The US and UK Reach a New Tariff Agreement, Talks Between the US, China, and Switzerland Begin: A Ray of Hope for the Global Trade Situation

Taiwan • Business • 05/11 22:55
The US and UK Reach a New Tariff Agreement, Talks Between the US, China, and Switzerland Begin: A Ray of Hope for the Global Trade Situation

In May 2025, the United States and the United Kingdom reached a bilateral trade agreement under a new tariff policy, which grants tariff reductions for British-made automobiles and steel products, reducing the base tariff to 10%. U.S. and Chinese officials met in Geneva, Switzerland, agreeing to set up a mechanism for economic and trade consultations, and a joint statement will be released on May 12. Market sentiment remains optimistic, U.S. Treasury yields have remained stable, and the Federal Reserve kept interest rates unchanged at its May 7 meeting, with the benchmark rate range at 4.25% to 4.50%.

Key Updates

05/12 10:25

Yi-Tsai Yen, General Manager of T3EX: Global container shipping rates are rebounding, and shipping companies are adopting strategies for steady capacity management.

On May 12, Yen Yi-Tsai, General Manager of T.S. Lines, stated that global container shipping rates have stopped falling and are rising again, with expectations that they will continue to rise in the third and fourth quarters. Progress in the US-China tariff negotiations has helped restore market confidence, and the rebound in shipping rates is closely tied to changes in tariff policies. Shipping companies, flush with cash, have shifted their strategy to maintaining stable capacity and are no longer slashing prices to compete for cargo. With US retailers holding low inventory levels, a wave of restocking is expected to push shipping rates higher. Key factors influencing shipping rates include tariffs, the US dollar, US Treasury bonds, and geopolitical risks.

05/12 08:57

The US and China Reach Provisional Tariff Agreement in Geneva: Significant Tariff Reduction Over the Next 90 Days Aimed at Easing Trade Tensions

On May 12, 2025, after high-level economic and trade talks between the United States and China in Geneva, Switzerland, the United States and China announced a temporary 90-day tariff agreement. The United States will lower tariffs on Chinese goods from 145% to 30%, while China will lower tariffs on American goods from 125% to 10%. This move is intended to ease trade tensions and set up a framework for future economic and trade talks. Both parties committed to implementing the tariff adjustments by May 14 and suspending or canceling most retaliatory measures.

05/12 06:26

The U.S. core CPI is expected to rise in April, businesses are facing challenges in passing on tariff costs, and the slowdown in consumer spending is raising economic concerns.

The U.S. core Consumer Price Index (CPI) for April is projected to increase by 0.3%, indicating a rise in inflationary pressures. Businesses are encountering a new wave of tariff pressures and are trying to pass these costs onto consumers, but the slowing demand is limiting the effectiveness of these efforts. Retail sales data is anticipated to remain unchanged, indicating consumer anxiety about the economic outlook. The Federal Reserve has cautioned that uncertainty in trade policy could increase inflation and unemployment, posing a risk to the economy.

05/12 02:59

Director of the CBO Warns: Trump's trade policies undermine confidence in foreign investment, the status of the dollar and the sustainability of U.S. debt face challenges.

Phillip Swagel, the director of the Congressional Budget Office, stated in an interview with The Financial Times that President Trump's trade policies and tariffs have had an impact on Wall Street and could potentially affect foreign investors' confidence in U.S. assets. While a 10% tariff might reduce the deficit, its impact on market confidence and the dollar's status cannot be overlooked. With the rise in U.S. debt interest expenses, the CBO and policymakers view U.S. debt as being on an unsustainable trajectory.

05/12 01:24

The US-China trade talks wrapped up in Geneva: An agreement was reached to cut the $1.2 trillion trade deficit and set up a consultation mechanism.

On May 11, 2025, the United States and China concluded a two-day high-level economic and trade talks in Geneva, Switzerland, where they reached a consensus on several key issues. This marked the first high-level talks since President Trump imposed tariffs on Chinese goods earlier this year. The agreement aims to reduce the U.S. trade deficit by $1.2 trillion and establish a mechanism for U.S.-China economic and trade consultations. Both parties are set to release a joint statement on May 12, detailing the agreement.

05/11 22:55

The US and UK Reach a New Tariff Agreement, Talks Between the US, China, and Switzerland Begin: A Ray of Hope for the Global Trade Situation

In May 2025, the United States and the United Kingdom reached a bilateral trade agreement under a new tariff policy, which grants tariff reductions for British-made automobiles and steel products, reducing the base tariff to 10%. U.S. and Chinese officials met in Geneva, Switzerland, agreeing to set up a mechanism for economic and trade consultations, and a joint statement will be released on May 12. Market sentiment remains optimistic, U.S. Treasury yields have remained stable, and the Federal Reserve kept interest rates unchanged at its May 7 meeting, with the benchmark rate range at 4.25% to 4.50%.

05/11 18:25

Trump's announcement of a 145% tariff sparks market volatility, as U.S. inflation data indicates rising trends.

On April 2, 2025, U.S. President Donald Trump announced a 145% tariff on Chinese imports and threatened to take similar measures against Mexico, the EU, and other countries, leading to global market turmoil and sparking domestic controversy in the United States. April U.S. inflation data showed an estimated 0.3% increase in core CPI, indicating the potential impact of the tariff policy on prices. This policy, led by Trump's economic advisory team, aims to bring manufacturing back to the United States and act as leverage in trade negotiations.

05/11 14:25

An Experiment by American Small Business Owners Reveals Consumer Willingness to Pay High Prices for "Made in USA" Products: Results That Give Food for Thought

Afina Showerhead Filter founder Ramon van Meer tested if consumers are willing to pay more for products "Made in USA" amid US-China trade tensions. He sold two identical products on his website, one priced at $129 made in China and the other at $239 made in the USA. The results showed that 584 customers opted for the China-made version, while no one purchased the USA-made version, indicating that consumers are not willing to pay extra to support American manufacturing. Van Meer plans to shift production to other Asian countries to cut costs.

05/11 03:53

Thaw in US-China Trade War: Geneva Talks Begin, Four Major Sectors in the Taiwan Stock Market Preparing for Rotation

On May 10, 2025, high-level representatives from the US and China held their first formal talks in Geneva, Switzerland, in an attempt to ease economic tensions caused by punishing tariffs. The talks, led by US Treasury Secretary Besant and Chinese Vice Premier He Lifeng, lasted eight hours and are set to continue on May 11. The Taiwan stock market showed signs of capital rotation, with four major sectors likely to be affected. Ukraine and the India-Pakistan regions announced ceasefires, easing global market sentiment.

05/10 15:02

Donald Trump's new tariff policies spark volatility in the U.S. Treasury bond market: 30-year Treasury yield jumps 50 basis points within a week

In April 2025, the U.S. Treasury bond market experienced significant volatility due to a new round of high tariff policy announced by Trump on April 2. The 30-year Treasury yield surged nearly 50 basis points in a single week, marking the largest increase since 1987. Perry, the manager of SOMA at the New York Federal Reserve Bank, pointed out that the large-scale closing of "swap spread trades" by leveraged investors was one of the primary reasons for the abnormal spike in yields. The Trump administration subsequently delayed some of the tariff measures, and the Federal Reserve increased liquidity support to stabilize the market.

US and UK Reach First New Tariff Agreement: Significant Reduction in Automobile and Steel Tariffs

On May 8, President Trump announced that the US and UK have reached a consensus on a trade agreement, making the UK the first country to reach an agreement with the US under the new global tariff policies. According to the agreement, all UK-manufactured goods exported to the US will be subject to a base tariff of 10%, replacing the previous auto tariff of up to 27.5% and the 25% steel tariff.

Specifically, UK car exports will have a quota of 100,000 vehicles per year, within which only a 10% tariff will be applied. UK steel and aluminum products will be completely exempt from tariffs, with no quota restrictions. Additionally, UK aircraft parts, including Rolls-Royce engines, will also be exempt from tariffs. In response, the UK agreed to reduce import tariffs on US beef to near zero, but still prohibits hormone-treated beef from entering the UK market.

US Secretary of Commerce Howard Lutnick stated that this agreement will protect the UK auto and steel industries and create more market opportunities for US exporters. Although some details of the agreement are still pending, both parties expect to finalize the text in the coming weeks.

US-China Tariff Negotiations Begin in Switzerland, Both Sides Agree to Establish Consultative Mechanism

From May 10 to 11, senior US and Chinese officials held closed-door talks at the United Nations residence by Lake Geneva in Switzerland. This is the first face-to-face negotiation since the Trump administration imposed tariffs of up to 145% on Chinese goods in January. The Chinese delegation was led by Vice Premier He Lifeng, while the US was represented by Treasury Secretary Scott Bessent and Trade Representative Jamieson Greer.

Both sides stated after the meeting that the negotiations made "substantial progress" and agreed to establish a US-China economic and trade consultative mechanism for regular and ad-hoc communication on issues of mutual interest. According to the US, this agreement will help reduce the US's $1.2 trillion global trade deficit.

President Trump stated on the social platform "Truth Social": "We had a very productive meeting with China in Switzerland today, discussed many issues, and reached many agreements. Great progress was made!" However, specific details of tariff adjustments have not yet been announced, with both sides only stating that a joint statement will be released on May 12.

The negotiations also covered non-tariff issues, including the fentanyl smuggling problem. China's Minister of Public Security Wang Xiaohong attended the meeting, highlighting China's emphasis on this issue. US officials noted that the fentanyl issue has become one of the core topics of the negotiations.

Market Reaction: Stable Bond Market, Slight Rise in Australian Dollar

With positive signals from the US-China negotiations, market sentiment has visibly stabilized. According to FXStreet, as of May 11, the Australian dollar rose slightly by 0.10% against the US dollar, trading at 0.6417. Analysts pointed out that this reflects market optimism about easing global trade tensions.

In the bond market, US Treasury yields showed a stable trend. According to CNBC quotes, at the close of the New York bond market on May 9, the yield on the 2-year US Treasury fell slightly to 3.889%, while the 10-year Treasury yield rose by 1 basis point to 4.386%. This indicates that market expectations for the Federal Reserve's policy direction are becoming more stable.

Federal Reserve Maintains Interest Rates, Adopts Cautious Policy Stance

At the Federal Open Market Committee (FOMC) meeting held from May 6 to 7, the US Federal Reserve decided to maintain the federal funds rate target range at 4.25% to 4.50%, marking the third consecutive time since December 2024 that the rates have been held steady.

The post-meeting statement noted that although the US real GDP experienced a negative growth of 0.3% in the first quarter, the Federal Reserve believes this is mainly due to changes in net exports and does not indicate a weakening of economic fundamentals. Fed Chairman Powell emphasized at a press conference that the current policy rate is at an "appropriate position" and that adjustments will be made based on data changes.

Additionally, Powell pointed out that the Trump administration's high tariff policy may put pressure on economic momentum, but the Federal Reserve will not implement preventive rate cuts and will base our decisions on actual data.

References

People Also Ask...

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Did the negotiations between the US and China mention environmental or human rights issues?

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Will the US-UK tariff agreement boost market sentiment in the automotive and steel industries?