Trade Deals Ease Recession Fears

Recession fears continued to fade this week as the Trump administration announced a flurry of trade deals with key trading partners. The probability of a 2025 recession in the US per the Polymarkets betting site fell to 37% on Friday after peaking as high as 66% on April 1st. Meanwhile, the markets have rallied and are now down only 5.9% off their February 2025 highs. Here are some of the key trade deals announced in the past few weeks.

US-China Trade Agreement May 12th

On Monday of this week, the US and China announced a temporary suspension of their tariff conflict.  The US reduced its 145% tariff on Chinese goods to 30%, while China decreased its tariff on US goods from 125% to 10%. In addition, China has reportedly agreed in principle to reduce many of their non-tariff trade barriers keeping US goods out of the country. The deal is only an initial step, and negotiations are continuing, but the market cheered the news that the two largest economies were easing back from an all-out trade war.

US-India Trade Agreement April 28th

According to US Treasury Secretary Bessent on April 28th the US and India had made substantial progress towards a bilateral trade agreement. While details of the deal remain elusive, both sides have made announcements committing to enhanced market access, reduced tariffs and reduced non-trade barriers.

US-United Kingdom Economic Prosperity Deal May 8th

The US and the United Kingdom “Economic Prosperity Deal” was announced on May 8th.  The deal keeps the 10% US baseline tariffs on UK goods but reduces more burdensome tariffs on specific goods.  For example, US tariff on British steel and aluminum was reduced from 25% to 10% and car imports were reduced from 27.5% to 10%.  Meanwhile, the UK agreed to reduce tariffs on US agriculture products and, importantly, committed to aligning its regulatory standards with the US, reducing a key non-tariff trade barrier keeping US products out of the UK.

US-Middle East Trade Engagements

President Trump’s four-day Middle East tour this week focused on trade. While there was little talk of tariffs, there were several key announcements including a ‘strategic economic partnership’ with Saudia Arabia, which committed to purchasing $600 billion from US defense firms. In addition, Qatar agreed to order 160 Boeing planes in a deal worth $96 billion, marking the plane makers largest ever order for wide-body jets. Qatar also agreed to purchase US defense products as part of a $244 billion economic partnership agreement.

Risk still remains, but the tariff turmoil appears to be easing.