Wednesday 04/06/25

And so the tax rollercoaster ride continues! Donald Trump orders 50% steel and aluminium tariffs to begin on June 4 (Financial Times, Myles McCormick) highlights Trump’s latest tariff attack as he signed another executive order last night that will double existing 25% levies on steel and aluminium imports. He justified this move by saying that it would stop foreign producers from dumping cheap product on the market that would “threaten to impair the national security”. British industry exempted from Trump’s doubling of steel tariffs (Financial Times, Peter Foster, George Parker, Madeleine Speed and Sylvia Pfeifer) shows that we were exempted from this for the time being, with the import tax for us remaining at the 25% level, in order “to allow for the implementation of the US-UK Economic Prosperity Deal” which could potentially see that 25% go to zero. * SO WHAT? * This latest tax attack obviously drew immediate criticism from Canada, the biggest supplier of steel and aluminium to the US. However, it’s not just bad news for Canada – it’s bad news for everyone because all the steel and aluminium that would have gone to the US is now going to be dumped elsewhere.

In Elon Musk derides Donald Trump’s tax bill as ‘a disgusting abomination’ (Financial Times, Joe Miller and Lauren Fedor) we see that the newly-unshackled Musk gave Trump’s tax bill both barrels, describing it as a “massive, outrageous, pork-filled Congressional spending bill”. Trump’s “big, beautiful bill” (aka the “BBB”) has a deadline of July 4th to pass and will set his stall out for his second term in office. * SO WHAT? * I don’t know what Musk is trying to achieve here. Is he trying to salvage his reputation by distancing himself from the government? Or is he directly or indirectly trying to become a rallying point for the Trump’s Republican detractors? Weirdly enough, he appeared to call for Republicans to be voted out of office in the midterm elections next year! He even said of the BBB on X: “I’m sorry, but I just can’t stand it anymore”. This could get interesting – the world’s richest man taking on the world’s most powerful man!

Elsewhere, South Korean leftwinger Lee Jae-myung wins presidential election (Financial Times, Christian Davies) shows that opposition candidate Lee Jae-myung of the Democratic party secured a clear victory over the People Power Party’s candidate Kim Moon-soo. * SO WHAT? * Lee vowed to protect Korean democracy after the massive kerfuffle caused by the previous president’s attempt to impose martial law, which ultimately led to his downfall. He also promised to spark the economy back to life, bolster its international security and bring together a politically fragmented electorate. At least now there’s a bit more stability – but still, the new guy’s got a lot to do at a very sensitive time!

Meanwhile on the Continent, ECB likely to cut rates after eurozone inflation drops below target (The Times, Mehreen Khan) suggests that the ECB will cut interest rates at tomorrow’s meeting because inflation fell to 1.9%, below the bloc’s 2% target while Swiss inflation turns negative for first time in four years (Financial Times, Ian Smith) highlights inflation in Switzerland slipping to -0.1% in May which has prompted speculation that the country’s central bank will move interest rates below zero once more to avoid a deflationary slump and rein in a booming currency.

Dutch premier resigns after far-right leader Wilders quits government (Financial Times, Andy Bounds) heralds the dramatic exit of far-right leader Geert Wilders who just decided to abandon his coalition government after 11 months, saying that the other three parties in the coalition did not back his proposed actions to cut immigration. A number of other ministers and state secretaries also resigned. This paves the way for a potential election in September.

UK set to back Nato push for members to spend 3.5% of GDP on defence (Financial Times, David Sheppard, Charles Clover and Henry Foy) shows that the UK’s up for getting everyone in NATO to spend at least 3.5% of their GDP on defence by 2035. * SO WHAT? * At the moment, we’re having trouble getting to 3% but I guess that this new date is far enough out to be achievable and it does give everyone a target to go for. NATO secretary-general Mark Rutte is on a mission to get all members to commit to the 3.5% number, up significantly from the current 2%. He’s also pushing for 1.5% on top of that to be earmarked for defence-related infrastructure. Trump wants NATO members to spend 5% of their GDP over the next ten years and he said that he’ll only attend the NATO leaders’ summit in The Hague later this month if they agree to this target. NATO defence ministers are to meet tomorrow in Brussels to discuss and approve the new target.

Then in UK interest rates more uncertain due to Trump policies, says Bank governor (The Guardian, Heather Stewart) we see that the governor of the Bank of England is highlighting the uncertainty caused by Trump’s tariffs, saying that businesses are suspending investment decisions. However, he did say that he expected wage growth in the UK to fall in the next few months which some are interpreting as indicating a potential sign of him being open to cutting interest rates further.

BlackRock removed from Texas blacklist after climate policy rollback (Financial Times, Eric Platt) shows that Texas has taken BlackRock off the list of companies that have been banned from receiving the state’s investment funds three years after first being put on it. It made the list initially because of its pro-environmental policies, which Texas took exception to given how important the oil industry is in the state. * SO WHAT? * This just signals another nail in the coffin of ESG as the asset manager earlier this year withdrew from the UN-sponsored Net Zero Asset Managers climate coalition, which itself followed its decision to drop out of the Climate Action 100+ group in 2024. Texas’s state funds are now allowed to buy BlackRock shares, trade its funds and use its financial advice and risk management guidance.

In Wells Fargo asset cap lifted after ‘fake accounts’ scandal (Financial Times, Peter Wells and Martin Arnold) we see that the US Federal Reserve has now removed the punitive $2tn cap on

assets it imposed on Wells Fargo in 2018 as punishment for the opening of millions of unauthorised customer accounts. The bank has paid over $5bn in penalties to regulators and class action claimants since the scandal where the bank had pushed staff to forge signatures, move money into unauthorised accounts and alter contact details to open accounts without the authorisation of its customers! Wells Fargo has finally shed its dunce cap (Financial Times, Lex) highlights the relief that must be felt at the bank but observes that the seven intervening years in the wilderness have seen rivals including Bank of America and JP Morgan build up a potentially unassailable lead over them. A push into investment banking could potentially help to narrow the gap, though.

In a quick scoot around some of today’s other interesting stories, Meta agrees 20-year deal to buy output from Illinois nuclear plant (Financial Times, Peter Wells and Hannah Murphy) highlights an interesting development where Meta has signed a deal with Constellation Energy to buy the output of the Clinton Clean Energy Center nuclear plant for the next 20 years! This is its first deal of this kind and highlights the burgeoning need for electricity, particularly for AI data centres. * SO WHAT? * The rising need for electricity that powers the data centres that power the AI models means that tech companies are having to keep all options open when it comes to ensuring that their data centres can keep running. Amazon, Google and Microsoft have all agreed deals with nuclear power operators recently for the same reason. We are going to need a LOT more energy as time goes on – for AI now but also as EV adoption becomes more widespread. Nuclear energy (including fusion, hopefully!), renewable energy and energy storage are all going to be key areas for governments around the world to focus on.

In Xiaomi among Chinese tech groups set to be hardest hit by US chip software ban (Financial Times, Zijing Wu and Eleanor Olcott) we see that smartphone maker Xiaomi is likely to be hard

hit by new US restrictions on software tools. The company last month unveiled a breakthrough self-designed mobile processor but this was made with US Electronic Design Automation (EDA) tools and TSMC’s contract manufacturing. Other Chinese companies that also design their own chips using these tools and capabilities include the world’s biggest computer maker Lenovo and bitcoin mining specialist Bitmain. * SO WHAT? * At the moment, it looks like existing licences will be OK but Chinese companies run the risk of being cut off from future updates and technical support. TSMC is essentially banned from making advanced AI chips for Chinese companies.

Cyberattacks Hit Victoria’s Secret, North Face and Cartier (Wall Street Journal, Suzanne Kapner) shows that it’s not just British retailers that get hacked – hackers have stolen customer information and disrupted online sales of North Face, Cartier and Victoria’s Secret. Hackers pretended to be employees locked out of their accounts and persuaded a help desk to reset their password. This should further increase demand for cybersecurity services I’m sure!

I am confident when I say that you’ve never seen bread quite like this before! It’s beautiful! I wonder whether it tastes as good as it looks!