Trump ‘electroshock’ offers chance for revival, says Macron

Today’s agenda: Trump’s “reciprocal” tariffs; delay in Shein’s UK float; European and Arab allies’ Gaza plan; HSBC’s overhaul; Arm’s plan to create its own chip; and Elliott’s BP stake build-up

Good morning. We begin with Emmanuel Macron, who has described Donald Trump’s return as an “electroshock” that should force Europe to secure its own future as well as Ukraine’s.

Reality check: Europe needs to “muscle up” on defence and the economy, the French president said during an interview shortly after Trump agreed with Vladimir Putin of Russia to hold imminent peace talks. The French leader has long argued that Europe should take on more responsibility for its own security, which would only be possible by increasing economic independence and reducing its reliance on the US and China.

Opportunity for revival: Macron described Trump’s return to the White House as a jolt to push the EU to invest in its own defence, economic and technological revival. It meant abandoning a fiscal and monetary framework that he described as “obsolete”. “This is Europe’s moment to accelerate and execute,” he said, while warning of the risk of failure for the EU. “It has no choice. It is running out of road.”

Read more from his interview with the Financial Times at the Élysée Palace.

Here’s what else we’re keeping tabs on today and over the weekend:

• Economic data: The EU issues its preliminary fourth-quarter GDP estimate while the US has January industrial production figures.

• Results: Hermès, Hydro, Ingersoll Rand, Leggett & Platt, Moderna, NatWest and Segro report.

• Munich conference: US vice-president JD Vance is set to meet Ukraine’s leader Volodymyr Zelenskyy at the global security conference, which opens today and runs until Sunday.

• Gaza: Hamas is due to free three Israeli hostages in return for dozens of Palestinian prisoners on Saturday as part of a ceasefire deal.

• German elections: Chancellor Olaf Scholz, conservative challenger Friedrich Merz, Alice Weidel of the AfD and the Greens’ Robert Habeck take part in a TV debate on Sunday ahead of this month’s federal election.

How well did you keep up with the news this week? Take our quiz.

Five more top stories

1. Donald Trump unveiled a sweeping plan to impose “reciprocal” tariffs on America’s largest trading partners yesterday, heralding greater disruption for the global economy. The US leader directed top trade advisers to come up with new tariffs on a “country-by-country” basis in retaliation against levies, regulations and subsidies deemed unfair by Washington. Here are the countries most at risk of being hit by the new tariffs.

2. Exclusive: Fast-fashion group Shein’s plans for a bumper UK stock market listing are likely to be delayed after Donald Trump’s crackdown on tariff-free imports of small goods from China. An initial public offering is now likely to be pushed into the second half of this year following Trump’s move, according to people familiar with the process. Read more about the US crackdown’s impact on the Chinese ecommerce business.

3. Exclusive: European states are working with Arab allies to urgently devise a Gaza plan to present to Donald Trump as an alternative to his proposal for the strip to be emptied of Palestinians. The foreign ministers of Germany, France, the UK and Italy will hold talks with key Arab states at this week’s Munich security conference.

4. Exclusive: HSBC is preparing to unveil $1.5bn of annual cost savings from chief executive Georges Elhedery’s radical overhaul of the bank. Europe’s largest lender will lay out the figures for the first time on Wednesday, when Elhedery presents the bank’s full-year results to investors, according to people familiar with the matter. Read more on the plans to shake up the lender.

5. The UK government has refused to disclose details of a January 2024 meeting between American billionaire Peter Thiel and then-investment minister Lord Dominic Johnson on the grounds that doing so could “prejudice diplomatic relations”. Read the full report.

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Deep dive

As BP shares sank to a two-year low last November, the activist investor Elliott was already building up a nearly £3.8bn stake in the troubled oil group. The move has started to pay off, with shares rising more than 26 per cent from that low. But the arrival of the US hedge fund is also setting up a crucial test for chief Murray Auchincloss.

We’re also reading . . . 

• Cutting red tape: The EU is scaling back tech regulation to spur artificial intelligence investment, not because of US pressure, says the bloc’s digital chief.

• Undercover Economist: Tim Harford lists the lessons that Elon Musk can learn from 13th-century Venice and the original Doge.

• ‘CEO scams’: If you think you’re too smart to be duped by scammers, think again, writes Claer Barrett. There’s a new breed of stings aimed at the wealthy.

• Heads roll: Argentina’s President Javier Milei and his sister Karina are stamping out dissent in his libertarian government ahead of crucial midterm elections.

Chart of the day

Cocoa stocks in London and New York have plunged to record lows in the latest sign of a shortage that has forced chocolate makers desperate to meet Valentine’s Day demand to seek alternative ingredients.

Take a break from the news . . . 

French football club Brest’s old-school model of local owners and prudent transfers is the antithesis of cash-rich clubs such as Paris Saint-Germain. Its canny use of a small budget and focus on experienced players is helping it make waves in this season’s Champions League.