To an economist, it might seem questionable for a country to impose tariffs on its biggest trading partners, especially when its economy is showing signs of shrinking, the stock market sagging, prices remaining stubbornly high and consumer sentiment downbeat.

That's because tariffs are "a tax on goods", as Warren Buffett describes them. In other words, they generally increase the cost of imported goods. Companies would either try absorbing the expense, which means a drop in revenue, or pass it on to consumers, possibly triggering an upward shock in prices.

But U.S. President Donald Trump said tariffs on Canada and Mexico are scheduled to go into effect Tuesday. His administration is also insisting such levies will not increase inflation, while encouraging allies to introduce tariffs on China as well.

There has been a lot of talk about U.S. exceptionalism last year, in reference to its economic and financial markets. With the country's slowdown in both aspects so far in 2025 — as well as its abrupt pivot away from European Union allies in foreign policy regarding Russia and Ukraine — the theme remains in 2025.

What you need to know today

Trump-Zelenskyy clash
Ukrainian President Volodymyr Zelenskyy left the White House on Friday afternoon without a deal with the U.S, following a televised explosive clash with U.S. President Donald Trump in the Oval Office. Trump found the tone and body language of Zelenskyy objectionable, the White House told CNBC. But Zelenskyy said he doesn't owe Trump an apology, in response to a question from a Fox News anchor. "This kind of spat is not good for both sides," he said. After Zelenskyy's dramatic clash with Trump and Vice President JD Vance in the U.S., Zelenskyy received a warm welcome from British Prime Minister Keir Starmer before a summit with European leaders.

Bessent urges Canada to follow suit on China tariffs
U.S. Treasury Secretary Scott Bessent said in a Bloomberg interview on Friday that Mexico proposed to match the Trump administration's tariffs on China, and urged Canada to follow suit. China's Ministry of Commerce said Friday that it "firmly opposes" Trump's move and vowed retaliation, if necessary. On Sunday, Bessent said tariffs are unlikely to raise inflation partly because China will "eat any tariffs." Separately, Warren Buffett, in a new documentary, described tariffs as "a tax on goods."

Inflation in U.S. as expected
The U.S. personal consumption expenditures price index rose 0.3% in January and 2.5% on an annual basis. Core PCE, which excludes food and energy, increased by 0.3% for the month and was up 2.6% annually — 0.3 percentage points below December's annual reading. All figures were in line with Dow Jones consensus estimates and will likely keep the U.S. Federal Reserve's fingers on the pause button for now. The PCE is the Fed's preferred inflation gauge as it measures consumer behavior.

U.S. economy on course to shrink
The U.S. Federal Bank of Atlanta's GDPNow tracker of incoming metrics is indicating that U.S. gross domestic product is on pace to shrink by 1.5% for the January-through-March period, according to an update posted Friday morning. Fresh indicators showed that consumers spent less than expected during the inclement January weather and exports were weak, which led to the downgrade.

Red February for U.S. markets
Major U.S. benchmarks climbed more than 1% Friday, but that wasn't enough to save them from ending February in the red. The Nasdaq Composite was the worst performer for the month, losing nearly 4%. The pan-European Stoxx 600 index closed fractionally above the flatline, but rose more than 3% in February after a 10-week winning streak, outperforming the S&P. Meanwhile, Germany's annual inflation in February remained unchanged at 2.8%.

U.S. strategic crypto reserve
Trump announced in a Truth Social post on Sunday the creation of a strategic crypto reserve for the U.S. It will include bitcoin and ether, as well as XRP, Solana's SOL token and Cardano's ADA, and is the first time Trump has specified his support for a crypto "reserve" rather than a "stockpile." The former assumes buying crypto in regular installments, while the latter would simply not sell any of the crypto currently held by the U.S. government.

[PRO] Falling benchmarks, more tariffs due
All major U.S. benchmarks fell for the month in February. Heading into March, Trump's tariffs on Canada and Mexico, and additional ones on China, will kick in on Tuesday — if he sticks to his word — and the U.S. jobs report for February comes out Friday. Here's what else to look out for this week.

And finally...

Xiaomi launches new $1,600 phone as it rides 300% stock rally to record high

Xiaomi launched its latest flagship smartphone at the Mobile World Congress in Barcelona on Sunday, continuing its push into higher-end devices. The Xiaomi 15 and Xiaomi 15 Ultra are powered by Qualcomm's Snapdragon 8 Elite Mobile Platform, one of the latest processors, but the latter boasts a better camera and better display. The latest phones from the Chinese manufacturer start at 999 euros ($1,047) and the Xiaomi 15 Ultra starts at 1,499 euros.

In 2024, Xiaomi's global smartphone shipments grew 15.4% year on year, outpacing rivals including Samsung and Apple, according to the International Data Corporation. The company's worldwide market share rose to 13.6% from 12.5% in 2023. Last year, it jumped into the electric vehicle space with the SU7. Xiaomi's shares, which are listed in Hong Kong, hit a record high this week.