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UK Prime Minister Keir Starmer speaks on the phone to US President Donald Trump at a car factory in the West Midlands, United Kingdom, on May 8, 2025.
US-UK trade deal a victory for Starmer, with some caveats
When President Donald Trump announced a trade deal that will reduce US tariffs on UK cars and plane engines in return for greater access to the British market for American beef and chemicals, he singled out Prime Minister Keir Starmer for praise.
“The US and UK have been working for years to try and make a deal, and it never quite got there,” said Trump. “It did with this prime minister.”
The president’s comment twisted the knife into the UK Conservative Party, which tried — and failed — to achieve a trade deal with the Americans during its 14 years in power. It took Starmer, the Labour leader, to finally clinch the deal less than a year after entering office.
Starmer isn’t the only winner. Brexiteers cited the prospect of a US trade deal to further justify exiting the European Union. The deal caps a stellar week for Reform UK leader Nigel Farage, after his party made extraordinary strides in the local UK elections last Thursday.
There’s a caveat. The scope of the deal was somewhat limited, with many goods still subject to the 10% tariff — Trump said this rate was “pretty well set.” The UK tariff rate appears to have dropped, while the US one has risen, although the White House numbers can sometimes be off.
What’s Trump’s strategy? With this deal — the first the US has made since “Liberation Day” — it’s not clear whether the president’s main goal is protectionism or winning concessions from America’s allies.
The US did nab some wins from the pact, including access to UK meat markets, but they inked it with a country with which they already have a trade surplus. Trump thus achieved both of these goals, making it unclear where his priority lies.US House Speaker Mike Johnson talks with reporters in the US Capitol on May 8, 2025.
GOP retreats on Medicaid cuts
US House Speaker Mike Johnson is walking a tightrope on Medicaid — and wobbling.
After intense pushback from moderate Republicans, Johnson abandoned some of the GOP’s most aggressive proposals to cut federal funding for Medicaid, including a plan that would cap the federal government’s per capita grants to states for the program.
The background: A budget framework passed earlier this year commits Congress to slashing some $1.5 trillion in spending in order to fund the extension of President Donald Trump’s first term tax cuts without further ballooning the deficit.
Why the climbdown?The Congressional Budget Office estimates that 5.5 million Americans would lose coverage under the mooted cost cuts. More than 70 million Americans are currently enrolled in Medicaid, a program that is viewed positively by nearly 80% of the country, according to recent polls.
What’s the president’s position? Trump has said he will not touch entitlements, including social security and Medicaid, which further narrows the GOP’s realistic options.
The president has imposed a deadline of Memorial Day for a “big beautiful” budget bill. We’re watching to see how the Republicans close the gap, without turning off the tap.
US President Donald Trump and Canadian Prime Minister Mark Carney meet in the Oval Office at the White House in Washington, D.C., USA, on May 6, 2025.
Carney met Trump: How did it go?
The first official meeting between Canadian Prime Minister Mark Carney and US President Donald Trump was friendlier than you might expect given the recent tensions in the relationship. Carney described Trump as a “transformational” president, while the US leader said he had “a lot of respect” for his Canadian counterpart.
It wasn’t all pleasantries, however: Trump again said Canada should become the 51st state, to which Carney cautioned the former real estate magnate that “there are some places that are never for sale.”
Trump’s response? “Never say never.”
The start of a beautiful friendship? Despite some disagreements, the two leaders agreed to begin talks on new economic and security frameworks. The Canadian dollar even rallied slightly after the “positive” exchange.
But tariffs remain in place: Canada and the US are keeping their tariffs on each other’s steel, aluminum, and auto industries for now.
Next stop, the G7. The two men will meet again, along with other world leaders, when Canada hosts the G7 summit in Kananaskis, Alberta, next month. Ahead of that, Carney gave Trump a gift. What was it? A Kananaskis Country Golf Course hat, naturally, and some other gear from the resort.
For more on Tuesday’s White House tête-à-tête and upcoming trade talks, read GZERO’s interview below with former Canadian Progressive Conservative leader and Quebec Premier the Hon. Jean Charest.A carnival float by artist Jacques Tilly depicting Russian President Vladimir Putin, U.S. President Donald Trump and Chinese President Xi Jinping, at the traditional "Rosenmontag" Rose Monday carnival parade in Duesseldorf, Germany, March 3, 2025.
How Trump affects the “no limits” China-Russia relationship
Chinese President Xi Jinpingarrived in Moscow on Wednesday for a four-day trip in which he’ll attend the Kremlin’s World War Two victory celebrations and aim to bolster his “no limits friendship” with Russian President Vladimir Putin.
Russia-China ties have deepened significantly in recent years, as both leaders prefer a multipolar world to a US-dominated one, and they share an affection for authoritarian politics. They also enjoy a natural symbiosis: Russia sells natural resources, while China buys them. And since Russia’s invasion of Ukraine, Beijing has helped Putin to survive Western sanctions, supplying Moscow with banned technology and arms while buying Russian oil.
But the return of US President Donald Trump – who has upended global trade and sympathized with Russia’s views on Ukraine – makes things interesting.
Beijing, which has clashed with the European Union over trade and technology in recent years, is now keen to exploit European misgivings about Trump to repair its own ties with Brussels. But standing next to Putin, whom most European leaders see as an arch villain for his invasion of Ukraine, will make that harder.
Meanwhile, Putin has a balancing act of his own to consider. Trump offers the prospect of a major improvement in US-Russia relations, which could help Moscow financially. But the White House is also trying to isolate China economically, something Putin couldn’t possibly go along with right now. Is there a way to square that circle? Would he even want to try?
Traders work as screens broadcast a news conference by US Federal Reserve Chair Jerome Powell following the Fed rate announcement, on the floor of the New York Stock Exchange (NYSE) in New York City, USA, on May 7, 2025.
Hard Numbers: Federal Reserve holds interest rates steady, US Navy jets skid into the sea, The one-percent impact on the climate, Feathery “mass cannibalism” in South Africa
4.5: The US Federal Reserve on Wednesday left its key interest rate unchanged for the third time in a row, keeping it at 4.25%-4.5%, where it’s been since December. President Donald Trump has publicly pressured Federal Reserve Chair Jerome Powell to lower rates. “The economy itself is still in solid shape,” Powell told reporters Wednesday, but he said a “great deal of uncertainty” remains about the impact of Trump’s global tariffs and wider trade wars.
2: Speaking of uncertainty, why are US warplanes falling into the sea? According to reports, two F/A-18 Super Hornet fighter jets have slid off the deck of the USS Harry S. Truman carrier into the Red Sea over the past week alone. The first plunged into the water when the warship made a hard turn to evade fire from Houthi rebels. The second may have experienced a landing problem. Each jet costs a cool $60 million – cue Commander Stinger, “you don’t own that plane, the taxpayers do!”
10: The richest 10% of the global population are responsible for two-thirds of the global temperature rise since 1990, according to new research published by Nature Climate Change. The study also claims that compared to the average person, the world’s richest 1% contributed 26 times more to extreme heat globally and 17 times as much to droughts in the Amazon. Private jets are not, as it happens, great for the environment.
350,000: Animal welfare officers in South Africa euthanized more than 350,000 chickens after a state-owned poultry company ran out of funds to feed them. Officials couldn't estimate how many other chickens had died before this intervention due to “mass cannibalism” at the farm (yes, chickens eating each other). Still, on the plus side, the NSCPA’s action saved more than 500,000 chickens who may now be… eaten by people anyway.Thousands of Yemenis gather in Sanaa's Al-Sabeen Square to demonstrate unwavering solidarity with Palestine and vehemently denounce Israel and the US. Organized by the Houthis, the protest included chants against Israeli actions in Palestine, with demonstrators pledging steadfast support for Palestinians amid regional tensions.
Trump reaches pact with Houthis, a positive sign for US-Iran talks
President Donald Trump said this week the US campaign against the Houthis is done for now. “They have capitulated,” he said, “but more importantly… they say they will not be blowing up ships anymore.”
The Houthis from the Signal chat? The very same. The Trump administration in March ramped up bombings of the Iran-backed group – which controls much of Yemen – to stop its ongoing attacks on ships in the Red Sea, a critical global trade artery.
The Houthis began attacking ships in October 2023 in an act of solidarity with Hamas, protesting Israel’s war in Gaza.
Why did the Houthis stop? Not necessarily because of the US airstrikes alone, says Gregory Brew, an Iran expert at Eurasia Group.
“The US hit the Houthis dozens of times,” he said, “but failed to do serious damage to the group’s capabilities.”
Rather, Tehran reportedly pushed the Houthis towards the US pact, a positive sign for US-Iran relations, Brew says. The US and Iran meet for a fourth round of talks on Iran’s nuclear program this weekend.
Meanwhile: the Houthis and Israel continue to clash. Israel leveled Yemen’s main airport this week after a Houthi missile landed near Ben Gurion airport near Tel Aviv. Israel is, notably, excluded from the US-Houthi pact.
Can Trump and Carney reset US-Canada relations?
But it has reduced cause for panic, in part because Trump stated a commitment of the United States to the basic alliance, to the security umbrella, to defending Canada as necessary, which was something he wasn't saying over the past few months with Justin Trudeau. He clearly likes Carney more than Trudeau, which is not surprising because that bar is pretty much on the floor. And also stopped with the governor speak, which is clearly disrespectful, but did push on the 51st state issue, and how much better it would be for Canada if they were actually a part of the United States, not that he intends to take it over militarily, but rather something he's going to keep talking about.
And Carney didn't interrupt Trump when he was going on and on, talking about that, but then responded with his best line of the conversation, which is, "I've spent the last couple months going around talking to the owners of Canada, meaning the voters, the citizens of Canada, and it's never, never, never going to happen." Trump says, "Never say never," and they kind of agree to disagree on something they shouldn't be talking about to begin with. But at the end of the day, not much there. The bigger problem, of course, is that there is an incredibly important trade relationship between the US and Canada. And no, it is not true that the US doesn't do much business with Canada. In fact, Canada actually buys more from the United States than any other individual country in the world does. And if you go talk to the governors, the senators, the representatives of all of the northern states that border Canada, they can tell you just how integrated those supply chains are, how essential the Canadian economy is for them.
And some of those are blue states, some of those are red states, and it don't really matter, they all care a lot about their relationship with Canada. So, it is important. But because Trump is individually taking the right to tariff from Congress, where it legally sits, and using legally contestable national emergency clauses to enforce tariffs, impose tariffs on other countries, including those that are governed by pre-existing trade relationships, like Canada, which has a robust USMCA, US-Mexico-Canada agreement, that Trump himself helped drive, negotiate, and trumpeted as a huge win at the time, but now he is singularly undermining it. And what that means is that we are very unlikely to get to a new agreed USMCA in the coming year, despite the utility of renegotiating it with the sunset clause, and instead... look, I don't think anyone's going to run away from it, I don't think it's going to break, instead, it means that every year we're going to kick it down the road and renegotiate so that you can keep it going.
And that means that the Canadians don't feel like they have a functional multilateral trade arrangement with the US and Mexico, that also means, because the US president can change it at any moment he wishes, and also that an enormous amount of time is going to be spent in those negotiations, not just now, but every year, creating more uncertainty for those that need to want to rely on the long-term stability of that trade relationship. And here is the rub, which is that the US-Canada relationship will stay important, it'll stay robust, but it will become more transactional, where it had been built on trust and shared values, and that means the Canadians will work really hard to hedge and de-risk their relations from their most important trading partner.
About 75% of Canadian trade is with the United States right now, they rely much more on the US than the Americans rely on Canada, Trump is absolutely right about that, but they now see that as a vulnerability. And for the last 40 years, the Canadians, really since '88, '89, the Canadians have focused singularly on increasing their interdependence with the United States. They built out all of this infrastructure from the provinces, not east-west, but rather north-south. If you look at the way that rail transit, and energy infrastructure, and supply chains work in Canada, it's as if these provinces were independent republics set up to do business just with the United States, not focused on what would make sense for an independent sovereign Canada over the long term, if that relationship suddenly were ruptured.
Well, that needs to change, and that's something that you're going to see the Canadians work very strongly on over the coming years. Easier for Carney to do, because his relationships internationally are much stronger than previous Canadian prime ministers, certainly generationally, if you think about the fact that he was Central Bank governor in the UK, and that one of his best international relationships is actually with the French president, Emmanuel Macron, and others and others, I think you're going to see a very strong effort to work with the UK, to work with the Commonwealth, to work with the EU, and to help shift those trade flows over time to hedge further away from the US.
And the costs of that will be significant, the impact of the trade rupture in the near term will be a major recession in Canada imminently, and a mild recession in the United States imminently as well, but over the long term, my view is no one benefits from that.
So, that's the main takeaway, a little less theatric maybe than the internet, apologies for that, but it is the way I see it, and I'll talk to you all real soon.
How will the Trump presidency influence elections in Europe?
Carl Bildt, former prime minister of Sweden and co-chair of the European Council on Foreign Relations, shares his perspective on European politics from Stockholm, Sweden.
How do you believe that the Trump presidency will influence elections in Europe?
Well, of course we don't know. But what we've seen during the last week with important elections in Canada and Australia, not Europe, but fairly similar in other ways, is that the Trump factor has been very important. It has boosted the incumbent governments. It has boosted the center-left. It has boosted those who are seen as standing up to American pressure, and thus produced results both in Canada, primarily in Canada, but also in Australia. Very different from what practically everyone expected a couple of months ago.
Europe, different place. But still we have two important elections coming up, within slightly more than 10 days. We have the first round of the presidential election in Poland. That's very important for the future possibilities of the Tusk government to continue reforming that particular country. And we have the second round of the presidential election in Romania. An important country often forgotten. But there of course, we had gross interference from Russia and TikTok, and a candidate was banned. In both of these cases, we see the Trump presidency acting. They received, in the White House the other day, the opposition candidate. The extreme right nationalist opposition candidate the other day. And they've been making distinct noises in favor of the same political alternative in Romania. Will this backfire in the way it did in Canada, Australia? Remains to be seen. Very important elections both of them. Watch this space.