Trade wars, Ukraine aid, Russia sanctions and Gaza alternative
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Today, trade wars erupt as President Trump's tariffs kick in with China, Mexico and Canada. The U.S. has halted military aid for Ukraine while also considering easing sanctions on Russia. And what we know about a proposal for rebuilding Gaza from Egypt and other Arab nations. It's Tuesday, March 4th. This is Reuters World News, bringing you everything you need to know from the front lines in 10 minutes every weekday.

I'm Tara Oaks in London. And I'm Christopher Waljasper in Chicago.

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President Donald Trump's new 25% tariffs on imports from Mexico and Canada have taken effect, as well as a doubling of duties on Chinese goods to 20%. It launches new trade conflicts with the countries who are the US's top trading partners. And China's already responded, announcing additional tariffs of 10% to 15% on certain US imports.

Lewis Jackson is in Beijing. So the response to date has targeted agricultural goods, you know, soybeans, beef, dairy, corn, to the tune of about $21 billion. And really, this is an escalation of the tariffs that we saw China impose in February. At that point, they were retaliating to Trump's first round of tariffs because, you know, agriculture is a huge, huge part of the US-China relationship.

relationship. China's the world's largest agricultural market, and it's the biggest sort of customer for US agricultural products. So by choosing to hit these items, it's definitely an escalation. So how is China impacted by the US tariffs? It's a blow to exports at a time when, you know, the Chinese economy is not doing so well and exports are sort of a rare bright spot. So we've already seen exporters in China and

anticipating these tariffs and trying to get sort of product out the door before they come in. I think the real big question here is, are we on a road to 60%? You know, that number that Trump flagged at 60%, you know, we'd start to expect companies to move production out of China, at least if they want to service the US market. So it's not great, but it could get a lot worse. China must have been anticipating this and getting ready for the tariffs, right?

So what's happened over really since the first trade war in Trump's first term is that China has made itself less reliant on US agricultural imports. They're buying more from other countries, especially in Latin America. And at home, they're boosting production, grain, soybean, livestock here. They're using new technology. They're experimenting with new crop varieties. And that's all about, you know, weaning themselves off US

US agricultural imports. Right now, China's in a position where it can hit US agricultural exports without really necessarily hurting its own food security. The tariffs kicking in has sent investors ducking for cover across markets.

Volatility gauges for Treasuries and for US and Japanese stocks hit their highest levels of the year this week, and implied volatility in currencies ticked higher. The fall in the dollar has been one of the most eye-catching reversals, as conviction turns to confusion in currency trade. At the White House, Trump took aim at China and Japan for holding their currencies too cheap.

In fact, the yuan against a basket of trading partners' currencies is historically firm, and Japan has been intervening in recent years to buy the yen. And you can follow along with all the latest reaction to the tariffs on Reuters.com and the Reuters app. The Trump administration has halted aid to Ukraine, as the aftermath of the meeting with Ukrainian President Volodymyr Zelensky last week continues to escalate.

President Trump on Monday criticizing Zelensky's remarks on where negotiations stand. But he said he thinks the war's going to go on for a long time. And he better not be right about that. That's all I'm saying. One Ukrainian lawmaker has told Reuters the decision pushes Kiev towards capitulation on Russia's terms. Our White House reporter is Andrea Shalal.

It raises a lot of questions that haven't been answered, including whether the munitions for the already delivered weapon systems can be supplied, perhaps by Europe, and whether the U.S. will still share intelligence with Ukraine and

on target identification and missile launches. That has been an important part of Ukraine's warfighting effort, and losing that would be really devastating. Beyond the military, the U.S. assistance to Ukraine also includes budgetary assistance, largely delivered through a World Bank trust fund, and the Europeans have rallied around Zelenskyy.

But it's not likely that they'll be able to make up for the pause in U.S. supplies. The changing relationship between Ukraine and the U.S. is set to be a key focus for Donald Trump's speech to Congress tonight. He's expected to say he's committed to ending the war, and there could be a path back to a minerals deal with Ukraine. As the dynamic around the war changes, the Trump administration is considering easing sanctions on Russia.

Now, this aligns with Trump's efforts to restore ties to the Kremlin in recent weeks, including the beginning of talks with Putin to negotiate an end to the war in Ukraine.

Our reporter Daphne Saladakis covers sanctions for us out of D.C. The Biden administration imposed rafts of sanctions targeting Moscow over the invasion of Ukraine in 2022. They targeted everything from Russian President Vladimir Putin himself and other officials, Russian oligarchs, banks and the energy sector.

Western governments led by Washington also imposed a $60 per barrel price cap on Russia's oil exports. And Biden hit Moscow with designations on Russian energy companies and vessels that shipped its oil. They went after people and entities in third countries that were helping Russia evade sanctions. So they imposed some really expansive sanctions targeting Moscow over the invasion of Ukraine.

What do we know about how this could impact Russia's economy? So Russia has been able to build a wartime economy with increased military spending since 2022 when it invaded Ukraine. But experts have said that the country's economy is vulnerable and in need of Western sanctions relief. The Kremlin said last week that Russia had lots of rare earth metal deposits and was open to doing deals to develop them.

And Putin has held out the possibility of such collaboration with the US. But we don't know what this will look like for Russia's economy until we know what sanctions relief looks like. Interior Minister Nancy Faeser offering condolences for the victims of Germany's latest car-ramming attack. A German man drove into a crowd in Mannheim on Monday, killing at least two and injuring 11 others. The suspect has been arrested.

Officials say he does not appear to have been motivated politically or religiously, but there were reasons to believe he was psychologically unwell. Pope Francis has suffered two episodes of acute respiratory insufficiency, according to the Vatican. The 88-year-old pope has been battling double pneumonia after being admitted to the hospital on February 14th. A group of Arab states are proposing a plan for the future of Gaza.

And notably, it doesn't include Hamas. Reuters has seen a draft of the plan, which will be presented at the Arab League Summit in Cairo.

Andrew Mills is in Doha and has the details. Egypt and Jordan, some of the Gulf states, have for the last month been having a number of meetings and discussions and throwing around ideas for what would be an alternative to President Trump's so-called Gaza-Riviera plan, which would see the potential displacement of Palestinians from Gaza. So this plan calls for a number of things, but one of the main things is

essentially the sidelining of Hamas in Gaza. So Hamas has played a political and security role in Gaza for a long time, since well before this war. But what really stands out about the plan is the questions that it doesn't answer. Who's going to pay for the reconstruction of Gaza? How will Hamas be forced aside in Gaza? And are other

other Arab countries going to support Cairo in its plan. Has there been any signal that Washington would be open to this sort of idea? The White House did indicate that they welcome ideas from the Arab world. They especially welcome ideas that reject the participation of Hamas in Gaza going forward. But what really comes next is to try to build some kind of unity in the Arab world, a

I think we're not at the stage to be able to even answer that yet. This episode is brought to you by Progressive Insurance. Do you ever find yourself playing the budgeting game? Well, with the Name Your Price tool from Progressive, you can find options that fit your budget and potentially lower your bills. Try it at Progressive.com. Progressive Casualty Insurance Company and affiliates. Price and coverage match limited by state law. Not available in all states.

And for today's recommended read, a Reuters exclusive. A review of travel and employment documents has shown that several senior Russian missile experts have flown to Iran in the last year. The travel comes amid a deepened defense cooperation between Moscow and Tehran. There's a link to the story in the pod description. For more on any of the stories from today, check out Reuters.com or the Reuters app. Don't forget to follow us on your favorite podcast players.

We'll be back tomorrow with our daily headline show.