Good morning. Donald Trump backs off on his two frequent punching bags. The US turns up pressure on Ukraine. And online merchants are being bombarded with offers to help dodge tariffs. Listen to the day’s top stories.

Confronted with fresh warnings from financial markets, business leaders and top advisers, Donald Trump this week eased off on two of his frequent punching bags: Federal Reserve Chairman Jerome Powell and China. But even as the president backed down, traders aren’t quite convinced their rollercoaster ride is over.

Trade latest: The Trump administration is considering whether to reduce certain tariffs targeting the auto industry that carmaker executives have warned would deal a severe blow to profits and jobs, according to people familiar. 

Trump ratcheted up pressure on Volodymyr Zelenskiy to accept a peace deal that critics fear will favor Moscow, accusing the Ukrainian president of prolonging the war. “I thought it might be easier to deal with Zelenskiy. So far, it’s been harder,” Trump said. Vice President JD Vance said the US has issued a “very explicit proposal” to Russia and Ukraine on a path forward to a peace deal.

European Central Bank President Christine Lagarde said that US tariffs may be more disinflationary than inflationary for Europe, but acknowledged the net impact is still unclear. The ECB may have to cut interest rates to stimulate the economy if trade uncertainty further hurts growth, Governing Council member Madis Muller said.

French President Emmanuel Macron doesn’t intend to dissolve parliament early to pave the way for an election ahead of the scheduled 2029 vote, according to his office. On the tariff front, France softened its approach to the trade clash as the country’s finance chief said he agreed with the US administration’s analysis of global commerce.

Deep Dive: Emerging-Markets Rally

Emerging-market stocks rallied, erasing losses for the year, while currencies were mixed Wednesday as traders weighed the odds of a moderation in trade tensions between the world’s two largest economies.
 

• An MSCI gauge for developing-nation equities rose for a fifth session, clocking its longest winning streak since February. The advance was led by gains in the technology and consumer discretionary sectors. 
• Latin American stocks climbed 2.1% to close at the highest since November. The resilience stands out as the S&P 500 Index remains more than 8% lower for the year, battered by Trump’s flip-flops on tariffs.

The Big Take

Listen to the Big Take Podcast. 

Opinion

UniCredit and Generali offer a test of Italy’s future, Paul J. Davies writes. Government intervention in banking consolidation smacks of bad, old politics and risks upsetting investors and European neighbors.

Before You Go

Photographer: NurPhoto

Trump is offering a dinner at his National Golf Club in DC to the top 220 investors in his Memecoin. The top 25 get an extra bonus—a tour of the White House.

“Made in Malaysia.” Online merchants are being bombarded with offers from logistics firms to help dodge tariffs on Chinese goods by faking the values of shipments or diverting them through countries with lower levies, such as Malaysia.

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