflation was on its way to meeting the 2% target, despite some lingering concerns.
The ECB meets again later this week and is widely expected to announce another interest cut, which would mark its sixth reduction since it started easing monetary policy back in June.
Markets will also pay close attention to the ECB statement accompanying the rate decision, searching for clues on policymakers’ assessment of inflation and monetary policy restrictions.
“For the European Central Bank, the big question is how low it will go,” ING’s Colijn said, adding that the Monday data will support the view that inflation is currently “fairly benign,” but that it will not provide a strong basis for how low rates should be.
“We expect another 0.25ppt cut later this week to be accompanied by a fiercer debate on when the ECB will reach its terminal rate,” he said.
The Monday data comes after several major economies within the euro zone reported inflation data last week. Provisional data showed that February inflation was unchanged at a higher-than-expected 2.8% in Germany, but eased sharply to 0.9% in France. The readings are harmonized across the euro zone to ensure comparability. More

China is still cautiously trying to figure out what Trump wants. The president has threatened big tariffs in response to the inaction.When President Trump threatened tariffs on Canada, Mexico and China in January, saying those countries needed to do more to stop the flow of drugs and migrants into the United States, Canadian and Mexican officials raced to Washington, bearing charts and videos detailing their efforts to toughen their borders.Canada created a “fentanyl czar” and committed fresh resources to combating organized crime, while Mexico dispatched troops to the border and delivered cartel operatives into U.S. custody. As a result, Mr. Trump paused tariffs on America’s North American neighbors for 30 days.China never made these kinds of overtures and, in Mr. Trump’s view, did not take any big moves to stop the flow of fentanyl into the United States. So on Feb. 4, Mr. Trump moved forward with imposing a 10 percent tariff on all Chinese imports. Last week, the president said that on March 4 he would add another 10 percent on top of all existing Chinese tariffs.Mr. Trump is moving quickly to radically transform the U.S.-China trade relationship. The Chinese are moving much more cautiously and deliberately as they try to assess Mr. Trump and determine what it is he actually wants from China. Some of Mr. Trump’s advisers, including Treasury Secretary Scott Bessent and Secretary of State Marco Rubio, have held calls with their Chinese counterparts. But a call between Mr. Trump and Xi Jinping, China’s leader, has failed to materialize.The Chinese do not want to initiate a conversation because they do not want to be seen as pleading, and are wary of offering concessions before they understand the parameters of the debate, people familiar with the discussions said. Instead, Chinese officials, academics and others close to the government have been holding discreet conversations to try to determine Mr. Trump’s motives, while floating various aspects of a potential trade deal between the countries to assess the Americans’ reaction.“With my experience with the Chinese, they are suspicious in the initial rounds of a negotiation that there are hidden traps or other reasons to be cautious,” said Michael Pillsbury, a China expert who advises the Trump administration on dealing with the country.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