The new week ushers in a new wave of US tariffs, an annual gathering of China’s economic leaders and the continued fallout from Friday’s Oval Office press conference disaster, as European leaders meet to discuss plans for defence and peace.
There’s also a member-exclusive webinar taking place on goods movements between Great Britain (GB) and Northern Ireland (NI), as tomorrow’s Lunchtime Learning addresses new processes introduced through the Windsor Framework.
Fresh US tariffs
Tomorrow will see an additional 10% tariff levied on Chinese goods imported into the US and a rate of up to 25% set to apply to Mexican and Canadian goods. However, commerce secretary Howard Lutnick yesterday told Fox’s Sunday Morning Futures show that Trump’s decision on the rate for the US’ neighbours is still “fluid”.
Tariffs on Mexican and Canadian goods were first announced last month but deferred when their respective leaders agreed to take steps to curb illegal migration and drugs trade, which preside Trump designated a national emergency at the start of his second term.
Trump claimed in a Truth Social post on Thursday (27 February) that “drugs are still pouring into our Country from Mexico and Canada at very unacceptable levels”, which could prompt an end to the tariff suspension.
Consumers to bear the brunt
Economists have told the Associated Press (AP) that the financial burden from the tariffs will largely fall on consumer shoulders as businesses increase the cost of their goods to absorb the taxes. Additional concerns were raised that sectors such as car manufacturing will struggle given the global scope of their supply chains.
The potential inflationary impact of Trump’s trade policy has been stressed by experts since before he took office, with inflation hitting 3% in January, according to official data from last month. Recent consumer surveys have also indicated that Americans are increasingly concerned by tariffs, with confidence at its lowest since the pandemic.
Carney set for Liberal Party leadership?
Unsurprisingly, tariffs are influencing Canada’s upcoming election, following the resignation of incumbent Liberal Party prime minister Justin Trudeau.
The Liberal Party had been heading for a stark loss to the Conservative Party, led by Pierre Poilievre. However, in recent weeks the Liberals have made a comeback, with research firm Leger finding that 38% of respondents favoured the Conservatives, with the Liberals just behind on 35%. In December, prior to Trudeau’s resignation, the figures stood at 43% and 21%, respectively.
Trump tariffs have dramatically shifted the narrative underpinning the election, with Poilievre’s Trumpian self-styling working against him as Canadians unite in anger at the US president’s trade policy.
The frontrunner for the Liberal leadership – set to be decided this Sunday (9 March) – is the former governor of the Bank of England, Mark Carney, who last week said:
“Who's the worst person to stand up to Donald Trump? It's Pierre Poilievre”.
“He worships the man. He uses his language. He's not the right person for our country at this crucial time.”
However, Carney himself has been in hot water over the past week, facing reports that he lied about his involvement in an investment firm’s headquarter move while on its board of directors. CBC reports that Carney downplayed his role in the decision to move Brookfield Asset Management’s (BAM) headquarters from Canada to the US, claiming it was made in December after he had left the company. However, documents indicate the decision was approved in October, while he was still on the board.
EU leaders’ summit
The week ahead also exists in the shadows of an historic week before, following Friday’s (28 February) disastrous Oval Office press briefing, in which tempers flared between Ukrainian leader Volodymyr Zelensky, Trump and vice-president JD Vance.
European leaders met Zelensky over the weekend in London following the debacle and are to meet again at a Special European Council meeting on Thursday (6 March).
Speaking to the BBC’s Laura Kuenssberg yesterday (2 March), British prime minister Sir Keir Starmer said that he aimed to play an intermediary role between the two leaders:
“We have to bridge this, we have to find a way that we can all work together because in the end we've had three years of bloody conflict now, we need to get to that lasting peace.”
Starmer and French leader Emmanuel Macron have led efforts to draw up a peace plan with Zelensky, which they will then present to Trump. Currently the group is split over whether to call for an immediate ceasefire, with Macron telling French media the plan includes a one-month truce covering “air, at sea and on energy infrastructure” – a claim which Starmer and Zelensky have both rejected.
US-Ukraine minerals deal still on?
Following the press conference, Zelensky issued a statement on X in which he appeared to appease the president, writing that it is “crucial for us to have President Trump’s support” and that Ukraine is “ready to sign the minerals agreement.”
The agreement would create a wealth fund jointly managed by the US and Ukraine. Trump has described it as a way for Ukraine to “pay back” the US for its military support, which he has repeatedly claimed totals US$350bn, despite data suggesting it’s much lower.
Zelensky has also said that the mineral deal alone is “not enough” and that “a cease-fire without security guarantees is dangerous for Ukraine”.
Defence shares on the rise
Diplomatic struggles in Washington DC have increased pressure on Europe to find new funds and resources to support Ukraine and bolster security against a Russia that many fear will be emboldened by Trump’s willingness to grant concessions on sanctions and territory.
Defence shares across Europe have surged following the weekend’s announcements, with the UK’s BAE systems up 15% this morning and Thales up 16%. The UK has also announced a £1.6bn exports agreement to supply Ukraine with missiles
Two Sessions
China’s Two Sessions opens on Tuesday (4 March). The week-long, annual gathering will see premier Xi Jinping make a state of the union address, indicating China’s economic direction for the next year.
Announcements are set to include the year’s GDP target, expected to remain at 5%, as well as consumer inflation targets, likely 2%. Xi will also unveil another stimulus package, expected to comprise 3trn yuan in ultra-long special treasury bonds.
The country’s export-led growth model is increasingly under strain as Trump introduces further tariffs. In addition to the general 20% tariff goods imported into the US will face from Tuesday, the US is also removing the ‘de minimis’ threshold, below which imported goods are exempted from tariffs and other customs charges.
E-commerce exporters, who sell via Chinese marketplaces like Temu, have raised concerns about what this will mean for their small businesses, with many saying they’ll be passing the cost on to consumers.
Chartered Institute events
This week we’re offering members insight into new processes being introduced for GB-NI goods movements under the Windsor Framework. From 31 March, traders will be able to use ‘simplified processes for Internal Market Movements’.
In Tuesday’s Lunchtime Learning, Northern Ireland trade expert Maighdlin Gibson will be explaining what the new processes are, which goods are eligible and the support available to traders. Members can still sign up to the session here.
Other dates in the diary
Monday – Euro area inflation figures published
Tuesday – Rachel Reeves answers Treasury questions in the Commons on growth, taxation and public borrowing
Wednesday – Society of Motor Manufacturers & Traders (SMMT) car sales figures published
Thursday – US Russia/Ukraine Envoy Keith Kellogg speaks at Council on Foreign Relations (CFR)
Friday – British Retail Consortium (BRC) economic monitor released
Saturday – Western Australia state elections held
Sunday – China consumer price index published
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