On May 6, 2025, the United Kingdom and India finalized a significant bilateral trade agreement, marking a pivotal moment for both nations. During the 11-year transition period this agreement creates, tariffs on 97% of goods traded between the two countries will be eliminated. More importantly, it underscores a developing trend, with countries increasingly working to deepen their economic integration outside the orbit of U.S. power.
The agreement comes the same day as U.S. President Donald Trump is meeting with the FIFA Task Force at the White House. This step further increases the danger that crass domestic priorities will supersede respect for our valuable international trade relationships. This week, U.S. Treasury Secretary Scott Bessent and Trade Representative Jamieson Greer are scheduled to meet with their Chinese counterparts in Switzerland. Their professed goals are to tackle critical economic and trade concerns. Now, this simultaneous U.S. focus on trade negotiations underscores the changing nature of global commerce.
The devil is in the details. Once the agreement is implemented, the U.K. will remove tariffs on 99.1% of Indian imports. In exchange, India will begin phasing down tariffs on important U.K. exports, such as the high threatened tariff U.K. whisky and automotive products face. This mutual provision is projected to greatly increase their respective exports to each other, creating new trade flows between the two countries.
As the U.K. and India make progress on their own deal, Trump’s administration seems to be taking a more protectionist direction. During that meeting with the then newly elected Canadian Prime Minister Mark Carney, Trump drops this jaw dropper. He proclaimed, “We don’t want any of their market. This simple declaration points to a deep and growing sentiment across the U.S.— There is no shortage of countries movement and willing to rat palpable, fixed- their own free trade agreements—keen on American engagement.
JPMorgan strategist Mislav Matejka expressed his concerns in a recent note about the fate of U.S. exceptionalism. He cautioned that, given what’s been happening recently, the U.S. could soon be “not a good place to hide.” His comments reflect a trend within the analyst community. Countries are beginning to look beyond outdated alignment with the U.S. and are looking to establish new, closer economic relationships with one another.
The impact of these changes is already being seen in markets. On May 6, the S&P 500 fell by 0.77%. At the same time, the Dow Jones Industrial Average closed down 0.95% and the Nasdaq Composite Index closed down 0.87%. Well, on May 7, Asian-Pacific markets were humming with excitement. As the announcement of a U.S.-China trade delegation promised short-term stability for increasingly jittery global markets…
Our trade negotiations in Switzerland are getting quite intense. Separately, the People’s Bank of China — China’s central bank — confirmed it will lower the seven-day reverse repurchase rates by 10bps to 1.4% from the current 1.5%. Additionally, the central bank announced its intention to reduce the reserve requirement ratio for banks by 50 basis points. This measure is intended to stimulate domestic economic demand in China at a time of heightened global trade tensions.
As all countries try to pick their way through these complicated international waters, it’s becoming obvious that the sands are shifting under us. The recently finalized U.K.-India agreement serves as an example to the contrary and a powerful reminder of which countries always put self-evident economic interests first. This is happening as U.S. policy takes a more isolationist turn.
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