Donald Trump calls for US to ‘take over’ Gaza and population to be resettled

Today’s agenda: EU’s “bazooka” against tariffs; Alphabet shares drop; PwC and BCG see M&A demand; Big Read on German chancellor hopeful Merz; and Canada’s long-running existential crisis

Good morning. We start in Washington, where just hours ago Donald Trump said the US would “take over” Gaza and that Palestinians should permanently leave the enclave. Here’s what we know.

What happened: The US president was holding talks with Israeli Prime Minister Benjamin Netanyahu at the White House. After the meeting, Trump said “all” Palestinians in Gaza should “be resettled”, his strongest indication yet that he wants the 2.2mn population moved to countries such as Egypt and Jordan. He also said the US would “develop” Gaza and “be responsible for dismantling all of the dangerous unexploded bombs and other weapons” in the territory. Speaking alongside Trump, Netanyahu said the proposal was “worth paying attention to”.

What this means for the region: Trump’s plan would upend decades of US policy, fuel outrage across the Arab world and rattle western allies who have long supported a two-state solution. Egypt and Jordan have already rejected Trump’s plans to resettle Gazans after he said last month it was time to “clean out” the enclave. Arabs view such moves as akin to 1948, when hundreds of thousands of Palestinians were forced from their homes or fled in the fighting that accompanied Israel’s founding.

Exactly what American control of the Gaza Strip might look like is still unclear, although it could mean a “decades-long commitment of tens of thousands of US troops”, said a former US intelligence official. Asked whether he would send troops to Gaza, Trump said: “We’ll do what is necessary”. We have more from Trump’s press conference with Netanyahu.

Here’s what else we’re keeping tabs on today:

• Economic data: Canada, the Eurozone, France, Germany, Italy, the UK and US have services purchasing managers’ indices.

• Results: UK chip designer Arm, Banco Santander, GSK, Novo Nordisk, T Rowe Price, Uber and Disney report. See our Week Ahead newsletter for the full list.

Join industry leaders online at the FT’s International Energy Policy Forum this morning as they discuss Europe’s energy transition. Register for free.

Five more top stories

1. Exclusive: The EU could hit Silicon Valley with retaliatory measures if Donald Trump follows through on tariff threats. The bloc’s plan to use its “anti-coercion instrument” in a potential dispute with Washington would allow it to target US service industries such as Big Tech, said officials with knowledge of the plans. Andy Bounds has more on Brussels’ “bazooka”.

• 72 hours of chaos: The US president’s brinkmanship with Canada and Mexico shows he is willing to take risks to get his way on the economy.

• China’s response: Beijing has revived antitrust investigations into Google and Nvidia and is weighing a probe against Intel as it looks for leverage in talks with Trump.

2. Alphabet shares dropped sharply after investors were unnerved by slowing growth in its cloud unit despite reporting double-digit rises in fourth-quarter revenues and profits driven by its core advertising business. The Google parent’s plans to spend $75bn this year on building capacity for artificial intelligence products also exceeded Wall Street’s estimates.

• Microsoft: Mustafa Suleyman, the tech group’s AI head, has poached former colleagues at Google DeepMind who built its popular podcast-generating feature.

3. Exclusive: PwC and Boston Consulting Group expect “pent-up demand” for mergers and acquisitions to boost their advisory revenues this year as an expected surge in dealmaking spurs hopes that the industry can break free from its post-pandemic funk. Here’s more from the two consultancies’ chiefs.

4. Exclusive: Jeff Bezos’s $10bn philanthropic fund has stopped backing the Science Based Targets initiative, the leading voluntary climate standard setter that affects how companies including Apple and H&M can achieve a credible “net zero” label. The move is seen as the billionaire’s latest effort to curry favour with Trump.

5. Software business-turned-bitcoin hoarder MicroStrategy is inspiring dozens of companies to buy the cryptocurrency and hold it in place of cash, according to data from crypto security company Coinkite. The manoeuvre being copied by companies ranging from pharma groups to advertisers is aimed at boosting their flagging share prices.

The Big Read

For weeks, Friedrich Merz appeared to be cruising towards his life-long dream of leading Germany by focusing on a pro-business pitch to revive its economy. But a recent flirtation with the far right to gain support on migration policy has hurt his campaign, antagonised potential coalition partners and complicated his plans to enact bold reforms if elected.

We’re also reading . . .

• The ‘51st state’: A quarter of young Canadians are open to exploring union with the US, writes Joel Suss, as Trump’s declaration resurfaces Canada’s long-running existential crisis.

• Netflix: The streaming group is betting on live events and an old-school addition to its line-up — the chat show — to boost its nascent ads business.

• Reform UK: Nigel Farage’s party is now more popular than Labour and the Conservatives. Can it break Britain’s century-old political duopoly?

• Ukrainians in Britain: With visa deadlines looming, thousands who fled Russia’s invasion are weighing their future in the UK as the government starts to pare back support.

Chart of the day

In Trump’s view, running a trade surplus with another country is a “rip-off”, which is of course the reverse of the truth, writes Martin Wolf. Under Trump, the US’s mad view of its own interests makes it a dangerous partner for other countries to trust.

For more coverage of global trade, sign up for Alan Beattie’s weekly Trade Secrets newsletter here if you’re a premium subscriber, or upgrade your subscription.

Take a break from the news . . .

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