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A 3D-printed miniature model depicting US President Donald Trump, the Chinese flag, and the word "tariffs" in this illustration taken on April 17, 2025.
US and China limp toward trade war thaw
In the three months before US President Donald Trump dropped widespread tariffs on April 2, aka “Liberation Day,” the American economy contracted 0.3% at an annualized rate, a sharp drop from the 2.4% annualized rise in the final quarter of 2024. Economists were already worried that a recession was looming, and now the world’s largest economy is heading in that direction.
“The true disruptive effects are only beginning to be felt and will start playing out over the ensuing quarters,” says Robert Kahn, Eurasia Group’s managing director of Global Macro.
It’s not me, it’s you. Last year, Trump tried to take credit for the booming stock market, even though he was not in power. He inverted the argument on Wednesday, pinning the blame for the struggling economy on his predecessor, Joe Biden, while urging Americans to “BE PATIENT!!!” Though the midterm elections are still 18 months away, Trump’s pleas for patience show he’s wary of the political effects of a receding economy.
“Today’s data are a reminder that the political costs of a recession are going to be broad-based and significant,” Kahn added.
They’re not the only ones. China, the object of Trump’s tariff ire, also faces an economic slowdown. Chinese factories saw their sharpest monthly slowdown in over a year, per the National Bureau of Statistics, after the US president raised levies on their products to 145%. Beijing released a video on Tuesday reiterating that it “won’t kneel down to Trump,” an apparent signal that the trade war won’t end soon.
Actions speak louder than words. Despite the rhetoric, China is tempering some of its retaliatory measures. It created a list of US-made goods that will be exempt from its 125% counter-tariff. It’s not clear which products will be on this “whitelist,” but China has already spared the imports of microchips and aircraft engines – among other items – from its list. The White House has also made exceptions for Chinese imports three weeks ago, allowing smartphones and other tech devices to enter the United States with just a 20% tariff, and Trump predicted on Tuesday that he’d strike a trade deal with China.
A “painful truce,” as Kahn put it, may be inbound.
Indian paramilitary soldiers patrol along a road in Srinagar, Jammu and Kashmir, on April 29, 2025.
India and Pakistan inch toward a major clash
Nerves are fraught throughout Pakistan after authorities said Wednesday they have “credible intelligence” that India plans to launch military strikes on its soil by Friday, fueling fears of an outright clash between the two nuclear-armed archrivals. Troops from both sides have been exchanging fire in the disputed territory of Kashmir since a terrorist attack in the Indian-controlled section killed 26 civilians last Tuesday. Both China and the US are calling for restraint.
Tensions are spiraling rapidly. India closed its airspace to Pakistan on Wednesday and ordered nearly all Pakistani citizens to leave the country last week. Pakistan – while denying any involvement in the attacks – also canceled visas last week for most Indian citizens in retaliation. The scenes of rapid flight evoked painful memories of the 1947 Partition when Hindus in Pakistan and Muslims in India fled bloody ethnic massacres in the newly formed nations.
How bad could it get? The two countries have had two major wars, in 1965 and 1971, both of which India won, in the latter case quite decisively. In the ensuing decades, however, India has utterly outstripped Pakistan economically, militarily, and diplomatically, which means that Islamabad’s chances of prevailing in a conventional confrontation are very slim.
The balance of power shifted nonetheless when Pakistan developed nuclear weapons in 1972 to match those that India built in 1967. This has prevented a full-scale attack ever since. When the two sides went to war in 1999, hostilities lasted just over two months and were geographically limited to the Himalayas. If New Delhi should be foolish enough to existentially threaten its neighbor, it raises the grim – albeit unlikely – prospect of a nuclear exchange.
We’re watching for a limited engagement, but we’re far from sanguine about the risks.
Visite d’Etat de M. XI Jinping, Président de la République populaire de Chine, en France en presence de Ursula Von der Leyen
HARD NUMBERS: China lifts EU sanctions, Harvard reports on discrimination, Turkish police continue crackdown, Argentines scoop up dollars, Plastics kill
5: China lifted sanctions on five European Union lawmakers on Wednesday as Beijing seeks to balance the growing trade war with the United States by warming ties with Europe. The sanctions were originally imposed on members of the European Parliament’s Subcommittee on Human Rights in relation to European condemnations of human rights abuses against Uyghur minorities in Xinjiang.
500: Two Harvard University reports on anti-Muslim and antisemitic sentiment on campus released Monday stretched to over 500 pages cumulatively, noting that sizable minorities of Muslims (47%) and Jews (15%) did not feel physically safe. The reports, which were commissioned before the Trump administration took office, also showed that 92% of Muslims and 61% of Jews feared professional and academic repercussions for expressing political beliefs.
18: Turkish police have arrested 18 municipal employees in Istanbul as part of a growing crackdown against city Mayor Ekrem Imamoğlu, who was imprisoned last month. Imamoğlu is widely considered the only opposition figure able to go toe-to-toe with President Recep Tayyip Erdoğan in the next presidential election, but legal obstacles may effectively bar him from running. The municipal employees were among a group of 52 detained over the weekend, and are accused of taking bribes and participating in criminal conspiracy.
1 billion: Argentines deposited $1 billion in US dollars into their bank accounts over the last eight business after the government lifted restrictions on buying US currency following five years of strict controls. The dollar’s relative value has been sliding under the Trump administration and hit a three-year low last week after the president repeatedly criticized the chair of the Federal Reserve.
350,000: What stretchy inanimate thing killed 350,000 people in 2018? One word. Are you listening? Plastics. More specifically, chemicals that are added to the plastics that we encounter in everyday items like food packaging, lotions, and shampoos. A new study suggests that these “phthalates,” as they’re called, contributed to hundreds of thousands of deaths from heart disease, especially in emerging economies where middle-class consumption has grown rapidly in recent decades.
U.S. President Donald Trump and Indian Prime Minister Narendra Modi shake hands as they attend a joint press conference at the White House in Washington, D.C., U.S., February 13, 2025.
A winner from Trump tariff wars? Maybe India
Modi has been around long enough to have navigated trade frictions during Trump’s first term, and he was one of the first world leaders to approach Trump earlier this year with a conciliatory approach to growing trade tensions. Now, according to US Treasury Secretary Scott Bessent, the first phase of a new US-India trade deal might be “one of the first trade deals we would sign." Following a visit to Washington last week, Rajesh Agrawal, India’s lead trade negotiator, highlighted hopes for a “mutually beneficial, multi-sector bilateral trade agreement by fall of 2025, including through opportunities for early mutual wins.” Creating more market openings for US exports will come at a cost in a country long known for trade protectionism, but Modi has also made moves in recent years to open trade talks with the EU, the UK, and others.
This also follows news that, to avoid the Trump administration’s surging tariff rates on China, Apple has unveiled plans to move production of most of the 60 million iPhones it sells in the US each year from China to India by the end of 2026 – though the transition may take longer.April 29, 1975: Vietnamese refugees line up on the deck of USS Hancock for processing following evacuation from Saigon.
Saigon’s Last Day: The fall, the flight, and the aftermath of the Vietnam War
April 30 marks 50 years since North Vietnamese troops overran the capital of US-aligned South Vietnam, ending what is known locally as the Resistance War against America. Despite strong US-Vietnam reconciliation in recent decades, US President Donald Trump has forbidden American diplomats to observe the anniversary of this transformative moment — but those who survived the chaos that followed will never forget the trauma echoing down through the generations.
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Saigon, April 29, 1975. For six weeks, South Vietnamese forces have been falling back in the face of a determined communist offensive. American troops have been gone for two years. The feeble government is in disarray. The people are traumatized by three decades of war and three million deaths.
Bing Crosby’s “White Christmas” begins playing on radios across the capital.
Some Saigonese know it’s a sign: It is time to run.
Lien-Hang T. Nguyen, now a Columbia University history professor, was just five months old, the youngest of nine children. After a failed first escape attempt by helicopter, her family heard about an uncle with access to an oil transport boat. More than 100 refugees crammed aboard the small vessel, where they waited for hours to set sail. Nguyen’s father nearly became separated when he dashed back into the city in a futile attempt to find more relatives.
At nightfall, they finally departed, crossing enemy-controlled territory under cover of darkness before being ordered onto an ammunition barge floating off the coast, bursting with over 1,000 refugees.
“When the sun rose the next day, April 30, we realized Saigon had fallen,” says Nguyen.
They were far from safety. The cable anchoring the barge in place severed, and they came under mortar fire as it drifted helplessly. Somehow, no one was killed in the shelling, but the refugees had no water and scant food, and they were baking under the unrelenting sun of the Mekong Delta.
Later that day, after dark, a US ship arrived to take on refugees, but as hundreds of bodies crowded toward their rescuers, they tipped the barge.
“People fell off, and it was in the middle of the night. Many drowned,” says Nguyen. “My brother watched a child fall in the water and then the father dive in after – they were never seen again.”
Baby Lien-Hang and her siblings all made it onto the second ship that arrived and transited through camps in Guam, Wake Island, and Hawaii, then a series of military bases on the US mainland. Months later, the family finally settled permanently in Pennsylvania. But for those who could not find a way out of Saigon that day, the odyssey is just beginning.
The revolution arrives
Americans often think of April 30, 1975, as the end of the Vietnam War. But for Vietnamese, “the fall of Saigon signals not just the victory of North Vietnam, but the peak of their revolution,” says Tuong Vu, a political science professor at the University of Oregon.
The Communist Party of Vietnam rapidly began purging society of threats to their regime, including former South Vietnamese officials and soldiers, capitalists, religious clergy, intellectuals, and ethnic Chinese and Khmer. The new government also seized property, collectivized agriculture, and removed hundreds of thousands of urban residents to the countryside for farming.
Erin Phuong Steinhauer, now the head of the Vietnam Society, was five years old when she watched North Vietnamese tanks roll down Nguyen Hue Boulevard and crash through the gates of the presidential palace. Her family were wealthy proprietors of camera shops, and her father was a former soldier for South Vietnam.
Shortly after the fall of Saigon, troops arrived at their home to take him away. He would spend the next four years in a re-education camp – a prison meant to indoctrinate and punish perceived enemies of the state – suffering extreme deprivations, forced labor, and brainwashing. The family’s property was confiscated, and Erin and nine of her siblings went to live with their grandparents.
“Then they arrested my mother, and interrogated her,” says Steinhauer. For a week, she slept in a corrugated panel box. “They kept her there and asked her over and over: ‘Where is your money? Where did you hide everything? What are your plans?’”
She returned deeply traumatized – but the family had a lifeline. Erin’s mother had hidden gold with relatives in the countryside, and over the next four years, the family used it to make risky escapes in small groups to Thailand, Malaysia, and Singapore, where Erin arrived with her mother and sisters in 1979.
“It was a strange feeling when we escaped Vietnam. I remember my dreams before 1975 were in bright color,” says Steinhauer. “Afterward, they were in dull grey overtones.”
Overextension and reform
The Communist Party’s policies strangled economic growth, and Vietnam’s situation was further complicated by China’s split with the USSR. Hanoi sided with Moscow, which had provided advanced weapons and advisors during the war with the US.
Meanwhile, the Khmer Rouge regime in neighboring Cambodia leaned on Beijing for support. Vietnam invaded its neighbor in 1978 to remove Pol Pot’s regime after over a year of border conflicts and failed peace talks, leading to an 11-year-long occupation and a brief punitive war with China in 1979.
“The Soviet Union, with its weak economy, became totally exhausted because of overreach,” says Vu. Straining under the weight of the war in Afghanistan and the arms race with the US, Moscow “was forced to consider economic reform, and in turn, encouraged the Vietnamese to reform as well.”
In 1986, the death of Party Secretary Le Duan allowed new leadership to initiate the Doi Moi reforms, gradually opening Vietnam’s market and sending out political feelers to former enemies.
“After 1986, Vietnam engaged with the global community again, moving away from the Soviet orbit,” says Nguyen. “It is the end of the international marginalization that came about with its war against Cambodia and China.”
Reconciliation with Washington
Repairing relations with the United States remained a slow process, in large part due to an American embargo, and formal diplomatic ties were not fully reestablished until 1995. The relationship strengthened rapidly in the following years, including defense and diplomatic cooperation, but most crucially through trade. Access to US markets helped the Vietnamese economy grow at an astounding pace, with per-capita GDP in 2023 more than 14 times higher than it was in 1995, and total US trade volume over 248 times larger.
That close relationship is part of why many Vietnam observers were shocked when the Trump administration ordered its diplomats in Hanoi to avoid any ceremonies recognizing the 50th anniversary of the fall of Saigon.
“It’s a smack in the face,” says Steinhauer. Though a symbolic gesture, “It invalidates everything we have gone through – not just Vietnamese-Americans, but US veterans, and the people of Vietnam, and the hundreds of diplomats who worked to broker reconciliation over the past 30 years. All of that seems like it is meaningless to this administration.”
People bathe in the sun under parasols on a beach near the city of Larnaca, Cyprus, on August 11, 2024.
HARD NUMBERS: UAE carries Cyprus’ water, China toughens trade stance, Trump admin ignores court order, Americans expect price hikes, Germany’s economy remains stagnant, South Korea’s ex-leader indicted
15,000: The United Arab Emirates is literally helping Cyprus navigate troubled waters by providing portable desalination plants to the Mediterranean island free of charge so it can supply enough water to the deluge of tourists set to visit this summer. The Emirati nation’s plants will reportedly produce 15,000 cubic meters of potable water per day. It’s unclear if the UAE is receiving anything in return – it seems happy to go with the flow.
$582 billion: China informed the United States that it must “completely cancel all unilateral tariff measures” if it hopes to begin talks over trade. Beijing had previously said that it was open to talks, without preconditions. However, on Friday, Reuters reported that Beijing would exempt some critical goods from its 125% and is asking its firms to identify imports they need to continue functioning --- though it stopped short of publicly making the first move in trade war de-escalation. Total trade between the two superpowers was $582 billion in 2024, but the sweeping new tariffs that each has slapped on the other is likely to force this number down.
2: In the latest clash between the Trump administration and the courts on immigration, the White House moved a Venezuelan man from Pennsylvania to Texas — possibly preparing to deport him — right after a judge ruled that the government couldn’t remove him from the commonwealth or the United States. The man, who wasn’t formally named, had been employed as a construction worker in Philadelphia for two months before his arrest in February on suspicion of being part of Venezuela’s Tren de Aragua gang.
77%: The price isn’t right: 77% of Americans expect President Donald Trump’s tariff plan to raise consumer prices, with 47% believing that consumer prices will “increase a lot,” according to an AP-NORC poll. Despite those numbers, 4 in 10 Americans still approve of Trump’s handling of the economy and trade negotiations.
0: In the wake of Trump’s tariffs, Germany announced on Thursday it was downgrading its predicted economic growth rate — the economy depends heavily on manufacturing exports — from 0.3% to 0.0%. If the prediction holds, 2025 will be the third straight year of stagnation for Europe’s largest economy.
217 million: Former South Korean President Moon Jae-in was indicted on Thursday on bribery charges, alleging that he received 217 million won ($151,705) from the founder of a low-cost airline. No, it wasn’t Turkish Airlines but Eastar Jet.President Donald Trump at a bilateral meeting with China's President Xi Jinping during the G20 leaders summit in Osaka, Japan, on June 29, 2019.
Trump promises to be “very nice” with China – but Beijing won’t be flattered
On Wednesday, Donald Trump said he would deliver a “fair deal” with China. He also said he’d be “very nice” to the country after meeting with major retailers. CNN reports the retailers gave the president a “blunt message” about the risks of a prolonged trade war with China, warning shop shelves could “soon be empty.”
Beijing, however, denied that there are any ongoing talks and told the US it must cancel its unilateral tariffs before China will broker any negotiations.
Trump is now promising a substantial drop in tariffs on China, which currently sits at 145%, though he says he won’t drop them to zero. Meanwhile, Treasury Secretary Scott Bessentsays there won’t be a tariff reduction without a trade deal, and that it could take two or three years before the US manages to rebalance its trade with its rival, citing the past precedent of Japan, with whom it took a decade to rebalance trade volumes.
On Wednesday, markets were up on the China expectations and news, further buoyed by Trump’s comment that he had “no intention” of firing Federal Reserve chair Jerome Powell. But don’t bank on a long-term comeback or market stability. Earlier in the week, stocks were down with indices closing roughly 2.5% lighter than they started the day after Trump called Powell “Mr.Too Late” and “a major loser” as he pressed for interest rate cuts he claims will buoy the economy amid declining consumer confidence and a growing recession risk.
Containers on a cargo ship are seen at an industrial port in Tokyo, Japan April 3, 2025.
Beijing tries to woo an uninterested Tokyo over joint tariff fight
Chinese Premiere Li Qiang sent Japanese Prime Minister Shigeru Ishiba a letter asking that they “fight protectionism together,” according to local reports Tuesday, as both countries face potentially disastrous US tariffs.
“I don’t know what the equivalent in Japanese for ‘chutzpah’* is, but I think the Japanese bureaucrats will snicker a bit to themselves,” says David Boling, Eurasia Group’s director for Japan and Asian trade. “China has a tendency when relations with the US are not going well to suddenly become much more positive in their approach to Japan.”
China is Japan’s largest trading partner but a highly distrusted neighbor from a national security perspective. Japan launched trade talks with the United States last week, and Boling says Tokyo is determined to strike a deal.
“The United States is just too important as an ally and trading partner, and even if talks break down, they’re not going to look to China first,” he says.
What’s more, Ishiba faces a crucial election in the upper house of the Diet, Japan's legislature, in July, right around when the US tariff pause is due to expire. With his political life on the line, we’re watching for an agreement in principle to be sealed with the US soon.
*Chutzpah is 厚かましさ (astukamashi-sa), if you were curious.