Good morning from the Financial Times.
Today is Thursday, January 22nd, and this is your FT News briefing.
Donald Trump says he has a future deal for Greenland, and the Mercosur trade agreement has hit yet another snag.
Plus, the U.S.
Supreme Court doesn't seem convinced the president can sack a member of the Federal Reserve.
It really does hit at the core potentially, of how arguably the most important central bank in the world is going to be able to retain its independence.
I'm Marc Filippino, and here's the news you need to start your day.
US President Donald Trump is dropping his tariff threat against European countries who opposed his plan to take control of Greenland.
Those tariffs would have kicked in on February 1st.
Instead, Trump told CNBC that he has a quote concept of a deal that involves mineral rights for the US and the Arctic island.
US stocks rose on the announcement.
It came after an eventful day at the World Economic Forum in Davos.
Here to talk about that is the FT's US News Editor, Derek Brower.
Hi, Derek.
Hi, Mark.
So Derek, the past few days Trump has been threatening to tariff NATO allies if they don't get on board with America's plan to own Greenland.
How significant is it that he's gone back on that?
Well, I think it's such a head spinning moment for foreign leaders.
This is kind of a classic of the Donald Trump genre.
He says something extreme.
People get very upset, in this case because it seemed like he was willing to use force, even to take the territory of another NATO country.
And then he claims a deal.
The day before that, Mark Carney had talked of the rupture of, not a transition, in his words that the international order was going through.
Yeah, here's a clip of the Canadian prime minister's speech.
Over the past two decades, a series of crises in finance health, energy and geopolitics have laid bare the risks of extreme global integration.
But more recently, great powers have begun using economic integration as weapons.
And it was maybe even entirely due to the behavior of the US as the hegemon, and these global powers were using tariffs and globalization and interconnectedness and supply chains as ways to enforce policy and enforce their whims on the weaker nations.
So what I think foreign leaders are finding is that Donald Trump and his policy, especially with regards to the rest of the world, can be so volatile, so unpredictable politically.
That foreign leaders really cannot know which way to turn when it comes to relying on him or what he says from one week to another.
More broadly, at Davos, Trump and other administration officials have had some tough talk for America's allies.
But global leaders and even some noteworthy US business leaders seem to be protesting that in some ways.
Yeah.
Scott Besson turned up and was pretty blunt about – U.S.
Treasury Secretary.
U.S.
Treasury Secretary.
That's right and was pretty blunt in his view that the European Union shouldn't stand up to Trump or retaliate to Trump's threats to hit more European countries and the UK with sanctions because of their stance on Denmark.
And said, I think in a kind of mocking way, that the EU really didn't have any power in this relationship and so should just step down.
And then Howard Lutnick, the US Commerce Secretary, had some blunt words about how the Trump administration perceives Europe and its weakness.
Lutnick was actually heckled at one of the events he attended by some of the people in the room.
Christine Lagarde, the president of the European Central Bank, walked out.
So, I mean, I think the reception for some of these lieutenants of Donald Trump was icy.
Let's put it that way.
Derek, the world has been watching this year's event in Davos because Trump is there.
Is his decision to drop the tariff threat the biggest news to come out of the gathering?
Well, let's see.
It's not quite finished yet.
Greenland might not be as settled as Donald Trump claims it yet.
So we'll see over the coming days.
Other than that, Donald Trump will point to the Board of Peace that he's establishing today.
The Board of Peace is his effort to create something that rivals the UN, with expansive authority to try and settle crises around the world.
In principle, it seems like a very benign idea from the President of the United States.
In reality, so far, the only countries that have been willing to sign up are hardly the representatives of Western values that I think many people would once have associated with this kind of international body, at least one created by the US.
That's the FT's Derek Brower in New York.
Thanks, Derek.
Thanks, Mark.
There's another delay in ratifying the EU's trade deal with the South American countries that make up Mercosur.
These countries include Brazil, Argentina, Uruguay, and Paraguay.
The Mercosur deal would remove almost all tariffs.
European farmers have opposed the deal for a long time.
They argue they can't compete with cheap imports made under lower standards.
EU lawmakers voted to postpone the ratification by seeking a legal opinion about the agreement from the bloc's highest court.
That could take up to two years.
Some European lawmakers claim that those who voted for the court referral just wanted to sabotage the deal.
The move drags out an already extensive process to get the agreement through.
It took 25 years to negotiate.
But the European Commission, the bloc's executive branch, could provisionally apply the deal while the court deliberates.
The U.S.
Supreme Court seems skeptical of President Trump's ability to fire a member of the Federal Reserve Board.
The court yesterday heard oral arguments about Trump's attempt to fire Fed Governor Lisa Cook in August.
It's the first time a US president has tried to remove a member of the central bank, and it puts the issue of Fed independence in the hands of America's highest court.
Here to talk about this is the FT's U.S. legal and enforcement correspondent, Stefania Palma.
Hi, Stefania.
Hi, Mark.
All right, so remind me, what are the basics of this case?
So all of this starts from Trump's attempt to fire Cook last year over accusations that she committed mortgage fraud, which she denies.
Cook basically challenged this attempt in court and we had lower courts who actually blocked the The firing while litigation continues.
And at that point, the administration appealed against these decisions with the Supreme Court.
And that is why we had these oral arguments this week.
Stefania, I want to play a part from yesterday's oral arguments that Justice Sonia Sotomayor said regarding Fed independence and Trump's push to get the central bank to lower interest rates.
The president, by your own admission, cannot fire someone for disagreeing with his policy choices.
You've conceded that, correct?
Correct.
All right.
Sotomayor was talking to Solicitor General John Sauer.
She's one of the more liberal judges on the bench, but many of the justices seemed unconvinced of the argument he was making.
How come?
Yeah, I mean that was, I think, one of the most interesting takeaways from the earlier arguments right,
We had a mix of justices, both conservatives and liberals, challenging Sauer's arguments.
We had Justice Samuel Alito, who is arguably one of the most staunch conservatives on the bench, raised the question as to why the executive branch, but also the lower courts, were sort of pushing to deal with this matter in such a hurried manner.
But also Justice Brett Kavanaugh, another conservative, who had some pretty sort of spicy quotes around, essentially how you know, if we followed the government's argument, that you know no judicial review or sort of process is needed when firing sort of a Fed governor.
And that would weaken, if not shatter, the independence of the Federal Reserve that we just discussed.
He also sort of launched a pretty strong sort of warning, saying you know, once these tools are unleashed, there is potentially a world where sort of presidents may feel incentivized to find ways to then fire any and all sort of Fed official that they themselves didn't appoint.
Now Stefania, we should mention that Fed Chair Jay Powell attended the hearing last And the Department of Justice is investigating him over the 25 billion renovation of the Fed's Washington headquarters.
U.S.
Treasury Secretary Scott Besson even commented on Powell's presence at this hearing from Davos.
I am not sure why Chair Powell would go and support Governor Cook when the Fed has not undertaken an examination of whether she did in fact commit mortgage fraud.
Stefania, is it unusual that Powell was there?
I mean, I think it's not necessarily usual, but I think all kind of bets are off with such high stakes cases.
I also found it quite interesting that Besant made this comment, given Besant himself actually went to a Supreme Court hearing not too long ago during arguments for a case that challenged Trump's tariff policy.
So he himself made a similar move.
It all points to how truly sort of fundamental a case like this is.
It really does hit at the core potentially, of how arguably the most important central bank in the world is going to be able to retain its independence, with obvious huge knock-on effects for the market in the US, but also more globally.
I'm curious, Stefania what should we be taking away from the fact that the justices seemed so skeptical of this case?
I think it's fair to say there's a clear concern around sort of potentially denting the independence of the Fed.
But more broadly, I think it felt like the justices were really kind of wrestling with kind of how broad to go when they do put together an opinion.
I think they really were going into kind of the nitty gritty of what some kind of judicial review for a move like this would look like.
And I think it's quite complex for them because, as you pointed out, this has never happened before.
So they don't have a lot of precedence to go by in terms of how do you handle a situation where a president is trying to remove a Fed governor?
That's the FT's Stefania Palma in Washington.
Thanks so much, Stefania.
Thank you.
Before we go, Berkshire Hathaway seems to have lost its appetite for Kraft Heinz.
It's thinking about selling its nearly $8 billion stake in the American food company.
The news sent Kraft Heinz's share price down almost 6% yesterday.
Now, you know Kraft Heinz is the company that makes everything you'd see at a barbecue.
Ketchup, mac and cheese, baked beans, all that good stuff.
Heinz and Kraft merged in 2015, but the company's share price has tanked since then and it's now splitting back into two.
Berkshire declined to comment.
You can read more on all these stories for free when you click the links in our show notes.
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