It’s been a month and a half since “Liberation Day”, and if you’ve been off the grid that whole time, the S&P 500 wouldn’t seem exciting, slight growth, nothing to write home about. However, since April 2, quite a lot has happened. Today, we shift our focus to trade agreements made in the past two weeks and how they are shaping global trade.
The action began on May 8, when President Trump and UK Prime Minister Keir Starmer unveiled the Economic Prosperity Deal – the first significant bilateral trade move of Trump’s second term. Though not a full free trade agreement, the deal set out clear intentions: reducing tariffs and reinforcing bilateral economic ties. Among the most notable changes, the US agreed to slash its 25% tariff on UK-manufactured cars down to 10%, but only for a quota of up to 100k vehicles annually (almost exactly the number Britain shipped across the Atlantic last year). Washington also lifted its 25% steel tariffs on UK exports, though details on quotas remain vague. In return, the UK eliminated its 20% tariff on US beef and drastically expanded import quotas. However, it’s important to note that Trump’s hallmark 10% universal import tariff remains in place, signaling it’s not just a negotiating tactic – it’s becoming structural. This deal is not yet final and doesn’t qualify as a free trade agreement, but it’s a strong signal of what’s coming.
Once the UK deal was out, the administration pivoted toward a more contentious front – China. On May 12, US trade envoys met Chinese officials in Geneva, Switzerland, and agreed on what’s best described as a 90-day tariff truce, this time including China. After weeks of retaliatory escalations, both sides took a step back. The US reduced its tariffs on Chinese goods from 145% to a much more manageable 30%, while China dropped its own tariffs from 125% to 10%. Beijing also scrapped the retaliatory measures and non-tariff barriers introduced in April. In turn, Washington lifted the emergency tariffs enacted post-Liberation Day but notably retained the original Section 301 tariffs and metal duties. Markets responded decisively – the S&P 500 jumped over 3% on the news, underlining just how hungry investors are for free trade.
Just the next day, on May 13, Trump arrived in Riyadh and signed a $600 billion investment package touching every pillar of strategic interest between the US and Saudi Arabia: energy, defense, technology, and infrastructure. Early highlights include major deals between Saudi Aramco and US firms, as well as a landmark $20 billion commitment from Saudi funds into US AI infrastructure. A tech consortium featuring Google, Oracle, and AMD announced $80 billion in joint tech investments spanning both countries. But the real eye-popper was a $140 billion arms agreement – the largest of its kind to date. The two nations even sealed a space partnership, agreeing to launch a Saudi satellite aboard a NASA mission. The Saudi trip was described as the “new golden era of partnership”.
One day later, the caravan moved to Qatar, and the numbers only got bigger. On May 14, Trump and Qatari leaders unveiled a $1.2 trillion economic package set to unfold over the coming years. The deal was anchored by Qatar Airways’ order of up to 210 Boeing airplanes powered by GE engines, showcasing American dominance in aviation. In the energy sphere, McDermott was tapped to expand Qatar’s LNG infrastructure, reflecting the critical US role in the Gulf state’s gas expansion. Moreover, a joint venture in quantum computing was announced. The defense side wasn’t left out either, with Qatar securing agreements for Raytheon’s counter-drone systems and General Atomics’ unmanned aerial platforms. On top of all this, Qatar reiterated its long-term hosting of critical US military installations.
Trump closed his Middle East tour on May 15 in Abu Dhabi, where another $200 billion in new agreements were signed. Energy remained central, with Occidental Petroleum and ADNOC announcing joint carbon capture projects in Texas. Also, Etihad Airways committed $14.5 billion for new Boeings. But the show-stopper was the AI and chip deal: the UAE will import 500,000 units annually of Nvidia’s most advanced AI chips, despite earlier US export restrictions. As part of the package, the UAE will match US investments in data centers and adapt its tech regulations to align with US export controls, effectively closing the door to Chinese access through back channels.
Taken together, this week of diplomacy marks a clear evolution of Trump’s trade doctrine. The tariffs still seem to be a bullying and “get what I want” tool for the US, but they are starting to really leverage American leadership across various industries and asserting their dominance. From strong-arming adversaries into truce-like concessions, to securing massive regional investments, the Trump administration is shaping a new global trade order which puts America first, just as pledged, at least for now.
Still, uncertainty remains high. Deals with the UK and China are still provisional. Europe has yet to be brought to the table. Aside from global trade, broader geopolitical tensions in Ukraine, Middle East, India and Pakistan all continue to simmer. Also, it will be crucial to monitor the US and other’s macroeconomic data, as well as central banks’ decisions.
Despite all this, markets continue to demonstrate one crucial trait: resilience. While corrections and bearish trends remain an ever-present possibility, the past few weeks remind us that recoveries don’t wait for perfect clarity. But I am going to spare you with platitudes today (even if true) and just leave you with the graph of the S&P 500 so you can see for yourself who got rewarded when others were greedy/fearful.
S&P 500 Index price (May 2024 – May 2025, points)
Source: Bloomberg, InterCapital Research
