U.S., U.K. to Unveil Trade-Deal Framework

Summary

WSJ What’s News Podcast Summary
Episode: U.S., U.K. to Unveil Trade-Deal Framework
Release Date: May 8, 2025

---

1. Introduction to the US-UK Trade Deal Framework

In today's episode of WSJ What’s News, host Luke Vargas delves into the anticipated announcement by President Trump regarding a new trade deal framework between the United States and the United Kingdom. This deal marks the first significant trade agreement of Trump's second term and focuses primarily on reducing existing tariffs.

Key Highlights:

• Tariff Reductions: The UK is seeking reductions on the 25% tariffs the US has imposed on steel, aluminum, and automobiles.
• Baseline Tariffs Maintained: According to London-based correspondent Max Colchester, the foundational 10% tariff applied to all countries is expected to remain unchanged.

Notable Quote:

“This isn't going to be a comprehensive trade deal that covers a lot of sectors. It's likely to be focused on a few key areas,” explains Paul Hannon, Economics Editor for Dow Jones Newswires. (02:08)

2. Insights from Experts

Paul Hannon and Max Colchester provide in-depth analysis of the trade negotiations, emphasizing the strategic importance and limitations of the proposed deal.

Paul Hannon's Analysis: Hannon underscores that the US-UK trade relationship is more straightforward compared to other international deals due to the balanced trade between the two nations and the predominance of services over goods in their trade exchanges.

Notable Quote:

“Most of the trade between the US and the UK is in services, not in goods. So it's important. But it's also quite symbolic,” Hannon states. (02:16)

Max Colchester's Perspective: Colchester suggests that while the agreement is relatively uncomplicated, it signifies a broader strategy by the Trump administration to ease some of the previously imposed trade restrictions without compromising the foundational tariffs.

Notable Quote:

“Trump's policies have spurred an economic rethink,” Colchester notes, indicating that the administration's actions have led other nations to proactively lower trade barriers. (03:01)

3. Global Impact and Shifts in Trade Dynamics

The episode explores how Trump's trade policies are influencing global trade strategies, particularly highlighting recent agreements like the UK-India trade deal.

Key Highlights:

• Globalization Trends: Contrary to claims that Trump's policies are detrimental to globalization, countries are finding new avenues to mitigate tariff impacts, as evidenced by the UK-India agreement.
• Shift in Trade Partnerships: Nations are increasingly seeking bilateral agreements to offset the challenges posed by US tariffs.

Notable Quote:

“Trump's efforts have actually kind of spurred countries to get more serious about lowering trade barriers,” says Paul Hannon. (03:09)

4. US-China Trade Relations and Export Controls

The podcast transitions to the ongoing trade tensions between the US and China, focusing on tariffs and export controls affecting the technology sector.

Key Highlights:

• Tariff Standoff: President Trump has maintained his stance against reducing the 145% tariffs on Chinese goods, despite ongoing negotiations.
• Export Controls Overhaul: The US administration plans to revise the restrictive export controls on AI chips, initially established under the Biden administration, to foster bilateral agreements rather than the previous tiered system.

Notable Quote:

“The Trump administration is considering getting rid of that tiered system in favor of a series of bilateral country-by-country agreements,” explains tech reporter Amrit Ramkumar. (04:39)

5. Monetary Policy Divergence: The Fed vs. Central Banks

A significant portion of the episode is dedicated to the contrasting approaches of the Federal Reserve compared to other major central banks like the Bank of England and the European Central Bank (ECB) in response to slowing economic growth and tariff-induced challenges.

Key Highlights:

• Federal Reserve's Dilemma: The Fed faces a unique challenge of balancing slow growth with the absence of rising inflation, unlike other central banks.
• Rate Cuts by Other Central Banks: In contrast, the Bank of England is poised to cut interest rates for the fourth time since last summer, anticipating that tariffs may cool prices rather than inflame them.

Notable Quotes:

Max Colchester explains, “The Fed has really the biggest challenge… it has to take account of these two threats, one inflation, the other a rise in unemployment further down the road.” (06:37)

“I think the Fed is obviously determined to kind of do things its way,” Colchester adds, highlighting the Fed's cautious stance. (07:58)

6. Market Reactions and Corporate Updates

The episode also touches upon recent developments in various global markets and corporations:

• Toyota's Profit Forecast: Japanese automaker Toyota is lowering its profit expectations for the year due to US tariffs and increased material costs, resulting in a 14% stock decline YTD.

• Maersk's Revenue Surge: Danish shipping giant Maersk reports a 13% increase in first-quarter freight revenue, benefiting from continued disruptions in the Red Sea despite tentative ceasefire talks.

• Rheinmetall's Growth: German arms manufacturer Rheinmetall experiences double-digit Q1 sales growth, driven by increased defense spending across Europe, with expectations of a 35-40% sales jump this year.

7. Domestic Developments: Protests and Appointments

Beyond international trade and economics, the podcast covers notable domestic events:

• Columbia University Protests: Pro-Palestinian demonstrators occupied a campus library, leading to arrests and injuries. The university sought assistance from the NYPD to secure the building after previous demonstrations overwhelmed the campus.

• Surgeon General Nomination: President Trump nominates California doctor and wellness influencer Kaci Means as the next Surgeon General. Means, known for her continuous glucose monitoring company and health-related social media presence, would oversee 6,000 public health professionals if confirmed.

8. Conclusion

The episode wraps up with acknowledgments to the production team and a preview of upcoming shows, ensuring listeners stay informed about the latest developments in business, finance, and global politics.

---

Notable Quotes Summary:

• Paul Hannon:
  “This isn't going to be a comprehensive trade deal that covers a lot of sectors. It's likely to be focused on a few key areas.” (02:08)

• Paul Hannon:
  “Most of the trade between the US and the UK is in services, not in goods. So it's important. But it's also quite symbolic.” (02:16)

• Paul Hannon:
  “Trump's efforts have actually kind of spurred countries to get more serious about lowering trade barriers.” (03:09)

• Amrit Ramkumar:
  “The Trump administration is considering getting rid of that tiered system in favor of a series of bilateral country-by-country agreements.” (04:39)

• Max Colchester:
  “The Fed has really the biggest challenge… it has to take account of these two threats, one inflation, the other a rise in unemployment further down the road.” (06:37)

• Max Colchester:
  “I think the Fed is obviously determined to kind of do things its way.” (07:58)

---

This comprehensive summary encapsulates the critical discussions and insights from the episode, providing listeners with a thorough understanding of the current trade dynamics and their broader economic implications.

Transcript

[Reba McEntire]

Isn't home where we all want to be? Reba here for realtor.com, the Pro's number one most trusted app. Finding a home is like dating. You're searching for the one with over 500,000 new listings every month. You can find the one today, download the realtor.com app cause you're nearly home. Make it real with realtor.com Pro's number.

[Luke Vargas]

One most trusted app based on August 2024 proprietary survey. Over 500,000 new listings every month based on average new for sale and rental listings. February 2024 through January 20In a first since Liberation Day, the US prepares to announce a trade deal with the UK plus, the Trump administration moves to overhaul curbs on chip exports. And we'll look at how tariff whiplash is spurring some central banks to cut rates even as the Fed stands pat.

[Max Colchester]

One bunch of central banks has a fairly clear one sided problem, which is growth is slowing without any real sign of an inflation pickup. The Fed has really the biggest challenge.

[Luke Vargas]

It's Thursday, May 8th. I'm Luke Vargas for the Wall Street Journal and here is the AM edition of what's news, the top headlines and business stories moving your world today. President Trump is expected to announce the framework of a trade deal with the United Kingdom today in what would be the first major agreement of his second term. The UK is hoping to get a reduction on the 25% tariffs the US has levied steel, aluminum and automobiles. But our London based correspondent Max Colchester says the baseline 10% tariff imposed on all countries will likely remain in place.

[Paul Hannon]

This isn't going to be a comprehensive trade deal that covers a lot of sectors. It's likely to be focused on a few key areas, notably the steel tariffs that Trump imposed on the UK and automobile tariffs that the two countries impose on each other. And there will also be potentially a tweak to the amount of tax the UK Levies on big US Tech companies here.

[Luke Vargas]

Max said that the agreement could be one of the more straightforward deals for the Trump administration, but nonetheless hints at a broader strategy.

[Paul Hannon]

The UK and the US Are very close transatlantic partners. Trade between the two countries is broadly balanced, so there wasn't a huge trade deficit as there is, for example, between the US and the EU or China. So this is always going to be one of the easier trade negotiations to undertake. And actually most of the trade between the US and the UK Is in services, not in goods. So it's important. But it's also quite symbolic and it shows the Trump administration is serious when it says it does want to try to ease some of the trade restrictions it imposed earlier this year. But I think what it shows is that the tariffs are here to stay, that the US Will maintain a basic tax on imports into its country, and that isn't up for negotiation at this stage.

[Luke Vargas]

And Max said that whether or not countries feel they will get concessions from the U.S. trump's policies have spurred an economic rethink.

[Paul Hannon]

The idea that Trump's moves are sort of the death knell for globalization might be slightly overstated. So we've seen, for instance, the UK Just this week sign quite a comprehensive trade deal with India. So now you've seen the fifth and sixth largest economies in the world signing a deal to ease trade. So it seems like Trump's efforts have actually kind of spurred countries to get more serious about lowering trade barriers, if anything to offset the tariff effect of.

[Luke Vargas]

The US that was Journal correspondent Max Colchester. Meanwhile, President Trump has said that he won't reduce the 145% tariffs on Chinese goods in order to negotiate a trade deal with Beijing. His comments come as Treasury Secretary Scott Besant and U.S. trade Representative Jamison Greer travel to Switzerland to meet with their Chinese counterparts. China has said the de escalation of tariffs is essential to kick off trade negotiations, according to people familiar with the matter in both Beijing and Washington. China's outreach on and cracking down on fentanyl paved the way for the initial talks between the two countries. And the Trump administration is looking to overhaul controversial export controls set to come into force next week that would limit how many AI chips individual countries can buy. The controls were announced in the final days of the Biden administration over fears that countries would route US Chips to adversaries, including China. Tech reporter Amrit Ramkumar says any changes to the export controls could take several months.

[Amrit Ramkumar]

The Biden rule would have divided countries into three tiers, and that would determine how many advanced chips the country could buy. Many US Allies such as Switzerland, India and Israel were in tier 2 and would still face limits and controls on the number of chips they could get. That fueled a strict backlash from those countries and many companies like Microsoft and Oracle that worried that that system would hurt their business. Our reporting indicates that the Trump administration is considering getting rid of that tiered system in favor of a series of bilateral country by country agreements and will now go about negotiating those. And we've been told that chip export controls are now part of tariff talks between the US and other countries.

[Luke Vargas]

Coming up with the bank of England expected to cut interest rates later today, we'll look at why the Federal Reserve isn't ready to follow suit. That and more after the break.

[Reba McEntire]

Isn't home where we all want to be? Reba here for realtor.com, the Pro's number one most trusted app, finding a home is like dating. You're searching for the one with over 500,000 new listings every month. You can find the one today. Download the realtor.com app cause you're nearly home. Make it real with realtor.com Pro's number.

[Luke Vargas]

One most trusted app based on August 2024 proprietary survey. Over 500,000 new listings every based on average new for sale and rental listings February 2024 through January 2025 the bank of England is expected to cut interest rates later this morning for the fourth time since last summer, following the Fed's decision to hold rates steady yesterday. Paul Hannon is the economics editor for Dow Jones Newswires. Paul, here we are right a moment of real monetary policy divergence between the US and the rest of the world. Break this down for us.

[Max Colchester]

What we're seeing here is a Federal Reserve that faces attention that other central banks such as the ECB and the bank of England do not face. So for the Fed, tariffs are likely to slow growth as they are elsewhere in the world, but they may also push inflation higher. So it has to take account of these two threats, one inflation, the other a rise in unemployment further down the road. For the bank of England and the ecb, it's more about the growth story. They've looked at the impact of the tariff announcement so far, and it increasingly looks to them as if this is not an inflationary blow. In fact, it may lead to some cooling of prices in the months to come. There is the potential for a diversion of goods from China. This is a big worry for Europe, that Chinese businesses looking for alternatives to their US Customers will come to Europe and are prepared to cut their prices very steeply in order to offload those goods that they can no longer find buyers for in America.

[Luke Vargas]

How should we be thinking about the dynamics in the US Going forward, especially if we see more monetary easing in the UK And Europe this year? I mean, just last month President Trump had lashed out at the Fed chair, saying basically you should be following the ECB's example and cutting.

[Max Colchester]

I mean, you're comparing economies that are in fundamentally different situations. I think the Fed is obviously determined to kind of do things its way, and Fed Chair Powell made it clear that there's an advantage to waiting to see how all of this plays out rather than jump on one side of this difficult balance that they have to carry off and make a mistake that they would then have to unwind or that might make the situation that they face even more difficult. I mean, it has to be said that investors generally believe that the Fed will cut later in the year because over time the hit to growth will become the dominant story as economies weaken, inflationary pressures weaken. So maybe the initial inflation hit from tariffs will wane over time as demand in the US Economy cools down because activity has slowed.

[Luke Vargas]

Paul Hannan is the economics editor for Dow Jones Newswire's Paul, thanks as always for the update.

[Max Colchester]

Thanks, Luke.

[Luke Vargas]

In other markets, news, Japanese carmaker Toyota is revising down its profit expectations for the year, forecasting that U.S. tariffs and higher material costs will dent its bottom line. Toyota Stock has fallen 14% so far this year, well holding its guidance steady today. Danish shipping giant Maersk, the beneficiary of a 13% increase in first quarter freight revenue and which has already priced in continued disruption in the Red Sea despite of a tentative ceasefire this week between the US And Yemen's Houthi militia. The world's top five container shippers have said they have no immediate plans to return to the area where the Houthis have frequently targeted merchant ships. And German arms manufacturer Rheinmetall Posted double digit Q1 sales growth this morning as defense spending surges across Europe. The maker of tanks and munitions expects a 35 to 40% jump in sales this year, but could revise that higher should the NATO alliance agree. Agreed to a further boost in defense spending at a June summit. New York City police have made arrests at Columbia University after pro Palestinian protesters occupied a campus library yesterday in an attempt to restart demonstrations that overwhelmed the school last spring. Columbia's acting president said that two campus safety officers were injured as protesters forced their way into the library and that she had asked the NYPD to help with securing the building. And President Trump has picked California doctor and wellness influencer Kaci Means to be America's next surgeon general. Means who dropped out of her surgical residency amid frustration with what she saw as the field's inability to treat underlying chronic conditions. Co founded a company that offers continuous glucose monitoring and regularly touts supplements and other health related products on social media and in an email newsletter. If confirmed to be what's known as the nation's doctor, Means would be tasked with providing health advice and overseeing 6,000 uniformed public health professionals within the U.S. public Health Service. And that's it for what's news for this Thursday morning. Today's show was produced by Daniel Bach and Kate Bullivant. Our supervising producer is Sandra Kilhoff. And I'm Luke Vargas for the Wall Street Journal. We will be back tonight with a new show, and until then, thanks for listening, Sam.