Economy

With less than a month in office, the president has pursued trade actions that could shatter the global trading system and dwarf the trade measures he took over his entire first term.President Trump is pursuing a far more aggressive trade policy than he embraced in his first term, allowing his unfettered instincts about how to put America at the forefront to guide him with little pretense of investigations or extended deliberations.Since taking office, Mr. Trump has threatened punishing tariffs on goods from every global trading partner. That includes proposals to tax more than $1.3 trillion of imports from Canada, Mexico and China — many times the volume of trade his tariffs affected in his entire first term.On Thursday, Mr. Trump proposed his most aggressive and consequential measure to date with a global rework of tariffs — a move that made it clear that the president would have no qualms about weaponizing tariffs and antagonizing trading partners to extract concessions.Mr. Trump ordered his advisers to devise new tariff rates for other countries globally, based on the tariffs they charge the United States, as well as other practices, including other taxes they charge on U.S. goods and subsidies they provide to support their industries.The president’s decision to embrace what he calls “reciprocal tariffs” could shatter the commitments the United States has made internationally through the World Trade Organization. That would end decades in which the United States has generally abided by the commitments it made internationally and would potentially usher in a new era of corporate uncertainty and global trade wars.Some of Mr. Trump’s threats could amount to negotiating tactics and fail to materialize. He sees tariffs as a powerful persuasive tool, which he is readily deploying to try to force other countries to make concessions on migration, drug enforcement and even their territory. But he and his base of supporters also view them as a crucial policy in their own right, a way to reverse decades of factories leaving the United States and to create jobs and shrink trade deficits.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

Liquor is leverage as the world careens toward another trade dispute. European tariffs on American whiskey snap back after March 31 unless an extension is granted.Liquor lobbyists gathered in a ritzy private club on a recent rainy evening in Brussels to swill cocktails with names like “Toasts Not Tariffs” and fret over the potential disaster confronting their industry. Again.Seven years ago, the spirits industry found itself a casualty in a worldwide trade war as President Trump unleashed tariffs on America’s partners. The European Union retaliated with a spate of tariffs that included a 25 percent charge on American whiskey — aiming to deliver a blow to Senator Mitch McConnell, Republican of Kentucky and the then majority leader. A series of tit-for-tat tariffs followed, hitting spirits from rum to cognac on both sides of the Atlantic.The levies were suspended during the Biden administration, but with Mr. Trump back in office and trying to rewrite the rules of global trade once again, alcohol is back in the crossfire.The European Union suspended the tariffs in question in 2021 and extended that decision in 2023, but the hiatus lasts only until March 31. After that, ramped-up tariffs of 50 percent will automatically apply to American whiskey, and charges will hit a range of other goods, including motorcycles.But it is the spirits industry that has been the most vocal about the risks the levies pose. Industry leaders and craft distillers say the taxes would decimate their export business, especially in growth markets like Germany and France, while risking retaliatory tariffs that would hit other kinds of alcohol.Bars have been importing extra bottles to try to get ahead of a trade war, distilleries have been putting overseas expansion plans on ice, and industry leaders have been flocking to Brussels, Washington and Rome, where Prime Minister Giorgia Meloni has become Mr. Trump’s bridge to Europe, to try to convince policymakers to help them avoid the looming pain of tariffs.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

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This article is an on-site version of our Europe Express newsletter. Premium subscribers can sign up here to get the newsletter delivered every weekday and Saturday morning. Standard subscribers can upgrade to Premium here, or explore all FT newslettersGood morning. French President Emmanuel Macron, in an interview with the Financial Times has described Donald Trump’s return to power as an “electroshock” for the EU and a moment “to accelerate and execute”, warning that otherwise the project is at risk of failure: “It has no choice. It is running out of road.”Last night, Donald Trump moved to impose long-threatened reciprocal trade measures on imports. Here, our trade correspondent explains what that means for Europe. And our Rome bureau chief reports on the European backlash to Giorgia Meloni’s satellite plans with Elon Musk.Gloves offFight or talk? That is the bleak option facing EU member states after US President Donald Trump escalated his trade war by pledging to levy tariffs for a number of ills such as selling cars Americans like to buy and taxing tech companies on the money they make in its market, writes Andy Bounds.Context: After slapping 25 per cent tariffs on all imports of steel and aluminium starting March 12, Trump yesterday instructed his trade advisers to draw up tariffs against countries that run a trade surplus in goods with the US, as the EU does, those that levy digital taxes, and those blocking US imports on health grounds.The expected but still startling broadside from the EU’s largest trade and investment partner came as European capitals were still reeling from Trump’s move 24 hours earlier to begin bilateral talks with Russian President Vladimir Putin to end the war in Ukraine, cutting out Europe.Brussels has already said it would retaliate against the metals tariffs. There is a package of up to 50 per cent tariffs on €4.8bn worth of US goods ready to go. But officials told the FT that more products could increase to try to deter Trump. Most member states backed negotiations in a trade ministers’ meeting on Wednesday, according to two diplomats briefed on the meeting.Maroš Šefčovič, the EU trade commissioner, gave a sobering readout from his call with US commerce secretary nominee Howard Lutnick, but still hopes to travel to Washington next week to meet him.“We have to respond — it’s better to negotiate from a position of strength,” said one EU diplomat.Ignacio García Bercero, until recently a senior EU trade official, said the bloc should co-ordinate with allies that were also threatened by Trump.“I think this needs to be treated very seriously. At the minimum all affected countries should prepare the launch of a WTO case as soon as tariffs are announced.”Chart du jour: Arms raceSome content could not load. Check your internet connection or browser settings.European arms companies have significantly increased their output in recent years, but decades of under-investment and long-term reliance on American hardware mean the continent’s capacity remains limited. The Italian JobItaly’s consideration of a $1.5bn, five-year military communication contract with Elon Musk’s Starlink has caused a furore in Europe, where critics warn that it could undermine the EU’s own satellite industry and leave Rome dependent on a mercurial tycoon, writes Amy Kazmin.Context: Italian Prime Minister Giorgia Meloni said last month that her government had “no public alternative” to Musk’s SpaceX, as her government seeks to bolster secure military communications for its estimated 7,000 troops deployed overseas. Musk is one of US President Donald Trump’s closest advisers.However, Christophe Grudler, a French MEP from the liberal Renew who is also the co-chair of the European parliament’s Sky and Space Intergroup, has expressed dismay at Rome’s approach, as did several other lawmakers in a European parliament debate yesterday on the subject of “threats to EU sovereignty through strategic dependencies in communication infrastructure”. In a letter to European Commission president Ursula von den Leyen, Grudler argued that Italy should take advantage of GOVSATCOM, an EU initiative to pool existing secure European satellite capacity from countries such as Germany, France and Italy itself, and make it available to all member states. The programme is supposed to start functioning this year. In his letter, Grudler asked von den Leyen to confirm that “every effort” was being made to ensure that EU member states, especially Italy, could take full advantage of a service that he said should be “fully capable of meeting Italy’s immediate needs while ensuring security and strategic autonomy”. Separately, citing the Renaissance-era Florentine political strategist and diplomat Niccolò Machiavelli, Grudler warned of the risks of Italy “delegating its security to private actors”, insisting it should rely on trusted allies instead.“Elon Musk, a former Democrat supporter, has shown he can easily switch alliances in campaigns according to his business interests,” Grudler said.What to watch today Munich Security Conference begins, featuring dozens of world leaders and defence industry executives.US vice-president JD Vance meets Ukraine’s President Volodymyr Zelenskyy in Munich.European parliament president Roberta Metsola visits Palestine.Now read theseRecommended newsletters for you Free Lunch — Your guide to the global economic policy debate. 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Rows of white concrete buildings near the Pearl River in southern China house one of the world’s fastest-growing industries: Gritty workshops are churning out inexpensive clothing that is exported straight to homes and small businesses around the world. No tariffs are paid, and no customs inspections are conducted.The laborers who make these goods earn as little as $5 an hour, including overtime, for workdays that can last 10 hours or more. They pay $130 a month to sleep on bunk beds in tiny rooms above factories packed with sewing machines and mounds of cloth.“It’s hard work,” said Wu Hua, who sews pants, seven days a week, at a factory in Guangzhou, a vast metropolis that straddles the Pearl River.E-commerce giants have forged close links from international markets to workers like Mr. Wu, shaking retailing and economies around the globe.The number of duty-free shipments to the United States has risen more than tenfold since 2016, to four million parcels per day last year. Similar shipments to the European Union have climbed even faster, reaching 12 million parcels a day last year. Duty-free shipments to developing countries like Thailand and South Africa have also surged.Now a global backlash is underway. President Trump ordered a halt on Feb. 4 to the duty-free entry, without inspection, of parcels with goods worth up to $800. Mr. Trump temporarily suspended his order to give officials time to devise a plan for dealing with the mounds of parcels that immediately started piling up at airports for inspection.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

$99 for your first yearFT newspaper delivered Monday-Saturday, plus FT Digital Edition delivered to your device Monday-Saturday.What’s included Weekday Print EditionFT WeekendFT Digital EditionGlobal news & analysisExpert opinionSpecial featuresExclusive FT analysis More

$99 for your first yearFT newspaper delivered Monday-Saturday, plus FT Digital Edition delivered to your device Monday-Saturday.What’s included Weekday Print EditionFT WeekendFT Digital EditionGlobal news & analysisExpert opinionSpecial featuresExclusive FT analysis More