Economy

Unlock the White House Watch newsletter for freeYour guide to what the 2024 US election means for Washington and the worldDonald Trump is confident that Chinese President Xi Jinping will not attack Taiwan during his time in the White House, according to US Treasury secretary Scott Bessent.Speaking on CNBC, Bessent said Trump was “confident that President Xi will not make that move during his presidency”. Bessent was responding to a question about whether he thought China would attack Taiwan. US intelligence officials said Xi had told the People’s Liberation Army to develop the capabilities to invade Taiwan by 2027, but they had also stressed this does not mean 2027 is a deadline for war.The White House did not respond to a question about whether Bessent’s assertion was based on any new intelligence.Tensions over Taiwan have risen significantly over the past few years, and particularly since Nancy Pelosi in 2022 became the first US House Speaker to visit Taiwan in 25 years.The PLA has rapidly expanded operations around Taiwan. Speaking at the Honolulu Defense Forum last month, Admiral Samuel Paparo, head of US Indo-Pacific command, said the exercises were no longer just training.“Their aggressive manoeuvres around Taiwan right now are not ‘exercises’, as they call them, they are rehearsals . . . for the forced unification of Taiwan to the mainland,” Paparo said in response to a question from the Financial Times.Bessent’s comments on China and Taiwan come as Taipei has become nervous that Trump’s stance on Ukraine could herald a weakening of the US’s decades-long support for the Asian country.US-China tensions spiked during the Biden administration because the countries were at loggerheads over a range of security-related issues. Since Trump took office, tensions have centred on trade. The US president has imposed a 20 per cent tariff on imports from China.The White House said the tariffs were designed to pressure Beijing to crack down on the export of ingredients for the deadly opioid fentanyl.It added that they were also intended to end subsidies for groups that make the dual-use chemicals sold to cartels in Mexico and used to produce fentanyl that is smuggled into the US.Chinese foreign minister Wang Yi on Friday described Trump as “two-faced” and said Beijing would take “countermeasures in response to arbitrary pressure” from Washington.“No country should fantasise that it can suppress China and maintain good relations with China at the same time,” Wang said at a press conference. “Such two-faced acts are not good for the stability of bilateral relations, or for building mutual trust.”Earlier this week, the Chinese embassy in Washington said it was ready to respond to any fight with the US, including war. “If war is what the US wants, be it a tariff war, a trade war or any other type of war, we’re ready to fight till the end,” the embassy wrote on the social media platform X. More

Unlock the White House Watch newsletter for freeYour guide to what the 2024 US election means for Washington and the worldIreland’s Taoiseach Micheál Martin heads to the White House next week to mark St Patrick’s Day, hoping to escape with only “a couple of kicks” from Donald Trump over his country’s huge trade surplus with the US.Martin is set to become the first head of state or government to visit the Oval Office since Trump’s bust-up with Ukrainian President Volodymyr Zelenskyy.His visit on March 12, five days before St Patrick’s Day itself, comes as the EU scrambles to boost defence spending to protect Ukraine after Trump cut off defence co-operation to the nation and as the bloc, which the president said last month was “formed to screw the United States”, braces for the prospect of trade tariffs.Ireland has deep cultural and business links with the US dating back to mass emigration during its 19th century famine. Trump on Thursday signed a proclamation declaring March Irish-American Heritage Month.He praised Irish-Americans as “great people — and they voted for me in heavy numbers, so I like them even more”.The proclamation referenced Trump’s plans to “correct trade imbalances with the European Union” saying “our historic relationship with Ireland presents an opportunity to advance fairer trade policies”.On that front, Ireland is hugely exposed. Exports of goods to the US rose 34 per cent to €72.6bn last year, compared with 2023, while imports of goods were €22.5bn, a 2 per cent fall on the previous year. US commerce secretary Howard Lutnick has blasted Ireland for running “a trade surplus at our expense”. Earlier this week, the US readout of a call between secretary of state Marco Rubio and Irish foreign minister Simon Harris said the pair discussed “the US priority to address the US-Ireland trade imbalance” — something Harris said was not mentioned directly.The US, however, exports €163bn in services to Ireland, meaning Dublin has an overall trade deficit of €93bn with the US. Martin will stress that Ireland is the sixth largest investor in the US, with the top 10 Irish companies in America employing 115,000 people.But “a couple of kicks” on trade in front of the cameras in the Oval Office were “inevitable,” said one senior government official.“I can’t see how we’d escape that. It’s the way Trump does business — flattery, kick, flattery, kick,” the official said.Ireland is home to major US tech and pharma companies, whose record corporation taxes have fuelled eye-popping surpluses — expected to hit some €24bn this year, boosted by back taxes from Apple that the European Court of Justice ordered Ireland to accept.Trump wants US companies to relocate home and has not ruled out tax incentives to encourage them — a policy that would hit Ireland hard. But Glenn Boehnlein, vice-president and CFO at US medical devices manufacturer Stryker, which has plants in Ireland, said that was not so simple.“You can’t turn anything on a dime — you really aren’t going to pick up manufacturing and move it instantaneously,” he told an EY CFO summit in Dublin this week held in partnership with the Financial Times.“The best-case scenario [for the St Patrick’s Day event] is all shamrocks and leprechauns,” said Ben Tonra, professor of international relations at University College Dublin. He hoped Martin would then “get to say the things he needs to say about Ukraine and Palestine” in private “and get out of that room as fast as possible”.Militarily-neutral Ireland has pledged its unwavering support for Ukraine and says it will “not be found wanting” on future peacekeeping. But Ireland has upset US ally Israel by recognising Palestine’s statehood. More

Unlock the Editor’s Digest for freeRoula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.Brazil is to slash import duties on foodstuffs ranging from sugar to sardines in a bid to control rapidly rising prices, running counter to Donald Trump’s protectionist onslaught and the spectre of trade wars it has invoked.Latin America’s largest economy said it would eliminate border levies on nine “essential” items as increasing supermarket bills eat into the popularity of leftwing president Luiz Inácio Lula da Silva.Vice-president Geraldo Alckmin, also minister for industry and trade, said the changes would take effect within days. “The government is waiving taxes in favour of price reductions,” he added on Thursday evening. “It won’t harm the producer but it will benefit consumers.”Duties will be reduced to zero for meat, which is currently subject to a 10.8 per cent border tax; coffee, currently at 9 per cent; sugar, now at 14 per cent; corn, now at 7.2 per cent; sunflower oil, from 9 per cent; olive oil, from 9 per cent; sardines, from 32 per cent; biscuits, from 16.2 per cent and pasta, from 14.4 per cent. An import quota for palm oil will more than double.Economists were sceptical about the impact because of Brazil’s position as a top global producer and exporter of agricultural commodities such as coffee, beef and sugar, but also because extreme weather events had affected some domestic production.“Most of these items are produced and supplied nationally, save a few exceptions like olive and palm oil,” said Felipe Camargo, economist at Oxford Economics, who calculated the total import value of the targeted foodstuffs at $15bn. “[It is] a political ruse to convince the electorate the government is trying to address rising grocery prices.”William Jackson, chief emerging markets economist at Capital Economics, said an import surge was unlikely.“We might see a bit of a decline [in] food inflation as a result. But there are more fundamental drivers of this spike in prices, particularly in beef and coffee, [such as] drought and fires,” he added.The move forms part of a wider package by Brasília aiming to make food cheaper for the population of 213mn. It underlines pressure on Lula, a former trade unionist who previously governed between 2003 and 2011, halfway through his four-year term. Despite robust GDP growth and low unemployment, pollsters say the 79-year-old’s ratings have suffered from stubborn inflation, which at an estimated annual 4.96 per cent in February was above an official target ceiling of 4.5 per cent. Food and drink prices rose an estimated 7.12 per cent in the year to February.Jackson said there were signs that grocery trips may become even more expensive in Brazil: “If you look at agricultural commodity prices and take account of usual lags, they point to food inflation of as much as 15 per cent in the next six months or so.”The loosening of certain import barriers by Brazil, a traditionally closed and protectionist economy, comes as US President Trump’s border duties on imports from China and threats of widespread tariffs on goods from Mexico and Canada — and the retaliatory tariffs that China and Canada have imposed — raise fears of a full-blown trade war. Trump specifically mentioned Brazil as a country charging tariffs on US goods this week, so Brasília’s levy reductions may help future negotiations with the Trump administration, some analysts argued. “The food inflation problem is global, and in our opinion it will become more relevant in some emerging markets and in the US due to Trump’s trade policy and tariffs in the coming months,” said Cristiano Oliveira, chief economist at Banco Pine.Additional reporting by Beatriz Langella More

Nonfarm payrolls increased by a seasonally adjusted 151,000 on the month, better than the downwardly revised 125,000 in January but less than the 170,000 consensus forecast.
Federal government employment declined by 10,000 in February though government payrolls overall rose by 11,000.
Average hourly earnings climbed 0.3%, as expected, though the annual increase of 4% was a bit softer than the 4.2% forecast.

Job growth was weaker than expected in February though still stable despite President Donald Trump’s efforts to slash the federal workforce.
Nonfarm payrolls increased by a seasonally adjusted 151,000 on the month, better than the downwardly revised 125,000 in January, but less than the 170,000 consensus forecast from Dow Jones, the Labor Department’s Bureau of Labor Statistics reported Friday. The unemployment rate edged higher to 4.1%.

The report comes amid efforts from Elon Musk’s Department of Government Efficiency to pare down the federal government, starting with buyout incentives and including mass firings that have impacted multiple departments.
Though the reductions likely won’t be felt fully until coming months, the efforts are beginning to show. Federal government employment declined by 10,000 in February though government payrolls overall increased by 11,000, the BLS said.
Many of the DOGE-related layoffs happened after the BLS survey reporting period, meaning they won’t be included until the March report. Outplacement firm Challenger, Gray & Christmas reported earlier this week that announced layoffs under Musk’s efforts totaled more than 62,000.

Health care led the way in job creation, adding 52,000 jobs, about in line with its 12-month average. Other sectors posting gains included financial activities (21,000), transportation and warehousing (18,000), and social assistance (11,000). Retail posted a decline of 6,000 workers.
On wages, average hourly earnings climbed 0.3%, as expected, though the annual increase of 4% was a bit softer than the 4.2% forecast.

Stock market futures moved higher following the report while Treasury yields were lower.
“We are not putting much stock in the jobs report at the moment,” said Byron Anderson, head of fixed income at Laffer Tengler Investments. “Today’s data was mixed at best, but we still have no clarity on the economy moving forward with the Trump turmoil. The longer we have chaos and turmoil from Trump, the higher the probability that we will eventually have data trend negative.”
Though the report indicated continued job growth, some of the details were a little less positive.
The labor force participation rate slumped to 62.4%, its lowest level since January 2023, as the labor force declined by 385,000. A broader measure of unemployment that includes discouraged workers and those holding part-time positions for economic reasons jumped half a percentage point to 8%, its highest level since October 2021.
Also, the household survey, which the BLS uses to calculate the unemployment rate, told a different story, showing a plunge of 588,000 workers. Those holding part-time jobs but wanting full-time positions swelled to 4.9 million, an increase of 460,000.
The BLS report tracks a tumultuous month for markets and the economy.
Stocks have gyrated on a daily basis since Trump has taken office, with movements depending largely on tariff news that has changed rapidly. At the same time, Musk’s efforts through DOGE have been reflected in surveys showing high levels of worker angst.
The February numbers, though, show that the labor market is stable. The December jobs count was revised up to 323,000, an increase of 16,000, while the new January figure represents a decline of 18,000 from the previous estimate.

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U.S. Treasury Secretary Scott Bessent attends at an Economic Club of New York event in New York City, U.S., March 6, 2025. 
Jeenah Moon | Reuters

Treasury Secretary Scott Bessent on Friday acknowledged some signs of weakness in the U.S. economy.
“Could we be seeing that this economy that we inherited starting to roll a bit? Sure. And look, there’s going to be a natural adjustment as we move away from public spending to private spending,” Bessent said on CNBC’s “Squawk Box.”

“The market and the economy have just become hooked. We’ve become addicted to this government spending, and there’s going to be a detox period,” he added.
Describing the economy as inherited is a reference to the administration under then-President Joe Biden. Current President Donald Trump took office on Jan. 20.
Under Biden, the U.S. saw generally strong economic growth. However, there were signs of a slowdown in late 2024, and inflation remained above the Federal Reserve’s 2% target.
In its first few months, the Trump administration has taken steps to reshape global trade policies and to reduce the federal workforce. There has not been much hard economic data reflecting Trump’s term, though consumer surveys have shown a decline in confidence.

One area where Trump’s policies could be felt quickly are tariffs. The president has hit Canada, Mexico and China with tariffs in his first two months in office, though the Canada and Mexico efforts now have a lengthy list of exemptions. The administration plans to implement broader tariffs in April.

“Tariffs are a one-time price adjustment,” Bessent said, pushing back against the idea that tariffs would fuel continued inflation.
Bessent also said the administration was “not getting much credit” for areas where costs have fallen since Trump’s inauguration, such as oil prices and mortgage rates. More

Unlock the White House Watch newsletter for freeYour guide to what the 2024 US election means for Washington and the worldThe threat of a trade war and rising security tensions alongside the US withdrawal from the Paris climate accord will “drain” resources away from efforts to curb global warming, leading to “civilisation doom”, Brazil’s environment minister warned. “It is clear that the withdrawal of the Paris agreement of the world’s second-largest emitter, the world’s largest economic and technological power, is a loss. We cannot be deniers — it is a loss,” Marina Silva said.The confluence of the US withdrawal, new trade tariffs and the resurgence of geopolitical conflicts would have a “triple negative effect” on climate action.“They may drain resources and they also may hamper the environment of confidence and trust among parties. We have a triple negative effect because the less action we see, the less money we see, resulting in less co-operation across countries,” she said.This increased the responsibility of countries like Brazil, South Africa, India, China, the EU and the UK, said Silva, who was born in the Amazon. “We will all have to continue climate action.” Brazil will host the UN COP 30, the world’s most important climate talks in November this year in the Amazon port of Belém. Countries are now expected to submit updated climate plans for 2035 by the time of the Belém summit, after only a handful met the February deadline set under the Paris agreement, including the UK, Japan and Brazil.On his first day in office US President Donald Trump pulled the US out of what he described as an “unfair, one-sided Paris climate accord rip-off”. The US also withdrew during his first term as president in 2017, a move reversed by Joe Biden in 2021. Silva noted that the US also did not ratify the groundbreaking 1997 UN climate conference in Japan, the Kyoto protocol. However, she warned that while the situation may be “similar, it is a very different context, because in the Kyoto protocol the problems were still in the realm of projections, in most cases while now we are already living the reality of the Earth’s temperature changing by 1.5C compared to pre-industrial levels”. Some scientists already calculate that the world will not meet the ideal Paris accord goal of limiting the global average temperature rise to no more than 1.5C from pre-industrial times. The UN has forecast the rise will reach 2.9C this century unless action is taken to cut greenhouse gas emissions.Silva said the almost 200 countries that were signatories would need to either “implement” their climate pledges or “will face an unthinkable, civilisational doom”.She was speaking on the sidelines of the World Sustainable Development Summit in New Delhi, where India’s environment minister Bhupender Yadav reiterated the goal of the world’s third-largest polluter for net zero emissions by 2070.India is among those countries that have not upgraded their targets, as required by the Paris agreement process. Developing countries such as India and Brazil face a daunting task in finding ways to plug what is estimated by an independent group of economists to be a $1tn gap in international climate change fundingAt the UN COP29 in Baku in November, almost 200 countries agreed that wealthy nations would take the lead in providing at least $300bn in climate finance by 2035 to help developing countries shift to green energy and cope with climate change. But Silva said that may now be in jeopardy. “This is very serious, because we need $1.3tn to be able to make the necessary efforts for this transition. We are starting from $300bn, but even that is not guaranteed,” she said.Climate CapitalWhere climate change meets business, markets and politics. Explore the FT’s coverage here.Are you curious about the FT’s environmental sustainability commitments? Find out more about our science-based targets here More

Unlock the Editor’s Digest for freeRoula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.The writer is the author of ‘Growth: A Reckoning’ and an economist at Oxford university and King’s College LondonIn normal times, forecasts on the UK public finances from the Office for Budget Responsibility, expected this month alongside the chancellor’s Spring Statement, would be a significant moment. This time, it is a seismic one. An institution that was established to reduce bias in public finance forecasting now finds itself with a far grander role: the ultimate arbiter of whether the government’s plan to achieve its central mission — more economic growth — is the right one. This was never meant to be the OBR’s purpose. Set up in 2010 by George Osborne, then chancellor, it was designed to solve a different problem: that the official UK public finance forecasts were not credible. The Treasury had a strong incentive to massage these numbers into better shape, whatever the political make-up of the government. And the belief was that an independent statistical authority would be free of that temptation. To that extent, the OBR is a success story: its forecasts do appear to be less biased.However, forecasts about the UK public finances also require forecasts about the UK economy — among them, what is expected to happen to growth. If the economy were happily trundling along, these numbers would be playing only a supporting role. But this economy is stagnant, the government has made changing that its main priority and His Majesty’s Treasury no longer produces its own official growth forecasts. So the OBR’s numbers have been thrust into the spotlight.Here, though, is the complication: the OBR does not actually know what causes growth. In fact, no one does. The true causes of growth are one of the great mysteries of economic thought. Hundreds of possible causes have been identified: everything from tax cuts to infrastructure spending, the number of frost days to the level of newspaper readership. And today they remain hotly contested among various schools of thought, divided along deeply political lines and duelling with one another. With that in mind, the idea that the OBR somehow knows enough to take each UK government policy and state its impact on growth to a single decimal point is fanciful. Yet that is what it will attempt to do at the end of the month, with immense practical consequence. A reduction of 0.1 percentage point in the OBR’s potential productivity growth forecast, for instance, is estimated to create a hole of £7bn-£8bn in the public finances — that is the equivalent of the entire budget of Defra.But do other countries not also have independent “fiscal watchdogs”, like the OBR? Yes, many do but their role tends to be different. Most simply assess the official government forecast or provide an alternative to sit alongside it. The OBR actually produces it. And chancellor Rachel Reeves has gone further, explicitly baking the OBR numbers into her new fiscal rules, making their forecasts definitive. So we find ourselves in a strange world, where Reeves is best advised not to do what she believes will drive growth, but to look instead at what the OBR assumes drives growth. Then she must simply do as much of that as she can, given her fiscal constraints, so the forecasts are better. In the old world, HMT was incentivised to fiddle the numbers; in the new one, HMT is incentivised to fiddle the policy. What’s more, if Reeves decided to challenge the OBR forecasts in public when they are published — perhaps saying she felt their internal model did not properly capture the promise of her growth strategy — that would not look like a legitimate intellectual disagreement about the true causes of growth. It would risk being seen as a shameful attempt to dodge the very rules she set up to bring an end to fiscal profligacy. The OBR was established with good intentions. But it has been a victim of its own success. A difficult political judgment about one of the most contested economic questions — what actually causes growth — has been reduced to a technocratic calculation performed largely out of sight of the public. What should we do? To begin with, the uncertainty in the OBR’s growth forecasts must be more explicitly recognised: independence might reduce their bias, but it does not make them correct. Politicians must be bold enough to say it; the OBR must be modest enough to agree.In turn, the Treasury must consider reintroducing its own growth forecasts. This is not because they are likely to be more accurate than the OBR’s, but because we need more public debate and disagreement in policymaking, not less of it, if we are to find creative ways out of our current economic malaise. Finally, Reeves ought to revisit her fiscal rules, maintaining their original spirit — current budget in balance, debt falling as a share of the economy — while tweaking the substance so they are not so tightly tethered to a set of calculations that, like all forecasts, will probably turn out to be wrong. More