A 90-day pause
Stocks, the dollar and oil are soaring on Monday after President Trump’s top negotiators outlined the specifics of a major — though temporary — de-escalation in the U.S.-China trade fight.
Expectations were sky-high for some kind of breakthrough. The market reaction suggests mission accomplished in terms of reaching an important détente, though significant trade barriers remain and plenty still needs to be worked out.
“The consensus from both delegations is that neither side wanted a decoupling,” Treasury Secretary Scott Bessent, who was a point person in the U.S.-China talks in Geneva over the weekend, said on Monday. “Now we have the mechanism in place for further talks,” he added, noting that the framework agreement expires after 90 days. Those talks could come in “the next few weeks,” Bessent told CNBC.
Here’s what is in the agreement:
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The U.S. will lower tariffs on Chinese imports to 30 percent from its current 145 percent.
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China will lower duties on U.S. goods to 10 percent from 125 percent.
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Sector-specific tariffs are not part of this deal, according to Jamieson Greer, the U.S. trade representative. Trump has imposed targeted levies on items including Chinese-made semiconductors, medical devices, and aluminum and steel imports.
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China will remove nontariff export controls, but did not say whether it would lift restrictions on critical mineral shipments to the U.S. Beijing said it looked forward to stable and sustainable trade relations.
Both sides appear to see futility in clobbering each other with huge tariffs. The tit-for-tat measures had created “the equivalent of an embargo, and neither side wants that,” Bessent said. Companies have been warning that the levies would upend global supply chains and force them to raise prices. (Apple is weighing raising prices on its fall lineup of iPhones, but is determined not to blame tariffs publicly for the move, according to The Wall Street Journal.)
That uncertainty has virtually paralyzed corporate investment and hiring, analysts say, and pushed the Fed into limbo on interest rates as it watches for any fallout on inflation and the labor market.
Trump seems onboard with Monday’s agreement. Yesterday, he hailed the state of talks on Truth Social, calling it “a total reset negotiated in a friendly, but constructive, manner.”
But the terms are far more dovish than what he called for just three days ago: 80 percent tariffs on China “seems right,” he wrote on Friday, adding it would be “up to Scott B,” an apparent reference to Bessent.
Investors had regarded the China impasse as the toughest trade hurdle to surmount. Any progress there is likely to fuel optimism for further deals. “The worst of his trade wars and much of the crippling uncertainty could be over within two months from now,” Holger Schmieding, the chief economist for Berenberg, wrote in a research note on Monday.
However, higher tariffs will stick, and the biggest damage would be to American businesses and households, Schmieding added.
Among those rallying in premarket trading are tech giants with big exposure to China, including Nvidia, Amazon and Apple.
DEALBOOK WANTS TO HEAR FROM YOU
We’d like to know how the tariffs are affecting your business. Have you changed suppliers? Negotiated lower prices? Paused investments or hiring? Made plans to move manufacturing to the U.S.? Or have the tariffs helped your business? Please let us know what you’re doing.
HERE’S WHAT’S HAPPENING
President Trump’s drug-pricing plan rattles pharma stocks. The president announced on Truth Social that he would sign an executive order on Monday seeking to lower drug prices to levels that peer countries pay. (In his first term, Trump unsuccessfully tried to do something similar with dozens of drugs covered under Medicare.) The move is likely to face stiff court challenges; still, shares in global drugmakers fell sharply on Monday. Separately, House Republicans yesterday released a proposal that would vastly weaken Medicaid coverage, as the party seeks cost savings to pay for expansive tax cuts later this year.
Air travel could be disrupted nationwide, U.S. official says. After another radar outage at Newark Liberty International Airport on Friday, Transportation Secretary Sean Duffy told NBC’s “Meet the Press With Kristen Welker” yesterday that he would begin discussions about scaling back flights there — and that the problems at Newark may be affecting other airports. Duffy said regulators had been finding “antiquated systems” at airport traffic control sites nationwide.
Inflation will be front and center this week. The Consumer Price Index report for April is scheduled for publication on Tuesday, with economists expecting to see new evidence of Trump’s trade war reigniting inflation. The health of the consumer will come into focus on Thursday with the release of retail sales and Walmart’s latest quarterly earnings. On Friday, the University of Michigan consumer sentiment survey is set for publication, as some polls show Trump’s handling of the economy eroding his approval rating.
What Qatar might gain from a gifted 747
Critics of President Trump were outraged over the weekend by reports that he is poised to accept a Boeing 747-8 from Qatar — valued at $400 million — as an upgraded Air Force One.
While White House officials said such a move would be done in compliance with federal law, skeptics said it represented a clear violation of ethics rules and a conflict of interest. It’s worth noting what Qatar has already gotten from Trump, and what it might gain in the future.
A recap: Qatar is in talks to give the 747, currently owned by the emirate’s royal family, to the administration, The Times reports, with the plane later being donated to Trump’s presidential library. That might mean he could use it after his term ends.
Trump has long complained about the state of the U.S. government’s current Air Force One planes, and excoriated Boeing as being slow in providing replacements. That said, the jumbo jet wouldn’t be available right away, since a U.S. contractor would still need to retrofit it to meet military standards.
ABC News, which broke the news, reports that administration lawyers concluded such a gift would be acceptable because it isn’t conditioned on a specific request, and the plane would be given to the federal government. A Qatari official added that such a gift would be a temporary loan.
Critics didn’t mince words about what they saw as a clear violation of federal law. The Qataris have an expansive array of business interests tied to the U.S., including energy projects and investments. Good-government advocates also noted that Trump’s family business just announced that it will build a new golf resort in Qatar, which will be developed in part by a state-owned business.
“The corruption is brazen,” Senator Adam Schiff, Democrat of California, wrote on X. “Nothing says ‘America First’ like Air Force One, brought to you by Qatar,” added Senator Chuck Schumer of New York, the minority leader. “It’s not just bribery, it’s premium foreign influence with extra legroom.” (Trump pointedly dismissed such criticism on Truth Social.)
The president has already faced criticism over an array of seeming conflicts of interest, including his family’s business interests in cryptocurrency, a sector he and Republicans are pushing to deregulate.
Worth watching: Trump’s visit to three Middle Eastern allies — Qatar, Saudi Arabia and Abu Dhabi — starting on Monday, which will be his first major international trip. (A deal for the Qatari 747 isn’t expected to be announced during the trip.)
Among Trump’s priorities is striking “economic agreements” with the three governments to invest more in the U.S., CNN reports.
Why was a copyright regulator fired?
The Trump administration has drawn criticism for dismissing scores of government officials suddenly and seemingly without explanation.
But one of the latest such moves is notable because of its timing — and for a potential benefit to a corner of the tech industry that President Trump has championed, artificial intelligence.
Shira Perlmutter was fired as head of the U.S. Copyright Office on Saturday, after holding the post since October 2020, in the first Trump administration. No reason was given.
The legality of the move is unclear: Politico reports that her position is appointed and supervised by the librarian of Congress, who must be nominated by the president and approved by the Senate — except that the last librarian, Carla Hayden, was dismissed on Thursday.
Critics of the move pointed to a report on A.I. that Perlmutter’s office published last week, which questioned how much data A.I. developers need to train their models. From the document:
When a model is deployed for purposes such as analysis or research — the types of uses that are critical to international competitiveness — the outputs are unlikely to substitute for expressive works used in training. But making commercial use of vast troves of copyrighted works to produce expressive content that competes with them in existing markets, especially where this is accomplished through illegal access, goes beyond established fair use boundaries.
Still, the report didn’t urge direct action by the government, at least for now.
A.I. companies have argued for more permissive copyright rules to keep creating more-capable models, with Elon Musk suggesting last month on X that he favored scrapping all intellectual property laws. (Disclaimer: The Times is suing OpenAI and Microsoft for copyright infringement of news content related to A.I. systems.)
A.I. is an industry that Trump has championed, having announced the expansive Stargate data center project led by OpenAI and SoftBank. OpenAI’s Sam Altman also donated $1 million to Trump’s inauguration, while Musk remains a close ally of the president.
“It’s surely no coincidence” that Perlmutter was fired “less than a day after she refused to rubber-stamp Elon Musk’s efforts to mine troves of copyright works to train AI models,” Representative Joe Morelle, Democrat of New York and the ranking member of the Committee on House Administration, wrote on X.
The White House has not responded to news organizations’ requests for comment on Perlmutter’s firing.
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In other A.I. news: Pope Leo XIV this weekend said that it would be a focus of his papacy, suggesting that he will continue his predecessor’s calls for greater worker protections amid the technology’s rapid commercialization.
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