EU needs ‘not to retaliate, but to negotiate’ with Trump on trade, says Lagarde

Today’s agenda: France may not detain Netanyahu if he visits; BlackRock has deal to buy HPS; RFK Jr’s health movement splinters; and Simon Kuper on what it’s really like to work in Paris

Good morning. We start with an exclusive interview with European Central Bank president Christine Lagarde. In her first interview since Donald Trump’s election victory, she told the Financial Times that European leaders needed “not to retaliate, but to negotiate” with the US president-elect on trade, and warned of the effects of a global trade war.

Key points from Lagarde: The ECB chief said Europe should deal with a second Trump term with a “cheque-book strategy” in which it offered “to buy certain things” from the US, such as liquefied natural gas and defence equipment. She said the fact that Trump had stated a range of 10 to 20 per cent for tariffs on non-Chinese imports suggested he was “open to discussion”, creating an opportunity to “sit at the table and see how we can work together”. Lagarde also warned that a “trade war at large” was “in nobody’s interest” and would lead to “a global reduction of GDP”.

Why it matters: The European Commission, which runs trade policy for the EU’s 27 member states, is still considering how it would respond to Trump’s proposed tariffs. European governments and officials fear tariffs would wipe out the EU’s large trade surplus with the US and spur the region’s manufacturers to shift production there. Economists also believe Trump’s threat of significant tariffs on Chinese exports to the US could lead China’s manufacturers to flood European markets with their products, presenting a further threat to domestic competitiveness.

We have more from Lagarde, including her views on Trump’s second term, Eurozone inflation and Europe’s competitiveness. You can read the transcript of the full interview here.

Here’s what else we’re keeping tabs on today:

• Economic data: Germany and Spain issue preliminary consumer price indices.

• European Central Bank: The bank’s general council meets.

• Thanksgiving: US markets are closed for the holiday.

For more analysis on trade in the Trump era, sign up for Alan Beattie’s Trade Secrets newsletter if you’re a premium subscriber, or upgrade your subscription here.

Five more top stories

1. France has suggested it would not necessarily detain Benjamin Netanyahu if he entered the country despite an outstanding arrest warrant issued by the International Criminal Court over alleged war crimes in Gaza. The French foreign ministry said yesterday that the Israeli prime minister could have immunity from arrest because Israel has not signed the Rome Statute, which established the ICC.

• Lebanon ceasefire: The deal appeared to hold on its first day as thousands of Lebanese attempted to return to their homes, with Israelis also weighing the risks of doing so against the threat of Hizbollah.

• The FT View: The truce offers a much-needed glimmer of hope after more than a year of unimaginable death and destruction in the Middle East, writes our editorial board.

2. Exclusive: BlackRock has a deal to buy HPS Investment Partners, as the world’s largest asset manager looks to bolster its alternative investment business with the addition of one of the biggest private credit groups on Wall Street. According to people with knowledge of the matter, the two sides plan to announce the general terms of the deal after the Thanksgiving holiday.

3. Donald Trump is considering naming an aggressive enforcer to lead the US Department of Justice’s antitrust unit. Gail Slater, a top aide to vice-president-elect JD Vance, is a leading contender to head the team, said people familiar with the matter. She had earlier been seen as a frontrunner to lead the Federal Trade Commission. Here’s what her nomination would entail.

4. Sir Keir Starmer will be invited to meet EU leaders to discuss European security in a significant post-Brexit move. EU officials said he will be asked to dine with leaders of the 27 member states at an informal retreat in Belgium on February 3. No British prime minister has attended such a gathering since the country left the bloc in 2020. Andy Bounds and George Parker have more details.

5. Hong Kong plans to exempt private equity funds, hedge funds and family offices from paying tax on cryptocurrencies, private credit investments and other assets, as it seeks to become an offshore finance hub. The Chinese territory’s government is running a six-week consultation on the plans. Here’s more from the 20-page official document.

The Big Read

Until recently, deepfakes required a lot of time, computing power and technical expertise, but advances in generative artificial intelligence have made it increasingly easy and cheap to generate hyper-realistic synthetic images and videos. So far there is little agreement on the best way forward, but campaigners hope that new laws could offer a template for controlling AI.

We’re also reading . . . 

• RFK Jr: Trump’s pick for health secretary wants to take on Big Pharma, but there are already signs his “Make America Healthy Again” movement is starting to splinter.

• Tehran’s transformation: The Iranian capital’s new architecture reveals a city in flux, writes Najmeh Bozorgmehr, balancing dreams of modernity with the harsh realities of inequality.

• UK railways: Britain’s three-decade experiment with rail privatisation will come to an end today. Can the complex move to renationalise fix an industry in crisis?

• Nickel: It is “production first, safety later” at the world’s biggest nickel processing site in Indonesia, one worker says, as fatal accidents come under scrutiny.

Chart of the day

French sovereign bonds and stocks fell yesterday as concerns intensified among investors that a dispute over a belt-tightening draft budget could bring down Prime Minister Michel Barnier’s government.

Take a break from the news

Half the world dreams of moving to Paris for the supposed 35-hour work week (not a reality in the city’s upper reaches) and long lunches (often a reality), writes Simon Kuper. But what is it really like to work in a French company?