Economy

Unlock the White House Watch newsletter for freeYour guide to what the 2024 US election means for Washington and the worldAnglo American chief executive Duncan Wanblad has warned US President Donald Trump’s wave of new tariffs will push up the cost of mining production for years.Wanblad’s remarks come as a worldwide trade war threatens to upend the flow of commodities on oil and gas and a range of precious and base metals on which their businesses depend.Trump’s sabre-rattling sent the stocks of some of the big mining groups lower on Monday with London listed Glencore and Anglo American down more than 2 per cent at the close.Wanblad warned Trump’s tariffs on Canada and Mexico and threat to freeze funding to South Africa over a new law that permits expropriation of land in public interest would lead to market volatility and inflation.“One thing I’m sure of is that under all circumstances, [tariffs] are going to be inflationary,” he said. “We are going to see the cost of production go up pretty much everywhere as a result of this.”It remains unclear whether Trump will stick to his plans, however, as Mexico’s President Claudia Sheinbaum said the tariffs would be suspended for one month after a discussion with the US president. Canada’s Prime Minister Justin Trudeau is also locked in talks with Trump.Wanblad said the near-term impact on mining groups depended on the region, the level of the tariff and where the product was bought. “I have no idea what to make of the [Trump] statement, other than we could have all done without it.”Wanblad’s views echo other mining chief executives, who are all assessing the impact of higher tariffs, particularly on resource-rich Canada, which has reserves of oil and gas and metals such as gold and copper.Speaking to the Financial Times in January before the tariffs were announced, William Oplinger, the chief executive of aluminium producer Alcoa, said a tax on Canadian imports would mean “aluminium prices in the US would be substantially higher”.“Ultimately it will be in the price of pick-up trucks and beer cans,” he said. “It’s really hard to determine how much demand destruction we’ll see . . . If prices are substantially higher in the US that has to put some downward pressure on aluminium demand.”Duncan Hobbs, an analyst at trader Concord Resources, said the impact of the tariffs would be reflected in the premiums metal users paid on top of the benchmark exchange price for physical metals in the US. Analysts at BMO said higher premiums were likely to endure until “Canadian producers and US consumers alike can reroute supply chains to avoid the new duties”.Practically, that is likely to mean Canadian metals being diverted to Europe and the US importing more from other regions such as Australia, they said.Such a change would “create longer supply chains which will result in a sustained increase in US premiums”.Speaking at the Investing in African Mining Indaba in Cape Town on Monday, South Africa’s mining minister Gwede Mantashe called on African countries to halt mineral exports to the US in retaliation for Trump’s decision to suspend funding aid programmes on the continent.“They want to withhold funding, but they still want our minerals,” he said. “Let us withhold minerals. Africa must assert itself.” More

Unlock the White House Watch newsletter for freeYour guide to what the 2024 US election means for Washington and the worldCryptocurrency prices tumbled after Donald Trump threatened sweeping tariffs on the US’s largest trading partners, undermining investors’ early expectations the US president would deliver a boost to the industry.Bitcoin sank as much as 7 per cent to $92,500 on Monday, its lowest level in three weeks, leading a rout of the sector. Ethereum, the second-largest and widely used in decentralised finance trading, fell more than a fifth to $2,565 per token. The two tokens retraced some of their losses after Mexico and the US agreed to put tariffs on hold for a month, pushing bitcoin to above $101,000.The declines took the losses over the weekend to a nominal value of $430bn, according to CCData, amounting to a 13 per cent decline of the entire market.Traders shied away from riskier assets after Trump slapped steep import duties on goods from Mexico, Canada and China. The sharp falls unravelled many cryptocurrency price gains since Trump’s inauguration two weeks ago, when investors had hoped he would boost their fortunes.“There’s good Trump and bad Trump,” said Geoff Kendrick, global head of digital assets research at Standard Chartered. “The good version of Trump is [him saying] the industry is going to move forward . . . regulatory changes. Bad Trump is things like tariffs and more volatile markets, which is . . . less helpful,” Kendrick said.Trump exuberantly courted the digital asset industry during his election campaign, winning financial and vocal backing from the sector. In return he has signed an executive order supporting the growth and use of digital assets and blockchain technology and vowed to create a national stockpile of bitcoin, moves that investors celebrated. But his tariffs jolted the market and sent shares in crypto companies lower. Shares in crypto exchange Coinbase lost as much as 5.6 per cent and bitcoin-hoarding software group MicroStrategy shed 5.4 per cent in early trading in New York. They later regained losses with Coinbase down 2.38 per cent and MicroStrategy up 3.67 per cent.“Trump said no one has to pay taxes on gains in crypto and then got rid of all the gains,” said Tyler Hogge, partner at Pelion Venture Partners. Among other coins, Ripple’s XRP and Cardano’s ADA tokens fell as much as 26 per cent and 15 per cent respectively on Monday. XRP later rose to be up 3.2 per cent while ADA was still down about 2.5 per cent.Memecoins such as Dogecoin, backed by Elon Musk, dropped 12 per cent before recovering to be up 2.9 er cent. Trump’s own memecoin plunged as much as 23 per cent, to take its total losses since a peak two weeks ago to more than 75 per cent. It later recovered to be down about 10.6 per cent. The memecoin for Melania Trump lost 15.3 per cent, but later recovered to be down about 5 per cent.“A tidal wave of fear, uncertainty and doubt has been unleashed across the cryptocurrency market,” said Petr Kozyakov, chief executive of crypto payments company Mercuryo. He added the collapse in value of the Trumps’ memecoins “underlines the highly speculative nature of meme tokens and the high risks that they pose to the uninformed”.Since becoming president, Trump has increased his personal interest in crypto. The president and his wife launched their own memecoins in January, to backlash from crypto executives who warned the speculative tokens would damage the industry’s reputation.Last week, Trump Media and Technology Group, in which Trump is a majority shareholder, said it would invest up to $250bn into crypto and other assets.Click here to visit Digital Asset dashboard More

President Donald Trump commended the Federal Reserve for its decision last week to leave interest rates unchanged.
“Holding the rates at this point was the right thing to do,” he told reporters.

U.S. President Donald Trump looks on as he signs an executive order in the Oval Office at the White House in Washington, U.S., Jan. 31, 2025. 
Carlos Barria | Reuters

President Donald Trump agreed with the Federal Reserve for its decision last week to leave interest rates unchanged, an early pivot from his previous demand that the central bank ease “immediately.”
In an exchange with reporters Sunday, Trump said holding its key borrowing level in a range between 4.25%-4.5% was the correct move for the Fed.

“I’m not surprised,” he said regarding the decision, according to multiple reports. “Holding the rates at this point was the right thing to do.”
The statement stood in stark contrast to one Trump delivered when speaking remotely to the World Economic Forum in Davos, Switzerland. In a Jan. 23 appearance, Trump said he would “demand that interest rates drop immediately.”
The president has no direct authority over the Fed, though he does nominate the chairman as well as other board members. Current Chair Jerome Powell is a Trump nominee, and a frequent target of the president’s criticism.
Markets don’t expect the Fed to lower rates until at least June. In his post-meeting news conference last Wednesday, Powell repeatedly asserted that the Fed doesn’t need to be in a “hurry” to lower further after shaving a full percentage point off the fed funds rate from September to December in 2024.
The Fed’s decision-making got potentially more complicated after Trump on Saturday said he would impose aggressive tariffs against Canada, Mexico and China, the three largest U.S. trading partners. Economists worry that the tariffs will drive up prices at a time when inflation has shown signs of easing.

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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 fabled stock market vigilantes are going to have to work much harder than this to tame Donald Trump.Since Trump’s re-election, a lot of investors and analysts have clung to the notion that it’s OK, the president won’t do anything too wild with economic policy because he uses stocks as real-time popularity gauges and will avoid doing anything to upset them. A short, sharp drop in stocks in response to any peculiar announcement would soon force a change of heart, or so the theory goes.That may still be true at some point. But it’s not now. Instead, the immediate market reaction to Trump’s announcement over the weekend of imminent steep taxes on goods from neighbours and allies Canada and Mexico, and milder additional duties on goods from China, was rather tame.The benchmark S&P 500 index opened 1.4 per cent lower — not great, but hardly a disaster. An immediate 5 per cent plunge in the index and maybe some circuit-breaker suspensions in the worst-affected big-name stocks might have been enough to alarm the president, but not this.One possible reason for the relative calm is that a large slice of investors think starting a trade war with Nato allies is an actively good idea — for the US economy, for geopolitical stability, or both. Maybe money managers are cheered by the sight of USAID being put in peril or by Elon Musk’s Department of Government Efficiency gaining access to the plumbing of the Treasury department. Let’s say for now that is a theoretical possibility but not the most likely explanation.Instead, the ho-hum reaction, which is mirrored also in the dollar (up a bit, nothing too bracing) and in Asian and European stocks (down a bit, not a bloodbath) reflects a few important assumptions.One is that, to quote John McEnroe, he cannot be serious. The inevitable rise in costs for consumers of imported goods, potential resurgence in the very inflation Trump vowed to defeat, and damage to global relations all point to a change of heart at some point soon. The self-harm is just too great. As Jan Hatzius and others at Goldman Sachs put it, “while the outlook is unclear, we think the Canada- and Mexico-focused tariffs are likely to be short lived”.This turned out to be rather prescient. Even before the new taxes kicked in, Trump and Mexico’s president said they were on hold for a month. But the evidence so far this year suggests it is flat-out dangerous to assume calm heads will prevail.The other possibility is that investors are just really bad at reading Trump. He has been a fan of tariffs for decades. He used them liberally in his first term in office. He spoke about them constantly on the campaign trail. He spoke about them at his inauguration. But markets have failed to take him at his word.Investors thought enlightened self-interest would give the president pause. Then they thought Treasury secretary Scott Bessent would act as an adult in the room, sensitive to the cold hard realities of economics and able to steer the president away from his darker impulses. None of this has worked.“Trump has made an end to the self-delusion in markets, the media and in politics that his tariff threats should be taken with a grain of salt,” wrote Philip Marey, a strategist at Rabobank.So, now that markets are on a low-salt diet, it is worth taking Trump entirely literally and entirely seriously on a range of geopolitical issues. One is Europe. Stocks there have been on a great run of late, as the very early days of Trump 2.0 have not delivered tariffs on the bloc. But as Trump reminded us today, he is serious about the EU, which he accused on Monday of conducting “an atrocity” in its trade relations with the US. Buckle up.Another is Panama and Greenland. I keep asking bankers and investors what would happen if Trump really did try to secure new territory there. They keep laughing me off, although one fund manager suggested buying German government bonds. This is getting less funny by the day.Even in a best-case scenario where Trump extracts whatever concessions he wants to backtrack on some or all of the new tariffs, significant harm has already been done. “Even if shortlived, threatened tariffs have two consequences,” said Paul Donovan at UBS. “Distrust may make negotiating trade deals more difficult. If the news cycle makes US consumers fearful about real income growth or job security, they may be less inclined to spend.”The economic pain, then, can still be real, even just from threats. But it is ambitious to assume stock vigilantes are going to stop it. Trump will chalk up this early reaction as a win and a validation by Wall Street of his efforts to make America great again.katie.martin@ft.com More

U.S. President Donald Trump has jolted global markets with an earlier-than-expected and stringent implementation of tariffs on China, Canada and Mexico.
Among the impacts are a slowdown in global economic growth, a spike in oil prices, higher prices for U.S. consumers, and higher-for-longer U.S. interest rates, with a stronger U.S. dollar as a result.
Outside of the U.S., autos, chips and consumer goods firms, along with Chinese e-retailers are all being impacted.

U.S. President Donald Trump this weekend announced hefty tariffs on his country’s three biggest trading partners, leaving investors scrambling to position themselves for a global trade war.
Canada and Mexico face 25% duties on their exports to the U.S., with a lower 10% levy imposed on Chinese goods. Canada has already responded with retaliatory tariffs of 25% against $155 billion of U.S. goods.

Trump has, meanwhile, stated that the European Union will be next in the firing line, with the U.K. also under consideration.
Though Trump repeatedly threatened tariffs on the campaign trail, Deutsche Bank analyst Jim Reid said in a Monday note that the market had been “completely under-pricing the risks” and would now be in “severe shock.”
Among the expected short- to medium-term impacts are a slowdown in global economic growth, particularly in countries with large manufacturing sectors, a spike in oil prices, higher prices for U.S. consumers and higher-for-longer U.S. interest rates, with a stronger U.S. dollar as a result.

Trump tariffs could create a new challenge for Chinese policymakers: A growth rate below 5%

Outside of the U.S. and the three other economies directly involved, sectors around the world are braced for impact from the tariffs.
Here are some of the areas expected to be hit:

Automotives

Autos firms — from car brands to the makers of vehicle parts — are expected to be among the worst affected by escalating trade tensions as they represent a major area of international imports into the U.S.
Germany’s Volkswagen, for example, owns Mexico’s biggest car factory where it produces vehicles for export to the U.S. Analysis by RBC Capital Markets estimates the company could see a 9% cut to its earnings as a result of tariffs in a worst-case scenario, while Stellantis — which owns Chrysler and Jeep — also has major operations in Mexico, including the production of Ram pickup trucks, and see a 12% hit to earnings.
The effects on stocks were immediate on Monday, with European automakers on the regional Stoxx 600 index plunging 3.4%, and part suppliers including Valeo and Forvia also tumbling on expectations of a sector slowdown.

Auto stocks plunge as Trump tariffs spark trade war concerns

Chip firms

Makers of chips and semiconductor equipment, ranging from Taiwan’s TSMC to the Netherlands’ ASML, are braced for a tariff impact given the industry’s global supply chains — including factories in Mexico and China — and because of a potential slowdown in demand.
Taiwan Semiconductor Manufacturing Co, the world’s largest chipmaker, specializes in making semiconductors for other companies, such as U.S. firms Apple, Nvidia, AMD, Qualcomm and Intel.
ASML, meanwhile, manufactures the extreme ultraviolet lithography (EUV) machines used by many global chipmakers to print intricate designs on chips. ASML ships these tools to multiple countries, including the U.S., Taiwan and South Korea.

“The latest moves won’t do much to calm the high tensions which have hit the semiconductor sector,” Susannah Streeter, head of money and markets at Hargreaves Lansdown, said Monday.
“Companies like Nvidia rely on the production of chips from outsourced factories overseas, like China and Mexico – but many other parts needed to construct AI data centers could also be vulnerable to tariffs, given they are imported.”

Consumer goods

For the U.S. consumer, a host of household and leisure goods made overseas could be set for price increases, from furniture and electrical appliances to clothing, video consoles, phones and toys.
Elsewhere, there will be an impact on U.S.-exported products sent to countries such as Canada which retaliate with tariffs — as well as on consumer goods firms around the world that send products across the U.S.’ borders.

Trump tariffs could raise prices on technology like laptops, smartphones and AI

One example is drinks giant Diageo, which has already been struggling with weakening demand in North America.
Fintan Ryan, consumer equity research analyst at Goodbody, told CNBC that tariffs were one of the biggest challenges for the company this year as the U.S. accounts for roughly 45% of the company’s operating profit.
Around 70% of its sales in the U.S. are imports, meanwhile, including Canadian whiskey, Mexican Tequila, Scotch, and Baileys and Guinness from EU member Ireland. Diageo is due to report earnings on Tuesday.

Chinese e-retailers

Chinese companies face the highest risk from tariffs and other changes to U.S. market access, according to analysis by Morgan Stanley. Of those, hugely popular China-linked online shopping platforms such as Temu, Shein and AliExpress are set to be hard hit.
This is because Trump has halted a trade exemption known as “de minimis,” which had allowed exporters to ship packages worth less than $800 into the U.S. duty-free.
U.S. officials have claimed the exemption allowed Chinese e-commerce companies to undercut their competitors and flagged safety concerns due to their “minimal documentation and inspection.”
The U.S. processed more than 1.3 billion de minimis shipments in 2024, according to data from the U.S. Customs and Border Protection agency.
Without the exemption, high-volume, low-cost products from China’s online retailers will face duties, potentially pushing up the end price of the items and causing a fall in demand.
— CNBC’s Ganesh Rao, Michael Bloom, Annie Palmer and Ryan Browne contributed to this story. More

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