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Economy
UK Prime Minister Keir Starmer meets with US President Donald Trump alongside US Vice President JD Vance and UK Foreign Secretary David Lammy in the Oval Office at the White House on February 27, 2025, in Washington, D.C., USA.
The US trade deal that London has been chasing for years is closer to reality now, after US Vice President JD Vance told UnHerd on Monday that there is a “good chance” that an agreement is possible.
UK Business and Trade Minister Sarah Jones alsosaid the negotiations are in a “good position,” but refused to divulge any timeline.
One major reported focus of the talks is the UK cutting its “tech tax” on the revenues of major digital firms in return for lower tariffs, although the sides are reportedly negotiating terms that go beyond this.
Back to being “special.” The United Kingdom escaped Trump’s “liberation day” with only the Administration’s general 10% tariff, albeit only because the UK doesn’t have a trade surplus with the US. A free trade deal would leave few or no tariffs on its US-bound exports.
A win for a Remainer and the Brexiteers. A trade pact would mark a big victory for UK Prime Minister Keir Starmer — his predecessors have failed to land a deal ever since Britain voted to leave the European Union in 2016. The idea was to replace the UK’s continental trade partners with the US, the world’s largest consumer market.
Pro-Brexit politicians like Nigel Farage had long promised that Brexit would result in just such a US trade accord.
The irony: it’s finally within sight, thanks, no less, to Starmer, a prominent Remainer.An aerial photo shows the Kumamoto factory of Taiwan Semiconductor Manufacturing Co., Ltd. (TSMC), the largest semiconductor contract manufacturer, in Kikuyo Town, Kumamoto Prefecture, Japan, on March 14, 2025.
The topsy-turvy-tariff tale continued to swing this week, as the Trump administration advanced a plan on Monday that could result in new levies on semiconductors and pharmaceuticals. The news came days after US President Donald Trump announced that smartphones would be exempt from the 145% duty that he had slapped on China.
Officially, the plan involves a first step of investigating the national security implications of importing pharma and semiconductors. The next step would be to invoke Section 232 of the 1962 Trade Expansion Act, which allows a president to impose tariffs in the interests of protecting national security. As such, the means for this latest slate of levies would be different from the widescale duties announced on “liberation day.”
Countries affected. The United States relies heavily on Taiwan in particular for semiconductors — one plant there crafts 92% of the world’s advanced chips. As for pharmaceuticals, the US imports many from China, Ireland, and India.
All that and a bag of CHIPS. Former President Joe Biden tried to spark the US’s own semiconductor industry with the 2022 CHIPS and Science Act, which allocated $53 billion for domestic semiconductor manufacturing. Trump said last month he wanted to “get rid of” the CHIPS Act, yet his more recent actions suggest he’s interested in leveraging the law to further his plan to reduce US reliance on foreign chips.
Ian Bremmer's Quick Take: A Quick Take to kick off your week, and what an extraordinary geopolitical environment we all find ourselves in right now.
The big macro lens is that the United States, my country, has become the principal driver of geopolitical uncertainty on the global stage. The most powerful country in the world, the biggest economy in the world, the home of the global reserve currency. And yet, at the same time, by far the most dysfunctional and kleptocratic and unfree political system of the advanced industrial democracies, so the G7 plus, compared to Japan or Germany or France or the UK or Canada, Australia, New Zealand, South Korea. That's what we're looking at right now. And of course, that's a really challenging thing for pretty much everybody to navigate.
It is playing out the most dramatically in global trade with massive tariffs coming from the United States. And it's unclear who is going to get hit the worst, but it is clear that everyone is going to take a hit. This isn't a good environment for anybody. You want to talk about winners? There's not really any winners when you're undoing globalization. It's painful for pretty much everyone inside the United States. It's painful for multinational corporations, it's painful for consumers, it's painful for friends and adversaries of the United States all over the world. Whether it's China, it's Europe, Japan, Global South, you name it, everyone is taking a hit, everyone's economy will do worse, global growth will do worse. We will all feel it in the pocketbook, in the portfolio. Uncertainty, a massive amount of uncertainty being driven and driven continuously by the most powerful country in the world is hard for everybody to navigate and creates more cost.
Now, the markets are clearly glad that there has been rollback from the United States, from Trump, in particular the over 10% tariffs on most countries coming off for some 90 days, the electronics and iPhone exception, at least for now, on China, et cetera. But it's certainly unclear how long those exemptions are going to last and what happens after that. And even where we are right now, with 10% additional tariffs on everybody and significant essentially trade embargo on most goods between the United States and China, the two most powerful countries in the world, that already brings us squarely back to the 1930s in terms of the global tariff environment, and also at a time that things are moving much faster, that efficiencies are much greater, that global interconnectedness and supply chains so much more important.
So that's a real problem. That is not going to get managed anytime soon because no one is going to suddenly believe, oh, okay, I now have a deal with the United States, and that isn't going to be upset in a week or in a month or in a year. So the amount of hedging that you have to do economically is going to be structural and great. Now, countries around the world do want to cut deals with the United States because it's very costly not to do so, and I think that Secretary Treasury Bessent, and as well as President Trump, absolutely right about that. And we see that in particular you've got the Japanese delegation coming this week, plenty of things they want to do to ensure that the US and Japan have a more functional trading relationship going forward. Countries around the world are going to be looking to make deals relatively quickly, especially smaller, poorer countries.
But also, an even more structural change is that everyone is going to try to hedge. For decades now, we've been talking and increasingly about the dangers of having too much exposure to China. And increasingly, in the last five plus years, this idea of de-risking your investments, your exposures, away from China. That's now shifting to conversations about de-risking the United States, which is extremely hard to do, and nonetheless, increasingly urgent. And so, we see this happening all over the world right now. The EU and Latin America are looking to speed up and make much more likely their trade deal, EU-Mercosur, than it would've been before the United States slapped all of these tariffs because it creates alternatives for increased trade.
We see India now moving to fast track their trade relations and improve them with the United Kingdom, with Australia, with the EU, with many other countries as well. We see China, Xi Jinping, making a snap trip to Southeast Asia and wanting to ensure that they can expand their trade and ease the regulatory and the constraints around that. Xi Jinping first in Vietnam and signing 45 new agreements for economic cooperation with them. And they'll do a lot more. They'll try to do that with the Europeans, with the Global South. More broadly, Canada, trying to engage much more closely with the Europeans, et cetera, et cetera, et cetera.
How is the United States winning here? And the answer is I don't see it, and I don't see it not only because I think it's going to be very hard to convince countries that they need to stop hedging away from the US and just work on getting a better deal with the United States, but also because the US isn't only picking this fight. The US is picking all sorts of fights simultaneously. The US is at the same time hitting other countries on trade, it's also trying to make itself less attractive for tourists to come to the United States, make them worry more that they are going to be treated as they might in an emerging market when they come over. Their smartphones are going to be combed through and they might get detained, they might even get arrested. A lot of people are worried about that. You go on Reddit threads, all of my friends outside the United States coming to the US, they're increasingly concerned about that.
You've got fights with the United States on issues of democracy and the export of algorithms and disinformation that undermines democracies around the world. You see the US picking fights with other countries on territoriality, whether it's with Greenland and Denmark or it's Panama or it's Canada. You see the Americans looking to work with the Russians over the heads of their closest allies in the G7. So they're not just picking one fight, they're picking lots of simultaneous fights, and they're also picking fights domestically at home. The United States trying to undo checks and balances on the executive, on the president that undermines rule of law and makes the US a less attractive place long-term to do business, to live, to educate, you name it.
So for all of those reasons, this to me, and I hope I'm wrong, looks like the most extraordinary act of geopolitical self-harm that I've witnessed. It's Brexit, but on a global scale. And my friends, all I can tell you is buckle up and we'll be watching this going forward. That's it, and I'll talk to you all real soon.
Sign seen at a liquor store in B.C., Canada earlier this year.
As the world reels from Donald Trump's on-again off-again "Liberation Day" tariffs, nations are lining up tomake deals – but also scrambling to shield their economies from the fallout.
The EU has proposed a "zero-for-zero" tariff agreement on industrial goods. But the bloc is prepared to enact a 25% tariff on US products if negotiations falter, and is also considering deploying itsnew anti-coercion instrument, which enables a range of retaliatory measures including export controls, intellectual property restrictions, and foreign investment limits.
North of the US border, Canadaenacted 25% counter-tariffs on US vehicles. The revenue is earmarked to support Canadian auto workers harmed by the US tariffs. Canadian Prime Minister Mark Carney and Trump had also previouslyagreed that trade negotiations will take place after the Canadian election, scheduled for April 28.
Interest rate cuts. Countries including India, New Zealand and the Philippines slashed interest rates to cushion their economies, and South Koreaunveiled a $2 billion aid package for its auto sector. Many countries, including Australia, Spain and Canada, are also urging consumers tobuy domestic products rather than American goods.
China strikes back. China, for its part, countered the 145% US tariff with a 125% levy on American goods. Beijing is also looking to bolster domestic consumption through initiatives like Chinese e-commerce company JD.com's$27 billion procurement deal from Chinese firms. So far, however, Beijing has not moved to devalue its currency to support exports, as some expected it might.US President Donald Trump attends a Cabinet meeting at the White House in Washington, D.C., on April 10, 2025.
Wednesday’s tariff respite is firmly in the rearview mirror, as China announced on Friday it was raising its duty on US imports to an astronomical 125%, taking effect Saturday. The announcement came less than 24 hours after the White House clarified that the new levy on Chinese imports would be 145%.
With US President Donald Trump’s collision course with the rest of the world on hold — the EU delayed its planned retaliatory levies Thursday — his fully-fledged trade war with China now has the spotlight to itself. Whereas he dropped tariffs on other countries on Wednesday, the commander-in-chief raised them on Beijing three times within one week, with the White House clarifying on Thursday that the rate is now 145%. After a brief delay, China has now responded in kind.
And just like that. These extraordinary levies are already affecting businesses. US firms have started canceling orders and some Chinese companies are putting staff on temporary leave. Trans-pacific shipping bookings have plunged. The March inflation figures released Thursday suggested that US price growth was easing, but the data was taken before the new China tariffs were implemented. With the levies accelerating skyward, it’s only a matter of time before US prices follow suit.
Markets suffer again. The laws of gravity applied to the markets Thursday — before China announced its latest retaliation — with stocks reversing again as the reality of Trump’s new world trade order set in for investors. The S&P 500 dropped 3.5%, the Dow Jones Industrial Average fell 1,000 points, and the dollar lost ground against the major Asian currencies. On top of all this, Democrats are now questioning whether the president and his allies engaged in insider trading this week. Wednesday’s comeback looks like a fever dream.
The dust won’t settle. Trump acknowledged Thursday that there would be “transition problems” with the markets, while retaining his unfailing optimism that stock would turn around. The former “Apprentice” star added that he was open to extending the 90-day tariff pause on countries that aren’t China, but with Beijing further escalating the trade war, investors will remain unsettled.
On GZERO World with Ian Bremmer, economist Larry Summers slams the Trump administration’s trade war as “the worst, most consequential, self-inflicted wound in US economic policy since the Second World War.” He says there’s still time to limit the damage—if the tariffs are walked back quickly—but warns that the global fallout is already underway. “Even in the best imaginable place, we have lost enormous credibility in the world,” Summers says, adding that the unpredictability rattles everything from debt markets to US alliances.
When Bremmer asks what the Trump administration is actually trying to accomplish, Summers is at a loss. "I don't see this as a rational way of either pursuing the objective of strengthening US manufacturing or the objective of reducing other countries' trade barriers." And the damage, Summers adds, will be extensive and long-lasting.
"We have lost enormous credibility in the world. We've created a large uncertainty premium about what we're going to do next, and we're going to be seen as a less reliable country...this kind of truculence does not go unnoticed, and it is not immediately forgotten."
Watch full episode: Larry Summers: Trump's trade war the "worst self-inflicted wound since WWII"
GZERO World with Ian Bremmer, the award-winning weekly global affairs series, airs nationwide on US public television stations (check local listings).
New digital episodes of GZERO World are released every Monday on YouTube. Don't miss an episode: subscribe to GZERO's YouTube channel and turn on notifications (🔔).GZERO World with Ian Bremmer airs on US public television weekly - check local listings.
Listen: For a special edition of the GZERO World Podcast, Ian Bremmer sits down with former Treasury Secretary Larry Summers to get his economic assessment of President Trump's unprecedented imposition of tariffs, which has sparked an escalating trade war.
"I don't see this as a rational way of either pursuing the objective of strengthening US manufacturing or the objective of reducing other countries' trade barriers," Summers tells Bremmer. "This is probably the worst, most consequential, self-inflicted wound in US economic policy since the Second World War."
Summers, who was also at one point the President of Harvard University, is especially astonished by the lack of backbone that certain institutions, from universities to law firms, have shown when it comes to standing up against the Trump administration. "History will record of the United States establishment at this moment, that it allowed itself to be especially cowed...If Harvard is not prepared to speak up... it's hard to imagine who will."
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