The World Trade Organization (WTO) predicts a decline in global trade this year, primarily due to US tariffs. This decrease is projected to be particularly significant in North America, exceeding ten percent. The WTO cites escalating trade tensions and uncertainty, especially the decoupling of US-China relations, as major contributing factors. While some regions may experience modest growth, the overall forecast reflects a substantial negative impact on global trade. The WTO also lowered its services trade growth projection.
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The World Trade Organization (WTO) forecasts a significant decline in global goods trade this year, revising its projection from a 2.7% expansion to a 0.2% contraction, primarily due to the impact of US tariffs. This downturn is largely attributed to the decoupling of US-China trade, potentially plunging by 81-91% without exemptions for tech products. The WTO warns that reimposition of paused tariffs, coupled with increased trade policy uncertainty, could exacerbate the situation, leading to even steeper declines in global trade and GDP growth. The organization urges member countries to address these issues to mitigate further economic damage.
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President Xi Jinping’s visit to Hanoi emphasized Sino-Vietnamese unity against perceived U.S. economic coercion, particularly citing recent U.S. tariffs. Xi advocated for stable global supply chains and resistance to trade pressure, framing China as a reliable alternative amid perceived erratic U.S. policy. Trump’s dismissal of the situation as nations attempting to exploit the U.S. economically underscored the underlying tensions. Xi’s trip, his first overseas visit of the year, serves as a key component of China’s strategy to counter growing U.S. influence.
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Following recent tariff-related market turmoil, a new German coalition government, beginning May 6th, aims to pursue a new transatlantic free trade agreement with the U.S., while also negotiating deals with other nations. This initiative includes exploring American gas imports and a united European approach to counterbalance U.S. policies. The plan also prioritizes European capital market unification and increased defense spending, acknowledging past reliance on the U.S. for security.
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Despite claims that over 75 countries have contacted the Trump administration seeking new trade deals, the White House refuses to release a list of these nations. President Trump recently announced a 90-day pause on most tariffs, citing a desire to avoid harming unnecessary countries while prioritizing negotiations. This decision, made without extensive legal counsel, followed a period of deliberation and resulted in a significant stock market surge. However, tariffs on China remain elevated at 145 percent.
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In response to the U.S. raising tariffs on Chinese imports to 145%, China retaliated by increasing its tariffs on U.S. goods to 125%, asserting that further tariff increases are economically nonsensical. This action marks the culmination of escalating tariff battles, with both nations signaling an end to further increases. Despite the heightened tensions and lack of immediate negotiation prospects, China’s commerce ministry maintained its openness to future talks on equal terms. However, U.S. Treasury Secretary Scott Bessent characterized China’s actions as a losing strategy and criticized its trade practices.
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In response to increased US tariffs, the Chinese Film Administration (CFA) announced a reduction in the number of imported American films. This decision follows the imposition of 125 percent tariffs on Chinese goods, which the CFA considers detrimental to American films’ popularity in China. While the extent of the reduction remains unspecified, it will affect the current agreement allowing for 34 foreign film releases annually. Despite a decline in recent years, US films still generated a substantial $585 million in revenue within the Chinese market in 2023.
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Following increased US tariffs on Chinese imports, China is attempting to create a united front against the US, but this effort has seen limited success. While China has engaged in discussions with the EU and ASEAN, several nations, including Australia and India, have declined to join forces. Despite China’s refusal to negotiate and its retaliatory tariffs, President Trump temporarily paused tariffs on most countries, aiming to isolate China. Global markets reacted positively to the pause, although uncertainty remains regarding future actions by both the US and China.
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Negotiations between the UK and US to avoid tariffs imposed by the Trump administration included discussions regarding the UK’s digital services tax and Online Safety Act. The White House opposes the digital services tax, while concerns exist in the US regarding the Online Safety Act’s impact on free speech. While neither act is expected to be fully repealed, modifications to lessen their impact on US tech companies are under consideration. The UK government maintains its commitment to protecting children online, but is exploring ways to amend the Online Safety Act to reach a trade agreement.
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In response to U.S. tariffs on steel and aluminum, the European Union approved retaliatory tariffs on U.S. goods, effective April 15th and May 15th. These countermeasures target a range of products including poultry, grains, clothing, and metals, aiming to protect European businesses and consumers from the economic harm caused by the U.S. actions. The EU emphasized its preference for a negotiated solution with the U.S., stating that the retaliatory tariffs could be suspended if a fair agreement is reached. This action comes after President Trump imposed tariffs on a wide range of EU imports.
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John Q. Hosedrinker