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Good morning and welcome back to FirstFT and if this is your first time reading the newsletter, glad to have you on board. If FirstFT was forwarded to you sign up here to receive it every weekday. Now on with today’s agenda:
Tariffs and their impact on companies
Ex-Big Four bosses launch rival
The lobbyist who has the president’s ear
And the FT-Schroders book prize
The cost of Donald Trump’s trade war on company balance sheets and supply chains became clearer this week following results announcements and analyst calls with executives from some of America’s biggest companies.
What are executives saying? Company bosses in the transport, energy, telecommunications and homebuilding sectors were among those to discuss tariffs with Wall Street analysts and they raised the alarm about Trump’s sweeping duties. Tariffs were cited on more than 90 per cent of first-quarter earnings calls, according to FactSet, while the term recession was mentioned on 44 per cent of calls. “Unlike anything we’ve ever seen since the end of World War II,” John Ketchum, chief executive of NextEra Energy, owner of the largest US power utility, said yesterday.
What about specific companies? Boeing, America’s largest exporter, yesterday warned that planes scheduled for delivery to China were being diverted to customers elsewhere. AT&T and Verizon, two of the biggest US telecoms groups, warned of the impact on the price of phone handsets and wireless routers. “If the tariff is going to be as high as they say on the handsets, we are not planning to cover that in our work,” Verizon chief executive Hans Vestberg told analysts. Others said they were trying to absorb the higher costs. “We’re trying to be pretty smart, strategic and surgical about this,” said William Brown, chief executive of 3M, the maker of Post-it notes and Scotch tape. For more company comments click here and for more on trade see below:
US-China trade talks: US Treasury secretary Scott Bessent yesterday played down hopes for a de-escalation of US-China tensions in comments to reporters.
UK-US deal: Chancellor Rachel Reeves has opened the door to a cut in tariffs on US car imports, but insisted Britain would not dilute its food standards or vehicle safety rules.
Chinese production: Factories in China are beginning to shut down and furlough workers as orders dry up.
Medical device suppliers: The highly integrated global supply chain used by medical device makers can rely on parts from up to 20 different countries and it is not currently shielded from tariffs.
Carmakers: Donald Trump is planning to spare carmakers from some of his most onerous tariffs, following intense lobbying by industry executives in recent weeks.
For more analysis, sign up for Alan Beattie’s Trade Secrets newsletter if you’re a premium subscriber, or upgrade your subscription. Here’s what else we’re keeping tabs on today:
IMF/World Bank Spring meeting: IMF managing director Kristalina Georgieva and UK chancellor Rachel Reeves are among the speakers on a panel discussion.
Results: Alphabet, Hasbro, Intel, Merck, Nasdaq, PepsiCo and Procter & Gamble are among those reporting. See our Week Ahead newsletter for the full list.
Economic data: Mexico’s national statistics agency will publish data on consumer price changes in the first half of the month.
Kashmir attacks: India has summoned the top Pakistani diplomat in New Delhi, according to local media reports, as a deadly attack on civilians threatened to reignite one of Asia’s longest running conflicts.
Join FT columnists and leading authors, scientists, and politicians at the FT Weekend Festival in May in Washington DC and online. Register here.
Five more top stories
1. Russian air strikes targeting Kyiv killed at least nine people and injured more than 80, in the deadliest and largest bombardment of the Ukrainian capital in months, authorities said. The ballistic missiles and drones struck apartment buildings in Kyiv, home to 4mn people, and others cities across seven regions of the country.
2. Exclusive: EY’s former UK head and PwC’s ex-chief operating officer are launching a rival firm with backing from private equity, vowing to peel off British clients and partners from the Big Four. The new venture, Unity Advisory, has quietly begun recruiting for a launch expected by June. Stephen Foley and Ellesheva Kissin have more details.
3. World Economic Forum founder Klaus Schwab allegedly manipulated the organisation’s research to curry favour with governments, according to whistleblower claims that led to his earlier resignation as chair. In a statement circulated yesterday, Schwab denied all the claims against him and said he was the victim of a “character assassination”.
4. Trump has accused leading US universities, including Harvard, of breaking federal laws on large foreign donations, although it was not immediately clear how, or if, any school had violated such rules. The president ordered officials “to conduct audits and investigations as appropriate”, escalating his attack on the country’s educational establishment.
5. Citigroup is closing its beachside Málaga office less than three years after opening the hub to offer junior investment bankers a better work-life balance. The Wall Street bank had hoped to set itself apart from its competitors by offering junior staff eight-hour days and work-free weekends on the Costa del Sol. Read more on why the bank changed course.
The Big Read
Elon Musk’s multimillion dollar foray into electoral politics looked like one of the savviest investments of his career following Donald Trump’s election win in November. But, by Musk’s own admission, his allegiance to Trump has instead led to damaging “blowback” for his flagship electric-car maker Tesla. “It went from a Cinderella story to Nightmare on Elm Street,” said one analyst. Facing investor pressure Musk this week changed course. Can he help Tesla regain its competitive edge?
We’re also reading and listening to . . .
US dollar: The currency has much further to fall, writes Jan Hatzius, chief economist at Goldman Sachs.
🎧 El Salvador: What’s the appeal of Nayib Bukele’s mass incarceration model for Donald Trump? Michael Stott and Gideon Rachman discuss the case of Kilmar Armando Abrego Garcia.
FTC commissioners: Two former antitrust regulators suing Trump for moving to fire them, discuss what their case means for US regulation and the economy.
The FT View: Trump’s unpredictability has already undermined the reputation of US assets and institutions. That won’t be easy to reverse, writes our editorial board.
Chart of the day
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Ballard Partners, which counts cabinet members Susie Wiles and Pam Bondi among its alumni, has become the go to lobbying firm in Washington for clients seeking to influence the famously transactional president. From its beginnings in Florida, it has expanded rapidly and now has offices in California, Israel, Turkey, Saudi Arabia and is adding 5,000 sq ft to its Washington office. Here’s more on the founder Brian Ballard.
Take a break from the news
With the FT and Schroders Business Book of the Year Award launching today, Andrew Hill looks at how the publishing industry is grappling with the debate over artificial intelligence.
Find out more about the award here.
