US president Donald Trump’s reshaping of the global trade system appears to be entering a new phase this week.
The first trade talks this year between China and the US are set to take place this weekend, while a deal with the UK could be announced before then.
There’s also rumblings of a possible agreement with Canada on automotives, following new Canadian prime minister Mark Carney’s first White House visit.
US-China talks
A breakthrough in the escalating trade war between the US and China will see senior representatives from both countries meet in Switzerland for talks this weekend.
China’s vice-premier He Lifeng will meet with US Treasury secretary Scott Bessent and US trade representative Jamieson Greer to discuss spiralling tariffs that are threatening both economies and disrupting global supply chains.
Currently, US tariffs on Chinese goods stand at 145%, while reciprocal Chinese rates of 125% are applied to US exports.
Bessant told Fox News that the talks “will be about de-escalation, not about the big trade deal, but we've got to deescalate before we can move forward”. He added that both parties had “a shared interest”, as current tariff rates aren’t “sustainable”.
“We don't want to decouple — what we want is fair trade”.
A spokesperson for the Chinese Commerce Ministry reiterated the call for fairness, saying that talks “must be based on mutual respect, equality and reciprocal benefit.”
“If the US side wants to resolve issues through dialogue, it must face the negative impact of its unilateral tariffs and respect international trade rules, fairness and justice”.
‘A long march’
Experts have been quick to point out that this is only the first step in the process and that talks are unlikely to yield results soon.
Speaking to the BBC, Henry Gao, a professor of Law at Singapore Management University and a former Chinese lawyer on the WTO’s secretariat, referred back to drawn out US-China trade talks during Trump’s first term, saying:
“I would expect the talks to drag on for several months or even more than a year”.
This sentiment was echoed by Wang Chong, a senior fellow of the Charhar Institute, who told the FT that “this week’s talks will just be the first step in a long march, a 1,000-miles long march”.
US-UK deal
While talks with China get underway, the FT reports that discussion with the UK are close to conclusion, with a deal set to be signed this week.
The UK has sought concessions to lessen the impact of sector-specific tariffs on cars and steel. This includes the rumoured introduction of a quota on the number of UK cars and amount of steel exported to the US, before they’re subject to the 25% tariffs Trump announced earlier this year.
The report also notes that UK negotiators, back in Washington DC this week, are also hoping to secure a broader reduction in the 25% levy. Those on the ground said that the talks were progressing “at speed”, but added that trade in pharmaceutical goods remained a blocker.
One historical blocker that has been removed from the talks, according to the FT, is the US demand for a reduction of UK food standards to allow for the importation of US goods, such as chlorinated chicken and hormone-fed beef. Negotiators confirmed that while tariffs on US agricultural products could be reduced, standards will not be lowered.
Other concessions granted by the UK government include a reduction in tariffs on US car exports, as well as a unspecified concession on the UK’s digital services tax, the 2% rate applied to firms providing “a social media service, a search engine or an online marketplace”, which impacts large US tech firms like Apple, Meta and Google-parent Alphabet.
Trade tensions as Carney meets Trump
Having won the Canadian premiership last month on a platform that rejected Trump’s aggressive trade policy and repeated threats to Canadian sovereignty, Mark Carney faced him in the White House’s Oval Office yesterday (6 May).
Carney quickly rebuffed Trump’s repeated allusions to Canada becoming the US’ “51st state”, telling him:
“Having met with the owners of Canada over the course of the campaign… it’s not for sale. It won’t be for sale, ever.”
UMSCA challenges
The shoe was on the other foot when the leaders discussed another key deal for their countries’ relationship, the US-Mexico-Canada Agreement (UMSCA), signed during Trump’s first term.
The deal granted concessions for US farmers, a group Trump claimed were disadvantaged by the previous North Atlantic Free Trade Agreement.
While Trump stood by the agreement, describing it as “good for everybody”, Carney said that it was only “a basis for broader negotiation”, adding that “some things about it are going to have to change”.
Way forward?
Although Trump reiterated his recurrent trade gripe and tariff rationale during the meeting – that Canada has a trade surplus with the US and that the US is effectively “subsidising” Canada – Carney later told reported that he was optimistic that progress could be made on trade.
Despite US tariffs still being in place on Canadian automotives, Carney said that Trump had proposed strengthening both countries’ car manufacturing industries against “foreign competition, including from Asia”.
