Trump threatens 200% tariff on EU wine, champagne
Just in: Donald Trump has hit back against the European Union’s planned countermeasures against his new 25% steel and aluminium tariffs, imposed yesterday on all global imports into the United States.
The EU levies would take effect from 1 April, although the EU said yesterday it was open to negotiations.
Posting on the platform Truth Social, he said that if the 50% tariff on US whisky is “not removed immediately, the US will shortly place a 200% Tariff on all WINES, CHAMPAGNES, & ALCOHOLIC PRODUCTS COMING OUT OF FRANCE AND OTHER E.U. REPRESENTED COUNTRIES. This will be great for the Wine and Champagne businesses in the US”.
Key events
Steelmakers wait and hope as UK faces ‘tricky balance’ over Trump’s 25% tariffs
A day after the US imposed a blanket 25% tariff on global steel and aluminium imports:
Sailors crossing the Atlantic in March are used to dealing with rough seas. But when two shipments of steel from Marcegaglia Stainless Sheffield were slowed up in crossing the Pond by storms this week it meant more than a few days’ extra journey: the metal was caught up in the global trade war started by the US president, Donald Trump, as well, writes my colleague Jasper Jolly.
“Obviously, it’s a massive frustration,” says Liam Bates, the president of long products at the Italian steelmaker’s northern England operation. The company had hoped to rush through two weekly shipments in order to avoid the Wednesday deadline for Trump’s 25% tariffs on steel and aluminium. Instead, it will have to bear the costs – or hope for grace from the US government.
The tariffs have put the US’s trading partners, including the UK, in a tricky situation. They are being pulled in two directions: some want trade war retaliation, while others want “pragmatic” negotiation in the hope that the changeable Trump can be persuaded to ease the levies.
The EU’s response was swift. The bloc immediately retaliated with revived levies on all-American products such as bourbon whiskey, jeans and Harley-Davidson motorcycles, and the promise of more on an array of other products including makeup, chicken, beef and metals.
Yet the UK is taking the second path: keeping its head down, and hoping it can persuade the changeable and deal-driven Trump to change his mind.
Keir Starmer told parliament on Wednesday he was “disappointed”, while adding that the UK “will take a pragmatic approach” as it tries to negotiate a deal with the US. “But we will keep all options on the table,” he said, leaving open the possibility of future retaliation.
Chris Southworth, the UK secretary general for the International Chamber of Commerce, a business group, says the UK government will come under “tremendous pressure” to retaliate, and it may still do so. However, Starmer’s relative success in mollifying Trump may open the way to talks that could roll back tariffs for the UK.
Jobs at risk unless EV demand is boosted, says SMMT
A failure to boost demand for electric vehicles (EVs) will put jobs in the UK automotive sector at risk, a major industry group has warned.
Mike Hawes, chief executive of the Society of Motor Manufacturers and Traders (SMMT), warned of the danger of “de-industrialisation” if more support for EV purchases is not introduced.
He described the decision to remove EVs’ exemption from vehicle excise duty and the expensive car supplement as “disincentives” for people to switch to electric motoring.
Hawes also said the automotive industry “doesn’t want to see an increase in tariffs”, after Donald Trump announced a 25% tax on US imports of steel and aluminium. The SMMT chief praised the UK government for “treating things very calmly” in its response, adding: “Cool heads can hopefully prevail.”
Under the UK’s zero-emission vehicles (Zev) mandate, at least 28% of new cars sold by each manufacturer in the UK this year must be zero-emission, which generally means pure electric. Pure electric vehicles now make up a quarter of the market.
Failure to abide by the mandate or make use of flexibilities – such as buying credits from rival companies or making more sales in future years – will result in a requirement to pay the government £15,000 per polluting car sold above the limits.
Hawes said:
We need to be pulling every lever to grow this demand because the consequences of this regulatory framework and an inability to meet it, you’re beginning to see play out in terms of flattening of sales, production is down, plants unfortunately closed or certainly consolidated, jobs lost.
Nobody wants that, because this should be a driver of growth, not a driver of de-industrialisation.
Stellantis, which owns Peugeot, Fiat and Jeep, will close its van-making factory in Luton in Bedfordshire next month, affecting around 1,100 jobs.
The SMMT calculates that halving VAT on new EV purchases would boost the market by a further 15% on top of the current outlooks, delivering a total of 2m new EVs by 2028.
This would cost the Treasury around £1,000 a car initially, the group said. But combined with flexible regulation and mandated roll out of charge points, it would have benefits such as increasing business for charge points, insurance, maintenance and other sectors, and reducing road transport emissions, according to the automotive body.
A survey commissioned by the SMMT indicated just 11.6% of new car buyers intend to switch to electric in the next three years. But nearly two in five “electric sceptics” said they would change their mind if there was a purchase incentive.
Hawes said investment by manufacturers means
10 times as many drivers are going electric compared with just five years ago.
This is great progress but with the right support for consumers, we can go beyond current expectations to put a total of more than two million new EVs on the road by 2028.
Government investment to convert the electric sceptics would energise business across the country far beyond just the automotive sector.
Every stakeholder would benefit from the impact of consumer incentives which, when combined with binding targets for charge point rollout and more flexible regulation, would create a virtuous circle of rising demand that stimulates green economic growth.”
The Zev mandate percentages rise each year, and is set to reach 80% of new cars in 2030. The government is analysing feedback from a recent consultation on proposed changes to the rules, which could include making it easier for non-compliant manufacturers to avoid fines.
It has previously committed to reverse then-prime minister Rishi Sunak’s decision in September 2023 to delay prohibiting the sale of conventionally fuelled new cars and vans from 2030 until 2035.
Transport minister Lilian Greenwood told the SMMT’s Electrified conference in Westminster that the UK has a “formidable public charging network” with 75,000 chargers, but “we need to go further”. She said:
That’s why we’re running hell for leather to deliver the charging infrastructure we need to meet our Zev targets.
We knew this fundamental transition – like any big change – wasn’t going to be easy, but with each passing year, we see record numbers of drivers going electric.
Farmers’ incomes have remained stagnant since the 1970s despite improvements in productivity and a fall in the workforce, research has found.
This has been driven by falling prices for farm produce; as the UK has become more reliant on imports, supermarkets have taken over grocery shopping, and households are eating more ultra-processed food, according to the report by the Food, Farming and Countryside Commission.
Over the past five years, the average income for a farmer has been £32,272. After adjusting for inflation, this is the same level as in the mid-1970s. During the same period, the economy has grown and real-terms wages have risen in other sectors.
Farmers in the UK have been protesting recently after the government introduced inheritance tax on their assets. They argue the meagre income they make from their farms will probably not be enough to pay the charges, meaning their children will have to sell the land. This change has coincided with the 18 wettest months on record, as well as the ending of EU farming subsidies.
Parents who are worried about their children gaming on Roblox should not let them use it, the platform’s chief executive has said.
There have been reports of bullying and grooming, and fears that children are being exposed to explicit or harmful content, on the site, which is the most popular platform in the UK among gamers aged eight to 12.
Roblox’s co-founder and chief executive, David Baszucki, told BBC News the platform was vigilant in protecting its users, and said “tens of millions” of people had “amazing experiences” on the site.
But he added: “My first message would be: if you’re not comfortable, don’t let your kids be on Roblox. That sounds a little counterintuitive, but I would always trust parents to make their own decisions.
Savills expects boost from back-to-office trend
Joanna Partridge
Property company Savills expects the push by employers to get their staff back to the office to boost its transaction levels over the coming year, after a string of large corporates have issued return-to-office mandates to staff in recent months.
Mark Ridley, the chief executive said:
We expect re-financing driven activity and the trend towards corporates requiring greater office attendance for staff to continue to be positive for transaction volumes.
The firm said most property markets were in recovery by the start of this year, and would be helped by expected reductions in the cost of capital, even if some economic uncertainty continues.
In the UK, leasing activity in commercial markets returned to “more normal levels” in 2024, Savills said, adding that it saw a 2% increase in take-up in the London office market last year, which is only 5% below the long-term average. This contrasted with stable take-up in the logistics market.
Increased demand from occupiers saw prime rents in the City of London climb by 7.5% over the year.
Interest rate cuts during the year helped the UK’s residential property market, although it said sentiment was hit by fiscal changes which were introduced in October’ budget.
In North America, Savills said financial services companies, law firms and other professional services firms were pushing up demand for prime properties, especially those with good amenities and higher environmental standards, while there was less demand for lower grade space.
It came as the international real estate company, listed on the London stock exchange, reported a 38% increase in its underlying pre-tax profit to £130m in 2024, slightly above average analysts’ estimates.
The Savills share price fell by nearly 9% in morning trading to 904p, the lowest since February 2024, despite the firm hiking its dividend by a third.
Chris Beauchamp, chief market analyst at online trading platform IG, said:
Savills has been on the downward move for months, and it just seems like the shares are in need of a turnaround plan, and the report has not really delivered it.
Deliveroo has made an annual profit for the first time, after a bumpy few years since a disastrous stock market listing that earned the takeaway delivery company the nickname “flopperoo”.
The 12-year-old company, a member of the FTSE 250 index of mid-sized companies, made a profit of £3m in 2024, compared with a loss of £32m in 2023, it said in a statement on Thursday.
The profit came alongside its first year of cash generation, after years of losing hundreds of millions of pounds as the company expanded from a startup to becoming a rare technology company float on the London Stock Exchange in 2021.
Deliveroo said the annual profit came despite an “uncertain consumer environment”, as it pushed beyond takeaways to grocery deliveries, which accounted for 16% of sales in the second half of the year.
Its share price fell by 8% after analysts flagged “soft” expectations for future profits, and the meal delivery company pushed back its margin growth target after a sower than expected recovery in consumer confidence.
Chief executive Will Shu said he had expected consumer spending to recover “a bit faster” when he set the target in 2023 to expand the core earnings margin to 4% “by 2026”. Deliveroo now expects margin growth to accelerate “from 2026” and to reach 4% in the medium term.
Shu told Reuters:
The consumer market since our capital markets event hasn’t been the smoothest.
Susannah Streeter, the head of money and markets at Hargreaves Lansdown, said:
It’s been a long hard slog but Deliveroo has finally climbed the tough summit of reaching annual profitability … Growth is already highly sluggish in the UK, and there are concerns that the harsh global trade winds blowing could knock recovery off course.
European shares rise; German parliament to debate borrowing bonanza
Elsewhere in financial markets, European shares are pushing cautiously higher, while the dollar is flat.
The UK’s FTSE 100 index has advanced by 37 points to 8,578, a 0.4% gain.
Germany’s Dax is a tad higher at 22,683 following strong gains in recent days, ahead of the parliamentary debate (starting at 11am GMT) on the planned borrowing bonanza to allow higher defence and infrastructure spending. The French and Italian stock markets are up by a smidgen.
The winner of Germany’s national election last month, Friedrich Merz, wants to get the fiscal changes passed before a new parliament convenes on 25 March, where they could be blocked by a higher number of far-right and far-left parliamentarians.
Merz’s conservatives and his likely coalition partner, the Social Democrats, need to win over the Green party to secure the two-thirds majority required to change the constitution to make the fiscal shift possible.
Britta Haßelmann, co-chair of the Greens’ parliamentary group in the Bundestag since 2021, told RTL/ntv News that there has been no progress in negotiations. She warned of “serious gaps and errors in the conception” of the borrowing plans towards tackling climate change, for example.
The Greens are pushing for assurances that the conservatives and Social Democrats won’t use the new funds on policies to please voters, an accusation that Merz has rejected. Haßelmann said:
None of this has been guaranteed so far with the current draft bill.
The dollar is little changed against a basket of major currencies, with the pound and the euro flat against the greenback. Sterling currently buys $1.2951 while the European single currency buys $1.1909.
Global oil supply to outstrip demand amid tariffs, IEA says
Global oil supply could outstrip demand by around 600,000 barrels per day this year, according to the International Energy Agency, which lowered its prediction for 2025 demand growth.
The global oil surplus could increase by a further 400,000 barrels a day (bpd) if OPEC+ (the OPEC oil cartel and allies including Russia) continues to unwind output cuts, and fails to rein in overproduction against quotas, the Paris-based agency said in its monthly oil market report.
The IEA revised down its 2025 oil demand growth forecast by 70,000 bpd to around 1m barrels, with growth driven largely by Asia, in particular China’s petrochemical industry.
It said demand in the last quarter of 2024 and the first quarter of this year was lower than expected amid “an unusually uncertain macroeconomic climate”. The agency said:
New US tariffs, combined with escalating retaliatory measures, tilted macro risks to the downside. Recent oil demand data have underwhelmed, and growth estimates for the fourth quarter of 2024 and the first quarter of 2025 have been marginally downgraded.
Oil prices are little changed at the moment, with the global benchmarks, Brent crude and US crude trading at $70.90 a barrel and $67.58 a barrel respectively.
Keir Starmer could face the biggest rebellion of his premiership with dozens of Labour MPs angry at his plans to cut billions from the rising welfare bill and threatening to vote against freezing disability benefits, reports our political editor Pippa Crerar.
In a bid to avoid a damaging showdown with MPs and peers, Downing Street began inviting groups of Labour backbenchers to meetings on Wednesday, stressing the “moral case” for changes designed to get people back to work as they made the case for painful changes.
The Guardian understands that dozens of MPs have urged the government to think again. Many are particularly concerned that Rachel Reeves is set to go further than the former Tory chancellor George Osborne who, despite cutting working-age benefits for four years, kept the personal independence payments (Pip) rising.
Why is Keir Starmer’s government seeking to cut the benefits bill?
Labour is targeting sickness and disability benefits that have ballooned amid an increasingly ageing and unwell population. Our economics correspondent Richard Partington takes a look.
The UK has tumbled down the league of affluent nations after almost a decade of welfare cuts and stagnant incomes, according to a report that found the poorest districts in Britain now rank below the lowest-income areas of Malta and Slovenia.
In a warning for ministers to protect welfare spending before Rachel Reeves’s spring statement in two weeks’ time, the National Institute of Economic and Social Research (NIESR) said the UK’s reputation for high living standards was under threat.
Districts in Birmingham were ranked as the poorest in the UK, according to the study, and below the poorest areas of Finland, France, Malta and Slovenia, it found.
Between 2020 and 2023, a combination of welfare cuts and near-zero real income growth meant the bottom 10% of earners in the West Midlands saw their living standards fall below the level in parts of Slovenia, researchers said.
“UK regional income growth has been among the slowest in Europe, whilst real incomes in the majority of European regions have grown at a faster rate than those in UK,” the report said.
Reeves is expected to use her spring statement on 26 March to outline further cuts to welfare benefits to meet spending rules laid out in the budget last autumn.
Donald Trump has accused Ireland of stealing the US pharmaceutical industry and the tax revenue that should have been paid to the US treasury, in a blow to the Irish premier, Micheál Martin, who had hoped to emerge unscathed from a visit to the White House marking St Patrick’s Day.
The US president showed grudging respect for Martin, alternately ribbing and complimenting him, while also launching several broadsides against the EU.
He repeatedly took aim at Ireland’s historical low-tax policies, which helped lure US multinationals including Pfizer, Boston Scientific and Eli Lilly to its shores.
Big pharma now drives Ireland’s €72bn (£60bn) worth of annual exports to the US, with taxes paid in Ireland on drugs consumed in the US.
“The Irish are smart, yes, smart people,” Trump said. “You took our pharmaceutical companies and other companies … This beautiful island of 5 million people has got the entire US pharmaceutical industry in its grasps.”
Here’s our full story on John Lewis:
In other news, two British taxi companies have launched a crowdfunding drive for the last leg of a lengthy legal battle with Uber that could result in higher cab fares.
Uber will seek, at a supreme court hearing in July, a ruling on contractual models that affect whether VAT applies to private-hire companies outside London, which it has argued would level the playing field across the UK.
However, the minicab industry has fought the move, which it said could raise the cost of taxi journeys outside London by at least 20%.
The private hire firms Delta Taxis from Liverpool and Veezu from Cardiff are attempting to raise £500,000 to sustain their legal battle. Costs already exceed £1m after high court cases in 2022 and 2023, and a court of appeal case in 2024.
Deutsche Bank pays highest bonuses in a decade
Deutsche Bank has ramped up its bonus pool to the largest in a decade, after a surge in deals and trading last year.
Germany’s biggest lender paid staff €2.5bn (£2.1bn) in variable compensation last year, it said in its annual report – up 26% on a year earlier.
The bank said it had a new remuneration system which means more staff can receive bonuses.
There were 647 high earners who were paid more than €1m each, up from 505 in 2023, on the back of a strong performance in the investment bank. Four bankers earned more than €10m each, one of them as much as €18m. Bonuses for investment bankers were up by 32%.
Chief executive Christian Sewing received a total package of €9.8m last year, up from €8.7m the year before. A change in the remuneration system means that the long-term part of his 2024 bonus is on a pro forma basis and the final amount will only be decided after 2026.
This came after Deutsche Bank reported strong fixed-income securities and currencies trading, while revenues fell in the corporate and private bank. Its expects higher investment banking revenues this year.
Full-year pre-tax profits rose by 2% to €5.7bn but profits tumbled by 10% in the fourth quarter, largely due to restructuring costs and a write-down on its recent takeover of the UK stockbroker Numis.
Like other banks, Deutsche Bank is cutting jobs, a total of 3,500, as part of post-pandemic cost reductions, by automating work where possible in a major hit to back-office staff.
Bundesbank chief warns US tariffs could tip Germany into recession
Donald Trump’s trade policies could tip Germany, Europe’s largest economy, into another recession, the president of the country’s central bank warns.
The Germany economy has shrunk in the past two years and with US tariffs, the country “could expect a recession for this year” too, Joachim Nagel, the head of the Deutsche Bundesbank, told the BBC World Service.
Without the impact of tariffs, the bank forecasts the German economy will grow moderately, by about 0.2%, he said.
Nagel said “there are only losers” when it comes to tariffs, and backed the EU’s countermeasures against Trump’s 25% levy on all steel and aluminium imports from overseas imposed yesterday.
Tariffs are a key part of the US president’s economic vision as he hopes they will boost US manufacturing and protect jobs, but economists say they will push up prices for US consumers.
Nagel called Trump’s tariff policy “economics from the past” and “definitely not a good idea”.
The EU announced countertariffs on a range of goods from 1 April. Nagel expressed hope that when the US realises that the price that needs to be paid will be “highest on the side of the Americans”, it will give an opportunity for both sides to come to a different resolution.
“I hope that in the end, good policy will succeed,” he said.
Germany is hugely reliant on exports, and its cars such as BMW, Mercedes, Volkswagen and Audi are popular in the US.
Nagel rejected claims that Germany was the “sick man of Europe”, saying it had a “strong economic basis” and “strong small and medium sized companies”.
But nevertheless, when you are exposed to an export-oriented model, then you are more exposed in a situation when tariffs are going up and there are so many uncertainties, so many unknowns.
The head of Germany’s BGA federation of wholesale, foreign trade and service, Dirk Jandura, warned yesterday that Germans might have to pay more for American products, such as orange juice, bourbon and peanut butter, in supermarkets.
Later today, the German parliament will debate proposals to loosen its controversial debt brake to allow higher defence spending and to set up a €500bn infrastructure fund, which would be a major fiscal shift.
Nagel said it was an “extraordinary measure” for an “extraordinary time”.
The whole world is facing tectonic changes which makes the current situation very different from those seen in the past, hence the fiscal change.
He said the policy change would give Germany some financial breathing room for recovery in the next few years, adding it provided a “stability signal to the market”.
Introduction: John Lewis staff miss out on bonus despite profits jump; Britain’s housing market loses steam
Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.
Despite tripling full-year profits, the John Lewis Partnership has decided not to pay a staff bonus for the third year in a row.
The owner of John Lewis and Waitrose, which is in the middle of a turnaround plan, reported a profit of £126m, with sales up 3% to £12.8bn in the year to 25 January. It has closed 16 department stores and at least 20 Waitrose outlets and cut thousands of jobs at head office.
The retailer said it is prioritising investment over the bonus with plans to spend £600m on transforming the business.
Jason Tarry, chairman of the John Lewis Partnership, said:
These are solid results, which show that our customers are responding well to our investments in quality products, value and service. We have made good progress with much more still to do.
The retailer, which employed about 69,000 people last year, has now skipped the bonus to workers in four out of the last five years, after diving to a loss during the Covid pandemic when it was forced to close stores during lockdowns.
Britain’s housing market had its slowest month in more than a year in February as a rush of buyers to complete before a tax break deadline ran out of steam.
The monthly survey from the Royal Institution of Chartered Surveyors showed buyer demand was weakest since November 2023, with a further slowdown expected in the months ahead.
The volume of newly-agreed sales fell in February, with London-based professionals reporting a particularly noticeable dip in sales agreed during the month.
Higher stamp duty costs for some home-buyers from 1 April are expected to dampen market activity. Stamp duty applies in England and Northern Ireland.
The net balance of house prices, which measures the difference between surveyors reporting a rise and a fall, dropped to +11, down from January’s +21 and a two-year high of +25 in December, and the lowest since September. However, a net balance of 47% expect property values to increase in the next 12 months.
The housing market had picked up in previous months, boosted by lower mortgage rates and expectations of Bank of England interest rate cuts.
RICS chief economist Simon Rubinson said:
The UK housing market appears to be losing some momentum as the expiry of the temporary increase in stamp duty thresholds approaches.
Some concerns are also being expressed by respondents about the re-emergence of inflationary pressures and the more uncertain geopolitical environment. That said, looking beyond the next few months, sales activity is seen as likely to resume an upward trend with prices also moving higher.
Turning to the rental market, he said:
Meanwhile, despite a flatter trend in demand for private rental properties, the key RICS metric capturing rental expectations is still pointing to further increases, demonstrating that the challenge around supply spans all tenures.
Sarah Coles, head of personal finance at Hargreaves Lansdown, explained:
The window of opportunity has effectively slammed shut on buyers, because even in February they knew there was next-to-no chance of getting a sale sorted before the end of the stamp duty holiday.
Unsurprisingly, it has sucked some of the life out of the market. House prices have continued to rise, but not as quickly, and agents are fairly convinced we’ll be in this lull for a while yet.
Asian stock markets are in the red, as optimism over cooling US inflation gave way to worries about the economic impact of Donald Trump’s trade tariffs. Japan’s Nikkei gave up earlier gains to dip slightly while Hong Kong’s Hang Seng was down by 0.7% and the Shenzhen exchange in China lost nearly 1%.
Stock futures are suggesting a lower open in Europe and on Wall Street later.
Gold rose by 0.5% as high as $2,947.06, approaching a record high hit on 24 February of $2,956.15.
The Agenda
-
10am GMT: Eurozone industrial production for January
-
12.30pm GMT: US Producer prices for February; initial jobless claims for week of 8 March
-
11am GMT: German parliament to debate borrowing bonanza
