Tariff’s and Trade Deals May 27th 2025

U.S.-India Trade Agreement

The U.S. and India have finalized a landmark trade deal, which India’s finance ministry believes will energize exports and open up new market access. The agreement is expected to flip current economic headwinds into tailwinds, potentially accelerating India’s growth toward the upper end of forecasts (6.3% to 6.8%).

Key Provisions of the Deal

Tariff Reductions: The deal includes significant tariff reductions on key sectors such as automobile parts, pharmaceuticals, and steel, which India had previously proposed as part of its zero reciprocal tariff strategy.
Digital Trade Cooperation: The agreement strengthens digital trade cooperation, allowing U.S. tech firms to expand operations in India while ensuring data protection measures align with Indian regulations.
Tax & Fiscal Measures: India’s finance ministry has also highlighted direct tax exemptions, fiscal measures, and central bank rate cuts as additional factors that could accelerate recovery and boost economic growth.
Projected Trade Growth: The agreement is expected to increase bilateral trade volume by $75 billion over the next five years.

UK-India Trade Deal

The United Kingdom and India have agreed on a long-stalled free trade agreement, which will slash tariffs on Scotch whisky and other products. The deal, which took over three years to finalize, is expected to increase bilateral trade by £25.5 billion (€30 billion) annually in the long run.

Key Highlights of the Agreement

Whisky & Gin Tariffs: Tariffs will be halved from 150% to 75%, before falling to 40% by year 10 of the deal.
Automotive Tariffs: Tariffs on cars and aeroplane parts will drop from over 100% to 10% under a quota system.
Indian Export Benefits: 99% of Indian exports will face no import duty under the agreement.
Strategic Economic Impact: India’s Trade Minister Piyush Goyal stated that the deal brings India closer to its goal of becoming a global economic powerhouse, while British Prime Minister Keir Starmer called it a “landmark” agreement that benefits British businesses, workers, and shoppers.

ASEAN’s Trade Negotiations with the U.S.

Southeast Asian leaders have agreed that any bilateral trade agreements with the U.S. should not harm other ASEAN members. The Kuala Lumpur Declaration on ASEAN 2045 emphasizes that trade negotiations with Washington must protect the interests of all 660 million people in the region.

Key Developments

Trump’s “Liberation Day” Tariffs: These tariffs could impose levies of 32% to 49% on six ASEAN countries if negotiations fail.
Regional Consensus: The declaration was signed by Singapore’s Prime Minister Lawrence Wong, Thailand’s Prime Minister Paetongtarn Shinawatra, and Vietnam’s Prime Minister Pham Minh Chinh, with Malaysia’s Prime Minister Anwar Ibrahim leading the discussions.
Myanmar Ceasefire Proposal: ASEAN leaders have also called for a temporary ceasefire in Myanmar to be expanded nationwide, allowing warring sides to build trust and work toward dialogue after four years of turmoil.
China’s Participation: The economic summit included representatives from Gulf countries and China, with Chinese Premier Li Qiang participating in discussions on trade and investment cooperation.

Trump Administration’s Trade Push

The Trump administration is preparing to announce multiple new trade agreements within days, with India, Japan, and Switzerland among the most advanced negotiations. The administration’s “onshoring” strategy aims to use tariffs as leverage to bring manufacturing jobs back to the U.S..

Key Economic Strategy

Upcoming Trade Announcements: National Economic Council Director Kevin Hassett has revealed that the White House is finalizing approximately two dozen trade agreements, with some expected to be announced this week.
India-U.S. Talks: Among the most advanced is a complex arrangement with India, where Vice President JD Vance recently held productive talks with Prime Minister Narendra Modi.
Market Reaction: The S&P 500 has reacted positively to these developments, rising 2.5% amid growing trade optimism.
Projected U.S. Growth: Hassett has projected U.S. economic growth to exceed 4% in the second half of 2025 as these trade deals and planned tax cuts take effect.

Britain’s EU Trade Deal

British Prime Minister Keir Starmer has finalized a new trade agreement with the European Union, covering defense, security, and trade. The deal includes concessions on European visas for British citizens, shorter airport queues, and potentially cheaper food imports.

Key Controversies & Benefits

Fishing Rights Concessions: The UK has agreed to allow European fishing fleets access to British waters for an extra 12 years, which has sparked criticism from the National Federation of Fishermen’s Organisations.
Public Opinion: Polling by YouGov shows that 66% of British citizens support closer ties with the EU, compared to 14% who do not.
Business Sector Response: The Federation of Small Businesses has praised the deal for untangling customs rules and reducing red tape for small exporters.
Political Reactions: While Starmer has described the agreement as a “win-win” pact, critics, including Richard Tice, an MP for the anti-immigration party Reform UK, have labeled it a “betrayal”.

Upcoming Trade Deals & Negotiations

U.S.-China Trade Talks

The United States and China are set to enter a critical phase of trade negotiations following their 90-day tariff pause. The U.S. has temporarily lowered its general tariff on Chinese goods to 30%, while China has reduced its retaliatory tariffs to 10%. During this period, both countries aim to negotiate a lasting resolution to ongoing trade tensions.

Key discussion points include:

Technology & Semiconductor Restrictions: The U.S. is pushing for stricter controls on Chinese semiconductor exports, while China is seeking greater access to U.S. tech markets.
Agricultural Trade: China may agree to increase imports of American soybeans and pork in exchange for lower tariffs on Chinese electronics.
Financial Market Access: The U.S. is considering easing restrictions on Chinese investment in American financial institutions.

Trump Administration’s Next Trade Moves

Following the U.K. trade deal, the Trump administration is expected to accelerate negotiations with Mexico, Canada, and China. The administration’s reciprocal tariff policy has led to intense discussions with trading partners, with some countries seeking exemptions or reduced tariffs.

Upcoming trade priorities:

Mexico & Canada: The U.S. is expected to revise NAFTA terms, focusing on automobile tariffs and agricultural exports.
China: The U.S. may extend the tariff pause if negotiations progress, but higher tariffs remain a possibility if talks stall.
Japan & Switzerland: Both countries are in advanced negotiations with the U.S. for new trade agreements.

Middle East Trade Agreements

The White House recently announced major trade deals with Saudi Arabia and Qatar, including a $600 billion investment commitment from Saudi Arabia and a $142 billion U.S.-Saudi arms deal. Additionally, the U.S. has secured an economic exchange worth at least $1.2 trillion with Qatar.

Upcoming developments:

Energy Cooperation: The U.S. is expected to expand oil and gas trade with Gulf nations.
Defense Contracts: Further military trade agreements may be announced in the coming weeks.

EU Trade Negotiations

The European Union is preparing to expand trade agreements with the U.S. and UK, focusing on digital trade, AI regulations, and energy cooperation. The EU is also considering retaliatory tariffs if negotiations with the U.S. fail.

Key upcoming discussions:

U.S.-EU Digital Trade Agreement: The EU is pushing for stronger data privacy protections in cross-border digital trade.
UK-EU Trade Expansion: The UK and EU may further reduce tariffs on automobiles, pharmaceuticals, and agricultural goods.

These upcoming trade negotiations will shape global economic policies in the coming months.

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