Economy

The firm, which the U.S. government scrutinized for its ties to China, is angling for hundreds of thousands of advanced artificial intelligence chips in a deal that could be finalized this week.The Trump administration is considering a deal that could send hundreds of thousands of U.S.-designed artificial intelligence chips to G42, an Emirati A.I. firm that the U.S. government has scrutinized in the past for its ties to China, three people familiar with the discussions said.The negotiations, which are ongoing, highlight a major shift in U.S. tech policy ahead of President Trump’s visit to the Persian Gulf states this week. The talks have also created tension inside the Trump administration between tech- and business-minded leaders who want to close a deal before Mr. Trump’s trip and national security officials who worry that the technology could be misused by the Emiratis.The Trump administration has embraced cutting direct deals for A.I. chips with officials from the Middle East, as it looks to strengthen U.S. ties in the region, said the people, who spoke on the condition of anonymity because the negotiations are ongoing. The approach marks a break from the Biden administration, which had rejected similar A.I. chip sales over fears that they could give autocratic governments with strong ties to China an edge over the United States in developing the most cutting-edge A.I. models in coming years.In the talks with G42 and officials from the United Arab Emirates, David Sacks, the White House A.I. czar, has been working on an agreement that would give the Emirati firm access to chips with limited oversight. Some of the chips would go to a partnership that G42 has with the U.S. firm OpenAI, while others would be sent directly to G42, one of the people said, adding that a deal is not yet final.The Trump administration is also expected to announce a deal this week with officials in Saudi Arabia, two people with knowledge of the agreement said. The deal would give the Saudi government and its new A.I. company, Humain, access to tens of thousands of semiconductors and technology support from Nvidia and its A.I. chip rival, Advanced Micro Devices.The United States began requiring a license for the purchase of A.I. chips during the Biden administration because of their value in helping governments develop military and surveillance technologies.We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More

Treasury Secretary Scott Bessent said Monday that the trade agreement reached over the weekend represents progress in “strategic” decoupling from China.
The details of the U.S.-China pact are still sketchy, but U.S. officials have said so-called reciprocal tariffs will be suspended though broad-based 10% duties will remain in effect.

Treasury Secretary Scott Bessent said Monday that the trade agreement reached over the weekend represents another stage in the U.S. shaking its reliance on Chinese products.
Though the U.S. “decoupling” itself from its need for cheap imports from the China has been discussed for years, the process has been a slow one and unlikely to ever mean a complete break.

However, Bessent said there are now specific elements of decoupling in place that are vital to U.S. interests. The U.S. imported nearly $440 billion in goods from China in 2024, running a $295.4 billion trade deficit.
“We do not want a generalized decoupling from China,” he said during an interview on CNBC’s “Squawk Box.” “But what we do want is a decoupling for strategic necessities, which we were unable to obtain during Covid and we realized that efficient supply chains were not resilient supply chains.”
When the pandemic struck in 2020, demand in the U.S. shifted from one reliant more on services to a greater focus on goods. That meant greater difficulty in obtaining material for multiple products including big-ticket appliances and automobiles. The technology industry, with its reliance on semiconductors, was also hit. What followed was an inflation surge in the U.S. not seen in more than 40 years.
The details of the U.S.-China pact are still sketchy, but U.S. officials have said so-called reciprocal tariffs will be suspended though broad-based 10% duties will remain in effect.
“We are going to create our own steel. [Tariffs] protect our steel industry. They work on critical medicines, on semiconductors,” Bessent said. “We are doing that, and the reciprocal tariffs have nothing to do with the specific industry tariffs.”

The agreement between the two sides is essentially a 90-day pause that will see reciprocal duties halted though the 10% tariff as well as a 20% charge related to fentanyl remain in place.
Bessent expressed encouragement on the fentanyl issue in which Chinese officials “are now serious about assisting the U.S. in stopping the flow of precursor drugs.” Bessent did not indicate a specific date when the next round of talks will be held but indicated it should be in the next several weeks.

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As the president heads to the Middle East, America’s dominance over A.I. chips has become a powerful source of leverage for the president.As President Trump tours the Middle East this week, governments that are flush with oil wealth will be focused on a different treasure, found in America’s Silicon Valley.Artificial intelligence chips, which are made by U.S. companies like Nvidia and AMD, are highly coveted by governments across the Middle East. Leaders of Saudi Arabia, Qatar and the United Arab Emirates want to pour billions of dollars into the construction of data centers to put their countries at the forefront of a new technology heralded for its power to disrupt businesses and create trillions of dollars in economic value.The Gulf States have plenty of energy and cash to build data centers, which house the supercomputers that run A.I. systems. But they need U.S. government approval to buy the American-designed chips to power them. The Biden administration had been wary of allowing such purchases. But the Trump administration appears more interested in using A.I. chips to secure strategic bonds in a region where Mr. Trump has deep financial and business ties.The technology is expected to be the focus of much deal making during the president’s trip. Officials from the U.A.E. and Saudi Arabia are likely to try to strike agreements with the Trump administration to obtain steady access to A.I. chips in the years to come. And the Trump administration is expected to showcase deals and negotiations across the region by American tech companies, including AMD, Nvidia, Microsoft, Google and OpenAI, according to half a dozen people familiar with the plans.Tech executives including Jensen Huang of Nvidia, Sam Altman of OpenAI, Lisa Su of AMD and Ruth Porat of Alphabet are scheduled to travel to the Middle East, with some rubbing shoulders with Saudi ministers and White House officials at an investment forum that will focus partly on partnerships in A.I. and data centers.The United States began regulating A.I. chips systematically during the Biden administration, because of their value in helping governments develop military and surveillance technologies. While many Trump officials are also concerned about the national security implications of selling A.I. chips abroad, some are more willing than their predecessors to deploy the chips as a broader source of leverage globally, potentially playing into trade talks and other negotiations.We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More

Hendrik Dierendonck, a second-generation butcher who has become, as he describes it, “world famous in Belgium” for his curated local beef, thinks Europe’s way of raising cattle results in varied and delicious cuts that European consumers prize.“They want hormone-free, grass-fed,” Mr. Dierendonck explained recently as he cut steaks at a bloody chopping block in his Michelin-starred restaurant, which backs onto the butchery his father started in the 1970s. “They want to know where it came from.”Strict European Union food regulations, including a ban on hormones, govern Mr. Dierendonck’s work. And those rules could turn into a trade-war sticking point. The Trump administration argues that American meat, produced without similar regulations, is better — and wants Europe to buy more of it, and other American farm products.“They hate our beef because our beef is beautiful,” Howard Lutnick, the commerce secretary, said in a televised interview last month. “And theirs is weak.”Questions of beauty and strength aside, the administration is right about one thing: European policymakers are not keen on allowing more hormone-raised American steaks and burgers into the European Union.Sides of beef at one of the Dierendonck meat production plants in Veurne, Belgium.Jim Huylebroek for The New York TimesWe are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More

A small group of Republicans is threatening to torpedo President Trump’s agenda over the state and local tax deduction, long a headache for both parties.It was perhaps inevitable that the Republican effort to pass a vast fiscal package this year would, at some point, get caught up in the thicket of the state and local tax deduction.After all, the deduction, often called SALT, has long had the potential to cause a political standoff. Many G.O.P. lawmakers abhor it and, in 2017, imposed a $10,000 limit on the amount of state and local taxes Americans can write off on their federal returns. But to pass a tax bill this year, the party will need the support of a motivated clutch of Republicans who have made lifting that cap the animating promise of their political careers.Those lawmakers, who represent high-tax states like New York and New Jersey where the deduction is cherished, say they are willing to tank the package over the issue. Representative Nick LaLota, Republican of New York, can already visualize voting against the bill.“There’s a green ‘yes’ button and there’s a red ‘no’ button to press. Come time, if there’s not enough SALT in this bill, I’m pressing the red ‘no’ button,” he said. “It is a hill I am willing to stake my entire congressional career on.”Attempts by House Republican leaders to reach a deal with members like Mr. LaLota yielded little progress this week, leaving the issue unresolved as G.O.P. lawmakers prepare to release the first draft of their tax bill next week. Along with Medicaid, the health care program for the poor that Republicans have targeted for cuts, the state and local tax deduction could determine the fate of the entire G.O.P. legislative agenda.That’s because any change to the current $10,000 limit would be incredibly expensive, threatening to swamp the overall Republican budget for tax cuts. Even a relatively modest change, like doubling the cap for married couples, would cost $230 billion over a decade, according to the Committee for a Responsible Federal Budget. More generous alterations along the lines of what New York Republicans have demanded could surpass $1 trillion.We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. 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

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