Flagship

China ratchets up tariffs

China showed no sign of relenting in an escalating trade war with the US, raising duties on US goods to 125%. Beijing also filed a complaint with the World Trade Organization and dismissed Washington’s ever-higher levies as “a joke”: A Chinese foreign ministry spokeswoman shared a Korean War-era video on social media of Mao Zedong vowing to never give up. Though Beijing has powerful cards to play in the standoff, its already slowing economy’s dependence on exports leaves it vulnerable to other countries’ protectionism. Several Chinese economists have urged policymakers to focus on boosting domestic consumption, though Beijing is also trying to win over neighbors to broaden its options: Chinese leader Xi Jinping will tour Southeast Asia next week.

EU ups trade diversification drive

The European Union paused planned tariff countermeasures against the US but ramped up efforts to diversify its trade relationships. European leaders welcomed US President Donald Trump’s 90-day tariff suspension but are not lowering their guard: Brussels opened free-trade negotiations with the United Arab Emirates and wants to accelerate talks with a raft of other nations. Ties with Beijing are a particular focus. European officials are planning to visit China in July, the South China Morning Post said, and according to Handelsblatt are discussing reducing tariffs on Chinese electric-vehicle makers. Yet the bloc is also keeping retaliatory tools in reserve, threatening to tax Silicon Valley if needed: “This 90-day pause means 90 days of uncertainty,” French President Emmanuel Macron noted.

Tariffs to hit US consumers

Tariffs could mean US consumers face higher prices within weeks. Recent inflation data was lower than expected, and markets rallied briefly after President Donald Trump announced a 90-day pause on his elevated tariffs for most countries. But by boosting duties to 145% on China — the third-largest US trading partner — the average overall impact of the tariffs on US consumers went up, Yale University’s Budget Lab said. The levies will soon start to bite and will cost the average US household $4,700 a year, “almost 18 months of normal inflation” at once, an economist told the Financial Times. Price increases will likely be felt first in the produce aisle, as the US imports much of its fresh fruit and vegetables.

US pushes budget plan forward

US lawmakers took a step toward bringing President Donald Trump’s tax-cutting agenda to reality. The Republican-controlled House of Representatives overcame unified Democratic opposition to narrowly pass a budget bill, but there are still “weeks, if not months” of work yet to do, The Associated Press noted, so “the champagne will remain on ice” in Republican Party offices, Semafor’s Principals newsletter reported. One GOP senator told Semafor that he feared “a long, drawn out and neverending process” of finalizing legislation. Yet the budget has symbolic import, showcasing a measure of Republican unity amid questions over Trump’s trade war, and practical implications, furthering the president’s plans for tax cuts alongside increased spending on immigration enforcement and defense.

US-Iran nuclear talks due

The US and Iran will hold talks tomorrow to resurrect an abandoned nuclear deal, but the pair’s widely diverging goals make an immediate breakthrough unlikely. Washington and Tehran agree on barely anything: Both have alternately voiced openness and intransigence on the nuclear talks, unable to even decide whether they are “direct,” as the US describes them, or “indirect,” as Iran insists. And while Tehran appears to want to return to a version of an Obama-era deal that US President Donald Trump ripped up in his first term, Washington is targeting a wider agreement addressing Iran’s missile program and support for regional proxies. The US will face a challenge, though: Much of Iran’s recent nuclear progress will be difficult to reverse.

UAE rejects Sudan claims

The United Arab Emirates rejected Sudan’s claim at the UN’s top court that it funds a rebel group accused of carrying out a genocide in the African nation. Khartoum says Abu Dhabi is responsible for arming the Rapid Support Forces, a paramilitary group which the US alleges has committed “mass atrocities” in a two-year civil war that has led to tens of thousands of deaths and almost 15 million people being displaced. But UAE officials told the International Court of Justice that it did not have jurisdiction over the case, which legal experts say is unlikely to proceed. Last year, a US-funded group identified aircraft it says supplied UAE arms to the RSF.

US court orders deportee’s return

The US Supreme Court ordered the White House to work toward the return of a man wrongly deported to a notorious Salvadorean prison. There appears to be no evidence that Kilmar Armando Ábrego García was a gang member, as the government alleged, and justices backed a district court’s ruling that his return must be “facilitated.” The White House acknowledged that his deportation was an “administrative error,” but argued that the ruling would “license district courts to seize control over foreign relations,” a view rejected by Ábrego García’s lawyers, who said the government’s position implies it can “deport [anyone], so long as it does so before a court can intervene.”

Jon Clifton, CEO, Gallup; Joseph Hinrichs, President and CEO, CSX; Diane Hoskins, Global Co-Chair, Gensler; Rep. Darin LaHood, (R) Illinois; D.G. MacPherson, Chairman and CEO, W.W. Grainger; Tony Sarsam, CEO, SpartanNash, and more, will join the What Works for the Global Workforce session at the 2025 World Economy Summit. As talent retention, recruitment, and workplace culture evolve in response to economic and technological shifts, this session will explore how employers, workers, and policymakers can create win-win dynamics that meet the needs of a changing labor landscape.

April 25, 2025 | Washington, DC | Learn More

OpenAI safety fears

OpenAI has reportedly slashed the time it spends safety-testing its artificial intelligence models, sparking concerns that it is racing towards powerful AI without proper safeguards. The company used to allow months for safety testing, but now gives just days, according to the Financial Times. AI safety campaigners worry about catastrophic risks from AI, including easing the development of bioweapons, and one former OpenAI researcher recently warned of arms-race dynamics leading to a dangerous dash for AI. Most researchers think AI will have a beneficial impact for humanity, but warn there exists a chance of disaster. AI safety regulation is approaching, but it’s not clear how well governments understand the technology: One US cabinet member recently referred to it as “A1.”

Self-driving car growth

Self-driving cars are becoming increasingly common worldwide. Alphabet’s Waymo is set to begin testing on Japanese roads, its first overseas venture, ahead of gaining permission for autonomous operations: Waymo runs robotaxi services in several US cities and is looking to expand further. And Nissan will use technology developed by UK self-driving startup Wayve in its cars from 2027 to boost its driver assistance systems: Wayve relies on a self-learning approach which works with cars’ existing cameras and radars rather than requiring specialist sensors. Nissan said it would lead to the automation of steering and braking, although drivers would still need to maintain control.

Chinese city’s baby boom

The central Chinese city of Tianmen said offering cash handouts to couples led births to jump by 17% last year, as the country seeks to boost its plummeting birth rate. Officials touted the rewards — as high as $23,000, four times the city’s average per capita disposable income — as leading to the reversal, but The Wall Street Journal pointed to other factors such as an influx of young workers fleeing expensive coastal cities. Beijing has found little success in boosting birth rates, which have fallen far below the replacement level, a legacy of its one-child policy. “After decades of successfully forcing women to have fewer children, China’s government is finding it cannot force them to have more,” The Economist wrote.

• The UK and Germany chair a meeting of NATO’s Ukraine Defense Contact Group in Brussels.
• EU finance ministers gather for an informal meeting in Warsaw.
• Lady Gaga headlines the first day of Coachella.

Cindy Levy is the co-head of McKinsey’s geopolitics practice.

Towards a Nude Architecture by Yuval Zohar. This book about the history of Japan’s onsen, or hot-spring baths, is “visually striking, beautifully written and highly informative,” according to Nikkei: Bathhouses have been an important part of Japanese life since at least 300 BC, and have now given rise to huge complexes. It creates a form of social equality, known as hadaka no tsukiai, or “naked friendship,” which describes the “honest and equal relationships between people from all walks of life that happens when they are sharing a bath, stripped of all the accoutrements of social status.” Buy Towards a Nude Architecture from Zohar’s Kickstarter.

Orbital Materials, a company founded by a former DeepMind researcher, is launching a first-of-its-kind effort to capture carbon from the air by piggybacking off the hot air emitted by data centers, Semafor’s Reed Albergotti reported.

In the age of AI, data centers are consuming enormous amounts of energy and boosting emissions. But Orbital Materials’ pilot program could do the opposite, resulting in a net reduction in carbon in the atmosphere — if it works.