Summary:
Last Week Review
• Billionaire Elon Musk said on Thursday many federal government agencies must be eliminated as part of President Donald Trump’s push to radically overhaul the U.S. government. Since Trump took office on January 20, Musk has dispatched members of his Department of Government Efficiency (DOGE) to scrutinize sensitive personnel and payment information in government computer systems. Musk has led a successful drive to dismantle two agencies – one that provides a lifeline to the world’s needy, USAID, and another that protects Americans from unscrupulous lenders, the Consumer Financial Protection Bureau. Musk, the world’s richest man, has disparaged civil servants as bureaucrats who are not elected and not held accountable to American taxpayers.
• Euro zone industrial production shrank by more than expected in December, indicating that the sector’s two-year recession is far from over even if some sentiment and order figures have pointed to bottoming out. Output in the 20 nations sharing the euro was down by 1.1% in December from the previous month, data from Eurostat showed on Thursday, underperforming expectations for a 0.6% drop as industrial powerhouse Germany shrank by 2.9% and Italy by 3.1%. Industry has been a drag on Europe for years now as expensive energy, weak demand from China, intensifying global competition, and out-of-fashion models in the car sector are all a drag on orders. Compared to a year earlier, output was down 2.0%, dragged down by a massive 8.0% drop in the production of capital goods.
• South Korea’s Acting President Choi Sang-mok said on Thursday the country should be able to negotiate with the administration of President Donald Trump on tariffs as its investment in the United States is sizeable. South Korea’s investment in the United States in the last two years has been higher than that of any other country, Choi said, as he answered lawmakers’ questions about the government’s response to U.S. tariffs in a parliamentary session. Foreign direct investment in the United States stood at a combined USD 57.54 billion during 2022 and 2023. During the first three quarters of 2024, the Asian country invested USD 16.27 billion, down 26% from the same period a year earlier.
• China has floated a proposal to hold a summit between Russian President Vladimir Putin and U.S. President Donald Trump to help end the Ukraine war, the Wall Street Journal reported, citing people familiar with the matter. Chinese officials in recent weeks have raised a proposal with the Trump team through intermediaries to hold a summit between the two leaders and to facilitate peacekeeping efforts after an eventual truce, according to people in Beijing and Washington cited by the newspaper. Asked about the newspaper report at a regular news conference on Thursday, a Chinese foreign ministry spokesperson said he had “no information to offer”. Trump said Putin and Ukrainian President Volodymyr Zelensky had expressed a desire for peace in separate phone calls with him on Wednesday, and Trump had ordered top U.S. officials to begin talks on ending the war in Ukraine. The Kremlin had said Putin and Trump had agreed to meet, and Putin had invited Trump to visit Moscow. Trump said their first meeting would “probably” take place soon in Saudi Arabia.
• President Donald Trump on Wednesday said that interest rates should be lowered and that would go “hand in hand” with his upcoming tariffs, despite economists’ expectations that tariffs would fuel inflation and postpone rate cuts. Trump substantially raised tariffs on steel and aluminum imports on Monday to a flat 25% “without exceptions or exemptions” in a move he hopes will aid struggling industries in the United States, but which also risks sparking a trade war. “Interest Rates should be lowered, something which would go hand in hand with upcoming Tariffs!!!” Trump wrote in a post on his Truth Social platform. However, Federal Reserve Chair Jerome Powell told U.S. lawmakers on Tuesday the Fed was in no rush to cut its short-term interest rate again given an economy that is strong overall. Powell is to testify before the House Financial Services Committee on Wednesday as Trump’s trade advisers finalize plans for additional reciprocal tariffs.
This Week’s Outlook
• U.S. President Donald Trump warned on Friday that levies on automobiles could be coming as soon as April 2, one day after members of his economic team are due to present reports to him on imposing like-for-like tariffs on every country charging import taxes on U.S. goods. It was the latest salvo in a series of escalating tariff threats issued by Trump during the early weeks of his administration, as he attempts to bring more manufacturing jobs back to the U.S. and address perceived inequalities in America’s global trading stance. Earlier this week, Trump ordered his economic team to review and create a plan for reciprocal tariffs, arguing that they are necessary for the “purposes of fairness.” He tasked officials with devising a push to begin tallying up U.S. duties so they can match those imposed by other countries.
• China considers Germany and the European Union as a whole as strategic partners, and it wants stronger cooperation with them in the spirit of free trade and multilateralism, the Chinese foreign minister told the German chancellor on Saturday. Foreign Minister Wang Yi told Chancellor Olaf Scholz China was willing to deepen “all-round cooperation” with Germany as part of positive bilateral efforts to maintain global peace and stability. Wang was in Germany, the EU’s biggest economy, to attend the annual Munich Security Conference and held talks with the EU’s foreign policy chief and his Spanish and French counterparts, as well as with Scholz. Germany, whose huge car sector is reliant on China, voted last October against the European Union’s tariffs on China-made electric vehicles (EVs).
• The European Union plans to block imports of certain foodstuffs made to different standards in an effort to protect its farmers, echoing U.S. President Donald Trump’s reciprocal trade policy, the Financial Times reported on Sunday. The European Commission will agree next week to explore tougher import limits, the newspaper said, citing three officials it did not name. Early targets could include U.S. crops such as soybeans grown using pesticides that EU farmers are not allowed to use, the report said.
Download full report HERE.
