The world economy is at a “pivotal juncture” as trade tensions flare, members of the International Monetary Fund said in a draft statement after a week of discussions that have been overshadowed by US President Donald Trump’s trade war. Europe should be prepared to protect its people while accepting structural changes to its economy, one of the Fund’s directors told us. 

The IMF’s warning was issued after the European Union’s second-biggest trading partner suggested Trump “misjudged” the situation by slapping tariffs on global commerce. Far from prompting surrender, said an adviser to China’s foreign ministry, the “high intensity” trade war is causing sides to dig in.

Beijing is readying emergency measures to buffer economic repercussions, even as the production of goods and services holds up, so far. China’s No. 1 carmaker, BYD, reported its first quarter profit overtook Tesla’s, showing a robust start to the year.

European policymakers are still assessing the trade war’s economic impact. Within the eurozone, they “seem to be rather deflationary,” European Central Bank Governing Council member Robert Holzmann told us. Swiss National Bank President Martin Schlegel warned his economy “feels the effects of protectionism particularly hard.” Meanwhile, Trump showed no signs of easing up on America’s allies. We’re told the White House is now pressuring European governments to reject rules governing artificial intelligence. --Jonathan Tirone

What You Need to Know Today

Russia is drilling oil wells at the fastest pace in at least five years as the country anticipates an easing of sanctions and looser output limits. It’s another sign that Western trade restrictions designed to cripple the Kremlin’s economy aren’t working. While still running hot, Russia’s central bank said inflationary pressures are retreating. 

Saudi deals in South Africa are picking up. A flurry of meetings between Saudi Arabia and South Africa over the past year has culminated in discussions about or signed deals worth billions of dollars into Africa’s most industrialized country — and more corporate action is in the pipeline. South Africa needs more investment to fuel economic growth, Democratic Alliance leader John Steenhuisen told us, noting his party will stick by the country’s coalition government. 

Cyril Ramaphosa and Mohammed bin Salman in 2022. Photographer: Anadolu/Anadolu

The crystal ball is looking murkier among forecasters. A month after chasing the market with multiple upgrades for European stocks, strategists are back to cutting their targets, spooked by volatility and trade tensions. Meanwhile in the US, Bank of America suggested investors should sell into rallies in US stocks and the dollar, cautioning that the conditions for sustained gains are missing. Economists we surveyed figure a US recession is practically a coin flip within the next year. 

Here’s a fresh podcast about the empty retail shelves coming to America. On this episode of Odd Lots, we talk supply chains and tariffs with Anna Wong, chief US economist at Bloomberg Economics. Data showing something severe is happening in the volume of cargo flowing from China to the US. The fear is growing that there will be an acute and dramatic impact on consumer companies, and that it will happen very soon.

Talks between Trump envoy Steve Witkoff and Russian President Vladimir Putin continued in Moscow, with the White House intensifying its push for a deal to end the war on Ukraine. Trump again said he doesn’t envision Ukraine joining NATO in the future, reiterating his administration’s stance that Kyiv relinquish its hopes of joining the military alliance.

Iveco Group’s defence unit is drawing interest from two US buyout firms. Bain Capital and KPS capital are considering bids for the Italian company’s business that makes armoured and tactical vehicles, we were told. European aerospace and defence assets have become more attractive to investors, as governments across the continent ramp up military spending after Trump threatened to pull back US commitments to Europe’s security amid Russia’s ongoing war on Ukraine.

Canadian beaver pelts destined for Europe were the original export industry behind North America’s oldest company. No longer. Hudson’s Bay Company is being liquidated, including its treasure trove of artefacts. Founded in 1670, Hudson’s Bay evolved from a colonial fur trading business into the country’s largest department store chain, and is North America’s longest continuously operating business. Like many traditional retailers, it struggled in the 2000s and 2010s to keep pace with the rise of e-commerce and changing consumer habits.

Sold out HB Stripes at the Hudson’s Bay Sherway Gardens on March 20. Photographer: Nick Lachance/Toronto Star

What You’ll Need to Know Tomorrow

For Your Commute

As tensions with Russia rise, 13 Norwegian soldiers have been sent to the far north to test the cold’s effects on their minds, bodies and equipment. Military experts see new urgency in understanding and overcoming the human and technological limits of military operations in extreme Arctic conditions. “It’s kind of like going to the moon. We don’t know what to expect,” the patrol leader told us. Almost everything about a soldier’s work has to be rethought in such low temperatures, from how the body reacts to the use of new technologies and dealing with casualties.