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Today’s agenda: Musk-Trump rift; German corporate tax break plan; Gaza update; Italy’s citizenship vote; and Geert Wilders’ gamble
Good morning. US tariffs of 50 per cent on steel and aluminium have come into force, after Donald Trump escalated his global trade war with an executive order yesterday. Here’s what you need to know.
What this means: The new tariffs, which took effect shortly after midnight eastern time (4am GMT), double existing levies on the sectors of 25 per cent that the US president introduced in March. The additional duties will not immediately apply to the UK, after the Trump administration handed a surprise carve-out to Britain over a trade deal agreed last month.
Why it matters: The tariffs will hit America’s top trading partners, notably Canada, the largest supplier of the metals to the US. The industry there has warned of “mass disruption” and “catastrophic” job losses. Trump’s move also comes after a recent court ruling against his “liberation day” levies has left much of his trade agenda in legal limbo, and follows the OECD’s warning yesterday that his trade policies were dragging global economic growth to post-Covid lows.
We have more on this fresh escalation in Trump’s global trade war.
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Trump triple threat: On Ukraine, Nato and trade, European officials fear the president will play these big issues off against each other over five weeks of wide-ranging talks.
For more analysis on tariffs, sign up for Alan Beattie’s Trade Secrets newsletter if you’re a premium subscriber or upgrade your subscription. And here’s what else we’re keeping tabs on:
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Economic data: Canada, the Eurozone, France, Germany, Italy, the UK and the US have services purchasing managers’ indices, while the Federal Reserve publishes its Beige Book on economic conditions.
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EU: The European Commission publishes a report on whether Bulgaria is ready to adopt the euro.
Five more top stories
1. Elon Musk has lambasted Trump’s signature tax bill as “a disgusting abomination”, in an outburst that threatens to destroy the relationship between the US president and his billionaire backer. In a series of posts on X yesterday, Musk called it a “massive, outrageous, pork-filled” bill.
2. Germany’s government will seek to pass a €46bn package of corporate tax breaks over the summer in an effort to jolt the Eurozone’s largest economy out of stagnation. The tax incentives include deductions for new equipment and electric vehicles, and will be outlined at a cabinet meeting today.
3. Aid distribution centres in Gaza will be closed today, the Gaza Humanitarian Foundation has said, hours after the local health ministry said Israeli soldiers killed more than two dozen Palestinians. The US-backed group said it would resume operations tomorrow. More details here.
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Related: Boston Consulting Group has put a partner on leave and launched an internal probe over work linked to the contentious US-backed aid overhaul in Gaza.
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Middle East: Israel has threatened to retaliate after missiles were launched towards the country from Syria for the first time since the fall of the Assad regime.
4. Exclusive: The executive leading Lloyds Banking Group’s push to grow its “mass affluent” division is leaving the bank after more than a decade, less than two weeks after the launch of a “premier” service that she called a “game changer”. Here are more details from an internal memo seen by the Financial Times.
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Citi: The Wall Street lender has revoked a policy curbing its dealings with companies that sell firearms.
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JPMorgan: The world’s biggest bank has expanded the responsibilities given to Marianne Lake, a favourite to succeed Jamie Dimon as chief executive.
5. Exclusive: Singapore’s Temasek is drastically reducing investments in early-stage companies following some embarrassing blow-ups at one of the world’s biggest investors. The state-owned fund has become more bearish on high-risk unlisted companies, believing it is harder for them to go public, according to people with knowledge of the group’s investment strategy.
The Big Read
Italian voters are wrestling with the contentious issue of whether the country should ease its restrictive immigration rules and give its long-term, legal migrant workers — and their children — a faster path to citizenship. In a rapidly ageing society and with migrant flows dominating public discourse across Europe, there will be profound implications from a national referendum that asks: who gets to be Italian?
We’re also reading . . .
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Geert Wilders: The far-right firebrand brought down the Dutch government yesterday, spurning coalition partners he may need in his election gamble.
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Global economy: Interest rates may have normalised in recent years, but the world does not look very “normal”, writes Martin Wolf.
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Swiss clampdown: The country’s government will lay out long-awaited reforms to bank capital rules on Friday, and the centrepiece proposal will affect just one company: UBS.
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‘Electronic tattoos’: As researchers burrow into our brains, our inner lives may no longer be ours alone, writes Anjana Ahuja.
Graphic of the day
The audacity of Ukraine’s weekend strike on a Russian bomber fleet — plotting for 18 months to hide drones in trucks to hit military airfields thousands of kilometres from Kyiv — has largely been matched by the material damage done. Here’s more on the daring operation that left Moscow reeling.
Take a break from the news
What does it take to open a gallery in London these days? The city’s newest dealers are as passionate as their predecessors about the art they sell, but seem more pragmatic about their prospects. “Getting rich quick is now out of the question,” one gallerist said.
