The U.S. and China strike a temporary tariffs deal
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So follow The Real Organic Podcast on Apple Podcasts, Spotify, or wherever you get your podcasts. Don't miss out. Tariffs have fallen, but is the trade war over? Good morning. This is the Marketplace Morning Report, and we're live from the BBC World Service. I'm Leanna Byrne. So there's been a thaw. The US and China have struck a temporary deal to ease their escalating trade war. Both sides sell cut tariffs by 115%.

A big step given the US was charging 145% on some Chinese goods. The agreement only lasts 90 days though, so it's more of a pause than a full resolution. The BBC's Mariko Oi is in Singapore and has been following this story. Hi Mariko.

Hello. So what's been agreed? It seems like quite a major de-escalation. So basically, the U.S. has agreed to lower tariffs on all Chinese goods from the current 145% to 30%. And China will also cut its levies on U.S. products to 10%. So basically, they have both agreed to cut levies by 115%.

for the next 90 days. So basically, they're hoping to reach a trade deal within those three months so that they don't have to keep fighting this tit-for-tat trade war. Now, if you're in the US, how quickly would you feel any relief from this 90 days pause?

I think it might. I mean, you know, we'll just have to see how quickly customs can, you know, get used to the new rules and so on. Because if you remember, when those tariffs were announced, there was a bit of a delay in customs figuring out how to deal with all the shipping and so on. After all those, you know, roller coaster ride, extreme volatility that we saw in the stock market, at least these agreements are definitely, you know, a sigh of relief.

How have markets reacted? The Chinese market, the Hong Kongese market have reacted positively, not surprisingly. You know, they were somewhat muted earlier in the day, even though we knew that some kind of an agreement was reached, but we didn't know any of the details. And I think it's fair to say that it is a lot bigger cut than what some experts were expecting, which is why we saw that jump in the stock market, especially in Hong Kong and mainland China.

At the same time, China's economy has been under pressure lately. And we also saw latest data out today showed some worrying signs, didn't it? Yes, absolutely. You and I have been talking about all these challenges that China's economy faces. But one of the things that many economists are concerned about is what's known as deflation. So that's when prices fall.

Now, many of our listeners might think that, oh, you know, that's great to have prices falling, but it really slows down the country's economic activity. So today's data show that prices in China are still falling, especially at factories at quite a steep level. In fact, the steepest fall in six months in the month of April. And that is definitely a worrying situation.

sign because even though Beijing has been trying many, many different measures, trying to stimulate the economy, encourage consumers to spend, it just goes to show that the fundamentals of the Chinese economy remain quite weak. And even though, you know, things might be improving slightly, this trade war is not going to help. Absolutely. We're going to be talking about it for a long time coming. The BBC's Mariko Oi, thank you so much for joining us on Marketplace. Thank you. Now let's talk about some more global numbers.

Saudi Aramco, the world's biggest oil firm, says profits dropped nearly 5% last quarter as weaker demand and rising costs took a toll. And in India, pharmaceutical stocks slid after President Trump pledged to cut drug prices by 30 to 80% to match other wealthy nations.

Now this week, President Trump makes his first foreign visit with a three-day Middle East tour. He's actually following in his own footsteps because in his first term, he also chose to kick off his overseas visits there. So what are both Trump and his hosts hoping for this week? Here's the BBC's Samir Hashmi. This was how President Donald Trump was welcomed to Riyadh back in 2017. Hundreds of Saudi men performed the Ardha, the traditional Saudi dance at the historic Marabba Palace.

And among them, swaying and smiling with a sword in his hand, was President Trump. Now 8 years later, I can also confirm the dates of the President's trip to the Middle East. He will travel to Saudi Arabia, Qatar and the United Arab Emirates from May 13th until May 16th. For Trump, the stakes are high. He is eyeing major Gulf investments, especially from sovereign wealth funds. Saudi Arabia has already pledged to invest $600 billion over the next four years.

The United Arab Emirates has committed $1.4 trillion over the next decade. Karen Young is a leading Gulf expert at the Middle East Institute. These are very big numbers. You know, they're not really realistic in terms of what would flow in direct investment. It's about sort of long-term strategic investment in the United States.

Defence will also be high on the agenda during President Trump's visit to Riyadh. The United States has long been a major arms supplier to Saudi Arabia, with President Trump offering a $110 billion weapons package during his first term. But those deals face scrutiny after the 2018 murder of Saudi journalist Jamal Khashoggi, leading to restrictions on arms sales. Now with bans lifted, President Trump is expected to propose a new $100 billion deal.

Saudi commentator and author Ali Shihabi says Riyadh will be looking for firm assurances from Mr. Trump that this time the deals will go through. It's a question of also having in place a more efficient procurement system, which allows the kingdom to get ammunition, for example. So it's important that President Trump highlights that.

I'm standing outside the King Abdulaziz Convention Center here in Riyadh. This is the venue where the Saudi government will be organizing a major investment summit on the day President Trump arrives. It will be attended by ministers and chief executives from both the countries. While much of the attention is on President Trump drawing Gulf capital into the U.S. economy, the Saudis will use this opportunity to attract American investments into the country.

For Saudi Arabia and its neighbours, this visit is more than symbolic. It's a strategic reset, a chance to revive ties that frayed during the Biden years. But for President Trump, it's about investment deals. In Riyadh, I'm the BBC's Samir Hashmi for Marketplace. And that's it from the Marketplace Morning Report from the BBC World Service. I'm Leanna Byrne. Have a great day. Thanks for listening.

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