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Slender, high-spirited and young, at least by the sagging standards of American politics, Nikki Haley, the former governor of South Carolina, and Chris Sununu, the current governor of New Hampshire, make a dynamic team as they barnstorm his state in advance of its primary on January 23rd. “What better place to meet the next president of the United States than in a candy shop,” boomed Mr Sununu, grinning, as he introduced Ms Haley recently to a gaggle of constituents in Chutters sweet store in Littleton, in the White Mountains. Smiling as brightly as her ally, she reeled off a list of policy objectives before warning that America could not hope to move forward with either Joe Biden or Donald Trump as president. “You can’t do it if you’ve got two 80-year-olds as the choice of where we’re gonna go,” she said.
That is the essence of her argument as Ms Haley tries, after Mr Trump’s thumping victory in the Iowa caucus, to block his march back to the Republican nomination. Ms Haley came in a close third there to Ron DeSantis, the governor of Florida, but both were out of hailing range of Mr Trump. The next day, her campaign began running a new advertisement in New Hampshire saying that Mr Trump and Mr Biden were America’s most disliked politicians, “consumed by chaos, negativity and grievances of the past”.
Yet the paradox of Ms Haley’s candidacy is that although she looks like the party’s future she, more than Mr Trump, can sound like its past. While Mr Trump continues to revise Republicanism, Ms Haley wants to return the party to its pre-Trump principles, to when it at least made a more substantial pretence of caring about cutting debt, reforming entitlement programmes and containing Russia, not to mention being polite and not getting indicted.
Though Mr Trump may have stolen Ronald Reagan’s campaign slogan (“Let’s make America great again”), he has otherwise shown little deference to the values Reagan laid down. In a sign of how Mr Trump has upended the party, and of his lingering anxiety about Ms Haley, he is running an ad in New Hampshire attacking her as wanting to cut Social Security, traditionally the kind of thing Democrats say Republicans are out to do.
There is a whiff of nostalgia in the very way Ms Haley is campaigning, not just in her commitment to retail politics but in the company she keeps. In 1988 another Governor Sununu—John, this Sununu’s father—rescued George H.W. Bush after he came in third in Iowa, delivering a victory that propelled him to the White House. “We’re copying a few pages out of that playbook,” Mr Sununu acknowledges, after snagging a chocolate bar from one of Chutters’s giant jars. “But only in that it’s tried and true.”
He argues that his state’s politics still depend on activating networks in towns such as Littleton, and that if Ms Haley, whom he endorsed last month, beats Mr Trump in New Hampshire, and then in her home state of South Carolina, “everything would flip upside down on him very, very quickly.” That is a very long shot but somehow, borne along on Mr Sununu’s stream of enthusiastic patter, it starts to sound more than barely plausible.
Mr Sununu, who is 49, has been elected to four consecutive two-year terms, most recently by more than 15 points, in a state whose two senators and two representatives are all Democrats. In his party he is a relative moderate on social issues, including abortion rights, but he boasts of being the most fiscally conservative governor in the country. He has little patience with the argument that Mr Trump has fundamentally changed the Republican Party, insisting he has merely hijacked it.
Mr Sununu thinks the anger of Americans over the failures of “elitists in Washington”, rather than any policies, led them to support Mr Trump in 2016 as a disrupter, and now as a victim. “He provides no leadership, no guidance, no basis in the Republican fundamentals of being fiscally conservative or limited government, or any of that,” Mr Sununu says. “His unique skill is making people feel like he’s sharing their troubles and chaos, right?” But Mr Trump is “using their anger for his own personal benefit. He’s not going to help them, at all. He didn’t before.” He fears a Republican wipeout at other levels of government if Mr Trump is re-elected.
He predicts that once Mr Trump leaves the scene—after a Haley victory, or further down the road—the old dynamics in the party will reassert themselves, “with no one individual trying to redefine where the party goes”.
Courage about conviction
This may sound wishful, or even delusional, particularly in light of Mr Trump’s showing in Iowa. But the picture remains more complicated than that. Less than 15% of registered Republicans turned out, and of them almost half preferred a different candidate from Mr Trump, a quasi-incumbent. More broadly, Republican governors—not just in New Hampshire but in states like Georgia, Ohio and even Iowa—are succeeding not as Trump acolytes, but with more conventionally conservative and pragmatic Republican politics. Congressional Republicans, particularly in the House, are falling in line behind Mr Trump, but Mr Sununu insists that is only because they need him to raise campaign money. He thinks they will also revert to previous form when “they won’t have this emperor, this, you know, this dictator, if you will”.
Maybe. For all his criticism of Mr Trump, Mr Sununu, a fierce opponent of Mr Biden, has also said he would support Mr Trump if he becomes the Republican nominee, even if he is convicted of a felony. Mr Sununu insists he was engaging in a “hypothetical” for “shock value”, to persuade Republicans they should not rely on the courts. “If you think Trump is a threat to democracy, then get up and participate in the democratic process and vote him out,” he says. “It happens in the primary.” But if it does not happen in the primary, conservatives such as Mr Sununu will have to ask themselves a hard question: whether they will really save their party by helping Mr Trump burn it down. ■
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Guests and attendeess mingle and walk through the atrium during the IMF/World Bank Group Spring Meetings at the IMF headquarters in Washington, DC, on April 24, 2025.
Jim Watson | Afp | Getty Images
After years dominated by the pandemic, supply chains, energy and inflation, there was a new topic topping the agenda at the World Bank and International Monetary Fund’s Spring Meetings this year: tariffs.
The IMF set the tone by kicking off the week with the release of its latest economic forecasts, which cut growth outlooks for the U.S., U.K. and many Asian countries. While economists, central bankers and politicians have been engaged in panels and behind-the-scenes talks, many are attempting to work out whether trade tensions between China and the U.S. are — or perhaps are not — cooling.
These were some of the main messages from ECB members this week.
Christine Lagarde, European Central Bank president
On inflation and monetary policy:
“We’re heading towards our [inflation] target in the course of 2025, so that disinflationary process is so much on track that we are nearing completion. But we have the shocks, you know, and the shocks will be a dampen on GDP. It’s a negative shock to demand.”
“The net impact on inflation will depend on what countermeasures are eventually taken by Europe. Then we have to take into account the [German] fiscal push by the defense investments, by the infrastructure fund.”
“We have seen successive movements, you know, announcement [of U.S. tariffs], and then a pause, and then some exemptions. So we have to be very attentive… Either we cut, either we pause, but we will be data dependent to the extreme.”
On market moves:
“When we had done our projections, we anticipated that… the dollar would appreciate, the euro would depreciate. It’s not what we saw. And there have been some counter-intuitive movements in various categories.”
“The German market has obviously been shocked in a positive way by the program soon to be put in place by the German government, with a commitment to defense, with a commitment to a big fund for infrastructure development.”
Klaas Knot, The Netherlands Bank president
On tariff uncertainty:
“If I look back over the last 14 years, in the initial days of the pandemic I think that was comparable uncertainty to what we have now.”
“In the short run, it’s crystal clear that the uncertainty that is created by the unpredictability of the tariff actions by the U.S. government works as a strong negative factor for growth. Basically, uncertainty is like a tax without revenue.”
On the inflation impact:
“In the short run, we will have lower growth. We will probably also have lower inflation. As we also see, the euro is appreciating as energy prices have also come down. So together with the sort of negative factor uncertainty in the short run, it’s crystal clear that it will accelerate the disinflation.”
“But in the medium term, the inflation outlook is not all that clear. I think there are still these negative factors. But in the medium term, you might get retaliation. You might get the disruption of global value chains, which might also be inflationary in other parts of the world than the U.S. only. And then, of course, we have the fiscal policy coming in in Europe. So this is actually a time in which you need projections.”
On a June rate cut and market pricing for two more ECB rate cuts in 2025:
“I’m fully open minded. I think it’s way too early to already take a position on June, whether it would be another cut. It will fully depend on these projections.”
“I would need to see a more structured analysis of the impact on the inflation profile ahead of us, and only then can I say whether the market is pricing fair or whether I don’t.”
Robert Holzmann, Austrian National Bank governor
On the need to wait for more data and news on tariffs:
“We have not seen this uncertainty now for years… unless the uncertainty subsides, by the right decisions, we will have to hold back a number of our decisions, and hence, we don’t know yet in what direction monetary policy should be best moved.”
“Before looking at data in detail, the question is, what kind of political decisions will be taken? Is it that we will have some tariff increases? Is it that we will have strong tariff increases? Is it that we will have retribution by high counter tariffs?”
On the ECB’s April rate cut:
“I think there’s a broad consensus [on rates]. But of course, at the margin, people differ.”
“My assessment is that at this time, it wasn’t clear yet to what extent [tariff] countermeasures were being taken. Because with countermeasures in Europe, prices may have increased. Without countermeasures, quite likely the price pressure is downward. And for the time being, we don’t know yet the direction.”
On the direction of interest rates:
“I think if the recent noises about an arrangement [on trade] were to be true, in this case, quite likely it is more towards the downside than the upside with regard to prices. But this can be changed with different decisions and the result of which, we may even imagine in [the] other direction. For the time being, no, it will be down.”
“There may be further cuts this year, but the number is still outstanding.”
Mārtiņš Kazāks, Bank of Latvia governor
On opportunity from tariffs:
“With all this uncertainty and vulnerability, this is also the time of opportunities for Europe.”
“It’s a time for Europe to grasp all the aspects of being an economic superpower and becoming a really fully-fledged political and geopolitical superpower, and this requires doing all the decisions that in the past, were not carried out fully.”
“This requires political will, political guts to make those decisions, and to strengthen the European economy and assert its place in a global world.”
On market reaction to tariffs:
“So far it seems to be relatively orderly … but if one looks at the spillovers to Europe, the financial markets are working more or less fine, we haven’t seen spreads exploding or anything like that.”
“But in terms, however, of the macro scenarios, this uncertainty is extremely elevated in the sense that, given the possible outcomes, the multiple scenarios and their probabilities are very similar with the baseline [tariff] scenario.”
US President Donald Trump speaks during a bilateral meeting with Prime Minister of Norway Jonas Gahr Store in the Oval Office of the White House in Washington, DC, on April 24, 2025.
Saul Loeb | Afp | Getty Images
President Donald Trump denied that an aggressive bond market sell-off influenced his decision earlier this month to hold off on aggressive “reciprocal” tariffs against U.S. trading partners.
“I wasn’t worried,” Trump said in a Time magazine interview during which he was asked about financial market tumult after his April 2 “liberation day” announcement.
In the decree, Trump slapped 10% across-the-board duties against all U.S. imports and released list of tariffs against dozens of other nations. The extra levies were based on trade deficits the U.S. had against the respective countries and raised fears about inflation, a potential recession and disruption of long-held trade agreements.
Markets recoiled following the release. Treasury yields initially headed lower but quickly snapped higher. The 10-year yield rose half a percentage point in just a few days, one of its quickest moves ever, as investors also ditched stocks and the U.S. dollar.
Ultimately, Trump issued a 90-day stay on the reciprocal tariffs to allow time for negotiation. But he said it wasn’t because of the market tumult.
“No, it wasn’t for that reason,” Trump told Time in the interview from Tuesday that was published Friday. “I’m doing that until we come up with the numbers that I want to come up with. I’ve met with a lot of countries. I’ve talked on the telephone. I don’t even want them to come in.”
Yields have since moved lower, with the 10-year most recently around 4.28%, about a quarter percentage point higher than its recent low. Trump had said when he made the decision to hold off that the bond market had gotten the “yips.”
“The bond market was getting the yips, but I wasn’t. Because I know what we have,” he said. “I know what we have, but I also know we won’t have it for long if we allowed four more years of the gross incompetence. This thing was just running — it was running as a free spirit. This was — this was the most incompetent president in history.”
Though negotiations over tariffs are ongoing, Trump added that he would consider it a “total victory” even if the U.S. has levies as high as 50% still in place a year from now.
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The Bank of England is focused on the potential impact of U.S. tariffs on U.K. economic growth if there is a slowdown in global trade, the central bank’s governor Andrew Bailey said Thursday.
“We’re certainly quite focused on the growth shock,” Bailey told CNBC’s Sara Eisen in an interview at the IMF-World Bank Spring Meetings.
Going into its May 8 monetary policy meeting, the central bank will consider “arguments on both sides” around the impact of tariffs on growth and domestic supply constraints on inflation, Bailey said.
“There is clearly a growth issue we start with, with weak growth … but a big question mark is how much of that is caused by the weak demand, how much of it is caused by a weak supply side,” he continued.
“Because the weak supply side, of course, unfortunately, has the sort of the upside effect on inflation. So we’ve got to balance those two. But I think the trade issue is now the new part of that story.”
Inflation could be pulled in either direction by wider forces, with a redirection of trade exports into other markets being disinflationary, but a retaliation on U.S. tariffs by the U.K. government — which he stressed did not appear likely — pushing up inflation.
Bailey added that he did not see the U.K. as being close to a recession at present, but that it was clear economic uncertainty was weighing on business and consumer confidence.
IMF downgrade
The IMF earlier this week downgraded its 2025 growth forecast for the U.K. to 1.1% from 1.6%, citing the impact of U.S. President Donald Trump’s trade tariffs, higher borrowing costs and increased energy prices.
However, economic forecasting remains mired in uncertainty as countries engage in negotiations with U.S. officials over Trump’s swingeing universal tariff policy, currently on pause. The U.S. has imposed 25% tariffs on steel, aluminum and autos and a 10% levy on other British exports.
U.K. policymakers have expressed hopes of reaching a trade deal with the White House, with U.S. Vice President J. D. Vance saying there is a “good chance” of an agreement.
Bailey told CNBC on Thursday that he would be “very encouraged if the U.K. does make a deal,” but that its economy was very open and services-oriented, so it would still be impacted by a wider slowdown in growth or trade.
He also noted that inflation would increase from the current 2.6% in the coming readings due to effects from markets such as energy prices and water bills, but that the bump up would be “nothing like what we saw a few years ago.”
The Bank of England held interest rates at 4.5% at its March meeting, before Trump shocked the world with the scale of his tariff announcement.
Markets now see the BOE slashing rates to 4% by its August meeting.