Economy

Unlock the White House Watch newsletter for freeYour guide to what the 2024 US election means for Washington and the worldUS inflation fell more than expected to 2.8 per cent in February, bolstering the case for the Federal Reserve to cut interest rates amid signs of slowing growth in the world’s largest economy.Wednesday’s annual consumer price index figure was below January’s 3 per cent and the 2.9 per cent expected by economists, according to a Reuters poll.US stocks have slipped in recent weeks but rose on Wednesday, with the blue-chip S&P 500 closing 0.5 per cent higher and the tech-heavy Nasdaq Composite adding 1.2 per cent.Futures markets are pricing in two rate cuts this year with a roughly 85 per cent chance of a third — up marginally from before the data release.The US central bank faces a difficult balancing act as it tries to bring down inflation without triggering a recession, amid intensifying fears that President Donald Trump’s aggressive economic agenda is hampering growth.Businesses and financial markets have been rattled by the chaotic rollout of the president’s tariffs on the US’s biggest trading partners, which has been marked by sudden escalations and U-turns.Wednesday’s figures showed core inflation rose 3.1 per cent, falling short of expectations of a 3.2 per cent increase.“Underlying inflation is slowing before we get to those upside risks of tariffs, which will come later in the spring, so that’s positive for the Fed,” said Veronica Clark, an economist at Citigroup. “That will make them less worried about planning cuts later in the year.”Some content could not load. Check your internet connection or browser settings.Last week, Fed chair Jay Powell played down concerns over the health of the US economy after the S&P 500 index’s post-election gains were wiped out following the release of disappointing employment figures for February.Powell suggested he expected the central bank to hold rates at their current range of between 4.25 per cent and 4.5 per cent at its meeting next week, saying the Fed was in no “hurry” to cut and was “focused on separating the signal from the noise as the outlook evolves”.The Bank of Canada on Wednesday cut interest rates by a quarter point to 2.75 per cent, citing the expected slowdown from “heightened trade tensions and tariffs imposed by the United States”.Although it said Canada’s economy had begun the year in good shape, the BoC also noted slowing economic activity in the US and warned its own outlook was harder to fathom as a result of “more than usual uncertainty because of the rapidly evolving policy landscape”.Some economists and investors fear Trump’s tariffs will stoke US inflation, with the price of several metals, including aluminium, rising after the administration imposed steep tariffs on imports from Wednesday.The White House’s decision to impose 25 per cent levies on all steel and aluminium imports triggered swift retaliation from the EU, which is targeting up to €26bn of US goods with tariffs. Tom Porcelli, chief US economist at PGIM Fixed Income, said February’s drop was welcome but said investors’ relief could prove shortlived given the possible impact of tariffs.In February, sectors registering the biggest price increases included medical care and used cars, while airfares and new cars were among those where costs declined.Egg prices, a significant contributor to January’s strong reading, were higher again in February, rising a further 10 per cent on the month for an annual increase of 59 per cent.“It’s good news, for sure, but I do think we don’t want to overstate this,” said Ryan Sweet, chief US economist at Oxford Economics. “Only the tariffs on China had gone into effect in February and it may be a bit too soon to be captured in this round of data.” More

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Unlock the Editor’s Digest for freeRoula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.China’s Ministry of Commerce has summoned executives at Walmart over reports the US retailer asked its suppliers to cut prices in response to tariffs imposed by President Donald Trump, according to state media.The discussions, reported on Wednesday by a social media account affiliated with state-run China Central Television, highlight mounting geopolitical risks for big US companies in China.“Chinese companies shall not bear the blame for US tariffs,” the Yuyuantantian account, a frequent source of official commentary on trade, said in a post on the social media site Weibo.Walmart has expanded its presence in China in recent years despite a wider slowdown in domestic consumer demand, and its US stores rely heavily on goods imported from the world’s second-largest economy.US companies have been struggling to avoid the fallout from tariffs announced since Trump’s inauguration as president in January. The new administration initially introduced an additional tariff rate of 10 per cent on imports from China, then doubled it to 20 per cent last week.Escalating trade tensions with Washington have prompted a host of countermeasures by Beijing. As well as implementing retaliatory tariffs on US exports of energy and agricultural goods this week, China has also increasingly targeted American companies in the country.Chinese authorities added clothing maker PVH, the owner of Calvin Klein and Tommy Hilfiger, to an “unreliable entity list” in February alongside California-based biotech group Illumina, and launched an antitrust investigation into Google.The move represented the first time US companies with substantial interests on the ground in China had been blacklisted on national security grounds, and prompted a wave of concern through international business communities in Beijing and Shanghai. Earlier this month, China added 10 US companies to the list. All had sold arms to Taiwan or been involved with military technology co-operation with the island, state media said then, citing the commerce ministry.Walmart said its “purpose is to help people save money and live better. Our conversations with suppliers are all aimed at making our purpose a reality for millions of customers, and we will continue to work closely with them to find the best way forward during these uncertain times”. The commerce ministry did not immediately respond to requests for comment on the Yuyuantantian report. Bloomberg reported last week that Walmart had asked makers of kitchenware and clothing in China to cut prices by 10 per cent.Walmart has a presence in more than 100 cities in mainland China and is well-known in the country for its popular Sam’s Club, a chain of membership-only warehouse stores. In the quarter to January 31, its sales after returns, allowances and discounts in China were $5.1bn, up 28 per cent from the previous year.Walmart sold its stake in JD.com, one of China’s biggest ecommerce platforms, for $3.6bn last August to focus on expanding its own brands.Additional reporting by Gregory Meyer in New York More

Unlock the White House Watch newsletter for freeYour guide to what the 2024 US election means for Washington and the worldTwo of Wall Street’s most prominent executives have said there are upsides to Donald Trump’s policies, even as the US president presses ahead with protectionist measures including import tariffs that have fuelled fears of a slowdown in the world’s largest economy.Stephen Schwarzman, chief executive of Blackstone, told reporters in India on Wednesday that the tariffs would, “at the end of the day”, lead to a significant increase in manufacturing activity in the US.“Given the size of the US, that tends to be a good thing for the world,” said Schwarzman, a prominent Trump donor. “If we’re growing faster we can consume more things. So, you know, that’s one scenario . . . there are other scenarios, because it’s just way too early to play this out.”Meanwhile David Solomon, chief executive of Goldman Sachs, said the business community “understands what the president is trying to do with tariffs”, though he pleaded for more “certainty” on the Trump administration’s policy agenda.Trump’s 25 per cent tariffs on steel and aluminium imports came into effect on Wednesday, triggering countermeasures from the EU, which the bloc said would affect up to €26bn of American goods. Canada has also announced 25 per cent retaliatory tariffs on about C$30bn of US-made goods.The “business community is always going to want lower tariffs, everywhere in the world”, said Solomon. But he welcomed Trump’s wider agenda and his openness to dealing with executives, telling Fox News that he liked the way “the president is engaged with the business community”. “That’s a different experience than what we’ve had over the course of the last four years,” Solomon said.“CEOs are excited about some of the tailwinds, like the move to lower regulation,” he said, adding that red tape had been a “significant headwind to growth and investment”.Solomon said he expected the number of initial public offerings, which had been “muted” over the past couple of years, to increase in 2025.The Goldman chief was part of a group of business leaders who met Trump at an event held on Tuesday evening by the Business Roundtable, an association of 200 CEOs of large American companies. Many of the attendees have seen the market capitalisation of their companies slump in recent days amid fears of recession and a widening trade war.Trump told the gathering that tariffs would boost domestic jobs and industrial production in the US. “The biggest win is if [businesses] move into our country and produce jobs,” he said. “That’s a bigger win than the tariffs themselves.”As well as resuscitating US manufacturing, Trump’s aggressive moves on trade are designed to reduce the country’s trade deficit, and force Mexico and Canada to stem the flow of irregular migrants and fentanyl across America’s southern and northern borders.But the deepening frictions between the US and some of its closest allies are causing jitters throughout the business community.In addition to retaliatory tariffs by the EU and Canada, there is concern about the possibility that Trump will follow through on his threat to impose so-called reciprocal tariffs on all trading partners from April 2, to punish them for taxes, levies, regulations and subsidies that Washington considers unfair.Additional reporting by Antoine Gara and Oliver Barnes in New York More

The U.S. Treasury Building is seen from the Washington Monument on a cold, winter day on Jan. 21, 2025 in Washington, DC.
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The U.S. debt and deficit problem worsened during President Donald Trump’s first month in office, as the budget shortfall for February passed the $1 trillion mark even though the fiscal year is not yet at the halfway point.
Government spending eased slightly on a monthly basis though it still far outpaced revenue, according to a Treasury Department statement Wednesday. The deficit totaled just over $307 billion for the month, nearly 2½ times what it was in January and 3.7% higher than February 2024.

Receipts and expenditures set records for the month, a Treasury spokesman said.
For the year, the deficit totaled $1.15 trillion through the first five months of fiscal 2025. The total is about $318 billion more than the same span in 2024, or roughly 38% higher, and set a record for the period.
Net costs to finance the $36.2 trillion national debt edged lower to $74 billion for the month. However, the total net interest payments year to date rose to $396 billion, just behind national defense and health. Social Security and Medicare are the largest costs in the U.S. budget.
The deficit swelled in the final three years of former President Joe Biden’s term, growing from $1.38 trillion to $1.83 trillion.
Trump has made getting the government’s fiscal house in order a priority since taking office. Since taking over, he created the so-called Department of Government Efficiency, led by Elon Musk. The advisory board has spearheaded job cuts across multiple departments in addition to early retirement incentives. A Treasury spokesman said there were no apparent impacts yet from the DOGE efforts but referred further comment to the Musk-led panel.
At the same time, Trump wants to extend the Tax Cuts and Jobs Act, spearheaded during his first administration. While Trump has touted growth that the tax reductions would bring, multiple think tanks say renewing the act also would add $3.3 trillion to the deficit over the next decade.

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Unlock the White House Watch newsletter for freeYour guide to what the 2024 US election means for Washington and the worldThe writer is associate professor of political science at Providence College and author of the forthcoming book ‘Extraction: The Frontiers of Green Capitalism’ Critical minerals have topped the agenda since Donald Trump’s return to the White House. On inauguration day, he released an executive order, “Unleashing American Energy”. With characteristic bluster, this seeks to secure “America’s mineral dominance”. He has also issued a related executive order (“Addressing the threat to national security from imports of copper”), threatened to seize Greenland and annex Canada, which have enviable mineral endowments, bullied Ukraine to accept a minerals deal (“they have great rare earth. And I want security of the rare earth”), and announced imminent additional action to “dramatically expand production of critical minerals and rare earths here in the USA”.Trump’s bellicose rhetoric and menacing behaviour has been rightly criticised but he is not acting in a vacuum. Last year, the EU signed a critical minerals deal with Rwanda. The European parliament voted to suspend the deal, however, because Rwanda is supporting a rebellion in the eastern Democratic Republic of Congo partly in order to seize and export the region’s coltan, tin, tungsten, tantalum and gold. Meanwhile, the government of the DR Congo, led by Félix Tshisekedi, has proposed a critical minerals deal to the US, modelled on the stalled Ukraine agreement. Tshisekedi pitched the idea of privileged access for US companies to abundant cobalt and copper reserves in exchange for security assistance in its fight with the M23 rebels. Vladimir Putin too saw the Ukraine deal as a model, offering Trump access to Russia’s minerals — as well as those in Ukrainian territories his military controls. These deals are part of a broader trend. Importing countries are racing to secure minerals, using a mix of onshoring (encouraging mining within their borders) and bilateral trade agreements. Producing countries are implementing export bans, establishing state-owned companies and in some cases nationalising entire mineral sectors. Whether justified on account of the energy transition, tech sectors or military preparedness, countries everywhere want their piece of the critical mineral pie.In the US, Trump’s moves mark the escalation of a bipartisan consensus that has been over a decade in the making. It was during Barack Obama’s presidency that federal officials first outlined a “critical minerals strategy”. In Trump’s first term, executive orders expanded the list of critical minerals and framed reliance on imports from foreign adversaries as a threat. Joe Biden’s administration increased domestic mining, established friendshoring alliances and imposed major tariffs on minerals from China. Some previous US policies bear an unsettling resemblance to Trump’s recent bluster too. Under Biden, for example, the state department lobbied the CEO of privately held Tanbreez to resist any offers from Chinese investors for its Greenland rare earth deposit.There is an even longer history at work here. The concept of “critical minerals” traces its origins to the lead-up to the second world war and was reinforced during the cold war race for atomic materials and the 1970s energy crisis. At each moment, labelling resources as “critical” has justified government support for extraction and access, deregulation of safeguards, and a preference for strong-arm tactics over co-operation. The consequences are deadly: mining ranks high among economic sectors for human rights violations.The idea of “critical minerals” shuts down debate. Critical for who? And extracted for whose benefit and whose expense? Instead of “mineral dominance” we need international agreements on environmental and social standards and policies that reduce mineral demand. Otherwise, the critical minerals consensus is liable to lead us to a 21st-century gold rush or resource war. More