National Economic Council Director Kevin Hassett expressed optimism on Sunday about a potential trade deal between the United States and China, with key negotiations scheduled for Monday in London.

Speaking on CBS’ Face the Nation, Hassett said he’s “very comfortable” that the deal will close soon, following President Donald Trump’s recent description of his conversation with Chinese leader Xi Jinping as “very good” and talks as “very far advanced.”

Restoring Crucial Trade Flows

A major focus of the deal is reopening the flow of rare earth minerals—essential components in electronics, electric vehicles, and military equipment—to levels seen before the trade war escalated in early April.

“Exports of critical minerals have improved, but they haven’t fully returned to the levels we agreed to in Geneva,” Hassett explained.

Leading the talks in London will be Commerce Secretary Howard Lutnick, Treasury Secretary Scott Bessent, and U.S. Trade Representative Jamieson Greer, who spearheaded recent negotiations in Geneva.

A Rocky Road: Trade War and Tariff Battles

Despite progress, tensions flared weeks ago after President Trump accused China on Truth Social of “totally violating” a 90-day trade agreement meant to ease the conflict. That deal had temporarily lowered U.S. tariffs on Chinese goods from a staggering 145% to 30%, while China reduced its tariffs on American imports from 125% to 10%.

China had also agreed to suspend various non-tariff retaliations, including restricting exports of rare earth minerals—a key point in this ongoing negotiation.

Tariffs Are Here to Stay

Since April 2, the Trump administration has imposed sweeping “reciprocal” tariffs on numerous trading partners, initially pausing and then setting them to a baseline of 10%. Hassett confirmed that tariffs will remain a part of the U.S. trade strategy going forward.

“You can be certain there’s going to be some tariffs,” he said, though he stopped short of revealing what the final baseline might be.

Commerce Secretary Lutnick, speaking earlier this year, echoed this, stating, “We will not go below 10%,” signaling that these tariffs are likely to be a long-term fixture.

Economic Impact and Revenue Gains

While the administration claims that tariffs place the burden on foreign countries, many businesses and economists warn they could harm American consumers and dampen spending. However, there is some good news: U.S. inflation slowed to its lowest in over four years in April, with consumer prices rising just 0.2%.

Hassett credits the tariff policy for helping to reduce inflation and increase government revenue. The Treasury Department reported a record $16.3 billion in customs duties collected in April alone, nearly doubling the $8.75 billion collected in March.

Since the start of the 2025 fiscal year (October 2024), total customs duties have hit $63.3 billion—over $15 billion more than the same period last year. The Congressional Budget Office (CBO) estimates that these higher tariff revenues could reduce the federal deficit by as much as $3 trillion over the next decade, although this doesn’t factor in broader economic effects.

Budget and Deficit Outlook

The U.S. government ran a $2 trillion deficit in 2024, roughly 7% of GDP. Meanwhile, House Republicans’ recent legislation to enact President Trump’s policy agenda could add $3.8 trillion to the nation’s $36 trillion debt, according to the CBO.

Bottom line: While challenges remain, the Trump administration is pushing hard to seal a trade deal with China that would ease tensions, restore critical mineral flows, and maintain tariffs as a key economic lever—hoping to boost revenue and reduce the deficit amid a complicated global trade landscape.

Source: CNN – Trump economic adviser ‘very comfortable’ with a trade deal closing with China on Monday

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While President Trump has hyped the upcoming announcement as a “major trade deal,” the reality is more modest. Here’s a breakdown of what to expect—and what it means for both sides.

Not a Trade Deal—But Still Significant

Despite the fanfare, this isn’t a comprehensive trade agreement. President Trump doesn’t have the authority to sign one without congressional approval. What’s coming instead is a limited pact focused on reducing or exempting specific tariffs.

The goal? A quick-win agreement before the 90-day pause on Trump’s original tariffs expires. So don’t expect sweeping changes—at least not yet.

A Narrow, Short-Term Arrangement

This deal is likely to be a bare-bones framework. Officials expect it to be short-term and narrowly focused on key industries rather than a broad overhaul.

The blanket 10% tariff on most UK goods entering the US is expected to stay in place. However, the UK may secure relief from the harsher 25% tariffs that hit some of its biggest exports—particularly in the automotive and steel sectors.

Autos Take Center Stage

The UK’s top export to the US—cars—could be at the heart of this deal. Last year, UK car exports to the US were worth about £9 billion.

Trump’s 25% tariffs on car imports have hit the industry hard. The new agreement could lower those tariffs or introduce a quota system, which would allow a fixed number of UK-made cars to enter the US tariff-free. Anything above that limit would face extra charges.

While UK manufacturers prefer a blanket tariff cut, a quota would still offer some breathing room. On the UK side, tariffs on US car imports—currently at 10%—are expected to be lowered. The US wants that rate slashed to 2.5%, and UK Chancellor Rachel Reeves has signaled a willingness to consider it.

Steel and Aluminium in the Spotlight

Steel and aluminium have been subject to a 25% US import tariff since March. Although the UK exports only about £700 million worth of raw steel and aluminium, products made from these materials—like gym equipment and machinery—make up a further £2.2 billion in exports.

Industry leaders warn that without relief, these tariffs could be devastating. They could also flood the global market with excess steel, putting more pressure on UK producers already struggling with competition and high energy costs.

Whether the deal offers lower tariffs or a quota system for these sectors remains to be seen.

The Big Unknown: Pharmaceuticals

One area still in the dark is pharmaceuticals. The UK exported £6.6 billion in medicinal and pharmaceutical products to the US last year—making it the second-biggest export category. The US, meanwhile, sent £4 billion worth of drugs the other way.

While medicines typically avoid tariffs under global agreements aimed at keeping healthcare affordable, there’s always the risk of future restrictions. For now, no new pharmaceutical tariffs have been announced by the Trump administration.

A Possible Trade-Off: Digital Services Tax

Another potential part of the bargain? The UK may agree to reduce its 2% digital services tax on US tech giants like Meta, Google, and Apple in exchange for tariff relief on exports like cars and pharmaceuticals.

The UK brought in around £360 million from the tax in its first year, but it’s a politically sensitive issue. Cutting it could be seen as bowing to pressure from Big Tech—or from President Trump.

Food Standards Off the Table

Although agricultural tariffs could be adjusted, don’t expect the UK to budge on food standards.

Chancellor Reeves has made it clear that imports like chlorinated chicken or hormone-treated beef will remain banned. The UK is prioritizing alignment with EU food safety rules, especially with a planned “Brexit reset” on the horizon.

American farmers have long pushed for more access to UK markets, but backing off these demands—even temporarily—would be seen as a diplomatic win for Prime Minister Keir Starmer.

Bottom Line

This UK-US tariff deal isn’t the sweeping trade agreement some headlines might suggest. But for key industries like automotive, steel, and tech, it could offer targeted relief—and help prevent further economic strain on both sides of the Atlantic.

As always, the devil will be in the details—and in the months of negotiations still to come.

Source: BBC – What could be in the UK-US tariff deal?

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​On April 2, 2025, President Donald Trump announced a series of significant tariffs aimed at revitalizing U.S. manufacturing and addressing what he termed an “economic emergency.” These measures include a 34% tariff on Chinese imports, 20% on goods from the European Union, and a baseline 10% import tax on all countries. Invoking the 1977 International Emergency Powers Act, Trump implemented these tariffs without congressional approval, a move that has sparked widespread debate.

Economists warn that these tariffs could elevate the average U.S. tariff rate to approximately 25%, potentially leading to increased consumer prices and a heightened risk of recession. Industry leaders from sectors such as electric vehicles, seafood, toys, and restaurants have expressed concerns about significant cost increases that could threaten jobs and competitiveness. For instance, toy manufacturers reliant on Chinese imports anticipate price hikes as a direct consequence of the tariffs.

The administration’s actions have elicited strong reactions from international allies. Countries like Canada, the EU, and China have voiced opposition, with some already enacting retaliatory tariffs. This escalation raises concerns about potential trade wars and further economic instability.

Domestically, President Trump is urging Senate Republicans to oppose a Democratic resolution that seeks to nullify his emergency declaration on fentanyl, which he is using to justify the tariffs on Canada. This resolution serves as a critical test of GOP loyalty, with some Republican senators, including Lisa Murkowski, Susan Collins, Mitch McConnell, and Rand Paul, showing support for it. Critics argue that the tariffs are economic tools disguised as border security measures and could harm American consumers and industries.

In parallel, Republican senators, backed by President Trump, have unveiled a budget proposal aimed at advancing key components of Trump’s domestic agenda. The proposal seeks to preserve $4 trillion in existing tax cuts and introduce $1.5 trillion in new ones, while raising the nation’s debt limit by $5 trillion. Despite broad Republican support, the plan faces staunch Democratic opposition, with critics arguing that the proposed policies favor the wealthy and could lead to deep cuts in critical government programs.

In a separate development, the race to secure a casino license in New York City could potentially net Donald Trump $115 million if Bally’s Corp. is awarded one of the three available licenses. Bally’s aims to open a casino at a public golf course in the Bronx, previously operated by Trump. In 2023, Bally’s purchased the course rights from Trump for $60 million and agreed to an additional $115 million payment if they secure the casino license. This association may impact the selection process, which involves community advisory committees and New York state’s gaming board.

Source: AP News – Live updates: Business leaders warn Trump tariffs will raise prices for US consumers

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Why the Tariffs?

In a post on Truth Social, Trump cited the illicit smuggling of fentanyl as the primary reason for the new tariffs.

“We cannot allow this scourge to continue to harm the USA, and therefore, until it stops, or is seriously limited, the proposed TARIFFS scheduled to go into effect on MARCH FOURTH will, indeed, go into effect, as scheduled,” Trump wrote.

• Mexico and Canada: A 25% tariff on most imports and a 10% tariff specifically on Canadian energy products like oil and electricity.
• China: The existing 10% universal tariff will double to 20% as part of efforts to curb the supply of chemicals used in fentanyl production.

Economic Impact and Stock Market Reaction

The announcement immediately rattled global markets, with concerns over higher consumer prices, potential inflation spikes, and economic slowdowns.

• The S&P 500 index dropped 1.6% on Thursday, wiping out nearly all post-election gains.
• The total cost of the Mexico and Canada tariffs for U.S. consumers is estimated between $120 billion and $225 billion annually.
• Additional tariffs on China could add another $25 billion in costs.

Consumer Concerns Over Inflation

Trump dismissed concerns that tariffs increase prices for consumers and importing companies, calling it “a myth.” However, economists argue that tariffs typically lead to higher costs for businesses and consumers, slowing economic growth.

Mexico and Canada Respond

Both Mexico and Canada emphasized their efforts to address drug trafficking and border security in response to Trump’s decision.

Mexico’s Reaction

• Mexican President Claudia Sheinbaum expressed hopes for negotiations before the tariffs take effect.
• Mexico deployed 10,000 National Guard troops to its border and is increasing intelligence-sharing efforts with U.S. officials.
• Sheinbaum remains optimistic:
  

  “I hope we are able to reach an agreement and on March 4 we can announce something else.”

Canada’s Reaction

• Prime Minister Justin Trudeau defended Canada’s $1 billion investment in border security and pushed back against claims of a crisis.
• Canada has prepared retaliatory tariffs on $30 billion of U.S. products, with an additional $125 billion in tariffs planned for three weeks later if no resolution is reached.
  

  “There is no emergency for the United States at the border with Canada when it comes to fentanyl,” Trudeau said.

China Calls for Trade Talks

China also criticized the doubling of tariffs and called for dialogue and negotiation.

• Commerce Minister Wang Wentao reached out to U.S. trade officials, urging a diplomatic solution instead of escalating tariffs.

More Tariffs on the Horizon?

Trump’s tariff strategy may expand further, with additional plans including:
25% tariffs on European imports
Tariffs on autos, computer chips, and pharmaceuticals
The removal of exemptions on steel, aluminum, and copper imports

Additionally, Trump confirmed that his “Reciprocal Tariff Plan” will begin on April 2, meaning U.S. tariffs will mirror the taxes imposed by other countries on American goods.

“The April Second Reciprocal Tariff date will remain in full force and effect,” Trump stated.

Consumer Confidence Drops Amid Tariff Fears

The announcement has already shaken consumer confidence, adding to economic uncertainty.

• The Conference Board’s Consumer Confidence Index dropped 7 points to 98.3, its largest decline since August 2021.
• Inflation expectations jumped from 5.2% to 6% in February, raising concerns about future economic stability.

“There was a sharp increase in the mentions of trade and tariffs, back to a level unseen since 2019,” said economist Stephanie Guichard of the Conference Board.

What’s Next?

With just days before the March 4 deadline, all eyes are on potential diplomatic negotiations between the U.S., Mexico, and Canada. However, the threat of a broader trade war looms, with retaliatory tariffs from key U.S. trade partners already in the works.

Key Takeaways:
Trump plans to impose tariffs on Mexico, Canada, and China starting March 4.
Stock markets and consumer confidence are already showing signs of instability.
Mexico and Canada are pushing for negotiations but are ready to retaliate if necessary.
China urges dialogue but faces a higher tariff rate from the U.S.
More tariffs on Europe, automobiles, and tech may follow.

With tensions rising, the next few weeks will be critical in determining whether Trump’s tariff strategy strengthens or weakens the U.S. economy.

Source

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