Economy

Unlock the White House Watch newsletter for freeYour guide to what the 2024 US election means for Washington and the worldThe Chevrolet Silverado has been one of America’s most popular pick-up trucks since it was launched almost three decades ago. But the iconic vehicle could now become one of the biggest victims of Donald Trump’s trade war.The high-margin General Motors model, which costs roughly $40,000-$70,000, relies on one of the most complex, international and interconnected automotive supply chains, making it particularly vulnerable to the US president’s threat to impose 25 per cent tariffs on Canada and Mexico.Of the 673,000 Silverados produced last year, 31 per cent were built at GM’s factory in the Mexican city of Silao and 20 per cent at its plant in Oshawa, Canada. But even for the roughly half manufactured at three US plants in Michigan and Indiana, it is likely that the power steering and door trim panels were built in Mexico; the rear lighting in Canada; the airbag module in Germany; and the centre stack display in Japan, according to S&P Global Mobility data.GM has been preparing for tariffs since Trump’s election, chief financial officer Paul Jacobson told an investor conference last month.The carmaker has shifted some production and reduced inventory at plants outside the US by nearly a third “because the last thing you want is a bunch of finished inventory that . . . suddenly became 25 per cent more expensive just with the passage of time”.If the tariffs become permanent, he said, the company would need to consider whether to relocate plants. But with the current uncertainty, GM cannot spend billions “whipsawing the business back and forth”.Data compiled by Export Genius shows that key components in Silverados are heavily dependent on parts imported from Mexico. The country’s exports of parts for the vehicle were worth almost $30bn last year, with braking systems alone accounting for $4.3bn. Trump threatened tariffs on Mexico and Canada in early February, then announced a 30-day reprieve hours before they were due to take effect — but he vowed on Thursday to press ahead from March 4. The upheaval will be worse if the levies expand to goods imported from the EU and the rest of the world.The big fear within the industry is that Trump will impose blanket tariffs without mechanisms that are usually in place to mitigate their impact, such as duty drawback programmes through which the levies can eventually be refunded if imported goods are subsequently re-exported. “This is not a trade action. This is border security negotiation,” said Dan Hearsch, Americas leader of the automotive and industrial practice at consultancy AlixPartners, referring to Trump’s argument that he was imposing tariffs in response to the flow of illegal immigrants and drugs across the Mexican and Canadian borders. “It’s one big hammer so that’s the challenge.”The Chevrolet Silverado remains one of America’s most popular pick-up trucks More

The Magnitude 7 Metals aluminium plant near the banks of the Mississippi is eerily quiet these days, its electrolysis cells dark and devoid of people, its once white-hot smelters cold to the touch.“It breaks my heart, ‘cos I’ve seen it in all its glory,” said Greg Lester, the facility’s manager, gesturing upwards to its cavernous vaults.The plant, a short drive from New Madrid in the economically depressed Missouri Bootheel, symbolises the decline of US heavy industry. It is a slump that President Donald Trump is determined to arrest and reverse.His instrument of choice is tariffs. Last month, Trump announced he was increasing levies on aluminium from 10 per cent to 25 per cent, saying imports of the metal were threatening to impair US national security.Some content could not load. Check your internet connection or browser settings.Trump’s economic nationalism has a clear goal. By addressing trade imbalances, he wants to resuscitate moribund domestic industries, reshore jobs and lessen American dependence on imports of critical metals.But it will take more than that to restore the fortunes of Magnitude 7, or Mag7 as it is known. The downturn in the US industry is being driven above all by high energy costs. And they show no sign of abating.“Unless I have power at a fair price, I can’t restart the facility,” said Lester.Production at Mag7 was curtailed in January last year, when the Mississippi River froze over, disrupting the supply of critical raw materials to the plant. But high energy prices were already taking their toll, making it ever harder for the plant to turn a profit. The aluminium smelter uses more electricity in 24 hours than the whole city of Springfield, Missouri More

Unlock the Editor’s Digest for freeRoula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.Brussels is to extend the EU’s lenient approach to policing state subsidies, as it unveils guidelines this week that will allow member states to keep pouring cash into cleantech investments until the end of the decade. Designed to avoid continent-wide subsidy races and wasteful grants to uncompetitive companies, the EU’s unique state aid regime empowers the European Commission to monitor state support, with tens of billions of euros recouped from companies in total. But successive economic crises prompted Brussels to suspend or relax enforcement across key sectors of the economy — an approach that will be extended on so-called clean technologies in the latest guidelines, according to a draft seen by the Financial Times. The approach has led to growing tensions between the EU’s biggest economies, France and Germany, and smaller member states with less fiscal firepower, which are increasingly concerned that less stringent rules will trigger a subsidy war and undermine the bloc’s single market.The EU first significantly relaxed the rules that govern state aid during the 2008 financial crisis, allowing governments to intervene to save failing banks. The Covid-19 pandemic and energy crisis sparked by Russia’s full-scale invasion of Ukraine not only delayed a return to Europe’s original stricter rules but increasingly framed the state aid regime as a tool for wider goals. “This is no longer a temporary tool,” said Carole Maczkovics of the law firm Covington & Burling. “It’s a perpetuation of the relaxed state aid rules introduced in response to the US Inflation Reduction Act for the green transition that Europe wants to accelerate.”The new state aid framework is a key pillar of the EU’s Clean Industrial Deal, unveiled last week, which attempts to balance the bloc’s climate goals and efforts to improve the bloc’s flagging competitiveness. To meet those goals, Brussels will allow European countries to fund investments that cut emissions, such as industrial decarbonisation projects and renewable energy products. However, the subsidy limits for cleantech manufacturing are lower than during the pandemic and subsequent energy crisis, according to the draft.Teresa Ribera, the EU’s competition chief who oversees state aid enforcement, told the Financial Times the rules attempted to follow the “fine line” between “a story of growth and protection of consumers and at the same time a well-functioning, transparent and balanced single market”.Amid fears of an existential decline of European industry and ascendant US and Chinese markets, the EU has adopted a more interventionist approach to industrial policy, especially when linked to climate targets. “Public support will be necessary to advance decarbonisation efforts,” the draft reads. “Enough investment is now probably considered as more crucial for the future of the EU,” said Giacomo Biagioni, a professor at Italy’s University of Cagliari.Biagioni said protecting competition was not at the core of the new rules. Instead, it “pays more attention to pushing member states towards the allocation of funds” required to meet the climate goals.The commission hopes to adopt the new rules by June. But the draft is expected to spark a fierce debate between member states. While more flexibility was broadly supported, three EU diplomats said much rode on the details. This includes how “clean” sectors are defined to avoid capitals using the new rules to support favoured industries.“There is a risk that this simply gives a free pass for the two biggest economies in the bloc to strengthen their national industries,” one of the diplomats said. Climate commissioner Wopke Hoekstra told the Financial Times he was optimistic European capitals would get on board.“Many are reading the signs of the times,” Hoekstra said. “We are living in a world of almost unprecedented geopolitical turmoil, with huge pressures on our industry and our competitiveness.” Given that context, using some public money to help companies decarbonise “is a fair and good bargain”. Additional reporting by Andy Bounds and Henry Foy in BrusselsClimate 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

This article is an on-site version of our The Week Ahead newsletter. Subscribers can sign up here to get the newsletter delivered every Sunday. Explore all of our newsletters hereHello and welcome to the working week.Put on your party clothes because you have a short window of excess to enjoy before it’s time for an extended period of hair shirts and humility. No, not Lent — although that will be happening on Wednesday after the traditional craziness of Carnival, Mardi Gras and Pancake Day (delete according to your nationality) on Tuesday — this is the week that Donald Trump’s beloved new tariffs come into play for neighbours Canada and Mexico. The US president will on Tuesday address a joint session of Congress outlining his agenda, his first such speech since his inauguration in January. Trump’s announcement last Thursday that he will push ahead with the levies on America’s two neighbours, and put an additional 10 per cent tariff on China for good measure, has already shaken global markets, so expect more volatility this week. Click here for a full list of Trump’s tariff moves. Ironically, one of the beneficiaries of Trump’s tariff tirades has been Canada’s ruling Liberal party. This gives added impetus to another event at the end of the week: the vote to find a replacement for Justin Trudeau. It shows what a long time a few weeks are in politics, especially with Trump back in the White House. Trudeau resigned less than two months ago as prime minister amid plunging poll ratings for his party. Thanks to Trump, his tariff threats and that “cherished 51st state” comment, the winner of the Liberal party vote on Sunday will not just become prime minister, but will gain an increased opportunity of winning the country’s next general election. The frontrunners to replace Trudeau are former Bank of England governor Mark Carney and former Canadian finance minister, and ex-FT deputy editor, Chrystia Freeland. Carney is godfather to one of Freeland’s kids, so this is not exactly a fierce rivalry, and some believe they’ll work together regardless of who becomes leader. One difference is that Carney is expected to call an early election, if or when, he wins, while Freeland has been vague on the issue.An Ipsos poll released last week showed the party had edged ahead of Pierre Poilievre’s opposition Conservatives, with the support of 38 per cent of decided voters — up 10 points since February 6 and the first time the Liberals have led in this poll in four years. For an FT take on the data to prove that Canada very much exists, with its own identity, read this.In Beijing, the annual meeting of the Chinese People’s Political Consultative Conference, a high-profile but largely ceremonial advisory body, starts on Tuesday. This will be followed on Wednesday by the opening of the National People’s Congress, China’s rubber-stamp parliament. Investors will be watching out for the targets for fiscal deficit and government bond issuance. Economists believe the growth target and official fiscal deficit are unlikely to surprise, with consensus forecasts of 5 per cent and 4 per cent respectively.In Europe, meanwhile, the focus will be on a special EU summit on European defence and support for Ukraine on Thursday.And so we move to the corporate news items to watch. The week starts with a high-stakes legal battle in London as former Barclays boss Jes Staley seeks to clear his name and overturn a 2023 ban imposed by the UK Financial Conduct Authority. The case dates back to 2023, when the American investment banker was banned from holding senior positions in financial services, and fined £1.8mn, for “recklessly approving . . . two misleading statements about the nature of his relationship” with deceased sex offender Jeffrey Epstein, with whom Staley had close ties during his time at JPMorgan Chase, before he joined Barclays. This was the first time the watchdog had banned a chief executive of a big British bank for actions taken on his watch. The appeal case is expected to run for a couple of weeks and throw up embarrassing revelations for those involved. Fortunately, my colleagues in the FT’s legal and banking team have written a comprehensive explainer.Monday also sees the start of MWC Barcelona, the world’s largest mobile telecoms industry convention, returning to the Mediterranean sun for another round of product launches and new service announcements until Thursday. Speakers include US Federal Communications Commission chair Brendan Carr and Vodafone chief executive Margherita Della Valle.On Thursday the European Central Bank will set its interest rates. The 26-member governing council is expected to vote through another 25 basis-point cut to 2.5 per cent, but some have raised concerns that the eurozone’s central bank is becoming boxed in by market expectations.There will be a steady stream of economic data updates to digest too, beginning with Monday’s purchasing managers’ index reports for the G7 nations and culminating in US employment figures and the EU’s fourth-quarter GDP estimate on Friday.Earnings season is drawing to a close with fewer than 20 S&P 500 companies reporting results, but expect figures from tech ventures Broadcom, Marvell and CrowdStrike. Numerous central bank heads will be out on the speakers’ circuit over the coming days too. More details on these and other items below.One more thing . . . The Moules family are now a year into owning a chocolate Labrador dog, which means the group family television event next Sunday evening is likely to be the grand finale of this week’s premier pooch event, Crufts. If you wish to get in touch, email me at jonathan.moules@ft.com or, if you’re reading this from your inbox, just hit reply. However you plan to spend your week, I wish you well.Key economic and company reportsHere is a more complete list of what to expect in terms of company reports and economic data this week.MondayEx-Barclays chief executive Jes Staley’s appeal against the Financial Conduct Authority begins in a London tribunal. The hearing is due to last two weeksMobile World Congress begins in Barcelona, SpainClaudia Buch, European Central Bank supervisory board chair, speaks on 10 years of banking union, its achievements and challenges for the future, at the 18th Finanzplatztag (Financial Centre Day) in Frankfurt, GermanyCanada, China, EU, France, Germany, India, Italy, Japan, UK, US: S&P Global/HCOB/HSBC manufacturing purchasing managers’ index (PMI) dataEU: preliminary February harmonised indices of consumer prices (HICP) inflation rate estimate for the EurozoneSouth Korea: Independence Movement Day (Samil Day). Financial markets closedUK: January money and credit figures, plus effective interest ratesResults: Bunzl FY, Burford Capital Q4, Quartix Technologies FY, Senior FYTuesdayAustralia: Reserve Bank board monetary policy meeting minutes publishedEU: January unemployment dataJapan: February consumer confidence survey and January labour force surveySouth Africa: Q4 GDP estimateUK: Kantar’s grocery market share and price inflation update. Also, British Retail Consortium’s Shop Price IndexResults: Abrdn FY, Ashtead Group Q3, Bakkavor FY, Beazley FY, Best Buy Q4, Campari FY, Chocoladefabriken Lindt & Spruengli FY, Continental FY, CrowdStrike Q4, Direct Line FY, Flutter Entertainment FY, Fresnillo FY, Greggs FY, Inchcape FY, International Workplace Group FY, Intertek FY, Johnson Service Group FY, Keller Group FY, Kitwave FY, Kuehne + Nagel FY, Oxford Nanopore Technologies FY, Prada FY, Progressive Corp Q4, Reach FY, Ross Stores Q4, Saudi Aramco FY, Spirent Communications FY, Target Corp Q4, Thales FY, Weir Group FYWednesdayBank of England governor Andrew Bailey appears before the parliamentary Treasury committee in London, presenting an assessment of the prospects for UK inflation and GDP growth.Australia: Q4 GDP estimateCanada, China, EU, France, Germany, India, Italy, Japan, UK, US: S&P Global/HCOB/HSBC services PMI dataEU: January producer price index (PPI) inflation rate dataSouth Korea: revised Q4 GDP figuresUK: February official international reserves data. Also, the quarterly review will confirm after the London markets close which companies have been promoted and relegated in the composition of FTSE indices by market capitalisation.US: Federal Reserve Beige Book publishedResults: Adidas FY, AIB Group FY, Atos FY, Bayer Q4, Breedon FY, Campbell’s Q2, Dowlais FY, Foxtons FY, Ibstock FY, Marvell Q4, Nexxen International Q4, Quilter FY, Ricardo HYThursdayFormer Credit Suisse banker Andrew Pearse to be sentenced after pleading guilty to one count of wire fraud for taking millions of dollars in kickbacks in connection with $2bn in loans to state-owned companies in MozambiqueEU: European Central Bank interest rate decisionFrance, Germany, Italy, UK: S&P Global construction PMI dataUK: Bank of England publishes its Decision Maker Panel survey of chief financial officers from small, medium and large British businessesUS: January trade in goods and servicesResults: Admiral Group FY, Bouygues FY, Broadcom Q1, Coats Group FY, Costco Wholesale Q2, Deutsche Post FY, Elementis FY, Entain FY, Funding Circle FY, Gap Q4, Getlink FY, Grafton FY, Hewlett Packard Enterprise Q1, Hunting FY, Informa FY, ING Groep FY, ITV FY, Lancashire Group Q4, Lufthansa FY, Melrose Industries FY, Merck Q4, PageGroup FY, Rentokil Initial FY, Robert Walters FY, Schroders FY, Spire Healthcare FY, Zalando FYFridayBank of England Monetary Policy Committee member Catherine Mann gives the keynote lecture at the Reserve Bank of New Zealand research conference Holding Anchor in Turbulent Waters in WellingtonFederal Reserve chair Jay Powell is among the central bankers speaking at the University of Chicago Booth School of Business 2025 US Monetary Policy Forum conference in New YorkWelcome address by European Central Bank president Christine Lagarde at the ECB International Women’s Day 2025 conference “Closing the Financial Literacy Gap” in Frankfurt, GermanyBrazil: Q4 GDP estimateEU: Q4 GDP estimateGermany: January manufacturing orders dataUK: Halifax House Price IndexUS: February employment dataResults: Just Group FY, Royal London FY, Stelrad Group FYWorld eventsFinally, here is a rundown of other events and milestones this week. Monday2025 Pacific Operational Science & Technology (POST) five-day conference begins in Honolulu, Hawaii, hosted by the National Defense Industrial Association and the US Indo-Pacific CommandFrance: Paris Fashion Week begins, running until March 11UK: Inquiry begins into government decisions to buy personal protective equipment (PPE) during the Covid-19 pandemic. It will include evidence related to PPE Medpro, a company linked to Conservative peer Michelle Mone and her husband Doug Barrowman, which Mone recommended to the government. The National Crime Agency opened an investigation into PPE Medpro in May 2021 into suspected criminal offences committed in PPE procurement. Mone and Barrowman deny any wrongdoing.US: third meeting of countries party to the Treaty on the Prohibition of Nuclear Weapons at the UN headquarters in New York. Japan is due to skip the gathering, which runs until Friday.TuesdayPre-Lent celebrations, variously called Carnival, Fat Tuesday, Mardi Gras, Shrove Tuesday and Pancake DayCanada/Mexico: 25 per cent tariffs scheduled to begin on goods from these countries travelling to the US marketChina: start of the third session of the 14th National Committee of the Chinese People’s Political Consultative ConferenceMicronesia: parliamentary electionsUK: Make UK national manufacturing conference in London. Speakers will include “a senior government minister” and shadow business secretary Andrew Griffith. Discussion about improving British growth prospects will be a key talking pointUS: President Donald Trump due to address a joint session of CongressWednesdayAsh Wednesday, the start of Lent in the western church calendarCanada: 2025 Ottawa Conference on Security and Defence begins its two-day gathering. The theme is From Policy to Action in an Unpredictable WorldRussia: 72nd anniversary of Joseph Stalin’s death. Communists traditionally lay flowers at the Soviet leader’s grave in Moscow to mark the occasionChina: National People’s Congress commences ThursdayEU: leaders of the 27 member states will hold an emergency summit to discuss next steps for Ukraine and Europe’s securityUK: 28th annual World Book Day, celebrating literature and readingFridayUS: 60th anniversary of “Bloody Sunday” in Selma, Alabama, when state troopers beat peaceful protesters marching against discrimination. The brutality against the marchers, including John Lewis, a Black civil rights activist who went on to become a congressman, helped spark the 1965 Voting Rights ActSaturdayInternational Women’s Day, commemorated in various countriesBrazil: final day of the Rio CarnivalSundayCanada: new Liberal Party leader announced, and de facto prime minister, following the resignation of incumbent Justin TrudeauChina publishes consumer price index and PPI inflation rate dataUK: Crufts 2025 Best in Show presented on final day of the 134-year-old pedigree dog competition, now held in Birmingham, named after Charles CruftUS: Daylight Saving Time beginsrecommended newsletters for youWhite House Watch — What Trump’s second term means for Washington, business and the world. Sign up hereFT Opinion — Insights and judgments from top commentators. Sign up here More

Unlock the White House Watch newsletter for freeYour guide to what the 2024 US election means for Washington and the worldPresident Donald Trump will impose tariffs on Mexico and Canada on Tuesday but is still deciding on the levels, commerce secretary Howard Lutnick has said.Mexico and Canada have done “a lot” to address Trump’s concerns about border crossings but not enough to address his worries about “fentanyl deaths in America”, Lutnick said on Fox’s Sunday Morning Futures show.Lutnick said Trump was thinking about “how exactly he wants to play it with Mexico and Canada, and that is a fluid situation”.Trump has also vowed to impose additional 10 per cent tariffs on China on Tuesday, which is “set”, Lutnick said. Those tariffs come on top of 10 per cent tariffs he already imposed this month.Trump has previously proposed imposing 25 per cent tariffs on Mexico and Canada, but Lutnick indicated that the figure could be lower. His remarks suggest Mexico and Canada will make a last-ditch diplomatic push to try to avert the measures, which Trump delayed once before last month.“He’s going to think about it. He’s going to put them into place on Tuesday. The Canadians and the Mexicans have been talking to him,” Lutnick said.© BloombergMexico last week extradited dozens of prisoners to the US, including a drug trafficker wanted since the 1980s, in a bid to try to ward off the expected tariffs. Trump also indicated he may extend his global trade war to Canada’s lumber industry after directing the commerce department to probe dumping into the US market.China, meanwhile, does not appear to have any room to manoeuvre before Tuesday.“They either end the subsidies and they end making these ingredients from fentanyl, or he’s going to put tariffs on there,” Lutnick said.China has vowed to take countermeasures to defend its interests. Beijing said last week it has tightened controls on precursor chemicals and fentanyl-like substances.“If they think they’re going to retaliate, remember they have so much more that they sell to us than we sell to them,” Lutnick said.In a poll released Sunday by CBS, Trump got narrowly positive ratings for handling the economy, but not on inflation. Fifty one per cent of Americans indicated they approved of his handling of the economy but 46 per cent said they approved of how he is tackling inflation.The survey found that Democrats and Republicans overwhelmingly want Trump to focus on the economy and inflation but a much lower percentage think he is actually prioritising those areas, focusing more on the border, tariffs and the federal workforce. More

This article is an on-site version of Free Lunch newsletter. Premium subscribers can sign up here to get the newsletter delivered every Thursday and Sunday. Standard subscribers can upgrade to Premium here, or explore all FT newslettersSunday greetings. I’ve been away in the United Arab Emirates this past week, so I’ve called upon some experts to assist me with this edition.In my Vietnam dialectic, I mentioned the often under-appreciated role of culture in shaping how economies develop.So this week, I asked academics and journalists to explain how norms and values have influenced capitalism in four nations from across the cultural spectrum: China, India, Sweden and the US.Culture mattersFirst, some background. Perhaps the most widely read work on the link between culture and economic outcomes comes from Max Weber. In The Protestant Ethic and the Spirit of Capitalism (1904) the German sociologist argued that values practised by reformist Christians — including hard work, discipline and frugality — paved the way for the emergence of capitalism in the west.But most nations have now accepted some role for private enterprise in their economies (albeit to differing degrees). And cultural norms have shaped how it has evolved.Asia, for instance, generally has more collectivist and hierarchical social structures than in the west. Thomas Talhelm, an associate professor at the University of Chicago, has linked this to the prevalence of rice agriculture in the east. He posits that its high labour intensity relative to wheat farming required farmers to create interdependent working customs, forming the basis of tighter-knit social structures.Dutch social psychologist Geert Hofstede created a way to categorise cross-cultural differences using six dimensions, based in part on surveys of IBM employees.Below are scores for each dimension in a few selected western and eastern countries, using survey and research data collated by The Culture Factor Group (check out its country comparison tool here).Asian nations tend to score higher for traits associated with paternalism, long-termism and community than in the west:Some content could not load. Check your internet connection or browser settings.Parag Khanna, author of The Future is Asian, explains that these characteristics underpin the region’s typically technocratic, socially conservative and mixed capitalist systems:“Inter-generational accumulation of private wealth in family businesses (which may be reinforced by a deferential culture), has seen the rise of dynastic corporate structures, where there has been little need to follow the path of publicly listing companies to raise capital. And, what Western analysts have come to view as a “weakness” of many Eastern economies — low market capitalisation and trading volumes — is viewed by Asians as a source of strength: long-term strategic orientation, stability, and even immunity from market pressures.”Beyond these broad western and eastern cultural traits, there are subtle combinational differences between countries in each region.Let’s begin with China, which scores high in values linked to thrift and respect for hierarchy. Keyu Jin, professor at the London School of Economics, explains how this is embodied in guanxi — a term used to describe one’s ability to draw on networks: “Guanxi isn’t everything in China — but without it, you won’t get far. It’s not just about contracts. It’s trust, reputation and reciprocity — the unwritten code of relationships in Confucianism. Need a top doctor, a fresh grad job, or even a better quarantine hotel? Guanxi helps.In business and finance, it’s even bigger. In a country where permits, licences and funding are controlled by local governments, guanxi is the ultimate shortcut.It’s not just for billionaires. Parents cosy up to teachers, real estate developers befriend village chiefs, and plenty of loans are secured over dining and wining with mid-level bank staff. Deftness and persistence is key. Many of China’s top tech entrepreneurs started with nothing but mastered the art of connection.Guanxi has evolved. It’s no longer just relationships — it’s “guanxi+” — where mutual value creation is key. Businesses that want government backing need to bring investment, jobs and innovation to the table. DeepSeek may not have started with guanxi, but moving forward, its success ensures it will secure the best conditions to navigate global competition. Today, it’s not just who you know that matters, but what you can offer.”Next, to India. Like China it values social hierarchy, but scores stronger on traits linked to driving immediate results. This underpins India’s jugaad, explains Jaideep Prabhu, professor of business and enterprise at Cambridge Judge Business School:“Jugaad — the ability to find ingenious, affordable solutions despite severe constraints — has shaped India’s economy ever since independence. This mindset initially fostered innovation across various sectors. Tata Motors’ Nano, once marketed as the world’s cheapest car, aimed to provide affordable four-wheel transportation to millions. And the Mitticool, a low-cost biodegradable clay refrigerator, offers an eco-friendly alternative to the conventional fridge.As India’s economy has grown, the concept of jugaad has evolved into more structured “frugal innovation.” This approach maintains the core principles of resourcefulness but applies them to create scalable, high-quality solutions at affordable prices. For instance the Chandrayaan-3 moon mission cost around $75 million, significantly less than comparable missions by other space agencies. India’s Digital Public Infrastructure also exemplifies the country’s ability to create high-tech, scalable solutions.”Next, the US, which scores high for individualism and valuing solo achievement. Here’s Adam Chandler, author of 99% Perspiration, on the country’s “hustle” culture:“The word hustle has taken an expansive journey in the US, evolving to a doctrine of basic endurance in a country with a thin-by-design social safety net. American Hustle culture grew out of a fascination with social mobility and has drawn millions from around the world to pursue their own American dream.Hustle initially moved beyond its connotations [of] grit and hard work to embody a scheme or a sleight of hand. This version of hustle identified a way to survive, implicitly against the long odds imposed by external forces like oppression and economic exclusion.As financial precarity has subsumed more would-be strivers, this interpretation of hustle has been more widely adopted. The hustle now appears as a call to be resilient or self-reliant; as a commodity that fetishises overwork and infuses it with good cheer as a cultural guideline that connects long hours with the need to play hard or indulge in high-priced self-care. Speaking in Nebraska in 2005, former President George W Bush met a divorced mother of three who told him that she worked three jobs to get by. “Uniquely American, isn’t it?” he told her. Unfortunately, anger is now also catching up. A 2023 Gallup poll found that 39 per cent of Americans believed that they were failing to get ahead despite working hard.”Finally, Sweden. Like the US it ranks high for valuing personal freedom, but places considerably less emphasis on individual achievement. Here’s how lagom encapsulates that, via Andreas Bergh, an economics professor at Lund University.“The Swedish word lagom is often translated as ‘just the right amount’. It goes back to Viking culture, where there was a custom of passing a communal drinking horn around. Each person had to drink ‘just enough’, ensuring that everyone could have their share. The practice of lagom embodied the principle of social trust and considering the collective good rather than individual excess. It helped Swedes act as a team and co-ordinate their behaviour.On a private level, lagom encapsulates a philosophy of avoiding extremes. Rather than pursuing excess, Swedes strive for harmony. On a political level, the culture of lagom and the ability to act collectively paved the way for an expansion of the welfare state that ensures no one has too much or too little. It’s prevalent in business and consumer behaviour too. For instance, the minimalist, functional design of Ikea is a prime example of lagom at work. Ikea’s products emphasise practicality, simplicity and affordability, aligning with the Swedish desire for moderation and balance in everyday life. Lagom also plays a role in Sweden’s corporate culture, where work-life balance is prioritised.”“Culture” is multi-layered, and does not always sit neatly in distinct categories. Still, Hofstede’s framework gives us a useful means to conceptualise beliefs, preferences and values. After all, history and geography mould societal behaviours in ways that influence how institutions and businesses operate — and how economies develop.Culture isn’t everything. But in a world that risks turning more insular, it’s important to remember that global capitalism — from Ikea to DeepSeek to Tata — is more than just the trade of goods and talent, but also an exposure to new ways of thinking and doing.Thoughts? Message me at freelunch@ft.com or on X @tejparikh90.Food for thoughtNew research from the Federal Reserve Bank of New York finds that American imports from China have decreased by much less than reported in official US statistics in the aftermath of tariffs over recent years. The implication is that American consumers could face larger consequences from Donald Trump’s latest amplification of the trade war.Recommended newsletters for youTrade Secrets — A must-read on the changing face of international trade and globalisation. Sign up hereUnhedged — Robert Armstrong dissects the most important market trends and discusses how Wall Street’s best minds respond to them. Sign up here More

The European Central Bank is widely expected to cut interest rates at its policy meeting next week, so investors will be focused on trying to find clues about its likely moves later this year.A quarter-point cut on March 6, which is fully priced in by the swaps market, would bring down the deposit facility rate to 2.5 per cent, the lowest level since February 2023 and 1.5 percentage points below its peak.Executive board member Isabel Schnabel told the Financial Times in February that the central bank should “now” start to debate a “pause or halt” to rate cuts, adding that rates have come down so far that “we can no longer say with confidence that our monetary policy is still restrictive.” If the ECB watered down or removed its previous statement that “monetary policy remains restrictive”, this could be seen as a hint that rate cuts may be paused in April or June, say analysts, a scenario that financial markets have partly priced in.“A pause in April is possible if disinflation stalls or the activity data surprises notably to the upside,” Goldman Sachs economists wrote in a note to clients on Friday.Preliminary inflation data for February, to be released on March 3 by Eurostat, will be a key data point for the ECB. Economists polled by Reuters on average expect an annual rate of 2.3 per cent. While this would be the fourth monthly miss of the ECB’s medium-term 2 per cent target in a row, it would still be a marked fall from January’s 2.5 per cent.The ECB is forecasting that price pressures will come down further over the coming months. “Core inflation has slowed broadly in line with ECB staff projections, with significant progress on wage growth normalisation,” Goldman Sachs economists said. Olaf StorbeckHow strong is the US jobs market?Investors will look at US jobs data for February, due on Friday, to provide clearer indications on the health of the world’s largest economy after a spate of mixed data muddied the outlook.Data from the Bureau of Labor Statistics is expected to show that US employers added 133,000 new roles last month, according to a Reuters poll of economists, down slightly from 143,000 in January.The previous reading was considerably lower than forecasts, but a drop in the unemployment rate and strong revisions to older numbers have pointed to a resilient American jobs market.Investors are relying on the jobs data to provide clues about the timing of interest rate cuts this year.Stronger-than-forecast jobs numbers could push back those expectations, while any signs of deterioration may lead traders to pull forward their bets on monetary policy easing. Current market pricing puts the first Fed cut of the year by July.Investors’ bets on the timing of rate cuts in 2025 have wavered in recent weeks as they wait to see if US President Donald Trump makes good on his threat to impose tariffs on some of the US’s largest trading partners.Some economists fear that an escalating trade war could slow global growth. But a pair of closely watched surveys subsequently showed that US consumers are also growing increasingly nervous about tariffs, while an S&P Global gauge showed a contraction in services activity in February for the first time in more than two years.Moreover, the US inflation growth rate came in at 3 per cent in January, above the Federal Reserve’s target of 2 per cent and overshooting economists’ expectations. “The broader outlook for the real economy has become increasingly uncertain, even as the Fed’s efforts to reestablish price stability are ongoing, at best,” said Ian Lyngen at BMO Capital Markets. “The verdict remains out as to whether [Fed policymakers] can claim victory on the inflation front,” he added. Harriet ClarfeltHas Chinese business activity picked up?China’s Caixin services purchasing managers’ index on Wednesday will offer the first insight since the lunar new year holiday into business activity in the world’s second-largest economy.The monthly reading has shown a modest expansion in the five months since Beijing aggressively cut lending rates in a bid to stimulate economic growth.That indicates that easing financial conditions are beginning to translate into the real economy, as the Caixin indices track activity in the country’s privately run businesses. Services PMIs tend to reflect domestic demand, while manufacturing PMIs are a better gauge of business sentiment for the country’s export-oriented factories.Investors may also look for any indication that technology is stimulating business activity, after Chinese start up DeepSeek in January released its cutting edge artificial intelligence model and roiled the share prices of US technology companies. However analysts cautioned against an immediate effect.“DeepSeek is a great three to five year trend,” said Winnie Wu, chief China equity strategist at Bank of America. But the technology will not fix China’s problems in weak consumption, deflation, youth unemployment and geopolitical uncertainty, Wu added. Economists said the shadow of a potential trade war with the US hung over the Chinese economy. US President Donald Trump announced this week that his administration would impose tariffs of 10 per cent on imports from China from March fourth.“There’s the AI enthusiasm, but there’s clearly a lot of geopolitical risk,” said Julian Evans-Pritchard, head of China economics at Capital Economics. “As those risks crystallise, the impact on Chinese markets is not going to be positive.” William Sandlund More

Unlock the White House Watch newsletter for freeYour guide to what the 2024 US election means for Washington and the worldCurrency markets are increasingly dismissive of Donald Trump’s tariff threats, raising the risk of big swings if the US president follows through on his promise to hit China, Canada and Mexico with levies next week.Trump’s proposal to bring in levies against the EU and China unsettled the euro and currencies of other US trading partners on Thursday. But the falls were less dramatic than some of the upheavals seen in recent weeks when he began spelling out his plans. Measures of expected short-term volatility in currencies such as the euro and the Mexican peso have fallen since the inauguration in January.“Having been burned on tariff trades already this year, investors are less reactive to unsupported tweets” and political rhetoric, said Jerry Minier, co-head of G10 forex trading at Barclays. Exchange rates have been buffeted by tariff headlines, with the dollar strengthening sharply against currencies of major trading partners on February 3 after Trump announced tariffs against Mexico, Canada and China. But the moves reversed by the end of the trading day after the president postponed the introduction of the levies against the first two countries.Since then, market moves in response to his announcements have been smaller. Having fallen after Thursday’s broadside, the euro steadied against the dollar on Friday and at just below $1.04 remains well above the low of less than $1.02 touched in early February.Akshay Singal, global head of short-term interest rate trading at Citigroup, said that after “trusting and believing” tariffs were coming, the currency market “wants to see them in action”.He added: “Previously it was ‘I believe what you tell me’, and now it is ‘show me.’” The announcement and then deferral of tariffs against Mexico and Canada had shaken investor confidence that tariff headlines could be trusted, Singal said.Investors’ expectations of swings in euro-dollar over the next month are down about a fifth from their peak in mid-January, according to an index from CME Group based on options prices.Its index of expected volatility in the Mexican peso has also fallen since January — and is now almost half its level at the US election last year — while the equivalent measure for the Canadian dollar is also down from its early February peak. That is despite looming deadlines such as the tariffs on Mexico and Canada that are due to go into place next week.“Our models indicate that tariff premium has unwound in recent weeks with little now priced in key [currency pairs]”, said Goldman Sachs in a note on Friday.One currency trader at a big European bank said work days had become “weirdly slow” in recent weeks. “Trump will shout about some tariffs, row back from those announcements, the White House will say something totally contradictory and then Trump might post the opposite on Truth Social 10 minutes later,” the trader said. “You can’t trade that.”Analysts said this inertia had crept into rates markets too, where fears of a boost to inflation from tariffs drove yields higher at the end of last year. The Ice BofA Move index, a gauge of bond investors’ expectations of Treasury market volatility, is well below the highs reached in the run-up to the US election.“You would think volatility would be higher given how little clarity the market has now, but the market has become numb to it, until [investors] actually see the path forward,” said Gennadiy Goldberg, head of US rates strategy at TD Securities. However, some investors and analysts say there is a growing risk that the market is no longer taking the potential economic fallout from tariffs seriously enough, with “complacency” now a danger, according to Barclays’ Minier.Some believe that expectations of lower volatility make a big sell-off more likely if significant trade taxes are eventually implemented.The day Trump “does follow through [on blanket tariffs], there would be a knee-jerk reaction, because most people think it is not priced in”, said Finn Nobay, a trader at investment firm Payden & Rygel. More