Shanghai is banking on more international sporting events and concerts in the city this summer to revive spending to counter the blows to consumer confidence from the China-US trade war.
The city will host international equestrian, archery, triathlon and Formula E events in May and June, aiming to reel in spectators at home and abroad.
In March, Formula One racing returned to Shanghai for the Chinese Grand Prix, attracting the McLaren, Red Bull, Mercedes and Aston Martin teams as well as 220,000 fans, according to official estimates.
The city is also in discussions with Taylor Swift’s team for possible concerts later this year.
In all, Shanghai will play host to 178 sporting and other shows this year, according to the official Jiefang Daily.
While authorities hope the events will burnish Shanghai’s reputation as the mainland’s most internationalised city, they are also looking to the sports and entertainment fixtures to help put a floor under falling consumption.
A lack of demand is weighing heavily on Shanghai’s economic outlook, even though its gross domestic product of 5.39 trillion yuan (US$74 billion) last year made it the country’s biggest municipal economy, ahead of Beijing on 4.98 trillion yuan.
Retail sales in Shanghai dipped 1.1 per cent year on year between January and March to 405.7 billion yuan, with restaurant takings shrinking 3.4 per cent. The poor showing contrasted with the 4.6 per cent rise in national retail sales during the same period.
That fall was on top of a 3.1 per cent decline in consumer spending in the city last year.
Consumer sentiment is yet to shake off the malaise of Shanghai’s months-long lockdown in 2022, when retail sales dropped 9.1 per cent. Pre-Covid, the city’s consumption was robust, rising 6.5 per cent in 2019 and 7.9 per cent in 2018.
This protracted underperformance is a particular concern for Shanghai because the city is more exposed than many other Chinese urban centres to the trade frictions between China and the United States, according to a policy researcher with a Shanghai university.
“The risk is that the export engine will sputter because of Donald Trump’s tariffs and local consumption may not swiftly return to growth, losing Shanghai two economic pillars at the same time,” he warned, declining to be named.
But Bala Ramasamy, deputy director of the China Europe International Business School, said the extent of the tariff war’s impact on consumer confidence had yet to be seen.
“There are a whole range of things being done to increase consumption [like hosting big events] … I hope that consumers do not think that [the trade war] is going to be the end of the world, because it is not,” Ramasamy said.
“There is still a lot of potential in the economy itself.”
Shanghai residents still seem reluctant to spend. (Photo: EPA-EFE)
As Shanghai scrambles to find ways to resurrect consumption, the policy researcher agreed that the city should play to its strengths – its state-of-the-art venues and experience hosting international mega-events.
“It is among the very few options within the purview of Shanghai officials to whip up sentiment, and [matches and concerts] hopefully can attract visitors from outside to spend here,” he added.
Still, Shanghai will be vying with Hong Kong, Singapore, Tokyo and other regional rivals to woo A-list acts and events.
Hosting international shows in China is a complex process that involves navigating a maze of regulations, prompting some observers to call for authorities to cut restrictions on international performers.
For now, according to Shanghai media, there are signs that the mood is already lifting.
Ticket sales for this year’s Chinese Grand Prix in March were up 30 per cent over last year, its organiser was quoted as saying, and, during the ongoing Labour Day national holiday, crowds have thronged shopping malls, precincts and performance venues. Tables have also been filling up at popular restaurants over the five-day break.
Starting Friday, the Trump administration is shelving a nearly century-old tax loophole that saved companies from paying tens of billions of dollars in fees on cheap imports, most of which come from China. The move stems from the sweeping tariffs President Donald Trump announced last month on most U.S. trading partners, and it will affect businesses from Etsy sellers and family-run footwear companies to e-commerce behemoths.
In fiscal 2022, 83 percent of all U.S. e-commerce imports used the “de minimis” loophole, according to a government report.
Trump initially did away with the de minimis exemption in February, but the move quickly overwhelmed U.S. Customs and Border Protection workers and prompted the U.S. Postal Service to briefly suspend inbound shipments from China and Hong Kong. The administration then reinstated the loophole to allow the Commerce Department to craft a way to collect the levy. The agency now has “adequate systems … in place to collect tariff revenue” on these low-value goods, the White House had said.
According to an executive order last month, imports from Chinathat previously qualified for the exemption now face a duty of at least 145 percent if they arrive via commercial shipping. Shipments through the Postal Service are subject to a fee of $100 per package — rising to $200 next month — or 120 percent of the import value.
“If a retailer is really reliant on manufacturing or shipping directly from China, this is going to be really painful for them,” Jess Meher, a senior vice president at the returns-management software company Loop, told The Post.
Ultimately, such costs generally filter down to consumers. Here’s why.
What is the de minimis exception?
In Latin, “de minimis” means something that is too small or insignificant to be considered. The rule, passed by Congress in the 1930s and amended over the years, spares merchandise worth less than $800 from import taxes.
E-commerce sites Shein and Temu have thrived off this loophole, allowing them to avoid paying billions of dollars in duties. Some trade experts contend that these retailers have fueled a surge in imports since fiscal 2015, when the number of de minimis entries hovered at about 139 million, according to CBP data. Between that fiscal year and 2023, the number of de minimis exceptions swelled over 600 percent. By 2024, they had surged to 1.36 billion, worth about $66 billion, said Gary Hufbauer, a nonresident senior fellow at the Peterson Institute for International Economics, a nonpartisan think tank based in Washington.
While those volumes represent a mere fraction of U.S. imports — now totaling more than $3 trillion annually — they help boost margins for small- to medium-size businesses in the United States, said Maggie Barnett, chief executive of LVK, a third-party logistics company with warehouses in the U.S. and Canada.
Many of these companies have about “30 percent of their revenue in retail, but the other 70 percent is leveraging the de minimis,” she said. If they’re not shipping directly from China, they often ship their items in bulk from manufacturers in China or Southeast Asia to warehouses in Canada or Mexico and “ship them over [to the U.S.] one by one when the orders come in,” she said.
So far, only items originating from China are prohibited from using the de minimis loophole, according to Trump’s executive order.
What does this have to do with Trump’s tariffs?
Killing the de minimis loophole is part of Trump’s broader strategy to boost domestic production. On April 2, he ordered a 10 percent tariff on all U.S. imports starting April 5, as well as additional taxes that would bring levies of as much as 50 percent on goods from certain countries starting April 9. Since then, Trump said he was pausing and lowering tariffs on goods from most nations for 90 days while simultaneously imposing a minimum tariff of 145 percent on all Chinese imports. Beijing responded with a 125 percent blanket levy.
Opposition to the de minimis loophole largely has been bipartisan, with some critics arguing that it has enabled illicit drugs, such as fentanyl, to be sent through the mail into the U.S. President Joe Biden, in his final days in office, issued limitations on the loophole, excluding certain imports from circumventing tariffs.
How will this affect my orders from Shein, Temu and Amazon Haul?
Without de minimis, prices on those orders could rise much as 30 percent, costing consumers about $22 billion annually, Hufbauer said.
A good chunk of that applies to Temu and Shein orders, which are responsible for an estimated 30 percent of packages shipped into the U.S. each day, according to a report from the Peterson Institute. Nearly half of all de minimis shipments originate in China, according to a report by House Republicans.
In a statement Friday, Temu said it is moving to a “local fulfillment model,” with U.S. orders handled by sellers in the U.S.
The vast majority of products for sale on Temunow have a green “local” sticker, indicating that they are already located in the U.S. at purchase. Shoppers took to social media this week to lament that a slew of items had been removed from their Temu shopping carts because they did not have that “local” tag. At one point last month, the company also displayed tariff-related costs to consumers by adding a charge at checkout for any imported item.
Shortly after Trump’s executive order ending de minimis, Shein said it would start making price adjustments on April 25. The retailer doesn’t break down import costs at checkout, but its website displays a message telling consumers that all tariff costs get included in the price they pay.
Also affected is Amazon, which launched its own platform in November called Haul that similarly sells cheap goods directly from China.Trump chastised the e-commerce giant this week after a news report said it planned to display tariff costs to consumers. An Amazon spokesperson previously told The Washington Post that the team that runs Haul “has considered listing import charges on certain products” but later added that “this was never approved and is not going to happen.”
With the tax loophole going away, brands that rely on sourcing low-cost goods, especially from China, “are going to have a really tough time because their margins are already really thin,” Meher said.
Shein, Temu and Amazon did not immediately respond to The Washington Post’s request for comment. (Amazon founder Jeff Bezos owns The Post.)
Who are the winners and losers?
American companies that haven’t been able to take advantage of the exemption could be the biggest winners, UBS analyst Jay Sole wrote in a February note after Trump initially revoked the loophole. He pointed to U.S. “fast fashion” retailers, specialty retailers, off-price retailers, department stores and kids’ clothing companies that have lost customers to these foreign e-commerce sites.
The flip side is that budget-seeking consumers, who have turned to these companies for cheap apparel and housewares, will bear the brunt of any price changes, Hufbauer said.
The same goes for small- and medium-size businesses, Barnett said. They have less cash on hand, less flexibility on inventory, fewer options to diversify their supply chain and less leverage to negotiate fair prices with major retailers selling their product.
“It’s going to be hard for those medium-sized businesses to maintain in this chaotic environment,” she said.
Elon Musk’s Net Worth Surges Past $400 Billion, Setting a Historic Record. (Forbes)
The past several weeks might have been tumultuous or even existential for a lot of U.S. businesses caught up in trade wars, but they’ve been pretty darn good for Starlink, the satellite company owned by Elon Musk.
After years of regulatory holdups, Starlink reached distribution deals in March with two giant internet providers in India, the world’s most populous country, and won approval in neighboring Pakistan as well. Another of America’s major trade partners, Vietnam, waived a rule that required Starlink to partner with a domestic company and said it would launch a five-year pilot program with Starlink.
Bangladesh, the second-largest exporter of garments to the U.S., just announced its own deal with Starlink after months of stalled negotiations. And in Lesotho, officials brushed aside long-standing objections to Starlink’s foreign ownership and granted the company a license.
I can find no publicly available data that lets us reliably compare the pace of Starlink’s dealmaking in the first part of this year to previous years. But all of these countries represent long-sought partnerships for Musk, and all of them but Lesotho will rank among Starlink’s top markets in terms of population.
This flurry of expansion, of course, comes as most of the world views Musk as the second most powerful man in D.C. So it raises some obvious questions.
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I’ve spent the past month trying to untangle the complicated case of Bangladesh because it goes directly to the intersection of Musk’s unprecedented role in the Trump administration, his personal interests and American trade policy.
A country that somehow packs half the population of the United States into a land mass roughly the size of Alabama (think about that for a minute), Bangladesh finds itself in a particularly delicate position. Last year, a student-led uprising led to the ouster of the country’s authoritarian leader, Sheikh Hasina, and the establishment of an interim government led by Muhammad Yunus, a Nobel laureate. Yunus has attracted intellectuals and former dissidents to his government as he tries to build the country’s first functioning democracy, while facing stiff resistance from his much larger neighbor, India, where Hasina has taken sanctuary.
It’s the kind of democratic revolution America has often embraced — especially since Yunus is a past recipient of both the Presidential Medal of Freedom and the Congressional Gold Medal. But the Trump administration’s stance toward Bangladesh has hovered somewhere between indifferent and hostile. Trump’s director of national intelligence, Tulsi Gabbard, has echoed dubious allegations from India that the new government persecutes Hindus and harbors Islamist terrorists.
This is a major concern for the Bangladeshis, who rely heavily on exporting T-shirts and the like to America. So, in February, shortly after Trump took office, Yunus dispatched a special envoy, Khalilur Rahman, to Washington in hopes of building bridges on trade and security issues.
According to a source familiar with the Bangladeshi government, who spoke on the condition of anonymity, Rahman visited the White House complex in mid-Februaryand met with an official from the trade representative’s office, who pressed him on the issue of cotton imports. Bangladesh, the world’s largest cotton importer, gets most of its supply from West Africa and Brazil, and the United States was insisting it buy more American cotton if it wanted to head off tariffs.
According to the account from the source, Rahman readily agreed to this demand if it would lead to a new trade deal — but his visit wasn’t quite finished. Rahman was then led to an office where he was surprised to find the world’s richest man.
Musk wanted to discuss ongoing negotiations between Starlink and Bangladeshi regulators, who were under pressure from local telecom companies to keep Starlink out. I was told Rahman called Yunus from that meeting and relayed Musk’s concerns.The apparent implication, though it wasn’t stated outright, was that one of the world’s largest textile exporters would not be able to get favorable trade terms from the United States if Starlink wasn’t allowed entry into the Bangladeshi market.
When I asked the Bangladeshi government, through its embassy in D.C., whether any of its officials had met with Musk in Washington or if the country felt pressured to approve a license for Starlink, I got the same one-sentence reply to both: “The answer is no.” Privately, government officials maintain that Yunus’s government has long wanted to bring Starlink into the country (mainly because the previous regime had shut down the locally controlled internet in an effort to thwart the student revolution), so there would have been no need for Musk to lean on them.
There’s no doubt Bangladesh did want a deal with Starlink. It’s also true that officials there don’t want to disclose anything that would risk souring relations with Musk because the last thing they want right now is to antagonize the Trump administration. It’s hard to blame them for that.
We know a few otherthings for sure, too. Around the same time Rahman was in Washington, newspapers in Bangladesh reported that Yunus and Rahman met by videoconference for 90 minutes with Musk and Richard Griffiths, one of his lieutenants at Starlink, and that Yunus invited Musk to come to Bangladesh to witness the launch of the Starlink system. On X, Yunus posted that he had a “great meeting” with Musk and looked forward to working with him.
We also know that Bangladesh was not the only country trying to avoid tariffs that talked with Musk about Starlink. The same week that Rahman was in Washington, Musk met with India’s prime minister, Narendra Modi, at Blair House, across the street from the White House. According to India Today, which published a picture of Musk and three of his children sitting with Modi, a central agenda item was Starlink’s pending approval in India.
I realize it feels hopelessly naive to dwell on ethics laws in Washington these days (you might as well reminisce about all the spittoons that once dotted offices on Capitol Hill), but in case you were wondering: federal law generally makes it illegal for an official of the executive branch to take part “personally and substantially in an official capacity” in any discussion where he or she has a personal financial interest. A meeting between Musk and foreign leaders about Starlink from the White House would appear problematic.
When I told Sen. Mark R. Warner (Virginia), the ranking Democrat on the Intelligence Committee, about Starlink’s recent flurry of agreements and Musk’s purported discussions with foreign leaders on government grounds, he was taken aback.
“I think that crosses virtually every ethical and legal standard that has at least been the traditional way our country operates,” Warner said. “Musk has created some great companies, but they should not have such an unfair advantage that they get forced on countries by their founder sitting in government spaces.”
Even if Musk isn’t making an explicit connection in these meetings between Starlink approvals and his influence on the president, the perception that there is one has taken hold among anxious officials in other countries. As I was reporting this column, the story about Bangladesh was making its way around political and business circles in South Africa, which is seeking its own crucial trade deal with the Trump administration.
Like Vietnam, South Africa has a law against foreign communications companies operating without local partners — in this case, specifically a Black-owned partner, as the country continues to shed the vestiges of the apartheid era. Musk, a South African native, has repeatedly denounced that law as racist; in March, he posted on X that “Starlink is not allowed to operate in South Africa, because I’m not black.”
Two South African insiders told me that that they now assumedthat approval of a license for Starlink was a prerequisite for getting a favorable trade deal. As if to underscore that point, a leading legislator just introduced a controversial measure to exempt Starlink from the partnership law.
(The White House, which fields questions related to Musk’s work at the so-called Department of Government Efficiency, declined to answer questions about Starlink’s role in trade negotiations or Musk’s meetings with Rahman and Modi. It has previously said that Musk abides “by all applicable federal laws.”An email I sent to Starlink’s media department went unanswered, as well.)
The idea that some of America’s worried trade partners think they’re trading Starlink licenses for merciful policy is disturbing enough. What makes it even worse, perhaps, is that they could get suckered in the process.
Consider, again, the case of Bangladesh. After resolving its impasse with Musk and stepping up its efforts to import American cotton, Bangladeshi officials were stunned to turn on the television in early April and see their country listed on Trump’s giant whiteboard of targeted trade partners — next to a draconian tariff rate of 37 percent. All their efforts to placate Musk and Trump, just a few weeks earlier, had essentially won them nothing (although Trump has since paused the implementation of most tariffs).
You could argue that this proves there isn’t any link, after all, between trade negotiations and Musk’s business dealings. But it seems the Bangladeshis were under a different impression. Days later, after Trump laid out his proposed tariffs, Yunus sent a letter to the president, recounting the many ways in which Bangladesh was cooperating with American trade demands — such as the construction of a “bonded warehousing facility” to increase cotton imports — and pleading with the president to postpone the tariffs for three months. Among the concessions to which he pointed: the country’s pending approval of Starlink.
Elon Musk attends a Cabinet meeting at the White House on April 10. (Nathan Howard/Reuters)
As I talked about this with dozens of insiders in Washington and abroad over the past few months, what struck me most was the lack of evident outrage. I mean, this is a city that once found itself, in the Clinton years, paralyzed for weeks over possible conflicts of interest in the White House travel office. But in just the first three months since Trump returned to town and installed Musk as a kind of prime minister for efficiency, everyone seems to have resigned themselves to a new kind of ethical normal.
The conflicts between Musk’s government work and his private businesses are too myriad to track. Not only do licenses for Starlink appear to have worked their way into trade negotiations,but the service has now been installed across the federal government — including at the White House campus — and may soon be included in a federal grant program to low-income areas. Trump’s new NASA administrator, Jared Isaacman, is a friend of Musk’s who commanded the first-ever civilian spaceflight by SpaceX, Musk’s rocket company; he is now in charge of designing the missions for which SpaceX will be bidding. (At his confirmation hearing, Isaacman repeatedly assured senators that he would not be influenced by his relationship to Musk.)
The Wall Street Journal reported in February that a lawyer at X had pressured the large advertising firm Interpublic to direct more ads toward the social media platform — a move interpreted by the firm as a warning that its proposed merger with Omnicom could face government scrutiny if it didn’t. (X declined comment at the time.)According to Wired, the Social Security Administration is now moving its entire communications operation to X. And Trump himself held what amounted to a public sales pitch for Tesla on the White House grounds.
The most common take you hear on all this — at least among non-Trump supporters — is that Musk is all about enriching himself, which is why he’s ignoring ethical conflicts and bending the government to his will. This seems simplistic to me. Musk is worth more than $300 billion; it strains credulity to think that he’s executed a plan to take over Washington just so he can land a few more contracts. This is like saying Napoleon invaded Italy because he wanted more wine.
No, I’m inclined to believe Musk can’t actually conceive of the conflicts here because he fundamentally believes that his businesses are forces for good. This is the central theme of his career: that he is single-handedly saving the planet and leading humankind to colonize Mars. The getting-rich part is just what happens when you’re a visionary. A corollary to that theme is that Musk disdains any rule or regulation that would stand in the way of his saving humanity, which is why he generally loathes government.
So in Musk’s mind, there would be no conflict in using his power to proselytize for his technologies to the rest of the world. The world will be better off for it. Great men of action do not suffer ethical watchdogs in badly tailored suits.
In some respects, he may be right — hard as that is to admit. You can jump up and down about Trump hyping Teslas on the White House lawn, but aren’t we supposed to want the proliferation of cleaner cars? If Musk’s rockets can make the quest for Mars faster and cheaper, wouldn’t any competent government accept his help? If Starlink can bring reliable internet to countries where repressive governments have had the ability to shut off the internet, isn’t that a good thing?
The truth is that if Musk were merely an influential outsider who happened to own some of the most innovative companies in America, his getting richer off government contracts wouldn’t be hard to justify. In fact, it would be the government’s job to champion his cause, as it always does for American industries when they create jobs.
What Musk can’t seem to grasp is that he isn’t just an influential outsider; he is, instead, the most powerful government official with no apparent accountability that the country has ever seen (or at least he will be for another month or so, after which he has said he will step back).Practically everything he does after getting up in the morning and brushing his teeth raises an ethical dilemma.
For instance, Musk has emerged over these past few weeks as the most vocal critic of the tariff policy inside the administration, going as far as to attack Peter Navarro, Trump’s principal trade adviser. Musk has long been a free trader.
But given his spate of new Starlink deals, how do we know he isn’t engaged in lobbying against the tariffs on behalf of other governments, in exchange for those governments removing obstacles to his business? We don’t, which is exactly why ethics laws exist in the first place.
The damage from Musk’s arrogance isn’t simply that he is spinning a web of impenetrable conflicts. It’s that he is doing more than anyone — except perhaps Trump himself — to obliterate the concept of “American exceptionalism,” the idea that the United States conducts itself by a different code than other world powers, past and present.
This, after all, is the thing that shocks officials in Bangladesh and South Africa and other countries who feel caught in Musk’s grip — not that a billionaire businessman would have influence over trade policy but that he could brazenly discuss his company’s licenses from the White House complex in the middle of trade negotiations.
Things have long been done this way in most developing countries, but never in Washington, where our lofty ideals about the rule of law are what supposedly set us apart. Other governments used to grumble that America always behaved as if it were better and more righteous than the rest of the world. Under the Trump-Musk regime, they are coming to understand that we no longer give a damn.
China has signaled that it is becoming more open to engaging in trade negotiations with the Trump administration, according to twoblogs closely associated with China’s state apparatus, even as Beijing maintains a defiant stance in the trade war.
After three months of bluster and tariffs so high they have all but curtailed trade between the world’s two biggest economies, both sides now appear to be softening their rhetoric ever so slightly. This comes amid new data showing that the trade war is already damaging both sides.
Beijing sees “little downside in exploring” contact with the Trump administration, wrote Yuyuan Tantian, a blog affiliated with state broadcaster CCTV. But, it added, China won’t start negotiations until the United States takes “concrete actions.”
“This could be a way for China to observe — and potentially draw out — the U.S.’s true intentions, while keeping the upper hand in both dialogue and confrontation,” the blog wrote Thursday.
That marks a subtle shift in Beijing’s trade war messaging and may indicate a fragile opportunity for the countries to come to the negotiating table, Chinese politics experts say, though brokering a real trade war de-escalation will probably be difficult.
“China appears ready to engage with the U.S. on talks or negotiations,” said Zichen Wang, author of the Pekingnology newsletter and research fellow at the Center for China and Globalization, a Beijing think tank.
The similar and simultaneous messages come from two blogs — the other run by Ren Yi, a politically well-connected writer who uses the moniker “Chairman Rabbit” — that “have a record of conveying messages out of Beijing,” he said.
Ren said in an interview that Beijing is “definitely” willing to come to the negotiating table. “Nobody wants this war,” he said, adding that this has been China’s position since the beginning of the trade showdown.
But the Trump administration needs to “indicate that they’re really serious,” he added, with moves like significant tariff reductions.
The U.S. has imposed a minimum tariff of 145 percent on all goods it imports from China, while Beijing responded with a 125 percent blanket levy.
It’s unclear whether President Donald Trump would be willing to take the steps that Beijing wants, given that he has repeatedly said China must make the first move, though he has struck a more conciliatory tone in the past two weeks. At a Cabinet meeting Wednesday, he praised Chinese leader Xi Jinping and claimed to be “talking with China.”
“At a certain point, I hope we’re going to make a deal with China,” he added.
Asked Wednesday whether China and the U.S. had been in touch on tariffs within the previous 24 hours, Chinese Foreign Ministry spokesperson Guo Jiakun said he was not aware of any consultations or negotiations between the two sides.
Festive goods for export at a factory in Yiwu, home to thousands of China’s small commodities companies. The trade war is hurting Chinese exporters, with official data this week showing manufacturing activity fell last month to its weakest level in more than a year. (Kevin Frayer/Getty Images)
The slight tempering from Beijing comes just after data was released showing the early economic toll of the trade war on China. Overall manufacturing activity in April was the weakest in over a year, according to figures published Wednesday by China’s National Bureau of Statistics.
Though the Chinese economy had been grappling with a property crisis and persistent deflation, there had recently been tentative signs of recovery, with the economy growing at an annual rate of 5.4 percent — exceeding expectations — in the first three months of the year. The trade war now threatens to undo that progress.
On the U.S. side, data released Wednesday showed the world’s biggest economy shrank in the first three months of 2025, as trade uncertainty spooked consumers, investors and businesses.
Some commentators in China say economic pressure in the U.S. is driving Trump to pull back from his previous trade brinkmanship.
“High tariffs are taking a huge economic toll, domestic political pressure is heating up day by day, and Trump’s strategy to rally allies [against China] has failed,” Chairman Rabbit wrote on Thursday. “Those, combined with resolute and forceful countermeasures from China, are pressuring the Trump administration to adjust its approach, proactively seek dialogues with China, and try to find a dignified way to wrap up his unsustainable tariff war.”
Still, the messaging from Beijing is mixed.
It has continued to blast Washington’s trade levies, and the Foreign Ministry published a fiery video this week promising that China would “never kneel down.”
— CHINA MFA Spokesperson 中国外交部发言人 (@MFA_China) April 29, 2025
At the same time, China exempted some U.S.-made goods, including semiconductors, from its 125 percent tariff.
During a visit to Shanghai this week, Xi conveyed strength, castingChina as a champion for the international community. Visiting an artificial intelligence incubator, he emphasized China’s investment and policy support for technologies of the future.
China’s legislature also passed a law on Wednesday aimed at promoting the private sector, ensuring fair competition and supporting entrepreneurs. Against the backdrop of the trade war, the Paper, a state-run outlet, said in an editorial that China needs such a law “all the more to encourage, support and guide the development of the private economy.”
The combination of Xi’s Shanghai visit and the confrontational video makes some observers skeptical that Beijing is ready to launch negotiations.
“I don’t think we should read too much into the CCTV piece, which is just one tiny soft voice in a mostly hard-line camp,” said Andy Xie, a Shanghai-based independent economist and financial adviser. “China is still defiant and has not softened its stance on Trump’s tariff war.”
One thing is certain: Beijing and Washington each seem to be betting on the idea that the rippling economic pain from the trade war will drive the other country to the negotiating table first.
“Both sides are waiting for the other side to blink first,” said Yao Yang, an economist at Peking University. “Both sides are worried if they blink first, they are going to lose bargaining power in the negotiation.”
Trump implied Wednesday that China’s tariff-related economic troubles — which he described as the country “getting absolutely hammered” — would help the two nations strike a deal.
Trump may be engaging in wishful thinking, said Alfred Wu, who studies public governance in China at the National University of Singapore.
“The trade war back-and-forth really impacts the daily lives of many people,” Wu said. “But the most important thing for Chinese leadership is trying to keep power. So the economic side is one factor, but it may not be fundamental.”
Even if the two countries begin talking, informally or formally, there is no guarantee of success.
It is unclear what concessions Washington is seeking in a potential deal with Beijing, while China may first look for significant tariff reductions or exemptions. As Chairman Rabbit put it: “Welcoming dialogue does not mean making concessions without principles.”
A screen at a mall in Beijing this month showed coverage of Chinese military drills around Taiwan. (Florence Lo/Reuters)
More broadly, the U.S.-China relationship has been increasingly fraught since Trump’s first term in office, with issues including Taiwan and the South China Sea creating stumbling blocks between the superpowers.
“We are still sounding each other out, and we don’t know how long this process is going to take,” said Xin Qiang, deputy director of the Center for American Studies at Fudan University. “And even after we get the talks started, it will probably be long before we see any concrete results.”
Beijing isn’t holding its breath, analysts say. Instead, Chinese officials are trying to expand trade relationships with countries in Asia and Europe.
As part of that outreach, China lifted sanctions on Wednesday on five European Union lawmakers, which it had imposed in retaliation for the bloc’s defense of Uyghur Muslims in China’s northwestern Xinjiang region, according to a European Parliament news release. The sanctions halted official dialogue with China and froze negotiations on a bilateral investment pact.
“Our relationship with China remains complex and multifaceted,” European Parliament president Roberta Metsola said. “The best way to approach it is through engagement and dialogue.”
The White House is coming down on Amazon over a Tuesday report from Punchbowl News that claimed the world’s largest online retailer will start showing how much Trump’s tariffs affect the price of each product. Amazon, however, says the report was inaccurate and “never a consideration for the main Amazon site.”
The Punchbowl report said Amazon planned to show the impact of tariffs “right next to the product’s total listed price,” according to a person familiar with the plans.
White House press secretary Karoline Leavitt erupted at Amazon over the report on Tuesday morning, calling it a “hostile and political act.”
But Amazon spokesperson Ty Rogers told Fortune on Tuesday morning that the company has only considered such a move, and that it would apply only to a new Temu-like section of the Amazon Haul shopping site that just launched six months ago—if implemented at all.
“The team that runs our ultra low cost Amazon Haul store has considered the idea of listing import charges on certain products,” Rogers said in the statement. “Teams discuss ideas all the time. This was never a consideration for the main Amazon site and nothing has been implemented on any Amazon properties.”
The company then followed up with a new, more definitive statement from a separate spokesperson, Tim Doyle, making clear the idea “was never approved and is not going to happen.”
Previously, Amazon spokesperson Ty Rogers hadclarified that if implemented, the move would be a reaction to the end of a longstanding trade loophole known as de minimis—which allows overseas companies to ship merchandise under $800 to U.S. customers without having to pay duties—and not explicitly to the Trump administration’s reciprocal tariffs. President Trump has signed an executive order that would ban the duty-free de minimis exception for goods from China and Hong Kong beginning May 2. In response, ultra-discounter Temu, which relies on de minimis to keep prices dirt-cheap, has begun listing “import fees” at checkout to help explain skyrocketing prices on its apps. Amazon had said the move under consideration would be a similar one.
But the White House press secretary was asked about the report prior to Amazon’s clarification.
“Why didn’t Amazon do this when the Biden administration hiked inflation to the highest level in 40 years?” Leavitt asked. “This is another reason why Americans should buy American.”
To be clear, the inflation Leavitt is referencing, which peaked during the Biden administration, was largely organic. An array of global and domestic factors played into inflation, from disruptions in the supply chain caused by the COVID-19 pandemic to the heightened consumer demand since everyone was locked down and forced to stay home. That time was also marked by labor shortages and a big spike in energy prices from Russia’s invasion of Ukraine in early 2022. In contrast, Trump’s tariffs—particularly on Chinese goods—were a conscious and targeted policy decision, the cost of his political strategy.
White House press secretary Karoline Leavitt, joined by Treasury Secretary Scott Bessent, holds a news article on Amazon CEO Jeff Bezos as she speaks during the daily press briefing on April 29, 2025, in Washington, D.C. (ANDREW HARNIK—GETTY IMAGES)
Before the press briefing, Leavitt said she had “just got off the phone with the president about Amazon’s announcement.”
Like many other retailers, especially those advertising discount prices like Shein or Temu, Amazon is particularly vulnerable to Trump’s proposed reciprocal tariffs on imports. Amazon sells millions of items across myriad product categories, from clothes to toys to electronics and more. Many of those products are manufactured in China, and Trump has imposed a 145% tariff on imports from the country, which is the world’s second-largest economy. Amazon’s third-party sellers are equally exposed.
You’ll have to save more before you pick up the next Call of Duty or Halo game. Microsoft has announced a series of price increases that will see the recommended retail price of its first-party games increase to $79.99.
The systems used to play those games are seeing a stiff increase in price as well. The Xbox Series S (512GB) is seeing prices increase by $80 from $299.99 to $379.99. The 1 TB Xbox Series X will cost $100 more, jumping to $599.99. And if you want the high-end 2 TB special edition Xbox Series X, that will now run you $729.99. Controllers will now cost $65.
The hardware price increases are effective immediately, the company said. Game prices will increase this holiday season.
Microsoft isn’t the first to embrace the $80 price point for games. Nintendo broke that ground earlier this year, announcing that Mario Kart World, an exclusive title for its new Switch 2 console, would carry a price tag of $79.99. Sony, which makes the PlayStation, has not announced any changes to its first party games yet, but the industry typically prices titles equally.
Microsoft did not cite tariffs as a reason in announcing the price increases. Like many Big Tech companies, the company has donated to Trump’s inauguration fund. Trump has lashed out when other tech firms have cited tariffs as a reason for higher prices, most recently angrily calling Amazon founder Jeff Bezos after reports emerged the company was considering displaying the added cost of tariffs on certain items. (Amazon now says it will not do so.)
“We understand that these changes are challenging, and they were made with careful consideration given market conditions and the rising cost of development,” Microsoft said in a statement. “Looking ahead, we continue to focus on offering more ways to play more games across any screen and ensuring value for Xbox players.”
Microsoft did not increase prices on its Game Pass program, which gives players access to a Netflix-like catalog of titles that can be played on demand.
The clock is ticking on trade deals that the U.S. will need to strike with many nations, most notably China, to avoid what President Donald Trump’s Treasury secretary, Scott Bessent, has described as an unsustainable tariff war. But in the U.S. farming sector, the damage has already been done and the economic crisis already begun.
U.S. agriculture exporters say the global backlash to Trump’s tariffs is punishing them, especially through a decline in Chinese buying of U.S. farm products, leading to canceled export orders and layoffs.
Peter Friedmann, executive director of the Agriculture Transportation Coalition, or AgTC, a leading export trade group for farmers, told CNBCthe number of canceled purchases of U.S. agricultural products should not be described as approaching a crisis. “It is a full-blown crisis already,” he said.
Data released by the U.S. Department of Agriculture on Thursday revealed China made its biggest cancellation of pork orders since 2020, halting a shipment of 12,000 tons of pork.
AgTC said “massive” financial losses are already being felt by its members as a result of the trade war, based on reports it is receiving from member companies.
A wood pulp and paperboard exporter reported to the trade group the immediate cancellation or hold of 6,400 metric tons in a warehouse and a hold of 15 railcars sitting in what is known in the supply chain as “demurrage,” when fees are charged for delayed movement of goods.
Meanwhile, the exporter said, 9,000 metric tons of the product are on the water to China, expected to arrive May 13 and facing the threat of costly diversion to Chinese bonded warehouses or to other countries, as Chinese buyers may refuse the cargo and abandon it at port.
One grass seed exporter told AgTC it received two weeks’ notice that eight loads were being canceled by Chinese customers despite vessels already being booked.
At a recent stakeholder meeting at the Port of Oakland headquarters regarding tariff impacts, Port of Oakland Executive Director Kristi McKenney warned that a tariff-induced downturn in the port’s cargo volume — whether from import slowdowns or retaliatory export losses — ultimately could jeopardize job stability and the region’s economic health.
McKenney cited retaliatory tariffs on U.S. agricultural products, as well as manufactured goods; both are essential exports that move through Oakland. Exports include almonds, beef, pork, dairy, and recycled materials, much of which is destined for Asia. China ranks as the port’s top import trading partner and third export partner, representing 29% of Oakland’s total trade volume.
US Port Data Visualization
Containerized agricultural imports and exports from the U.S. by port
Total TEUs | Jan. 2024—Feb. 2025
Note: Waterborne exports
Source: U.S. Department of Agriculture
Unlike many U.S. ports that lean heavily on imports, Oakland is unique in maintaining a near 50/50 balance of imports and exports. That leaves Oakland concerned that tariff retaliation would directly impact its top export destinations — Japan, Taiwan, China and South Korea — and could significantly erode California’s market share for perishable and high-value commodities.
The Port of Oakland is the No. 1 refrigerated export gateway in the U.S., and nearly all containerized cargo moving through Northern California goes through the Port of Oakland.
“So many local, union jobs depend on the Port’s robust shipping operations including dockworkers, truck operators, and warehouse workers,” said Rep. Lateefah Simon, D-Calif. “I support smart trade policies that uplift workers and lower costs for Oakland’s working families — not an illogical and retaliatory trade war.”
Agricultural exporters warned that there are no other markets that can quickly replace China’s demand and absorb the volume, and that is already affecting prices.
“We have diverted employees and production to other (less profitable) production and dramatically slowed down purchasing from independent venders (loggers, truckers, sawmills),” one lumber exporter reported to AgTC. Some products have already declined 20% in market value, the exporter reported, which it said will influence inventory planning and future investments.
“The U.S. market was stable and improving, but now awash with inventory of former China products,” the lumber exporter said.
Waterborne Trade Data
Waterborne containerized agriculture imports and exports from the U.S.
Total TEUs and metric tons | Jan. 2024—Feb. 2025
Source: U.S. Department of Agriculture
An exporter of forage such as hay and straw that is a big business for U.S. farms supplying overseas livestock operations reported 68 blanked sailings after Trump announced new tariffs April 2. It said this limits its ability to export forage goods, as vessel space for exports is restricted on freight ships still calling on U.S. ports.
“The worry is the vessel space that remains is going to be the most expensive/most ‘premium’ services that our product cannot absorb without selling at a loss. Being a high volume, low value item, we cannot afford drastic increases in ocean freight,” the forage exporter reported to AgTC.
“What we’ve seen in the last two weeks is a continued correction in booking demand for U.S. imports, especially U.S. imports from China,” said Ben Tracy, Vizion’s vice president of strategic business development. “We are now seeing this translate to a drop in departures as well.”
Agriculture Categories Chart
Top 15 containerized agriculture export and import categories from the U.S.
Total TEUs | Jan. 2024—Feb. 2025
Animal feed, hay, brewer grain
971.7K
Braid, canvas, cloth, fabric, textile
660.7K
Banana, plantain
Paste, pulp, whole
638.3K
Foodstuffs, pastes, sauces, soups
556K
Soybean
Corn soya milk, isolates
535.2K
Meat
468.8K
Vegetables
364.3K
Fruit
358.9K
Beverage
277.6K
Wine
266K
Bread, cereal, grain, malt, flour
254K
Rice
Crackers, pasta, table articles
252.5K
Fowl, poultry
202.8K
Milk, eggs, dairy
170.7K
Edible nuts
165.3K
Note: Waterborne exports
Source: U.S. Department of Agriculture
A hay exporter in central Washington that sends a large amount of its crop output to Hong Kong and mainland China was told to reroute most of the exports shipped in the past two weeks to Japan, Dubai, Taiwan, and a few Chinese ports. Those changes came at a cost to the company, which told the AgTC that “it’s not sustainable, no one can replace all the volume that China buys.”
The hay exporter said it immediately put a stop on all orders in process, and has begun layoffs.
“We had to adjust our employee count down by 12 persons. This accounts for one-fourth of our total employees,” it wrote. The company said it has been communicating to customers and employees its hope that “hasty and reckless decision-making at the top of our country will reverse, easing deep troubles that we are facing at this time.”
In addition to the tariff backlash, agriculture is facing another looming financial challenge with the recently announced SHIPS Act measures approved by the US Trade Representative, with Chinese-made vessels calling at U.S. ports to be charged port fees of more than $1.5 million starting in the fall.
Bulk agriculture was carved out of the port fees imposed under the USTR rule, but agriculture shipped in containers is not exempt from the fees. Friedmann said an exemption is essential because the most valuable U.S. agriculture exports are shipped in containers, not bulk.
Containerized exports include refrigerated beef, pork, poultry, fruit, vegetables, dairy, and processed foods such as french fries. Cotton, nuts, dried dairy, lumber, paper, soybeans for human consumption, and forage, such as hay and alfalfa, are also shipped in containers. “Efforts to exempt all agriculture exports, including containerized agriculture, are continuing,” Friedmann said.
Based on U.S. trade data, the share of U.S. agriculture moved in containers is approximately 25% by volume and nearly 55% by value.
The USTR did not respond to a CNBC request for comment on fee exemptions for containerized agriculture.
“So much of our future lies in the hands of so few,” a hay exporter wrote to AgTC. “We plead for those few to take a very long careful look at what can be done to keep shipments flowing while they work out the trade imbalances and perceived differences.”
President Trump this week revived a longstanding threat against Jerome H. Powell when he accused the Federal Reserve chair of “playing politics” and moving too slowly to lower interest rates. But privately, according to people close to Mr. Trump, the president has for months been aware that trying to oust Mr. Powell could inject more volatility into jittery financial markets.
Investors are already uneasy after a period of tumult due to a blitz of tariffs announced by the administration this month. Undermining the political independence of the Fed, which is seen as critical across Wall Street, could risk a much more significant financial panic.
“If I want him out, he’ll be out of there real fast, believe me,” Mr. Trump told reporters in the Oval Office of the White House on Thursday when asked about Mr. Powell. The warning came on the heels of an early morning social media post in which Mr. Trump said, “Powell’s termination cannot come fast enough!”
Mr. Trump’s advisers have repeatedly told him that firing Mr. Powell is both legally and financially fraught — and that the uncertainty could cause a significant downturn in financial markets. Mr. Trump, at least for the moment, has seemed persuaded, the people said.
For months, Mr. Trump has privately fretted about the prospect of a Great Depression-scale event’s happening on his watch — a scenario he shorthands in conversations as “1929.” But the events of the past two weeks so alarmed some of Mr. Trump’s closest advisers, including his Treasury secretary, Scott Bessent, that Mr. Trump himself seems to have absorbed how close they came to a financial meltdown.
Mr. Trump’s decision at the beginning of the month to announce historic tariffs on nearly all of the country’s trading partners and aggressively escalate his global trade war sent financial markets into a tailspin. Stocks plummeted, and an alarming sell-off in U.S. government bonds and the dollar fanned fears that the country was starting to lose its vaunted status as the safest corner in the financial system.
After the scope of Mr. Trump’s tariffs became clear, Mr. Powell cautioned that the policies would lead to both higher inflation and slower growth. His comments suggested that the bar would be high for the Fed to lower rates, after a series of cuts last year.
Mr. Trump soon reversed course and paused many of his tariffs for 90 days, citing a “queasy” bond market. But that reprieve ended swiftly as Mr. Trump raised tariffs on Chinese imports to at least 145 percent even as he exempted an array of the most widely used consumer electronics and heralded imminent trade deals with other countries. The whiplash has kept financial markets on edge and has done little to alleviate Mr. Powell’s concerns about the economic outlook.
At an event at the Economic Club of Chicago on Wednesday, Mr. Powell made clear that it was the Fed’s “obligation” to ensure that “a one-time increase in the price level does not become an ongoing inflation problem” even as he reiterated his warnings about the prospects of slower growth. He also stressed that the Fed could afford to be patient on taking further action on interest rates until it had more clarity about the outlook.
Those comments, coupled with the fact that the European Central Bank was readying to lower interest rates on Thursday, appeared to set off Mr. Trump’s tirade against Mr. Powell.
President Donald Trump delivers remarks after signing an executive order on reciprocal tariffs in the Oval Office at the White House in Washington, DC, on February 13. (Andrew Harnik/Getty Images)
Even before the recent bond market turmoil, it seemed to advisers that Mr. Trump was leery about firing Mr. Powell. Mr. Trump regularly complains about how “terrible” Mr. Powell is and that he believes the Fed chair is deliberately keeping interest rates high to hurt him, for political reasons, an adviser said, but the president has not seemed serious about replacing him imminently.
Last week, Mr. Bessent, who described the Fed’s independence as a “jewel box that’s got to be preserved,” said the White House would begin interviewing candidates this fall to replace Mr. Powell. Mr. Trump had nominated Mr. Powell in his first presidential term, and President Joseph R. Biden Jr. renominated him. Mr. Powell’s term as chair officially ends May 2026, although his term as a governor runs through 2028, suggesting that he could stay on the Fed’s Board of Governors if he wanted to. Mr. Trump will first be able to fill a vacancy in January, when the term expires for Adriana Kugler, a sitting governor.
The president has already appointed Michelle Bowman, a current governor, to be the next vice chair for supervision in charge of regulating Wall Street. That position became available in February after Michael Barr, who stayed on as a governor, stepped down from the position to avoid a protracted legal battle with Mr. Trump that he worried would hurt the central bank.
Kevin Warsh, a former Fed governor with close ties to Mr. Bessent, is seen as a leading contender to serve as the next chair. During the transition, Mr. Trump was interested in the idea of making Mr. Warsh, whom he had considered for Fed chair in his first term, his Treasury secretary. The president also considered installing him as Fed chair to replace Mr. Powell before the end of his term, according to people briefed on his thinking. At the time, Mr. Trump inquired about his legal rights to fire Mr. Powell, and what the broader effects of such a move would be.
Mr. Powell has been emphatic that the law does not permit a president to remove the chair of the central bank nor meddle directly with the institution. The Federal Reserve Act says members of the Fed’s seven-strong Board of Governors can be removed only “for cause,” which is interpreted as serious misconduct and other violations.
When asked by reporters on Friday about the possibility of firing Mr. Powell, Kevin Hassett, the director of the National Economic Council, said, “The president and his team will continue to study that matter.” Later in the day, Mr. Trump again pushed the Fed chair to lower rates but didn’t discuss his future.
The Fed’s independence from the White House has historically been seen as crucial to the stability of the economy and the global financial system. Congress granted the central bank this status to ensure it could make policy decisions related to the economy and the banking system free from political interference.
The fear is that Mr. Trump will seek to erode that protection. Already, he has issued an executive order that seeks to exert authority over how the Fed oversees Wall Street. Monetary policy decisions were exempted, but the expansive nature of the order has raised questions about how long that separation will last.
Mr. Trump has also fired officials at the Federal Trade Commission, the Merit Systems Protection Board and the National Labor Relations Board, removals that have prompted legal challenges that the Supreme Court is set to hear.
What the Trump administration is arguing is that the precedent — which stems from a 1935 ruling commonly referred to as Humphrey’s Executor — infringes on the president’s executive power. The ruling’s proponents argue that it insulates independent agencies from undue political influence.
This month, Chief Justice John G. Roberts Jr. temporarily authorized Mr. Trump’s dismissals while the challenges move forward in court. The chief justice, acting on his own, issued an “administrative stay,” an interim measure intended to give the justices some time while the full Supreme Court considers the matter.
Mr. Powell said on Wednesday that he did not expect the court’s decision to apply to the Fed, but that it was something the central bank was “monitoring carefully.” The Fed’s independence is a “matter of law” and “very widely understood and supported in Washington and in Congress, where it really matters,” he added.
Boeing’s 787 Dreamliner jet is a multinational concoction, made of parts from around the globe. Wings from Japan. Doors from France. Portions of the fuselage are built in Italy before they are shipped to the United States to be assembled by workers in South Carolina.
It’s an arrangement made possible by a nearly 50-year-old trade agreement that allowed Boeing and other players in the U.S. aerospace industry to sell airplanes and buy parts from anywhere in the world, duty-free.
Now President Donald Trump’s global tariffs threaten to disrupt this interlocking supply chain. For the first time in nearly half a century, Boeing will pay a levy to import those wings, doors and other components. For now, there is a new 10 percent tax on most imports. But that levy could rise depending on what the president decides during a 90-day reprieve he declared before stiffer tariffs land on most countries.
While Trump has said his sweeping protective tariffs will reduce the U.S. trade deficit, the levies on Boeing’s parts supply line will tax a company that is America’s biggest exporter of goods. About 80 percent of Boeing’s multimillion-dollar planes are shipped to overseas customers.
Trump’s trade war also is causing retaliatory moves that could hurt Boeing. On Wednesday, conflicting news reports suggested China had directed its national carriers to stop ordering or accepting new Boeing planes. Trump then posted on Truth Social that China “just reneged on the big Boeing deal, saying they will ‘not take possession’ of fully committed to aircraft.” Trump did not elaborate on what deal he was referencing, adding to the confusion. Boeing, based in Arlington, Virginia, did not respond to requests for comment.
“These tariffs and trade restrictions have unleashed chaos in the global aerospace and airline industry,” said Ken Quinn, a partner at Clyde & Co and former general counsel at the Federal Aviation Administration. “It’s only harmful and destructive.”
Boeing is not the only aerospace company with international operations coping with the effects. Airbus, the European aerospace manufacturer that has an assembly operation in Alabama, said it is assessing impacts. Other international vendors that make everythingfrom engines to landing gear face disruption.
Experts say it makes little sense to apply tariffs so broadly they burden the biggest U.S. exporters.
“I absolutely agree that there are certain countries, most notably China, that have mistreated the United States when it comes to trade,” said Scott Hamilton, managing director at Leeham Company, an aviation consultancy firm. “But you just don’t go out there with a sledgehammer. You gotta go out with a ball peen hammer to deal with this stuff.”
The 1980 Agreement on Trade in Civil Aircraft governs how companies do business around the world and is credited with opening markets to U.S. aerospace products, particularly in Europe. Dak Hardwick, vice president of international affairs for the Aerospace Industries Association, an industry trade group, said the trade pact has translated into a more than 2,000 percent increase in U.S. exports over a 40-year period.
The suspension of the agreement has confounded many experts and industry officials. Richard Aboulafia, a managing director at Aerodynamic Advisors, said it makes no sense given the industry enjoys a “monster trade surplus” in the United States.
The American aerospace industry exported $136 billion worth of goods in 2024, helping to lower the overall U.S. trade deficit by 13 percent, according to Morningstar. Aerospace was second only to the oil industry in exports. The administration did not respond to questions about the 1980 trade pact and why it thinks tariffs should be imposed on aerospace companies.
Partsfor the 787 comefrom around the world to Boeing’s factories in Charleston, South Carolina, which employ about 7,800 workers. The largest components, such as wings and fuselage sections, arrive from aboard air freighters dubbed “Dreamlifters” with cavernous cargo bays, which Boeing built especially for the job.
Trump visited the factory in 2017, only a month after he was inaugurated for his first term, to celebrate the plant as an example of American manufacturing while denouncing companies that offshore their work.
“Our goal as a nation must be to rely less on imports and more on products made right here in the U.S.A.,” he told the crowd then. “I don’t want companies leaving our country, making their product, selling it back, no tax, no nothing, firing everybody in our country.”
Trump’s tariffs have set off a private lobbying effort as the aerospace industry seeks to minimize the impact, according to one industry leader who spoke on the condition of anonymity because of the sensitivity of negotiations.
“There are war rooms being set up at suppliers across the industry,” said Kevin Michaels, a managing director at AeroDynamic Advisory. He said companies will have to negotiate with their customers who will pay the higher costs.
Boeing imports parts built at its production facility in Sheffield, England, which the company opened in 2018 to manufacture high-tech components for the next generation 737, the 737 Max and 767 aircraft. The company also sources approximately $1.25 billion a year worth of parts from a network of more than 300 suppliers in India, where it directly employs 7,000 people, while an additional 13,000 people work for other partners in its supply chain, according to the company’s website.
Airbus employs more than 5,000 people in the United States. It has 2,000 employees in Mobile, Alabama, alone, where workers assemble the company’s A220 and A320 jets at a 53-acre campus.
The company’s arrival was transformational, said Bradley Byrne, CEO of the Mobile Chamber. Airbus broke ground on the factory in 2013, and workers began assembling A320 jets two years later.(Mobile landed the Airbus assembly plant after losing its bid to be home to Boeing’s 787 Dreamliner campus, which went to Charleston.) It’s helped the community attract more businesses as suppliers seek to be closer to the company that buys their products.
Byrne has been in close contact with the company, most recently receiving assurances that it is moving forward with plans to open a third manufacturing line in Mobile, which would add 1,000 jobs. Still, Byrne can’t help but worry.
“We don’t know, and Airbus doesn’t know, what impact [tariffs] could have on the number of orders that they get,” he said.
For its part, Airbus said it is trying to figure out the effect tariffs will have.
“Like others in the industry, we are actively assessing the impact of these trade policy changes on our operations and supply chain, and are working closely with our customers and suppliers to evaluate how best to navigate these evolving conditions,” the company said in a statement.
A crucial question roiling the industry is who will pick up the tab for U.S. tariffs. In an earnings call this month, Delta Air Lines CEO Ed Bastian said the carrier will not be responsible for the additional costs on the jets it expects to receive from Airbus this year.
“These times are pretty uncertain, and if you start to put a 20 percent incremental cost on top of an aircraft, it gets very difficult to make that math work,” he said.
Howmet Aerospace, a Pittsburgh-based company that supplies components for jet engines and counts Boeing and Airbus among its customers, has warned that it might halt some shipments because of tariffs, according to Reuters. In a letter sent to customers, the company said itmay not be able to honor contract prices.
A Illusion orange color Medicine tablet. Jeff Henry/The NewYorkBudgets
President Trump’s decision to move a step closer to imposing tariffs on imported medicines poses considerable political risk, because Americans could face higher prices and more shortages of critical drugs.
The Trump administration filed a federal notice on Monday saying that it had begun an investigation into whether imports of medicines and pharmaceutical ingredients threaten America’s national security, an effort to lay the groundwork for possible tariffs on foreign-made drugs.
Mr. Trump has repeatedly said he planned to impose such levies, to shift overseas production of medicines back to the United States. Experts said that tariffs were unlikely to achieve that goal: Moving manufacturing would be hugely expensive and would take years.
It was not clear how long the investigation would last or when the planned tariffs might go into effect. Mr. Trump started the inquiry under a legal authority known as Section 232 that he has used for other industries like cars and lumber.
Mr. Trump said in remarks to reporters on Monday that pharmaceutical tariffs would come in the “not too distant future.”
“We don’t make our own drugs anymore,” Mr. Trump said. “The drug companies are in Ireland, and they’re in lots of other places, China.”
While some drugs are made at least in part in the United States, America’s reliance on China for medicines has generated alarm for years, with both Republicans and Democrats identifying it as a national security vulnerability.
Many drugs are not produced without at least one stage of the manufacturing process happening in China. Even India’s giant generic drug sector is deeply dependent on China, because Indian manufacturers typically obtain their raw materials from Chinese plants.
Imposing disruptive levies on lifesaving medications creates risks for Mr. Trump that were not a major concern with some of his other tariff targets, like steel and aluminum, where Americans generally aren’t directly exposed to increased prices.
He could face a harsh backlash if pharmaceutical tariffs lead to significant drug price increases or shortages for patients. The number of drug shortages reached a record-level high last year. Americans fill several billion prescriptions a year, on top of purchasing over-the-counter products like cough syrup and Tylenol.
On Tuesday, Mr. Trump signed an executive order outlining a series of actions intended to lower drug prices, including helping states import drugs from Canada. The idea behind these imports is to bring in cheaper drugs, but tariffs could mean that those imports would not offer the same savings as in the past.
If pharmaceutical tariffs cause an increase in any drug prices, Democrats could jump on the issue for the midterm elections next year and try to undercut Mr. Trump’s popularity among working-class voters.
Democrats have already seized on the issue. In a letter sent to Trump officials last week, a group of lawmakers led by Representatives Doris Matsui of California and Brad Schneider of Illinois wrote that “reckless tariffs” on medicines threatened to harm Americans.
“The supply disruptions of critical medical products will unavoidably hurt U.S. patients, force providers to make impossible rationing decisions, and potentially even result in death as treatments are delayed, or more effective medicines and products are swapped for less effective alternatives,” they wrote.
Kush Desai, a spokesman for the White House, said in a statement on Monday that “President Trump has long been clear about the importance of reshoring manufacturing that is critical to our country’s national and economic security.”
Targeting pharmaceuticals also risks further inflaming relations with allies like the European Union and India, whose economies are supported by drug exports to the United States. Officials of those countries fear that drug tariffs could prompt companies to renege on investments, resulting in a loss of jobs, factories and tax revenue.
Along with cars and electronics, pharmaceuticals are one of the categories of goods that the United States imports the most, measured by value.
Tariffs on drugs would add tens of billions of dollars of import costs for a powerful industry that relies on a complex global supply chain. Production of most medications consumed in the United States happens in more than one part of the world, with plants in different countries handling different stages of the process.
Expensive patented medications, like the popular weight-loss drug Wegovy, are more likely to be made in Europe or the United States.
China and India do most of the production of cheaper generic drugs, which account for the vast majority of U.S. prescriptions. For example, plants in those countries make nearly all of the world’s supply of the active ingredients in the painkiller ibuprofen and the antibiotic ciprofloxacin, according to Clarivate, an industry data provider.
Pharmaceuticals are the latest sector that Mr. Trump has targeted. Tariffs of 25 percent are already in effect for imported steel, aluminum and cars. The Trump administration has also initiated Section 232 investigations, or inquiries into national security concerns, for copper, lumber and computer chips.
Investigations under the 232 provision must be completed within nine months.
The drug industry has been lobbying the Trump administration to phase in tariffs gradually or to exempt certain types of products, such as medications at risk of shortages or those deemed essential, like antibiotics.
John Murphy III, the head of a trade group that represents manufacturers of generic drugs, said in a statement on Monday that tariffs “will only amplify the problems that already exist in the U.S. market for affordable medicines.”
The tariffs would be paid by drug companies importing products or ingredients into the United States. Many of those manufacturers would most likely try to pass at least some of the added costs to employers and government programs like Medicare and Medicaid that cover most of the tab for Americans’ prescription drugs. That would ultimately affect patients.
Levies could cause shortages of some cheaper generic drugs, because prices are so close to production costs. Manufacturers with such thin margins may be forced to curtail or end production.
Industry experts said they were not concerned about shortages for brand-name drugs, which generally have high profit margins that could absorb tariffs.
Patients whose insurance requires them to pay a deductible or a percentage of a drug’s price could eventually face higher out-of-pocket costs for some drugs. They may also have to pay a higher co-payment if shortages resulting from the tariffs force them to switch to a different, pricier medication. In future years, people could face higher health insurance premiums.
In some cases, contractual agreements and steep financial penalties may discourage manufacturers from sharply raising prices. With patented products, manufacturers typically have such large margins that their sales would still be highly profitable even if they absorbed the cost of tariffs.
David Ricks, the chief executive of Eli Lilly, told the BBC earlier this month that his company expected to eat the cost of tariffs. But Lilly could reduce its research spending or cut staffing as a result, he said.
Mr. Trump has been saying that his tariffs will prompt drugmakers to move their overseas production back to the United States. In recent weeks, several of the industry’s richest companies — Eli Lilly, Johnson & Johnson and Novartis — announced plans to spend billions of dollars to build new plants in the United States.
But experts say the tariffs aren’t nearly enough to bring most drug production back to the United States. The obstacles are especially steep with crucial generic drugs. Building a new plant takes years. Even shifting production to an existing American plant may be too costly. Labor and other production expenses are much higher in the United States.
Joaquin Duato, chief executive of Johnson & Johnson, said on a call with analysts on Tuesday that “if what you want is to build manufacturing capacity in the U.S., both in med-tech and in pharmaceuticals, the most effective answer is not tariffs, but tax policy.”
The Trump administration has been taking aim at Ireland, where nearly all of the largest American drugmakers have a manufacturing presence, in some cases dating back decades. One of Ireland’s biggest appeals for the industry is the tax advantages it offers. Some drugmakers shift their profits there to lower their overall tax bills.
Last month, Mr. Trump said that Ireland “took our pharmaceutical companies away.” Howard Lutnick, the commerce secretary, saidthat Ireland was running a “tax scam” that American pharmaceutical companies were exploiting. “That’s got to end,” Mr. Lutnick said.
Some of the industry’s biggest blockbusters, including the cancer drug Keytruda and the anti-wrinkle injection Botox, are partly produced in Ireland. The United States imports more pharmaceutical products, as measured by their value, from Ireland than any other country.
Irish officials fear that tariffs could prompt drugmakers to pull back from investments in the country. But experts said that drugmakers may be reluctant to undergo the costly, disruptive process of uprooting their operations there, especially while uncertainty persists about how long Mr. Trump’s tariffs will last.
Pharmaceuticals have historically been spared from tariffs under a World Trade Organization agreement meant to ensure that patients have access to vital medications.
Medications were mostly exempted from the round of global tariffs Mr. Trump announced earlier this month and then partly delayed for 90 days. Drugmakers importing from China into the United States have been subject to tariffs, initially 10 percent and later 20 percent, that Mr. Trump had imposed on Chinese imports earlier this year.
President Trump came into office sounding as if he were eager to deal with President Xi Jinping of China on the range of issues dividing the world’s two biggest superpowers.
He and his aides signaled that they wanted to resolve trade disputes and lower the temperature on Taiwan, curb fentanyl production and get to a deal on TikTok. Perhaps, over time, they could manage a revived nuclear arms race and competition over artificial intelligence.
Today it is hard to imagine any of that happening, at least for a year.
Mr. Trump’s decision to stake everything on winning a trade war with China threatens to choke off those negotiations before they even begin. And if they do start up, Mr. Trump may be entering them alone, because he has alienated the allies who in recent years had come to a common approach to countering Chinese power.
In conversations over the past 10 days, several administration officials, insisting that they could not speak on the record, described a White House deeply divided on how to handle Beijing. The trade war erupted before the many factions inside the administration even had time to stake out their positions, much less decide which issues mattered most.
The result was strategic incoherence. Some officials have gone on television to declare that Mr. Trump’s tariffs on Beijing were intended to coerce the world’s second-largest economy into a deal. Others insisted that Mr. Trump was trying to create a self-sufficient American economy, no longer dependent on its chief geopolitical competitor, even if that meant decoupling from the $640 billion in two-way trade in goods and services.
Autonomous vehicles transport shipping containers at Tianjin port.Source: Bloomberg
“What is the Trump administration’s grand strategy for China?” said Rush Doshi, one of America’s leading China strategists, who is now at the Council of Foreign Relations and Georgetown University. “They don’t have a grand strategy yet. They have a range of disconnected tactics.”
Mr. Doshi says he holds open the hope that Mr. Trump could reach deals with Japan, South Korea, India, Taiwan and the European Union that would allow them to confront Chinese trade practices together, attract allied investment in U.S. industry and increase security ties.
“If you are up against someone big, you need to get bigger scale — and that’s why we need our allies to be with us,” said Mr. Doshi, who in recent days published an article in Foreign Affairs with Kurt M. Campbell, the former deputy secretary of state, arguing for a new approach. “This is an era in which strategic advantage will once again accrue to those who can operate at scale. China possesses scale, and the United States does not — at least not by itself,” they wrote.
Mr. Trump insisted on Monday that his tariffs were working so well that he might place more of them on China, among other nations. Just 48 hours after he carved out a huge exemption for cellphones, computer equipment and many electronic components — nearly a quarter of all trade with China — he said he might soon announce additional tariffs targeting imported computer chips and pharmaceuticals. “The higher the tariff, the faster they come in,” he said of companies investing in the United States to avoid paying the import tax.
So far, the Chinese response has been one of controlled escalation. Beijing has matched every one of Mr. Trump’s tariff hikes, trying to send the message that it can endure the pain longer than the United States can. And in a move that appeared to experts to have been prepared months ago, China announced that it was suspending exports of a range of critical minerals and magnets used by automakers, semiconductor producers and weapons builders — a reminder to Washington that Beijing has many tools to interrupt supply chains.
American soldiers during a military exercise in Finland in February. China announced that it was suspending exports of rare minerals widely used in the U.S. defense industry.Credit…Jim Huylebroek for The New York Times
The result, said R. Nicholas Burns, who left his post in January as the American ambassador to China, is “one of the most serious crises in U.S.-Chinese relations since the resumption of full diplomatic relations in 1979.”
“But Americans should have no sympathy for the Chinese government, which describes itself as the victim in this confrontation,” said Mr. Burns. “They have been the greatest disrupter in the international trade system.” He said the challenge now would be “to restore communications at the highest levels to avoid a decoupling of the two economies.”
So far, neither side wants to be the one to initiate those communications, at least in public, for fear of being perceived as the one that blinked. Mr. Trump often insists he has a “great relationship” with Mr. Xi, but he gave the Chinese leader no direct warning about what was coming — or a pathway to head it off. And Mr. Xi has pointedly avoided joining the ranks of what the White House insists are 75 countries that say they want to strike a deal.
There are flickers of back-channel communications: Cui Tiankai, who served as China’s ambassador to the United States from 2013 to 2021, was in Washington as the tariffs were rolling out, talking to old contacts and clearly looking for a way to defuse the growing confrontation. Though retired, Mr. Cui is still among the Chinese with deep connections in both capitals — he is a graduate of the Johns Hopkins School of Advanced International Studies, and American officials still use him as a conduit to the Chinese leadership.
But recent history suggests that freezes in the U.S.-China relationship can be long-lasting and that relations never quite get back to where they had been before. The August 2022 visit to Taiwan by a congressional delegation led by Representative Nancy Pelosi, the California Democrat who at the time was still the speaker of the House, led China to send its air and naval forces on military exercises over the “median line” in the Taiwan Strait. Nearly three years later, those exercises have only intensified.
The following winter a high-altitude balloon, which China claimed was a weather balloon and U.S. intelligence officials said was stuffed with intelligence-gathering equipment to geolocate communications transmissions, crossed over the continental United States. President Joseph R. Biden Jr. ultimately ordered it shot down off the South Carolina coast.
Again, it took months to get past the mutual recriminations and set up a summit meeting between Mr. Xi and Mr. Biden. That encounter resulted in some modest agreements on cracking down on fentanyl precursors, along with a joint statement that A.I. technologies should never be used in nuclear command-and-control systems.
A Chinese high-altitude balloon crossed over the continental United States in 2023. President Joseph R. Biden Jr. eventually ordered it shot down off the South Carolina coast.Credit…Larry Mayer/The Billings Gazette, via Associated Press
But the stakes in those confrontations were not as high as they are in the emerging trade war, which could help push both countries to the brink of recession — and could ultimately spill into the power plays happening each day around Taiwan, in the South China Sea and just offshore of the Philippines.
Among the questions hanging over the administration now is whether it can put together a coherent approach to China at a moment when key members of Mr. Trump’s inner circle are arguing in public about the right strategy. Elon Musk, who relies on China as a key supplier to his companies Tesla and SpaceX, called Peter Navarro, a top White House trade adviser, a “moron” and “dumber than a sack of bricks.” Mr. Navarro shrugged it off during a Sunday appearance on NBC’s “Meet the Press,” saying, “I’ve been called worse.”
Treasury Secretary Scott Bessent pushed back Monday on a Chinese commerce official who dismissed the tariffs as a “joke.”
“These are not a joke,” Mr. Bessent said in Argentina, where he is on a visit. But then he added that the tariffs were so big that “no one thinks they’re sustainable.”
But whether they are sustainable is a different question than whether Mr. Trump or Mr. Xi can afford, politically, to be the first to back away from them. And then the administration will have to decide what its priorities are when it comes to China. Will the United States declare that it will defend Taiwan? (Mr. Trump clearly has his hesitations, based on his public statements.) Will it seek to find common projects to work on with Beijing?
It is hardly unusual for an administration to spend months, maybe more than a year, debating how to navigate a relationship as complex as the one with China. President Richard M. Nixon and Henry A. Kissinger spent years plotting out their approach to what was still called “Red China,” resulting in Mr. Nixon’s historic trip to the country and the yearslong diplomatic opening it triggered. President Bill Clinton entered office having campaigned against the “butchers of Beijing,” a reference to the killings in Tiananmen Square and the crackdowns that followed, and he ended his term ushering China into the World Trade Organization. President George W. Bush courted Chinese leaders to join the battle against terrorism.
Mr. Biden had to get beyond the Covid era before he settled on a strategy of denying Beijing access to critical semiconductors and other technology.
But none was trying to overcome what Mr. Trump faces. He has unleashed an act of economic confrontation so large that it may poison the relationship with a country that is deeply intertwined with the American economy. In the end, Mr. Trump may have to choose between an unhappy marriage or an abrupt divorce.
Container trucks are seen while waiting for cross the border at Huu Nghi border gate connecting with China, in Lang Son province, Vietnam February 20, 2020. REUTERS/Kham/File Photo
Even when India was staring down the barrel of a 27 percent tariff on most of its exports to the United States, business executives and government officials saw an upside. India’s biggest economic rival, China, and its smaller competitors like Vietnam were facing even worse.
India has been pushing hard in recent years to become a manufacturing alternative to China, and it looked as if it had suddenly gained an advantage.
Then India and its smaller rivals got 90-day reprieves, and President Trump doubled down on China, boosting its tariff to 145 percent.
The sky-high tax on Chinese imports to America presented “a significant opportunity for India’s trade and industry,” said Praveen Khandelwal, a member of Parliament from the ruling party of Prime Minister Narendra Modi and a top figure in the country’s business lobby.
India, with its enormous work force, has been trying to elbow into China’s manufacturing business for a long time, yet its factories are not ready. For the past 10 years Mr. Modi has pursued a goal he named “Make in India.”
The government has paid incentives to companies producing goods in strategic sectors, budgeting over $26 billion, and tried to attract foreign investments in the name of reducing India’s dependence on Chinese imports. One of its goals was to create 100 million new manufacturing jobs by 2022.
There have been successes. The most eye-catching one is that Foxconn, the Taiwanese contract manufacturer, has started making iPhones for Apple in India, moving some work from China.
Yet the role of manufacturing in India over a decade has shrunk, relative to services and agriculture, from 15 percent of the economy to less than 13.
Manufacturing and the jobs it can bring are thought to be crucial to India’s rise as a global power. China, with an economy five times the size of India’s, is the biggest of the Asian countries to have sped toward prosperity by making and selling stuff the rest of the world wants to buy. But manufacturing accounts for a 25 percent share of most East Asian economies — twice as much as in India.
Image Source: BloombergA factory for electric scooters in Tamil Nadu. Public infrastructure has improved under Prime Minister Narendra Modi’s direction, but the growing work force requires more training to match businesses’ needs. Credit…Atul Loke for The New York Times
Public infrastructure has come a long way under Mr. Modi’s direction. But 10 years has not been enough time to train the country’s growing work force to match businesses’ needs. And the route remains bumpy when it comes to connecting India’s pockets of economic strength to one another.
Barely an hour from New Delhi on a new eight-lane elevated highway, the Rai Industrial Estate in Haryana occupies land that grew wheat and mustard crops earlier this century. Some of the factories on the dusty grid inside have been grinding out auto parts and processed foods for 20 years. Others are just starting, hoping for an imminent breakthrough.
Vikram Bathla, who in 2019 founded LiKraft, which manufactures lithium-ion batteries for vehicles, said access to technology was the most frustrating obstacle to his business. He depends heavily on imports, which need to be bought in bulk and take time to ship, and finds it difficult to hire the people he needs to do highly technical work.
“We can buy the equipment, and we do” — and most of it comes from China. “What we don’t have,” he said, “is the skilled workers to use it.” For five years, he said, he has been trying to catch up with competitors that started 15 years before him.
Mr. Bathla, tall, mild-mannered and English-speaking, paces among LiKraft’s 300 workers, most of them migrants from poorer Indian states, quietly bent over brightly lit benches, assembling batteries. They start with cells imported from China, some of them turquoise cylinders labeled “Made in Inner Mongolia.”
Other workers operate larger machines, also imported from China, to weld cells and electronic components into batteries. The finished products will be marked “Made in India.” But the supply chain is foreign.
It is not just a high-tech phenomenon. Another factory, half a mile away in the same industrial park, depends on foreign inputs, too.
Factory workers in Navi Mumbai, a city in the state of Maharashtra. A problem for many Indian factories is the reliance on foreign inputs.Credit…Elke Scholiers for The New York TimesA factory in Silvassa. Among the problem manufacturers face are the high cost of land, a shortage of the right kinds of engineers and a lack of good financing from banks.Credit…Elke Scholiers for The New York Times
AutoKame designs, cuts and sews car-seat covers for the Indian market. Its high-precision fabric cutters, with whirring, robotic arms, are imported from Germany and Italy. The synthetic fiber also has to be imported.
Expensive raw materials are only the tip of the iceberg, said Anil Bhardwaj, the secretary general of a trade organization for manufacturing businesses. Also contributing to the problem, he said, are the high cost of land, a shortage of the right kinds of engineers and a lack of good financing from banks. Many difficulties that he and other owners face are about inconsistent government policy and red tape, problems that have dogged Indian industry for many decades.
Mr. Bhardwaj also cited a less obvious need faced by manufacturers: a well-functioning justice system. India’s courts are slow and their rulings arbitrary, he said, putting small businesses like his colleagues’ at the mercy of larger firms that can afford better lawyers and political influence.
“That’s why people really fear the big companies in India,” he said.
Smaller companies can’t afford to confront them, or the politicians and regulators who accommodate them. India’s court system is so disastrously backed up — with more than 50 million cases pending — that any entanglement can turn deadly for a smaller player. So they avoid growing, and miss out on efficiencies of scale.
He and other experts acknowledge significant improvements in recent years. For instance, power, which was in short supply 10 years ago, has become plentiful in places like Haryana’s industrial parks, though it is not as reliable as the small factories there would like. Many government processes have been streamlined during Mr. Modi’s time in office.
And states have managed to replicate some parts of the production system that made China’s factories the world’s envy. A cluster of Apple suppliers in the state of Tamil Nadu is by some estimates producing 20 percent of the world’s iPhones. Until the past few years, nearly all were made in China.
Records from Tamil Nadu’s main airport show that in the weeks before Mr. Trump announced his 27 percent tariff, outbound shipments of electronics doubled, to more than 2,000 tons a month, as Apple and other companies stocked up. A decision on Friday by Mr. Trump to exclude smartphones and other electronics could tamp down the rush to ship iPhones to America.
Still, long-term changes are afoot. A person who works closely with Apple’s suppliers, who was not authorized to discuss their plans publicly, said the suppliers were hoping to ramp up production so India could make 30 percent of the world’s iPhones.
Mr. Khandelwal, the politician, said India was ready to seize the overnight advantage created by the 145 percent tariff against China across many industries, including electronics, auto parts, textiles and chemicals.
Smaller factory owners are eager for the same things. But they see big old Indian obstacles in their way, the very kind that have resisted reform for decades.
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 "Can India Gain From the US and China's Trade Problems? Is India Set? 25")
