Introduction: China ‘considering exempting some goods from US tariffs’
Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.
Hope is swirling this morning that China might relax some of the tariffs it has imposed on US goods as part of Donald Trump’s trade wars.
With the economic costs of the tit-for-tat trade war hurting Chinese companies, Beijing appears to be seeking to mitigate the economic fallout from the conflict.
According to Bloomberg, this means China’s government is considering suspending its 125% tariff on some US imports – a sign that policymakers are worried about the damage caused by its trade war with Washington.
Bloomberg say:
Authorities are considering removing the additional levies for medical equipment and some industrial chemicals like ethane, the people said, asking not to be identified discussing private deliberations.
Officials are also discussing waiving the tariff for plane leases, the people said. Like many airlines, Chinese carriers don’t own all of their aircraft and pay leasing fees to third-party companies to use some jets — payments that would have become financially ruinous with the additional tariff.
China is considering suspending its 125% tariff on some US imports including medical equipment, ethane and plane leasing, sources say https://t.co/Uf9NNQnLAz
— Bloomberg (@business) April 25, 2025
This potential easing in the US-China trade conflict comes after Donald Trump revealed yesterday that the world’s two largest economies had held talks to help resolve the trade war.
The US president told reporters:
“We may reveal it later, but they had meetings this morning, and we’ve been meeting with China.”
Reuters is also reporting that China is considering exempting some U.S. imports from its 125% tariffs and is asking businesses to identify goods that could be eligible.
A Ministry of Commerce taskforce is collecting lists of items that could be exempted from tariffs and is asking companies to submit their own requests, Reuters adds, citing a source.
Signs of de-escalation in the trade war will cheer investors, after a bruising few weeks since Trump announced his tariffs on trading partners.
It could also reassure politicians and central bankers around the world, who fear the consequences of a slowdown in world trade.
As the Bank of England’s governor, Andrew Bailey, warned on Thursday, the UK economy faces a “growth shock” as a result of Trump’s trade policies.
The agenda
-
7am BST: UK retail sales report for March
-
9.30am BST: UK trade data for Q4 2024
-
3pm BST: University of Michigan’s survey of US consumer confidence
-
3pm BST: IMF holds press conference on the economic outlook for Europe
Key events
China’s Politburo pledges to support firms and workers hit by US tariffs
Back in China, top policymakers have pledged to support firms and workers most affected by the impact of new US tariffs.
The ruling Communist Party’s Politburo held a top-level meeting today, and state media report that officials also reiterated plans to accelerate debt issuance and ease monetary policy.
The state media Xinhua reports that president Xi Jinping presided over the meeting.
Xinhua says:
It was noted at the meeting that the country has seen its economy improve this year, with public confidence continuously boosted and solid progress made in high-quality development.
However, the foundation for the country’s sustained economic recovery needs to be further consolidated, and the country faces increasing impact from external shocks, the meeting said.
The meeting urged preparing for worst-case scenarios with sufficient planning, and taking concrete steps to do a good job in economic work.
FTSE 100 on track for best winning streak since 2019
The UK stock market is on track to extend its longest winning run since the aftermath of Boris Johnson’s election victory over five years ago.
The FTSE 100 has already risen for the last nine trading sessions, as trade war tensions have cooled, which is the best run since December 2019. A 10th rise today would match the “Boris Bounce” rally.
Before that, I think you’ve got to look back to December 2016/January 2017, when the FTSE 100 posted a 14-day rally.
European stock markets are rising this morning, amid hopes that China is relaxing some of its tariffs.
In London, the FTSE 100 index is up 12 points or 0.13%, at 8417 points. Engineering companies are among the top risers, with aerospare manufacturers Melrose up 3.6%, and Rolls-Royce up 2%, after Safran reported that tariffs on aircraft parts have been lifted.
Across Europe, Germany’s DAX is up 0.36% while France’s CAC is 0.6% higher.
Safran says China grants tariff exemptions for jet engines and parts
Now this is interesting…
The head of French engine maker Safran has said that China has granted exemptions from import tariffs for some aircraft parts including engines.
That’s a sign that, as rumoured earlier today, China is taking steps to remove tariffs from some imports.
CEO Olivier Andries told reporters on first-quarter results call (via Reuters):
“We learned last night that China has taken the decision not to tax engines or landing gear or nacelles – in other words a certain number of aerospace equipment parts.”
“It demonstrates that the situation is very fluid.”
WPP: Tariffs will hit clients, and broader economy
Advertising group WPP has reported that its clients are waiting to see how the trade conflict unfolds.
Mark Read, chief executive officer of WPP, told investors this morning:
“While WPP is not itself directly affected by tariffs, they will impact a number of our clients as well as the broader economy. At this point we have not seen any significant change in client spending and we reiterate our full-year guidance which already reflected a challenging environment.”
WPP also reported a 0.7% drop in like-for-like revenues in the first quarter of this year, which it says reflects “macroeconomic challenges”.
Reeves warns of many challenges from globalisation
Heather Stewart
Rachel Reeves used a brief speech to US investors at the British ambassador’s lavish residence in Washington last night, to acknowledge some of the downsides of globalisation, in a nod to Donald Trump’s stance.
As she prepares to meet Treasury secretary Scott Bessent today, Reeves said China’s entry into the global trading system 25 years ago had created “huge benefits in terms of cheaper goods, more innovation and more opportunities to trade”.
But she said there had also been “many more challenges”, reports our economics editor Heather Stewart.
Drawing parallel between the frustrations that drove British voters to back Keir Starmer last July, and those of Trump’s supporters, she said, “in this country, but also back home in my country last year, people voted for change”.
She added:
“They voted for change because they didn’t think that the economy worked well enough for them and their families. They saw the erosion of good jobs that paid a decent wage. They saw industries that once powered their towns disappear. And as elected politicians we have to respond to that”.
Reeves’s host, current British ambassador Lord Peter Mandelson, also highlighted the strong transatlantic relationship in his introductory remarks, with a typically colourful metaphor.
Mandelson said:
“Some may say that under this very consequential president we have at the moment, this is a rollercoaster period and therefore a challenge to us all. But we would say that a rollercoaster is fine, as long as we are rolling in the right direction.”
UK retail sales: what the experts say
City economists are encouraged that UK retail sales rose last month.
Kris Hamer, director of insight at the British Retail Consortium, credits the warmer weather, which boosted demand for clothing and DIY equipment:
“Sales continued to grow in March as the sunshine and warm weather encouraged people to spend more. Clothing and footwear performed well as consumers sought to take advantage of the good weather and prepare for summer.
The sunny weather also gave a boost to garden supplies and DIY, as people spent more time outside.
Sagar Shah, associate partner at McKinsey & Company, says consumers appear resilient:
“Mother’s Day and the spring sunshine saw retail sales rise by 0.4% in March. A positive surprise given that Easter hopped over into April this year – meaning March didn’t benefit from the holiday lift. It also marks the largest three-month rise in sales volumes since July 2021 – a sign there is some underlying resilience in shopper behaviour and the big discounts in the early part of the quarter brought back consumers.
Food sales saw a decline of 1.3%, likely due to people eating out and Easter not falling in March. But, we’d expect this to bounce back in April. Conversely, sales volumes in textiles, clothing, and shoes jumped by 3.7%, as people started getting ready for the spring.”
However…..there is a wrinkle, as these retail sales are seasonally adjusted to smooth out one-off factors, such as the timing of Easter.
Jacqueline Windsor, head of retail at PwC UK, explains:
“March’s retail sales should be read with care as the ONS adjusts for the impact of Easter and school holidays falling in April this year. Continuing February’s improving trend, seasonally-adjusted retail sales rose again month-on-month, for the third consecutive month in volume terms.
Excluding petrol, retail sales volumes rose by a respectable 3.3%, which translated into 3.8% more pounds in the till compared with this time last year.
In the event, the sunniest March since records began particularly helped seasonal fashion retailers, which grew sales volumes on an annual basis for the first time in six months. In fact, all product categories showed positive sales growth, with only grocery retail showing a slight decline in volume terms, no doubt due to the later Easter holidays.
The oil price is inching higher today, amid hopes of a de-escalation in US-China trade conflicts.
Brent crude, the international benchmark, has risen by 0.5% to $66.86 per barrel.
UK retailers post largest three-monthly rise in sales volumes since July 2021
Back in Britain, retail sales grew faster than expected last month – in an encouraging sign for growth this year.
Retail sales volumes across Great Britain rose by 0.4% in March, the Office for National Statistics reports, surprising economists who had expected a 0.4% fall.
Clothing and outdoor retailers reported that good weather boosted sales, the ONS reports. However, that was partly offset by falls in supermarket sales.
The recent good weather helped to boost sales across a variety of sectors, with garden centres reporting robust trading, the sunshine also helped to improved sales of DIY goods and clothing.
However, it was another poor month for food sales, particularly within supermarkets. pic.twitter.com/0DMtMtpkvU
— Office for National Statistics (ONS) (@ONS) April 25, 2025
March’s growth follows a rise of 0.7% in February (revised down from a first estimate of 1.0%).
The broader picture is that retail sales volumes grew by 1.6% rise in the first three months of 2025, comped with October-December 2024.
That’s the largest three-monthly rise since July 2021, suggesting consumer spending is holding up quite well this year.
FT: Apple aims to source all US iPhones from India in pivot away from China
The US-China trade conflict is forcing companies to rethink their supply chains.
Apple, for example, is reportedly pivoting away from China, which would be a major change to its supply chain.
The Financial Times reports this morning that Apple plans to shift the assembly of all US-sold iPhones to India by as soon as the end of 2026. That would mean doubling the iPhone output in India.
The FT explains:
Apple has in recent years been steadily building capacity in India with contract manufacturers Tata Electronics and Foxconn, though it still assembles most of its smartphones in China.
iPhone assembly is the last step in the production process, bringing together hundreds of components for which Apple is still heavily reliant on Chinese suppliers.
Markets cheered by hopes of US-China de-escalation
Stock markets across the Asia-Pacific region are higher today, following those reports that China is considering suspending its 125% tariff on some US imports,
Hong Kong’s Hang Seng index has rallied by 1%, as has South Korea’s KOSPI.
Japan’s Nikkei index has jumped by 1.8%, while China’s CSI 300 share index is up a more modest 0.2%.
Ipek Ozkardeskaya, senior analyst at Swissquote Bank, reports that signs of de-escalation of trade tensions are lifting optimism.
Yesterday allowed global risk investors to take a deeper breath. Dovish comments from Federal Reserve (Fed) members, and de-escalation of trade tensions between the US and China allowed a further recovery in global equities.
Optimism was backed today by the Chinese announcement that it is considering easing tariffs on some US imports, further signalling de-escalation of trade tensions and supporting earlier comments from the Trump administration that triple-digit tariffs could come ‘substantially’ down.
Introduction: China ‘considering exempting some goods from US tariffs’
Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.
Hope is swirling this morning that China might relax some of the tariffs it has imposed on US goods as part of Donald Trump’s trade wars.
With the economic costs of the tit-for-tat trade war hurting Chinese companies, Beijing appears to be seeking to mitigate the economic fallout from the conflict.
According to Bloomberg, this means China’s government is considering suspending its 125% tariff on some US imports – a sign that policymakers are worried about the damage caused by its trade war with Washington.
Bloomberg say:
Authorities are considering removing the additional levies for medical equipment and some industrial chemicals like ethane, the people said, asking not to be identified discussing private deliberations.
Officials are also discussing waiving the tariff for plane leases, the people said. Like many airlines, Chinese carriers don’t own all of their aircraft and pay leasing fees to third-party companies to use some jets — payments that would have become financially ruinous with the additional tariff.
China is considering suspending its 125% tariff on some US imports including medical equipment, ethane and plane leasing, sources say https://t.co/Uf9NNQnLAz
— Bloomberg (@business) April 25, 2025
This potential easing in the US-China trade conflict comes after Donald Trump revealed yesterday that the world’s two largest economies had held talks to help resolve the trade war.
The US president told reporters:
“We may reveal it later, but they had meetings this morning, and we’ve been meeting with China.”
Reuters is also reporting that China is considering exempting some U.S. imports from its 125% tariffs and is asking businesses to identify goods that could be eligible.
A Ministry of Commerce taskforce is collecting lists of items that could be exempted from tariffs and is asking companies to submit their own requests, Reuters adds, citing a source.
Signs of de-escalation in the trade war will cheer investors, after a bruising few weeks since Trump announced his tariffs on trading partners.
It could also reassure politicians and central bankers around the world, who fear the consequences of a slowdown in world trade.
As the Bank of England’s governor, Andrew Bailey, warned on Thursday, the UK economy faces a “growth shock” as a result of Trump’s trade policies.
The agenda
-
7am BST: UK retail sales report for March
-
9.30am BST: UK trade data for Q4 2024
-
3pm BST: University of Michigan’s survey of US consumer confidence
-
3pm BST: IMF holds press conference on the economic outlook for Europe
