- The Economy Tracker
- Posts
- This Week in Tariffs
Table of Contents
A First “Win” for the U.S. in the Trade War
The Trump Administration finally notched a real win in the ongoing Trade War last week, thanks to a 90-day pause in tariffs with China.
(And this is the point where Team Trump might say, “Finally, Nick’s coming around!” while Team Progressive might start questioning my sanity. But this is what happens when you stop playing for a political team and start focusing on facts, data, and human behavior with an emphasis on what it best for the long-term prosperity of the US.)
At first glance, the 90-day pause may have looked like another overhyped headline. But under the surface, the U.S. actually secured some major concessions from China.
Key Highlights of the Deal:
Tariff Reductions from China:
China agreed to lower tariffs on U.S. goods to 10%, down from the 10–25% range that existed before 2025.U.S. Tariff Rollbacks:
Tariffs on Chinese imports were reduced from a high of 145% to 30%. And of that 30%, two-thirds is tied to fentanyl. Specifically, 20% is a fentanyl-specific levy, which means if China stops producing and exporting fentanyl into the U.S., that 20% could disappear, leaving just a 10% base rate.While this 10% tariff is still above the 8% rate that existed before Trump’s presidency, it’s a significant drop from the peak levels of the current trade war.
Non-Tariff Barriers Eased:
Perhaps the most important part of the agreement, according to Trump himself, is China’s acceptance of reduced non-tariff barriers. This could allow U.S. businesses to operate and compete more freely in the Chinese market. (Time will tell on this one.)
The Bigger Picture:
We’ll have to see how this plays out over the next few months and years. But as of mid-May, this is a win for the U.S., and a much-needed win for the Trump Administration.
Of course, there’s still a long road ahead. One win doesn’t make a successful trade strategy. But you have to get the first one before you can build momentum.
With that being said, excessive tariffs are a terrible way to run a developed and superpower economy. They may serve as leverage in negotiations, but history shows they’re not a long-term strategy for prosperity as they create an atmosphere perfect for crony capitalism to thrive within.
Ideally, this agreement is just a stepping stone toward a more balanced and open global trade system.
Trade Deal Rumors: Japan and South Korea
On May 14th, rumors began swirling that the U.S. was close to announcing trade deals with Japan and South Korea.
So far, however, the only official announcement has been a “deal” with the United Kingdom. But calling that a trade deal is very generous, at least when measured against historical standards from the past 80 to 100 years.
However, it sounds like a deal with Japan, South Korea, and Europe is hung up on tariffs for auto manufacturers.
Japan is also accurately pointing out that the US is quickly losing credibility due to reneging on past trade agreements. Specifically, the one reached with the first Trump Administration in 2018.
Forcing another party to make a new deal and then quickly reneging on that deal is not an example of good negotiations as it ruins credibility. This may work in the short run, but eventually it will bite you in the ass. To put it another way, the screwing you get will be worse than the screwing you give.
It is yet another example of subpar negotiating skill and capabilities.
Trump Secures Major Investment Commitments from Saudi Arabia and Qatar
During last week’s visits to the Middle East, President Donald Trump announced major economic commitments from both Saudi Arabia and Qatar, totaling over $1.8 trillion in pledged investments.
🇸🇦 Saudi Arabia: $600 Billion Committed
While visiting Riyadh, Trump secured a $600 billion investment pledge from Saudi Arabia, aimed at strengthening U.S. - Saudi economic ties.
Key sectors include:
Defense sales
Artificial intelligence and tech infrastructure
Energy and mineral projects
U.S.-based manufacturing
Other high-growth industries
Saudi officials reported that $300 billion in deals were finalized during the forum, with the remainder in development, targeting a long-term goal of $1 trillion in joint investments. The package includes both public and private partnerships, with a strong focus on emerging technologies and innovation.
🇶🇦 Qatar: $1.2 Trillion in Economic Agreements
In a separate visit to Qatar, Trump secured $1.2 trillion in economic commitments, with funds focused on:
Commercial aviation
Advanced defense systems
U.S. military base upgrades
Quantum computing and technology
Energy infrastructure
A Qatari official also stated that $500 billion would be invested in the U.S. economy over the next decade, though most of that is tied to long-term planning, with specific projects still in development.
Big Picture: Jobs, Innovation, and Strategic Alliances
According to the White House and regional officials, these agreements are expected to:
Drive job creation in both the U.S. and the Middle East
Strengthen U.S. manufacturing, defense, tech, and energy sectors
Lay the groundwork for long-term strategic partnerships
While not all of the pledged amounts are finalized or assigned to specific projects yet, the scale of these commitments shows a heavy emphasis on the areas of defense, emerging tech, and energy.
Expect fewer tariff headlines from the administration this week as the current focus is on the budget bill currently working it’s way through Congress.
Click the Leave a comment button if you have any questions or comments, or need something clarified. Don’t be shy. The main point here is to improve constantly. Questions and comments help us both and tells me what you are interested in learning/hearing more about.
If you enjoyed this post or found it useful, do me a favor and hit the like (heart button all the way back to the top of the post and to the left) and share it with others.
Reply