Trump delays Mexico tariffs for USMCA goods

Good morning. Here's what happened overnight and what you need to know today.

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1.

Trade detour: US President Donald Trump said he will exempt Mexico from the newly imposed 25% tariffs on USMCA-covered goods and services, delaying them until 2 April. The announcement, made in a social media post after a call with Mexican President Claudia Sheinbaum, was described by Trump as “an accommodation, and out of respect for, President Sheinbaum.” It remains unclear whether Canada will receive the same exemption. Commerce Secretary Howard Lutnick said Trump was considering exemptions for both Mexico and Canada and estimated that over 50% of imports from both countries are USMCA-compliant. The tariffs, which include a 10% rate on Canadian energy, took effect Tuesday. Exports from Ciudad Juarez to the US fell 40% that day, with USD100 million ($157.4 million) in goods held back. Trump linked the tariffs to stopping fentanyl trafficking and illegal migration, warning they could return after 2 April if progress is insufficient. (Capital Brief)(Donald Trump post)

2.

High vol: Wall Street stocks fell overnight as traders navigated sharp market swings driven by shifting US trade policy. The S&P 500 dropped as much as 2.1%, the Nasdaq 100 slid as much as 2.8% and the Dow Jones 1.4%, reversing earlier gains after President Donald Trump announced a delay on tariffs for Mexican goods under USMCA until 2 April. Commerce Secretary Howard Lutnick suggested the reprieve could extend to Canada, but uncertainty persisted. Tech shares dragged down the market, with Nvidia leading losses and Marvell plunging as much as 20.48% after its outlook disappointed investors hoping for stronger AI-driven growth. Treasury yields edged higher, while the dollar weakened further against major currencies as investors digested trade and labour data. Low-volatility stocks have outperformed, becoming the best-performing investment theme in 2025 among 13 tracked by Bloomberg Intelligence. (WSJ)(Bloomberg)(Reuters)

3.

Seismic selloff: A global bond selloff deepened on Thursday, as markets reacted to Germany’s plan to inject hundreds of billions of euros into defence and infrastructure, driving up borrowing costs worldwide. German 10-year bund yields reached 2.93%, the highest since October 2023, after a 30-basis-point jump on Wednesday—the biggest rise since 1989. Italian yields exceeded 4% for the first time since July, while Japan’s 10-year yields neared a 16-year high. US Treasuries were mixed, and UK gilts erased losses. Germany’s spending announcement follows a US pullback that has led to a historic realignment with Russia and halted funding for Ukraine. Deutsche Bank’s Jim Reid called the bond selloff a “seismic shift of the most epic proportions.” Strategists predict German yields could reach 3% this year as increased debt issuance weighs on markets. (Bloomberg)(Reuters)(Capital Brief)

4.

DOGE shock: US employers announced 172,017 job cuts in February, up 245% from a year earlier and the highest since July 2020, according to Challenger, Gray & Christmas. Government layoffs accounted for 62,242 cuts, largely driven by the Trump administration’s Department of Government Efficiency (DOGE), led by Elon Musk. DOGE actions, including federal workforce and contractor cuts, accounted for 63,583 layoffs, with an additional 894 planned due to funding reductions for private non-profits. Despite this, initial jobless claims fell by 21,000 to 221,000 last week, though continuing claims hit a nearly three-year high. Meanwhile, Trump’s tariffs on Canada, Mexico and China drove a 34% surge in the US trade deficit to a record USD131.4 billion in January. Economists warn government job cuts and tariffs could spur up to 500,000 total job losses by year-end, with broader effects on private-sector service providers emerging in the coming months. (Capital Brief)(Challenger, Gray & Christmas)(US DOL)(Bloomberg)

5.

Rate cut: The European Central Bank cut rates as expected but signalled its easing phase is drawing to a close, boosting the euro to a four-month high. The ECB cut its Deposit Facility Rate by 25 basis points to 2.50%, and said inflation is evolving in line with forecasts, with headline inflation projected to average 2.3% in 2025, 1.9% in 2026 and 2.0% in 2027. It said monetary policy is becoming “meaningfully less restrictive,” with rate cuts easing borrowing costs and supporting loan growth. The central bank lowered growth projections by 0.9% for 2025 and 1.2% for 2026, citing a challenging economic outlook. ECB President Christine Lagarde said growth risks remain tilted to the downside. “An escalation in trade tension would lower Euro area growth by dampening exports and weakening the global economy.”(Capital Brief)

6.

Legal tango: Dovetail legal counsel Bethany Lo Russo has made fresh claims against the software startup in revised court documents, alleging the company threatened to terminate her employment and that she was “belittled and intimidated” after her relationship with the company’s co-founder and CEO Benjamin Humphrey ended. Lo Russo accused Humphrey of "a pernicious and relentless pursuit", using his authority to pressure her into encounters and other inappropriate behaviour. Humphrey vehemently denies the claims. The documents, filed in the Federal Court, also claim Dovetail lacked adequate policies to manage sexual harassment and unlawful discrimination and failed to manage conflicts of interest. Former head of operations Emlyn Gavin allegedly suggested Lo Russo consider leaving, saying, “It takes two to tango.” The filing claims the company’s board had a responsibility to prevent workplace risks arising from the relationship, and Lo Russo's lawyers allege the company contacted Glassdoor to have a review referencing Humphrey’s relationship removed. (Capital Brief)

7.

BNPL IPO: Buy-now-pay-later (BNPL) company Klarna plans to raise at least USD1 billion ($1.58 billion) in a US initial public offering, with a public filing expected next week, Bloomberg reported citing unnamed sources. The company is targeting a USD15 billion valuation on the New York Stock Exchange (NYSE), a sharp fluctuation from its USD45.6 billion peak in 2021 and USD6.7 billion low in 2022. Klarna filed for an IPO with the US Securities and Exchange Commission in November and has since streamlined operations, focusing on payment partners and AI. In June, it sold its Checkout payments unit for USD520 million to remove friction with partners Adyen and Stripe. In August 2024, Klarna acquired New Zealand BNPL firm LayBuy. (Bloomberg)(Capital Brief)

8.

Stop and frisk: US President Donald Trump’s administration is weighing a plan to stop and inspect Iranian oil tankers to disrupt its oil supply, according to sources cited by Reuters. The government would carry out the strategy under the Proliferation Security Initiative launched in 2003, an international accord designed to counter the spread of weapons of mass destruction. Trump has already hit Iran with two waves of sanctions, targeting a ‘shadow fleet’ of oil tankers that sail without Western insurance and transport oil from sanctioned countries, and has expressed plans to isolate Iran and drive its oil exports into the ground. Sources say that US officials are looking at ways to stop and inspect ships passing through chokepoints including the Malacca Strait, among others. The power would enable foreign governments to target Iranian oil shipments at Washington’s request, hitting key Tehran supply chains by delaying delivery. (Reuters)