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The US trade roller coaster ride seems to be flattening, with signs of potential moderation and stability. It appears increasingly likely that our original expectation that the US Trump administration would primarily use the threat of tariffs as a negotiating strategy will be correct. While we do not expect to the US tariff position return to pre-2025 levels, we believe the overall US tariff burden is more likely to settle at around 10-30% globally rather than the elevated rates of 50-100% that seemed possible in recent weeks
US-UK Trade Agreement and China Truce Signal Tariff Easing and EV Uncertainty
US Trade Breakthroughs with UK and China Reshape Global Tariff Landscape
The United States and United Kingdom have successfully negotiated a trade agreement that eases tariffs and expands US market access. Under the new deal, UK steel and aluminum are now exempt from the 25% Section 232 tariffs, while the auto tariff on UK cars drops to 10% for the first 100,000 vehicles, down from 25%. The agreement marks a significant development in the US approach to reciprocal tariffs and may serve as a blueprint for upcoming deals.
Of greater global importance, the US and China agreed on May 12 to a 90-day de-escalation of their trade war. During this period, reciprocal tariffs will be reduced to 10%, while the US applies a cumulative 30% tariff on Chinese goods, down from the previous 145%. This total includes the 10% universal tariff and two 10% emergency tariffs.
In response, China will reduce its tariffs on US goods from 125% to 10% and has indicated a willingness to ease export restrictions on critical minerals such as graphite and rare earth elements, key components in battery and tech manufacturing. While China’s graphite controls have not disrupted trade volumes, they continue to serve as a credible strategic tool.
The US-China trade truce follows a sharp slowdown in bilateral trade, with high reciprocal tariffs nearly halting flows. The Section 232 tariffs on steel, aluminum, and automobiles also impacted imports from other countries. As a result, US businesses front-loaded imports in early 2025, contributing to a trade-driven GDP contraction.
Fastmarkets reported a noticeable decline in shipping activity at the Port of Baltimore, a key indicator of slowed trade. Roll-on/roll-off (RoRo) car carriers have virtually disappeared from Chesapeake Bay since early May, where it was once common to see 10–15 ships waiting to dock.
With the 90-day pause now in effect, US consumers and businesses are expected to ramp up purchases to stockpile goods before tariffs potentially rise again. President Donald Trump has stated that tariffs on China will return after the negotiation window ends on August 12, though not to the previous 145% level.
EV Market Falters Amid Policy Volatility and Consumer Confusion
Amid trade shifts, the US electric vehicle (EV) market contracted in April, with sales down 5% year-over-year—only the third monthly decline since 2021. Tesla sales dropped 13%, disproportionately affected by public backlash after CEO Elon Musk’s controversial involvement in government job cuts under the new Department of Government Efficiency.
Several contributing factors influenced the market dip, including the earlier rush to purchase EVs ahead of a potential repeal of the $7,500 federal 30D tax credit, now still in effect but under threat. Additionally, dealer incentives and lease deals have declined, compounding the slowdown.
Fastmarkets forecasts that US EV sales will remain sluggish throughout 2025. Persistent policy uncertainty around tariffs and tax credits, coupled with reduced incentives, has eroded consumer confidence and market momentum.
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