Trade deal unlocked

🚢 The U.S. and U.K. strike a tariff-trimming trade agreement, boosting key industries and transatlantic cooperation.

May 09, 2025

Silver banana goes to…

In this issue of the peel:

  • 🚢 The U.S. and UK strike a tariff-trimming trade agreement, boosting key industries and transatlantic cooperation.

  • ✈️ China’s exports rise 8.1% in April despite a steep U.S. trade plunge, powered by gains in developing markets.

  • 📦 U.S. crude stockpiles drop as output slows, reinforcing concerns over tightening global energy supply.

Market Snapshot

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Macro Monkey Says

China’s Export Resilience Amid Tariff Turmoil

In April 2025, China's exports showcased a paradox of resilience and vulnerability. Despite facing a 21% year-over-year decline in exports to the U.S.—a direct consequence of President Trump's 145% tariff escalation—China's overall exports grew by 8.1% in April from a year earlier.

This growth was not uniform. Exports to Southeast Asia surged by 21%, Latin America by 17%, Africa by 25%, and the European Union by 8.3%, reflecting Beijing's rapid diversification away from the U.S. market. 

China's export machine is clearly adaptive, but not immune—exporters are still grappling with margin pressure, logistics bottlenecks, and limited visibility on future demand from Western buyers.

However, the sustainability of this growth is questionable. Economists forecast a potential 5% annual drop in exports, threatening China’s 5% GDP growth target. In response, the People's Bank of China implemented measures to stimulate the economy, including a 0.5 percentage point reduction in the reserve requirement ratio and cuts to key interest rates. 

Additional liquidity injections are expected in the coming weeks as the manufacturing Purchasing Managers' Index (PMI) continues to hover near contraction territory.

Amid these economic maneuvers, diplomatic efforts are also underway. U.S. Treasury Secretary Scott Bessent and Trade Representative Jamieson Greer are scheduled to meet with China’s Vice Premier He Lifeng in Switzerland from May 9 to 12. These preliminary talks aim to de-escalate tensions and could pave the way for broader trade negotiations. 

President Trump has expressed optimism about the discussions, suggesting that if successful, tariffs, which currently stand at 145%, could be reduced.

China’s Trade Momentum: Imports vs. Exports

The Takeaway?

China’s export sector demonstrates remarkable resilience in the face of escalating U.S. tariffs by pivoting to alternative markets. However, the long-term efficacy of this strategy remains uncertain, and domestic economic challenges persist. 

The upcoming U.S.-China talks in Switzerland represent a critical juncture; successful de-escalation could alleviate economic pressures on both sides and potentially lead to a recalibration of trade policies. 

Career Corner

Question

When connecting with the mentors from the roster on LinkedIn, should I add a note mentioning I’m in the WSO academy, or just send a connection request without a note?

Answer

Yes, strongly suggest. I get connection requests, and it's not entirely clear from the Academy, but it just makes accepting easy.

Head Mentor, WSO Academy

What's Ripe

Applovin (APP) 11.9%

  • AppLovin's stock surged 12.4% this week after the company reported impressive Q1’25 results. Earnings per share reached $1.67, surpassing the consensus estimate of $1.45, while revenue climbed 40% year-over-year to $1.48 billion. 

  • The adtech segment was a standout, with sales increasing 71% to $1.16 billion. Additionally, AppLovin announced the sale of its gaming division to Tripledot Studios for $400 million, allowing the company to focus on its rapidly growing advertising business.

Boeing (BA) 3.3%

  • Boeing's shares rose by 3.3% following the announcement of a $10 billion aircraft order from a UK airline, as part of a new U.S.-UK trade agreement. The deal is expected to include a mix of passenger and freighter planes, bolstering Boeing's international sales. 

  • This development comes as Boeing works to overcome previous production challenges and aims to increase the output of its 737 MAX jets. 

What's Rotten

Fortinet (FTNT) 8.4%

  • Fortinet's stock declined 8.4% after the company provided a mixed outlook for the upcoming quarter and full year, despite reporting solid Q1 earnings. The cybersecurity firm posted earnings per share of $0.58, beating the consensus estimate of $0.53, with revenue slightly beating expectations at $1.54 billion. 

  • However, investors were cautious due to the company's guidance, which suggested potential challenges ahead.

Eli Lilly (LLY) 3.3%

  • Eli Lilly's shares fell by 3.3% amid reports that President Trump plans to sign an executive order aimed at reducing Medicare drug prices. The pharmaceutical sector reacted negatively to the news, fearing potential impacts on pricing and profitability. 

  • Despite the company's strong portfolio, including its weight-loss drug, the market responded negatively to the anticipated regulatory changes. Similarly, the leading competitor and pharmaceutical giant known for its market-leading Ozempic medication, Novo Nordisk shares, also saw a fall of 4% today. 

Thought Banana

Cross-Atlantic Commerce Heats Up

In a diplomatic two-step across the Atlantic, President Trump and UK Prime Minister Keir Starmer announced a new trade agreement on May 8, marking a significant but measured shift in the post-Brexit U.S.-U.K. trade environment. 

While not a comprehensive free-trade pact, the deal includes key tariff adjustments that offer strategic relief to both nations’ industries. 

  • The U.S. will reduce tariffs on British steel and aluminum and lower the car tariff from 25% to 10% for the first 100,000 vehicles exported from the UK. 

  • In return, Britain will lift import barriers on American beef and ethanol and ramp up purchases of Boeing aircraft—a not-so-subtle nod to the U.S. industrial base.

The deal is crafted not just to ease trade friction but to support broader national security goals. Both countries emphasized that economic security is now being treated as national security, with an eye on strengthening critical industries and protecting sensitive technologies. 

American farmers and manufacturers are also expected to benefit from improved access to British markets and expedited customs processing.

Still, the economic impact of this agreement is likely to be modest in the near term. The U.K. is a relatively small trading partner for the U.S., and key tariffs remain in place for most goods. But, as a diplomatic gesture, this agreement may open the door to more substantial negotiations down the road. 

The Takeaway?

The new U.S.-U.K. trade agreement includes reduced American tariffs on British steel, aluminum, and up to 100,000 U.K.-made cars annually, while Britain will ease barriers on U.S. beef and ethanol and increase Boeing aircraft orders. 

Though not a full-scale free trade deal, it reflects growing alignment on economic and national security interests. The agreement offers targeted industry benefits, signals future cooperation, and marks a diplomatic moment tied to the anniversary of Victory in Europe Day.

The Big Question: Does this deal set the stage for deeper trade integration, or will politics stall progress again?

Banana Brain Teaser

Previous

In order to complete a reading assignment on time, Terry planned to read 90 pages per day. However, she read only 75 pages per day at first, leaving 690 pages to be read during the last 6 days before the assignment was to be completed. How many days in all did Terry have to complete the assignment on time?

Answer: 16

Today

Of the 150 houses in a certain development, 60% have air-conditioning, 50% have a sunporch, and 30% have a swimming pool. If 5 of the houses have all 3 of these amenities and 5 have none of them, how many houses have exactly 2 of these amenities?

Send your guesses to [email protected]

❝

Wealth consists not in having great possessions, but in having few wants.

Epictetus

How Would You Rate Today's Peel?


Happy Investing,
Chris, Vyom, Ankit ,Mithun, & Patrick