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Affinity Policy Comment 28 April 2025

The Art of the Deal?

From ‘Liberation Day’ on 2 April, to a 90-day pause in most tariffs just a week later, to continued doubling down against China, April 2025 has sure been a whirlwind month, sending gold to record levels and causing considerable market consternation. Economists, businesses, and governments alike have warned of the highly negative impacts tariffs promise, but recent events hint these warnings could be cutting through.

Last Tuesday, US Treasury Secretary Scott Bessent conceded that a prolonged high tariff environment against China is ‘unsustainable’, and that tariffs are intended to bring China to the negotiating table, rather than the current 145 per cent rate being an end goal in and of itself. Bessent further noted that the current tariff regime – which also sees 125 per cent Chinese tariffs against the US – amounted to a de facto embargo, and that a deal would be done in short order. “The goal isn’t to decouple,” Bessent added. Naturally, markets were enthusiastic about the prospect of a deal and, following the Treasury Secretary’s remarks the ) and S&P 500 ended the day 1.7 per cent up, while the Nasdaq composite rose by 2.7 per cent. As excited as markets may be, any deal of course depends on China playing ball, yet at least on the surface Beijing looks incentivised to push a hard bargain.

For the US to so rapidly escalate trade tensions, only to propose de-escalation so quickly, seems to Beijing like the US is coming from a position of weakness, against which China can press its advantage. Expectedly, China has publicly insisted talks can only happen if the US unilaterally cancels tariffs (which Washington cannot accept), and claims it has not held trade talks with the US despite American assertions otherwise. Beijing may have a political incentive to espouse perseverance until the bitter end, but having run a trillion dollar trade surplus last year it has much to lose from a trade war economically. With this in mind, it has drawn up a list of potential exemptions from its 125 per cent tariffs, expected to include cost relief for drug manufacturers and airlines, as well as cheaper petrochemical and semiconductor imports. To be clear, we’re still a long way off from proper de-escalation talks, and indeed Bessent could not give a timeline on when a deal could be expected. But amid plentiful warnings about what the US has to lose from a trade war, Beijing’s list represents the clearest sign yet that it is concerned of the impact a trade war could have on employment and lower domestic prices from a mountain of unsold exports. A deal, then, is in the interest of both parties, and markets can hold onto hopes of future rallying as one comes into view.  

A deal to reduce US-China trade barriers would be welcome, but other Trump-mediated agreements appear far more problematic. Elsewhere last week, the US President renewed his focus on ending the war in Ukraine which, despite ostensible peace overtures, remains deadly.

On Thursday, Moscow launched a devastating missile and drone strike on Kyiv, which killed 12 and wounded 90 others, marking the biggest Russian assault on the Ukrainian capital in months. This followed fresh Russian attacks over the Easter holiday despite a de jure ceasefire, with Ukraine accusing Moscow of launching drone strikes and combat engagements over the period. Amid such deadly and obvious aggression, which surely reveals Moscow has little interest in peace, we might have expected decisive condemnation and an authoritative US response, but this has been in little evidence. Trump insists his administration has applied “a lot of pressure” on Russia, having implored Putin to cease such action after the attack. Yet, with Trump only able to describe it as “not necessary, and very bad timing”, it seems like the White House’s scepticism of the Ukrainian plight is unchanged. Even this weak condemnation comes at a time when the US President has blamed Zelensky for holding up his peace plan, and has threatened that the alternative would be another three years of war only to lose the rest of the country. Washington may have been among Kyiv’s biggest backers since 2022, but the return of Trump has only vindicated the worst fears of those sympathetic to the Ukrainian cause.

Trump’s envoy Steve Witkoff met Putin in St Petersburg earlier this month to hash out what peace terms could look like, and met Putin again on Friday. The outlined peace terms, though, are hard for Kyiv to swallow, as the US is reportedly prepared to recognise Russian control over Crimea, with Trump insisting that the peninsula’s status was “not even a point of discussion”. As for other territorial matters, Russia has offered to abandon claims to parts of the four Ukrainian oblasts it annexed back in September 2022 that it does not control, but has shown no willingness to return any occupied territory. Other terms remain up for discussion, with the US proposing a European peacekeeping force in Ukraine and a separate non-Nato military force to patrol the front line – something that Russia has always considered unacceptable. Potential Ukrainian NATO membership however, a Ukrainian and European red line, seems decidedly off the table. In the eyes of many, Trump is running roughshod over Kyiv’s conditions, while offering Moscow far more generous terms. Ukraine and Europe may warn of the dangers a bad deal poses, but the way things are going a bad deal they will get, even after Trump supposedly softened his stance after talks with Zelensky in the Vatican over the weekend.

Many have argued that recognising Russian ownership of Crimea sends a powerful message that forcible annexation of territory by military means is acceptable, emboldening not just future Russian aggression, but also other actors with designs against their neighbours. It would of course destroy a foundational pillar of the postwar global order, making the world a far more dangerous place.

Ultimately, how, and when, the conflict in Ukraine will end remain to be seen. But barring a major sea change, peace and international security don’t look set to advance.

Affinity Research LLP

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    Our Sale & Purchase team has extensive experience of working with private clients, national shipping companies, major corporates, oil companies, grain houses and institutional investors. We provide a cradle to grave services across all shipping sectors. We operate from London, Singapore and Seoul to give 24-hour coverage of the markets, working for both newbuilding and second-hand buyers.

    Contact: Tom Morrison
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    +44(0) 20 3142 0128

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    Our established tanker chartering teams serve the industry from London, Houston and Santiago delivering a highly proficient spot chartering service with a prime position in the fuel oil market. The team has close relationships with oil majors, national oil companies, oil traders and major ship owners and operators. 
    Our ethos for operations and post-fixture is simple: these roles are as important to us as the chartering/commercial function, and we continue to apply those same principles of professional ship broking throughout the life of each fixture.

    Contact: Tim Gurdon
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    We provide transparent, objective ship valuation service to major owners, banks and other financial institutions at short notice and a daily basis. We provide a retainer service for regular fleet valuations.

    Affinity Valuations Limited Terms of Business

    Contact: Stuart Morrison
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    +44 (0)20 3142 0144

    Carbon

    Using tailored analytics platforms, we offer client-specific advisory and trading services across the global carbon markets. Contributing to hedging strategies, sustainability reporting and financing requirements, our aim is to assist clients in managing their financial exposure to the approaching energy transition.

    Contact: Hugo Wilson
    [email protected]
    +44(0)20 3142 0121

    Dry Cargo

    Our dry bulk chartering teams in Sydney, Melbourne, Perth, Santiago, Lima, Montevideo, Buenos Aires, Singapore and London are cargo-focussed and they fix voyage, COA and time charter business on behalf of their clients with a wide range of ship owners.
    For Atlantic business please contact Hans Bredrup
    For Pacific business please contact Rahul Khanna

    Contact: Hans Bredrup
    [email protected]
    +56 99 887 3036
    Contact: Rahul Khanna
    [email protected]

    LNG

    Our young and dynamic LNG team possess wide-ranging experience of spot and term charters working with all major LNG shipowners and charterers. The LNG team has close interaction with the Newbuilding and Sale & Purchase divisions with an unrivalled track record of contracting LNG newbuildings and in the sale and purchase of LNG assets.
    We maintain up-to-date knowledge and an understanding of new technologies within the LNG sector to ensure that our clients can make the most suitable and cost-effective decisions on shipping solutions.

    Contact: Joni Mackay
    [email protected]
    +44(0)20 3142 0133

    Newbuilding

    Our Newbuilding team has concluded over 500 newbuildings of all types, including LNGCs, FSRUs, drillships, crude tankers, product tankers and dry cargo vessels. We have contracted in all major newbuilding centres globally, with particular focus on the Korean Shipyards.

    Contact: Nick Wood
    [email protected]
    +44(0)20 3142 0111

    Offshore

    Affinity Offshore is based out of our Oslo and Houston offices. The Team focuses on world-wide sale & purchase of offshore support vessels, as well as chartering – particularly in the Americas and Mediterranean/MENA regions.

    Contact: Tor-Øyvind Bjørkli
    [email protected]

    Research

    Our research department combines real time market information with econometric modelling and the latest technology. 

    Contact: Charlestest Chasty
    [email protected]
    +44 (0)20 3142 0185

    S & P

    Our Sale & Purchase team has extensive experience of working with private clients, national shipping companies, major corporates, oil companies, grain houses and institutional investors. We provide a cradle to grave services across all shipping sectors. We operate from London, Singapore and Seoul to give 24-hour coverage of the markets, working for both newbuilding and second-hand buyers.

    Contact: Tom Morrison
    [email protected]
    +44(0) 20 3142 0128

    Tankers

    Our established tanker chartering teams serve the industry from London, Houston and Santiago delivering a highly proficient spot chartering service with a prime position in the fuel oil market. The team has close relationships with oil majors, national oil companies, oil traders and major ship owners and operators. 
    Our ethos for operations and post-fixture is simple: these roles are as important to us as the chartering/commercial function, and we continue to apply those same principles of professional ship broking throughout the life of each fixture.

    Contact: Tim Gurdon
    [email protected]
    +44(0)20 3142 0142

    Valuations

    We provide transparent, objective ship valuation service to major owners, banks and other financial institutions at short notice and a daily basis. We provide a retainer service for regular fleet valuations.

    Affinity Valuations Limited Terms of Business

    Contact: Stuart Morrison
    [email protected]
    +44 (0)20 3142 0144

Click here for our terms of business

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