Trade talk turmoil

Daily update

US President Trump announced trade negotiations with Canada would end. Trump is unhappy with the Province of Ontario’s adverts, directly quoting US President Reagan arguing against tariffs on economic grounds. Previous negotiation breakdowns focused on policy issues, which were more readily resolved. However, only a limited part of US-Canada trade is affected by this, and precedent does suggest an eventual resolution.
Markets may be more concerned about increased policy uncertainty, in particular ahead of a scheduled meeting between Trump and China’s President Xi. Increased uncertainty or antagonism in the Sino-US trade relationship would potentially have more serious economic consequences.
US September consumer price inflation is due. This lone release in the shutdown-induced data drought is because swathes of US government spending are tied to the consumer price index, and the number legally has to be calculated. Markets expect the headline number to increase slightly. Any significant impact from August tariffs is not expected before the first quarter of 2026.
UK September retail sales (which adjust for inflation) were stronger than expected, and revised higher in August. Low unemployment and the relative strength of the economy in the first half of the year give a solid basis to growth. Technology, and increased online gold sale volumes at jewelers drove the improvement.