Economy

Unlock the Editor’s Digest for freeRoula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.When commodity prices plunge, producers turn off the taps. The Democratic Republic of Congo, home to three-quarters of the world’s cobalt, has done the next best thing by slapping a three-month suspension on exports. This is unlikely to reverse the pounding taken by the blue metal.Cobalt, named for the evil spirits old-time miners took to be responsible for noxious fumes in their ore, is used in phones, jet engines and electric vehicle batteries. Optimism over electric vehicles pushed the price up to about $40 per pound in 2022, giving a nice ride to miners like London-listed Glencore, which ruled the roost until being elbowed aside by China’s CMOC in 2023. Naturally, supply boomed. As a byproduct of copper mining, production of cobalt rose alongside growing production of the red metal. CMOC deployed the low cost, high volume China playbook with aplomb, increasing production to the tune of 114,000 tons last year. That left Glencore well behind and vaulted CMOC’s own guidance of 60,000-70,000 tons. This year — pre-export halt — it is guiding for up to 120,000. Cobalt stockpiles have also risen. In December, warehouses were holding 128 metric tons, according to the US Geological Survey, much of it likely in China.Low prices, now around one-quarter of the 2022 peak, have not put the brake on CMOC’s ambitions. This is a low-cost operator and the incremental cost of producing cobalt alongside copper is small. And think of CMOC as a vertically integrated behemoth. Major shareholder CATL is the world’s biggest manufacturer of EV batteries. In addition to its near-25 per cent indirect holding in CMOC, the battery maker also took a 25 per cent stake in one of the mines.Suspending exports is one of the few levers DR Congo can pull, but it is a weak one. Enforcement is one reason: borders are porous, and all the more so when conflict with neighbouring Rwanda is raging. Even assuming policing, more mining is coming on stream, including in Canada. Indonesia, producing cobalt from nickel, has more capacity. On the demand side, technologies are changing. Car manufacturers are starting to switch from nickel manganese cobalt batteries to cobalt-free lithium-iron-phosphate (LFP) batteries, which have longer life cycles and fewer environmental issues. For now they pack less power but as technology improves, more will follow the likes of London electric buses powered by LFP batteries. That suggests the picture will not change much for DR Congo. History shows those doing the extracting typically win when it comes to tussles over resources. Extractivism has had a long history in the global south; that is one thing technology has done nothing to change.louise.lucas@ft.com More

Unlock the Editor’s Digest for freeRoula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.South Africa’s central bank chief has warned counterparts in the world’s largest economies that their authority to set interest rates independent of political influence was under threat from rightwing populism.Lesetja Kganyago, governor of the South African Reserve Bank, said institutions such as central banks were increasingly becoming the target of attacks, as democracies shifted to the right of the political spectrum.“It used to be that the concern was about leftwing populism. But what the world’s now facing is rightwing populism,” he told the Financial Times from the G20 finance meetings in Cape Town, which he co-chaired. “And there’s one thing populists always do, which is to attack institutions.”The remarks underscore the anxiety created by the rise of a radical brand of populism, tending to authoritarianism, that threatens the independence not only of leading central banks but also of multilateral institutions such as the World Bank.Central bank independence was enshrined during the 1970s and 1980, as bank authorities across the world were handed control of interest rates after a wave of inflation proved difficult to tame in an environment where political interference in monetary policy was rife.But the principle has come under renewed threat, notably from Donald Trump, who critics have accused of undermining the authority of the Federal Reserve. The US president told the World Economic Forum in January that he would “demand that interest rates drop immediately”, and recently criticised the Fed of doing “a terrible job”.Only a limited number of elected leaders before Trump have sought to interfere in monetary policy, although Turkey’s President Recep Tayyip Erdoğan fired several central bank governors for not lowering interest rates as he wanted.South Africa’s central bank also came under pressure from then-president Jacob Zuma in 2016, as his supporters demanded the constitution be amended to alter its mandate, arguing it should be “nationalised”. In an address to the Arbitration Foundation of Southern Africa last month, Kganyago said the bank “felt duty bound to defend the independence of the SARB as a key institution of our democracy”, so it went to court to overturn official reports arguing that the mandate be altered. “The court ruled emphatically in our favour,” he said.The G20 meetings of top finance ministers and central bankers concluded on Thursday without any agreement on priorities after some countries — understood to include the US — took dissenting views on issues including climate finance and the introduction of trade tariffs.A summary of the meetings did find general agreement from members that the independence of central banks was “crucial” to ensuring price stability. Kganyago, who has been bank governor since 2014, said the new wave of economic protectionism triggered by Trump’s return to the White House had cast a shadow over global co-operation and risked a dangerous game of tit-for-tat.“To the extent that any country decides to impose tariffs on others, it impacts on global trade,” the governor said, adding that retaliation — potentially via measures other than tariffs — risked undermining the post-pandemic global recovery.This scenario began to play out this week, after Trump threatened to impose 25 per cent duties on goods from the EU, saying the bloc had been created “to screw the United States”.French finance minister Eric Lombard responded: “It is clear that if the Americans maintain the tariff hikes, as President Trump announced, the EU will do the same, [as] we too must protect our interests.”Kganyago said monetary institutions that were complacent about the “populist charge” were the most vulnerable.“Central banks are not immune,” he said. “In any democracy, where there’s contestation about the role of institutions, central banks must understand there will be contestations about their role.”“Our best defences are honesty with the public and excellence in pursuing our mandates.” More

Unlock the Editor’s Digest for freeRoula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.Businesses in parts of Syria formerly held by the Assad regime are struggling to sell their wares as a deluge of cheap imports undercuts local producers, sparking widespread anger at the new government’s move to cut import tariffs. Foreign goods, which had been restricted for years, were allowed into the country in January after rebels led by Islamist militant group Hayat Tahrir al-Sham ousted president Bashar al-Assad a month earlier.Under Assad’s rule, most goods were produced domestically or smuggled in through a system of exorbitant taxes, duties and fines, steeply increasing costs. Electricity shortages also meant businesses had to pay extortionate amounts for power.Some businesses are opting to shut shop temporarily rather than sell goods at enormous losses, underscoring the challenge faced by the new government in reviving the shattered economy and maintaining social stability.One car dealer said that a car costing $10,000 in Beirut, for example, would have sold for $60,000 in Syria under Assad, but now the same vehicle would go for $11,500. “Two months ago, all the products on the market were Syrian,” said a Damascus-based banker. “Nowadays, a ready-made product from Turkey is cheaper than the cost of imported fabric.”A textile businessman in the capital said he expected consumers would eventually realise the imported products were lower quality, “but by then the market will have been disrupted, and a lot of factories that could not handle the loss of business will have closed”.A vegetable vendor waits for customers in front of a damaged building in Homs, west Syria More

Unlock the Editor’s Digest for freeRoula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.China’s ecommerce suppliers are rethinking how they do business after US President Donald Trump said he would soon close a tax exemption that has proved a crucial lifeline to thousands of small-scale export businesses.Trump announced the end of the so-called de minimis rule, which exempts shipments under $800 in value from tariffs and rigorous customs checks, in an executive order last month.He later paused efforts to end the exemption for packages from China but the US still plans to halt de minimis as soon as “adequate systems” are in place to screen and tax the millions of packages that arrive in the country each day. Trump on Thursday announced another 10 per cent tariff on Chinese goods, on top of 10 per cent tariffs that he imposed in February, to take effect from Monday.The combined moves have forced Chinese sellers on cross-border ecommerce platforms — who had rapidly taken up the tariff-free form of trade in recent years — to expand production in the US, seek new customers in alternative markets or pass costs on to consumers.“Tariffs . . . will definitely reduce sales and market share in the US,” said Yarong Wuliu, former deputy secretary-general of the cross-border ecommerce division of the Communist party-backed Chinese Association for Small and Medium-sized enterprises. “The ecommerce industry should be prepared.”Many traders started selling small-value orders on or via online platforms after tariffs and trade restrictions initiated during Trump’s first presidency hit orders from traditional buyers in western markets. Cross-border ecommerce ballooned more than 60 per cent in the four years to 2024, totalling Rmb2.63tn that year. In 2023, it accounted for almost 6 per cent of all of China’s goods trade, officials said last year.Zhao Xiuxiu, a factory boss in Guangzhou’s textile-producing Baiyun district that supplies goods to sellers on platforms such as Shein for the past five years, said her business would focus on traditional, large shipment trade with her customers in Africa and the Middle East.Sales had already halved in the second half of last year, around the time former president Joe Biden first proposed tightening de minimis rules.“If there are tariffs, it’s definitely bad news,” she said. “Starting from last year it started to be hard, and this year it’s been no good either.”Concerns about an overhaul of the de minimis rules pushed Casetify, a Hong Kong-based phone case maker that counts the US as its largest market, to build printing facilities in the US last year. “Casetify needs to move quickly, so it ships blank cases in bulk to the US first and then prints them there,” according to a person familiar with the matter. “Production lines are not firing on all cylinders like they were a year earlier,” said Zhang Zhongbao, founder of Xingcheng Excellent Swimwear Consultancy, which helps Shein and rival platform Temu source swimwear suppliers. “Factories don’t dare stock up due to concerns over US tariffs.”Chinese exporters are also expected to step up efforts to expand production in countries less likely to be targeted by Trump, logistics executives said.Ecommerce merchants that “hitherto have been running big manufacturing [and] distribution facilities ex-China to the rest of the world [were] long before the tariff discussion” looking to boost production elsewhere, said John Pearson, chief executive of DHL Express, which helps Chinese businesses deliver their goods. Now they have “had some of those plans accelerated”.Even with tariffs, many believe their goods would remain competitive and that they could simply pass any additional costs on to US consumers.Huang, who prefers to go only by one name and sells home decor and holiday decorations on Temu, said he had only increased prices “slightly” following Trump’s executive order.“For us individual sellers, a tariff only means a slight reduction in profit margins,” he added. “Consumers can afford it, and it hasn’t affected the orders.”Prices of goods on Temu that the company sets itself increased 42 per cent after the executive order before falling when the move was put on pause days later, according to a Goldman Sachs survey.Liu, another seller who asked to be identified by his surname, and who sells circuit boards to the US and other markets on platforms including Amazon and eBay, agreed that consumers would bear the brunt of cost increases, suggesting that sellers would one day itemise customs duties on bills separately.“In the end, tariffs will definitely be passed on to consumers,” he said.Additional reporting by Oliver Telling in London More

Unlock the White House Watch newsletter for freeYour guide to what the 2024 US election means for Washington and the worldDonald Trump has ordered a probe into dumping in the US lumber market, setting the stage for the industry to join the widening basket of commodities targeted by Washington’s global trade war. The president on Saturday directed the Department of Commerce to investigate whether imports of lumber and wood products were undermining domestic loggers in a way that posed a risk to US national security, days after ordering a similar review of the copper industry.If the investigation finds evidence of dumping, the president can impose retaliatory measures including quotas and tariffs. Canada, by far the biggest source of US lumber imports, would be hardest hit. “Clearly, something is going on here. We know that there’s massive subsidies with these exporters who are taking advantage of our market,” said a White House official ahead of the order. “But it’s up to [Commerce] Secretary Howard Lutnick to investigate this and come back to the president with a report.” While Canadian lumber imports are already subject to tariffs of 14.5 per cent, the announcement marks the first formal step towards dragging the industry into Trump’s global trade war. Any new tariffs would be in addition to the pre-existing Canadian levies. It comes on the eve of sweeping 25 per cent tariffs set to be introduced on Canada and Mexico next week, plus a further 10 per cent duty on Chinese imports as Trump ratchets up the pressure on US trading partners. The president has also sought to target specific industries where he argues imports are undermining domestic industry. He is set to impose 25 per cent tariffs on steel and aluminium imports from March 12, following a similar probe into that sector during his first term.On Tuesday he announced an investigation into imports of copper, sparking fears that the metal would be the next sector slapped with tariffs. The US has had a long-running feud with Canada over lumber imports. It imported about 34mn cubic feet of softwood lumber in 2023. The vast majority of that — over 28mn cu ft — came from Canada. The next biggest, Germany and Sweden, shipped less than 3.5mn cu ft combined. Forestry is big business for Canada. In 2022, the sector contributed C$33.4bn to real GDP, or about 1.2 per cent. In the same year Canada’s forest product exports were valued at C$45.6bn, with the majority destined for the US, according to government data. British Columbia province, where there is a high concentration of Canada’s forestry industry, as well as companies, have spent decades in the courts fighting US levies and anti-dumping duties.In 2016 the US lumber industry launched the most recent round of litigation, urging the commerce department to act as “Canadian lumber is unfairly subsidised and dumped into the US market,” according to a statement from the BC government. The dispute hinges on the Canadian forestry industry’s practice of sourcing wood from Crown land, or parks run by the provinces, so production and administration costs are lower than for US forestry companies who rely on private land.Since becoming president, Trump has repeatedly raised the issue and threatened tariffs on wood imports. Derek Nighbor, president of the Forest Products Association of Canada, said any increase in tariffs on lumber would hurt forest sector employees on both sides of the border, and on American families seeking affordable housing.“We should be focused on strengthening our competitive advantages, building more affordable housing, working together to address worsening wildfire risks, and bringing more North American wood to the world,” he said in a statement last month. But Andrew Miller, owner of Stimson Lumber and the chair of the US Lumber Coalition, said: “Canada’s unfair trade comes at the direct expense of US companies and workers.” More

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The Atlanta Fed’s GDPNow tracker of incoming data is indicating that gross domestic product is on pace to shrink by 1.5% for the first quarter.
While the tracker is volatile through the quarter and typically becomes more reliable much later in the quarter, it does coincide with some other indicators showing a growth slowdown.

A customer shops for produce at an H-E-B grocery store on Feb. 12, 2025 in Austin, Texas.
Brandon Bell | Getty Images

Early economic data for the first quarter of 2025 is pointing towards negative growth, according to a Federal Reserve Bank of Atlanta measure.
The central bank’s GDPNow tracker of incoming metrics is indicating that gross domestic product is on pace to shrink by 1.5% for the January-through-March period, according to an update posted Friday morning.

Fresh indicators showed that consumers spent less than expected during the inclement January weather and exports were weak, which led to the downgrade. Prior to Friday’s consumer spending report, GDPNow had been indicating growth of 2.3% for the quarter.
While the tracker is volatile and typically becomes a more reliable measure much later in the quarter, it does coincide with some other measures that are showing a growth slowdown.
“This is sobering notwithstanding the inherent volatility of the very high frequency ‘nowcast’ maintained by the Atlanta Fed,” Mohamed El-Erian, chief economic advisor at Allianz and president of Queens’ College Cambridge, said in a post on social media site X.
The gauge had pointed to GDP gains as high as 3.9% in early February but has been on a decline since then as additional data has come in.
On Friday, the Commerce Department reported that personal spending fell 0.2% in January, missing the Dow Jones estimate for a 0.1% increase. Adjusted for inflation, spending fell 0.5%. As a result, that shaved a full percentage point off the expected contribution to GDP, down to 1.3%, according to the GDPNow calculation.

At the same time, the contribution of net exports tumbled from -0.41 percentage point to -3.7 percentage points.
The combination of data and its impact on the growth outlook comes with surveys showing decreasing consumer confidence and worries about rising inflation. The Commerce Department also reported that an inflation measure the Fed favors moved lower during the month, as the core personal consumption expenditures price index fell to 2.6%, down 0.3 percentage point from December.
The week also brought some concerning news out of the labor market as initial unemployment claims hit a level that was last higher in early October.
In addition, the bond market also has been pricing in slower growth. The 3-month Treasury yield this week moved above the 10-year note, a historically reliable indicator of a recession at the 12- to 18-month horizon.
The economic and policy uncertainty has led to a bumpy start to the year for the stock market. The Dow Jones Industrial Average is up 2% in 2025 amid wild fluctuations in a volatile news cycle.
“My sense is that the complacency that has crept into asset markets is about to be disrupted,” said Joseph Brusuelas, chief U.S. economist at RSM.
Markets increasingly believe the Fed will respond to the slowdown with multiple interest rate cuts this year. Traders in the fed funds futures market increased the odds of a quarter percentage point reduction in June to about 80% as of Friday afternoon and raised the possibility of three such cuts total this year.

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