tariff

Guess who suddenly has a “TACO” allergy? President Yuge Taco Salad himself.

In the annals of four-letter words and acronyms Donald Trump has long hitched his political fortunes on, the word “taco” may be easy to overlook.

There’s MAGA, most famously. DOGE, courtesy of Elon Musk. Huge (pronounced yuge, of course). Wall, as in the one he continues to build on the U.S.-Mexico border. “Love” for himself, “hate” against all who stand in his way.

There’s a four-letter term, however, that best sums up Trump’s shambolic presidency, one no one would’ve ever associated with him when he announced his first successful presidential campaign a decade ago.

Taco.

His first use of the most quintessential of Mexican meals happened on Cinco de Mayo 2016, when Trump posted a portrait of himself grinning in front of a giant taco salad while proclaiming “I Love Hispanics!” Latino leaders immediately ridiculed his Hispandering, with UnidosUS president Janet Murguia telling the New York Times that it was “clueless, offensive and self-promoting” while also complaining, “I don’t know that any self-respecting Latino would even acknowledge that a taco bowl is part of our culture.”

I might’ve been the only Trump critic in the country to defend his decision to promote taco salads. After all, it’s a dish invented by a Mexican American family at the old Casa de Fritos stand in Disneyland. But also because the meal can be a beautiful, crunchy thing in the right hands. Besides, I realized what Trump was doing: getting his name in the news, trolling opponents, and having a hell of a good time doing it while welcoming Latinos into his basket of deplorables as he strove for the presidency. Hey, you couldn’t blame the guy for trying.

Guess what happened?

Despite consistently trashing Latinos, Trump increased his share of that electorate in each of his presidential runs and leaned on them last year to capture swing states like Arizona and Nevada. Latino Republican politicians made historic gains across the country in his wake — especially in California, where the number of Latino GOP legislators jumped from four in 2022 to a record nine.

The Trump taco salad tweet allowed his campaign to present their billionaire boss to Latinos as just any other Jose Schmo ready to chow down on Mexican food. It used the ridicule thrown at him as proof to other supporters that elites hated people like them. Trump must have at least felt confident the taco salad gambit from yesteryear worked because he reposted the image on social media this Cinco de Mayo, adding the line “This was so wonderful, 9 years ago today!”

It’s not exactly live by the taco, die by the taco. (Come on, why would such a tasty force of good want to hurt anyone)? But Trump is suddenly perturbed by the mere mention of TACO.

Doritos Locos Tacos at the Taco Bell Laguna Beach location.

(Don Leach/Daily Pilot)

That’s an acronym mentioned in a Financial Times newsletter earlier this month that means Trump Always Chickens Out. The insult is in reference to the growing belief in Wall Street that people who invest in stocks should keep in mind that the president talks tough on tariffs but never follows through because he folds under pressure like the Clippers. Or a taco, come to think of it.

Trump raged when CNBC reporter Megan Cassella asked him about TACO at a White House press conference this week.

“Don’t ever say what you said,” the commander in chief snarled before boasting about how he wasn’t a chicken and was actually a tough guy. “That’s a nasty question.”

No other reporter followed up with TACO questions, because the rest of the internet did. Images of Trump in everything from taco suits to taco crowns to carnivorous tacos swallowing Trump whole have bloomed ever since. News outlets are spreading Trump’s out-of-proportion response to something he could’ve just laughed off, while “Jimmy Kimmel Live!” just aired a parody song to the tune of “Macho Man” titled — what else? — “Taco Man.”

The TACO coinage is perfect: snappy, easily understandable, truthful and seems Trump-proof. The master of appropriating insults just can’t do anything to make TACO his — Trump Always Cares Outstandingly just doesn’t have the same ring. It’s also a reminder that Trump’s anti-Latino agenda so far in his administration makes a predictable mockery of his taco salad boast and related Hispandering.

In just over four months, Trump and his lackeys have tried to deport as many Latino immigrants — legal and illegal — as possible and has threatened Mexico — one of this country’s vital trading partners — with a 25% tariff. He has signed executive orders declaring English the official language of the United States and seeking to bring back penalties against truck drivers who supposedly don’t speak English well enough at a time when immigrants make up about 18% of the troquero force and Latinos are a big chunk of it.

Meanwhile, the economy — the main reason why so many Latinos went for Trump in 2024 in the first place — hasn’t improved since the Biden administration and always seems one Trump speech away from getting even wobblier.

As for Latinos, there are some signs Trump’s early presidency has done him no great favors with them. An April survey by the Pew Research Center — considered the proverbial gold standard when it comes to objectively gauging how Latinos feel about issues — found 27% of them approve of how he’s doing as president, down from 36% back in February.

President Trump gives a thumbs up to the cheering crowd after a Latinos for Trump Coalition roundtable in Phoenix in 2020.

(Ross D. Franklin / Associated Press)

Trump was always an imperfect champion of the taco’s winning potential, and not because the fish tacos at his Trump Grill come with French fries (labeled “Idaho” on the menu) and the taco salad currently costs a ghastly $25. He never really understood that a successful taco must appeal to everyone, never shatter or rip apart under pressure and can never take itself seriously like a burrito or a snooty mole.

The president needs to move on from his taco dalliance and pay attention to another four-letter word, one more and more Americans utter after every pendejo move Trump and his flunkies commit:

Help.

US Secretary of State Marco Rubio’s salvo against Chinese students, promising to “aggressively revoke” their visas, is the latest move in heightening tensions between the world’s two largest economies.

Despite a temporary tariff truce reached between them earlier this month, divisions between Washington and Beijing remain wide, with recent ruptures over higher education, artificial intelligence (AI) chips and rare earth minerals.

Here’s all we know about how relations between China and the United States are worsening despite diplomatic efforts.

What did the US and China agree on tariffs?

A US-China trade spat escalated after Trump’s administration raised tariffs on Chinese goods to 145 percent earlier this year, with cumulative US duties on some Chinese goods reaching a staggering 245 percent. China retaliated with 125 percent tariffs of its own on US goods.

Under an agreement reached on May 12 following two days of trade talks in Geneva, tariffs on both sides were dropped by 115 percentage points for 90 days, during which time negotiators hope to secure a longer-term agreement. For now, the US has maintained a 30 percent tariff on all Chinese goods while Beijing has a 10 percent levy on US products.

In the weeks since the temporary reprieve, however, Washington and Beijing appear to have had only limited discussions.

On Thursday, US Treasury secretary Scott Bessent told Fox News that trade talks between the US and China are “a bit stalled”, and may need to be reinvigorated by a call between US President Donald Trump and Chinese leader Xi Jinping.

In the meantime, the Trump administration has announced new, strict visa controls on Chinese university students and told US companies to stop selling their advanced chip software used to design semiconductors to Chinese groups.

Why is the US targeting Chinese students?

On Wednesday, Rubio announced that the US will “aggressively revoke” the visas of Chinese students studying in the country. He also pledged to ramp up scrutiny of new visa applicants from China and Hong Kong.

The Trump administration’s decision to carry out deportations and to revoke student visas is part of wide-ranging efforts to fulfil its hardline immigration agenda.

China is the second-largest country of origin for international students in the US, behind India. Chinese students made up roughly a quarter of all foreign students in the US during the 2023-2024 academic year – more than 270,000 in total.

China’s Ministry of Foreign Affairs criticised the decision to revoke visas, saying it “damaged” the rights of Chinese students. “The US has unreasonably cancelled Chinese students’ visas under the pretext of ideology and national rights,” Foreign Ministry spokesperson Mao Ning said.

The Trump administration also banned Harvard University from enrolling any foreign students on May 22, accusing the institution of “coordinating with the Chinese Communist Party”. That move has since been blocked by a US federal judge.

Still, the largest portion of foreign students at Harvard – almost 1,300 – are Chinese, and many top officials, including the current leader Xi Jinping, have sent their children to the Ivy League school.

How is the US taking aim at Chinese semiconductors?

On May 13, just after the end of trade talks in Geneva, the US Commerce Department issued guidance warning American firms against using Huawei’s Ascend AI semiconductor chips, stating that they “were likely developed or produced in violation of US export controls”. 

The move marked the latest in a series of efforts by the Trump administration to stymie China’s ability to develop cutting-edge AI chips. The tiny semiconductors, which power AI systems, have long been a source of tension between the US and China.

China’s Commerce Ministry spokesperson fired back against the guidance last week, accusing Washington of “undermining” the consensus reached in Geneva and describing the measures as “typical unilateral bullying and protectionism”.

Then, on May 28, the US government ramped up the row by ordering US companies which make software used to design semiconductors to stop selling their goods and services to Chinese groups, The Financial Times reported.

Design automation software makers, including Cadence, Synopsys and Siemens EDA, were told via letters from the US Commerce Department to stop supplying their technology to China.

Why is the US targeting Chinese semiconductors?

The US has been tightening its export controls on semiconductors for more than a decade, contending that China has used US computer chips to improve military hardware and software.

Chinese officials and industry executives deny this and contend that the US is trying to limit China’s economic and technological development.

In his first term as president, Trump banned China’s Huawei from using advanced US circuit boards.

Huawei is seen as a competitor to Nvidia, the US semiconductor giant which produces its own-brand of “Ascend” AI chips. In April, Washington restricted the export of Nvidia’s AI chips to China.

But Nvidia’s chief executive, Jensen Huang, recently warned that attempts to hamstring China’s AI technology through export controls had largely failed.

How could China be affected by US measures?

The suspension of semiconductor sales will limit supplies for aerospace equipment needed for China’s commercial aircraft, the C919, a signature project in China’s push towards economic and transport self-reliance.

Christopher Johnson, a former CIA China analyst, told The Financial Times that this week’s new export controls underscored the “innate fragility of the tariff truce reached in Geneva”.

“With both sides wanting to retain and continue demonstrating the potency of their respective chokehold capabilities, the risk the ceasefire could unravel even within the 90-day pause is omnipresent,” he added.

Will China ease restrictions on rare earth minerals exports?

US officials had expected the Geneva talks to result in China easing its export restrictions on rare earth elements. So far, there have been few signs of that, however.

Rare earth minerals are a group of precious minerals required to manufacture a wide range of goods in the defence, healthcare and technology sectors.

Rare earth metals, which include scandium and yttrium, are also key for producing components in capacitors – electrical parts which help power AI servers and smartphones.

China processes some 90 percent of the world’s rare earth minerals and instituted export controls in April to counter Trump’s “Liberation Day” tariffs in April, triggering alarm among US companies.

Last week, for instance, Ford temporarily closed a factory in Chicago which makes utility vehicles after one of its suppliers ran out of a specialised rare earth magnet.

In most new cars, especially elevate vehicles (cars with robotic technology allowing them to “climb” over obstacles), these high-tech magnets are used in parts which operate brake and steering systems, and power seats and fuel injectors.

The restrictions on the supply of rare earth minerals provide Beijing with a strategic advantage in future negotiations, as it can limit supplies of crucial technologies for US industry.

President Trump’s tariff strategy has been thrown into turmoil after a U.S. court issued a rare rebuke blocking many of the import taxes he has threatened and imposed on other countries.

In a ruling issued late Wednesday, a three-judge panel for the U.S. Court of International Trade declared that the Trump administration had wrongly invoked a 1977 law in imposing his “Liberation Day” tariffs on dozens of countries and they were therefore illegal. It also extended that ruling to previous tariffs levied on Canada, Mexico and China over the security of the U.S. border and trafficking in fentanyl.

The Trump administration immediately said it would appeal, putting the fate of the tariffs in the hands of an appellate court and potentially the Supreme Court. The ruling doesn’t affect Trump’s first-term levies on many imports from China or sectoral duties planned or already imposed on goods including steel, which are based on a different legal foundation that the Trump administration may now be forced to make more use of to pursue its tariff campaign.

It’s unclear just how fast Wednesday’s ruling will go into effect, with the court giving the government up to 10 days to carry out the necessary administrative moves to remove the tariffs. But if the decision holds, it would in a matter of days eliminate new 30% U.S. tariffs on imports from China, 25% tariffs on goods from Canada and Mexico and 10% duties on most other goods entering the U.S.

Those tariffs and the prospect of retaliatory ones have been seen as a significant drag on U.S. and global growth and eliminating them — even temporarily — would improve prospects for the world’s major economies.

There is uncertainty over whether the ruling represents a permanent setback to Trump’s push to reshape global trade or a mere impediment. Trump and his supporters have attacked judges as biased and his administration has been accused of failing to fully comply with other court orders, raising questions over whether it will do so this time.

A White House spokesperson dismissed the ruling as one made by “unelected judges” who should not have the power “to decide how to properly address a national emergency.” Trump has invoked national emergencies ranging from the U.S. trade deficit to overdose deaths to justify many of his tariffs.

“Foreign countries’ nonreciprocal treatment of the Unites States has fueled America’s historic and persistent trade deficits,” White House spokesman Kush Desai said in a statement. “These deficits have created a national emergency that has decimated American communities, left our workers behind, and weakened our defense industrial base — facts that the court did not dispute.”

If the ruling isn’t reversed or ignored, one of the consequences could be greater fiscal concerns at a time when bond markets are questioning the trajectory of the U.S.’s mounting debt load. The Trump administration has been citing increased tariff revenues as a way to offset tax cuts in his “one big, beautiful bill” now before Congress, which is estimated to cost $3.8 trillion over the next decade.

U.S. importers paid a record $16.5 billion in tariffs in April and Trump’s aides have said they expected that to rise in the coming months.

Major trading partners including China, the European Union, India, and Japan that are in negotiations with the Trump’s administration must now decide whether to press ahead in efforts to secure deals or slow walk talks on the bet they now have a stronger hand.

Deal doubts

Also thrown into doubt would be the outlines for a trade deal that Trump reached with the UK earlier in May. That potential pact calls for the imposition of a 10% U.S. tariff on all imports from the UK that would be null and void if Wednesday’s decision endures.

“I don’t know why any country would want to engage in negotiations to get out of tariffs that have now been declared illegal,” said Jennifer Hillman, a Georgetown Law School professor and former WTO judge and general counsel for the U.S. Trade Representative. “It’s a very definitive decision that the reciprocal worldwide tariffs are simply illegal.”

Hillman and other legal experts pointed out that Trump has other legal authorities he can draw on. But none would give him as broad powers as those he invoked under the International Emergency Economic Powers Act, or IEEPA.

A provision of the 1974 trade act gives presidents the power to impose tariffs of up to 15% for up to 150 days, though only in the event a balance of payments crisis, which Trump may not want to declare given the current nervous state of bond markets, Hillman said.

Trump could also invoke other authorities to impose tariffs on individual sectors or countries, as he did in his first term. In recent months, he has already used national security powers to impose duties on imported steel, aluminum and cars and launched seven other investigations pertaining to things like pharmaceuticals, lumber and critical minerals.

“The Trump administration’s toolbox won’t be completely empty,” Dmitry Grozoubinski, director of ExplainTrade and author of the book “Why Politicians Lie About Trade” said in an interview on Bloomberg Television. But as for IEEPA, “if they comply with this ruling that takes that toy out of the toy box.”

More uncertainty

Wednesday’s ruling came in two parallel cases brought by a conservative group on behalf of a small business and U.S. states controlled by Democrats.

“This ruling reaffirms that the President must act within the bounds of the law, and it protects American businesses and consumers from the destabilizing effects of volatile, unilaterally imposed tariffs,” said Jeffrey Schwab, senior counsel for the conservative Liberty Justice Center, which brought one of the cases.

For many other businesses, it brought the prospect of yet another sharp turn in U.S. tariff policies and more short-term questions and headaches.

Southern California-based Freight Right Global Logistics has several shipments on the water now for clients all over the U.S., carrying goods largely from China. Those containers are filled with everything from toys to robots, and it’s very uncertain what the tariff burden will be for those shipments when they land, said Freight Right Chief Executive Robert Khachatryan.

Khachatryan fielded questions Wednesday evening from his clients on potential refunds, which tariffs will be removed, and what would be the effective dates.

“We are working hard to answer customers questions but the reality is that there is not enough information out there yet,” he said. “Tomorrow we’re going to be all over the place figuring out what this means in practice.”

Donnan, Larson and Curtis write for Bloomberg News.

This latest twist in the Trump trade tariff drama has many people asking what it means for the UK’s deal with the US.

The answer is actually not as much as you might think.

For a start, the tariffs that the US court has ruled illegal do not include those on cars, which make up the bulk of what the UK exports to the US, and steel and aluminium, which are the other UK industries most affected.

UK exports of cars are currently attracting 27.5% tariffs while steel and aluminium are hit with 25% tariffs – the same as every other country. Wednesday’s ruling has not changed that.

And although the UK has done a deal with the US to reduce car tariffs to 10% and steel and aluminium tariffs to zero, that deal is yet to come into force.

Sources at Jaguar Land Rover told the BBC that these tariffs were costing them “a huge amount of money” and pushed back on the notion floated by the car industry trade body, the SMMT, that they could run down current US inventories before feeling the pain of the tariffs.

The government said it was working to implement the deal as quickly as possible and that Trade Secretary Jonathan Reynolds would press the case for speedy implementation when he meets US representatives at a meeting of the Organisation for Economic Co-operation and Development think-tank in Paris next week.

The ruling does block Trump’s imposition of blanket tariffs of 10% on other UK goods entering the US – such as products like salmon and whisky. So how that part of the tariff deal will pan out remains uncertain.

British exporters’ sigh of relief at tariffs being stopped could be short-lived as the White House has said it intends to appeal the decision.

There are also other mechanisms for the President to impose tariffs – through different provisions in trade acts or pushing them through congress.

The UK announced its trade deal with the US to some fanfare, but there are question marks as to how much better off the UK will be than other countries if it turns out that the President is prevented from imposing swingeing tariffs on others by either the courts or his own legislature.

Perhaps the most corrosive effect of all is yet another wild card being thrown into an already unpredictable game of international trade stand-off.

It makes it hard for businesses to plan, to invest, with any confidence.

FRANKFURT, Germany — Top officials at the European Union’s executive commission say they’re pushing hard for a trade deal with the Trump administration to avoid a 50% tariff on imported goods. Trump had threatened to impose the tariffs on June 1, but has pushed back the deadline to July 9, repeating an oft-used tactic in his trade war.

European negotiators are contending with Trump’s ever-changing and unpredictable tariff threats, but “still, they have to come up with something to hopefully pacify him,” said Bruce Stokes, visiting senior fellow at the German Marshall Fund of the United States.

Stokes also sees more at play than just a disagreement over trade deficits. Trump’s threats “are rooted in frustration with the EU that has little to do with trade,’’ Stokes said. “He doesn’t like the EU. He doesn’t like Germany.”

What exactly does Trump want? What can Europe offer? Here are the key areas where the two sides are squaring off.

Buy our stuff

Over and over, Trump has bemoaned the fact that Europe sells more things to Americans than it buys from Americans. The difference, or the trade deficit in goods, last year was 157 billion euros ($178 billion). But Europe says that when it comes to services — particularly digital services like online advertising and cloud computing — the U.S. sells more than it buys and that lowers the overall trade deficit to 48 billion euros, which is only about 3% of total trade. The European Commission says that means trade is “balanced.”

One way to shift the trade in goods would be for Europe to buy more liquefied natural gas by ship from the U.S. To do so, the EU could cut off the remaining imports of Russian pipeline gas and LNG. The commission is preparing legislation to force an end to those purchases — last year, some 19% of imports — by the end of 2027.

That would push European private companies to look for other sources of gas such as the U.S. However the shift away from Russia is already in motion and that “has obviously not been enough to satisfy,” said Laurent Ruseckas, a natural gas markets expert at S&P Global Commodities Insights Research.

The commission doesn’t buy gas itself but can use “moral suasion” to convince companies to turn to U.S. suppliers in coming years but “this is no silver bullet and nothing that can yield immediate results,” said Simone Tagliapietra, an energy analyst at the Bruegel think tank in Brussels.

Europe could buy more from U.S. defense contractors as part of its effort to deter further aggression from Russia after the invasion of Ukraine, says Carsten Brzeski, global chief of macro at ING bank. If European countries did increase their overall defense spending — another of Trump’s demands — their voters are likely to insist that the purchases go to defense contractors in Europe, not America, said Stokes of the German Marshall Fund. One way around that political obstacle would be for U.S. defense companies to build factories in Europe, but “that would take time,’’ he said.

The EU could also reduce its 10% tax on foreign cars— one of Trump’s long-standing grievances against Europe. “The United States is not going to export that many cars to Europe anyway … The Germans would be most resistant, but I don’t think they’re terribly worried about competition from America,’’ said Edward Alden, senior fellow at the Council on Foreign Relations. ”That would be a symbolic victory for the president.’’

A beef over beef

The U.S. has long complained about European regulations on food and agricultural products that keep out hormone-raised beef and chickens washed with chlorine. But experts aren’t expecting EU trade negotiators to offer any concessions at the bargaining table.

“The EU is unwilling to capitulate,” said Mary Lovely, senior fellow at the Peterson Institute for International Economics. “The EU has repeatedly said it will not change its sanitary rules, its rules on (genetically modified) crops, its rules on chlorinated chickens, things that have been longtime irritants for the U.S.’’

Backing down on those issues, she said, would mean that “the U.S. gets to set food safety (standards) for Europe.’’

Value-added tax

One of Trump’s pet peeves has been the value-added taxes used by European governments, a tax he says is a burden on U.S. companies.

Economists say this kind of tax, used by some 170 countries, is trade-neutral because it applies equally to imports and exports. A value-added tax, or VAT, is paid by the end purchaser at the cash register but differs from sales taxes in that it is calculated at each stage of the production process. In both cases, VAT and sales tax, imports and exports get the same treatment. The U.S. is an outlier in that it doesn’t use VAT.

There’s little chance countries will change their tax systems for Trump and the EU has ruled it out.

Negotiating strategy

Trump’s approach to negotiations has involved threats of astronomical tariffs – up to 145% in the case of China – before striking a deal for far lower levels. In any case, however, the White House has taken the stance that it won’t go below a 10% baseline. The threat of 50% for the EU is so high it means “an effective trade embargo,” said Brzeski, since it would impose costs that would make it unprofitable to import goods or mean charging consumers prices so high the goods would be uncompetitive.

Because the knottiest issues dividing the EU and U.S. — food safety standards, the VAT, regulation of tech companies — are so difficult “it is impossible to imagine them being resolved by the deadline,’’ Alden said. ”Possibly what you could have — and Trump has shown he is willing to do this — is a very small deal’’ like the one he announced May 8 with the United Kingdom.

Economists Oliver Rakau and Nicola Nobile of Oxford Economics wrote in a commentary Monday that if imposed, the 50% tariffs would reduce the collective economy of the 20 countries that use the euro currency by up to 1% next year and slash business investment by more than 6%.

The EU has offered the US a “zero for zero” outcome in which tariffs would be removed on both sides industrial goods including autos. Trump has dismissed that but EU officials have said it’s still on the table.

Lovely of the Peterson Institute sees the threats and bluster as Trump’s way of negotiating. “In the short run, I don’t think 50% is going to be our reality.’’

But she says Trump’s strategy adds to the uncertainty around U.S. policy that is paralyzing business. “It suggests that the U.S. is an unreliable trading partner, that it operates on whim and not on rule of law,’’ Lovely said. “Friend or foe, you’re not going to be treated well by this administration.’’

McHugh and Wiseman write for the Associated Press. Wiseman contributed to this report from Washington.

Southeast Asian leaders are set to hold their first ever summit with China and the six-member Gulf Cooperation Council (GCC), as they seek to insulate their trade-dependent economies from the effect of steep tariffs from the United States.

The meeting, in the Malaysian capital, Kuala Lumpur, is taking place on Tuesday, on the second day of the annual summit of the 10-member Association of Southeast Asian Nations (ASEAN).

It follows separate talks between leaders of the ASEAN and the GCC, which comprises of Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates.

Malaysian Prime Minister Anwar Ibrahim, opening the ASEAN-GCC summit, said stronger ties between the two blocs would be key to enhancing interregional collaboration, building resilience and securing sustainable prosperity.

“I believe the ASEAN-GCC partnership has never been more important than it is today, as we navigate an increasingly complex global landscape marked by economic uncertainty and geopolitical challenges,” Anwar said.

Malaysia is the current chair of ASEAN, which also includes Brunei, Cambodia, Laos, Myanmar, the Philippines, Singapore, Thailand and Vietnam.

In written remarks before the meetings, Anwar said “a transition in the geopolitical order is underway” and that “the global trading system is under further strain, with the recent imposition of US unilateral tariffs.”

With protectionism surging, the world is also bearing witness to “multilateralism breaking apart at the seams”, he added.

China calls for stronger ties

China’s Premier Li Qiang, who arrived in Kuala Lumpur on Monday, will join ASEAN and the GCC in their first such meeting on Tuesday. He met with Anwar on Monday and called for expanded trade and investment ties between Beijing, ASEAN and the GCC.

“At a time when unilateralism and protectionism are on the rise and world economic growth is sluggish,” Li said, China, ASEAN and GCC countries “should strengthen coordination and cooperation and jointly uphold open regionalism and true multilateralism”.

China is willing to work with Malaysia to “promote closer economic cooperation among the three parties” and respond to global challenges, Li told Anwar.

ASEAN has maintained a policy of neutrality, engaging both Beijing and Washington, but US President Donald Trump’s threats of sweeping tariffs came as a blow.

Six of the bloc’s members were among the worst hit, with tariffs between 32 percent and 49 percent.

Trump announced a 90-day pause on tariffs in April for most of the world, and this month struck a similar deal with key rival China, easing trade war tensions.

Al Jazeera’s Rob McBride, reporting from Kuala Lumpur, said ASEAN members are “very much looking at building ties with other parts of the world, in particular China, but also the Middle East” to strengthen their economic resilience.

“A measure of the importance that the GCC is also placing on this meeting is the delegation that has been sent here and the seniority of its members,” he added. “The Emir of Qatar, Sheikh Tamim bin Hamad Al Thani, is here, and we have crown princes from Kuwait and also Bahrain. We also have a deputy prime minister from Oman.”

Anwar said Monday he had also written to Trump to request an ASEAN-US summit this year, showing “we observe seriously the spirit of centrality.” However, his Foreign Minister Mohamad Hasan said Washington had not yet responded.

‘Timely, calculated’

ASEAN has traditionally served as “a middleman of sorts” between developed economies like the US and China, said Chong Ja Ian from the National University of Singapore (NUS).

“Given the uncertainty and unpredictability associated with economic relations with the United States, ASEAN member states are looking to diversify,” he told the AFP news agency.

“Facilitating exchanges between the Gulf and People’s Republic of China is one aspect of this diversification.”

Malaysia, which opened the bloc’s 46th summit on Monday, is the main force behind the initiative, he said.

China, which has suffered the brunt of Trump’s tariffs, is also looking to shore up its other markets.

Premier Li’s participation is “both timely and calculated”, Khoo Ying Hooi from the University of Malaya told AFP.

“China sees an opportunity here to reinforce its image as a reliable economic partner, especially in the face of Western decoupling efforts.”

Beijing and Washington engaged in an escalating flurry of tit-for-tat levies until a meeting in Switzerland saw an agreement to slash them for 90 days.

Chinese goods still face higher tariffs than most, though.

US president continues to fuel global economic uncertainty with erratic trade policy.

United States President Donald Trump has backed away from launching a trade war with the European Union, two days after threatening to impose punishing tariffs.

Trump said on Sunday that he has agreed to extend trade negotiations with the EU to July 9 following a call with European Commission President Ursula von der Leyen. As part of that agreement, the US will also hold back from imposing a 50 percent tariff on imports from the bloc, which Trump announced on Friday would be imposed on June 1.

The announcement is the latest U-turn on US trade policy in a long series in recent months, and will only add to the uncertainty that Trump’s erratic and unpredictable policy is casting over the global economy.

Trump said, “[von der Leyen] said she wants to get down to serious negotiation. We had a very nice call.”

“She said we will rapidly get together and see if we can work something out,” he told reporters.

The European Commission chief noted that she had shared a “good call” with Trump and that the EU was ready to move swiftly.

Backtracked

Trump set a 90-day window for trade negotiations with the EU in April, making them due to end on July 9.

He had backtracked on Friday, saying he was not interested in reaching an agreement at all and escalated the transatlantic trade dispute.

“I’m not looking for a deal,” the president said. “We’ve set the deal – it’s at 50 percent.”

However, by Sunday, he welcomed von der Leyen’s assertion that the bloc is willing to negotiate but needs more time.

“Europe is ready to advance talks swiftly and decisively,” she recapped on X. “To reach a good deal, we would need the time until July 9.”

The bloc’s top trade negotiator, Maros Sefcovic, had on Friday urged the US to show “mutual respect, not threats”.

Trump roiled financial markets with his Liberation Day announcement in April, which threatened sweeping tariffs on multiple countries.

However, amid nosediving markets, threats of retaliation, and turmoil across the globe, the US president has in many cases softened his stance in favour of negotiations.

Washington has made deals with the United Kingdom and opened talks with China. Those moves have buoyed markets somewhat, but uncertainty persists as the US stance continues to shift.

WASHINGTON — President Trump said Sunday that the U.S. will delay implementation of a 50% tariff on goods from the European Union until July 9 to buy time for negotiations with the bloc.

That agreement came after a call Sunday with Ursula von der Leyen, the president of the European Commission, who had told Trump that she “wants to get down to serious negotiations,” according to the U.S. president.

“I told anybody that would listen, they have to do that,” Trump told reporters Sunday in Morristown, N.J., as he prepared to return to Washington. Von der Leyen, Trump said, vowed to “rapidly get together and see if we can work something out.”

In a social media post Friday, Trump had threatened to impose the 50% tariff on EU goods, asserting that the 27-member bloc had been “very difficult to deal with” on trade and that negotiations were “going nowhere.” Those tariffs would have kicked in starting June 1.

But the call with Von der Leyen appeared to smooth over tensions, at least for now.

“I agreed to the extension — July 9, 2025 — It was my privilege to do so,” Trump said on social media shortly after he spoke with reporters Sunday evening.

Von der Leyen said the EU and the U.S. “share the world’s most consequential and close trade relationship.”

“Europe is ready to advance talks swiftly and decisively,” she said. “To reach a good deal, we would need the time until July 9.”

Kim writes for the Associated Press.

US President Donald Trump is once again taking aim at trading partners of the United States. This time it’s the European Union.

The US president is now threatening to impose a 50-percent tariff on all goods from the EU starting June 1. If he follows through, that will mean much higher import taxes on the EU’s hundreds of billions of dollars’ worth of exported goods.

So is Europe about to pay a high price for not settling with Trump sooner? Or will Trump’s tariffs – now his signature move – backfire for US manufacturing?

Presenter: Tom Mcrae

Guests:

Paolo von Schirach, President, Global Policy Institute

Will Hutton, President, Academy of Social Sciences.

Brian Wong, Fellow, Centre on Contemporary China and the World

May 23 (UPI) — President Donald Trump on Friday threatened tariffs against Apple on iPhones that are manufactured outside of the United States.

Trump said in a Truth Social post that a tariff of “at least 25%” will be levied on future iPhones that are manufactured internationally and sold in the United States.

“I long ago informed Tim Cook of Apple that I expect their [iPhones] that will be sold in the United States of America will be manufactured and built in the United States, not India, or anyplace else,” Trump wrote.

Trump’s post did not include details on how the proposed tariffs would be implemented.

The warning came after a White House official said Trump met with Cook at the White House earlier in the week, CBS News reported.

Treasury Secretary Scott Bessent told Fox News Friday he was not present in that meeting but suggested they may have discussed an effort by the Trump administration to focus on “precision manufacturing” of products made in the United States.

“A large part of Apple’s components are in semiconductors. So we would like to have Apple help us make the semiconductor supply chain more secure,” he said.

Most iPhone production is currently handled in China, but Foxconn, a primary assembly partner on the phones, has been exploring expanding its facilities in India.

Dan Ives, senior equity research analyst and managing director at Wedbush Securities, suggested in a post on X that manufacturing an iPhone in the United States could more than triple the cost of an iPhone 16, the latest model, from its current $1,000 price tag.

“The pressure from Trump on Apple to build iPhone production in the U.S. as we have discussed this would result in an iPhone price point that is a non-starter for Cupertino and translate into iPhone prices of [approximately] $3,500 if it was made in the U.S. which is not realistic in our view,” Ives wrote.

Apple stock was down 2.44% roughly an hour after markets opened on Friday.

The “One Big Beautiful Bill” is one big, ugly mess.

We’ve seen false advertising in naming laws before — the Democrats’ 2022 Inflation Reduction Act jumps to mind. Yet no legislation has been as misbranded as the Republican tax and spending cuts that President Trump, the branding aficionado himself, is pushing along a tortuous path in Congress.

Trump’s appeal to many Americans has always been his purported penchant for “telling it like it is.” But he’s doing the opposite by labeling as the “One Big Beautiful Bill” a behemoth that encompasses just about everything he can’t even try to do by unilateral executive orders — deeper tax cuts, more spending on the military and on his immigration crackdown and, yes, Medicaid cuts. His so-called beauty is a beast so frightening that ratings firm Moody’s saw the details last week, calculated the resulting debt and on Friday downgraded the United States’ sterling credit rating for the first time in more than 100 years. That likely means higher interest costs for the nation’s increased borrowing ahead.

And yet, in another example of the gaslighting at which Trump and his party are so adept, the White House and House Republican leaders dismissed the rebuke of their bill. Treasury Secretary Scott Bessent said it would spur economic growth — the old, discredited “tax cuts will pay for themselves” argument. Speaker Mike Johnson said the Moody’s downgrade just proved the urgent need to pass the big, beautiful bill with its “historic spending cuts.” Which only proved that Johnson didn’t read Moody’s rationale, explaining that spending cuts would be far exceeded by tax cuts, thereby reducing the government’s revenues and piling up more debt.

The Republican Party, which postures as the fiscally conservative of the two parties despite decades of evidence to the contrary, would add about $4 trillion in debt over the next 10 years if its bill becomes law, according to Moody’s. Other nonpartisan analyses — including from the Congressional Budget Office, the Committee for a Responsible Federal Budget and the Penn Wharton Budget Model of the University of Pennsylvania, similarly project additional debt in the $3-trillion-plus to $5-trillion range, more if the tax cuts are made permanent as Trump and Republicans want.

No surprise: Trump, after all, set a record for the most debt in a single presidential term: $8.4 trillion during Trump 1.0, nearly twice what accrued under his successor, President Biden. Most of Trump’s first-term red ink stemmed from his 2017 tax cuts and spending, which predated the COVID-19 pandemic and the government’s costly response.

“This bill does not add to the deficit,” White House Press Secretary Karoline Leavitt insisted to reporters on Monday, showing yet again why such a facile dissembler was chosen to speak for the habitually prevaricating president.

“That’s a joke,” Republican Rep. Thomas Massie of Kentucky responded.

Worse, it’s a lie.

And no surprise here, either, but Trump’s tariffs — another economic monstrosity that he’s declared “beautiful” — aren’t paying for this bill despite his claims. Yet the president repeated that falsehood on Tuesday (along with others), when he visited the Capitol to strong-arm Republican dissidents, including Massie, into supporting the measure ahead of a House vote. (Inside a closed caucus with House Republicans, the president reportedly called for Massie to be unseated; the Kentuckian remains opposed.)

“The economy is doing great, the stock market is higher now than when I came to office. And we’ve taken in hundreds of billions of dollars in tariff money,” Trump told reporters at the Capitol. Every point a lie.

(This week provided yet more evidence that he’s utterly wrong to keep insisting that foreign countries pay his tariffs, not American consumers. After Walmart, the largest U.S. retailer, said late last week that it would have to raise prices, Trump posted that it should “ ‘EAT THE TARIFFS.’ ” He added: “I’ll be watching, and so will your customers!!!” This after a Walmart exec said that “the magnitude of these increases is more than any retailer can absorb.”)

While details of the budget bill shift as Republican leaders dicker with their dissidents, here’s the ugly general outline, according to Penn Wharton:

Extending and expanding Trump’s 2017 tax cuts, which otherwise expire this year, would cost nearly $4.5 trillion over 10 years, $5.8 trillion if the cuts are permanent. (Mandating that tax cuts expire after a time, as Trump did in 2017, is an old budget gimmick to understate a bill’s cost. The politicians know they’ll just extend the tax breaks, as we’re seeing now.) The bill’s proposed spending increases for the military, immigration enforcement and deportations would cost about $600 billion more.

Spending cuts over 10 years, mostly to Medicaid as well as to Obamacare, food stamps and clean-energy programs, would save about $1.6 trillion. That offsets as little as one-quarter of the cost of Trump’s tax cuts and added spending.

Also, the bill is inequitable. The tax cuts would disproportionately favor corporations and wealthy Americans. Its spending cuts, however, would mostly cost lower- and some middle-income people who benefit from federal health and nutrition programs. Changes to Medicaid, including a work requirement (92% of recipients under 65 already work full or part-time, according to the health research organization KFF), and to Obamacare would leave up to 14 million people without health insurance.

Penn Wharton found that people with household income less than $51,000, for example, would see their after-tax income reduced if the bill becomes law, and the top 0.1% of income-earners would get hundreds of thousands of dollars more over the next 10 years. Beyond that time, Penn Wharton projected, “all future households are worse off” given the long-term impact of spiraling debt and a tattered safety net.

“Don’t f— around with Medicaid,” Trump told Republicans at the Capitol, according to numerous reports. How cynical, given that he was pressuring them to vote for a bill that would do just that.

All of which recalls an acronym that’s popular these days: FAFO.

@jackiekcalmes

SEOUL, May 20 (UPI) — South Korea sent a delegation to Washington to hold a second round of technical discussions this week over the Trump administration’s proposed “reciprocal” tariffs, Seoul’s Trade Ministry said Tuesday, with both sides aiming to reach an agreement by July.

A South Korean delegation led by senior ministry official Jang Sung-gil will visit Washington for talks slated to run from Tuesday through Thursday, the Trade Ministry said.

Discussions will be centered on the six areas of trade balance, non-tariff measures, economic security, digital trade, country of origin of products and commercial considerations, the ministry said. The agenda was set during a meeting held on the sidelines of last week’s Asia-Pacific Economic Cooperation trade ministers’ meeting, held on South Korea’s southern resort island of Jeju.

“Through this technology consultation, we will respond from the perspective of prioritizing national interests in order to derive the direction of a mutually beneficial agreement centered on the areas that both sides have discussed so far,” Jang said.

This week’s discussions follow a first round of working-level talks held May 1 in Washington.

South Korea is facing 25% tariffs threatened by U.S. President Donald Trump as part of his sweeping package of “Liberation Day” trade measures. Trump announced the tariffs on April 2 but quickly put their implementation on hold for 90 days. Tariffs on steel and automobiles, two key South Korean industries, are already in place.

Seoul and Washington agreed to work toward a “package” deal on trade and other related issues before July 8, when the 90-day pause on tariffs is set to expire, South Korean Trade Minister Ahn Duk-geun said in April.

The uncertain trade environment has shaken the export-dependent Asian powerhouse, which saw its economy unexpectedly shrink in the first quarter of the year.

Last month, the International Monetary Fund sharply cut its forecast for South Korea’s 2025 economic growth as part of an overall global decline reflecting “effective tariff rates at levels not seen in a century and a highly unpredictable environment.”

The April edition of the IMF’s quarterly World Economic Outlook projected 1% growth for Asia’s fourth-largest economy, down from a 2% forecast in its previous edition.

South Korea is looking to get a reduction or exemption from the American tariffs, Trade Minister Ahn Duk-geun said Friday after he met with U.S. Trade Representative Jamieson Greer at the APEC event in Jeju.

“In Friday’s meeting, we tried to raise awareness that South Korea has a bilateral free trade agreement with the United States, unlike some other countries, and has expanded trade and investment with the U.S. under the FTA,” Ahn told reporters at a press briefing.

“We are continuing to request exemption from all reciprocal tariffs and item tariffs against us,” Ahn added in a statement. “Our government will actively consult with the United States to establish a mutually beneficial solution by prioritizing national interests.”

SEOUL — In South Korea, the Trump administration’s 25% tariff on imported cars has sent local automakers Hyundai and Kia scrambling to protect one of the country’s most valuable exports. But General Motors, which last year shipped 418,782 units from its factories here to American consumers — or 88.5% of its total sales — may be facing a much larger predicament.

Unlike Hyundai and Kia, which control over 90% of the domestic market here, the Detroit-based automaker produces budget SUVs like the Chevrolet Trax or Chevrolet Trailblazer almost exclusively for the U.S. market. The Trax has been South Korea’s most-exported car since 2023.

That business model has made GM, which operates three factories and employs some 11,000 workers in the country, uniquely exposed to Trump’s auto tariffs, resurfacing long-running concerns in the local automobile industry that the company may ultimately pack up and leave.

Until last month’s tariffs, cars sold between the U.S. and South Korea were untaxed under a bilateral free trade agreement. That helped South Korea become the third-largest automobile exporter to the U.S. last year to the tune of $34.7 billion — or around half of its total automobile exports. In contrast, South Korea bought just $2.1 billion worth of cars from the U.S.

Earlier this month, GM executives estimated that the tariffs would cost the company up to $5 billion this year, adding that the company would boost production in its U.S. plants to offset the hit. With additional factories in Mexico and Canada, GM currently imports around half of the cars that it sells in the U.S.

“If the U.S. tariffs remain in place, GM will no longer have any reason to stay in South Korea,” said Lee Ho-guen, an automotive engineering professor at Daeduk University.

“The tariffs may add up to $10,000 to the sticker price on cars shipped to the U.S., while GM sells less than 50,000 units a year in South Korea. There is very little room for them to adjust their strategy.”

Kim Woong-heon, an official in GM Korea’s labor union, said that the union is approaching current rumors of the company’s potential exit with a dose of caution, but added that broader concerns about the company’s long-term commitment remain.

“The cars we’re manufacturing here are on the lowest end of GM’s price range so labor costs will make it impossible to immediately shift production to the U.S.,” he said.

“But we have painful memories of GM shutting down one of its factories in 2018, so we get nervous every time these rumors surface.”

GM Chevrolet automobiles bound for export sit parked at the Port of Incheon in South Korea.

(SeongJoon Cho / Bloomberg via Getty Images)

This isn’t the first time that GM’s prospects in the country have come under question. The company first established itself in South Korea in 2002 by acquiring the bankrupt Daewoo Motor Co. in a government-backed deal that some at the time criticized as “GM taking the cream off Daewoo for almost nothing.”

Struggling to compete with the likes of Hyundai, GM briefly positioned itself as a production base for European and Asian markets until its bankruptcy in 2009.

Amid the global restructuring efforts that followed, concerns that it would close its South Korean operations led the government to once again intervene. In the end, GM stayed after receiving $750 million in financing from the country’s development bank on the condition that it would remain open for at least 10 more years.

But in 2018, the company closed its factory in the city of Gunsan, which had employed around 1,800 workers, and spun off its research and development unit from its manufacturing base — a move that many saw as the company strategically placing one foot out the door.

In February, shortly after President Trump announced the 25% tariffs on foreign-made cars, Paul Jacobson, GM’s chief financial officer, hinted that the company may once again be facing similarly tough decisions:

“If they become permanent, then there’s a whole bunch of different things that you have to think about in terms of, where do you allocate plants, and do you move plants.”

In recent weeks, executives from GM Korea have sought to assuage the rumors that the company’s South Korean operations would be affected.

“We do not intend to respond to rumors about the company’s exit from Korea,” said Gustavo Colossi, GM Korea’s vice president of sales, at a news conference last month. “We plan to move forward with our sales strategies in Korea and continue launching new models in the coming weeks and months, introducing fresh GM offerings to the market.”

The union says the company’s two finished car plants have been running at full capacity, with an additional 21,000 units recently allocated to the factory in Incheon, a city off the country’s western coast — a sign that business will go on as usual for now.

But with GM’s 10-year guarantee set to expire in 2027, Kim, the union official, said that their demands for measures that prove the company’s commitment beyond that have gone unanswered.

These include manufacturing GM’s electric and plug-in hybrid vehicles in South Korean factories, as well as making a greater range of its products available for sale in South Korea and other Asian markets.

”If the company intends to continue its operations here, it needs to make its business model more sustainable and not as reliant on imports to the U.S.,” Kim said.

“That will be our core demand at this year’s wage and collective bargaining negotiations.”

GM’s immediate prospects in the country will depend on the ongoing tariff talks between U.S. and South Korean officials that began last month with the goal of producing a deal by July 8.

Although South Korean trade minister Ahn Duk-geun has stressed that cars are “the most important part of the U.S.-South Korea trade relationship,” few expect that Seoul will be able to finesse the sort of deal given to the U.K., which last week secured a 10% rate on the first 100,000 vehicles shipped to the U.S. each year.

Unlike South Korea, which posted a $66-billion trade surplus with the U.S. last year, the U.K. buys more from the U.S. than it sells. And many of the cars that it does sell to the U.S. are luxury vehicles such as the Rolls-Royce, which Trump has differentiated from the “monster car companies” that make “millions of cars.”

“At some point after the next two years, I believe it’s highly likely GM will leave and keep only their research and development unit here, or at least significantly cut back on their production,” Lee, the automotive professor, said.

In the southeastern port city of Changwon, home to the smaller of GM’s two finished car plants, local officials have been reluctant to give air to what they describe as premature fearmongering.

But Woo Choon-ae, a 62-year-old real estate agent whose clients also include GM workers and their families, can’t help but worry.

She says that the company’s exit would be devastating to the city, which, like many rural areas, has already been under strain from population decline.

GM employs 2,800 workers in the region, but accounts for thousands more jobs at its suppliers. The Changwon factory, which manufactures the Trax, represented around 15% of the city’s total exports last year.

“People work for GM because it offers stable employment until retirement age. If they close the factory here, all of these workers will leave to find work in other cities, which will be a critical blow to the housing market,” she said.

“Homes are how people save money in South Korea. But if people’s savings are suddenly halved, who’s going to be spending money on things like dining out?”

California is facing an additional $12-billion state budget shortfall next year, a deficit largely caused by overspending and that Gov. Gavin Newsom said was made worse by President Trump’s federal tariff policy.

“California is under assault,” Newsom said. “The United States of America, in many respects, is under assault because we have a president that’s been reckless.”

Newsom unveiled the forecast during a presentation Wednesday of his $321.9-billion revised spending plan that proposes walking back free healthcare for low-income undocumented immigrants, eliminating Medi-Cal benefits for expensive weight loss treatments and cutting back overtime hours for in-home supportive service workers, among dozens of other trims.

The new deficit comes in addition to $27.3 billion in fiscal remedies, including $16.1 billion in cuts and a $7.1-billion withdrawal from the state’s rainy day fund, that lawmakers and the governor already agreed to make in 2025-26.

The overall $39-billion shortfall marks the third year in a row that Newsom and lawmakers have been forced to reduce funding for state programs after dedicating more money than California has available to spend.

Newsom’s proposed cuts

Among the new cuts Newsom put on the table Wednesday is a call to cut back on his signature policy to provide free healthcare coverage to income-eligible undocumented immigrants.

Newsom is proposing freezing new Medi-Cal enrollment for undocumented adult immigrants as of Jan. 1 and requiring those over 18 to pay $100 monthly premiums to receive healthcare coverage through Medi-Cal.

The cost share will reduce the financial burden on the state and could lower the total number of people enrolled in the healthcare program if some immigrants cannot afford the new premiums. Freezing enrollment may prevent the price tag of the program from continuing to balloon after more people signed up for coverage than the state anticipated.

The changes offer minor savings of $116.5 million next year, with savings growing to $5.4 billion in 2028-29.

The governor is also following the federal government’s lead and cutting $85 million in benefits for Ozempic and other popular weight loss medications from all Medi-Cal coverage plans, while saving $333.3 million by eliminating long-term care benefits for some enrollees.

Newsom wants to cap overtime hours for in-home support service workers, according to his budget, to save $707.5 million next year.

The governor’s budget includes a controversial proposal to grab $1.3 billion in funding in 2025-26 from Proposition 35, a measure voters approved in November that dedicated the revenue from a tax on managed care organizations to primarily pay for increases to Medi-Cal provider rates. The decision is expected to draw pushback from a coalition of doctors, clinics, hospitals and other healthcare groups that supported the proposition, which nearly 68% of voters backed.

Under another cost-saving measure, the governor wants to shift $1.5 billion in funding for Cal Fire from the general fund. Instead, Newsom wants to provide that $1.5 billion from the greenhouse gas reduction fund paid for by proceeds of the state cap-and-trade program next year.

The governor’s budget proposes extending the cap-and-trade program — a first-of-its-kind initiative that sets limits on companies’ greenhouse gas emissions and allows them to buy additional credits at auction from the state, and he wants to dedicate at least $1 billion each year to high speed rail.

A spending deficit

The budget marks a continuation of years of overspending in California under the Newsom administration.

After predicting a lofty $100-billion surplus from federal COVID-19 stimulus funding and the resulting economic gains three years ago, Democrats have not reduced spending to match up with a return to normal after the pandemic.

Poor projections, the ballooning cost of Democratic policy promises and a reluctance to make long-term sweeping cuts have added to the deficit at a time when the governor regularly touts California’s place as the fourth largest economy in the world.

State revenues have exceeded expectations since April, but so has state spending.

Despite the shortfall, California has more money to spend than in the prior budget approved in June, and the governor and lawmakers still plan to take $7.1 billion from the state’s rainy day fund to cover the total 2025-26 deficit.

A “Trump Slump”

Though personal income tax and corporate tax receipts in the state came in $6.8 billion above projections through April, Newsom is predicting that overall revenues will be $16 billion lower than they could have been from January 2025 through June 2026 because of the economic impact of Trump’s tariffs.

The governor originally released the new information, which his team dubbed the “Trump Slump,” on the eve of the presentation of his revised 2025-26 state budget plan, seeking to blame the president for California’s expected revenue shortfall.

Trump in April implemented a series of tariffs on all imported goods, higher taxes on products from Mexico, Canada and China, and specific levies on products and materials such as autos and aluminum. The president has backed down from some of his tariffs, but Newsom alleges that the policies and economic uncertainty will lead to higher unemployment, inflation, lower GDP projections and less capital gains revenue for California.

California filed a lawsuit last month arguing that Trump lacks the authority to impose tariffs on his own. On Tuesday, the state said it will seek a preliminary injunction to freeze the tariffs in federal court.

On Monday, the United States and China reached an agreement to slash sky-high tariffs for 90 days. Though both sides claimed they could withstand a long trade war, they reached a truce quicker than many analysts expected.

The breakthrough marked a dramatic ratcheting down of trade tensions following the tariff war launched by US President Donald Trump during his “liberation day” announcement on April 2.

Trump initially unveiled so-called reciprocal tariffs on dozens of countries before pausing them just one week later. China, however, did not get off the hook and Beijing soon retaliated with tariffs of its own.

Tit-for-tat exchanges quickly snowballed into eye-watering sums. By April 11, tariffs on Chinese goods entering the US had reached 145 percent and levies on US products going to China had swelled to 125 percent.

Tensions were already at boiling point last weekend when US Treasury Secretary Scott Bessent and He Lifeng, China’s vice-premier, agreed a ceasefire that would slash respective tariffs by 115 percentage points for three months.

US duties on Chinese products will now fall to 30 percent, while China’s tariffs on US goods will drop to 10 percent. Stock Markets rallied on the news, with the Nasdaq Composite climbing 4.3 percent on Monday and gaining 20 percent over its April low.

But one key question has significant implications for trade talks to come: Did Washington or Beijing flinch first?

What did the two countries say?

The tariff suspension, which was sharper than analysts expected, came after two days of trade talks in Geneva, Switzerland. On Monday, the US and China released a joint statement announcing the deal.

The two countries acknowledged the importance of their “bilateral economic and trade relationship” as well as the importance of a “sustainable, long-term, and mutually beneficial economic and trade relationship”.

The US and China agreed to establish a mechanism to continue discussing trade relations. China also agreed to “suspend or cancel” non-tariff measures against the US, but did not provide any details.

Speaking to reporters in Geneva last weekend, China’s Vice Premier He described the talks as “candid, in-depth and constructive”.

For his part, US Treasury Secretary Bessent told Bloomberg Television on Monday that “both sides agree we do not want a generalised decoupling.”

“The US is going to do a strategic decoupling in terms of the items that we discovered during COVID were of national security interests – whether it’s semiconductors, medicine, steel,” Bessent said.

After the talks concluded, Trump praised negotiations as a “great trade deal”, adding “we’re not looking to hurt China.” He then claimed a personal win, saying he had engineered a “total reset” with Beijing.

Elsewhere, Hu Xijin, former editor of the Chinese state-run Global Times publication, said on social media that the deal was “a great victory for China”.

What are the terms of the pause?

After the tariff pause had been announced, Bessent said it’s “implausible” that reciprocal tariffs on China will fall below 10 percent. However, he said the April 2 level – set by President Trump at 34 percent – “would be a ceiling”.

He also said “we could see some amount of the fentanyl tariffs… come off.” Earlier this year, Trump put a 20 percent tariff on China, accusing it of not doing enough to stop the flow of fentanyl, a highly addictive and deadly opioid, into the US.

For now, Chinese goods will continue face a 30 percent tariff. In addition, specific products from China, such as electric vehicles, steel and aluminium, are subject to even higher, separate tariffs imposed in recent years.

On Monday, the White House also issued an executive order lowering duties on low-value packages – items costing up to $800 – from China from 120 to 54 percent.

And while a minimum $100 fee on packages from e-commerce sites Temu and Shein will remain in place, the increase to $200 planned for June 1 was dropped.

On the flip side, Beijing pledged to suspend non-tariff forms of retaliation imposed since April 2, such as export restrictions on critical minerals that US manufacturers use in high-tech equipment and clean energy technology.

Notably, the deal does not include concessions from Beijing on several US sticking points, like its huge trade surplus with the US or its exchange rate policy, China is accused of keeping its renminbi artificially low in order to boost export sales.

Tariff suspensions will be in place for 90 days. They will be subject to reviews based on broad negotiations in the coming weeks and months.

Who conceded more ground?

The speed with which the US and China unwound their tariffs, taking many analysts by surprise, suggests the trade war was inflicting pain on both sides.

The tariffs were threatening job losses for Chinese factory workers and higher inflation and empty shelves for American consumers.

But for Piergiuseppe Fortunato, an adjunct professor of economics at the University of Neuchatel in Switzerland, it is clear who wanted the deal more badly.

“First of all, America made more concessions than China. Second, America’s economy, which is unsteady at the moment, is more reliant on China’s than the other way around.”

In April, the International Monetary Fund (IMF) warned that the US economy was facing an increased risk of recession as Trump’s trade war – and the accompanying increase in consumer prices – could unleash a “significant slowdown”.

Fortunato told Al Jazeera that “Beijing is not in such a precarious position. Take, for example, its latest export figures.”

China’s exports grew sharply in April. The strong performance, an 8.2 percent increase from the year before, came as Chinese firms diverted trade flows to Southeast Asia, Europe and other destinations.

“I think that Washington overplayed its hand with Beijing,” says Fortunato.

“The White House overestimated the importance of the US market, and underestimated China’s success in diversifying its exports away from the US since the first Trump trade war” in 2018.

What will happen next?

“It could take a long time to reach a detailed agreement, if one is even possible,” notes Fortunato.

In 2018, the US backed away from a potential trade deal following talks with Beijing. The next 18 months saw tariff exchanges before a Phase One deal was signed in January 2020.

However, China did not meet all the terms of that purchase agreement. It fell some 43 percent short of the $200bn worth of goods it agreed to buy from the US by 2021.

Then, the US trade deficit with China jumped up during the COVID-19 pandemic, setting the stage for the current trade war.

Earlier this week, Bessent once again hinted that Washington might be looking for the type of “purchase agreements” that characterised the Phase One deal.

“The US has made noises that it may be going for more purchase agreements. But the American economy took a hit last time from similar arrangements,” says Fortunato.

During Trump’s first trade war with China, the US-China Business Council estimated that 245,000 US jobs were lost.

As the scope of tariffs is greater today, even after last weekend’s announcement, it’s fair to assume that even more jobs will be shed.

In the future, Fortunato suspects the US will “land at an average tariff rate of 15-20 percent, and even higher for China. That’s five times greater than what it was in January… a massive change.”

SACRAMENTO — Gov. Gavin Newsom’s Office said Tuesday that President Trump’s tariff policies will reduce state revenues in California by $16 billion through next year.

Despite personal income tax and corporate tax receipts in the state coming in $6.8 billion above projections through April, the Newsom administration is predicting that overall revenues will be lower than they could have been from January 2025 through June 2026 because of the economic impact of Trump’s tariffs.

The governor released the new information, which his team dubbed the “Trump Slump,” on the eve of the presentation of his revised 2025-26 state budget plan, seeking to blame the president for California’s expected revenue shortfall. His office has not released any additional figures about the state budget.

Newsom is expected on Wednesday to project a deficit for California in the year ahead with Medi-Cal costs exceeding expectations, including his signature policy to provide free healthcare coverage to low-income undocumented immigrants. The new shortfall comes in addition to $27.3 billion in financial remedies, including $16.1 billion in cuts and a $7.1 billion withdrawal from the state’s rainy day fund, that lawmakers and the governor already agreed to make in 2025-26.

The deficit marks the third year in a row that Newsom and lawmakers have been forced to reduce spending after dedicating more money to programs than the state has available to spend. Poor projections, the ballooning cost of Democratic policy promises and a reluctance to make long-term sweeping cuts have added to the deficit at a time when the governor regularly touts California’s place as the fourth largest economy in the world.

Trump implemented a series of tariffs on all imported goods, higher taxes on products from goods from Mexico, Canada and China, and specific levies on products and materials such as autos and aluminum, in April. The president has backed down from some of his tariffs, but Newsom alleges that the policies and economic uncertainty will lead to higher unemployment, inflation, lower GDP projections and less capital gains revenue for California.

California filed a lawsuit last month arguing that Trump lacks the authority to impose tariffs on his own. On Tuesday, the state said it will seek a preliminary injunction to freeze the tariffs in federal court.