The United States is withdrawing from the large-scale trade war with China

Well, it didn't take long. And I thought that China's resistance to be rebounded in an agreement – including the insistence that the United States had asked for talks – meant it had settled for a long distance from negotiations. To be clear: the pactAccessive in Switzerland properly neutral during the weekend, leaves American prices on ridiculously high and asymmetrically China. But that the United States was ready to conclude an agreement so quickly and reduce the tasks that suggest so much that the more is to come.

Today's main part examines the agreements that Trump has so far agreed with China and the United Kingdom. I also look at the state sorry for help and development abroad after the news that Bill Gates will finish its foundation. And now, the first question of the reader for a while: simply China and the law of the United Kingdom accepted transactions? Answers please alan.beattie@ft.com.

Take the offer or pay the Danish

Trump's agreements with China and the United Kingdom have one thing in common, which is – and please sit if you are subject to fainting – they are not binding and they leave a huge negotiation on the line. Isn't it? In fact, it is not 100% clear what they want now, in particular the Chinese agreement. From the time of “Send Send” of this newsletter, the world's commercial nerds always thought about the announcement, trying to determine exactly what had been agreed. The first stab in overall prices, including an average for non -Chinese emerging markets and advanced savings, is here, the Oxford Economics consulting company.

And, of course, they are subject to crossfire of the other loose guns of Trump. The other news yesterday was Trump declaring that the American pharmaceutical industry could not invoice more in the United States than in another country. Is it at the top of the sectoral pharmaceutical rates he wants? What does this mean for the vast pharmaceutical trade between the United States and the United Kingdom and China? No one knows.

Even before that, literally the day after the announcement of the British agreement, the Trump administration launched another so-called Article 232 National Security SurveyThis time on plane, which could end with prices. Is the United Kingdom pre-existing these duties due to the agreement? No one knows.

In theory, the United States has left a lot of leverage. The question is, in particular with the threat of financial market disorders, a germatous, if it is willing to use it. The British agreement, which explicitly indicates that it is not legally binding, makes Great Britain vulnerable to blackmail in a joint action against China if Washington describes it. Simon Lester from the International Blog of Economic and Policy Law has a Great overview here Many uncertainties around the pact.

With China, the non-reciprocal “fentanyl prices” in the United States are still high and asymmetrically. Beijing is encouraged to return to the negotiating table and agree with another liberalization set – or even, as the Treasury Secretary Scott Bessent said on Sunday, agree to buy more American exports.

This puts us directly on the territory of the “phase 1” agreement of the first presidency of Trump, in which China would have agreed with a lot of liberalizing measures. The United States’s commercial representative Robert Lighthizer has made it a big problem, but they did not exactly prevent the United States from moaning on Chinese state capitalism. Beijing has also agreed to buy a soybean load and other American products, What he did not do.

However, if there is one thing that we apparently know, it is that the United States is moving towards the negotiation of prices (although it seems to consider the basic line of 10% as inviolable). This will put him in place for a beautiful old confrontation with perhaps the main target of Trump of Ire, the EU, who continued to insist that the minimum of 10% is unacceptable.

Partly, what is going on now will depend on which on Trump's team to the president's ear every day, given their very contrasting opinions. In the end of the raffle, official trade, you never know who will make a clicking around the management policy of the oval office when the decisions become taken.

If it is the Chinese in supreme Peter Navarro, the United Kingdom could find itself led in a trade war and that Beijing is denied more price reductions. If it is the commercial secretary Howard Lutnick, whose work seems to be to discover what Trump wants that day and the Cheerlead, probably less. Navarro clearly had little to do with the British agreement because he was later talk About the United Kingdom accepting beef and chicken produced to American hygiene standards, which the government of Sir Keir Starmer has wisely refused to accept.

Do you remember the rules?

Finally, what does this mean for the global trading system based on rules? It is not great for the United States to accept bilateral offers everywhere. As I wrote last weekThe British pact is more directly harmful, because it involves violating the principle of the “most favored nation” by granting market access to the United States that it will not give to other countries.

The metaphor that immediately came to my mind was Dane-Geld, the protection money that Anglo-Saxon kings paid to the Vikings in exchange for prerogative for a while.

Rudyard Kipling had a downer on this tactic, saying that “we have proven it again and again, if you have paid him the Dane-Geld, you never get rid of the Dane”. (My favorite feedback To my article, it came from a real medieval historian, who maintains that paying Dane-Geld was a completely reasonable thing to do.)

The United Kingdom will have to continue to scan the horizon for the signs of the reappearing striped Viking sails. This could be worth the bet and the MFN violation, or he cannot. China may have reached a better strategy (certainly in a very different position), or may not have done so. No one knows anything.

The barbarians of musk at the doors

Bill Gates revealed Let it accelerate the expenses and then close the Gates Foundation, but not for 20 years. It's a poignant moment. Savage of Trump (and specifically Elon Musk) of American development aid, including the American Agency for International Development (USAID) and the American program for the relief of HIV-Aidsleft the breathless sector for air. Gates (correctly) Last week said This musk killed children. By pouring his fund, Gates hopes to improve the impact of official help reductions.

Traditional help donors turn away. The United Kingdom, which has already made fun of its aid budget by spending part of the money for the accommodation of asylum seekers in Great Britain, announced that it cut off even more expenses From 0.5% to 0.3% of gross national income. The former Prime Ministers of Labor, Tony Blair and Gordon Brown, who fell in competition to announce more aid, seem to have been silent when seeing their work defeated, even if Brown had Choose a public fight with Musk During discounts of help from the United States a few weeks earlier. Not for the first time, Brown commitment to courage is stronger in theory than practice.

There is no doubt that the Gates Foundation has made a ton of good. (Disclosure: FT A received money from the doors In the past.) In particular, being able to work with a longer time than the governments of donors – which were under pressure to show the results in a few years – allowed him to finance programs such as the elimination of polio, which is slow and not very spectacular work.

But he took a strong policy and ideological positions, a tactic which was strangely with his philanthropic mission. The Foundation publicly opposed the granting of a waiver of COVVI-19 vaccines during the pandemic Before overthrowing the courseA question of highly controversial public policy to weigh.

More generally, the idea of ​​giving private to save the world – remember the “philanthrocapitalism“Two decades ago?” – Now looks seriously naive. The new generation of billionaires of technological crypto has been seduced by the quasi-scientific approach to effective altruism, which has become under Heavy and deserved criticism. The development sector is full of fear. There are stories of NGOs and think-tanks drawing research articles with controversial sounding or by cutting the word “equity” of the title. It turns out that it is much less independent of the state and governments than it thought.

Graphic waters

Customs income increases in American ports, but far from sufficiently sufficient to replace a large part of federal income tax receipts as Trump wishes.

Trade links

• Chinese companies are Purge their supply chains Foreign components, in case the Trump trade war turns into a large-scale decoupling of its economy in the United States.

• Chinese exports jumped in April While his shipping companies pushed the goods before the commercial discussions and the prices imposed.

• Speaking of this, Wired Magazine look Whether consumers should buy now to beat the prices or wait.

• Treasury secretary Scott Bessent was sent to Try to calm nervous investors. However, it is unlikely that they were reassured that the administration is at the top of the things by Stephen Miran, president of the Trump's economic advisers' council, Echo Trump (Before the agreement with China) that the United States does not need a trade agreement with China.

• My colleague FT Martin Sandbu reminds us That an import tax is a tax on exports and will hit American companies that sell abroad.

Trade Secrets is edited by Harvey Nriapia