Good morning from the Financial Times. Today is Tuesday, February 11th. This is your FT News briefing. PwC China is seeing partners head towards the door. And Donald Trump's tariffs are giving the world feelings of deja vu. Plus, Hezbollah is trying to hang on to its followers. Hezbollah, at its core, is a vast popular base across Lebanon. And without that popular support, the organization really is nothing. I'm Mark Filipino, and here's the news you need to start your day.
PwC China is still paying the price for its botched Evergrande audit. You might recall that back in September, Chinese authorities hit the firm with a $60 million fine and a six-month ban. Beijing said that PwC concealed and even condoned fraud in its audit of the failed property developer. Since then, the FT has learned that more than five dozen partners have left.
Now, it's not clear if they've resigned, but it signals that things are not great over at PwC. The firm has been struggling to keep its client base in the region. which is mostly made up of privately held companies and Hong Kong-listed groups like Alibaba and Tencent. Donald Trump has his eye on more tariffs, this time for aluminum and steel imports. The news sent U.S. metal prices soaring on Monday, with American traders paying big premiums compared with their European counterparts.
Now, if you're thinking, gee, this sounds familiar, you would be correct. Trump hit most countries with the same thing during his first term in office. So to get a better grasp on what we're in for this time around, I'm talking with my colleague Andy Bounds in Brussels. Hey, Andy. All right. So take me back to 2018. What were the details of Trump's tariffs on these metals? And what was he hoping to accomplish?
Well, Mark, as you know, Donald Trump has a thing about steel workers and aluminium workers and the Rust Belt, if you want to call it, of the US, where many of his voters are. And he really wanted to protect that industry from... imports, and not just cheap imports from China, but also from the EU, from Japan, a lot of his allies around the world. So that's what happened in 2018. He actually went with 25% for steel and 10% for aluminium last time. Now he's going for 25% on both.
And in 2018, did imports into the US drop? They did actually. There were a lot of exemptions as well because a lot of people that use the metal like car manufacturers would say we need this particular grade and we can't get it in the US or we need these parts that we can't get in the US.
There were some exemptions, but nevertheless, the predictable thing happened, as any trade economist would tell you. Imports went down, and therefore prices went up. Yeah, break that down for me. So for something like a car manufacturer, like you mentioned, How were they impacted? Yeah, I mean, basically it hit their earnings, especially General Motors and Ford, who relied on this cheaper imported metal to produce their cars.
increase the raw material costs going into cars you're obviously going to increase the cost of the car at the end and then they either have to take a hit or charge more to the consumer okay so this is all on the u.s side but andy how did other countries respond to the imposition of tariffs Well...
In a pretty predictable way, which is that they retaliated with their own tariffs, sometimes on steel and aluminium, but also on sort of classic American products like bourbon whiskey, Harley-Davidson's, jeans, especially things coming from... where Republican lawmakers were in power and countries were trying to put pressure on those lawmakers to get Trump to change course, which didn't really actually work very well, but they lasted Trump's time and then...
Biden came in and settled some of these disputes. So, for example, he did a deal with the EU, but a lot of them remained in place. I guess what I'm wondering, Andy, is... What sort of lessons should we take away from 2018? Yeah, I think there's two impacts, right? So one is on the industry itself. Prices will rise, so American cars will probably get more expensive or the American car industry could absorb.
and sell things at a loss. So that's one thing. Secondly, supply chains do change. So, you know, a lot of Chinese steel makers started opening capacity in other countries to try and get around the tariffs. You know, Indonesia is now a big... steel producer, and a lot of that capacity is actually Chinese, and you get collateral damage. So, for example, the bourbon sales to the EU drop by a third, and they're still feeling the pain.
So in the end, did the 2018 tariffs make US manufacturing more competitive? Did they end up helping the steelworkers that Trump was so concerned about? I think, sadly, it was probably just a brief pause, stay of execution, if you like. But, you know, the travails of the US steel industry against very fierce global competition remain. And you can only sort of... wall off the world for a certain period andy bounds is the ft's eu correspondent thanks so much andy thank you
Hamas says it's postponing the next release of Israeli hostages. The militant group accused Israel of violating a three-phase ceasefire agreement. Hamas said Israel delayed returning Palestinians to north Gaza and limited humanitarian aid entering the enclave. Israel's defense minister responded with accusations of his own, saying the delay by Hamas would break the deal.
The two sides have been blaming each other for putting the ceasefire at risk. Up until this point, there have been a few delayed hostage releases, adding pressure to the fragile deal. Stage two of the plan is supposed to start in March. Meanwhile, in Lebanon, Hezbollah is trying to find a path forward. It just suffered its worst defeat ever against Israel. And now, in order to survive, it needs to appeal to its constituency in Lebanon.
which is easier said than done. I'm joined now by the FT's Malaika Tapper to talk more about this. Hi, Malaika. Hi, Mark. So get me up to speed really quickly on what sort of position Hezbollah is in these days. Hezbollah is probably the weakest it has ever been right now. Its military ranks were completely decimated by Israel's military offensive on Lebanon over the past few months.
And its charismatic longtime leader, Hassan Nasrallah, was assassinated at the start of that military escalation. Meanwhile, it is suffering after... It's ki ally Bashar al-Assad had his regime toppled in a lightning offensive in neighboring Syria. It's also fighting to hold political ground on the domestic level after...
a series of elections that have left it politically sidelined in the domestic Lebanese scene. Okay, so it sounds like the group is basically trying to rebuild from the rubble. How much support does it have on the ground?
I think that what's really important to emphasize is that while on these macro levels, the regional military level and the domestic political level, Hezbollah is incredibly weak right now. On the very local and... minute level, it is still really powerful and has these extremely strong networks and has very strong welfare institutions that a lot of people, even non-card carrying sort of residents.
rely on so yes people are still supportive of hezbollah but at the same time hezbollah has long kept up a bargain with its supporters that when it goes to war with israel it will compensate and rebuild after those wars. And right now we're in this shaky period between that destruction and that period of rebuilding, and people are waiting to see what Hezbollah is going to do.
Yeah, so tell me a little bit about what that rebuilding program looks like. Yeah, Hezbollah right now, what they're doing, as soon as the war ended, they began this massive effort of...
deploying hundreds of engineers across the country to assess the damage to people's homes from the war, and kind of calculating a cash amount that they were entitled to from these damages. And then these residents... receive checks from one of Hezbollah's civilian institutions called the Qard al-Hasan, which is a microfinance institution, and get compensation for the damages.
And how do constituents feel like that's going so far? Some of them were perfectly happy with the amounts that they received. Many others expressed a sense of dissatisfaction with the assessments. They felt like The party was being stingy and was cutting corners with these assessments and giving them less than they were entitled to. And I think that some people linked these, what they saw as small checks, to the...
current financial situation of the party, which, you know, is seen to be much weaker than it previously was. Israel targeted Hezbollah's microfinance institution during the war. And the fall of Assad cut off key supply routes through Syria. that the party previously relied on for weapons and money. And if Hezbollah really isn't able to satisfy its base, you know, make these payments to help people rebuild their lives, what might that mean for the group long term?
So while Hezbollah has historically played a really important regional military role and a major role on the domestic political scene, at its core is a vast popular base across Lebanon. And without that popular support, the organization really is nothing. Malaika Tapper covers Lebanon for the FT. Thanks, Malaika. Thank you.
You can read more on all these stories for free when you click the links in our show notes. This has been your daily FT news briefing. Check back tomorrow for the latest business news. AI, show me the best performing flexible savers. OK, that's a list of famously agile goalkeepers. So let's try something different. AI, can I see the latest share prices?
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