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Introduction: Trump’s new tariffs kick in at 10%
Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.
President Donald Trump’s new tariffs have come into effect today at a rate of 10%, after the US supreme court blocked many of his import taxes on Friday.
The president signed an executive order last Friday authorising the 10% tariffs just hours after the supreme court ruling. He later threatened to raise the rate to 15%, but did not officially do so by Tuesday 12.01am time in Washington, when the 10% levy came into effect.
However, Bloomberg is reporting that officials in the White House are working on a formal order that will increase the rate to 15%.
It comes after Trump declared this week that he can use tariffs in a “much more powerful and obnoxious way”.
The new tariffs, which Trump is applying under Section 122 of the 1974 Trade Act, have triggered uncertainty with a number of US trading partners, including the UK (which negotiated a 10% rate with the US last year) and the EU.
On Monday the EU paused the process of ratification of the deal it had struck with the US last July for the second time in a month, after it froze and unfroze the deal in the wake of Trump’s Greenland threats. The deal was for 15% blanket tariffs on EU imports that were inclusive of previous levies.
Meanwhile in the UK, a spokesperson for Keir Starmer, when asked whether retaliatory tariffs were an option, said:
No one wants to see a trade war. No one wants to see a situation that’s escalated. But as I say, nothing is off the table at this stage.
The agenda
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5am GMT: EU car registrations
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11am GMT: CBI Distributive trades for Feb
-
2pm GMT: Case-Shiller US home price index
-
2.15pm GMT: Bank of England governor to discuss MPC decision to hold interest rates at 3.75% with the Treasury Committee
Key events
Matt Britzman, senior equity analyst at the broker Hargreaves Lansdown, says the Meta/AMD deal indicates the AI arms race has “shifted up another ear”.
Coming hot on the heels of Meta’s recent Nvidia agreement, the message couldn’t be clearer: AI infrastructure is priority number one. Meta is locking in supply, diversifying away from a single vendor, and doing whatever it takes to make sure its AI ambitions aren’t bottlenecked by chips.
For AMD, this is a vote of confidence in its next-generation AI hardware – but having to give up a 10% stake suggests it could be struggling to generate organic demand.
That said, delivering solutions at this scale is a new test. Designing competitive chips is one thing; manufacturing, deploying and supporting them in volumes this large is another.
…Zooming out, this deal underlines just how dominant Nvidia still is… AMD had to sweeten the agreement with a potential equity option – something you simply don’t see Nvidia needing to do to secure demand. Nvidia remains the clear top dog in AI chips, with unmatched scale, software, and customer pull. AMD is making progress and carving out a role, but with Nvidia’s results due tomorrow, we’re expecting Jensen Huang to once again remind the market who’s in charge.”
Meta strikes multi-billion dollar chip deal with AMD
Meta has agreed a multi-billion dollar chip deal with Advanced Micro Devices, in which it could also buy a 10% stake in the business.
The company, which owns Facebook, Instagram and WhatsApp, has agreed to buy $60bn of artificial intelligence chips from AMD.
It is the latest blockbuster deal in the AI space, as companies pour billions of dollars into developing their AI tech. Meta has separately struck a deal with AMD’s larger rival Nvidia to buy millions of AI chips.
AMD will supply six gigawatts’ worth of chips to Meta, starting with one gigawatt of the company’s forthcoming MI450 flagship hardware in the second half of this year, AMD chief executive Lisa Su said.
Meta also plans to buy central processors (CPUs), including a variant that will be customised for the social media platform’s needs.
The custom CPU will be tuned to deliver powerful performance while keeping energy consumption as low as possible, Su said. The deal will include two generations of AMD’s CPUs.
Su said:
So no question Mark [Zuckerberg] is very, very ambitious in what he wants to accomplish, and we want to use every aspect of our technology to really help Meta to accomplish that.
…Meta is making a big bet on AMD.
Meta also gets a performance-based warrant as part of the deal, giving it the option to acquire up to 160 million AMD shares in tranches at an exercise price of $0.01 as it buys processors.
Shares in AMD are poised to jump when the US market opens, with the stock up 10% in pre-market trading.
The stock market looks pretty stable for now – the UK’s FTSE 100 is now only down by 0.07%, and the Stoxx Europe 600 is up slightly by 0.1%.
Futures for the US stock market were up 0.4%. Investors will be watching the US market open closely in a couple of hours, after a gloomy report on AI risks triggered a sell-off in software stocks yesterday.
The report, which was published over the weekend by the research firm Citrini, imagined a world in 2028 in which rapid advances in machine intelligence boost productivity, but could spark human job losses, weigh on consumer spending and hit stock indexes.
Shares in the tech giant IBM also suffered yesterday, although that was off the back of AI startup Anthropic saying its Claude Code tool can help modernise Cobol, an old programming language that runs on IBM computers.
UK bank stocks wobble amid credit concerns
Some of Britain’s biggest banks have been the worst performers in the FTSE 100 today: shares in Lloyds Banking Group, NatWest and Barclays are all down between 1.5-2%.
There are concerns growing around the health of the credit market, especially after Jamie Dimon, the chief executive of the American bank JPMorgan, said that there was a risk of bad loans in the banking system.
When asked about fierce competition in the financial industry, Dimon said that he was starting to see parallels with the era before the 2008 financial crisis.
He told investors:
Unfortunately, we did see this in ’05, ’06 and ’07, almost the same thing — the rising tide was lifting all boats, everyone was making a lot of money.
Adding that while JPMorgan was not willing to make riskier loans to boost net interest income, he said:
I see a couple people doing some dumb things. They’re just doing dumb things to create NII.
Kathleen Brooks, of the broker XTB, said that these fears are now being echoed across the Atlantic, but it could well be an over-reaction.
Fears about credit quality are also weighing on banks in Europe and is it is dragging the index lower. HSBC, Barclays, Lloyds and NatWest are all sharply lower today, as Dimon’s fears echo across the Atlantic. Intesa San Paolo, ING Group and Allianz are also weighing heavily on the European index. We will need to see if this sell off continues, or if a recovery in US banks helps to calm credit fears in Europe.
…It is worth noting that the default rate across European corporates was very low at 4.4% at the end of 2025, this is expected to fall this year. There were only $3.9bn of defaults in European high yield debt last year, and only $9bn in defaults in leveraged European loans.
While this could change this year, it is hopeful that it comes off a low base. Trying to guess a credit collapse might make good headlines, but it may not become a reality, and the markets could be overreacting to what Dimon had to say.
UK retail sales dampened by the rain
Heather Stewart
February’s relentlessly soggy weather depressed UK retail spending, the CBI has suggested, with volumes falling sharply, according to its monthly distributive trades survey.
The main balance on the survey slipped to -43 from -17 last month.
The CBI’s economist Martin Sartorius said:
Retail sales volumes fell at a sharp pace in the year to February, with some firms reporting that the wet weather discouraged shoppers from visiting stores.
Online shopping was up, the CBI found – but not enough to drag the overall balance into positive territory. The forward-looking indicators in the survey were more optimistic, however, with expected sales volumes for March standing at -17: the strongest reading in six months.
Rachel Reeves will deliver her spring forecast next week, and is hoping interest rate cuts from the Bank of England, and cheaper energy bills, will help to boost consumer confidence in the coming months.
China will decide on tariff retaliation in ‘due course’
China has said it will decide whether to retaliate to Trump’s latest tariffs in “due course”, a commerce ministry official said on Tuesday.
The spokesperson told Reuters:
China has consistently opposed all forms of unilateral tariff measures and urges the US side to cancel unilateral tariffs and refrain from further imposing such tariffs.
China was one of the biggest beneficiaries of the Supreme Court ruling last week against Trump’s initial raft of tariffs. Last year Beijing had retaliated against the US trade policy with multiple counter tariffs on American goods, including levies on some agricultural commodities and in energy.
Trump is expected to travel to China from 31 March to 2 April for talks with Chinese President Xi Jinping.
Oil prices hit seven-month highs ahead of US-Iran talks
Priya Bharadia
Oil prices have reached seven-month highs, as traders reacted to heightened tensions between the US and Iran ahead of nuclear talks this week.
US crude futures rose to $67.28 a barrel on Monday, while Brent crude touched its highest level since 31 July at $72.50 a barrel. Prices fell back late in the session, but were up again on Tuesday morning, approaching Monday’s highs.
James Hosie, a research analyst at Shore Capital, said oil markets were:
rationally trying to price in a risk premium for oil prices, given the disruption a conflict could have on global supplies”.
The risk of possible military escalation in the Middle East is gaining traction, and thus, traders appear to hedge against worst-case scenarios,” said Priyanka Sachdeva, a senior market analyst at Phillip Nova. She added that the current prices were “largely driven by anticipation rather than actual supply loss”.
Washington and Tehran are set to hold a third round of nuclear talks in Geneva this Thursday.
While many exporters around the world cheered when the supreme court ruled against Trump’s “reciprocal” tariffs last week, the unintended consequence could be that the trade war escalates further, says Neil Wilson at the broker Saxo Markets.
Trump warned countries not to ‘play games’ and threatened ‘a much higher tariff’ than they had agreed to…the unintended consequence of the Supreme Court ruling could be an escalatory trade war that markets hadn’t anticipated. Or as Trump put it the Supreme Court had ‘unwittingly’ handed him ‘far more powers and strength’ to levy fresh tariffs than before the ruling.
… The White House insists it’s working on a 15% levy at a later date, which gives the president a degree of optionality, but this is evolving into a far messier situation than we had a week ago.
… The trade situation is now more ambiguous now than it was a week ago. This may affect investment and capital flows…So we are left with both more ambiguity than before and a greater chance of an escalatory trade war between the US and its main trading partners.
Economists debate US claims over trade deficit
There is some debate emerging around the premise that supports Trump’s latest round of tariffs.
The president invoked Section 122 of the Trade Act of 1974, which allows him to impose duties for up to 150 days “in situations of fundamental international payments problems”. Those include “large and serious United States balance-of-payments deficits” and an ‘imminent and significant depreciation of the dollar”.
Trump’s latest tariff order argues that the US has a goods trade deficit of $1.2 trillion and a current account deficit of 4% of GDP.
Some economists have contested this. Gita Gopinath, a former International Monetary Fund first deputy managing director, said in an interview with Reuters:
We can all agree that the US is not facing a balance of payments crisis, which is when countries experience an exorbitant increase in international borrowing costs and lose access to financial markets.
She rejected the White House’s claim that a negative balance on the US primary income for the first time since 1960 was evidence of a large and serious balance of payment problem. Instead, she said the negative balance was due to a large increase in foreign purchases of US stocks and risky assets over the past decade, which have outperformed foreign stocks.
Bitcoin continues fall below $65,000
Bitcoin has continued to drop this morning, down 2% to $63,149, as the cautious mood in markets ripples out to the world of crypto. It is now down by about 20% this month alone, which has put it on track for its worst monthly performance since June 2022.
It would also put the original cryptocurrency on track for its fifth consecutive monthly decline, which would be its longest losing streak since 2018, according to Bloomberg.
$BTC has lost the $65,000 support zone.
There are strong bids around the $60,000-$63,000 level for Bitcoin, but now it all depends on how the stock market moves.
At this point, it looks like BTC will probably sweep the $60K lows before reversal. pic.twitter.com/2IaCOlz2F2
— Ted (@TedPillows) February 24, 2026
Investors will be waiting for clues about future US trade policy during Trump’s state of the union address tonight, says Susannah Streeter, chief investment strategist at the broker Wealth Club.
The blanket 10% global duties have come into force, but the threat of upping these to 15% is still dangling. Plus, the President and his team appear to be looking at other options in the trade arsenal, including considering imposing new tariffs under the pretext of national security on industrial sectors such as large batteries, chemicals, power grids and telecoms equipment.
The President won’t want to lose face against trade opponents, which is why relying on the TACO trade, and the expectation he’ll ‘chicken out’, bears risks. The State of the Union address could also see Trump justify the military build‑up in the Gulf and potentially a fresh attack on Iran. Oil prices are hovering near seven‑month highs as tense negotiations are set to resume on Thursday, with the threat of military action still high. The concern is that it would not just disrupt shipments from Iran, but oil supplies across the region.
Trump’s new tariffs are at 10% now, but multiple reports suggest that officials in the White House are plotting a path to increase the rate to 15%.
Such an increase would hit the UK particularly hard, as the government had negotiated a rate of 10% on many goods last summer.
Here’s a chart from the independent trade monitoring body Global Trade Alert, which plots out the potential impact of a 15% rate. In that scenario Brazil would enjoy the biggest reduction in average tariff rates, down by 13.6 percentage points, followed by China, with a 7.1 percentage point fall.
European markets have opened a bit lower this morning, as investors digest the news of Trump’s latest 10% tariff.
The UK’s blue chip FTSE 100 index has dropped 0.25%. In Italy the FTSE MIB has dropped 0.4%, the German Dax is down 0.2% and the French Cac 40 is down by 0.1%.
The Stoxx Europe 600, which tracks the biggest listed companies across the continent, has slipped 0.2%.
The worst performer in Europe so far is the UK-listed student accommodation provider Unite Group, with its shares falling by more than 8% this morning. The company told investors that it had sold fewer student beds last year, after a drop in demand from international applicants.
‘Fresh uncertainty’ for UK businesses exporting goods to the US
William Bain, head of trade policy at the British Chambers of Commerce, warns that while the 10% tariff is not as bad as threats of a 15% rate, the changing policies are making it harder for businesses to plan ahead.
He says:
It is far from clear what will happen next, and whether a higher tariff rate is still on the way. Despite the immediate reprieve, there is fresh uncertainty for UK firms exporting goods to the US.
This makes it very difficult for firms to understand the prices and margins they will be able to secure for their goods, currently under production, for export in several months’ time. Inevitably this will have an impact on their sales and hit the economy.
The BCC has provided government with a six-point plan to guard against the worst economic outcomes from the new tariffs and potential further hikes.
This includes continued negotiation with the US government, engagement with the US Congress, an uplift in UK Export Finance capacity and reviewing the UK’s Global Tariffs.
The risk of further tariff pain to come is still real and the government must do everything it can to prepare for the worst.”
Not everyone was happy that Trump’s “reciprocal” tariffs were deemed illegal by the US supreme court last week.
FedEx has sued the US government, seeking to receive reimbursement of their share of an estimated $175bn in levies after the highest court found Trump had overstepped his authority in issuing the tariffs.
The FedEx lawsuit named as defendants US Customs and Border Protection (CBP), which collects tariffs; the agency’s commissioner Rodney Scott; and the United States of America. The suit was filed in the US court of international trade. The company did not specify an amount in its complaint but said it was seeking a “full refund” for duties paid to the US.
The company said in a statement:
While the supreme court did not address the issue of refunds, FedEx has taken necessary action to protect the company’s rights as an importer of record to seek duty refunds from US Customs and Border Protection.
You can read the full story by my colleague Gabrielle Canon here:
New 10% tariff set to last at least 150 days
Trump’s new global 10% tariff is being applied under Section 122 of the 1974 Trade Act, which allows the president to impose the charge for 150 days without congressional approval.
The president has used this approach after the supreme court ruled that he had violated an emergency-powers law to enact his “reciprocal” tariffs on imported goods from countries around the world.
The new tariffs do have some exemptions, including goods that were part of the North American trade pact between the US, Canada and Mexico. The order also includes an exception for some agricultural goods.
It is not clear yet what the fallout will be. The UK has not ruled out retaliation, with a spokesperson for Keir Starmer saying yesterday that “nothing is off the table”, and the chair of the EU Parliament’s trade committee, Bernd Lange, said yesterday:
We want to have clarity from the US that they are respecting the deal because that’s a crucial element.
Trump has warned that any country that wants to “play games” with the supreme court decision would be “be met with a much higher Tariff, and worse, than that which they just recently agreed to.” But Jim Reid, of Deutsche Bank, says it is unclear how the president might respond to developments in the UK and the EU.
At the moment the rate is 10% with White House officials stating that they are working on a formal order to raise to 15%. Perhaps the stacking concern is delaying things for now. Late yesterday, we also saw the WSJ and Bloomberg report that the administration was preparing new Section 232 national security investigations into several industries including batteries, telecom equipment and industrial chemicals.
Remember that Trump’s delivering the State of the Union address tonight, so it’s possible we might get a better sense of the next steps on tariffs…net-net we still think the effective tariff rate will fall this year and that the world post-SCOTUS will see lower tariffs than the pre-SCOTUS world.
Introduction: Trump’s new tariffs kick in at 10%
Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.
President Donald Trump’s new tariffs have come into effect today at a rate of 10%, after the US supreme court blocked many of his import taxes on Friday.
The president signed an executive order last Friday authorising the 10% tariffs just hours after the supreme court ruling. He later threatened to raise the rate to 15%, but did not officially do so by Tuesday 12.01am time in Washington, when the 10% levy came into effect.
However, Bloomberg is reporting that officials in the White House are working on a formal order that will increase the rate to 15%.
It comes after Trump declared this week that he can use tariffs in a “much more powerful and obnoxious way”.
The new tariffs, which Trump is applying under Section 122 of the 1974 Trade Act, have triggered uncertainty with a number of US trading partners, including the UK (which negotiated a 10% rate with the US last year) and the EU.
On Monday the EU paused the process of ratification of the deal it had struck with the US last July for the second time in a month, after it froze and unfroze the deal in the wake of Trump’s Greenland threats. The deal was for 15% blanket tariffs on EU imports that were inclusive of previous levies.
Meanwhile in the UK, a spokesperson for Keir Starmer, when asked whether retaliatory tariffs were an option, said:
No one wants to see a trade war. No one wants to see a situation that’s escalated. But as I say, nothing is off the table at this stage.
The agenda
-
5am GMT: EU car registrations
-
11am GMT: CBI Distributive trades for Feb
-
2pm GMT: Case-Shiller US home price index
-
2.15pm GMT: Bank of England governor to discuss MPC decision to hold interest rates at 3.75% with the Treasury Committee
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