Good morning and welcome to White House Watch. In today’s newsletter, we’ll dig into:
In the latest chapter of navigating the US tariff wars, the UK government has said it will increase NHS spending on medicines by making drug approvals easier.
Ministers yesterday promised this overhaul of NHS value-for-money rules in England would help boost pharmaceutical investment and secure a carve-out from the import tariffs threatened by the US president. Trump has threatened a 100 per cent levy on branded medicines from Washington, although the tariff has yet to be imposed on any country.
The UK’s measures include a 25 per cent rise in the price the health service is willing to pay for branded medicines on the back of the first-ever increase to the threshold at which the NHS deems medicines value for money.
It will also reduce the clawback tax that pharmaceutical companies pay the NHS from 23 per cent to 15 per cent, in a concession to industry.
In his second term, Trump and his administration have railed against European countries “freeloading” on American innovation while the US pays much higher drug prices, as it battles to lower the cost of living for Americans.
Under the zero-tariff deal, which will initially last three years, NHS spending on medicines is forecast to rise from about 9.5 per cent of its budget to 12 per cent.
Meanwhile, Americans are bracing for their own surge in healthcare costs. My colleague Guy Chazan has this report from West Virginia on the looming disaster over rising insurance premiums.
And Alan Beattie breaks down why Trump’s tariffs aren’t doing much to reduce the US trade deficit.
Join senior FT editors tomorrow for a live discussion exploring the forces shaping the year ahead, from political realignments and economic change to technology’s growing influence on global power. Register for free.
The latest headlines
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Early results in Honduras’s presidential election show a virtual tie with just over 500 votes separating a conservative former mayor backed by Trump and an ex-television host making his fourth run for the presidency.
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Global bond markets dropped on Monday after the Bank of Japan signalled that it could raise interest rates later this month in a decline that heaped fresh pressure on bitcoin and other speculative assets.
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Shares of Strategy tumbled after the bitcoin champion launched a US dollar reserve to fund its dividends and warned that it could incur a $5.5bn loss if the price of the cryptocurrency did not rebound this year.
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The former Intel chief executive sat down for dinner with the FT’s Michael Acton. After saying grace, Pat Gelsinger explained how his family and his religion are key to understanding why, just two days after being pushed out of Intel last year, he was already planning a return to the stage.
What we’re hearing
The Trump administration is insisting that its multiple strikes on a single suspected Venezuelan drug trafficking boat on September 2 were carried out “in compliance with the law of armed conflict” — and that Trump “has a right” to kill the people on board such vessels.
These comments from White House officials came as the administration faces growing scrutiny over its controversial drug war in the Caribbean Sea.
A report last week that US defence secretary Pete Hegseth ordered a second missile strike on a drug vessel after a first US missile failed to kill everyone on board has ignited a bipartisan call for answers. And yesterday, White House press secretary Karoline Leavitt provided them, sort of.
“The strike conducted on September 2 was conducted in self-defence to protect Americans and vital United States interests,” she said, reading a statement.
She confirmed that the US military in September had, indeed, carried out two strikes on the vessel — the first in the US’s military campaign against suspected narco-trafficking boats in the Caribbean and eastern Pacific.
But she denied a report in The Washington Post that Hegseth ordered the second strike in order to kill the first strike’s survivors.
“I would reject that the secretary of war ever said that,” she said.
Hegseth authorised Admiral Frank Bradley, the commander of US Special Operations Command, to carry out the strike, Leavitt said. And Bradley directed “the engagement to ensure the boat was destroyed, and the threat of narco-terrorists to the United States was eliminated”.
Pressed on the lawfulness of eliminating the survivors of a missile strike, Leavitt said: “The president has the right to take them out if they are threatening the United States of America and if they are bringing illegal narcotics that are killing our citizens at a record rate.”
Do you have thoughts on US politics? FT journalists will take your hardest questions and answer them on the Swamp Notes podcast, a show about the intersection of money and power in Washington. Send them to our producer, Henry, at henry.larson@ft.com.
Viewpoints
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Trump is in a no-man’s land between overkill and underprepared following his troop build-up off the Venezuela coast, says Edward Luce. The risks of an epic blunder are growing, he says.
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Chinese President Xi Jinping is ending the year in a better position than Trump and Vladimir Putin, says Gideon Rachman in his assessment of who comes in as “the strongest of the strongmen” amid a revival of “strongman style” in global politics.
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Running the White House and launching memecoins once seemed so simple for Elon Musk. But Jemima Kelly wonders what the lasting effects of the White House’s “lol era” are.
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Europe needs a plan for decoupling from America, writes Martin Sandbu. All of Europe, the EU and its member states are facing the choice between being in control of their own affairs and their long-standing partnership with the US, he says.
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Trump says he favours “dealmakers” over diplomats, and Jonathan Derbyshire examines what that means for peace in Ukraine. Sign up to receive the FT Swamp Notes newsletter here.
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The view that the stock market is in a massive bubble and bound to crash is incorrect over the medium term, argues professor and economic strategist Nouriel Roubini.
