Fallout from Trump tariffs deepens as nations race to supply concessions

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Good morning and welcome back following a day of carnage on global markets. We’ll bring you the latest on the latest on the impact of the Trump tariffs. And here’s what else we’re covering:

South Korea’s president removed
What ‘geoeconomics’ can teach us
US troops prepare for Arctic warfare
And the Orient Express’s first makeover in four decades

A global stock market sell-off, triggered by Donald Trump’s “liberation day” tariffs, deepened today, with falls in Asia and Europe presaging further falls in the US when Wall Street opens. Here’s what you need to know:

The fallout so far. The tariffs wiped out about $2.5tn of market value on Wall Street yesterday, with technology stocks, banks and consumer goods companies suffering the biggest falls on the worst day for US shares in nearly five years. Brent crude slumped amid fears of a global economic slowdown and on the back of an unexpected announcement from the Opec+ countries that they would increase production from next month.

Havens such as government bonds and gold benefited from the “flight to safety”. Shorter-dated bonds, which move with interest rate expectations, were particular beneficiaries. We saw the largest moves in two- and three-year yields, which move in the opposite direction to prices, since August 2024. Longer-term inflation expectations have been more stable.

“There has been a massive flight to quality into Treasuries,” said Matthew Scott, head of core fixed-income and multi-asset trading at AllianceBernstein.

What does the Federal Reserve do next? The bond price moves suggest investors are expecting a burst of inflation. Fed chair Jay Powell, who is speaking at an event later today on the economic outlook for the US, is facing a fiendishly difficult trade-off between rising prices and weakening growth. Scarred by the inflation surge that followed the end of the Covid-19 lockdowns, the central bank is anxious to prove it takes its inflation-fighting mandate seriously.

The next few days will see many countries rushing to placate Washington with concessions. The universal 10 per cent import duty kicks in tomorrow and higher “reciprocal” tariffs from Wednesday. Here’s more analysis on the fallout:

For more on the impact of Trump’s trade war, sign up for our Trade Secrets newsletter if you’re a premium subscriber, or upgrade your subscription here. Here’s what else we’re keeping tabs on today:

Economic data: The government’s monthly employment data report is expected to confirm hiring slowed last month. Brazil’s statistics agency the IGP-DI price inflation index which is expected to confirm price rises slowed in Latin America’s biggest economy last month.
Federal Reserve: Board governor Michael Barr will appear at an AI and banking conference hosted by the Federal Reserve Bank of San Francisco while Christopher Waller will participate in a discussion in New York on payments.
TikTok: A deadline forcing the sale of the hugely popular social media app to non-Chinese owners comes into force tomorrow. Trump suggested yesterday he could cut tariffs if China allows ByteDance to divest the app.

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

Five more top stories

1. The director of the US National Security Agency was fired yesterday, according to Democratic lawmakers, as President Donald Trump extended his purge of America’s security establishment. The dismissal of Timothy Haugh came just hours after Trump sacked a number of national security officials following claims by a far-right activist of disloyalty to the president’s “Make America Great Again” agenda. Here’s more on the sackings.

2. South Korea’s president Yoon Suk Yeol has been removed from office four months after his shortlived attempt to impose martial law sparked a prolonged political crisis. The country’s Constitutional Court upheld Yoon’s impeachment, ending his presidency less than three years into his five-year term.

3. BP chair Helge Lund has announced plans to step down “most likely during 2026” after a bruising tenure in which the oil major tried to pivot away from fossil fuels only to reverse course this year. Tom Wilson looks back at the highs and lows of Lund’s tenure.

3. PwC China plans to spin off its Dark Lab cyber security arm in a private buyout deal as the Big Four firm seeks to improve liquidity and navigate the financial fallout from its audit of failed Chinese property developer Evergrande. Here’s how much the deal could generate.

4. Meta and the US Federal Trade Commission are set to face off in federal court later this month in the first big test of whether the new Trump-appointed antitrust regulator will continue to crack down on Big Tech. Mark Zuckerberg has met the president in recent days in an apparent last-minute lobbying attempt to avoid a court showdown.

From the Magazine

A group of US Marines are debriefed after training in the Arctic © Kalpesh Lathigra

A group of soldiers in full snow combat gear stand listening. In the background we see tall pines and snow. They are being debriefed after a training in driving on ice — A group of US Marines are debriefed after training in the Arctic © Kalpesh Lathigra

In the depths of the cold war, US soldiers were a familiar sight in Norwegian garrison towns north of the Arctic Circle, but they left after the break-up of the Soviet Union. As hostilities with Russia have grown, they are back to learn how to master the art of Arctic warfare.

We’re also reading . . .

The FT View: If they endure, Trump’s sweeping “reciprocal” tariffs will go down as one of the greatest acts of self-harm in US economic history, writes our editorial board.
‘Geoeconomics’: The growing field offers a guide for those perplexed by the US president’s seemingly self-sabotaging moves, writes Gillian Tett.
India’s divide: Today’s Big Read looks at the deep-rooted tensions between the country’s more populous north and wealthy south, and how they may inflame politics.

Chart of the day

With Microsoft celebrating its 50th birthday this week, Richard Waters looks back at the rise of the software company started by Bill Gates and Paul Allen and the challenges that lie ahead for the current leadership under Satya Nadella in the era of artificial intelligence.

Take a break from the news . . .

The Orient Express La Dolce Vita is the first new iteration of the world’s most famous train in more than 40 years. Maria Shollenbarger gets an exclusive preview.