Progress in tariff negotiations between the Trump administration and India: Plans to use the cancellation of the AI chip export classification system as trade leverage

Taiwan • Business • 05/01 00:41
Progress in tariff negotiations between the Trump administration and India: Plans to use the cancellation of the AI chip export classification system as trade leverage

At the end of April 2025, President Trump of the United States stated that the U.S.-India tariff talks are going smoothly, and a trade deal is expected soon. Officials from the U.S. Department of the Treasury and the Department of Commerce highlighted that India could be among the first to sign a trade deal in Trump's second term. Meanwhile, the Trump administration is considering scrapping the AI chip export classification system from Biden's time, choosing instead to use intergovernmental agreements for export authorization, using AI chips as a bargaining chip in trade talks, which could deeply impact the global semiconductor supply chain.

Key Updates

05/01 17:01

In April 2025, the US manufacturing PMI index fell to 48.7, indicating a continued contraction.

In April 2025, U.S. manufacturing activity further contracted, with the ISM Manufacturing PMI dropping from 49.0 in March to 48.7, staying below the 50-point mark for the second month in a row, signaling a contraction. Even though there was a slight improvement in new orders and employment, the decline in output, rising price pressures, and fewer export orders highlight multiple challenges. Uncertainty around tariff policies and supply chain bottlenecks are adding to the pressures on businesses.

05/01 17:01

Decline in U.S. Retail Performance in Q1 2025: Pressure from Tariff Policies Affects Consumer Confidence

In the first quarter of 2025, the annual U.S. GDP rate declined by 0.3%, marking its first contraction in three years, mainly due to a surge in imports and the effects of tariff policies. Financial reports from brands such as McDonald's, Harley-Davidson, and Estée Lauder indicate declining sales and weakened consumer confidence. The U.S. imposed tariffs as high as 145% on Chinese goods, resulting in a surge in imports and a record trade deficit. The consumer confidence index dropped to its lowest point since the pandemic, highlighting the adverse effects of tariff policies on the economy.

05/01 13:01

One Month into the US-China Trade War: Chinese Stationery Exporters Resume Shipping to the US, with Tariff Costs Passed on to American Customers

As trade tensions between the US and China heat up, with both sides imposing high tariffs on each other, some Chinese stationery and other exporters have resumed shipments to the US because American importers are facing urgent inventory shortages and struggling to find alternative suppliers. Even though the US has imposed tariffs as high as 145% on Chinese goods, the cost is passed on to American customers and is reflected in retail prices, indicating the market's dependence on Chinese-made products.

05/01 12:31

General Motors Cuts 2025 Forecast Due to U.S. Tariff Policies, Expects a $5 Billion Cost Impact

General Motors (GM) has revised down its 2025 financial forecast due to the U.S. imposing a 25% tariff on imported cars and parts, which is anticipated to raise costs by $5 billion. This move impacts GM's profit outlook, forcing GM to suspend its stock repurchase program and withdraw its full-year earnings guidance. The U.S. has eliminated the "de minimis" exemption for Chinese imports, putting pressure on e-commerce retailers dependent on the Chinese supply chain, highlighting the effects of shifts in U.S. trade policy on corporate operations.

05/01 09:30

U.S.-China Trade War Heats Up: How American Investors Can Handle Market Risks and Economic Shocks

Amid the escalating US-China trade war and the turmoil in global supply chains, the US stock market has demonstrated resilience. Despite the first quarter GDP contraction, the S&P 500 index has only decreased by 2.4% since the announcement of tariffs. Investors underestimated the impact of the trade war and adjusted their asset allocation strategies to favor defensive assets. The dollar index declined, and international funds flowed to Europe and emerging markets. Companies are reorganizing supply chains to address risks. Small-cap stocks are facing both challenges and opportunities, consumer confidence is waning, and corporate investment remains hesitant.

05/01 00:41

Progress in tariff negotiations between the Trump administration and India: Plans to use the cancellation of the AI chip export classification system as trade leverage

At the end of April 2025, President Trump of the United States stated that the U.S.-India tariff talks are going smoothly, and a trade deal is expected soon. Officials from the U.S. Department of the Treasury and the Department of Commerce highlighted that India could be among the first to sign a trade deal in Trump's second term. Meanwhile, the Trump administration is considering scrapping the AI chip export classification system from Biden's time, choosing instead to use intergovernmental agreements for export authorization, using AI chips as a bargaining chip in trade talks, which could deeply impact the global semiconductor supply chain.

04/30 14:33

China canceled an order for 12,000 tons of U.S. pork: escalating U.S.-China trade tensions, severely impacting the U.S. supply chain.

In April 2025, China canceled an order for 12,000 tons of U.S. pork imports, marking the largest cancellation record since 2020, due to U.S. tariff measures. This move led to significant inventory and value losses for U.S. exporters, impacting the agricultural supply chain and the slaughtering and processing industries. Tariffs up to 172% limit the competitiveness of U.S. pork in the Chinese market, and China's unique demand for pork by-products makes it challenging for alternative markets to absorb the supply. The U.S. holds advantages in cost and supply flexibility, but in the short term, the market gap and pressures from supply chain adjustments are significant.

04/30 13:31

In April 2025, private sector job growth in the United States slowed to 62,000, marking a nine-month low.

In April 2025, the U.S. private sector added 62,000 jobs, which was below the expected range of 115,000 to 125,000, representing the smallest increase since July 2024. ADP data shows that companies are cautiously expanding their workforce due to uncertainties in policy and consumer behavior. This report was released two days before the U.S. Department of Labor's non-farm employment report, offering the latest insights into the labor market.

04/30 11:04

China plans to exempt certain American goods from the 125% tariff, focusing on textile and semiconductor companies.

The Chinese government is implementing a tariff exemption policy, exempting certain American goods from the 125% retaliatory tariffs, including ethane, certain pharmaceuticals, aircraft engines, and some semiconductor products. Local governments are conducting investigations into textile and semiconductor companies to evaluate the impact of the trade war. Companies must verify if their imported goods qualify for the exemption. The policy has yet to be officially announced, indicating a pragmatic adjustment by China despite maintaining a tough stance.

04/30 09:30

Due to Uncertainty from Trump's Tariff Policy, Stellantis Pauses Full-Year 2025 Forecast

On April 30, 2025, global automaker Stellantis announced that due to the frequent changes in President Trump's tariff policies on imported cars and components, creating an uncertain market outlook, the company has decided to withdraw its financial guidance for the full year 2025 and reassess its capital expenditure plans. Other automakers, such as General Motors and Mercedes-Benz, have also withdrawn their financial forecasts due to tariff uncertainties, highlighting the automotive industry's significant concern over changes in U.S. trade policies.

Rapid Progress in US-India Tariff Negotiations, Trade Agreement Nearing

US President Trump stated to the media on April 29 that the tariff negotiations between the US and India are "going very well," and he expects both parties to "reach an agreement soon." Trump told reporters at the White House, "India is making very good progress, and I think we will reach an agreement with India." These remarks were made before he attended a rally in Michigan.

US Treasury Secretary Scott Bessent also mentioned on the same day that the US is "very close" to completing a trade agreement with India. He added that India might be one of the first countries to sign an agreement in this round of negotiations. Bessent stated that negotiations with India have been relatively smooth and pointed out that India has "high non-tariff trade barriers," which is one of the key points of the negotiations.

According to US Commerce Secretary Howard Lutnick, the Trump administration has completed a trade agreement, awaiting approval from the other country's Congress. Although he did not specify which country, multiple sources indicate that India is the most likely candidate. The two sides initiated the first phase of trade agreement negotiations in February, aiming to complete it by the end of the year and increase bilateral trade to $500 billion by 2030.

In the early stages of his second term, the Trump administration imposed reciprocal tariffs ranging from 10% to 49% on multiple countries and levied a 26% retaliatory tariff on India. To help with negotiations, Trump announced a 90-day pause on higher tariffs for some countries, with India being seen as one of the most promising negotiation partners.

Major Adjustments Proposed for AI Chip Export Policy, Abolishing the Tier System

Alongside trade negotiations, the Trump administration is conducting a major review of AI chip export policies. According to multiple media reports, the Trump administration is considering abolishing the three-tier system in the "Framework for Artificial Intelligence Diffusion" implemented by the Biden administration in January 2025.

The framework originally categorized countries worldwide into three tiers:

  • Tier 1: Includes 17 major US allies and Taiwan, with unrestricted access to AI chips;
  • Tier 2: About 120 countries, including Israel, Mexico, and Portugal, subject to chip quantity quotas;
  • Tier 3: Such as China, Russia, Iran, and North Korea, completely banned from obtaining AI chips.

The Trump administration is currently considering abolishing this tier system and authorizing exports through bilateral government agreements, making AI chips a bargaining chip in trade negotiations. This move would give the US more negotiating space in trade talks with up to 150 countries.

Former Commerce Secretary Wilbur Ross stated, "The voices for abolishing the tier system are increasing, and this is still a work in progress. Government-to-government agreements are an option." An informed source noted that this model aligns with Trump's consistent "tailor-made" trade strategy, allowing the US to use AI chips more flexibly as a negotiation tool.

Proposal to Lower Export Exemption Threshold, Tighten Control Measures

In addition to abolishing the tier system, the Trump administration is also considering adjusting the current export exemption threshold. Under Biden-era regulations, Tier 2 countries ordering AI chips with computing power below approximately 1,700 Nvidia H100 chips only need to notify the government without obtaining an export license. The Trump administration plans to lower this threshold to 500 chips to tighten control over exports.

AI company Anthropic stated in its official statement that it supports the US government's strengthening of AI chip export controls and suggests that Tier 2 countries should purchase chips through government-to-government agreements to prevent smuggling and enhance US control. The company also calls for the government to increase enforcement resources to ensure the effective implementation of new regulations.

However, the industry has mixed reactions to this policy adjustment. Companies like Nvidia and Oracle criticize the policy for potentially weakening the global competitiveness of US companies and possibly prompting Tier 2 countries to turn to China for "unregulated cheap alternatives." Seven Republican senators also wrote to Commerce Secretary Lutnick in mid-April, requesting the withdrawal of the regulation.

Integration of AI Chip Policy and Trade Negotiation Strategy

The Trump administration's policy direction indicates that AI chips are not just a key resource in tech competition but are also gradually becoming a strategic tool in US foreign trade negotiations. Officials from the US Department of Commerce and the Treasury Department have repeatedly stated that export controls will be incorporated into trade agreements in the future, further strengthening the US's dominant position in the global semiconductor supply chain.

According to The Wall Street Journal, the Trump administration has proposed easing AI chip export restrictions as a bargaining chip in negotiations with countries like the UK and Mexico, in exchange for lowering tariffs on US goods or limiting economic and trade exchanges with China. This strategy is also seen as part of the Trump administration's "isolate China" economic strategy.

Currently, the Trump administration has not officially announced a specific timetable for abolishing the tier system or adjusting the export threshold, but according to current regulations, the AI chip export restrictions established during the Biden era will take effect on May 15. It's still unclear if the Trump administration will announce new policies before then.

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