After intense negotiations, USA and China arrive at an unexpected trade agreement, but the tariffs remain high and controversial
Well, it didn’t take long. And I think China’s resistance to be pressured to an agreement – including the insistence that it was the US who asked for negotiations – meant it was prepared for a long period of negotiations. To be clear: the pact, agreed in a sufficiently neutral place in Switzerland over the weekend, keeps US fees on absurdly high and asymmetrical China. But the fact that the US is willing to close such a fast agreement and reduce so many tariffs suggests that there is more to come.
Today’s main text analyzes the agreements Trump has so far closed with China and the United Kingdom. I also examine the sad state of help and international development after the news that Bill Gates will end its foundation. And now a reader’s first question at some time: simply, China and the UK were right to accept the agreements?
Accept the offer or pay the Danish
Trump’s agreements with China and the United Kingdom have one thing in common-and feel if they are prone to faint-they are not binding and leave a huge amount of negotiation for the future. Amazing, no? In fact, it is not 100% clear what they mean now, especially the deal with China. By the time this newsletter was sent, the nerds of world trade were still analyzing the ad, trying to understand exactly what was agreed.
And of course, they are subject to the crossfire of other unpredictable actions of Trump. Yesterday’s other news was Trump stating that US pharmaceutical industry cannot charge more in the US than in any other country. Is this beyond the sectoral tariffs he wants for the pharmaceutical sector? What does this mean to the extensive pharmaceutical trade between the US and the United Kingdom and China? No one knows.
Prior to that, literally a day after the announcement of the United Kingdom agreement, the Trump government launched another national security investigation under section 232, this time on aircraft, which may end in tariffs. Is the United Kingdom exempt from these rates because of the agreement? No one knows.
GENERAL TERMS OF THE UNIT
“Both the United States and the United Kingdom recognize that this document is not a legally binding agreement,” the agreement says.
With China, US non -reciprocal tariffs on fentanil remain high and asymmetrical. Beijing has an incentive to return to the negotiating table and wake up an additional liberalization package – or, as the Scott Bessent Treasury Secretary said on Sunday, agreeing to buy more US exports.
This brings us back to the territory of Trump’s first phase “phase 1”, in which China allegedly agreed with a series of liberalization measures. The then US commercial representative, Robert Lighthizer, said, but they did not prevent the US from complaining about Chinese state capitalism. Beijing also agreed to buy a load of soy and other US products, which he did not.
Still, if there is one thing we apparently know, the US is walking to negotiate the rate reduction (although it seems to consider the base of 10% as untouchable). This will put them in confrontation with perhaps the main target of Trump’s wrath, the EU, which continues to insist that the minimum of 10% is unacceptable.
Part of what will happen now will depend on which member of Trump’s team has the president’s attention on a given day, given the disparity of opinions. In the endless game of the “Tombola de Commerce,” you never know who will be influencing politics when decisions are made.
Remember the rules?
Finally, what does this mean to the rules -based commercial system? It is not great for the US to be closing bilateral agreements everywhere. As I wrote last week, the pact with the United Kingdom is more harmful, as it violates the principle of “most favored nation,” giving access to the US market that will not be given to other countries.
The metaphor that came to mind was the Dane-Geld, the protective money that Anglo-Saxon kings paid Vikings in exchange for less pile for a while. Rudyard Kipling famously criticized this tactic, arguing that “if you pay the Dane-Geld once, you will never get rid of the Dane.”
The United Kingdom will need to keep an eye on the horizon for signs of Viking ships reappearing. It may be worth the bet and violation of the NMF, or not. China may have found a better strategy (in a very different position) or not. No one knows anything.
Musk’s barbarians at gates gates
Bill Gates has revealed that it will accelerate spending and then end the Gates Foundation, although only 20 years from now. It is a striking moment. Trump’s attack (and specifically Elon Musk) to assistance to US development, including USAID and the HIV/AIDS program, left the industry without breath. Gates said correctly last week that Musk was killing children. By reducing his background, Gates hopes to alleviate the impact of cuts on official aid.
Traditional donors are moving away. The United Kingdom, which has already ridiculed its aid budget to spend part of the money in the country, announced that it will further cut its spending from 0.5% to 0.3% of gross national income.
There is no doubt that the Gates Foundation did very well. But he assumed strong political and ideological positions, a tactic that contrasted with his philanthropic mission. The idea that private donations will save the world now seems naive. The development sector is full of fear.
With information from Alan Beattie for the Financial Times*
Source: https://www.ocafezinho.com/2025/05/12/eua-recua-de-guerra-comercial-em-larga-escala-com-a-china/
