US backtracks on Canada-Mexico tariffs

Good morning and happy Friday. We start with Donald Trump’s latest shift on trade. Also in today’s newsletter:

• Singapore’s DBS courts rich Chinese

• TSMC is ‘not afraid’ of losing US chip subsidies

• FT Globetrotter’s guide to Hong Kong

The Trump administration has backtracked further from its threat to impose sweeping 25 per cent tariffs on Mexico and Canada, in a major climbdown from its aggressive trade agenda.

The US president signed an executive order saying that all goods that met the rules of a 2020 free trade deal with the US’s neighbours would be granted a one-month reprieve from the duties.

The move was Trump’s second U-turn in two days. On Wednesday, he had said carmakers compliant with the USMCA would be granted a month-long carve-out.

The levies’ imposition on Tuesday prompted a turbulent market reaction after Canada and Mexico announced plans to retaliate. But Howard Lutnick, Trump’s commerce secretary, said yesterday that movements in the stock market would not drive US trade policy.

“The fact that the stock market goes up or down a half per cent on any given day is not the driving force of our outcome,” Lutnick said. Here’s more on Trump’s chaotic trade policy rollout.

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

• Chinese economy: China publishes February trade data today and inflation figures on Sunday.

• Tropical Cyclone Alfred: Australia is bracing for the cyclone to hit parts of the east coast of Australia much farther south than such storms typically land.

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

Five more top stories

1. Singapore’s DBS is dramatically increasing staff numbers in its wealth management business as the bank tries to attract rich Chinese clients keen to move their money overseas. DBS’s expansion comes as other banks have grown increasingly wary about accepting accounts from wealthy Chinese customers following a S$3bn (US$2.2bn) money-laundering scandal.

2. Taiwan Semiconductor Manufacturing Company said it was “not afraid” of losing Washington’s subsidies for its massive US investments. The comments from chief executive CC Wei, just days after TSMC pledged an additional $100bn investment in the US, were meant to reassure investors following Trump’s call to kill the $52bn chips act.

• Related news: A former top Wall Street banker and longtime Elon Musk ally has led a purge of the US government office charged with administering billions of dollars in semiconductor subsidies.

• Opinion: TSMC’s attempt to keep Trump on side is not without risks, writes Chris Miller.

3. Seven & i, the Japanese retail group, is planning to list its 7-Eleven store business in North America and launch a huge share buyback, as it combats a $47bn takeover attempt by Canada’s Alimentation Couche-Tard. The group has also appointed its first foreign chief executive and agreed to sell non-core assets to private equity firm Bain Capital, in its most radical attempt so far to prove to shareholders it should stay independent.

4. EU leaders have endorsed new defence funding initiatives including €150bn of new loans backed by the region’s shared budget and a relaxation of the bloc’s rules governing debts and deficits to allow countries to spend more on defence. Here are the latest developments from the emergency summit in Brussels.

5. Microsoft has walked away from some of its commitments to cloud computing provider CoreWeave in a significant blow to a company seeking to launch a blockbuster $35bn initial public offering next month. CoreWeave provides Microsoft with computing capacity from its AI data centres under a partnership worth billions of dollars. Here are the reasons behind Microsoft’s shift.

FT Investigations

Brook­field Cor­por­a­tion, one of the world’s most com­plex financial con­glom­er­ates, is attract­ing scru­tiny for circular flows of cash involving its global property portfolio. Read the FT investigation in full.

We’re also reading . . . 

• US politics: As the Trump administration threatens the rule of law, business leaders are taking an enormous risk by staying silent, writes Anne-Marie Slaughter.

• ‘Whatever it takes’: Plans to unleash defence spending and overhaul infrastructure could return Germany to a pre-pandemic growth trend.

• Zelenskyy’s fashion designer: The Ukrainian designer behind the president’s wartime look explained his attire after it proved one of the first flashpoints in last week’s dramatic clash at the White House.

Chart of the day

For the first time in more than 30 years, Europe’s defence sector is hot property. After decades in which military budgets were squeezed, Donald Trump’s hardline approach towards Ukraine and calls on allies to shoulder more of their security burden have forced the region’s leaders into action.

Take a break from the news . . . 

Explore all there is to do in Hong Kong with FT Globetrotter’s guide to the city.