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Good morning from the Financial Times. Today is Monday, April 14th, and this is your FT News Briefing. The Trump administration is sending mixed messages to big tech. And U.S. banks are riding out the market storm, at least for now. Plus, what happens when the American government goes after universities? The next few weeks, we're going to see significant readouts of the impact of this longer term. I'm Kasia Broussalian, and here's the news you need to start your day.
Personal electronics might only be exempt from U.S. tariffs for a little while longer. At least, that's what Commerce Secretary Howard Lutnick had to say yesterday. That's right. Semiconductors and pharmaceuticals will have a tariff model in order to encourage them to reshore to be built in America. Let me back up and explain. Late on Friday, the Trump administration said it was excluding things like smartphones and laptops from the massive quote reciprocal tariffs on China.
That was big news for companies like Apple, which makes roughly 80% of its iPhones in the country. But then on Sunday, Lutnik warned in an interview with ABC that the semiconductors inside these devices could still eventually face levy. These are included in the semiconductor tariffs that are coming and the pharmaceuticals are coming. Those two areas.
are coming in the next month or two. So this is not like a permanent sort of exemption. He's just clarifying that these are not available to be negotiated away by country. These are things that are national security that we need to be made in America. U.S. President Donald Trump also tried to play down his exemptions. He wrote on Truth Social that, quote, The announcements add to the global uncertainty around the administration's new trade policies.
JPMorgan Chase, Morgan Stanley, and Wells Fargo reported quarterly earnings on Friday after a week filled with wild swings in the market. But so far, it looks like all that volatility has actually benefited these big... Here to explain why is the FD's U.S. banking editor, Joshua Franklin. Hey, Josh. Hi there. Yeah, so just tell me about Friday's report.
Yeah, so I guess you could choose to look at it glass half full or glass half empty. The glass half full version is all this volatility that's been happening in the early months of the Trump administration has meant that clients of these banks have been trading a lot around events. And volatile markets are great for banks because they're the ones who facilitate a lot of this trading activity, kind of financing trades for other investors like hedge funds and big asset managers.
So banks had just a blowout first quarter for their trading businesses, especially trading equities. JP Morgan, which is the biggest bank in the U.S. by assets and deposits, they had a 9% rise in profits, but the standout performance was its equities trading business, revenues rising almost 50% from a year earlier to $3.8 billion. All right, so that's the glass half full version. Now, what's the glass half empty? The glass half empty version is the rest of the year is really uncertain.
in terms of the trajectory of the U.S. economy under Trump. And so banks tend to perform pretty well in a rising economy when people have a lot of certainty about the direction of things. People are borrowing. There's an expectation that a lot of that money that they borrow is going to be paid back. A lot of uncertainty about all of that right now. So the rest of the year is a little bit more cautious for these guys.
Can you just walk me through a little bit more what all the economic fallout from the tariffs will be for banks specifically? Like what are we hearing from some of them? Well, we heard from JPMorgan Chase CEO Jamie Dimon, who's one of the most influential voices on Wall Street and in corporate America. He was pretty cautious in his outlook, talked about the considerable turbulence.
that the US economy was facing, potential negatives of tariffs and trade wars. You are seeing some warning signs, especially in credit card lending. These guys are big credit card lenders. For JP Morgan, which is the biggest credit card bank in the U.S., the portion of the credit card loans that they mark as unrecoverable is at a 13-year high. So you're seeing kind of a few more signs of strain for everyday Americans.
So we're sort of seeing this split screen here, at least for these banks that reported on Friday. Now, Josh, Bank of America and Goldman Sachs will report earnings later this week. What are you looking out for there? So it's going to be really interesting with Goldman to see whether or not they really benefited as well or as much as some of these other banks on the trading side.
Few banks have their finger on the pulse of what's going on in investment banking as much as Goldman Sachs does. So we'll see what they're talking about with clients, what their pipeline is looking like. There had been a lot of hopes at the beginning of the year that 2025 was just going to be... gangbusters for investment banking. But all this uncertainty has had a big chilling effect on dealmaking. And so that also, for the rest of the year, very uncertain how that's going to go.
And then Bank of America as well, obviously after JP Morgan, they're the second biggest bank in the U.S. by assets and deposits. So what they're seeing in terms of the health of the U.S. consumer is going to be really interesting to see. That's the FT's Joshua Franklin. Thanks, Josh. Thanks very much. The UK is expected to sign a defense agreement with the European Union. It would allow British arms companies to participate in a joint loan program to secure military equipment.
The EU and the UK have been cooperating on security a lot more since the war in Ukraine started. And now President Donald Trump's threats to walk away from NATO have helped bring them even closer. British Prime Minister Keir Starmer will host a summit in London next month to discuss the pact. That'll be the first time EU leaders have met there since Brexit. The defense agreement could also pave the way for the two sides to sign other accords on issues like energy and migration.
The US is home to some of the best universities in the world, and jobs at these institutions are in high demand. But recent attacks by the Trump administration have some professors looking for positions overseas. And now there's a risk of a brain drain. The FT's Global Education Editor, Andrew Jack, is here to talk with me about it. Hey, Andrew. Hi. So first, just put this into context for me. What kind of pressure are U.S. universities facing from the Trump administration?
Financially, there's been a whole series of actions by the Trump administration in recent weeks, both around cutting federal grants that they perceive as part of the culture wars, so anything that mentions climate or diversity, for example. And then around the overheads or the indirect costs associated with grants, notably linked to health research, saying the maximum they can cover is 15% of the overall grant level. So that's created some huge financial pressures on universities.
And then in parallel, there's been some pretty aggressive actions, notably accusing the universities of failing to react sufficiently to alleged anti-Semitism on campus, particularly in the context of the protests following October 7, 23, which pitted, of course, pro-Palestinian against pro-Israeli student demonstrators. So that's all coming together now. And what kind of impact is this pressure campaign having on the morale of university professors?
There's a big debate. Of course, there are some in faculty who believe that for a long time, universities have increasingly excluded those with more right-wing views. On the other hand, many faculty feel that this is an attempt essentially by the Trump administration to restrict academic freedom and freedom of speech. And then the financial pressures, as I say, which are limiting their flexibility to research, to hire new graduate students, to expand their activities.
And university administrations, which are torn between those external pressures and trying to minimize the damage to universities. versus their own faculty and students who often feel they're being excluded by debates and decisions by university leaders and trustees. Well, how's that tension playing out on the ground? I mean, what are you seeing from professors, academics, and students in that regard?
So the next few weeks, we're going to see significant readouts of the impact of this longer term. Students are going through their cycles of application. And so by the sort of late spring, early summer, we'll start to see whether student numbers are falling. We're going to see also the next round of...
donations from alumni and other external grant givers, philanthropists and so on. And then internally, the pressures on academics, a number of whom, as we've reported and others had, who are at least looking to new opportunities, the possibility either of... quitting academia or perhaps moving to another country such as Canada or elsewhere in Europe as institutions there actively reach out and see an opportunity potentially to recruit.
and to offer a different environment for these academics to work. So ultimately, do you think that we could see an actual brain drain from the U.S.? I think we're certainly already seeing a brain trickle how far that really turns into a torrent.
academics fleeing or deciding to take up opportunities in other countries is more open to question partly because of that huge disproportionate wealth and resource and reputation of US universities, and indeed the job opportunities that exist in the wider US economy.
notably in science, you know, areas where there are big investments in laboratories, in equipment, in complex teams. It's quite difficult in many more resource-strapped higher education institutions, whether in Canada or Europe, to compete. That was the FT's Andrew Jack. Thanks, Andrew. Thank you. And finally, for all us workers out there, we probably wouldn't say no to a bit more appreciation. You know, a pat on the back for a job well done.
Now, for all of you bosses listening, there's a robot for that. The Irish tech company WorkHuman is using artificial intelligence to help people dole out some really nice compliments. The so-called social recognition tool allows managers to summon a virtual assistant, and that assistant will help them find the perfect words to praise their employees.
WP, Cisco, and LinkedIn are already using the platform. You can read more on all of 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. We've reset our strategy to grow value for shareholders, growing upstream, focusing downstream, playing to our strengths and disciplined investment in the transition. This is a reset.
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