Client Update - 16th May 2025

A jumbo jet worth an estimated $400m and replete with golden bathrooms and wood trimmings is proving irresistible to Donald Trump, though deeply problematic for the US on a number of fronts.

Presented as a gift from Qatar, one that the American president believes he’d be stupid not to accept, the grand gesture from the tiny Gulf state raises a raft of ethical, legal and security concerns.

For Trump, it’s free — so what’s the issue guys? For critics, the offer is an attempt to buy influence. For the US intelligence community, it’s nothing short of a nightmare. The entire 89-seater jet would need to be taken apart to ensure it has no secret spying devices, and that could take months, if not years. I wonder who will win that one. The whole affair is emblematic not just of the transactional nature of Trump’s presidency but also the razzle-dazzle display of wealth and excess during his tour this week of Saudi Arabia, Qatar, and the United Arab Emirates.

Trump is undoubtedly enjoying himself this week, aircraft gifts aside. Fresh from a deal, or at least a blueprint of one, with the UK (more to follow on that one) over the weekend it emerged that a deal with China was soon to be announced, and this duly came to light on Monday. Trump announced that he would cut tariffs on Chinese goods from 145% to 30% for ninety days and China would cut its tariffs on US goods from 125% to 10%. Markets bounced once more in response to this. Trump blinked first, China stood firm, but the US President has still ended up with a significantly higher tariff on goods coming into the US than going out. So - a win?

Let us look back at the UK deal, our tariff on exports to the US has been cut, with some quotas, but is still well above previous tariff levels before Trump’s Liberation Day speech. Our tariffs on US imports to the UK are now lower than before Trumps speech as we also backed down last week – another win for the President? His tactic has evidently been to bring in the super high tariffs, everyone screams and shouts with panic, we then agree a much lower deal, bringing great relief and a market recovery. This leaves Trump the great negotiator smiling to himself as everyone is so busy celebrating that they don’t notice they have a significantly worse deal with the US than they did two months ago. Congratulations. On the face of it this sounds quite clever, but ultimately what lasting damage Trump has done to the US economy and its global reputation remains to be seen.

Whilst cargo ships are busily loading up Chinese goods and sailing merrily over to the US, this surge in imports will undoubtedly support the economy as warehouse stocks are rebuilt to excessive levels in case the 90-day pause does not end with good news. However, we must not forget the impact of the last six weeks when no ships were docking in the US. This will surely bring inflationary pressures in the US over the summer, poorly stocked shelves and consumer discontent at higher prices and a lack of key goods - surely something the US Federal Reserve are keeping a keen eye on and why US rate cuts may not be coming any time soon.

The hawk-eyed readers of last week’s email noted that I reported on the UK Governments announcement that “the UK will remove its tariff on US ethanol, used to produce beer." Ah, only – it isn’t! Equally as swift as our readers, the British Beer and Pub Association quickly countered this claim and said: “We are urgently seeking clarity about the details of the deal as, given ethanol is not used to make beer, we cannot see how this is a win for brewers or pubs.” Ethanol is in fact imported as a biofuel and readers of this email are evidently well aware that ethanol is actually what naturally makes alcoholic beverages alcoholic and is produced by the brewing process, not added into it. The Government has since updated its statement to say: “We will also remove the tariff on ethanol – which is widely used in our manufacturing sector”. Oh dear. Please accept my apologies, I am off for a lie down. Do have a good weekend!