Flagship

Markets surge on tariff reprieve

The US-China deal to slash tariffs buoyed global markets Monday, as economists scaled back their recession forecasts and investors embraced American assets. Wall Street traded like “Donald Trump’s ‘Liberation Day’ shock never happened,” Bloomberg wrote, marking a reversal of the market trends that defined the last month: The S&P 500 had its best day since April 9, the dollar rose, and gold — a safe haven during economic turmoil — fell. “No one had these low China tariff rates on their bingo cards,” one strategist said. Still, analysts cautioned the 90-day trade truce is but a temporary deescalation: While “panic mode” has subsided, the future economic picture “is as clear as mud,” Reuters’ Mike Dolan wrote.

US tariff deal could give China leverage

Chinese commentators hailed the tariff breakthrough with Washington as a victory for Beijing, while US experts questioned President Donald Trump’s objectives. Ever since Trump announced his “Liberation Day” tariffs, China remained defiant, vowing to “fight to the end” and refusing to lower duties unilaterally. Ultimately, “the US backed down,” a Trivium China analyst said, making China “confident that they have leverage over the US.” For Washington, the climbdown blunts several of Trump’s stated goals, like using duties to fund tax cuts, analysts said. The “two big losers,” Bloomberg’s Joe Weisenthal argued, are those who had hoped “for a Trump-led economic catastrophe” and those who thought his duties were part of a “brilliant, strategic plan” to rectify the US’ global economic standing.

Obscure US trade court in the spotlight

A little-known New York court on Tuesday will weigh the legality of US President Donald Trump’s sweeping tariff agenda. The Court of International Trade — which typically hears obscure cases like whether certain imported pencils illegally evaded anti-dumping duties — will rule on whether to halt Trump’s levies in a lawsuit brought by several small businesses. The case speaks to the broader issue of whether the president can invoke emergency powers to enact the tariffs, The Wall Street Journal reported. One “wrinkle,” Politico wrote, is that the US Supreme Court hears arguments later this week on whether lower courts like the trade panel can even check the White House in this way.

Modi vows ‘new normal’ with Pakistan

Indian Prime Minister Narendra Modi said Monday that any future terror attack linked to Pakistan would be considered an “act of war,” a sign of the hostilities looming over the region amid an uneasy truce. By declaring “a new normal” in relations — his first public remarks since tit-for-tat strikes brought the nuclear-armed neighbors to the brink of war — Modi made clear that “the rules of engagement have irrevocably changed,” The Washington Post wrote. The clash showed the countries “have limited room for imposing costs on each other, without risking major catastrophe,” an analyst wrote in The Indian Express. But with Modi’s supporters furious over the ceasefire with Pakistan, he may feel pressure to escalate the next time tensions arise.

What Trump wants in the Gulf

US President Donald Trump embarked on a Middle East trip Monday, as experts and regional allies tried to discern his foreign policy goals for the visit. It’s clear that Trump is seeking to strike business deals in Saudi Arabia, Qatar, and the United Arab Emirates, but his diplomatic objectives are “foggy,” The New York Times wrote. Washington’s Arab allies are unsure whether Trump “will ask them to prepare for war or peace with Iran,” an expert wrote in Foreign Affairs: “Such uncertainty is unusual.” What is apparent, though, are Trump’s shifting geopolitical priorities in choosing the Middle East for the first major overseas trip of his new term: “The Gulf is the new Europe, basically,” an analyst said.

Trump pushes drug firms to cut prices

US President Donald Trump signed an executive order Monday aimed at cutting prescription drug costs, but experts questioned how effective it will be. Trump threatened to impose restrictions on drugmakers if they didn’t lower prices to be closer to what other high-income countries paid. It’s unclear which drugs will fall under the order, but White House officials said they wanted to hone in on those with the biggest price disparity between the US and other countries. Americans are unlikely to see rapid cost reductions, one expert told The Associated Press, as actions to force companies to cut prices likely have “a very long timeline, some of which could potentially, years in the future, lower drug prices.”

UN debates ‘killer robot’ regulation

The United Nations General Assembly on Monday held its first meeting on so-called “killer robots,” as experts warn time is running out to regulate autonomous weapons. There are virtually no international standards governing the use of arms systems that operate without human control, but their use is becoming more commonplace on the battlefield: Russia and Ukraine have deployed autonomous drones, and artificial intelligence has helped Israel identify targets in Gaza. The UN is pushing for a treaty by 2026, but international consensus remains lacking: Major powers like the US, Russia, China, and India prefer existing international laws, according to Amnesty International.

Semafor’s Eleanor Mueller will sit down with Coinbase CEO Brian Armstrong and Senators Kirsten Gillibrand and Cynthia Lummis for a timely discussion about the future of innovation and regulation in the digital asset space. Join us at the ‘Stand With Crypto Day’ Reception this Wednesday, May 14, in Washington, DC. RSVP here.

Google to back nuclear projects

Google will fund the development of three US nuclear plants, as progress toward small modular reactors gathers pace. Elementl Power, a nuclear startup that will identify the sites, said each will eventually produce 600 megawatts of low-carbon electricity — enough to power around 600,000 homes. Amazon, Meta, and Microsoft have all also announced plans to back SMRs to support their data center energy use. It’s not just Big Tech: Nation-states are racing to produce them, part of a wider resurgence in nuclear power generation. Canada hopes to build the first SMR in the Western world, and several other nations plan to follow. One small reactor is already operating in Russia, and China expects to build its first by 2026.

At-home cervical cancer test approved

US regulators approved the first at-home screening test for cervical cancer. The test looks for the presence of human papillomavirus, the pathogen behind genital warts that also causes almost all cases of cervical cancer. Some experts argue that cancer screenings are often oversold — in many cases, the cancers are rare and the tests imprecise, meaning false positives are common, leading to distress and, sometimes, dangerous and unnecessary medical procedures. But cervical cancer screening is better than many others thanks to its clear target, and an at-home option could save lives, Gizmodo reported. US cervical cancer deaths have halved since the 1970s, but progress has lagged behind other countries such as the UK where uptake of the HPV vaccine is higher.

Global matcha demand grows

International demand for Japanese matcha is at record levels. Exports of green tea reached nearly 9,000 tons last year, a tenfold increase on 20 years ago, with matcha making up more than half of that. But the increase comes as domestic demand, as well as production, declines: Most tea growers are smallholders, many are over 65, and few have the savings to finance major expansions of capacity, Nikkei reported. Also, producers are distrustful of chasing a fad and seeing it collapse — the rapid growth in overseas demand is heavily driven by social media influencers who tout matcha’s reputed health benefits. As a result, supply is short, and vendors are limiting customer purchases until supply increases.

May 13:

• The China-CELAC forum, a summit hosting Latin American and Caribbean leaders, begins in Beijing.
• SoftBank and Honda publish full-year earnings reports.
• The 78th edition of the Cannes Film Festival begins in France.

A new photography collection charts a decade of New York City commuter life on the Staten Island Ferry. Singaporean photographer Nguan took hundreds of trips on the fleet of ships that make up the century-old service, which runs 24 hours a day and serves more than 16 million passengers every year. The resulting compilation, All the Dreamers, sets pensive portraits of construction workers and nurses against the colorful interiors of antique vessels. It’s also a study in natural light, which “cut[s] right through the boat and illuminate[s] everything within” as evening approaches on the ferry, Nguan told The New Yorker. “Even the most ordinary, mundane person can look iconic.”

Details of a Boeing 747 that appears to be the same plane offered by the Qatari government to President Donald Trump are available online, offering a glimpse inside the luxurious jet, Semafor’s Shelby Talcott and Ben Smith reported.

A so-called “palace in the sky,” the proposed gift includes an upper deck lounge, master bedroom, club seating area, and private office, prompting domestic criticism. It “will need to be literally torn apart to confirm that there’s nothing on board that can compromise security,” one former DHS official told Semafor.