Evening Report | China shows willingness to trade talks with some U.S. agreements

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China shows willingness to trade talks with some U.S. agreements... China has shown a willingness to engage in trade talks with the U.S. if it sees a number of steps from President Donald Trump’s administration, including showing more respect by reining in disparaging remarks by members of his cabinet, a person familiar with Beijing’s thinking told Bloomberg. Other conditions include a more consistent U.S. position and a willingness to address China’s concerns around American sanctions and Taiwan, said the person. Beijing also wants the U.S. to appoint a point person for talks who has the president’s support and can help prepare a deal that Trump and Chinese leader Xi Jinping can sign when they meet, the person said.

WTO ‘very concerned’ on trade, slashes 2025 global forecast... The World Trade Organization (WTO) sharply cut its forecast for global merchandise trade, warning further U.S. tariffs and spillover effects could lead to the heaviest slump since the height of the Covid pandemic. WTO said it expected trade in goods to fall 0.2% this year, down from its forecast for 3.0% expansion in October. It said its new estimate was based on measures currently in place. WTO said if President Donald Trump reintroduced the full rates of his broad tariffs that would reduce goods trade growth by 0.6 percentage points, with another 0.8 point cut due to spillover effects beyond U.S.-linked trade. Taken together, this would lead to a 1.5% decline, the steepest drop since 2020.

“I’m very concerned, the contraction in global merchandise trade growth is of big concern,” WTO Director General Ngozi Okonjo-Iweala said. “If we have contraction in global merchandise the concern is spill over into broad GDP growth. We’ve seen that the trade concerns can have negative spillovers into financial markets, into other broader areas of the economy,” Okonjo-Iweala added.

Okonjo-Iweala noted her greatest concern was a decoupling of the U.S. and Chinese economies. “A decoupling could have far reaching consequences if it were to contribute to a broader fragmentation of the global economy along geopolitical lines to two isolated blocks,” she said.

In this scenario, global GDP could shrink by 7% in the long term, which Okonjo-Iweala described as “significant and substantial.”

Services trade, though not subject to tariffs, would also take a hit, WTO said. It expects commercial services trade to grow 4.0% in 2025 and 4.1% in 2026, well below baseline projections of 5.1% and 4.8%.

Trump launches Section 232 probe into critical minerals, eyes tariffs and domestic incentives... President Trump signed an Executive Order on Tuesday directing the Department of Commerce (DOC) to initiate a Section 232 investigation into imports of processed critical minerals and their derivative products. The move aims to assess national security risks tied to foreign supply chains. Key points:

• DOC has 90 days to prepare a report for internal review and 180 days to submit a final recommendation to the president.
• The investigation could result in tariffs or restrictions on mineral imports.
• The Executive Order highlights the United States’ ongoing reliance on foreign sources, calling them vulnerable to “serious, sustained, and long-term supply chain shocks.”
• Derivative products are defined as any goods that incorporate processed critical minerals as inputs.
• The order also tasks the DOC with proposing measures to “incentivize domestic production, processing, and recycling.”

This is the latest in a series of Section 232 actions under Trump’s trade agenda, signaling potential ripple effects across sectors that rely on imported minerals — such as clean energy, defense and high-tech manufacturing.

Powell: Tariffs could pose ‘challenging scenario’ for Fed... Fed Chair Jerome Powell expressed concern in a speech that the U.S. central bank could find itself in a dilemma between controlling inflation and supporting economic growth. With uncertainty given President Trump’s tariff/trade policy, Powell said it’s unclear which the Fed will need to devote a greater focus.

“We may find ourselves in the challenging scenario in which our dual-mandate goals are in tension,” Powell said in prepared remarks before the Economic Club of Chicago. “If that were to occur, we would consider how far the economy is from each goal, and the potentially different time horizons over which those respective gaps would be anticipated to close.” He said tariffs are “likely to move us further away from our goals... probably for the balance of this year” as the “are highly likely to generate at least a temporary rise in inflation.” But he also noted, “For the time being, we are well positioned to wait for greater clarity before considering any adjustments to our policy stance.”

Placements expected to rise in Cattle on Feed Report... Analysts polled by Urner Barry expect USDA’s Cattle on Feed Report Thursday afternoon to show the April 1 feedlot inventory declined 1.7% from year-ago. A focal point will be placements, which are expected to have risen 3.7% from year-ago levels, due largely to the small number of cattle moved into feedlots in March 2024. While the U.S. reopened the border to Mexican cattle imports earlier this year, resumption of trade has been gradual. Marketings are anticipated to have risen 0.7%.

LanzaJet warns tariffs on Brazilian ethanol could raise U.S. SAF costs... Biofuels producer LanzaJet voiced concerns that potential Trump administration tariffs on Brazilian ethanol could significantly increase the cost of domestically produced sustainable avian fuel (SAF). CEO Jimmy Samartzis told Bloomberg there is currently “no alternative for a U.S.-produced ethanol that qualifies,” making the tariff especially burdensome.

The company is also grappling with regulatory uncertainty as it awaits final guidance on the Clean Fuel Production Credit (45Z).

Renewable diesel producers share similar concerns, particularly over whether imported used cooking oil (UCO) will be eligible under 45Z. The Biden-era policy excluded imported UCO, and industry players warn that any new tariffs on UCO could shift reliance toward soybean oil, potentially tightening domestic supply and inflating costs.