Trump pledges new tariffs against China, Canada and Mexico

Today’s agenda: Citi slashes promotions; Telegram’s crypto holdings; Israel-Hizbollah truce in “days”; UniCredit turns domestic consolidator; and Guy Chazan reviews Angela Merkel’s memoir

Good morning. Donald Trump has said he would impose tariffs of 25 per cent on all US imports from Canada and Mexico on his first day in office, and an extra 10 per cent tariff on Chinese goods. The US dollar jumped on the news. Here’s what we know.

Why the tariffs? In social media posts, Trump accused the countries of permitting illegal immigration and drug trafficking. The president-elect also accused China of failing to follow through on promises to carry out the death penalty for people dealing fentanyl, a deadly synthetic opioid. Trump said the new China tariffs would come on top of existing levies. He had also threatened on the campaign trial to impose “whatever tariffs are required” to stop Chinese cars from crossing into the US from Mexico.

What’s the impact? The tariffs on the US’s three largest trading partners would increase costs and disrupt business, one expert said, adding that “even the threat of tariffs can have a chilling effect”. A former US trade official agreed the disruption would be significant, especially given the degree of integration in North American manufacturing across sectors such as the automotive industry. He added that “tariffs are inflationary and will drive up prices”. Here’s more on what to expect with Trump’s new tariffs.

• Trump trials: The US Department of Justice plans to drop two federal criminal cases against Trump, citing long-standing policy against prosecuting a sitting president.

For more updates on the incoming Trump administration’s plans, sign up for our White House Watch newsletter. And here’s what else we’re keeping tabs on today:

• Federal Reserve: The US central bank publishes minutes from its last rate-setting meeting.

• France: The National Assembly votes on a proposed trade deal between the EU and South America’s Mercosur bloc, which is strongly opposed by French farmers.

• Companies: Online fast-fashion retailer Boohoo is expected to issue new ordinary shares on AIM. Dell, Halfords, HP and Manchester United report results.

Join more than 100 world and business leaders next Wednesday at the Financial Times’ Global Boardroom conference, as they discuss critical issues such as artificial intelligence, global trade and climate change. Register here.

Five more top stories

1. Exclusive: Citigroup is slashing the number of year-end promotions it usually awards, as the bank seeks to hold costs down. About 2,000 employees could receive pay and title bumps in the next month, down from about 8,000 in previous rounds, according to people familiar with the decisions. Stephen Gandel has more details from New York.

2. Exclusive: Mistral, Europe’s most valuable artificial intelligence start-up, is ramping up its US expansion in an effort to compete with Silicon Valley rivals for AI talent. The Paris-based company is building out an office in Palo Alto, California and expanding its US sales team. One of its co-founders is also weighing a potential move from Paris, according to people familiar with the company’s thinking. Read the full story.

• More AI: Apple is struggling to roll out AI features for iPhones in China, with a top official warning of a “difficult and long process” for foreign companies to win approval unless they partner with local groups.

3. Exclusive: Telegram has told investors that the detainment of its CEO has had no “material impact” on its operations, as financial disclosures showed that the surging value of its crypto holdings is increasingly underpinning its business. The value of the messaging app’s digital assets rose to $1.3bn in the first half of 2024, compared with nearly $400mn at the end of last year, according to unaudited financial statements seen by the FT.

4. The UK chancellor has said there will be no more tax increases on British businesses, as she insisted there was no alternative to the £40bn increase in taxes in last month’s Budget. Rachel Reeves told yesterday’s CBI conference that she had no regrets about her fiscal decisions, even as some executives warned they were reconsidering investment plans because of her actions.

• Labour’s first act: Everything the party has done since entering office and plans to do in the coming years will be distorted by its tax pledges, writes Stephen Bush.

5. Israeli officials say a deal to end the fighting with Hizbollah could be finalised “within days”, as US diplomats work to end more than a year of conflict between Israel and the Lebanese militant group. One official said that Israel’s security cabinet is set to meet today to vote on a ceasefire agreement. Here are more details on the proposed deal.

• Opinion: The indictment of Benjamin Netanyahu on war crimes charges is a disaster for Israel and a huge problem for the western alliance, writes Gideon Rachman.

News in-depth

Two months ago, UniCredit chief executive Andrea Orcel was swooping in on Commerzbank. Now, he is bidding for Italian rival Banco BPM. The surprise move has propelled Orcel to the centre of Italy’s banking consolidation, and suggests his takeover priorities are in flux after UniCredit’s advances to the German lender encountered fierce opposition in recent months.

We’re also reading . . . 

• Shanghai’s future: The city was meant to be China’s answer to New York. But trade tensions and changing domestic priorities have taken a toll.

• Angela Merkel: There are few mea culpas in the former German chancellor’s autobiography, Freedom, writes Guy Chazan, though she does not pull her punches when it comes to Trump and Putin.

• ‘Green jobs’ bonanza? The public doesn’t buy the idea because they know transitions are hard, and it’s time politicians did as well, writes Sarah O’Connor.

• Jefferies’ Adani problem: Loyalty to the Indian group helped propel the US bank’s rapid expansion in India, but now puts it in a potentially tricky position.

Chart of the day

UK stocks are set to outpace their European peers, according to some of Wall Street’s biggest institutions, with the London market viewed as better placed to weather the fallout from Trump’s plans for sweeping trade tariffs.

Take a break from the news

Where does an award-winning novelist do his work? John Banville needs a blank wall, a wide desk and a menagerie of inanimate creatures — including ferocious Chinese dragons and a wooden mouse in a polka-dot frock. Here’s what the Irish author’s writing table looks like.