Aurelia Butler

Stay informed with free updatesSimply sign up to the More

Your browser does not support playing this file but you can still More

Stay informed with free updatesSimply sign up to the More

The first meeting to break the US-China trade deadlock was held almost three weeks ago in the basement of the IMF headquarters, arranged under cover of secrecy.US Treasury secretary Scott Bessent, who was attending the IMF spring meetings in Washington, met China’s finance minister Lan Fo’an to discuss the near complete breakdown in trade between the world’s two biggest economies, according to people familiar with the matter.The previously unreported encounter was the first high-level meeting between US and Chinese officials since Donald Trump’s inauguration and the launch of his tariff war. The Treasury declined to comment on the secret meeting. The talks culminated this weekend in Geneva with Bessent and He Lifeng, China’s vice-premier, agreeing a ceasefire that would slash respective tariffs by 115 percentage points for 90 days. Despite both sides warning they were willing to dig in for a long haul, the truce proved easier and faster to agree than expected. One overriding question has significant implications for the negotiations to come: did Beijing or Washington flinch first?Trump on Monday claimed victory, saying he had engineered a “total reset” with China. Meanwhile, Hu Xijin, former editor of national Communist party tabloid the Global Times, said on social media that the deal was “a great victory for China”. “The US has chickened out,” said one popular Chinese social media post of the deal.Economists agreed that the US might have overplayed its hand by raising the tariffs too quickly and too high. “The US blinked first,” said Alicia García-Herrero, chief Asia-Pacific economist at French investment bank Natixis. “It thought it could raise tariffs almost infinitely without being hurt, but that hasn’t been proven right.”US trade representative Jamieson Greer, left, and Treasury secretary Scott Bessent in Geneva on Monday More

US stocks notched one of their biggest jumps in recent years, as the de-escalation of tariff tensions between the US and China sparked a strong rally for risky assets.The S&P 500 closed 3.3 per cent higher on Monday. That was its biggest jump since April 9, but also ranked as its third-biggest one-day gain of the past five years.Consumer cyclicals, energy stocks and financials among the best performers in Wall Street’s benchmark index after the world’s two largest economies agreed to drastically scale back tariffs for 90 days.The tech-heavy Nasdaq Composite closed 4.3 per cent higher, ranking as its fourth-biggest single-session jump in the past five years. Shares in Meta, Apple and Nvidia leapt 7.9 per cent, 6.3 per cent and 5.4 per cent, respectively.Monday’s gains extended a recent surge for US stocks, which have rebounded in recent weeks from a sharp sell-off in the days after Trump’s “liberation day” tariff announcements on April 2. The latest move left the S&P 500 close to erasing all of its year-to-date losses, and came as the dollar rallied against other major currencies.The tariff reduction “really is a big and positive surprise” and “represents a far larger backtracking from Trump than we had expected,” said David Seif, chief economist for developed markets at Nomura.He cautioned, however, that “things can swing back very quickly in the other direction, and we would not preclude tariff rates rising back up on July 8 for the rest of the world and August 10 for China” when the two relevant 90-day pauses expire.Read more here More

Unlock the White House Watch newsletter for freeYour guide to what Trump’s second term means for Washington, business and the worldUS President Donald Trump has signalled his openness to cutting tariffs on China ahead of Saturday’s high-stakes talks between the world’s two largest economies, as both sides seek to de-escalate their trade war.In a post on his Truth Social network, Trump suggested the US could almost halve its tariffs on Chinese goods, which now stand at 145 per cent, while calling on Beijing to open up its markets to American products.“80% Tariff on China seems right! Up to Scott B,” he said, in a reference to the Geneva meeting led on the US side by Treasury secretary Scott Bessent.Bessent and trade representative Jamieson Greer are set to meet China’s vice-premier, He Lifeng, as the two countries seek to look for ways to unwind their huge levies on each other in a tit-for-tat confrontation that threatens the global economy. Despite the US’s current steep tariffs on China, data on Friday showed that China’s overall exports grew sharply in April, strengthening Beijing’s hand ahead of the talks. As Chinese companies diverted trade flows from the US to south-east Asia, Europe and other destinations, exports rose 8.1 per cent in dollar terms compared with a year earlier, China’s customs service said.Later on Friday the White House clarified that Trump “still remains with his position that he is not going to unilaterally bring down tariffs on China. We need to see concessions from them as well,” press secretary Karoline Leavitt told reporters. “As for the 80 per cent number, that was a number the president threw out there and we’ll see what happens this weekend,” she added.Trump’s “liberation day” tariff announcements on April 2 rocked global markets, which have rebounded after the president paused most of his “reciprocal” levies. But that recovery has petered out and the US duties on China remain in place, as have China’s retaliatory tariffs of up to 125 per cent on US imports.While the S&P 500 index has broadly recovered from the steep losses it sustained just after April 2, it has fallen 0.5 per cent this week and was little changed on Friday.Libby Cantrill, head of public policy at US bond group Pimco, warned that while “some softening of tariffs over the next few weeks” might be likely, “the chances of a durable substantive deal coming out of these weekend talks is very low”.She stressed that trade deals historically took an average of 18 months to agree and a further 25 to implement, and that the US-China relationship had “only deteriorated” since Trump’s first term.“We might see some positive reaction from the equity market, but any deal would be in name only,” she said.Trump’s suggestion on Friday that Washington could lower duties on Beijing came a day after he concluded a deal to provide tariff relief to the UK, his first since he kicked off the trade war in April.But people familiar with the matter said the figures Trump floated in his Truth Social post were probably a negotiating tactic ahead of Saturday’s talks rather than an actual target.China’s commerce ministry said this week it had decided to engage with the US “based on thorough consideration of global expectations, China’s own interests and calls from US businesses and consumers”.Beijing had previously said the US should cut tariffs as a precondition for negotiations but has since softened its position.Bessent, who has characterised the Geneva meeting as an attempt to de-escalate the trade war, has also labelled the US and China’s current tariffs on each other as “not sustainable”.The US Federal Reserve warned this week that Trump’s tariffs had increased policymakers’ uncertainty and could increase both inflation and unemployment. Washington has been locked in negotiations with other countries for the past month, since Trump paused his tariffs on most trading partners for 90 days.On Friday, Trump wrote on social media that there were “Many Trade Deals in the hopper, all good (GREAT!) ones!” Privately, however, many foreign officials have indicated that talks with Washington appear to be progressing slowly, with US officials unable to articulate specific demands.Additional reporting by William Langley in Guangzhou, Joe Leahy in Beijing and Steff Chávez in Washington More

Trade experts and industry bodies have warned that the US-UK trade pact leaves a host of unanswered questions that will need to be resolved via further negotiations. The deal covers just five pages of text providing only the outline of an agreement that was pulled together in just six weeks following US President Donald Trump’s “liberation day” tariffs announcement on April 2. The document, published on Thursday, notes that it “does not constitute a legally-binding agreement” and that both sides must now begin talks “to develop and formalise” the proposals, which will allow the UK to escape the worst of Trump’s global tariff regime. Beef and bioethanolThe White House claimed the deal presented a “$5bn opportunity” for US farmers to export to the UK, but contained detail in only two areas: a 13,000 tonne tariff-free reciprocal beef quota, and a UK promise to remove its existing 19 per cent levy on 1.4bn litres of US ethanol. The two sides said they would “work together” to improve market access for other agricultural products but did not specify which or over what timeframe. The White House noted that the UK “unfairly” maintained tariffs of up to and over 125 per cent on meat, poultry and dairy from the US. The UK farming and biofuel sectors said they were still trying to ascertain whether the tariff-free quota applied to all ethanol, including for use in fuel, or just ethanol used in food and drink production. The National Farmers’ Union warned that arable farmers who sold wheat to biofuel producers could lose a profitable income stream if the quota applied to fuel. Up to 15 per cent of UK domestic demand for wheat came from biofuels, the NFU added. The UK has two biofuel plants: Ensus, in Teesside, and Vivergo, in East Yorkshire, which is owned by British retail, sugar and grocery conglomerate Associated British Foods. Ensus said the deal raised “very significant questions” around the viability of manufacturing bioethanol in the UK and that it was waiting for details from the government. The Agricultural Industries Confederation, which represents the UK’s feed sector, said the removal of the 19 per cent UK tariff on US ethanol “requires further clarity”.  “The government needs to consider how it can ensure the competitiveness of this sector is maintained,” said Edward Barker, AIC head of policy. Setting standardsTrade experts also noted the agreement raised the issue of whether the UK would recognise US industry standards-setting bodies as international standards bodies — a long-standing ask of American trade negotiators.Currently, the UK is also part of a 34-country European regional grouping that mirrors the international system of standards-making based around World Trade Organization definitions, while the US system is more commercially driven. International rules cover a vast range of products and services and how business is conducted, according to Scott Steedman, director-general of standards of the British Standards Institution.He said the US request risked “muddying the waters” around the UK’s commitment to the international governance structures of standards.Peter Holmes, fellow of the UK Trade Policy Observatory at Sussex university, added that while the deal did not commit the UK to lowering standards, it risked the UK diverging from its current position in Europe, making the impending EU-UK “reset” harder. “The UK has to be very careful of actually negotiating an agreement that might weaken consumer protection, or which causes us to diverge from the EU position on standards and regulations,” he said.Pharmaceuticals Drugs industry observers say the US-UK deal leaves many crucial matters unclear, including proposed tariff rates, rules on supply chain security and intellectual property, and British policy towards the sector. The pact promises to offer the UK “significantly preferential” treatment if and when Washington imposes tariffs on pharmaceuticals, which are the subject of a so-called Section 232 investigation as to whether tariffs should be applied as a matter of national security.The probe, which will conclude by the end of the year, comes in the context of rising US concern over dependence on China for critical products. China is a big global source of active pharmaceutical ingredients (APIs), which are crucial components of medicines. Another uncertainty relates to a British pledge to “endeavour to improve the overall environment for pharmaceutical companies operating in the UK”. The industry is already in talks with the UK government over prices paid by the National Health Service for drugs.    Richard Torbett, chief executive of the Association of the British Pharmaceutical Industry lobby group, said imposing tariffs would make it harder to maintain supply chain resilience and ensure patients in both countries have access to medicines and vaccines they need.“Although this initial deal is only a first step for pharmaceutical products, we remain convinced that reaching a favourable outcome remains possible and in the interests of both countries,” he added.Steel and aluminiumSteel and aluminium manufacturers were left struggling to understand the impact on their business after the document failed to explicitly confirm the “zero tariff” agreement announced by UK Prime Minister Sir Keir Starmer on Thursday.UK Steel, the main industry lobby, said the uncertainty was already affecting some sales as customers hold off on placing orders in the hope that details would become clearer in coming weeks. There were still questions as to the conditions that need to be met in order to address Washington’s concerns about squeezing China out of supply chains for strategically vital materials.“The terms of the deal highlight a number of hoops to jump through before the UK steel sector can see the benefits of this deal,” UK Steel added. “To fully assess the impact on our sector, we will need to fully understand the supply chain conditions that need to be met, how the quotas will be defined and when these will take effect.”A senior UK official said the deal would lead to the majority of UK steel exports to the US attracting a zero tariff, although some specific categories of steel would still carry levies of up to 3 per cent. “The max is 3 per cent, but most will be at zero tariffs,” they added.Noble Francis, economics director at the Construction Products Association, said it was also unclear whether the deal covered steel used in derivative products such as vehicle parts, industrial components and household goods that were initially included in Trump’s announcement of the 25 per cent steel tariffs in March. “It is critical that firms get clarity on this as soon as possible as it could have a major impact on their exports to the US,” he added.AerospaceUK aerospace executives on Friday said there was still uncertainty about the details of the trading terms for the sector even though officials insisted that “all UK aerospace parts” were tariff-free. There was “no mention” of aerospace in the official draft documents from the UK government, said one, adding that companies were still waiting for confirmation in writing before publicly welcoming the trade deal with the US. Executives also said that given the integrated nature of the supply chain, they were trying to establish whether “all aerospace” parts drawn from different countries would be exempt from tariffs, or just those sourced from the UK. Industry on “both sides of the Atlantic need to see a 0 per cent tariff applied on aircraft parts — it has been critical to air safety for almost half a century”, said Kevin Craven, chief executive of trade group ADS. The industry was calling for this to be confirmed “as soon as possible”.There is also uncertainty over what the deal means for military aerospace, such as the F-35 fighter jet programme led by US defence group Lockheed Martin. Britain is the US’s only Tier 1 partner for the F-35, with UK companies contributing about 15 per cent of the value of each aircraft. Lockheed, as the importer of parts into the US, has been shouldering the burden of the tariffs, according to analysts. Several crucial parts are delivered first to Lockheed Martin in the UK before being shipped to the US, according to people familiar with the situation. The White House said the agreement with the UK “maximises the competitiveness and secures the supply chain of US aerospace manufacturers through preferential access to high-quality UK aerospace components”. More

Stay informed with free updatesSimply sign up to the More