Economy
Trump cuts tariffs on China, hails rare earth deal after meeting Xi
U.S. President Donald Trump described his face-to-face meeting with Chinese leader Xi Jinping on Thursday as a roaring success, saying he would cut tariffs on China, as Beijing agreed to allow the export of rare earth elements and start buying American soybeans.
The president told reporters aboard Air Force One that the U.S. would lower tariffs implemented earlier this year as punishment on China for its sale of chemicals used to make fentanyl from 20% to 10%. That brings the total combined tariff rate on China down from 57% to 47%.
“I guess on the scale from 0 to 10, with ten being the best, I would say the meeting was a 12,” Trump said. “I think it was a 12.”
Trump said he would go to China in April and Xi would come to the U.S. “sometime after that.” The president said they also discussed the export of more advanced computer chips to China, saying that Nvidia would be in talks with Chinese officials.
Trump said he could sign a trade deal with China “pretty soon.”
“We have not too many major stumbling blocks,” Trump said.
China separately confirmed that it would suspend for one year certain export restrictions, including on rare earth materials, that were announced this month.
“China will suspend the implementation of the relevant export control measures, which were announced on Oct. 9, for one year, and will study and refine specific plans,” an unnamed commerce ministry spokesperson said.
Despite Trump’s optimism after a 100-minute meeting with Xi in South Korea, there continues to be the potential for major tensions between the world’s two largest economies. Both nations are seeking dominant places in manufacturing, developing emerging technologies such as artificial intelligence, and shaping world affairs like Russia’s war in Ukraine.
Trump’s aggressive use of tariffs since returning to the White House for a second term, combined with China’s retaliatory limits on exports of rare earth elements, gave the meeting newfound urgency. There is a mutual recognition that neither side wants to risk blowing up the world economy in ways that could jeopardize their own country’s fortunes.
When the two were seated at the start of the meeting, Xi read prepared remarks that stressed a willingness to work together despite differences.
“Given our different national conditions, we do not always see eye to eye with each other,” he said through a translator. “It is normal for the two leading economies of the world to have frictions now and then.”
There was a slight difference in translation as China’s Xinhua News Agency reported Xi as telling Trump that having some differences is inevitable.
China did not provide immediate comment on the meeting or any outcomes.
The leaders met in Busan, South Korea, a port city about 76 kilometers (47 miles) south of Gyeongju, the main venue for the Asia-Pacific Economic Cooperation (APEC) summit.
In the days leading up to the meeting, U.S. officials signaled that Trump did not intend to make good on a recent threat to impose an additional 100% import tax on Chinese goods, and China showed signs it was willing to relax its export controls on rare earths and also buy soybeans from America.
Officials from both countries met earlier this week in Kuala Lumpur to lay the groundwork for their leaders. Afterward, China’s top trade negotiator Li Chenggang said they had reached a “preliminary consensus,” a statement affirmed by U.S. Treasury Secretary Scott Bessent, who said there was ” a very successful framework.”
Shortly before the meeting on Thursday, Trump posted on Truth Social that the meeting would be the “G2,” a recognition of America and China’s status as the world’s biggest economies. The G-7 and G-20 are other forums of industrialized nations.
Sense of relief
But while those summits often happen at luxury spaces, this meeting took place in humbler surroundings: Trump and Xi met in a small gray building with a blue roof on a military base adjacent to Busan’s international airport.
The anticipated detente has given investors and businesses caught between the two nations a sense of relief. The U.S. stock market has climbed on the hopes of a trade framework coming out of the meeting.
Trump has outward confidence that the grounds for a deal are in place, but previous negotiations with China this year in Geneva, Switzerland and London had a start-stop quality to them. The initial promise of progress has repeatedly given way to both countries seeking a better position against the other.
“The proposed deal on the table fits the pattern we’ve seen all year: short-term stabilization dressed up as strategic progress,” said Craig Singleton, senior director of the China program at the Foundation for Defense of Democracies. “Both sides are managing volatility, calibrating just enough cooperation to avert crisis while the deeper rivalry endures.”
The U.S. and China have each shown they believe they have levers to pressure the other, and the past year has demonstrated that tentative steps forward can be short-lived.
For Trump, that pressure comes from tariffs.
China had faced new tariffs this year totaling 30%, of which 20% were tied to its role in fentanyl production. But the tariff rates have been volatile. In April, he announced plans to jack the rate on Chinese goods to 145%, only to abandon those plans as markets recoiled.
Then, on Oct. 10, Trump threatened a 100% import tax because of China’s rare earth restrictions. That figure, including past tariffs, would now be 47% “effective immediately,” Trump told reporters on Thursday.
Xi has his own chokehold on the world economy because China is the top producer and processor of the rare earth minerals needed to make fighter jets, robots, electric vehicles and other high-tech products.
China had tightened export restrictions on Oct. 9, repeating a cycle in which each nation jockeys for an edge only to back down after more trade talks.
What might also matter is what happens directly after their talks. Trump plans to return to Washington, while Xi plans to stay on in South Korea to meet with regional leaders during the Asia-Pacific Economic Cooperation summit, which officially begins on Friday.
“Xi sees an opportunity to position China as a reliable partner and bolster bilateral and multilateral relations with countries frustrated by the U.S. administration’s tariff policy,” said Jay Truesdale, a former State Department official who is CEO of TD International, a risk and intelligence advisory firm.
Disinflation in Türkiye continues across all subgroups, albeit at varying speeds, the central bank’s chief said on Monday, according to the text of a presentation made in New York.
Annual inflation declined to 30.9% in March despite the pricing pressures from the fallout of the Iran war. Central Bank of the Republic of Türkiye (CBRT) Governor Fatih Karahan said underlying trend of inflation also eased last month.
In the presentation to investors in the U.S., Karahan said the disinflation process was supported by a reduced rigidity in rent and education prices, an effect he said was expected to continue throughout the year.
The U.S.-Israeli war on Iran has damaged Gulf energy production, stranded tanker traffic in the key Strait of Hormuz and boosted oil prices in the world’s worst energy shock.
That came as a major test for countries that import most of their energy needs, including Türkiye.
Turkish authorities have taken steps to cushion the fallout of the war on domestic markets. Officials said they were prepared for more steps if the two-week cease-fire, announced last week, does not hold.
The CBRT has already halted its easing cycle at 37%, lifted its overnight rate by about 300 basis points to near 40% and announced steps to support liquidity in the domestic markets.
Bankers on Monday estimated that the central bank bought $13 billion in foreign exchange last week in a reversal since the Iran war began, and total reserves rose by some $9 billion to $171 billion.
Net reserves are estimated to have increased by $10 billion last week to $55 billion, bankers said, citing calculations based on data.
Karahan said declining gold prices have contributed to easing household demand for foreign currency, while international reserves are currently stronger compared to previous periods of capital outflows.
Meanwhile, Turkish authorities last month reintroduced a system that adjusts the special consumption tax (ÖTV) on fuel products and prevents higher oil prices from being fully passed through to consumers.
Karahan said the mechanism, called the “sliding-scale” system, has helped limit inflationary pressures.
The presentation also showed that the governor said demand indicators pointed to a slowdown in Türkiye’s economic activity.
Capacity utilization remains weak, he said, and demand-side indicators suggest moderating growth. Survey-based data also confirm the slowdown, while credit growth decelerated in the first quarter.
On external balances, Karahan stated that the current account deficit, shaped largely by energy imports and tourism revenues, remains below historical averages.
Official data on Monday showed Türkiye’s current account balance registered a deficit of $7.5 billion in February, in line with market expectations.
The figure lifted the January-February deficit to $14.54 billion.
Investors are buoyed by a political change in Hungary and are banking on a positive new chapter for the Central European nation as incoming Prime Minister Peter Magyar insists there is no time to waste following his resounding defeat of Viktor Orban – provided he can stick to his plans.
Magyar’s landslide win gives his center-right Tisza party the chance to change the judicial, electoral, public tendering and media control laws that were at the heart of Orban’s fractious relationship with Brussels and led to around 18 billion euros ($21.2 billion) of EU funding being withheld.
During a marathon post-victory press conference, Magyar, who wants to use the money to boost the economy, pledged to carry out sweeping reforms, join the European Public Prosecutor’s Office, set a two-term limit for prime ministers and unblock a 90 billion euro EU loan for Ukraine.
For economists, the implications are obvious – the unfreezing of EU funds alone, which amount to some 8% of Hungary’s annual gross domestic product (GDP) – could add 1-1.5 percentage points to its growth, Morgan Stanley estimates.
For international investors, who can pick and choose where they put their money, that and the broader change in mood music would be a significant lift.
“It’s a new chapter for Hungary, and it’s a great opportunity,” PGIM’s head of emerging market macro research, Magdalena Polan, said about the change of government.
“To move the economy will not take much because sentiment and rule of law are such an important part of the economic set of factors that impact growth.”
Analysts at JPMorgan expect a reset in relations with the EU to take place almost immediately and say early commitments to reform are likely to be enough to start unlocking the frozen EU money.
EU Commission President Ursula von der Leyen hailed Magyar’s win as “a victory for fundamental freedoms,” comparing the ousting of nationalist Orban to Hungary’s 1956 anti-Soviet uprising and its 1989 break with communism.
Although the mid-year deadline for Budapest to absorb the EU’s post-COVID Recovery and Resilience Facility (RRF) funds looks too tight on the face of it, JPMorgan also believes the “extraordinary circumstances will call for exceptional flexibility” from the EU.
Skeletons in the coffers
The election result sent Hungary’s forint surging to its best level against the euro in four years, while 10-year Hungarian government borrowing costs fell by half a percentage point to their lowest since 2024, and the stock market gained almost 5%.
Once the initial excitement settles, though, investors will want to see what Tisza says about state finances after they have had a proper look at the books.
Hungary currently has one of the EU’s largest budget deficits at over 5% of GDP. Its debt-to-GDP ratio is above 70% and rising, and credit rating agency S&P Global has the country just one downgrade away from “junk” status.
Magyar has said he hopes stronger growth and an improvement in sentiment that lowers the government’s borrowing costs further will help the situation. He also vowed to stamp out corruption, end “prestige” investment projects and halt overpriced public procurement.
“I’m sure they will find some skeletons,” Aberdeen EM debt portfolio manager Viktor Szabo said, referring to Tisza’s audit of the finances, although he also expects S&P to stabilize Hungary’s credit rating given the likely unfreezing of EU funds.
The other key to-dos on the new government’s list will be a credible medium-term budget plan, Szabo said. One needs to be presented to the European Commission by October, but an outline of the plan and some ad-hoc measures might be required well before then.
New beginnings, old realities
Euro adoption is also on the agenda, even if still years away.
It was a key pledge of Magyar’s election campaign, and Tisza’s supermajority should allow it to push through all the required constitutional changes.
Still, Deutsche Bank analysts say the country’s “fiscal and debt dynamics remain incompatible with Maastricht criteria at the moment,” given a eurozone entry requirement to have a sub 3% of GDP budget deficit and a debt-to-GDP level of 60% or lower, or at least reducing towards it.
Hungary’s 3% (+/-1pps) inflation target also needs to be brought in line with the “close-but-below” 2% preferred level of the European Central Bank (ECB), they said.
PGIM’s Polan also sees some broader economic and political realities remaining in place.
A sudden disbursal of EU funding before reforms are cemented could leave Brussels open to legal challenges from other potentially unhappy member countries.
Hungarian companies, meanwhile, are running into a labor shortage made worse by an aging population, language barriers and their approach to immigration. Living standard improvements haven’t kept up with some of its neighbors either, and ending reliance on Russian gas looks even harder for now, given the Middle East conflict.
Nevertheless, the departure of Orban means much is about to change, and most likely for the better for many investors.
“We are in a completely new situation here,” Polan said.
The International Monetary Fund (IMF) slashed its 2026 global growth projection Tuesday, as expected, warning that the world economy could be “thrown off course” by war in the Middle East, which hit commodity markets and sparked higher prices.
The global economy is set to grow by 3.1% this year, said the International Monetary Fund in its World Economic Outlook report, released during its spring meetings in Washington.
This is down from a 3.3% forecast in January before hostilities erupted as U.S.-Israeli strikes against Iran started on Feb. 28, prompting Tehran’s retaliation and sparking a broader conflict in the region.
“We were planning to upgrade growth for 2026 to 3.4%” if not for the war, IMF chief economist Pierre-Olivier Gourinchas told Agence France-Presse (AFP).
Prices of oil, gas and fertilizers have surged due to the conflict, as Iran virtually blocked traffic through the Strait of Hormuz, a key waterway for shipments. U.S. President Donald Trump has also ordered a naval blockade around Iran’s ports.
Higher inflation
The fund expects higher inflation this year at 4.4%, 0.6 percentage points above its January forecast.
After this, the “disinflation path” of the past few years should reassert itself, Gourinchas said.
But these projections assume a relatively short-lived conflict with temporary energy market disruptions.
“We have to be very concerned about the potential for this to become a major energy crisis,” he warned.
In more adverse scenarios where energy prices remain steep for the year, global growth could slow to 2.5% or even to around 2.0%.
“Since 1980, it’s basically been four times when growth has been at two percent or below,” said Gourinchas.
These included periods such as the 2008 global financial crisis and the COVID-19 pandemic.
“This latest shock comes less than a year since the shift in U.S. trade policies, and the transition to a new international trade system is still ongoing,” the IMF said.
A year ago, Trump unleashed sweeping tariffs on U.S. trading partners, rocking financial markets and snarling supply chains.
A swath of these tariffs has been struck down by the Supreme Court, but uncertainty lingers as Trump moves to reimpose duties via other means.
Uneven impact
Although overall revisions to global growth and inflation appear modest, the IMF cautioned that the war has taken a bigger toll on the Middle East and “vulnerable economies” elsewhere.
“The impact on emerging market and developing economies would be almost twice that on advanced economies,” the fund said.
Higher energy and fertilizer costs could bring steeper food costs, mainly hitting low-income energy importers, Gourinchas said.
Growth projections this year for the Middle East and central Asia were cut by around half to 1.9%.
Saudi Arabia, the Middle East’s biggest economy, is set to see 3.1% growth this year, down 1.4 percentage points from January’s expectation.
Among the world’s two biggest economies, U.S. growth is still set to accelerate to 2.3% this year, although the pace of growth was revised slightly lower.
“The U.S. at the margin is benefiting from higher energy prices,” Gourinchas said. But gasoline prices have also jumped for consumers.
China’s growth is anticipated to cool to 4.4%, a touch below the January forecast, too.
The IMF flagged an underlying “unevenness” in both economies.
Domestic activity lags behind exports in China, while a strong showing in the United States has been accompanied by low employment growth.
Euro area growth was revised 0.2 percentage points down to 1.1% for 2026.
U.K. growth saw a bigger downshift by 0.5 percentage points, to 0.8% this year.
While the IMF does not expect inflation expectations to go off-track, there is concern that they may not be as well-anchored as before.
Past inflation episodes remain fresh in the public’s minds, and firms might act to restore margins more quickly than before.
“If that happens, then you can get much more persistent inflation going on, that would be reflected in higher inflation expectations,” Gourinchas said.
If so, central banks might need to step in and raise interest rates to cool the economy, despite the ongoing negative supply shock.
China’s exports slowed down sharply in March as the war in the Middle East led to a rise in energy and transportation costs, hurting global demand and exposing the risks in Beijing’s strategy of leaning on manufacturing to sustain growth.
The world’s second-largest economy surged into 2026 on red-hot AI-fuelled electronics demand, raising expectations it could eclipse last year’s $1.2 trillion record trade surplus.
But the conflict has disrupted global growth, leaving China especially vulnerable as it has relied on foreign demand to offset a prolonged inability to revive consumption at home.
Outbound shipments grew by just 2.5% in March, customs data showed on Tuesday, a five-month low, and far below the 21.8% surge seen over the January-February period. Economists had forecast growth of 8.3% in a Reuters poll.
“Export growth to major destinations slowed across the board,” said Zhiwei Zhang, chief economist at Pinpoint Asset Management, attributing the drop to global uncertainty over the Iran war.
“I think China’s trade surplus will shrink this year, as China cannot pass through the higher energy prices completely to foreign consumers,” he added.
The signs are already evident: China’s March trade surplus came in at just $51.13 billion, far below expectations of $108 billion.
Surge in imports
A sharp 27.8% surge in imports – the strongest since November 2021 – weighed on the balance. That compared with a 19.8% increase in January-February and forecasts for 11.2% growth.
China’s status as the world’s largest manufacturer and energy importer leaves it acutely exposed to a global energy shock. Diversified supplies and large oil reserves offer some protection, but uncertainty over the conflict’s duration risks undermining artificial intelligence-fuelled demand for chips and servers, blurring the growth picture.
Even China, long criticized by trading partners for subsidy-backed, cut-price manufacturing, is not insulated from the hit to buyers’ purchasing power as fuel and transport costs rise.
Separate gross domestic product (GDP) data due on Thursday is expected to show the $19 trillion economy regaining some momentum in the first quarter, but full-year growth is set to slow to 4.6% from last year’s 5.0%, broadly in line with the official target of 4.5%-5.0%.
Chinese goods more competitive?
Chinese goods will be “even more competitive” as the energy shock “pushes up the price in most of the countries” more than in China, said Chen Bo, senior research fellow at the National University of Singapore’s East Asian Institute.
Chen expects global demand for Chinese-made electric vehicles to increase.
Fred Neumann, HSBC’s chief Asia economist, said China could stand to benefit from taking the decision in the early 2000s to stockpile commodities, as it could help blunt the impact of raw-material shocks on factory gate prices.
China’s exports of refined oil products rose 20.5% month-on-month, totalling 4.6 million metric tons.
Disruptions to global energy supply lines will be felt in China, even if it’s not yet showing up in the data.
Natural gas imports for March dropped by an annual 10.7%, the lowest level since October 2022, with Chinese ships diverting between eight and 10 cargoes over the course of the month to sell where prices are higher, according to ICIS, Kpler and Vortexa data.
Crude oil imports also fell 2.8% year-on-year, but this was predominantly due to a high base effect, with March arrivals having been loaded onto ships before the war began.
The figures were further muddied by the seasonal effects of a late Lunar New Year national holiday, said Xu Tianchen, senior economist at the Economist Intelligence Unit, during which factories shut as workers down tools to celebrate.
“This explains the decline across the low-value-added sectors, textiles, garments, bags, toys, furniture, as they are reliant on migrant workers,” Xu said.
A high base is also a drag, after Chinese factories rushed shipments a year earlier to beat U.S. President Donald Trump’s April 2 “Liberation Day” tariff deadline.
March factory activity data out of China showed goods exports continued to support growth, but the war in Iran weighed on sentiment as commodity prices rose sharply, lifting input costs.
Some analysts expect sustained tech demand to underpin Chinese exports.
“For Q1 as a whole, export growth rose to its highest level in four years,” said Zichun Huang, China economist at Capital Economics.
“Despite the energy price shock, exports should stay solid in the coming quarters, thanks to strong demand for semiconductors and green technologies.”
Danish pharmaceuticals giant Novo Nordisk, maker of the Ozempic and Wegovy anti-obesity drugs, announced Tuesday a “strategic partnership” with ChatGPT developer OpenAI to accelerate the development of new medications and bring them to patients faster.
Like other drugmakers, Novo Nordisk is banking heavily on artificial intelligence to test new treatments and vaccines and bring them to market faster for less money.
Novo Nordisk said the partnership would place it “at the forefront of AI transformation in health care and help the company bring new and better treatment options to patients faster.”
No financial details of the partnership were disclosed.
“This collaboration with Novo Nordisk will help them accelerate scientific discovery, run smarter global operations, and redefine the future of patient care,” OpenAI CEO Sam Altman said.
Pilot programs will be launched across several business areas “with full integration by the end of 2026,” the statement added.
Novo Nordisk has seen its share price slide as it has slashed prices to meet rising competition, particularly from its U.S. rival Eli Lilly.
It has also faced competition from copycat versions of Ozempic and Wegovy, and last month it took legal action against the U.S. telehealth chain Hims & Hers after it began selling so-called compounded versions of the injectable.
Currently, it can take more than a decade to develop a drug, and out of ten candidates, only one manages to reach the market.
According to industry analysts, the average research and development cost to bring a new drug to market is around $2 billion.
A U.S.-sanctioned tanker passed through the Strait of Hormuz on Tuesday despite a maritime blockade launched by the United States a day earlier in response to Iran’s refusal to reopen the narrow waterway that is vital for global oil trade.
U.S. President Donald Trump announced the blockade on Sunday after weekend peace talks in Islamabad between the U.S. and Iran failed to reach a deal.
The Rich Starry, an oil and chemicals tanker, left the Gulf via the Strait of Hormuz on Tuesday morning and is traveling in the Gulf of Oman, according to shipping traffic trackers Lloyd’s List and Marine Traffic.
The tanker and its owner Shanghai Xuanrun Shipping Co Ltd were sanctioned by the United States for dealing with Iran.
Rich Starry is a medium-range tanker that is carrying about 250,000 barrels of methanol, according to the data. It loaded the cargo at its last port of call, the UAE’s Hamriyah, the data showed.
The Chinese-owned tanker has Chinese crew on board, the data showed.
China’s Foreign Ministry said on Tuesday that a U.S. blockade of Iranian ports is “dangerous and irresponsible,” warning it would only aggravate tensions. It did not mention whether Chinese ships were passing the strait.
Since the United States and Israel began the war on Feb. 28, Iran effectively shut the Strait of Hormuz to all vessels except its own, saying passage would be permitted only under Iranian control and subject to a fee.
The fallout has been widespread, as nearly a fifth of the world’s oil and gas previously flowed through the narrow waterway.
In a countermeasure, the U.S. military began blocking shipping traffic in and out of Iran’s ports on Monday. Tehran has threatened to hit naval ships going through the strait and to retaliate against its Gulf neighbors’ ports.
Meanwhile, another two Iran-linked vessels were seen transiting the strait on Tuesday. Since they were not heading to Iranian ports, they are not covered by the blockade.
Panama-flagged Peace Gulf, a medium-range tanker, is heading to Hamriyah port in the United Arab Emirates, LSEG data showed.
The vessel typically moves Iranian naphtha, a petrochemical feedstock, to other non-Iranian Middle Eastern ports for export to Asia, Kpler data showed.
Prior to this, two U.S.-sanctioned tankers passed through the narrow waterway.
Handy tanker Murlikishan is heading to Iraq to load fuel oil on April 16, Kpler data showed. The vessel, formerly known as MKA, has transported Russian and Iranian oil.
-
Daily Agenda2 days agoOne heart against the genocide network
-
Economy2 days agoFrom tariffs to energy shock: How global economy is holding up
-
Sports2 days agoArsenal suffer title dream blow while Liverpool boost UCL push
-
Daily Agenda2 days ago2025 data in mediation: 54 percent of disputes ended in agreement
-
Daily Agenda3 days agoTürkiye solves the water crisis – Last Minute News
-
Daily Agenda2 days agoThere is no similar brand in Türkiye
-
Daily Agenda3 days agoBilal Erdoğan’s emphasis on the Turkish brand: We have a unique brand
-
Daily Agenda3 days agoHe targeted President Erdoğan with vile words! Successive reactions from Türkiye to murderer Netanyahu