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Trump’s China deal leaves world exposed to trade policy lottery

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Trump’s China deal leaves world exposed to trade policy lottery

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Well, that didn’t take long. And there was me thinking that China’s resistance to being bounced into a deal — including the insistence that it was the US that had asked for talks — meant it had settled in for a long haul of negotiations. To be clear: the pact, agreed in suitably neutral Switzerland over the weekend, leaves US tariffs on China ludicrously high and asymmetrically so. But that the US was prepared to make a deal so quickly and reduce duties so much suggests more is to come.

Today’s main piece looks at the deals Trump has agreed so far with China and the UK. I also look at the sorry state of overseas aid and development following the news that Bill Gates will wind down his foundation. And now the first reader question for a while: quite simply, were China and the UK right to accept the deals? Answers please to alan.beattie@ft.com.

Get in touch. Email me at alan.beattie@ft.com

Taking the offer or paying the Dane

Trump’s deals with China and the UK have one thing in common, which is — and please sit down if you’re prone to fainting — they’re not binding and they leave a huge amount of negotiation down the line. I know, right? In fact, it’s not 100 per cent clear what they mean now, especially the China deal. As of this newsletter’s “hit send” time, the world’s trade nerds were still pondering over the announcement, trying to work out exactly what had been agreed. The first stab at overall tariffs, including an average for non-China emerging markets and advanced economies, is here, from the consultancy Oxford Economics.

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And, of course, they’re subject to crossfire from Trump’s other loose cannons. The other news yesterday was Trump declaring that the US pharmaceutical industry could charge no more in the US than in any other country. Is that on top of the sectoral pharma tariffs he wants? What does it mean for the extensive pharmaceutical trade between the US and both the UK and China? Nobody knows.

Even before that, literally the day after the UK deal was announced, the Trump administration launched yet another so-called Section 232 national security investigation, this time on aircraft, which could end in tariffs. Is the UK pre-exempted from those duties because of the deal? Nobody knows.

In theory the US has left itself quite a lot of leverage. The question is, especially with the threat of financial market turmoil an ever-present, whether it is willing to use it. The UK deal, which explicitly states it is not legally binding, leaves Britain vulnerable to being blackmailed into joint action against China if Washington decrees it. Simon Lester of the International Economic Law and Policy Blog has a great rundown here of the many uncertainties around the pact.

General terms for the US-UK trade deal
“Both the United States and the United Kingdom recognise that this document does not constitute a legally binding agreement”, the deal reads

With China, the US’s non-reciprocal “fentanyl tariffs” are still high and asymmetrically so. Beijing has an incentive to come back to the negotiating table and agree a further package of liberalisation — or indeed, as Treasury secretary Scott Bessent said on Sunday, agree to purchase more US exports.

This puts us straight back into the territory of the “phase 1” deal of Trump’s first presidency, in which China supposedly agreed a bunch of liberalising measures. The then US trade representative Robert Lighthizer made a big deal out of these, but they haven’t exactly stopped the US moaning about Chinese state capitalism. Beijing also agreed to buy a load of US soyabeans and other products, which it did not.

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Still, if there’s one thing we apparently know, it’s that the US is heading towards negotiating the tariffs down (though it seems to regard the 10 per cent baseline as inviolable). This will set it up for a nice old confrontation with perhaps Trump’s foremost target of ire, the EU, which has continued to insist the 10 per cent minimum is unacceptable.

Partly what happens now will depend on which of Trump’s team has the president’s ear on any given day, given their wildly contrasting views. In the endless game of Trade Official Tombola, you never know who’s going to be rattling round the Oval Office leading policy when decisions come to be made.

If it’s China warrior supreme Peter Navarro, the UK might find itself being led into a trade war and Beijing being denied more tariff cuts. If it’s commerce secretary Howard Lutnick, whose job seems to be to find out what Trump wants that day and cheerlead it, probably less so. Navarro clearly didn’t have much to do with the UK deal, since he was subsequently talking about the UK accepting beef and chicken produced to US hygiene standards, something Sir Keir Starmer’s government wisely refused to accept.

Remember the rules?

Finally, what does this mean for the rules-based world trading system? It’s not great that the US is agreeing bilateral deals all over the place. As I wrote last week, the UK pact is more directly damaging, since it involves violating the “most-favoured nation” principle by granting market access to the US it will not give to other countries.

The metaphor that immediately came to mind was Dane-geld, the protection money that Anglo-Saxon kings paid to Vikings in return for easing off the pillaging for a while.

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Rudyard Kipling famously had a downer on this tactic, contending that “we’ve proved it again and again, that if once you have paid him the Dane-geld, you never get rid of the Dane”. (My favourite feedback to my piece on this came from an actual mediaevalist historian, who argues that paying Dane-geld was an entirely sensible thing to do.)

The UK will need to keep scanning the horizon for signs of the striped Viking sails appearing again. It might turn out to be worth the gamble and the violation of MFN, or it might not. China might have hit on a better strategy (admittedly in a very different position), or might have not. Nobody knows anything.

Musk’s barbarians at the Gates

Bill Gates has revealed that he’s going to be accelerating spending and then closing the Gates Foundation, albeit not for 20 years. It’s a poignant moment. Trump’s (and specifically Elon Musk’s) savaging of US development assistance, including the US Agency for International Development (USAID) and the US programme for HIV-Aids relief, has left the sector gasping for air. Gates (correctly) last week said that Musk was killing children. By running down his fund, Gates hopes to ameliorate the impact of official aid cuts.

The traditional aid donors are turning away. The UK, which has already made a mockery of its aid budget by spending a chunk of the money on housing asylum seekers in Britain, has announced it will cut its spending yet further from 0.5 per cent to 0.3 per cent of gross national income. Former Labour prime ministers Tony Blair and Gordon Brown, who used to fall over each other competing to announce more aid, seem to have been silent on seeing their work undone, even though Brown had picked a public fight with Musk over the US’s aid cuts just weeks earlier. Not for the first time, Brown’s commitment to courage is stronger in theory than practice.

There’s no doubt the Gates Foundation did a tonne of good. (Disclosure: the FT has received money from Gates in the past.) In particular, being able to work with a longer time horizon than donor governments — which were under pressure to show results within a few years — enabled it to fund programmes such as the elimination of polio, which is slow and unspectacular work.

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But it took strong policy and ideological stances, a tactic that sat oddly with its philanthropic mission. The foundation publicly opposed the granting of a waiver on Covid-19 vaccines during the pandemic before reversing course, a highly contentious public policy issue to weigh in on.

More generally, the idea of private giving saving the world — remember the “philanthrocapitalism” of two decades ago? — now looks seriously naive. The new generation of tech crypto billionaires were seduced by the quasi-scientific approach of effective altruism, which has come under heavy and deserved criticism. The development sector is full of fear. There are stories of NGOs and think-tanks pulling controversial-sounding research papers or cutting the word “equity” from the title. It turns out it is a lot less independent of the state and governments than it thought.

Charted waters

Customs revenue is rising at US ports, but by nowhere near enough to replace a significant portion of receipts from the federal income tax as Trump wishes.

Line chart of Revenue collected at US customs ($bn) showing Lots of chips and dolls

Trade links

  • Chinese companies are purging their supply chains of foreign components, in case Trump’s trade war turns into a full-scale decoupling of its economy from the US’s.

  • Chinese exports jumped in April as its shipping companies pushed goods through ahead of trade talks and tariffs being imposed.

  • Speaking of which, Wired magazine looks at whether consumers should buy now to beat the tariffs or wait.

  • Treasury secretary Scott Bessent has been sent out to try to calm nervy investors. However, they are unlikely to have been reassured that the administration is on top of things by Stephen Miran, the chair of Trump’s Council of Economic Advisers, echoing Trump (before the deal with China) that the US doesn’t need a trade deal with China.

  • My FT colleague Martin Sandbu reminds us that a tax on imports is a tax on exports and will hit US companies selling abroad.


Trade Secrets is edited by Harvey Nriapia

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Map: 2.3-Magnitude Earthquake Reported North of New York City

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Map: 2.3-Magnitude Earthquake Reported North of New York City

Note: Map shows the area with a shake intensity of 3 or greater, which U.S.G.S. defines as “weak,” though the earthquake may be felt outside the areas shown.  All times on the map are Eastern. The New York Times

A minor, 2.3-magnitude earthquake struck about 12 miles north of New York City on Tuesday, according to the United States Geological Survey.

The temblor happened at 10:17 a.m. Eastern in Sleepy Hollow, N.Y., data from the agency shows.

The Westchester County emergency services department said in a statement that it had not received any reports of damage.

As seismologists review available data, they may revise the earthquake’s reported magnitude. Additional information collected about the earthquake may also prompt U.S.G.S. scientists to update the shake-severity map.

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Source: United States Geological Survey | Notes: Shaking categories are based on the Modified Mercalli Intensity scale. When aftershock data is available, the corresponding maps and charts include earthquakes within 100 miles and seven days of the initial quake. All times above are Eastern. Shake data is as of Tuesday, March 10 at 10:30 a.m. Eastern. Aftershocks data is as of Tuesday, March 10 at 2:18 p.m. Eastern.

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Ed Martin, outspoken Justice Department lawyer, is formally accused of ethical violations | CNN Politics

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Ed Martin, outspoken Justice Department lawyer, is formally accused of ethical violations | CNN Politics

Ed Martin, an outspoken Trump administration official, is facing attorney discipline proceedings in Washington, DC, for a letter he sent to Georgetown Law about its diversity programs, the district’s professional conduct investigator announced on Tuesday.

Martin is formally accused of violating his ethical codes as an attorney for telling Georgetown Law’s dean last year that his Justice Department office wouldn’t hire students because of the school’s diversity, inclusion and equity initiatives programs, according to the filing from Hamilton Fox, the disciplinary counsel for DC who acts as a quasi-prosecutor on attorney discipline matters.

Unlike unsolicited complaints, Fox’s formal disciplinary complaint kicks off professional conduct proceedings for Martin in which he will need to respond and could be sanctioned or ultimately lose his law license.

Fox’s announcement on Tuesday marks the first major bar discipline proceeding against a high-profile administration official or attorney supporting President Donald Trump during Trump’s second term. Several Trump lawyers faced disciplinary proceedings after the efforts to overturn Joe Biden’s victory in the 2020 presidential election, including Rudy Giuliani, who lost his law license.

“Acting in his official capacity and speaking on behalf of the government, he used coercion to punish or suppress a disfavored viewpoint, the teaching and promotion of ‘DEI,’” Fox wrote in the complaint. “He demanded that Georgetown Law relinquish its free speech and religious rights in order to continue to obtain a benefit, employment opportunities for its students.”

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Martin was removed from the top prosecutor job in DC after senators made clear he would not be confirmed to the role, but has remained at the Justice Department in several roles, including as pardon attorney.

“Mr. Martin knew or should have known that, as a government official, his conduct violated the First and Fifth Amendments to the Constitution of the United States,” Fox wrote.

Martin is being represented by a Justice Department attorney, a source told CNN.

A spokesperson for DOJ attacked Fox’s complaint. “The DC bar’s attempt to target and punish those serving President Trump while refusing to investigate or act against actual ethical violations that were committed by Biden and Obama administration attorneys is a clear indication of this partisan organization’s agenda,” DOJ said.

Martin had sent the letter to Georgetown Law while serving temporarily as US attorney for DC, a prominent Justice Department position, and told the school his federal prosecutors’ office wouldn’t hire Georgetown’s law school students. It came at a time when the Trump administration was beginning to crack down on universities for their DEI efforts.

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In his letter, Martin claimed a whistleblower told him that the school was teaching and promoting DEI.

Martin also violated attorney ethics rules by contacting judges of the DC court directly, Fox alleged, rather than going through official channels, once he was informed he was under investigation for his professional conduct. The DC Court of Appeals ultimately signs off on attorney discipline findings.

Early last year, Fox’s office had formally asked Martin to respond to a complaint it received by a retired judge regarding the Georgetown letter.

Martin instead wrote to the judges on the DC court complaining about Fox.

“In that letter, he stated that he would not be responding to Disciplinary Counsel’s inquiry, complained about Disciplinary Counsel’s ‘uneven behavior,’ and requested a ‘face-to-face meeting with all of you to discuss this matter and find a way forward,’” Fox wrote.

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“He copied the White House Counsel ‘for informational purposes because of the importance of getting this issue addressed,’” Fox said.

The top judge in the DC courts told Martin the court wouldn’t meet with him about the disciplinary matter and that he would need to follow procedure.

With Fox’s complaint, there will now be several steps ahead of bar discipline authorities looking at Martin’s action, and Fox didn’t specify how Martin should be reprimanded or punished if the discipline boards and the court ultimately determine he violated his ethical codes.

Spokespeople for the Justice Department didn’t immediately respond to requests for comment on Tuesday morning.

In recent days, Attorney General Pam Bondi announced her office would have a more powerful role in reviewing attorney discipline complaints against Justice Department attorneys, potentially setting up an approach that could keep the department at odds with the bar on behalf of DOJ attorneys facing their own individual disciplinary proceedings.

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CNN’s Paula Reid contributed to this report.

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Europe and Asia battle for LNG as Iran war chokes supply

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Europe and Asia battle for LNG as Iran war chokes supply

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Asian and European buyers are battling to source liquefied natural gas after the war in the Middle East choked off shipments through the Strait of Hormuz, blocking a fifth of global supplies.

In an indication of the intensifying contest for LNG since the US and Israel launched strikes on Iran, a handful of gas carriers have abruptly changed course while sailing to Europe and swung towards Asia instead, according to ship monitoring data analysed by the FT.

Countries across Asia are highly dependent on oil and gas sent through the Strait of Hormuz, a critical waterway where shipping has slowed to a near standstill.

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Most of the LNG produced in Qatar and the United Arab Emirates is ordinarily shipped through the strait to Asia, and Asian LNG prices surged almost immediately after war broke out, creating an incentive to divert US gas to the region.

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Taiwan, South Korea and Japan are among the countries that need to source LNG to make up for supplies they will not receive from the Gulf, said Massimo Di Odoardo, head of gas and LNG analysis at consultancy Wood Mackenzie.

Taiwan relied on Qatar for more than 30 per cent of its gas consumption in 2025, according to Citigroup, while for South Korea and Japan the figures were 15 per cent and 5 per cent respectively. Asia typically uses more gas than Europe in the hotter summer months because of more air-conditioning use, creating urgency for Asian utilities to secure cargoes.

The vast majority of LNG is sold under long-term contracts rather than on the spot market, but some buyers are able to change the final destination of their purchases and some sellers are willing to break contracts if prices rise high enough.

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By Thursday, surging European gas prices and rocketing shipping rates had swung the balance back against diversion of US LNG to Asia, according to data company Spark Commodities.

The decision on where to send gas carriers can depend on the relative levels of the European gas price, Asia’s JKM benchmark for LNG and shipping rates.

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For European buyers, the battle with Asia for LNG supplies is eerily familiar to the situation four years ago after Russia slashed pipeline natural gas flows to the continent following Moscow’s full-scale invasion of Ukraine. Competition for spare cargoes then pushed prices to record levels.

On Monday, European gas prices reached as high as €69.50 per megawatt hour, more than double their level before the Iran conflict began. Even so, prices are still far from the €342 per megawatt hour reached in 2022.

JKM gas prices also more than doubled since the start of the war to $24.80 per 1mn British thermal units by Monday, equivalent to €73.10/MWh.

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European buyers have learnt from their experience in 2022. “Europe has more weapons at its disposal in this extreme price scenario to try and fight,” said Alex Kerr, a partner at law firm Baker Botts.

Buyers had started putting clauses in contracts to say that suppliers would face much higher penalties if they diverted cargoes for commercial gain, Kerr said.

There is also much more LNG on the market now that is not committed to set destinations, largely because of new projects starting in the US.

While producers such as Qatar impose strict rules on where its LNG can be sent, almost all US exports are allowed to sail wherever buyers want. Several analysts said there had also been an increase in the willingness of some producers to break contracts for financial advantage.

This makes diversions more likely, while the reluctance of some European buyers to sign long-term supply contracts before the outbreak of war this month could prove costly.

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Expectations of a global supply glut convinced some European buyers that it would be cheaper to wait until later in the year to sign supply deals.

Wood Mackenzie’s Di Odoardo said the buyers had also held off on LNG purchases because new EU legislation on methane emissions made it unclear whether they could incur penalties in the future.

The risk of prices rising as Europe and Asia fight for available cargoes is increasing every day the Strait of Hormuz stays almost closed.

Gas is more difficult to store and to carry in tankers than oil, making its markets more vulnerable to shortages and price shocks.

“The longer the Strait remains shut, the greater the risk that the shipping disruption turns into a genuine gas shortage, as tankers cannot load and facilities have limited storage,” said consultancy Oxford Economics in a research note.

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Additional reporting by Harry Dempsey in Tokyo. Data visualisation by Jana Tauschinski

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