After ratcheting upwards for the past couple of months, global trade tensions have been easing since the beginning of May, bringing a modicum of relief. The United States (US) and China have agreed to lower additional tariffs for 90 days. Thus, the additional rate China applied on US goods will be slashed from 125% to 10% while the US rate will be lowered from 145% to 30%. These will be subject to exceptions.

The US has brokered a deal with the United Kingdom, secured commitments from Middle Eastern countries and is likely to sign trade deals with other countries, including India. While this may quell uncertainty, reimposition of tariffs later remains a risk. Data will have to be carefully monitored to assess the impact.

Even so, latest economic data showed the adverse impact of trade tensions. Sentiment in the US continued to deteriorate in May, with year-ahead inflation expectations at 7.3%. Global supply chains continued to be underutilised.

Manufacturer purchases worldwide have declined at the sharpest rate since the start of 2025. Stockpiling picked up substantially as well. Both crude oil and coal prices have also been easing further, driven by the trade tensions and its expected adverse impact on US and global growth.

• Growth contracted in the first quarter of 2025 in the United States and Japan
• It picked up in the first quarter in both the euro area and the United Kingdom
• Energy prices fell 7.6% on-month in April on the back of a 4.1% decline in March