TheChek News Flow

Johnson, GOP leaders urge House holdouts to back Senate-passed plan

WASHINGTON—House Republicans’ moves to advance President Trump’s “one big, beautiful bill” this week have been cast into doubt by defections from GOP lawmakers worried that spending cuts are being pushed aside in a rush to enact tax reductions.

Republican leaders want to vote on a fiscal framework that would unlock a fast track to legislation carrying many Trump priorities, including tax cuts and new spending on border security and the military. Trump and House Speaker Mike Johnson (R., La.) are hoping to show progress on extending expiring tax cuts to counteract the market chaos sparked in recent sessions by Trump’s tariff rollout.

“The American people are counting on us, and failure is not an option,” Johnson and GOP leaders wrote to lawmakers, emphasizing the importance of moving the process forward and insisting that the House won’t let the Senate dictate the text of a final bill.

In a post on Truth Social, Trump directed the House to pass the Senate measure quickly, saying it “will make, even the subject of World Trade, far easier and better for the U.S.A.”

But just when Trump needs Republicans to stay united, the House GOP conference is fracturing, endangering the prospect of quick action.

Republican opponents already have more than enough declared “no” votes to block the House from passing the version that came out of the Senate on Saturday. They argue that the Senate version fails to lock in enough spending cuts alongside tax cuts and that pushing it forward now risks unacceptably large budget deficits. Republicans control the House with a 220-213 majority, meaning they can’t afford to lose more than three of their own members on any legislation if all Democrats vote no.

Johnson has faced this kind of math before, and his playbook is clear: Have Trump lean on wavering House Republicans and promise critics a bigger say in the next phase, when final legislation is written. That general approach worked three times already this year—once to get Johnson re-elected as speaker, once on a short-term spending bill and once on the House version of the fiscal framework.

There are reasons to think this time could be different, despite top Republicans being eager to demonstrate progress before a two-week congressional break.

The opponents of moving ahead now aren’t just the members of the hard-right House Freedom Caucus such as Reps. Andy Harris (R., Md.) and Chip Roy (R., Texas). They also include lawmakers such as Reps. Lloyd Smucker (R., Pa.) and David Schweikert (R., Ariz.), who are concerned about budget deficits—and aren’t the usual obstacles for House GOP leaders.

On a conference call Sunday of House Republicans, Smucker argued that he couldn’t back the Senate measure because it would add to deficits, according to people on the call. Instead, he pushed for the party to secure agreements to find specific savings ahead of time, which he said they would need to send to the Senate to pass before he would sign on.

Rep. Andy Ogles (R., Tenn.), a member of the Freedom Caucus, said on X: “Make no mistake, the Senate budget resolution is everything but America-first.”

Rep. Ralph Norman (R., S.C.) told reporters Monday that he is a no on the budget resolution and he expects more than a dozen other Republicans to be in that camp as well. His remarks came before Johnson was expected to meet with the Freedom Caucus, of which Norman is a member, late Monday in an effort to get naysayers onboard.

The House and Senate must both pass the same version of a budget resolution—the fiscal framework—before they can advance a bill that dodges Democrats and the Senate filibuster. That track is likely the only way Republicans can extend all of the Trump tax cuts expiring Dec. 31, add other ideas such as Trump’s proposed “no tax on tips” and reduce spending.

The House version, passed in late February, called for at least $1.5 trillion in spending cuts over a decade, largely from the committee that handles Medicaid, the health insurance program that covers more than 70 million people, including children and people with low incomes or disabilities. It would permit $4 trillion in tax cuts and even more if the spending cuts exceeded $1.5 trillion.

Conservatives were willing to accept that $2 trillion-plus gap between spending cuts and tax cuts, citing expectations of faster economic growth. Moderate GOP House members grumbled about potential Medicaid cuts but pushed the plan forward.

The Senate version kept the House’s numbers as targets for House committees but included different and much more lenient targets for Senate committees, creating a mismatch instead of confronting the House-Senate disagreement. The Senate plan would lock in $4 billion in spending cuts and would allow more than $5 trillion in tax cuts.

Senators say they are actually aiming for $2 trillion in spending cuts but set those far lower floors because they were aiming for maximum flexibility. They are mindful that failing to hit a minimum target would imperil the procedural fast track. Some House members worry that the Senate will produce a take-it-or-leave-it bill down the road with deadlines looming and that they will lose the chance to secure spending cuts if they don’t force changes now.

The Senate backed its maximum-flexibility approach on a 51-48 vote after an overnight voting session, with Republicans Rand Paul of Kentucky and Susan Collins of Maine voting no along with Democrats. Other Republican senators—Josh Hawley of Missouri, Lisa Murkowski and Dan Sullivan of Alaska—used amendment votes to express concerns about Medicaid cuts.

Heading into the week, Johnson also appeared like he was going to be squeezed by his own party on an entirely different matter. House Freedom Caucus members were threatening to shut down the floor if Johnson didn’t block a push by Rep. Anna Paulina Luna (R., Fla.) to establish proxy voting for new parents.

Johnson announced a proposed deal Sunday, which would include “vote pairing” that essentially allows a member to offset an absence by forming a pair with a member on the opposite side of an issue who votes present.

Commission urges U.S. to invest at least $15 billion in biotech research and other measures, and to bar work with Chinese firms that pose national-security risk

China is moving fast to dominate biotechnology, and the U.S. risks falling behind permanently unless it takes action over the next three years, a congressional commission said.

Congress should invest at least $15 billion to support biotech research over the next five years and take other steps to bolster manufacturing in the U.S., while barring companies from working with Chinese biotech suppliers, the National Security Commission on Emerging Biotechnology said in a report Tuesday.

To achieve its goals, the federal government and U.S.-based researchers will also need to work with allies and partners around the world.

“China is quickly ascending to biotechnology dominance, having made biotechnology a strategic priority for 20 years,” the commission said. Without prompt action, the U.S. risks “falling behind, a setback from which we may never recover.”

The findings convey the depth of worry in Washington that China’s rapid biotechnology advances jeopardize U.S. national security. Yet translating the concern into tangible actions could prove challenging.

Last year, the House passed with overwhelming bipartisan support a measure, called the Biosecure Act, that would bar companies that receive U.S. government funds or contracts from doing business with a list of Chinese organizations and companies of concern. But the bill never passed the Senate.

Meantime, the commission is calling for collaboration with organizations and researchers overseas, as well as billions of dollars in new investment, while the federal government cuts grants for public health work overseas and health spending.

Sen. Todd Young (R., Ind.), the chairman of the commission, expressed confidence Congress will act on the recommendations, though it will involve persuading lawmakers to move resources to American biotech as a matter of protecting national security.

“This area, as we have emphasized, needs a lot more attention. So we would advocate the shifting of our priorities from some current areas of research into biotech and very quickly,” Young said.

China plays a large role supplying drug ingredients and even some generic medicines to the U.S. For years it produced copycat versions of drugs developed in the West. Recent years have seen it become a formidable hub of biotechnology innovation, after the Chinese government gave priority to the field as a critical sector in China’s efforts to become a scientific superpower.

Now, Western venture-capital firms are investing in promising Chinese biotech startups, and Western pharmaceutical giants such as AstraZeneca, GSK and Johnson & Johnson are buying and licensing drugs discovered and tested in China.

Last December, for example, Merck & Co. struck a licensing deal, worth $112 million up front and up to $1.9 billion if milestones are met, with China’s Hansoh Pharma to develop and sell an experimental pill that could compete in the white-hot obesity market.

“Initially it was how to do shoes and sneakers faster and cheaper and better. Then it was how to build iPhones faster and better. Now it’s how to build biotech and AI faster and better,” said Paul Zhang, a partner at Bluestar BioAdvisors, which advises drugmakers on commercial strategies, including seeking business in China.

Congress established the biotechnology commission in 2021 to review how biotech and other technologies affect national security, and to make recommendations to preserve America’s dominant position. Both Democrats and Republicans in Congress serve on the panel, along with leaders from industry and academia and former government officials.

The 215-page report said China’s growing ascendance in biotech threatens more than American medical advances, because the technology could give China advantages in other fields such as agriculture or even have military applications.

“Our objective here is not to out-China China. It’s instead to harness the very best of our innovation ecosystem from the private sector to our research, universities and labs to our broad and deep capital markets so that we can be prepared for this biotech-related defense challenge,” Young said.

The commission expressed concerns about China “weaponizing biology” if it gained an advantage by restricting access to cutting-edge technologies, as it has done with certain rare-earth minerals.

Among the report’s recommendations are barring firms that work with U.S. national-security agencies and the Department of Health and Human Services from using Chinese companies that pose a national-security threat.

The commission recommended creating a National Biotechnology Coordination Office within the office of the president to develop a national biotechnology strategy.

It asked Congress to create a roughly $1 billion fund that would invest in technology startups that strengthen national security. It also asked Congress to work with private companies to build plants to make products important for defense needs and to fund the government’s development of a network of manufacturing plants.

The total of at least $15 billion in funding would cover costs associated with the recommendations, including $5 billion to pay for biotech research that industry was unlikely to pursue on its own.

The commission also recommended creating a center to support research and a centralized online location to access high-quality data, in an effort to make the U.S. the world’s preferred partner for biotech research and ensuring it is used responsibly.

“While we have led in the past, we have not done so alone. We need to work together with our partners and allies to deliver on the benefits of biotechnology while also preventing misuse,” the commission said.

US government debt sells off as hedge funds cut down on risk

10-year Treasury yields jump most in almost three years

US government debt sold off sharply on Monday as hedge funds cut back on risk in their strategies and investors continued shifting into cash during a third day of acute tumult on Wall Street.

The benchmark 10-year Treasury yield jumped 0.19 percentage points on Monday to 4.18 per cent, the biggest daily rise since September 2022, according to Bloomberg data. The 30-year yield jumped 0.21 percentage points, the biggest move since March 2020. Yields rise when prices fall.

Monday’s drop in Treasuries — ultra-low-risk assets that typically shine during periods of market turbulence — highlights how US President Donald Trump’s announcement last Wednesday of steep tariffs against trading partners continues to reverberate across Wall Street. Equities fell sharply on Thursday and Friday, shedding $5tn of market value, but investors had initially sought refuge in Treasuries.

Market participants said the declines in the $29tn Treasury market on Monday reflected several factors, including hedge funds cutting down on leverage — or borrowing used to magnify trades — and a broader dash for cash as investors sheltered from swings in the wider market.

Gennadiy Goldberg at TD Securities said the move reflected “an ‘everything, everywhere all at once’-type trade”. He added: “Multisector funds are trying to deleverage, which leads to a ‘sell everything’ trade.”

Investors and analysts pointed in particular to hedge funds that took advantage of small differences in the price of Treasuries and associated futures contracts, known as the “basis trade”. These funds, which are large players in the fixed-income market, unwound those positions as they cut back on risk, prompting selling in Treasuries.

“Hedge funds have been liquidating US Treasury basis trades furiously,” said one hedge fund manager.

The moves were not limited to hedge funds. Investors across the board sold Treasuries to raise cash, with one fixed-income trader pointing specifically to traditional asset managers.

“I think investors are moving to cash and cash-adjacent assets to weather this market volatility,” said Ed Al-Hussainy, senior rates analyst at Columbia Threadneedle Investments.

“The simplest explanation (for the move in yields) is investors selling what they can and hunkering down. Selling equities now will lock in losses so the lowest-hanging fruit is to raise cash by selling Treasuries,” said Al-Hussainy.

The hedge fund manager who attributed the moves in yields to the basis trade said the scale of the broader hedge fund selling was “destroying” liquidity — or the ability to easily buy and sell assets — across Treasuries, high-grade corporate bonds and mortgage-backed securities.

“There’s massive deleveraging going on, any source of liquidity is being tapped,” the person said.

Panama to file criminal complaint over canal concession

Move comes hours before visit by Pete Hegseth as US raises pressure over Chinese influence on waterway

Panama’s government on Monday said it would file a criminal complaint against local executives of a Hong Kong company that runs ports at either end of its famous canal, as the country comes under intense US pressure over alleged Chinese influence in the waterway.

US President Donald Trump has repeatedly threatened to retake control of the Panama Canal, the 110-year-old crossing that handles about 5 per cent of global maritime trade, alleging that a concession for two ports held by Hong Kong-based conglomerate CK Hutchison posed a national security risk.

Panama’s comptroller announced the criminal complaints, which were the result of a three-month forensic audit, at a news conference on Monday just hours before US secretary of defence Pete Hegseth was due to arrive in the country.

Auditor Anel Bolo Flores alleged the contract held by CK Hutchison’s subsidiary was “abusive” and resulted from a renegotiation that was highly unfavourable to the Panamanian state, causing it to lose $1.3bn in revenue.

Flores said his team would present criminal complaints in the coming days against company and government officials involved in the renegotiation. They would have to “explain to the Panamanian people and the prosecutors why such magnanimity, why such benevolence in a contract that has been abusive to say the least”, he said.

A BlackRock-led investor group last month offered to buy CK Hutchison’s ports division, which holds the concession, in a deal worth $22.8bn. Chinese authorities are reviewing the transaction, casting doubt on whether the bid will succeed.

However, BlackRock chair Larry Fink on Monday said he was optimistic the deal would get done despite Chinese objections.

“I’m pretty confident. The Panamanian ports only represent 4-5 per cent of the total valuation of the whole enterprise,” he told the Economic Club of New York.

The auditor’s announcement is a boost for Hegseth, who plans to attend the Central American Security Conference in Panama and is expected to meet President José Raúl Mulino on Tuesday.

Hegseth’s trip will “drive ongoing efforts to strengthen our partnerships with Panama and other Central American nations towards our shared vision for a peaceful and secure western hemisphere”, said Pentagon spokesperson Sean Parnell.

US military personnel were visible in Panama City last week as the two countries concluded the initial phase of annual military exercises focused on the security and interoperability of the Panama Canal. The US military said more joint exercises would be held this week.

NBC News last month reported the White House had directed the Pentagon to draw up plans to potentially increase US troop presence in Panama, including an option for American soldiers to seize the waterway by force. The White House did not respond to a request for comment.

Panama has been reeling from suddenly becoming a US foreign policy priority. Washington’s move comes as Mulino is dealing with several domestic challenges including a sharp economic slowdown, water risks in the canal and the future of a large copper mine that it closed 18 months ago.

Mulino and Hegseth in February agreed “to expand co-operation between the US military and Panama’s security forces” and safeguard the canal, according to a Pentagon readout of the call.

Panama has also been trying to placate Trump by cracking down on migrants heading for the US via the Darién Gap, a 60-mile stretch of dense jungle between Colombia and Panama.

The first trip abroad for Marco Rubio, the US secretary of state, was to Panama earlier this year. He told Mulino that Trump views “the current position of influence and control of the Chinese Communist party over the Panama Canal” as a violation of the canal’s neutrality treaty, a state department spokesperson said at the time.

Mulino and other Panamanian officials have said the canal is fully controlled by the independent Panama Canal Authority (PCA) and that the country’s sovereign control was not up for debate.

CK Hutchison has denied Trump’s criticism played a role in its decision to sell the ports and said the deal was “purely commercial in nature”.

On Friday, deputy secretary of state Christopher Landau spoke to Panama’s foreign minister Javier Martínez-Acha. The state department said the pair discussed the “importance” of the audit.

“The visit reflects how important relations with Panama have become for the US,” said Orlando Pérez, professor of political science at the University of North Texas. He added that if the audit were to find irregularities, as many believe it would, then “the pressure for Panama’s regulator to take some action against the port concessions will be significant”.

Eric Schmidt buys £42mn London mansion

Former Google chief becomes the latest in a surge of US buyers at the top end of the London property market

Eric Schmidt has bought a Holland Park mansion for almost £42mn, the latest high-profile property deal by an American buyer in London. 

The former Google chief bought 18 Holland Park, a double-fronted, stuccoed residence, last May, according to UK property records and people familiar with the matter.

One of the people said he plans to rent out the London property. 

A spokesperson for Schmidt confirmed the deal and said: “Eric invests in high-end real estate properties around the world.”

Even before last year’s US presidential election agents reported that American buyers were an increasing force at the top end in London — taking advantage of a relatively soft market and strong dollar.

Americans surpassed Chinese nationals as the largest cohort of overseas buyers in prime central London in the last quarter of 2024, according to agency Knight Frank. 

Fashion designer Tom Ford and Chelsea Football Club co-owner Behdad Eghbali both made trophy purchases in London last year.

The Italianate mansions of Holland Park lie between Notting Hill and Kensington with the streets around the eponymous park among the most expensive in the city.

The house was bought in 2022 by William “Bill” Adderley, founder of home furnishings group Dunelm, for £36mn, according to Land Registry records. Adderley could not be immediately reached for comment.

The family office for Adderley’s son Will confirmed the property had belonged to Bill but declined to comment further.

The Grade II-listed, mid-Victorian villa comes with mews houses at the back, property records show.

Since standing down as executive chair of Alphabet, the Google parent company, in 2018, Schmidt has become a tech investor and philanthropist.  

London’s market for super-prime rentals, often costing tens of thousands of pounds per week, has grown as clients seek places to live with greater flexibility and fewer headaches from maintenance and renovations. 

The top end of the London sales market has faced headwinds from increased transaction taxes for overseas buyers and changes to the non-dom tax regime, which can be used to shield overseas income and gains from British tax. 

Agents say US clients tend to be less sensitive to the changes in UK tax rules since they are generally already subject to worldwide US taxation. A tax treaty between London and Washington generally allows Americans to claim back British taxes that duplicate US levies.

Prices for used Teslas drop in US and Britain

A glut of former fleet cars may explain the fall rather than any link to Elon Musk but the brand is undoubtedly under pressure

Used Teslas in the US and Britain are falling in price faster than other electric vehicles — but the decline appears to be driven primarily by a glut of formerly leased cars coming on to the market rather than by the brand’s association with Elon Musk.

US prices for second-hand Teslas dropped 7 per cent year-on-year in March, according to data from online marketplace CarGurus, against a 1.5 per cent decline for other EV brands. In the UK they fell 15 per cent, more than the general 10 per cent slide for all used EVs, according to sales platform Auto Trader.

The falling prices come amid suspicion that Tesla’s brand is being damaged by Musk’s emergence as a figurehead for the American far right and a confidant of US President Donald Trump, especially given that EVs tend to be more popular among left-of-centre voters.

Edmunds, a US car shopping site, has reported a sudden rise in the number of post-2017 Teslas being traded in at dealerships — accounting for 1.4 per cent of all trade-ins in mid-March, up from 0.4 per cent in March last year.

However, Kevin Roberts, director of economic and market intelligence at CarGurus, said the US sales data suggested “an influx of former fleet vehicles have caused the average list price of a used Tesla to drop”. He added that price cuts for new Teslas since 2023 were also weighing on the second-hand market.

Meanwhile, Auto Trader’s commercial director Ian Plummer said falling UK prices of second-hand Teslas appeared to be being driven by a large cohort coming on to the market that had been bought new on finance, taking the number of used Teslas for sale on the platform in March to 5,400, up from 2,900 a year earlier.

Plummer pointed to evidence of “strong levels of demand for used Teslas” in the UK, where they are selling after an average of 23 days on the market compared with 29 for the average EV on the platform.

FT analysis of prices of used Teslas in Germany, where Musk intervened on behalf of the far-right Alternative for Germany party during this year’s federal election, has also detected no shifts in the first quarter of 2025 in the number of Teslas offered for sale, their ages or asking prices.

However, the brand is certainly under pressure, with Tesla’s new-car sales falling well short of market forecasts. Official statistics suggest that first-quarter sales were down 55.2 per cent in Sweden, 49.7 per cent in the Netherlands, 41.1 per cent in France and 25.5 per cent in Norway.

This has contributed to Tesla’s worst quarter since 2022, with the group delivering 336,681 vehicles in the first three months of this year — 13 per cent fewer than a year earlier and well below the 390,000 expected by analysts.

Ryan Brinkman, auto analyst at JPMorgan, said Tesla’s most recent delivery numbers were “far below even our low-end estimate, confirming the unprecedented brand damage we had earlier feared”.

“The trend in Tesla sales is worse than we and the market had appreciated,” added Brinkman, prompting the broker to “lower our already below consensus estimates” for the group.

But Alexander Potter, a senior research analyst at Piper Sandler, disagrees, writing in a recent note that the “brand damage is overdone”.

While Potter acknowledged that “all else equal, Musk’s political endeavours are probably a net negative for deliveries”, he argued that a bigger issue was supply-side, after “multi-week shutdowns” hit “all four of the company’s Model Y factories”.

Much rests on the reception to the refresh of the Model Y, Tesla’s best-selling car, which analysts hope will breathe life into an ageing line-up.

Harald Hendrikse, an analyst at Citigroup, suggested customers may be delaying purchases ahead of the revamp.

A further challenge for Tesla is increased rivalry from overseas automakers, according to Hendrikse, with the US brand now facing “much stiffer competition from Chinese and other Asian peers, who are taking share with an influx of new, high-tech and relatively affordable EVs”.

This point was underscored in March when shares in China’s BYD touched a record high after the company said it had developed a platform capable of charging EVs in the time it takes to refuel a regular petrol car. Tesla’s shares, in contrast, are down more than 40 per cent this year, having given up a post-election bounce.

China puts pressure on western producers of electric car battery materials

Industry vital for energy transition is ripe for consolidation as fierce competition unsettles market

The industry that makes materials in electric car batteries — vital for the energy transition — is ripe for consolidation as fierce Chinese competition threatens western rivals, one of Europe’s top producers has warned.

Bart Sap, the boss of Belgian-based multinational Umicore, which makes materials used in cathodes, said he was hunting for deals and partnerships that would bolster the group’s struggling batteries business.

“We’re looking at all angles to recover value in this business because we’ve destroyed value over the last years,” Sap told the Financial Times.

“The industry is ready for consolidation . . . We are actively exploring partnerships” in the battery materials space, he added. “We’ve seen there’s an interest [in deals] in the industry in general.”

Umicore’s shares have plunged more than 50 per cent in the past year, and last month the company slashed its battery cathode materials capital expenditure by 50 per cent as part of a strategy reset. 

It has also been forced to delay plans for a battery recycling plant in Europe and a battery materials plant in Canada. This followed a €1.6bn impairment on its battery materials business last year. 

The company has been hit hard by a slowdown in the electric car market and the rapid growth of Chinese cathode materials, an essential and expensive part of an EV battery.

As well as Umicore, China’s dominance has put pressure on western groups such as Germany’s BASF, which have to contend with low-priced Chinese material, analysts said.

A surplus of manufacturing capacity, mainly from China, has triggered a fall in capacity rates at plants. Some in the industry were operating at 30-40 per cent of full capacity, Sap said. They typically needed rates of about 75-80 per cent to get good returns, he added.

Even in China, some smaller producers were “dropping out or running their facilities at 10 per cent utilisation . . . Consolidation in the market will happen,” said Evan Hartley of data provider Benchmark Mineral Intelligence.

China controls more than 80 per cent of the market in cathode active materials, one of a battery’s two electrodes, having rapidly built out manufacturing capacity, according to S&P Global Mobility.

“There was an obscene amount of capacity that came online in China in the past few years . . . It’s enormous,” said Hartley.

Jason Ying, commodity strategist at BNP Paribas, said despite the EV slowdown global cathode material capacity would continue to grow this decade, “led by Chinese projects”. 

The cathode material market is one example of the west’s reliance on China for supply chains essential to a range of core sectors.

Industrial groups needed European policymakers to set out clear policies for the long term to help the sector “to avoid over-dependency on other regions,” Sap said.

US tariffs threaten almost $2tn of investment pledges by global companies

Businesses with supply chains vulnerable to sweeping duties had been hoping to negotiate concessions from Washington

Companies have pledged to invest at least $1.9tn in the US since the start of Donald Trump’s presidency but the spending bonanza could be threatened by a spiralling tariff war.

Investment pledges from overseas and US companies have reached $1.9tn, according to an analysis by the Financial Times. This compares with $910bn of private manufacturing investments announced from the start of Joe Biden’s presidency until October 2024, according to the US commerce department. 

The latest commitments include $100bn each from SoftBank, which made the commitment in December, and chip manufacturer TSMC, $20bn from French shipping group CMA CGM, a $500bn pledge by Apple and $5bn from carmaker Stellantis. 

However, many of the promises are from businesses with global supply chains that are vulnerable to the sweeping tariffs Trump has announced against trading partners including China, India and the EU.

Teresa Fort, associate professor and international trade expert at Dartmouth College, said the damage from Trump’s tariffs would go far beyond the $1.9tn investment pledges already made: “The amount of uncertainty that he has introduced to the world trading system means that nobody is in a position to make long-term investments. It is definitely going to make the US a less attractive place to invest in.”

Trump said in late March that money was “pouring in” because of his trade policies. But after he unveiled a 20 per cent tariff on EU imports, French President Emmanuel Macron urged companies to pause US investment as his government works with the European Commission on the EU’s response. 

 “What message would we send by having major European players investing billions of euros in the American economy at a time when [the US] are hitting us?” Macron said, calling on industries to also refrain from trying to negotiate exemptions with Washington. 

Japan’s foreign ministry said on Monday that Prime Minister Shigeru Ishiba “expressed strong concerns that the tariffs measures by the US could weaken investment capacity among Japanese companies” on a phone call with Trump. Japan is the top source of foreign investment in the US.

Some analysts argue that Trump’s protectionist policies could accelerate investment in US production as countries try to win concessions. Earlier this year the Capgemini Research Institute estimated that US companies were expected to spend $1.1tn on reshoring manufacturing to the US over the next three years, up from $750bn predicted in 2024.

But Scott Lincicome, vice-president of the free-market Cato Institute think-tank, said a decline in corporate earnings, higher production costs and a slowdown in the US economy as a result of the tariffs could dent investment appetite.

“Whoever had the plan to use these [investment] announcements to get the tariffs to go away or slow down has proven to be pretty wrong-headed,” Lincicome said. “It’s impossible to look at the tariffs that were announced as some sort of systematic plan to induce long-term investment.”

Stellantis, which makes Jeep and Ram trucks, has already said it would furlough 900 workers at five plants in the US and temporarily shut down production in Canada and Mexico as a result of the tariff uncertainty. 

Experts noted the difficulty in determining how much of the pledged amounts were new, as well as predicting how much of it would happen. Promises made during Trump’s first presidential term included some investments that were already planned, while it is unclear how many of those made during Biden’s presidency materialised.

“These investment announcements, coming in January or February, cannot be the result of the new incoming administration,” said one US academic focused on management, noting that financial planning happened over longer timescales.

Apple announced $500bn of investment in February but lost more than $300bn in market value after Trump unveiled his tariffs, which will hit its supply and production hubs in Asia. Apple already invests substantially in the US, so it is unclear how much can be attributed to Trump.

South Korea’s Hyundai promised it would spend $21bn over three years to expand its US car production and steel business and create 100,000 jobs. Despite that, foreign-made cars sold in the US now face a 25 per cent tariff.

Trump also announced an additional 25 per cent tariff on all South Korean imports.

SoftBank, led by CEO Masayoshi Son, said it had exceeded a $50bn pledge made after Trump’s first win in 2016, creating more than 50,000 jobs, although it did lay people off during the pandemic.

Kirk Boodry, analyst at Astris Advisory, said SoftBank could be forced to sell assets if the tariffs caused a prolonged market downturn — as it did in 2020 during the pandemic.

Universities should not be greedy with technology spin-offs

Letting software and life sciences companies emerge from research has long-term benefits for academic institutions

The financial stress facing many UK universities is prompting them to look for new sources of cash. Here is the bad news for those hoping that spinouts from technology and life sciences research will plug the gap: not only are they likely to be disappointed, but they also could miss a long-term opportunity.

Do not take my word, but listen to Anne Lane, who heads UCL Business, the technology transfer operation of University College London. UCL is in the “golden triangle” of research universities linking London, Oxford and Cambridge and is among the most successful in profiting commercially from the science and healthcare inventions streaming out of its research.

UCL Business last year contributed £6mn in gift aid to the university and gained another £18mn in revenues from inventions such as the technology behind Roctavian, a gene therapy treatment for haemophilia A. It currently has 95 active spinout companies and 24 advanced therapeutics based on its research in clinical trials. It is not, in other words, a financial dunce.

But this is still modest compared with UCL’s income of £2.1bn last year, or within that its research grants and contracts of £538mn. “Academics want to get involved because it gives their work real-world impact. If anyone hoped to [fully] finance research with spinouts, it would be a long wait,” Lane says.

Or listen to Lord Jim O’Neill, chair of Northern Gritstone, the £312mn partner investment fund of Leeds, Manchester and Sheffield universities. Universities “need to appreciate how risky venture investing is and not hope for a guaranteed income stream . . . If they try to dominate the equity and control all intellectual property, they will not be able to attract investors.”

The good news is that despite the financial challenges facing universities, and the fact that many are coming late to the opportunity of research commercialisation, it does exist. Once a few bets on technologies turn into an ecosystem in which a university’s researchers can easily and consistently turn ideas into ventures, it starts to become ingrained.

The more modest a university’s short-term expectations and the more agile it is in spinning out or licensing its intellectual property, the more it stands to gain eventually. “It’s better just to take a little bit of everything than try to play at venture capital,” says David Grimm, partner of AlbionVC, which has collaborated with UCL on two spinout investment funds.

Universities are recognising this, encouraged by a 2023 review of spinouts co-led by Irene Tracey, vice-chancellor of Oxford university. A recent study by the research group Beauhurst found that universities’ equity stakes in spinouts have fallen to a 10-year low of 16 per cent. This opens up more equity to inventors and investors.

Taking less equity and adopting a standard model rather than negotiating individually and slowly over every potential invention brings two benefits. One is that it promotes greater scale, especially alongside partner investment funds. The second is that it gives a university a tangible economic role and attracts researchers who prefer to combine pure and applied research.

One size does not fit all across the range of science and technology research in institutions such as UCL. For software and artificial intelligence, business ideas need to be developed by entrepreneurs to have true financial value. For life sciences, molecules and therapeutics that emerge from university laboratories can have patentable and enduring worth.

Thus, UCLB takes quite an open approach to software spinouts, encouraging anyone with a business idea to develop it and licensing out its right for 5 per cent of the equity. For medicines, it tends to retain bigger stakes or work with academics to license intellectual property to biotechnology companies, which is less risky and offers a revenue flow from royalties.

The fact that UCL has a practised technology transfer office helps. The think-tank Onward last year criticised the offices of many universities as lacking in funding, capacity and expertise. The bigger the university operation, the more likely it is to work well with investors, and draw in proof-of-concept funding for potential spin-offs.

So there are many reasons for universities to take spin-offs seriously, and to enable partner funds such as Northern Gritstone. Forget about trying to fill a hole in the budget, and focus on making universities more engaged and inventive places. It will pay off in time.

Beijing and Washington swap warnings of additional trade retaliation as markets rebound in Asia

China has vowed to “fight to the end” if the US goes ahead with threatened tariff increases, intensifying fears that the world’s two most important economies are set for a hard decoupling.

The commerce ministry on Tuesday said it would further retaliate if US President Donald Trump makes good on his threat to levy an additional 50 per cent tariff on Chinese goods.

“If the US proceeds with implementing these escalated tariff measures, China will resolutely take countermeasures to safeguard its own rights and interests,” a commerce ministry spokesperson said on Tuesday. “If the US insists on going its own way, China will fight to the end.”

Trump’s tariff plans have roiled global markets in recent days.

The S&P 500 index has shed more than $5tn since Trump shocked US trading partners with universal tariffs and “reciprocal” levies, triggering warnings of faster inflation and slower economic growth — or outright recession. The index closed down 0.2 per cent overnight after wild swings and Asian markets have regained ground in early trading.

Beijing has said it will impose tariffs of 34 per cent on US imports after US levies on Chinese goods come into effect. Trump on Monday threatened to introduce an additional 50 per cent tariff on Chinese goods, a move that would bring US duties on Chinese imports to more than 120 per cent by some estimates.

“The US threat to further escalate tariffs is a mistake compounded by another mistake and once again exposes the coercive nature of the US side,” said the ministry spokesperson. “China will never accept this.”

Beijing backed up the threat of retaliation by fixing the exchange rate of its currency, the renminbi, at Rmb7.20 per dollar — the lowest since September 2023 — in a sign it could use depreciation to offset Trump’s tariffs.

During the first Trump administration, Beijing let its currency decline to offset the impact of tariffs. On Tuesday morning the offshore renminbi, which trades freely, weakened past the threshold of Rmb7.35 per dollar for the first time since February.

“I don’t think Beijing’s going to back down,” said Lynn Song, ING chief economist for greater China. “It might be [a case of] who blinks first.”

Song added: “It feels more like a test of endurance at this point — basically who feels the pain first and who has to come to the table with a slightly weaker bargaining position.”

Chinese markets rose on Tuesday after sustaining big falls on Monday. Hong Kong’s Hang Seng index jumped 3 per cent, led higher by the Chinese companies listed in the territory, while the mainland’s CSI 300 rose 0.3 per cent.

China’s financial regulators and state fund managers weighed in on Tuesday with vows to support the country’s stock market. Several Chinese companies also announced share buybacks.

Chinese experts said that while the world’s second-largest economy stood to suffer from Trump’s trade turmoil, Beijing would hold fast to its stance rather than concede to Washington.

“There is no possibility that Beijing would submit to Trump’s intimidation,” said Gao Jian, a Shanghai-based foreign policy expert with the Center for International Security and Strategy at Tsinghua University.

Shi Yinhong, a government adviser and professor at Renmin University, said that while US-China trade stood to be “mostly destroyed”, Beijing’s hardline approach was unlikely to change.

“China stands out as the only country in the world that has taken a uniquely tough and uncompromising position in response to Trump’s tariff war,” Shi added, predicting that a new global trade paradigm would be “extremely disadvantageous for China”.

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