Canada makes it plain

Prime Minister Mark Carney did what he came to do in Washington on Tuesday—he reminded his counterpart to the south that Canada is a sovereign nation. But Donald Trump’s musings about taking over Canada (or Greenland, the Panama Canal and the Gaza Strip) weren’t the big takeaway of their Oval Office meeting. Instead it was the US president’s global trade war and the deals that haven’t happened yet.

While most every day brings headlines with hints and promises that deals spurred by American tariffs are in the offing, none have materialized. At the White House today, Trump even expressed exasperation with all the questions about when any agreements would be struck. And while Trump has said the US is in negotiations with China—the main target of his tariff ire—his key deputy on such matters, Treasury Secretary Scott Bessent, conceded to Congress that’s actually not the case.

And as the trade war drags on, trade flows are shifting away from America. Canadian exports to the US tumbled while shipments to other countries soared. The Trump administration’s duties on Canadian steel, aluminum, autos and other products, as well as Canada’s retaliatory levies on a range of American goods, led to a large pullback in activity between Canada and its largest trading partner in March.

Canadian exports to the US plunged 6.6%, the biggest drop since the pandemic, while imports fell 2.9%. Canada’s exports to countries other than the US jumped 24.8%, however, almost entirely offsetting the decline in shipments to the south. —David E. Rovella

What You Need to Know Today

The European Union is planning to hit about €100 billion ($113 billion) in US goods with additional tariffs in the event ongoing trade talks fail to yield a satisfactory result for the bloc. The proposed retaliatory measures will be shared with member states as early as Wednesday. The new EU counter-measure list will come on top of the €21 billion of US goods already targeted by EU levies in response to Trump’s 25% duty on steel and aluminum exports. The EU agreed earlier this month to delay for 90 days the implementation of those measures after the US lowered its so-called reciprocal rate on most EU exports to 10% from 20% while the negotiations are taking place.

India said it conducted military strikes against what it labeled terrorist camps in Pakistan, an expected move after it pledged retaliation for an attack last month in Kashmir that killed 26 people. India said it had not targeted any Pakistani military facilities. The Associated Press reported that India fired missiles at multiple targets that, according to Pakistani officials, killed a child and wounded two other people.

Ties between the nuclear-armed rivals have rapidly deteriorated in the wake of the Kashmir attack. Indian Prime Minister Narendra Modi’s government has accused Pakistan of involvement and vowed to punish those responsible. Pakistan has denied any links to the attacks and warned of retaliation if India takes military action. Now, as with previous confrontations between the two countries, the question becomes whether escalation will ensue.

Traders are betting on a slower pace of interest-rate cuts from the US Federal Reserve this year, the thought being that economic resilience will force policymakers to remain on hold for longer before easing more sharply in 2026. Just a day ahead of the central bank’s latest policy decision, money markets are pricing three quarter-point reductions this year, one less than at the start of April. About a half point of additional cuts are expected next year, the most priced in for 2026 at any point in the current easing cycle.

Market expectations for a cut at the June policy meeting have also faded since Friday, when employment data came in stronger than economists predicted. “Unless something bad happens between now and June, it means the Fed doesn’t need to go,” said Kevin Flanagan, head of fixed income strategy at Wisdom Tree. But there are plenty of people predicting bad things in the near future. Here’s your markets wrap.

Days before Trump unveiled “reciprocal” tariffs in early April, Brazil’s Luiz Inacio Lula da Silva made a trade announcement of his own: Vietnam had agreed to resume purchases of Brazilian beef it had halted nearly a decade prior. Years in the making, the deal was part of a larger Brazilian push to expand commercial ties with the Association of Southeast Asian Nations—a 10-country bloc home to more than 600 million people and a $2.3-trillion market—as it explored new commercial frontiers for its agricultural products. Now Lula’s government is betting the global upheaval triggered by Trump will supercharge those efforts, boosting the odds Brazil emerges as one of the few nations that benefits if the US and China remain locked in a trade war.

What You’ll Need to Know Tomorrow

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