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How to make a deal | The fallout from US-China decoupling | Automakers get a slight reprieve

How to make a deal

The Wall Street Journal reports on Trump Administration efforts to streamline tariff talks, while Wendy Cutler in Foreign Policy advises on how to strike trade deals in record time.  Reuters reports that China is 'evaluating' an offer from the US to hold talks over Trump’s tariffs. Bloomberg writes that Japan is resisting US efforts to form a bloc against China.  Thitinan Pongsudhirak opines in the Bangkok Post that Trump tariffs are sowing divisions in ASEAN.  Zoe Zongyuan Liu writing in Foreign Affairs tells us how China armed itself for the trade war, while Martin Wolf in the Financial Times tells us why the US will lose the trade war to China. 

Mentioned publications

1. Trump Administration Lays Out Roadmap to Streamline Tariff Talks – Gavin Bade, The Wall Street Journal, April 25, 2025
   The Trump Administration plans to negotiate with dozens of countries simultaneously before the 90-day deadline expires. Talks will proceed in three waves of six countries each, repeating in cycles up to July 8 deadline, after which reciprocal tariffs may take effect on non-compliant nations.
2. How to Strike Trade Deals in Record Time – Wendy Cutler, Foreign Policy, April 15, 2025
   As many US trading partners embark on negotiations with the White House, Cutler gives a range of options and criteria they may be considering, such as what they can offer and when to negotiate. At the same time, the White House must also consider its own approach and the leverage it holds in order to secure the best possible deals.
3. China 'evaluating' US offer to negotiate tariffs; Beijing's door is 'open' – Reuters, May 2, 2025
   Reuters reports on the Chinese Ministry of Commerce’s statement that the US has approached China to seek talks on trump’s tariffs, with Beijing saying that the door is open for discussions and quietly creating a list of products it is exempting from retaliatory tariffs.
4. Japan to Resist Trump Efforts to Form Trade Bloc Against China – Bloomberg, April 24, 2025
   Japan is considering its negotiating positions with the US while also protecting its highly-important trade relations with China, rejecting efforts to form a bulwark with the US against China while recognizing the importance of the strategic relationship with the US. Japan faces a growing strategic dilemma amid mounting pressure from both sides over trade alignment.
5. Trump tariffs sow divisions in Asean – Thitinan Pongsudhirak, Bangkok Post Op-Ed, May 2, 2025
   Trump’s tariffs may pose a challenge to the Association of Southeast Asian Nations regional unity like never before, given their differentiated, discriminatory, and trade-diversionary impact. Countries like Vietnam, hit with high tariffs despite offering concessions, are now more cautious, while larger economies like Malaysia and Singapore may weather the storm better due to lower tariffs and economic resilience. Meanwhile, China should avoid dumping exports in Southeast Asian markets as each economy navigates its way through the new reality of Trump’s trade landscape. 
6. How China Armed Itself for the Trade War – Zongyuan Zoe Liu, Foreign Affairs, April 29, 2025
   The best way to understand the stand off between US and China, Liu explains, is to examine faulty assumptions and misjudgments that led the two countries to this point. She outlines a more effective strategy for rebalancing the trade relationship in a way that would contribute to the economic growth in both countries while acknowledging competition between the two in industries of the future.
7. HF sponsored accessWhy the US will lose against China – Martin Wolf, Financial Times Op-ed, April 30, 2025
   Trade wars are lose-lose, and in this case, the US, which wants to win at China’s expense, is the most likely loser, both misjudging and squandering its own leverage, while misreading China’s. US’s turn toward isolation, transactionalism, and institutional erosion under Trump threatens its ability to compete or cooperate effectively on the world stage.
8. The art of trade deal – Henry Gao, Hinrich Foundation, April 29, 2025
   By announcing, and then temporarily pausing, universal tariffs on all countries on Liberation Day, Trump effectively reset the global trade agenda, initiating the largest round of trade negotiations since the launch of the WTO’s failed Doha Round in 2001. The key objective was the creation of leverage to compel every country to negotiate new bilateral deals with the US that address three crucial areas: tariffs-related issues, non-tariff barriers, and China’s economic strategies. 

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The fallout from US-China decoupling

Global Trade Alert considers the concerns the Chinese exports to the US will be deflected elsewhere, in three reports: US Reciprocal Tariff Chart Book: Deflection Edition, Redirecting Chinese Exports from the USA, and Is A Wave of Chinese Products Coming Your Way? Meanwhile, the Financial Times notes that Chinese manufacturing activity in shrinking and the Wall Street Journal reports that US retail giants are keeping a lid on prices…for now. The New York Times reveals your home without China. 

Mentioned publications

1. US Reciprocal Tariff Chart Book: Deflection Edition – Johannes Fritz, Global Trade Alert, April 14, 2025
   Global Trade Alert charts likely destination markets for key products targeted by Trump’s tariffs on China. 
2. Redirecting Chinese Exports from the USA: Evidence on Trade Deflection from the First U.S.-China Trade War – Simon J. Evenett and Fernando Martin, Global Trade Alert, April 14, 2025
   Concerns of deflection of Chinese exports to third markets have resurfaced as US-China trade decoupling gains momentum. Global Trade Alert tracks Chinese trade deflection during the first US–China trade war, before the Covid-19 pandemic, linking these findings to current US imports and factors shaping future deflections to third markets.
3. Is A Wave of Chinese Products Coming Your Way? Identifying Potential Chinese Export Redirection in 2024 U.S. Trade Data – Simon Evenett, Global Trade Alert, April 22, 2025
   Worried about increased competition from Chinese products, some business associations and officials are urging importing governments to take preemptive action. Using US import data, Global Trade Alert shows that only 101 Chinese product categories in 2024 had sufficient export volumes to realistically pose redirection risks. However, the majority of these products are losing ground in the US market, raising doubts about whether the exporters behind them will become fearsome competitors in global markets, as some assert.
4. HF sponsored accessChina’s manufacturing activity shrinks as US tariffs take effect – Thomas Hale, Financial Times, April 30, 2025
   China’s manufacturing activity contracted to its lowest level since 2023 in April, in an early sign of Trump’s tariffs having a real-world impact on orders of new goods. With export orders plunging and pressure mounting, Beijing is likely ramp up stimulus to offset the economic damage.
5. Retail Giants Manage to Keep a Lid on Prices but Warn It Can’t Last – Sarah Nassauer, Shane Shifflett and Sebastian Herrera, The Wall Street Journal, April 29, 2025
   Major US retailers are holding steady on prices for the time being while pressuring suppliers to absorb the costs of tariffs and relying on stockpiled inventory. That said, they warn that they will not be able to stave off price increases or possible product shortages indefinitely.
6. Your Home Without China – Pablo Robles, Agnes Chang and Lazaro Gamio, The New York Times, April 27, 2025
   The New York Times provides a graphic illustration of the role Chinese products play in American households and everyday life, highlighting the overwhelming product share China enjoys for many products. It shows that 'prohibitive' tariff levels on Chinese imports are likely to have a deep and tangible impact on American consumers.  

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Automakers get a slight reprieve

Bloomberg explains Trump’s proclamation and executive order to lift some of the burden on US automakers, to prevent auto tariffs from stacking on each other and the Wall Street Journal highlights the first victim of Trump’s trade war: Michigan’s auto-centric economy.

Mentioned publications

1. Trump Signs Order to Prevent His Auto Tariffs From Stacking on Top of Each Other – Gabrielle Coppola, Bloomberg, April 30, 2025
   Trump’s latest executive orders meant to give US automakers more time to adjust their supply chains and relieve some of the tariff burden he has imposed. Automakers, however, remain uncertain about the implications of the orders and the tariffs in general.
2. Amendments to Adjusting Imports of Automobiles and Automobile Parts into the United States – Proclamation, The White House, April 29, 2025
   The White House proclamation amends existing tariffs on imported automobiles and parts to prevent circumvention and address national security risks tied to foreign vehicle imports.
3. Addressing Certain Tariffs on Imported Articles – Executive Order, The White House, April 29, 2025
   President Trump’s executive order clarifies how US tariffs are applied to imported goods by ensuring only the highest applicable tariff is imposed when multiple trade actions overlap, thereby preventing cumulative penalties.
4. The First Victim of Trump’s Trade War: Michigan’s Economy – Jeanne Whalen and Christopher Otts, The Wall Street Journal, April 6, 2025
   Michigan is likely to serve as the first proving ground for Trump’s tariff theories, given its heavy reliance on the auto industry. Trump’s speech celebrating 100 days in office and simultaneously announcing an easing of certain tariff terms for autos took place in a Michigan county outside of Detroit, known for both its auto production and America’s changing political landscape.

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