By Abhirup Roy

PALO ALTO, California (Reuters) -A joint venture between U.S. electric pickup and SUV maker Rivian (NASDAQ:RIVN) and Volkswagen (ETR:VOWG_p) is in talks with other automakers about supplying their software and electrical architecture, a senior Rivian executive said on Thursday.

The German automaker agreed in November to invest $5.8 billion in the joint venture, which will integrate advanced electrical infrastructure and Rivian’s software technology for both companies’ future electric vehicles.

While a joint venture will give Rivian higher volumes to negotiate better supplier deals and reduce costs, seen as critical amid a slowdown in EV demand, Volkswagen and potentially other traditional automakers will get quick and easy access to technology and software they have struggled to build for years.

“I’d say that many other OEMs are knocking on our door,” Rivian Chief Software (ETR:SOWGn) Officer Wassym Bensaid said in an interview, referring to Original Equipment Manufacturers, a phrase used to describe vehicle makers.

Bensaid, who is also co-CEO of the joint venture, declined to provide names of the interested automakers and details on what stage the talks were at.

Rivian’s architecture requires fewer electronic control units and significantly less wiring, reducing vehicle weight and simplifying manufacturing. The technology is core to building cars with software that could be updated over the air like a smartphone – what the industry calls “software-defined vehicles”, an area where established automakers are still running behind.

“There is demand,” said Bensaid, adding that the priority until 2027 was to roll out the R2, Rivian’s smaller, less-expensive SUV and to integrate the technology in other Volkswagen brands. “Obviously other OEMs are talking to us and we’re trying to figure out how to support that in the future.”

“Any other OEM who wants to make a leap from a technology standpoint, the joint venture today becomes one of the key partners with whom they can make that collaboration,” he said.

The venture is likely to become the platform of choice in the Western world apart from Tesla (NASDAQ:TSLA), Canaccord Genuity analysts said in a note. The joint venture also helps alleviate “a significant chunk of the capital concern” for Rivian, the analysts said.

By Humeyra Pamuk, Maggie Michael and Lena Masri

WASHINGTON (Reuters) – The Trump administration urged U.S. Agency for International Development (USAID) workers to join the effort to transform how Washington allocates aid around the world in line with Trump’s “America First” policy. It threatened “disciplinary action” for any staff ignoring the administration’s orders.

A sharply-worded memo sent on Saturday to more than 10,000 staff at USAID offered further guidance to Friday’s “stop-work” directive that effectively put a sweeping freeze on U.S. foreign aid worldwide. The memo, reviewed by Reuters, laid out expectations for the workforce on how to achieve Trump’s goals.

“We have a responsibility to support the President in achieving his vision,” Ken Jackson, assistant to the administrator for management and resources wrote in the internal memo, titled “Message and Expectation to the Workforce.”

“The President has given us a tremendous opportunity to transform the way we approach foreign assistance for decades to come,” the memo said. Reuters confirmed the authenticity of the memo with several sources.

Since taking office last week, Trump has taken steps toward fulfilling his vow to remake a federal bureaucracy he believes was hostile to him during his 2017-2021 presidency. He has reassigned or fired hundreds of federal workers in simultaneous moves against a swath of agencies.

Hours after taking office, Trump ordered a 90-day pause in foreign aid to review if it was aligned with his foreign policy priorities. On Friday, the State Department issued a stop-work order worldwide even for existing and appropriated assistance, calling into question billions of dollars of life-saving aid.

The United States is the largest single donor of aid globally. In fiscal year 2023, it disbursed $72 billion in assistance.

USAID and the White House National Security Council (NSC) did not immediately respond to a request for comment on this story.

Friday’s memo shocked the humanitarian groups and communities conducting development aid across the globe. While the scope of the directive appears far-reaching, uncertainties linger over how it will be carried out.

The memo on Saturday offered only partial clarity.

The pause on foreign aid spending means “a complete halt,” it said. The only exceptions are for emergency humanitarian food assistance and for government officials returning to their duty stations. Waivers allowing delivery of emergency food during the review period will require “detailed information and justification.”

The memo said further waivers would require two layers of approval – one from USAID leadership and another by U.S. Secretary of State Marco Rubio.

“Any waiver must be thoroughly justified to demonstrate that the specific assistance for which the waiver is sought is necessary for lifesaving purposes, cannot be performed by current U.S. direct hire staff, or would otherwise pose significant risks to national security,” the memo said.

All foreign assistance programs will undergo “comprehensive review” during the pause in spending, the memo says. “It is important to emphasize that it is no longer business as usual. Every program will be thoroughly scrutinized.”

Saturday’s directive also banned any communications outside the agency, including between USAID and the State Department, unless they are approved by the former’s front office.

“Failure to abide by this directive, or any of the directives sent out earlier this week and in the coming weeks, will result in disciplinary action,” it said.

Separately, USAID sent contractors a notice ordering them to “immediately issue stop-work orders” and to “amend, or suspend existing awards.” 

Humanitarian organizations and other donors are scrambling to understand how the directive will impact life-saving operations in countries across the globe. It is too soon to tell whether or what specific services will have to be paused, they said.

In 2024, the U.S. provided 42% of all humanitarian aid tracked by the United Nations.

Investing.com – The 2020s kicked off with a global pandemic that forced billions of people into lockdown and heavy government stimulus measures in response to the crisis.

What followed was a boom in economic growth, a surge in inflation, and a jump in interest rates — all against an environment of renewed violence in several regions around the world and the emergence of artificial intelligence.

This has all translated into 563 rate hikes, $7 trillion in quantitative tightening, a cumulative $11 trillion US deficit, $36 trillion in national debt, and $1.2 trillion in annual US interest payments over the opening half of the decade, analysts at Bank of America flagged in a note to clients.

However, they argued that perhaps the biggest change for asset prices has come from an inflection in bond yields, which move inversely to prices. An uptick in benchmark 10-year US Treasury yields to their long-term average after a pandemic-era drop “has led to frequent booms and busts in asset prices, with the former more concentrated than the latter”, the analysts said.

“Ultimately, macro has dominated over the past five years,” they said.

But, as the back-half of the 2020s dawns, an “era of micro” may be about to begin, the analysts predicted.

“We think micro themes will dominate macro in the coming 5 years: tech transforming our economy against a backdrop of populism, AI resource bottlenecks, generational shifts in power and wealth, and a return of government fiscal discipline,” they wrote.

In particular, the change to a focus on micro trends will be driven by accelerating technological disruption fueled by the widespread adoption of AI in both businesses and societies, they said.

Productivity growth will have to increase in turn in order to justify soaring tech sector equity valuations and prices, while AI itself will require “more of everything — from resources to infrastructure”, the analysts argued.

“These huge funding requirements could not come at a less opportune time: record government debt and populist policies will prioritize breaking the inflation cycle in the US and reviving stagnant growth at the heart of Europe,” they wrote, adding that they foresee “backlashes” to the disruptive force of AI over the rest of the decade.

Generation Z, also known as “Zoomers”, will subsequently “have a major say in the government response and the extent to which AI disrupts our societies and the labour market, as well as how government debt is managed,” they said.

By David Morgan

WASHINGTON (Reuters) – Republicans who control the U.S. House of Representatives are trying to overcome internal differences on how to pay for President Donald Trump’s sweeping tax cuts, with hardline conservatives determined to reduce an annual federal deficit approaching $2 trillion.

With a narrow 218-215 House majority, they need near-total unity as they prepare to vote within weeks on a fiscal 2025 budget resolution that will be a critical step toward passing Trump’s sprawling agenda of tax cuts, border and immigration reform, energy deregulation and increased military spending.

Ahead of a three-day policy retreat that kicks off in Miami on Monday, some worried openly that House Speaker Mike Johnson’s leadership team might balk at the spending cuts needed to offset the cost of Trump’s $6 trillion tax-cut agenda while also addressing the nation’s more than $36 trillion in debt.

Republicans have vowed to extend Trump’s tax cuts from the 2017 Tax Cuts and Jobs Act, or TCJA, which are set to expire at the end of this year. The nonpartisan Committee for a Responsible Federal Budget estimates that doing so would cost more than $4 trillion over ten years, while Trump campaign pledges to eliminate taxes on tips, overtime and Social Security benefits could cost another $1.8 trillion.

Failure to reach agreement could trip up Republican lawmakers’ plan to pass Trump’s agenda by the end of May, using a maneuver to bypass Senate Democrats that will require almost all of the fractious majority to agree.

“Most of us support the TCJA. I don’t think that’s the issue. We all want to support what President Trump is doing. But we also recognize the need to get our fiscal house in order,” said Representative Michael Cloud, a member of the hardline House Freedom Caucus.

“We’ve got to have a course correction, and it’s got to be dramatic,” he told Reuters.

Johnson said he hopes to finalize components of a single sprawling legislative package to fund Trump priorities. Republicans must also decide whether to include an increase in the federal government’s debt ceiling — which Congress must do later this year to avoid a devastating default — and disaster relief for Los Angeles communities devastated by wildfires.     

“There are a number of ideas on the table,” Johnson told reporters before lawmakers left Washington last week, saying his caucus aimed to reach agreement in Miami.

House Democratic leader Hakeem Jeffries blasted Republican plans as “a contract against America.” He warned: “It will hurt working families, hurt the middle class, hurt our children, hurt our seniors and hurt our veterans.” 

Jeffries also said the Republican agenda would undermine the Medicaid healthcare program for the poor, as well as government-subsidized healthcare for uninsured workers under the Affordable Care Act.

COST OF TRUMP AGENDA

Republicans say they face a major challenge finding enough spending cuts to cover the cost of the Trump agenda and worry privately that hardliners’ insistence on significant deficit reduction could harm their constituents by reducing Medicaid funding for hospitals and outlays for other community services.

“This thing cannot be deficit neutral,” said Republican Representative Ralph Norman, adding that the package would need to reduce the deficit “to the tune of a big number.”

Another potential roadblock: The rising U.S. deficit is weighing on the bond market, pushing the nation’s borrowing costs higher. A significant deepening of the deficit could add to those worries.

‘THIS IS AN EQUAL BODY’

The debate will test which is more powerful — Trump’s demands or hardliners’ will to hold to a traditional Republican goal of cutting the deficit.

“The president said very clearly what he wants. Now the question is, what do we want? This is an equal body … We’re supposed to have different opinions. If we don’t, we’re in trouble, because we’re no longer a constitutional republic, said Representative Richard McCormick (NYSE:MKC).

The House Budget Committee has circulated a 50-page menu of proposals that includes trillions of dollars ranging from ideas widely supported in the party, such as repealing green energy tax credits, to the controversial, including the federal home mortgage interest deduction.

A proposal to raise $1.9 trillion from a 10% tariff on imported goods, which Trump has proposed, also faces opposition from House and Senate conservatives. 

“I’m not in favor of raising taxes. Tariffs are simply a tax,” said Republican Senator Rand Paul, a leading fiscal hawk.

Even as Republicans try to edge toward agreement, Representative Tim Burchett said he worries that up to $200 billion in proposed additional funding for the Pentagon could absorb savings that he would rather use to address the deficit. But he stopped short of saying that such an outcome would lead him to oppose the package.   

“If I see us trending in the right direction, that might be enough,” Burchett said. “But again, we’re lying to ourselves, and we’re lying to the public. We go home and say, we’re going to do these things. And then we come up here and wink and nod and sell the people down the river. And we go home and get reelected. It’s a crazy system.”

Investing.com — Donald Trump’s presidential victory raised fears that the U.S. was on a unavoidable path toward another trade war with China, but the president has refrained from coming out swinging against China, ING says, providing some hope that there could be a path, albeit a narrow one, for a trade war to be avoided.

“Markets avoided what would’ve been a worst-case scenario for risk assets on Donald Trump’s inauguration. The President indeed held back from enacting a national economic emergency and countrywide tariffs on China and the rest of the world,” ING said in a recent report.

Trump’s restraint in the early days of his presidency has opened up room for negotiations and avoided an immediate escalation of friction with China, ING added.

The bank highlighted several areas where cooperation between the U.S. and China could be possible, including addressing the fentanyl crisis and resolving the TikTok issue. On fentanyl, ING said this “is an area where there should be room for cooperation,” noting that chemical exports to Mexico and Canada accounted for just $2.8 billion in 2024, or less than 0.1% of China’s total exports.

The ongoing TikTok saga, meanwhile, could set the tone for U.S.-China ties, with the 75-day moratorium on TikTok’s ban setting up early April as a “potentially important time window to watch if negotiations do not proceed smoothly.”

ING cautioned, however, that while China appears ready to ramp up imports and open up market access, the path to avoid a more destructive trade war remains narrow.

“While China clearly would prefer to avoid trade conflicts, especially given recent economic sentiment, this decreased reliance on the US market and US suppliers does open up the possibility for more aggressive retaliation (such as export controls or more targeted tariffs on large US multinationals) from China if it is pushed into a corner,” ING added.

GENEVA – Switzerland’s President and Finance Minister Karin Keller-Sutter forecast higher annual budget deficits of around 3 billion Swiss Francs ($3.31 billion) in the next few years due to higher military spending and pension costs, she told SonntagsZeitung in an interview.

Switzerland has historically had balanced budgets although began reporting larger deficits from 2020 due to extra costs tied to the COVID-19 pandemic. In 2024, the projected deficit was 2.6 billion Swiss Francs, a government website showed.

Swiss voters decided in a referendum last year to increase pension payments for older people despite government warnings that it is financially unsound.

The neutral country is also upgrading its defences after the Ukraine war, buying new fighter aircraft and missile systems as well as building new data centres to make it less vulnerable to cyber attacks.

($1 = 0.9057 Swiss francs)

By Nandita Bose

LAS VEGAS (Reuters) – President Donald Trump is capping a frenzied first week back in office with a stop in Las Vegas on Saturday to talk about cutting taxes on tips, a 2024 campaign promise he made in the gambling and hospitality hub.

Since taking office on Monday, the new Republican president reversed a myriad of policies put in place by Democratic predecessor Joe Biden and moved to fulfill his vow of remaking and shrinking the federal bureaucracy.

In visits on Friday to disaster areas in North Carolina and California, Trump pledged federal aid to help those states recover from hurricane and wildfires after floating an idea to shutter the Federal Emergency Management Agency.

In Las Vegas, Trump was expected to discuss a less controversial pledge to end taxation of income from tips and overtime, a proposal he first made in June as he courted service workers in the presidential swing state of Nevada. The tip-heavy hospitality industry comprises more than a fifth of jobs.

“Can you remember that little statement about tips?” Trump said during one of several inauguration day speeches on Monday. “Anybody remember that little statement? I think we won Nevada because of that statement.”

Michael McDonald, Nevada Republican Party chairman, said the idea is attractive to people in the state who are facing high prices for essential goods like food and gas.

“He cares about the no tax on tips, no tax on Social Security. That was something that we brought to the community, and everybody loved it because we’re all hurting,” McDonald told local television after welcoming Trump on Friday night.

Trump promised to pursue an aggressive agenda of tax cuts if re-elected, which may face some hurdles even in a U.S. Congress controlled by his fellow Republicans.

The proposals Trump made on the campaign trail – from extending his 2017 tax cuts to abolishing tax on tips, overtime and Social Security benefits – could add $7.5 trillion to the nation’s debt over the next decade, according to the nonpartisan Committee for a Responsible Federal Budget.

Trump is pushing a plan to explicitly use revenue from higher tariffs on imported goods to help pay for extending trillions of dollars in tax cuts, an unprecedented shift likely to face opposition from Republican budget hawks concerned about the reliability and durability of tariff revenue.

Days before he returned to office, some of his Republican allies in Congress warned that Trump’s aggressive tax-cut agenda could fall victim to signs of worry in the bond market.

At a closed-door meeting on Capitol Hill, Republicans in the House of Representatives aired concerns that the estimated $4 trillion cost over the next 10 years of extending the 2017 Trump tax cuts could undermine the U.S. government’s ability to service its $36 trillion in debt, which is growing at a pace of $2 trillion a year.

Investing.com — Treasury Secretary Nominee Scott Bessent is widely expected to secure confirmation from congress, but just how will ‘Bessenomics’ be deployed to boost growth and cut debt without the inflationary impact required to usher in Golden Age for United States?

“We believe the new Treasury Secretary, Scott Bessent, plans to pursue a policy mix – which we call Bessenomics – that boosts economic growth and stabilizes the public debt-to-GDP ratio,” BCA Research said in a special report that sought to explore potential policies that Bessent may opt to implement.

The policy mix, dubbed ‘Bessenomics,’ is expected to be built on three key pillars: currency depreciation instead of high import tariffs, fiscal policy calibration, and increased U.S. oil supply to deflate crude prices.

Bessent may push for dollar depreciation rather than tariffs to boost U.S. manufacturing competitiveness and create industrial jobs. This approach, according to BCA, could avoid the potential destabilizing effects of tariffs on markets and the economy.

Bessent may also strike a deal with the Federal Reserve to reduce interest rates substantially, provided the government and Congress cut fiscal spending. This combination of tighter fiscal and easier monetary policy has historically led to currency weakness.

To prevent inflation expectations from rising and bond yields from spiking, Bessent’s strategy, BCA hypothesizes, could include cutting fiscal spending and lowering oil prices. These measures, along with “proper macro communication and our credibility, will be sufficient to bring down bond yields despite dollar weakness,” the report speculates.

Investing.com — U.S. President Donald Trump didn’t unleash tariffs on ‘day one’ as many had feared, but Barclays (LON:BARC) warns that markets shouldn’t get complacent for too long, and singles out Apr. 1 as a key date to watch for changes to tariff policy, citing clues from the ‘America First Trade Policy’ presidential memorandum. 

“President Trump did not impose tariffs on day one. Instead, he issued a presidential memorandum entitled ‘America First Trade Policy,’” Barclays said in a note. “Investors should read the memorandum as a blueprint for what to expect next on tariffs.”

The memorandum directs certain departments and agencies to review and issue reports by April 1, 2025. These reports, the analysts believe, are likely to serve as the catalysts for new tariff proposals or adjustments to current tariffs. 

In further support of the Apr. 1 as key date to watch, the analysts believe the timeline also provides ample time for the Senate to confirm key positions, including Howard Lutnick as Commerce Secretary and Jamieson Greer as US Trade Representative. These two roles need to be filled before the Trump administration begins to alter tariff policy, the analysts added.

Following the reports due on Apr. 1, changes to tariff policy could be announced, likely taking effect 30-to 60-days later, Barclays said.  

The presidential memo suggests that various tariffs could be on the table including a universal tariff and tariffs targeting China, Mexico, and Canada.

Trump has, however, already threatened to impose 25% tariffs on Mexico and Canada starting Feb 1, and up to 100% tariffs on China over TikTok, but Barclays believes the timeline proposed in the memorandum carries more weight rather than these “off-the-cuff remarks.”

The memorandum also calls for investigations into the causes of the U.S.’s annual trade deficits in goods and recommendations for remedies, which could include “a global supplemental tariff or other policies.”

This suggests that “countries and sectors most vulnerable to targeted tariffs could be those with the largest trade deficits in goods with the US,” Barclays said.

The German economy in 2025 is facing critical challenges, primarily driven by weak household consumption, a decline in export performance relative to global demand, and low potential growth, as per analysts at UBS Global Research. 

Each of these factors contributes to the broader economic landscape, necessitating attention from policymakers.

Weak household consumption remains a central concern for the German economy. High inflation and rising living costs have significantly impacted household purchasing power, leading to reduced consumer confidence. 

As households tighten their budgets, the overall consumption levels decline, which further stifles economic growth. 

Investing.com — This environment not only affects retail and service sectors but also dampens investment sentiment, creating a cycle that limits recovery.

In addition, Germany’s export performance has weakened relative to the global demand landscape. 

While the country has historically been a dominant player in international trade, recent data indicates a lag in its export growth compared to other nations. 

Factors such as supply chain disruptions, rising production costs, and shifting consumer preferences have contributed to this decline. 

As competitor countries capitalize on new opportunities, Germany must address its export strategies to remain competitive in a rapidly changing global market.

Lastly, the issue of low potential growth looms large over Germany’s economic horizon. Structural obstacles, including an aging population and insufficient workforce growth, have hindered productivity advancements. 

This stagnation in potential growth limits the economy’s capacity to expand and innovate, ultimately impacting long-term sustainability. 

Without reforms to enhance productivity and attract talent, Germany risks falling behind its peers in Europe and the global economy.