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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 textile exports into the EU have surged as manufacturers hit by heavy US tariffs redirect goods to Europe, the European textile industry body has said.EU imports of Chinese clothing and textiles increased by 20 per cent in value and volume in the first half of 2025, compared with last year, according to Euratex data shared with the Financial Times. The majority of the value increase came from an approximately €2bn rise in cheap clothing imports.“We are talking about this tariff war and we see that China is exporting less to the USA,’’ said Mario Jorge Machado, president of Euratex. ‘‘We see a significant amount of it exported to Europe but [it] also connects with a decrease in price in the articles we are importing.” “The Chinese companies, because they cannot sell in the United States, are behaving in a very aggressive way to sell in Europe.”The knock-on impact of US tariffs has been coupled with the EU’s slow progress to cut the number of packages flooding into the bloc from online sellers such as Temu and Shein. The European Commission has proposed scrapping its €150 de minimis threshold, below which parcels can be sent to the EU duty-free, and charging a flat €2 fee on packages with a value under €150 instead. Member states must agree on the change before it becomes law. The US scrapped its own de minimis regime in August. Shippers face a minimum $80 fee on packages into the US.“We are comparing for the same package €2 to $80,” Machado said, describing the EU’s effort as “ridiculous”.“European politicians have not been defending European industry for many years . . . we are watching our industry being destroyed,” as China and the US acted in their own industrial interests, he added. At the same time, the value of exports from the EU to China fell 19 per cent, driven by a fall in the prices of clothing in Europe due to competitive pressure and a weaker yuan against the euro.Léa Marie, director-general of Le Slip Français, a French underwear company, said the company was in “direct competition” with imports from Asia and had invested extra in communicating to consumers “that purchasing our products helps accelerate job growth in the French textile industry” in order to persuade them to buy French.Policymakers have been on high alert for signs of Chinese dumping of goods in the EU, which could push down inflation. Europe has also been hit by a surge in steel imports diverted from the US because of high tariffs. The US administration’s tariff regime has caused huge ructions in long-established supply chains, particularly from China, as Chinese companies turn to Europe as an outlet for their production, as opposed to sending it to the US. Additional tariffs imposed on China since Donald Trump took office are 30 per cent at present, following extensive talks between the two sides.That has left European companies facing even tougher competition against cheap imports from China at the same time that they are struggling with a heavy administrative burden and higher energy costs than in most other markets.Textile companies, like much of the EU industry, are also struggling with higher tariff rates to sell to the US. Before the bloc’s trade deal with the US in July, which sets a standard 15 per cent tariff rate across most products, the majority of clothing and textile products had tariffs of less than 15 per cent.Only 11 per cent of textile products had tariffs above 15 per cent, said Euratex.The EU textile industry accounts for €170bn in annual turnover and 1.3mn jobs.Marie said that contrary to many businesses that argue that EU regulation is stifling their growth, “we do not have any particular difficulties with EU regulations; on the contrary, these rules protect us”.Data visualisation by Keith Fray More
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Unlock the White House Watch newsletter for freeYour guide to what Trump’s second term means for Washington, business and the worldInvestors will be watching for the release on Wednesday of the Federal Reserve’s minutes from its September rate-setting meeting, which should offer insight into deliberations among officials about how many times the central bank will cut interest rates again this year. At the Fed’s September meeting, policymakers cut its key interest rate for the first time since December 2024, by 0.25 percentage points. Through its Summary of Economic Projections, the Federal Open Market Committee also signalled that it saw the possibility of at least two additional quarter-point cuts by the end of December.The September decision was notable for being almost unanimous — there was just one dissenting vote, from President Donald Trump’s appointee Stephen Miran, who wanted interest rates to be cut by 0.5 percentage points. Governors Michelle Bowman and Christopher Waller, who had dissented at the board’s previous meeting, joined the majority in September, in a show of solidarity at a time when Trump has been threatening the Fed’s independence. The minutes should offer insight into the decision to cut, and might show the extent of the debate around Miran’s proposal. The minutes will also illuminate the shift in the Fed’s focus from inflation risks to labour market risks. Though the unemployment rate remains low, a series of weak jobs reports lay behind the committee’s decision to cut. Chair Jay Powell said after the meeting: “The labour market has softened. The case for there being a persistent inflation outbreak is less.”Traders in the futures market are currently pricing in between one and two quarter-point cuts by the end of the year. Kate DuguidHas gold reached the top? Gold’s extraordinary rally has been one of the biggest stories in markets this year, with the most recent leg up leaving investors asking how much further it can go.The price of gold — which investors often turn to as a store of value when inflation is rising — is within touching distance of $4,000 a troy ounce, having started the year just above $2,600.Concerns about the independence of the Federal Reserve and fears that the ballooning US fiscal deficit will erode the attractiveness of US Treasuries have sent investors flocking to gold for safety. The price jumped 12 per cent in September alone, with some investors looking for havens in the face of the US federal government shutdown.But analysts think there is further to go, partly as a function of the market’s bet that the Fed will make four quarter-point interest rate cuts between now and September 2026. Lower interest rates tend to push the price of gold higher as investors expect a lower return from holding bonds and look to other assets. The surge has also been driven by investors piling into gold-backed exchange traded funds.“We now expect gold to rise to $4,200 per ounce over the coming months,” UBS analysts wrote on Friday, up from a previous target price of $3,800. “We believe lower US real interest rates, further dollar weakness and ongoing political twists will drive prices higher, pushing ETF inflows higher than we initially forecast,” they said. Goldman Sachs analysts wrote this week that gold remained “our highest-conviction long commodity recommendation” and that the “upside risks” to their bet of $4,000 an ounce by mid-2026 had “intensified”. Emily HerbertBusiness activity in India has been robust but can it last?A widely followed survey of Indian business activity and confidence is expected to extend a string of robust readings recorded this year, but analysts are questioning how long it can last.HSBC’s composite purchasing managers’ index for September, covering the manufacturing and services sectors, is due out on Monday. The previous reading, for August, came in at 61.9, deep inside positive territory and comfortably clear of the 50-point threshold that separates contraction from expansion.But the pall of 50 per cent US tariffs imposed on India’s exports from the end of August is beginning to weigh on that outlook.HSBC’s India manufacturing PMI, released earlier this week, fell to a four-month low of 57.7 in September, down from 59.3 the previous month. The data painted a mixed picture, according to economists at Goldman Sachs, with the decline suggesting that the sky-high tariffs are starting to bite. Nevertheless, the index for new export orders rose slightly, “likely due to higher demand from countries outside the US”, Goldman’s economists said.Prime Minister Narendra Modi has moved to shore up domestic demand with tax cuts. However, the Indian rupee has fallen nearly 4 per cent against the dollar in 2025 and is hovering near record lows. The Reserve Bank of India on Wednesday held its benchmark repo rate at 5.5 per cent, adopting a wait-and-see approach after cutting by 1 percentage point so far this year.India’s latest PMI data shows that “the strength of the economy observed in the first half of the year won’t last and the central bank . . . will loosen policy further,” said Shivaan Tandon, emerging markets economist at Capital Economics. Chris Kay More
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