TheChek News Flow

Stocks around the world remain hammered by President Donald Trump’s April 2 tariff onslaught, despite the relief rally that followed his 90-day pause announcement a week later. Investors are looking to two, perhaps surprising, emerging markets for potential bargains: Mexico and China. Yes, China.

India, the No. 2 emerging market, remains relatively above the tariff fray: a domestically driven economy whose highest-margin exports to the U.S. are non-tariffed software services. Stocks there have all but recovered from Trump’s “Liberation Day” shock.

Mexican shares are still down 8% (about the same as the S&P 500. China’s Hong Kong-traded index has sunk 15%. Those could be dips worth buying on.

The shifting announcements and complex formulas around Mexico obscure the fact that Trump has walked back most of his trade threats for now. Finished vehicles exported to the U.S.—$87 billion worth last year—are subject to a 25% tariff, but with a pro rata deduction for U.S.-produced components, notes Oscar Ocampo, economic development director at the Mexican Institute for Competitiveness.

Auto parts, a still bigger category at $100 billion, will continue to flow tariff-free. “They are well aware that tariffing parts would be killing Detroit,” Ocampo says.

Mexico’s special nearshoring relationship with the U.S. increasingly looks like it will survive the current turmoil. “In relative terms, our highest conviction remains with Mexico,” says Arthur Budaghyan, chief emerging markets strategist at BCA Research.

The chances for U.S.-China trade peace look slimmer. “China will simply not start negotiating at Trump’s tariff level,” Budaghyan predicts. “They see this as a war, not just a trade war.”

Washington, and investors, may be overestimating the No. 2 economy’s vulnerability, however. China’s dependence on exports to the U.S. has been shrinking for a decade, to less than 3% of gross domestic product. Many of its leading exporters are multinational companies, like Apple or Tesla, while the biggest Chinese stocks— Tencent Holdings, Alibaba Group Holding, Meituan —are domestically focused, notes Justin Thomson, head of international equity at T. Rowe Price. “The impact of trade on the China index is relatively small,” he says.

Chinese leader Xi Jinping has levers he can pull to rev up domestic consumption. “Chinese consumers are sitting on $10 trillion in savings, which in the past would have gone into flipping properties,” says Alex Smith, head of equities investment specialists at Aberdeen. “That’s possibly China’s secret weapon.”

Beijing also has room for more direct fiscal and monetary stimulus, adds Guilherme Valle, a founding partner at asset manager ABS. “They were holding back because of the threat from Trump and tariffs,” he says. “This is the moment they have been waiting for.”

China can offset some lost U.S. exports by increasing share elsewhere. Trump’s attack gives the authorities an excuse to let the yuan devalue as much as 10% without stirring popular discontent, Budaghyan thinks. Chinese electric vehicles and home appliances are leading a “move up the value curve “in (ex-U.S.) world markets, Aberdeen’s Smith adds.

With Chinese stocks still down by half from their 2021 peak, valuations look attractive, too. EV champion BYD trades at 18 times earnings versus 83 for Tesla, Smith observes.

Trump’s campaign to revamp U.S. trade is hardly over. At least investors don’t think it is, to judge by renewed selling after the April 9 rally.

Two trading partners look to be on more solid ground than most, for opposite reasons.

Denmark’s economy was reshaped by Novo Nordisk and obesity drugs. That identity is now under attack on multiple fronts, from science to geopolitics.

n the sleepy suburb of Bagsværd, a 25-minute train ride from Denmark’s capital of Copenhagen, weight-loss drugmaker Novo Nordisk

is everywhere. Street after street is filled with the company’s offices, parking lots for Novo employees, and construction sites for the pharma giant’s future expansion. It is virtually a Novo-town.

In the sleepy suburb of Bagsværd, a 25-minute train ride from Denmark’s capital of Copenhagen, weight-loss drugmaker Novo Nordisk

is everywhere. Street after street is filled with the company’s offices, parking lots for Novo employees, and construction sites for the pharma giant’s future expansion. It is virtually a Novo-town.

Almost everyone in Denmark has a link to the maker of blockbuster weight-loss drug Ozempic. Rohan Parshad is a 21-year-old student at Copenhagen Business School who holds Novo stock. Henrik, Rohan’s father, worked as a scientist at Novo Nordisk for 13 years and opened up a savings account for his son when he was born; 60% is Novo stock. Rohan’s grandfather Ram has also benefited from Novo’s medications for the past two decades as a Type 2 diabetic.

“This company is going to do great things in the future,” Rohan Parshad tells Barron’s. “We are just so proud of a company in Denmark thriving and being one of the biggest in the world.”

But Denmark’s new identity is under attack on multiple fronts, from science to geopolitics.

Shares of Novo have sunk 58% from their June 2024 peak, amid tariff troubles, fierce competition from U.S. rival Eli Lilly, and an overall pullback in excitement around weight-loss drugs.

This past week, Goldman Sachs lowered its total addressable market for obesity drugs by 2030 to $95 billion from $130 billion. The numbers are still huge, but a 30%-plus market reduction makes investors nervous.

Novo has already lost its crown as Europe’s most valuable company, falling behind SAP, the German software maker, last month. More recently, it has also slipped behind luxury-goods maker LVMH Moët Hennessy Louis Vuitton.

Meanwhile, Novo’s pioneering work in so-called GLP-1 weight-loss drugs has now been surpassed by Eli Lilly. Clinical trials on Lilly’s latest drugs have led to greater weight loss than Novo’s new treatments.

President Donald Trump’s tariff policy is also causing uncertainty for Novo and its home country. An unwinding of global trade will hit the company and country hard; Novo has 16 production sites across the world, including in Brazil, China, Denmark, France, and the U.S. For Denmark, the uncertainty goes beyond trade, with Trump making waves about taking control of Greenland, a Danish territory.

Denmark is a small country reliant on exports, which have soared alongside booming Novo sales. Without Novo Nordisk, Denmark would probably find itself in or close to a recession, like other parts of Europe. Its influence on the Danish economy goes beyond multibillion-dollar investments in new factories, its 30,000 local employees, and how much it adds to growth. It also affects the government’s spending budget, interest rates, housing prices, and mortgages.

Denmark’s Discovery

Pharma has been a key driver for Denmark’s growth for 20 years, but Novo took it to another level with semaglutide, the key ingredient in Ozempic. It’s a type of gut hormone called glucagon-like peptide-1, or GLP-1.

Ozempic became a pioneering treatment for diabetes, and Novo’s business exploded as researchers realized its potential for weight loss.

At one point, the company’s success—and investors’ optimism—pushed the company’s market value past Denmark’s annual gross domestic product.

Denmark’s thriving economy contrasts starkly with its neighbors, which are suffering sluggish growth or even stagnation. “If we took Novo out of the story in the past five years, the Danish economy would have been in a similar lackluster situation as the Swedish or the German economy,” economist Lars Christensen tells Barron’s. “Novo is making that difference.”

Around half of Denmark’s GDP growth can be traced back to the success of the pharmaceutical sector, which is overwhelmingly made up of Novo Nordisk, according to economists at Danske Bank, Denmark’s largest financial firm. There’s also growth excluding pharma, due to a knock-on effect from pharmaceuticals to other areas, the economists say.

In late 2024, the Ministry of Economic Affairs cited the rapid expansion of Novo Nordisk as it raised the country’s growth outlook to 3% for 2024, from an earlier estimate of 1.9%, and to 2.9% in 2025, from 2.2%. That is largely due to soaring exports, which have doubled since prior to Covid-19. They now account for 70% of Denmark’s GDP.

The growth spurt in exports gave Denmark a record trade surplus of over 384 billion kroner, or about $58 billion, in 2024.

That has contributed to a strengthening of the Danish krone. The currency is pegged against the euro, and the Danish central bank has held down interest rates to prevent it from appreciating. Denmark’s target interest rate is 2.1%, currently the lowest in the European Union.

Lower interest rates have benefited businesses, the public sector, and homeowners. In other words, Novo’s success even helps Danes who have never worked for the company or owned its stock, boosting home prices while keeping mortgage rates low.

Novo is also Denmark’s largest taxpayer. It paid about DKK26 billion in tax in 2024, almost double what it paid two years earlier. It also drove a fifth of employment growth in Denmark last year as it ramped up multibillion-dollar investments in manufacturing sites amid a global shortage of its products.

“I don’t think that has sunk in just how important Novo is [for Denmark],” says Danske Bank Chief Economist Las Olsen.

But Novo’s massive influence on the Danish economy means that shocks to the business have a national impact. That became painfully clear on Dec. 20, when the stock fell 18%. Novo’s selloff dragged down the entire Denmark stock market. The Copenhagen blue-chip index fell 13% on the day.

The selloff came on disappointing clinical results for Novo’s experimental weight-loss drug CagriSema. Novo had expected a trial to show at least 25% weight loss for patients. Instead, the data showed that patients lost 22.7% of their body weight over 18 months. That loss only matched Eli Lilly’s existing weight-loss drug Zepbound.

“What am I going to do? This is all my money,” friends of Nikolaj Byg Jørgensen, 38, told him that day in late December. Like many people in Denmark, they had invested a lot in Novo. Now they were forced to face a future where they might not be able to afford to buy their first apartment, or face a leaner pension.

Jørgensen, a fairly seasoned retail investor who works at a residence for autistic adults, put on a brave face for his friends but didn’t want to check the state of his own investments. It was depressing, he says. But shares will go up again—Jørgensen is convinced of that. “Wait it out; it’s going to go up again,” he told both his friends and himself.

Novo Nordisk began as two Danish companies in the 1920s: Nordisk Insulinlaboratorium and Novo Terapeutisk Laboratorium. The business stems from Danish Nobel laureate August Krogh and his wife, Marie, a doctor living with diabetes, using insulin to treat patients in 1923—a tale that most Danes know well. In 1982, Novo became the first company to market a product identical to human insulin; the hormone had previously been extracted from animals.

Nordics have witnessed the risk of national pride—and an entire economy—being tied up in one company.

A generation ago, Nokia, the Finnish telecom company, was the world’s largest smartphone maker. In 2007, Nokia’s sales were about $70 billion. That year, Apple launched its first iPhone, and Nokia’s 50% smartphone market share fell to 4% in four years, with sales plunging to $17 billion by 2013. Today, Nokia is no longer in the smartphone business.

Nokia’s downfall made it that much harder for Finland to cope with the financial crisis. Its GDP contracted by 8.1% in 2009, roughly double Europe’s decline. Its growth trailed Europe’s for years after that.

Denmark Prime Minister Mette Frederiksen and Novo Nordisk Foundation CEO Mads Krogsgaard Thomsen have both downplayed the so-called Nokia risk. The small Nordic countries are both export-driven economies, but there are significant differences as well, especially around labor.

Danske Bank’s Olsen says that Finland’s economy didn’t adapt quickly enough to Nokia’s downfall. Weak labor conditions were driven by centralized wages and high rates of long-term unemployment, he says, while Nokia’s success had pushed up wages, making other industries uncompetitive. “It was very difficult for the remaining Finnish companies to compete and pick up the slack from Nokia,” he says.

Danish regulations provide more flexibility around labor, Olsen says.

Given the soaring number of people worldwide affected by obesity and diabetes, the market for weight-loss drugs will continue to grow over time. Kurt Jacobsen, a historian and author of a book on Novo, likens the phenomenon to the universe: It keeps expanding. Novo, though, is in a battle with Eli Lilly for market share.

In the U.S., Novo and Lilly have the only GLP-1 drugs approved for weight loss, Wegovy and Zepbound, respectively. They stem from the companies’ diabetes treatments, Ozempic and Mounjaro.

Lilly’s rival drugs have already been shown to result in more pronounced weight loss than Novo’s approved treatments.

After this article published online, Novo told Barron’s that the benefits of obesity drugs go beyond weight loss. “Wegovy is the only obesity medicine proven to reduce the risk of major cardiovascular events,” a spokesperson said.

Though Ozempic, approved in the U.S. in 2017 for treating Type 2 diabetes, had a four-year head start on Mounjaro, Lilly’s weight-loss sales have almost caught up with Novo’s. In 2024, Novo’s Ozempic/Wegovy sales were $25.2 billion (about DKK178.5 billion), while Lilly’s Mounjaro/Zepbound revenue was $16.5 billion.

The next big thing will be obesity pills, analysts say. Here, Lilly has an edge—and that’s unsettling Novo’s backers. If Novo builds its future oral drug the same way as its injectables, which seems likely, that could cause supply issues because it would need the same ingredients and require the same intensive manufacturing process, says Artisan Partners portfolio manager Chris Smith.

Meanwhile, Lilly’s late-stage obesity pill candidate orforglipron is a so-called small-molecule drug, meaning that it’s easier to manufacture and has a more scalable process than Novo’s large molecule treatments. The pills could also have greater global scope, as they don’t need to be shipped overnight in cold storage like injectable versions, adds Smith, who owns Lilly stock but not Novo, partly for this reason.

The good news for Novo is that scientists and researchers see no ceiling on the potential uses for GLP-1s. The medicine’s labels have already expanded to include heart conditions, kidney disease, and sleep apnea. Clinical trials have suggested that the drugs could be used to treat Alzheimer’s and substance abuse, as well.

In Bagsværd and Copenhagen, Danes remain optimistic and seem unbothered by the harsh economic climate that’s weighing on the country’s neighbors. The Danish cafe Social Brew, on the corner of Vesterport station in central Copenhagen, is bustling at lunchtime as people dig into the country’s traditional cuisine smørrebrød. The diners appear full of hope that the months of declines are just a blip for Novo and Danish pride.

But with Novo stock filling Danish pension funds, there’s no running from the company’s prospects. No other country and stock can tout such a symbiotic relationship.

In its latest annual report, Novo is clear-eyed about the issues: “The current risk landscape is impacted by elevated geopolitical uncertainties and market dynamics in the segments in which we operate.”

As Olsen, the economist, says, “What goes up can also go down, and pharma is a volatile business.”

For Danes like Parshad and Jørgensen, it’s a risk they’re learning to live with. As Parshad says, “Nothing is really safe.”

Apple could be forced to revamp its entire iPhone product strategy amid President Donald Trump’s trade war with China, according to Wall Street analysts.

Morgan Stanley analyst Erik Woodring believes Apple can mitigate the effects of the tariffs by cutting the less-profitable models from its iPhone lineup.

A “targeted iPhone mix shift could significantly minimize the tariff headwind,” Woodring wrote in a note to clients Thursday. Instead of raising prices, Apple can remove low-end iPhone storage options, the analyst said.

BofA analyst Wamsi Mohan suggested an even more-aggressive action on Wednesday by saying Apple can move new launches to a two-year schedule from annually. That would to help simplify the supply chain by extending the timeline on expensive manufacturing changes.

Last week, Trump unveiled a so-called reciprocal tariff rate of 34% on China. This week, Trump added additional tariffs resulting in a total rate of 145% on China imports, while the Asian country retaliated with 125% tariffs on U.S. goods.

Analysts generally believe domestic iPhone manufacturing isn’t tenable on a financial basis. The company relies on the contract manufacturer Foxconn to make the vast majority of its iPhones in China. Wedbush analyst Daniel Ives estimates an iPhone made in the U.S. would be sold at $3,500 versus $1,000 today. It may mean that Apple will need to either raise iPhone prices for American consumers or make other drastic changes to its product strategy.

On Friday, Apple shares rose by 0.9% to $192.21. Apple did not immediately respond to a request for comment if the company is considering reducing its iPhone product lineup or going to a two-year product cycle.

US drafting order to collect ‘nodules’ from Pacific seabed for minerals used in battery supply chains

Donald Trump’s administration is drafting an executive order to enable the stockpiling of metal found on the Pacific Ocean seabed, in an effort to counter China’s dominance of battery minerals and rare earth supply chains, said people familiar with the matter.

The potato-sized nodules that are formed on the sea floor at high pressure over millions of years contain nickel, cobalt, copper and manganese used in batteries, electrical wiring or munitions, as well as traces of rare earth minerals. They could be added to existing federal stockpiles of crude oil and metals.

The US is seeking to become self-sufficient in these critical minerals. The Trump administration has pushed Ukraine to accept a minerals deal, threatened to seize Greenland and annex Canada, and announced measures to increase domestic production.

Alexander Gray, an Asia expert who was chief of staff to the US national security adviser in the first Trump administration, said it would make sense for the White House to focus on deep-sea mining as China increasingly views the deep seabed as “a front line in economic and military competition with the US”.

“As the Trump administration has done with shipbuilding and critical minerals more broadly, catalysing US government focus on the areas of greatest vulnerability to PRC ambitions is essential,” Gray added, referring to the People’s Republic of China.

A strategic state reserve of so-called polymetallic nodules from the seabed would help the US catch up with China in the global race to explore the resource-rich floor of the Pacific. Beijing last week placed export restrictions on some rare earth elements in its latest attempt to use the metals as a form of economic coercion.

The stockpile is being considered as part of a broader push to fast-track deep-sea mining applications under US law, and to create onshore processing capacity for nodules, the people familiar with the plans said.

Influential Republicans, including secretary of state Marco Rubio and national security adviser Mike Waltz, have been strong advocates when they served in Congress. The annual defence budget bill last year instructed the department to conduct a feasibility study on how the nodules could be refined for defence applications.

“It’s moved beyond a commercial question,” said a House aide. “This is a Chinese strategic capability built up for decades such that it could be weaponised.”

Under the plans the stockpile would “create large quantities ready and available on US territory to be used in the future”, in case of a conflict with China that would constrain imports of metals and rare earths, another person familiar with the matter said.

Despite enthusiasm among top Republicans for exploring the seabed, the US has continued under Trump to be largely absent from international negotiations on seabed mining. It has not ratified the treaty that first established the legal framework for these activities, the 1982 United Nations Convention on the Law of the Sea.

Talks at the International Seabed Authority in Jamaica last month ended without a go-ahead for mining in international waters, as dozens of countries continue to call for a moratorium on the practice.

Opponents argue mining could harm the poorly understood life forms that live thousands of metres below the surface, including corals and white octopuses. They also question whether the industry could ever recreate China’s extensive supply chain of critical minerals, and compete with the low price of Indonesian nickel.

The Metals Company, a Vancouver-based frontrunner, said during the talks that its US subsidiary had initiated a process overseen by the US Department of Commerce to apply for permits to explore and mine international waters under a 1980 US law. TMC’s chief executive Gerard Barron told the Financial Times the ISA did not have an “exclusive mandate” to regulate mining in international waters.

“You can’t give rights to something you have no jurisdiction over, pursuant to a treaty you are not a part of,” countered Jose Fernandez, a top economic envoy under former president Joe Biden, with a focus on minerals security. “So the lawyer in me tells me that companies will want to be careful proceeding without a permit from the ISA.”

The US commerce department did not reply to a request for comment. The White House NSC declined to comment.

A POLITICO survey of more than 15 countries, including five key Asian trading partners, suggested confusion about the administration’s approach.

Trump administration officials are negotiating trade deals with select allies, while leaving most countries hit by Donald Trump’s tariffs in the dark about what the president wants from them.

The administration is embarking on a daunting sprint of talks with more than 70 countries in 90 days, amid a turbulent stock market and growing disapproval from Americans.

Trump has opened himself up to just a handful of serious negotiations so far — Vietnam, India, South Korea and Japan — prioritizing existing trading partners that are strategic to countering China, according to two people close to the White House, granted anonymity to discuss the administration’s tactics. A White House official, who was similarly granted anonymity, confirmed the strategy.

That means most countries are stuck, waiting for the attention of the world’s largest economy — all while paying the highest rate on exports to the U.S. in nearly a century. Trump paused some of his highest tariffs earlier this week, but left a 10 percent levy he imposed on all countries on April 2 and left hints that he’s interested in bulldozing other barriers to trade.

A POLITICO survey of more than 15 countries, including five key Asian trading partners, suggested confusion about the administration’s approach.

“We really don’t know what the Trump administration wants,” said one diplomat from an Asian country, who is close to the negotiations. That person, like other officials quoted, was granted anonymity to speak freely about the sensitive discussions.

“We’ve been told literally nothing,” said another official representing an Asian country. They said the lack of clarity from the administration suggests a deal-making process that’s “reactive, with no clear direction.”

The early focus on Asian countries with ties to China reflects the administration’s goal of curbing what it says are large-scale illegal shipments, effectively laundering Chinese goods through third countries, including Vietnam and Cambodia.

Diplomats in the embassies of two key Asian trading partners said that their personnel were helping to broker connections between the White House and trade officials in their home countries.

“I’d say my colleagues are trying to lay the groundwork” for talks, one of those diplomats said.

The White House did not respond to requests for comment about the state of current negotiations and whether the pause would be extended if deals weren’t reached.

The administration’s approach is creating uncertainty about whether it will be able to strike a deal with every country by Trump’s self-imposed deadline for when the so-called reciprocal tariffs will go back into effect. That leaves a wide range of countries to weather a 10 percent tariff that’s likely to slow the global economy and strain nations that depend on exports to the U.S., even if they’re eager to make a deal.

The U.S. has indicated that Israel’s decision to eliminate its tariffs on U.S. goods wasn’t enough for an early deal — even after Israeli Prime Minister Benjamin Netanyahu met directly with Trump to plead his case. And the 27-bloc European Union’s public offer to eliminate all tariffs on cars and industrial goods between the U.S. and the EU was rejected.

The administration’s strategy effectively sidelines the country’s top trading partners, putting the bloc alongside China, Canada and Mexico, as they wait for a deal. Collectively, the EU, China, Canada and Mexico account for more than $3.1 trillion in total trade with the U.S.

“Every country is banging on the White House’s door at once so it’s no wonder they’re not responding to everyone. But what did they expect with worldwide tariffs? It’s a mess,” one EU diplomat said. EU leaders are now questioning whether “this is a dealmaking tactic or the start of a total paradigm shift in how the U.S. will view global trade. And that has us quite rattled,” he said.

The urgent nature of the tariffs mean that embassy personnel are mostly playing secondary characters to senior officials as delegations fly in from the foreign capitals. Pessimism stalks preparations for those talks.

“It doesn’t seem like the baseline 10 percent has room for adjustment so far,” one diplomat said.

Asian diplomats waiting on the sidelines have expressed confusion about the administration’s trade policy and the difficulties in trying to engage in productive discussions given Trump’s sudden reversal in the size of the original so-called Liberation Day tariffs Wednesday.

“It’s going to take more than removing tariffs,” said Ken Weinstein, Japan Chair at the Hudson Institute and a former U.S. ambassador designate to Japan during the first Trump administration. “It’s going to also take removing non-tariff barriers as well, which are critical, and investing. But the issue is, how far can people go to please the administration?”

South Korea’s trade envoy Cheong In-kyo’s experience is a case in point.

Cheong met with U.S. Trade Representative Jamieson Greer on Tuesday to discuss the 25 percent tariff on Seoul’s imports. A day later Trump cut that tariff to 10 percent for the next 90 days for South Korea and other targeted countries, excluding China. Cheong said that despite that confusion, he came home with “a framework for item-by-item negotiations, particularly concerning steel and automobiles,” the Korea Herald reported Friday.

Another Asian diplomat said his nation wanted to talk to the Trump team about a deal, but that it didn’t expect to be high on the list because it was not as large a trading partner as others.

Still, many countries are touting limited progress towards permanently staving off the duties.

One Indian diplomat acknowledged disagreements in near-daily talks between lower-level officials from both countries and said they remain “confident that gaps can be bridged” before tariffs snap back into force.

Vietnam celebrated the launch of formal talks to address reciprocal tariffs in a post on the government’s website on Thursday. But even though the countries are working within the 90-day pause, “the two countries need to soon negotiate a bilateral trade agreement to create a long-term framework,” the post said.

Japan has signaled that they are willing to negotiate non-tariff barriers. Japan is dispatching Economic Revitalization Minister Akazawa Ryosei to Washington for direct talks with both Greer and Treasury Secretary Scott Bessent, NHK reported Friday, and “non-tariff barriers and exchange rates” are expected to be discussed.

But any effort to eliminate non-tariff barriers would make for much more difficult negotiations, according to trade experts. If the administration goes after its perceived barriers like the value added tax, which is essentially a sales tax used by 175 countries, or digital services taxes, it would be asking countries to effectively restructure their tax base in order to meet Trump’s demands.

The administration has also indicated it hopes to bring down barriers that prevent American agricultural exports to countries like Australia, Israel and the EU. Those barriers can be particularly challenging, given the political dynamics surrounding local farmers and environmental regulations.

“Making that kind of concession is risky,” said William Reinsch, a former senior U.S. trade official and senior adviser at the Center for Strategic and International Studies. “It’s very easy to demagogue: ‘Americans want us to have unsafe cars. They want us to have dirtier air. And they want us to have sick chickens. And they want us to drink bad wine.’”

Smaller countries with less developed economies have less room to maneuver when it comes to negotiations to remove both reciprocal and Trump’s flat 10 percent tariff on all imports, and it’s not realistic for them in the short term to meaningfully address Trump’s problems with the trade deficit.

One African diplomat said his government had decided to simply “lay low” because it was not as hard-hit by the original tariffs as some other nations.

One Latin American diplomat said their country has put in multiple requests for meetings with higher level Trump officials within the Commerce and Treasury departments but have not received a reply.

“We’re out from the worst of it,” the official said but they are still “weighing what to do.”

European finance ministers discuss response to US trade moves

Germany and other European countries have cautioned against Brussels potentially hitting Big Tech if trade negotiations with the Trump administration fail over the next few months.

US President Donald Trump earlier this month said he would impose a 20 per cent “reciprocal tariff” on all EU imports, which has since been reduced to 10 per cent over a 90-day period in which he is seeking talks with global partners.

European Commission president Ursula von der Leyen in an interview with the Financial Times said Brussels was readying retaliatory measures should these talks fail, including a possible tax on digital advertising revenues that would hit tech groups such as Amazon, Google and Facebook.

But Germany on Friday cautioned against such a move.

“We simply have to be cautious with digital corporations because we have no real alternatives to the offering by the American digital industry,” said German finance minister Jörg Kukies, mentioning data centres for cloud services and artificial intelligence.

“There are products where the ability to substitute from other services and other goods from other regions of the world is easy, and there are sectors where it is more difficult,” he said ahead of a meeting of European finance ministers in Warsaw to discuss the economic impacts of trade tensions.

Kukies said that the bloc should prepare retaliatory measures, but added: “We just have to be nuanced and differentiated.”

The EU has suspended its own retaliatory tariffs on US products such as yachts, motorcycles, clothing and foodstuffs for 90 days to allow for the talks to play out. Those levies had been imposed in response to Trump imposing 25 per cent tariffs on European steel and aluminium, which remain in place.

France and most other EU member states support von der Leyen’s decision to draw up retaliation options on US services companies, according to people briefed on discussions between capitals. But countries with a large US tech presence such as Ireland and Luxembourg are more reticent.

Eric Lombard, the French finance minister, told the FT: “We have said everything is on the table. Among the set of measures that we could take there could be measures that concern the digital industry. It is one of the elements on the table.”

He added that the measure had not yet been decided and that the first objective remained “to reach an agreement with the Americans”.

French President Emmanuel Macron has also raised the possibility of hitting digital services — an area that, contrary to trade in goods, the US enjoys a large surplus with the EU.

EU economy commissioner Valdis Dombrovskis on Friday also said that “when we are discussing the trade response we obviously have to look also at trade in services including digital services”.

Poland’s finance minister Andrey Domański, who chaired the discussions in Warsaw, appealed to the bloc to “remain united”. “We would rather prefer to first hear the Commission official proposal and then to comment,” he said.