Two “deals” but little certainty

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US-China trade | Trade with the UK | Whither other us trading partners? | Tariffs on planes and movies? | Tariff trackers

US-China trade

The Economist reports on China’s strangely good tariff deal, which also included reducing tariffs on ‘de minimis’ parcels to as low as 30%, per Reuters. Philip Luck of CSIS presents his understanding of the temporary de-escalation of the US-China Trade War. Separately, Trump has scrapped a Biden-era AI chips rule restricting sales of the semiconductors abroad, writes the Wall Street Journal. The Hinrich Foundation’s Deborah Elms unpacks the 90-day reprieve and the big questions it demands.

Mentioned publications

1. America has given China a strangely good tariff deal – The Economist, May 12, 2025
   The US and China agreed to a 90-day tariff pause, cutting reciprocal duties from 125% to 10% and halting some retaliatory measures. While this eases recent tensions, earlier tariffs remain, keeping average rates elevated. Lasting resolution remains uncertain, with future talks hinging on China increasing purchases of US goods and addressing fentanyl-related concerns.
2. US slashes 'de minimis' tariff on small China parcels to as low as 30% – Reuters, May 14, 2025
   The US has reduced tariffs on low-value commercial shipments from China to 30%, and on postal shipments to 54% or US$100 per package. The de minimis rule is blamed for driving a surge in cheap imports and smuggling.
3. Understanding the Temporary De-Escalation of the U.S.-China Trade War – Philip Luck, Center for Strategic and International Studies, May 13, 2025
   The US and China have agreed to a mutual tariff pause, easing rates and lifting some export restrictions. While this move may reduce inflation and support investment, it comes after weeks of damaging trade shocks that disrupted supply chains, weakened credibility, and strained alliances. The temporary rollback offers relief but underscores the long-term risks of unpredictable and threat-based trade policy.
4. U.S. Scraps ‘AI Diffusion’ Rule in Revamp of Biden-Era Chip Curbs – Sherry Qin, The Wall Street Journal, May 14, 2025
   The US has scrapped the AI Diffusion Rule, a move opposed by tech firms like Nvidia who argued it stifled innovation and hurt diplomatic ties. The Trump administration now aims to promote American AI technology among trusted partners while restricting access for adversaries. The policy shift benefits countries like Saudi Arabia as well as US AI players, but has limited impact on China’s chipmakers.
5. A major U-turn on US-China tariffs, but questions remain – Debrorah Elms, Hinrich Foundation, May 13, 2025
   A dramatic U-turn on tariffs, engineered over a furious weekend of negotiations between the US and China, may appear to be a return to the status quo. It is not. Instead, it illustrates the consequences of rapid, unanticipated policy shifts with real economic consequences. This 90-day pause on the highest levels of tariffs imposed in history provides an opportunity to reconsider the trade agenda between the US and China, but the window is too limited and the agenda is long.

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Trade with the UK

The US and UK agreed on general terms for a future "economic prosperity deal", which, per Inu Manak of the Council on Foreign Relations, illustrates Trump’s shifting trade policy.  Alan Beattie opines in the Financial Times that the US’s deals with China and the UK leave the world exposed to a trade policy lottery. The UK and India’s historic agreement may be a sign of things to come, writes the Economist.

Mentioned publications

1. General Terms for the United States of America and The United Kingdom of Great Britain and Northern Ireland Economic Prosperity Deal – Office of the US Trade Representative, May 8, 2025
   The US-UK Economic Prosperity Deal is set to focus on cutting tariffs, boosting digital trade, and aligning economic security. Key provisions include reduced US tariffs on UK vehicles and metals, duty-free quotas for US beef and ethanol, and closer cooperation on export controls, cybersecurity, and customs enforcement. While not legally binding, the deal sets a framework for deeper trade and regulatory ties.
2. U.S.-UK Trade Deal Illustrates Trump’s Shifting Trade Policy – Inu Manak, Council on Foreign Relations, May 9, 2025
   The US-UK Economic Prosperity Deal marks the Trump administration’s first trade agreement, setting a limited but symbolic precedent for future deals. While it offers modest tariff relief and outlines cooperation on digital trade and economic security, it locks in the 10% US tariff as a new baseline and skirts World Trade Organization (WTO) norms. With vague terms and no legal binding, the deal serves more as a framework for ongoing negotiations than a comprehensive trade pact.
3. HF sponsored accessTrump’s China deal leaves world exposed to trade policy lottery – Alan Beattie Op-ed, Financial Times, May 12, 2025
   Trump’s recent trade deals with China and the UK are non-binding and leave key terms unresolved, fueling uncertainty for businesses and US trade partners. The UK risks being pulled into US strategic aims, while China’s deal echoes past promises with little clarity on enforcement. With shifting advisers and unpredictable policy shifts, these bilateral moves threaten global trade norms and offer limited economic stability.
4. The Britain-India trade deal is a sign of things to come – The Economist, May 7, 2025
   The UK–India trade deal delivers major tariff cuts and signals a shift toward faster bilateral pacts in a disrupted global trade landscape. While it boosts goods trade and sets a precedent for India’s openness, progress on services was limited and backlash has emerged over immigration and tax provisions. The deal may influence future EU–India talks and reflects a broader trend of nations moving quickly to secure strategic trade ties post-Trump tariffs.

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Whither other US trading partners?

Politico reports on Trump’s plan to set new tariff rates for countries, skirting negotiations. Bloomberg writes about India’s first counter move against Trump’s tariff regime. The Financial Times finds the US and the EU potentially breaking an impasse in negotiations, while Joshua Kurlantzick of the Council on Foreign Relations finds that Vietnam’s tariff trouble just gets worse.

Mentioned publications

1. Trump says US will set new tariff rates for countries, skirting negotiations – Giselle Ruhiyyih Ewing and Daniel Desrochers, Politico, May 16, 2025
   Trump has acknowledged for the first time that his administration can’t finalize trade deals with over 50 countries by July and will instead unilaterally impose new tariffs via formal notifications. A 10% base tariff now appears permanent, even for partners like the UK, raising doubts among major trading blocs. While a temporary truce with China has eased tensions, the broader strategy of selective engagement and imposed terms is fueling uncertainty and resistance abroad.
2. India Proposes First Counter Move Against Trump’s Tariff Regime – Shruti Srivastava, Bloomberg, May 13, 2025
   India has taken its first retaliatory step against Trump tariffs, notifying the WTO of plans to impose levies on American goods in response to steel and aluminum duties. The move marks a shift from earlier conciliation and risks complicating trade talks, as both nations work toward a bilateral deal. With WTO rules in play and diplomatic tensions rising, India is asserting its position more forcefully on the global trade stage.
3. HF sponsored accessUS and EU break impasse to enable tariff talks – Aime Williams, Peter Foster, and Andy Bounds, Financial Times, May 17, 2025
   The US and EU have begun serious trade talks to defuse Trump-era tariffs, with both sides exchanging negotiating texts for the first time. While the EU resists pressure for fast concessions and rejects a UK-style deal, it remains open to aligning with the US on curbing Chinese exports. Tariff threats linger, but both parties appear ready to test whether common ground can be found.
4. Vietnam’s Tariff Trouble Just Gets Worse – Joshua Kurlantzick, Council on Foreign Relations, May 12, 2025
   Vietnam is scrambling to strike a deal by offering zero duties, increased US imports, and stricter controls on Chinese transshipment. With limited leverage and rising domestic frustration, Hanoi seeks market economy status and better access to high-tech exports. Despite its desire to balance between great powers, Vietnam is unlikely to be included in Trump’s proposed coalition of trade partners due to its deep ties with China and limited strategic value to Washington.

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Tariffs on planes and movies?

Bloomberg reports on Trump’s section 232 investigation into imports of commercial aircraft and engines, while Politico describes a state of confusion in Hollywood over proposed tariffs on foreign made films.

Mentioned publications

1. Trump Opens Door to Tariffs on Commercial Aircraft, Engines - Josh Wingrove, Julie Johnsson, and Hadriana Lowenkron, Bloomberg, May 10, 2025
   The Trump administration has launched a national security probe into aircraft and engine imports, potentially setting the stage for new aerospace tariffs. The investigation will focus on the concentration of US imports, and the impact of foreign government subsidies and predatory trade practices on the industry's competitiveness. Major players such as Boeing and Airbus are increasingly caught in trade tensions, with the EU warning of retaliatory tariffs on American made aircraft. Industry leaders argue the aerospace sector drives a US$75 billion trade surplus and support for 1.8 million US jobs, urging preservation of duty-free frameworks.
2. Lights, camera, inaction? Trump’s film tariff confuses Hollywood – Jeremy B. White and Melanie Mason, Politico, May 6, 2025
   Trump’s proposal to slap 100% tariffs on foreign films has rattled Hollywood and California officials, who are demanding clarity and pushing for tax credits instead. With production already fleeing the state, critics warn the move could harm a key US export industry and invite retaliation, echoing failed protectionist efforts from the past.

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Tariff trackers

The Wire China covers where we are with China tariffs, and Bloomberg tracks every Trump tariff and its economic effect.

Mentioned publications

1. China Tariffs: Where Are We Now? – Noah Berman, The Wire China, May 14, 2025
   The US-China 90-day pause on tariffs cuts US duties on Chinese goods to 30% and China's to 10%. While this eases immediate pressure, tariffs remain historically high and uneven across sectors, with some products still facing rates above 50%. Experts warn this may signal a “new normal” in US trade policy, with high tariffs entrenched even amid negotiations.
2. Tracking Every Trump Tariff and Its Economic Effect – Bloomberg, May 13, 2025
   Bloomberg provides an interactive overview of the tariffs implemented by the US and their effect on trade, GDP, and inflation. The US has agreed to reduce the reciprocal tariff rates on Chinese imports to 10% and will continue negotiating with other trade partners around the world. The White House has ordered investigations into the national security implications of imports in several key sectors. The results from these investigations will guide tariff imposition on these goods.

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