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Good morning and welcome back to the end of what has been a chaotic week for global trade and international markets. We’ll bring you the latest developments in the US-China trade war and impact on capital markets. And here’s what else we’re covering:
Ursula von der Leyen warns of expanding EU levies to services
OpenAI insider warns on falling safety standards
Naomi Campbell’s charity scandal
China is to raise additional tariffs on US imports to 125 per cent, the latest salvo in an increasingly bitter trade war between the world’s two largest economies that is threatening to push the US into recession and lower global growth.
The higher Chinese tariffs, which come into effect tomorrow, follow Donald Trump’s decision yesterday to increase duties on imports from China to 145 per cent. China’s finance ministry said Trump’s latest tariffs violate “international economic and trade rules, basic economic laws and common sense.”
What does the latest move by China mean for markets? Beijing’s announcement of higher tariffs on US imports sent investors scurrying for safety, pushing up the prices of traditional haven assets such as gold, the Swiss franc and the yen and pushing down the value of riskier holdings such as equities, the dollar and also, once again, US government bonds.
The dollar slumped to a three-year low against the euro, used by one of the US’s biggest trading partners, and a decade low versus the Swiss franc. An index of the dollar’s value against currencies of big US trading partners fell below 100 as questions about the dollar’s status as the global reserve currency grew louder. “The question of a potential dollar confidence crisis has now been definitively answered — we are experiencing one in full force,” said Francesco Pesole, an FX strategist at ING.
Global stock markets fell and the sell-off in the Treasury market accelerated as investors dumped US assets. Thirty-year US bond yields rose to 4.90 per cent and are on course for their biggest weekly jump since at least 1982, according to LSEG data. Futures trading suggests US equities are set for further falls when markets open later in New York.
Gold, one of the biggest winners from the current market volatility, hit another record high this morning of $3,219.84 an ounce, putting it on course for a gain of 5 per cent this week alone and more than 20 per cent since the start of the year.
What does Trump’s impulsive and erratic trade policy mean for Main Street? Economists have lowered their US growth estimates in recent days and warned that the uncertainty surrounding Trump’s trade policy threatens investment, inflation expectations and employment prospects. An analysis from the Yale Budget Lab said American consumers now face a tariff rate of 27 per cent, the highest level since 1903. Goldman Sachs lowered its 2025 US growth forecast to just 0.5 per cent, down from 2.8 per cent last year. The bank said its new forecast reflected a “sharp tightening in financial conditions” as well as US government policy uncertainty. Zooming out, the OECD last month reduced its 2025 global growth estimate to 3.1 per cent from an earlier forecast of 3.3 per cent but that was before the latest round of US-China tariffs were launched. For the latest coverage of the global market fallout, follow our live blog and our Trump tracker for the latest tariff rates and policy announcement.
Consumer impact: US retailers are warning of higher prices, as analysts estimate Trump’s levies could cost the average household $4,700 a year.
Dollar’s status: The US would be better off without the dollar’s role as the dominant “safe” currency, writes Michael Pettis of the Carnegie Endowment.
Opinion: Trump’s tariffs are testing American attitudes towards pain and shared adversity, writes Gillian Tett.
For more on markets, sign up for the Unhedged newsletter here if you’re a premium subscriber or upgrade your subscription here. Here’s what else we’re keeping tabs on today and over the weekend:
Companies: Wall Street banks begin reporting first-quarter earnings later, led by JPMorgan Chase and Morgan Stanley. Wells Fargo, BNY and BlackRock also report results.
Economic data: The US March producer price index, which measures wholesale prices, is released. Brazil and Argentina release March consumer inflation data and Mexico publishes industrial output figures for February.
Elections: Incumbent president Daniel Noboa faces leftist former lawmaker Luisa González in Sunday’s run-off election in Ecuador after a very close first round of voting. Gabon holds its presidential election tomorrow.
Sport: The US Masters continues today and over the weekend at the Augusta National Golf Club, with Englishman Justin Rose going into the second round with a three-shot lead.
How well did you keep up with the news this week? Take our quiz.
Five more top stories
1. Exclusive: The EU is prepared to deploy its most powerful trade measures and may impose levies on US digital companies if negotiations with Trump fail to end his tariff war against Europe. European Commission president Ursula von der Leyen told the Financial Times that the EU would seek a “completely balanced” agreement with Washington during Trump’s 90-day pause on additional tariffs. Read the full interview.
2. OpenAI has slashed the time and resources it spends on testing the safety of its powerful artificial intelligence models, raising concerns that its technology is being rushed out without sufficient safeguards. One person testing the upcoming o3 model said: “I hope it is not a catastrophic mis-step, but it is reckless. This is a recipe for disaster.” Here’s what’s driving the time crunch.
3. The US Supreme Court has directed the Trump administration to return a man it erroneously deported to a maximum-security prison in El Salvador. The decision upholds a lower-court ruling that had ordered the government to “facilitate and effectuate the return of” Kilmar Armando Abrego Garcia to the US. Read more on the latest legal blow to the government’s efforts to turbocharge mass deportations.
4. The US has sacked the commander of its military base in Greenland over her alleged attempts to “subvert President Trump’s agenda” after hosting the American vice-president on the Arctic island. Colonel Susannah Meyers’ removal came after she reportedly sent an email to all staff criticising JD Vance after his visit to the Pituffik Space Base.
5. The Pentagon has terminated $4bn worth of IT services contracts with companies including Deloitte, Accenture and Booz Allen Hamilton as part of the Trump administration’s ongoing purge of consultancy spending. Defence secretary Pete Hegseth said the contracts represented “$5.1bn in wasteful spending” in a memo issued yesterday.
Trade tracker
As tensions between the US and the rest of the world escalate, the FT’s trade tracker monitors the latest announcements and executive orders that are reshaping the global economy. It is a one-stop shop for trade, tariff and markets and economic data designed by our award-winning data visualisation team.
We’re also reading . . .
John Coates: America’s businesses need to stand up to the president’s assault on the rule of law, writes the professor of law and economics at Harvard Law School.
US-China relations: If Donald Trump is trying to suppress China, he’s going about it the wrong way, argues Keyu Jin.
Climate change: Arctic sea ice hit a record low for the end of the region’s winter last month, according to the EU’s earth observation agency Copernicus.
Chart of the day
As European cities struggle to deal with a post-pandemic resurgence of mass tourism, short-term letting platforms such as Airbnb, Vrbo and Booking.com are once again in the line of fire. Residents of tourist hotspots such as Barcelona and Amsterdam have long demanded the platforms be banned, but with booking numbers rising, holiday rentals are winning the war for Europe’s city centres.
Take a break from the news
Naomi Campbell’s charity Fashion for Relief ended in disgrace, with the supermodel banned from running any charity for five years. Now, Campbell is laying out what she says really happened — and tells a tale of stolen identity, siphoned funds and betrayed friendship.
