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USA
7th March 2025
 
THE HOT STORY
Trump signs tariff exemptions for certain imports from Canada, Mexico
President Donald Trump has signed off on tariff exemptions for imports from Canada and Mexico that are covered under the 2020 U.S.-Mexico-Canada Agreement (USMCA). The levies will now not apply until April 2nd, at which point Mr. Trump has pledged to impose reciprocal tariffs on other nations with duties on American imports. The exemptions apply to some things like potash, which is used in fertilizers, but some Canadian energy products won’t qualify and will be subjected to a 10% tariff. All other goods, including computers from Mexico, will be subjected to the 25% tariff. "On April 2nd, we're going to move with the reciprocal tariffs, and hopefully Mexico and Canada will have done a good enough job on fentanyl that this part of the conversation will be off the table, and we'll move just to the reciprocal tariff conversation," Commerce Secretary Howard Lutnick said. "But if they haven't, this will stay on."
STRATEGY
Pushback against Elon Musk’s cost-cutting project
Donald Trump has instructed his Cabinet to work with Elon Musk’s Department of Government Efficiency (DOGE) but clarified that Cabinet members should be the ones making staffing decisions.  In a meeting at the White House yesterday attended by secretaries of state and Musk, the president hinted that DOGE may have been too indiscriminate in its mass firings of federal employees. Trump posted on Truth Social soon after the meeting ended: “As the secretaries learn about, and understand, the people working for the various departments, they can be very precise as to who will remain, and who will go. We say the ‘scalpel’ rather than the ‘hatchet’ . . . It’s very important that we cut levels down to where they should be, but it’s also important to keep the best and most productive people . . . We’re going to have these meetings every two weeks until that aspect of this very necessary job is done.” At the same time, Trump also praised Musk and DOGE after the meeting. "I think they've done an amazing job," he told reporters.
WORKFORCE
Drop in jobless claims allays fears about labor market
Applications for U.S. unemployment benefits fell last week and returned to muted levels seen at the start of the year, offering some relief after other reports pointed to worsening labor market conditions. The Labor Department said Thursday that initial claims fell 21,000 to 221,000 in the seven days to March 1st, significantly below the 235,000 forecast by economists polled by Reuters. The four-week moving average was up 250 to 224,350, while the total number of people receiving benefits after an initial week of aid, reported with a one-week lag, was up 42,000 to a seasonally-adjusted 1.897m. “Initial claims from U.S. federal workers have surged, while regular state claims have abated," commented economist Eliza Winger. "Initial unemployment compensation claims for federal employees will continue to rise in coming weeks amid the Department of Government Efficiency (DOGE) cost-cutting efforts, with spillovers to claims at a national level.”
Disney to cut nearly 6% of staff at ABC News and Disney Entertainment Networks
Disney is set to eliminate around 200 positions, representing 6% of its workforce at ABC News Group and Disney Entertainment Networks, according to a report by the Wall Street Journal. The layoffs are anticipated to be announced soon, with the consolidation of ABC shows "20/20" and "Nightline" into a single unit. Additionally, the political and data-driven news site 538, which employed about 15 people, will be shut down. These staffing reductions come as Disney faces a decline in television viewership due to the shift towards streaming. Disney's recent financial report showed a 44% increase in adjusted per-share earnings, reaching $1.76 for the October-December quarter, with operating income for its Entertainment unit rising to $1.7 bn, largely due to the success of "Moana 2."
ECONOMY
Trade deficit widened 34% in January
The U.S. trade deficit widened 34% in January from December, to $131.4bn, according to the Commerce Department. Imports rose 10% to $401.2bn, while exports climbed by 1.2% to $269.8bn. Consumer-goods imports rose by $6bn, mostly reflecting a rise in pharmaceutical imports. Imports of capital goods such as computers, computer accessories and telecommunications equipment rose $4.6bn. A separate report released by the Commerce Department showed wholesale inventories in the U.S. increased 0.8% in January.
CRYPTO
Trump signs order to establish government bitcoin reserve
President Donald Trump has signed an executive order to create a government reserve of bitcoin, marking a significant step towards mainstream acceptance of cryptocurrency. According to David Sacks, Trump's “crypto czar,” the U.S. will retain approximately 200,000 bitcoin seized in various legal proceedings, saying: “The U.S. will not sell any bitcoin deposited into the Reserve. It will be kept as a store of value.” The order also mandates a comprehensive audit of the government's bitcoin holdings, which have never been fully assessed. Trump, who has shifted from skepticism to support for digital currencies, is pushing for favorable legislation and plans to host a “Crypto Summit” at the White House. Bitcoin has a market cap of about $1.7tn and is seen as a hedge against inflation despite criticism regarding its inherent value.
CORPORATE
Macy's faces 'choppy year ahead'
Macy's is expecting its sales to decline again this year, with chief executive Tony Spring commenting that "the affluent customer" is just as uncertain as all others about how new tariffs and inflationary pressures will impact the economy. For the fourth quarter ended February 1st, the company's sales fell 4.3% to $7.77bn, missing forecasts for $7.78bn, according to FactSet. Like-for-likes across all of its stores rose 0.2%, with a 1.9% dip at its namesake outlets offset by respective gains of 6.5% and 6.2% at Bloomingdale's and Blue Mercury. Sales are expected to be down about $1bn from last year to $21bn-$21.4bn this year, in line with analysts' forecasts for $21.34bn. GlobalData managing director Neil Saunders said that, while the coming year is likely to be "a choppy one" for Macy's, the company is "now at least headed in the right direction". Macy's shares closed down 0.68% at $13.22.
Gap shares soar on strong holiday-quarter sales
Gap beat fourth-quarter sales and profit estimates on Thursday, suggesting that chief executive Richard Dickson's turnaround strategy is working. The company's shares rose 17% in extended trading, after it reported sales of $4.15bn for the three months to February 1st - a 3% annual decline - and net income of $206m, or 54 cents per share - up from $185m. Analysts surveyed by LSEG expected revenues of $4.07bn and per-share earnings of 37 cents. Overall comparable sales were 3% higher; at its namesake stores, they rose 7%, and were up 3% and 4% respectively at Old Navy and Banana Republic. However, they declined 2% at Athleta. Looking ahead, Gap said it projects first-quarter sales to be flat to up slightly and full-year sales to rise between 1% and 2%. Chief financial officer Katrina O'Connell noted that the company's exposure to tariffs is "minimal", with " less than 10% of our product coming from China and less than 1% from Canada and Mexico".
DEI
Retailers walk a tightrope on DEI
Several U.S. retailers, including Target, Amazon, and Tractor Supply, have publicly ended their diversity, equity, and inclusion (DEI) programs but continue to support certain initiatives behind the scenes. Jason C. Schwartz, an employment law partner at Gibson Dunn, noted that companies are "trying to thread the needle" between corporate values and legal risks. While some retailers have ceased specific DEI efforts, they maintain support for events and resource groups for underrepresented employees. For instance, Tractor Supply ended a DEI program aimed at increasing management diversity but assured employees that inclusivity initiatives would persist. Schwartz said that companies are "essentially picking their battles" in this evolving landscape.
REGULATORY
Senate committee approves McKernan's CFPB nomination
The U.S. Senate Banking Committee has voted 13 to 11 to advance the nomination of Jonathan McKernan as the director of the Consumer Financial Protection Bureau (CFPB). The party-line decision allows Mr. McKernan's nomination to proceed to the full Senate for consideration. The Trump administration has been actively working to limit the agency's powers, making the nomination significant. Meanwhile, the CFPB is allowing some offices to resume their functions, after an order last month from acting director Russell Vought to cease “all supervision and examination activity” and “shareholder engagement." 
DEALS & TRANSACTIONS
Couche-Tard holds talks for sale of U.S. shops in Seven & i deal
Alimentation Couche-Tard is in "exploratory discussions" regarding the potential divestiture of U.S. stores to facilitate its takeover of Japanese rival Seven & I Holdings. Couche-Tard said: "We have identified a potential divestiture portfolio of U.S. stores" as it collaborates with Seven & i to identify buyers. The Canadian retailer previously proposed acquiring Seven & i for $47.5bn but has faced challenges in negotiations. Seven & i is restructuring, including selling an underperforming retail business and replacing its chief executive, to strengthen its independence. Couche-Tard  says its approach remains non-hostile, aiming to learn from Seven & i to enhance its North American operations. The acquisition could face significant U.S. antitrust scrutiny, potentially requiring Couche-Tard to divest up to 2,500 stores. Charles Emond, head of Couche-Tard's largest investor, expressed his confidence, noting: "Shareholders believe there would be a great fit between the two companies”.
MERGERS & ACQUISITIONS
Walgreens set for $10bn acquisition
Walgreens Boots Alliance is being acquired by an entity affiliated with Sycamore Partners for $10bn. The private equity firm specializes in retail and consumer investments. Walgreens will continue to operate under its existing names, with its headquarters remaining in the Chicago area. The $11.45 per share deal is expected to complete in the fourth quarter of this year. Chief executive Tim Wentworth commented: “While we are making progress against our ambitious turnaround strategy, meaningful value creation will take time”, emphasising the benefits of being managed as a private company.
INTERNATIONAL
Campari hits pause on M&A activity
Italian spirits group Campari is halting mergers and acquisitions (M&A) to concentrate on its most promising brands, a significant change from the previous strategy, which aimed for 50% growth through acquisitions. Chief executive Simon Hunt explained that the company needs to reduce its net debt, which currently stands at approximately 3.2 times the group's core profit. The company is now evaluating potential divestments of brands that are limited to single markets, he added.
 

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