Allianz Trade unpacks outcomes of US trade deals with China, UK, and Gulf States - Trade Treasury Payments

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Allianz Trade unpacks outcomes of US trade deals with China, UK, and Gulf States

A new report from Allianz Trade outlines the near-term implications of three major trade agreements signed by the United States this month, with China, the United Kingdom, and key Gulf states. While the report points to moderate gains across markets, it stops short of labelling any of the agreements as structural breakthroughs.

US-China: Truce signals relief, not resolution

Top billing in the report is the 90-day pause in tariff escalation between the US and China. Under the agreement, US tariffs on Chinese goods have been cut from 103% to 39%, while China has lowered its average tariffs on US goods from 140% to 24%.

Though the cuts offer breathing room, they remain elevated compared to the pre-2021 baseline, and the deal is temporary. If no further progress is made by 12 August, tariffs could ratchet back up, with the US rate potentially climbing to 52%.

In the meantime, the macroeconomic effects are already visible. Allianz expects US inflation to peak at 3.5% (down from a previous 4.3% forecast) and has revised GDP growth for 2025 up to between 1.3% and 1.5%.

China, on the other hand, faces projected export losses of up to $108 billion, but most of that is expected to be redirected, with around three-quarters rerouted via other Asian markets and roughly $12 billion headed to Europe.

US-UK: Targeted tariff relief, but trade imbalance persists

The US-UK agreement offers modest concessions. Tariffs on UK car exports have been reduced from 27.5% to 10%, subject to a quota of 100,000 units. Steel and aluminium duties have been dropped altogether.

Despite this, the trade-weighted US tariff on UK goods will remain around 6.1%, a notable increase from the pre-Trump average of just 1%. Allianz estimates the UK will face annual export losses of approximately $3 billion.

The US, in return, has secured expanded access for a mix of goods (particularly in aerospace, manufacturing, and agriculture) expected to yield around $700 million in additional annual exports.

Gulf investment pledges: Capital commitments with strategic upside

In the Gulf, the US has secured a series of investment commitments as part of broader bilateral deals. Saudi Arabia pledged $600 billion in long-term US investments and signed $142 billion in defence procurement deals. The UAE followed with a $1.4 trillion investment pledge, with similar announcements anticipated from Qatar.

These figures may be headline-grabbing, but they are not guaranteed, and indeed, previous cycles saw significant shortfalls in actual capital deployment. Still, Allianz views the commitments as politically significant, particularly amid falling oil prices, which have recently slipped below $70 per barrel.

Tariff reductions across the region are expected to deliver around $1.5 billion in export gains, assuming the deals proceed as outlined.

Outlook: Constructive, but conditional

While the report recognises the improved sentiment and short-term economic upside, it does not shy away from acknowledging the transitory nature of the deals. The US-China truce, in particular, is a temporary detent that could easily unravel without further diplomatic progress.

Even so, recent developments have reversed some of April’s “divest-US” sentiment in financial markets. Allianz notes that this shift introduces mild upside risk to capital market performance through Q3, provided geopolitical conditions remain stable.