Good morning, happy Friday and welcome back. In today’s newsletter:
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Donald Trump’s tariff ‘shock regime’ tests Wall Street’s mettle
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Trump sues JPMorgan and Jamie Dimon for $5bn
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Crypto security company Ledger plots $4bn New York listing
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A dispatch from Greenland’s capital
We begin with Wall Street, where nerves were tested this week amid market turmoil spurred by Donald Trump’s tariff “shock regime”.
What to know: The US president’s retreat from his tariff threats over Greenland this week followed a sharp stock sell-off, underscoring investors’ power to influence Trump even as he brushes off Washington’s top allies.
US equities shed more than $1tn on Tuesday in one of the worst sell-offs since Trump’s “liberation day” tariff announcement in April.
The president shrugged off the fall as “peanuts” compared with the market’s gains over the past year but by Wednesday afternoon he had ditched his plans for steep levies on the UK, France, Germany and others.
Why it matters: The U-turn was the latest example of financial markets’ apparent power to tame Trump — a phenomenon widely known as Taco, or Trump always chickens out. It also shows how investors are being forced to second-guess the president’s pain threshold, and in the process are becoming inured to more extreme policies. Read the full story.
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Trumpian uncertainty: Judging from the chatter at Davos, there are four key lessons for chief executives and investors amid the turmoil, writes Gillian Tett.
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‘Waiting for the king’: Davos drew record attendance but Trump’s foreign policy pronouncements fuelled tension and prompted walkouts.
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Transatlantic ties: EU leaders still voiced concern over relations with the US even after the president dropped his tariff threat.
Here’s what else we’re keeping tabs on today and over the weekend:
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Economic data: S&P Global releases purchasing managers’ index data for the Eurozone, France, Germany, the UK and the US.
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Italy-Germany relations: German Chancellor Friedrich Merz meets Italian Prime Minister Giorgia Meloni in Rome for a summit.
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Davos: Speaking at the World Economic Forum are World Trade Organization chief Ngozi Okonjo-Iweala, IMF managing director Kristalina Georgieva and European Central Bank president Christine Lagarde.
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India: On Sunday, European Commission president Ursula von der Leyen and European Council president António Costa travel to New Delhi for Republic Day celebrations at the invitation of Prime Minister Narendra Modi ahead of an India-EU summit on Monday.
How well did you keep up with the news this week? Take our quiz.
Five more top stories
1. Trump has sued JPMorgan Chase and its chief executive Jamie Dimon, seeking at least $5bn in damages over claims the biggest US bank unfairly closed his accounts for political reasons. Read details of the lawsuit.
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Pay boost: JPMorgan Chase increased Dimon’s pay 10 per cent to $43mn for 2025, a record package for the long-serving chief executive.
2. Exclusive: French cryptocurrency company Ledger is working with bankers on a US initial public offering that could value the group at more than $4bn, underlining ongoing investor interest in digital asset businesses. Here are the banks it has tapped for the deal.
3. Exclusive: Revolut has scrapped plans to buy a US lender and will instead apply for an American banking licence, betting that the Trump administration’s light-touch approach to approvals will be a faster route for the UK-headquartered fintech to grow its operations in the country.
4. UK consumer confidence has been negative or flat for 10 years, underlining the impact of the Covid-19 pandemic, political upheaval and the cost of living crisis on Britons’ morale, according to a closely watched survey. Read the full report.
5. German prosecutors are investigating suspected fraud at industrial group Heraeus Precious Metals after the company set aside almost €460mn to cover potential risks. Read the full story.
News in-depth
Greenland’s capital has been on alert over Trump’s threats to take control of the island. The worst fears eased after the US president ruled out using force, but much remains unclear. Jacob Judah sends a dispatch from Nuuk.
We’re also reading . . .
Chart of the day
The pattern of liberal democracy’s advance tracking economic growth can also be seen in reverse in the past 15 years, writes John Burn-Murdoch, who examines how democracies have slipped as growth has slowed.
Take a break from the news . . .
The Congo, Africa’s second-longest river, is rarely sailed by tourists. New expeditions aboard the Princesse Ngalessa offer encounters with hippos, gorillas and elephants, as well as a glimpse of a very different way of life.
