Global Risks Weekly Roundup #15/2025: Tariff yoyo, OpenAI slashing safety testing, Iran nuclear programme negotiations, 1K H5N1 confirmed herd infections.

Executive summary

The Trump administration backtracked from his tariff plan, reducing tariffs from most countries to 10%, but imposing tariffs of 145% on China, which answered with 125% tariffs on US imports and export controls on rare earth metals.

The US saw protests against Trump and DOGE, and the US Supreme court ruled that the administration must facilitate the return of an immigrant wrongly deported to El Salvador.

OpenAI is slashing the amount of safety testing they will do of their new AI models, from months down to days, and Google launched a new AI chip for inference.

Negotiations between the US and Iran on its nuclear program are starting, reducing our estimated probability of a US strike on Iran’s nuclear programme by the end of May to 15%.

The number of US dairy herds that have had confirmed H5N1 infections has hit 1,000.

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Economy

After stock market turmoil and a spike in US treasury bond yields, Trump backtracked from his tariff plan. He announced that imports from most countries would only face tariffs of 10%, and he further exempted smartphones, computers and chips from tariffs—important categories of exports from China. Kevin Hassett, the director of Trump’s National Economic Council, has said that it would take an extraordinary deal for a country’s exports to face tariffs lower than 10%. The focus of some negotiations may be to get tariffs on steel, aluminium and cars down from 25%.

However, the trade war between the US and China continues, with the US placing tariffs of 145% on Chinese imports and China placing tariffs of 125% on US imports. China has further intensified the trade war by placing export controls on rare earth metals, effectively halting exports while companies pursue export licenses. The US, meanwhile, has been asking that China request a phone call between Trump and Xi. Paul Krugman has calculated that, based on 2024 trade, the average US tariff rate is now 24.95%. But if you account for lower imports from China due to tariffs, as well as the costs of not importing from China, he comes up with an effective tariff rate of just below 20%. Estimates vary.

In the meantime, China is seeking to take advantage of the rift between the US and its allies, attempting to strengthen its ties with the European Union and countries in Southeast Asia. Spain’s Prime Minister Pedro Sanchez visited China, and Xi will visit Malaysia, Vietnam and Cambodia this week.

Beyond tariffs, Trump signed an executive order that directs the US Trade Representative to impose million-dollar fees per port call on ships in fleets that have at least one Chinese-built or Chinese-flagged vessel. The details of the fees will be determined by April 17. While the order aims to boost the US ship-building industry, Ryan Petersen, CEO of Flexport, points out that such fees would hamper US exports and cause a lot of ships to avoid all but the largest ports, to reduce the per-port-call fees. With many ships avoiding smaller ports, the largest ports would immediately be overwhelmed, and a lot of dock workers in smaller ports would lose their jobs.

Forecasters estimate a 47% chance of a global recession by the end of the year, with a range of 39% to 55%. They emphasize, on the one hand, that a global recession is a high bar to clear—it was met in 2009, but not in 2008—but, on the other hand, that even if Trump were to reverse bad decisions, instability itself destroys value and the ability to plan.

Tech and AI

The Financial Times reports that OpenAI is slashing the amount of time they will spend safety testing their new AI models, from months down to days, because of “competitive pressures”. And the EU Commission is considering watering down AI rules, to lighten the regulatory burden for startups.

A dozen former OpenAI employees have filed a legal brief backing Elon Musk’s legal case to stop OpenAI from converting into a for-profit company. Meanwhile, OpenAI is countersuing Elon Musk, claiming harassment.

An escalating global trade war could cause slower growth in data center demand. Microsoft is "slowing or pausing" some of its plans to build data centers in the US, including a $1B data center in Ohio, as demand for its cloud and AI services has grown less rapidly than expected.

But for the most part, AI progress is accelerating. Google launched a new AI chip for inference. Anthropic is rolling out a new $200/month subscription tier. Alphabet and Nvidia are investing in Sutskever’s SSI AI company. OpenAI is updating ChatGPT to reference previous chats users have had with it. Verizon says its use of Google’s AI customer service agents have led to more sales. Some experiments with custom AI malware appear pretty scary. Taiwan says China is using AI to increase the spread of disinformation and divide Taiwan.

Geopolitics

Middle East

Iran

Envoys from Iran and the United States have travelled to Oman to discuss Tehran’s nuclear program.

Iran’s supreme leader, Khamenei, was imprisoned and tortured for his views and speeches by the SAVAK (internal security forces of the Shah of Iran) in his youth. He viewed them as the puppets of the US, so he has a deep and longstanding hatred of the West that goes beyond ideology. He had previously opposed nuclear talks, but the United States placed pressure on Iran by moving military assets to the Middle East, and he was ultimately swayed by intense pressure from parliament, the judiciary, the IRGC, and the president. They explained that a war would be a potential existential threat to the regime, which is currently in an economic crisis so deep that it’s rationing energy.

Conversely, Trump is now saying exclusively that it is essential that Iran not develop nuclear weapons and is not speaking about wider issues that he used to justify his previous withdrawal from the JCPOA. Still, the Trump administration also imposed further sanctions on companies related to Iran’s nuclear programme.

Early interactions seemed positive on Saturday. Both sides have agreed to meet again next Saturday. Continuing negotiations reduce the likelihood that Trump’s original hard deadline of the end of May for Iran to give up their nuclear programme will be kept.

Abbas Araghchi, Iran’s Foreign Minister leading negotiations, is an interesting veteran figure who has deftly navigated domestic political changes and has been described by Western diplomats involved in the JCPOA as a “serious, technically knowledgeable and a straightforward diplomat.”

Forecasters estimate a 15% (6% to 55%) chance of a US strike on any part of Iran's nuclear programme, down from ~30% two weeks ago. US military resources necessary for a strike are in place in the region, but the initiation of talks with the Iranians drastically reduces the short-term risk.

Gaza

Israel is continuing its blockade of Gaza. The Israeli finance minister said that, ”’not even a grain of wheat” will enter Gaza, and Israel’s Supreme Court rejected a petition to restore electricity to Gaza.

Yemen

The US has used B-2 stealth bombers to strike targets in Yemen. The Houthis have attacked US and Israeli forces, largely ineffectively. We aren’t sure whether the US will keep up its attacks on the Houthis while it keeps its forces in the region, or whether it will hold off on strikes against the Houthis during negotiations with Israel and Iran. There are multiple reports of 80,000 troops from the internationally recognized government of Yemen massing to retake the port of Hodeidah, which is currently under Houthi control.

Africa

Conflict continues in Sudan. Ethiopia and Eritrea might be on the brink of war. Islamic terrorists killed over 300 villagers in Burkina Faso. The US is reducing its influence in Africa, enabling the rise of Islamic groups and greater Russian influence on the continent.

Americas

A Financial Times contributor writes:

> [Trump’s] administration is engaged in a comprehensive assault on the American republic and the global order it created. Under attack domestically are the state, the rule of law, the role of the legislature, the role of the courts, the commitment to science and the independence of the universities. All these were the pillars on which US freedom and prosperity rested. Now, he is destroying the liberal international order. Soon, I presume, Trump will be invading countries, as he proceeds to restore the age of empires.

The US saw large-scale protests against Trump and DOGE over the past two weeks—and Twitter seems to have suppressed some mentions of it.

The Trump administration’s conflict with the judiciary has escalated to the Supreme Court. The Supreme Court ruled that the administration must facilitate the return of an immigrant wrongly deported to El Salvador, and a federal district judge required daily updates. Instead, the administration has said in court filings that it is not obligated to help him get out of prison in El Salvador, and that it is only obligated to "remove any domestic obstacles that would otherwise impede the alien's ability to return here."

In addition, law firms and lawyers in the US who pursue or have pursued cases the Trump administration disagrees with are increasingly being targeted. To date, 14 firms have been singled out for punitive actions, and of those, four have pushed back. One firm argued that the administration's actions were unconstitutional and constituted “a clear and harmful attempt to discourage law firms and their clients from challenging abuses of government power.” Law firms have pledged around $1B in pro bono work for “the administration’s priorities” to avoid retribution.

ICE has announced that it will immediately begin to monitor the social media of immigrants in the US for antisemitic activity and will use negative findings to deny immigration benefit requests or revoke immigration status.

A group of defense contractors has proposed a plan to the administration to dramatically increase deportations to El Salvador.

The State Department has asked employees to report instances of suspected “anti-Christian bias,” in order to comply with an executive order to support Christian federal employees.

The acting IRS commissioner and several other IRS officials resigned after Treasury Secretary Scott Bessent and Homeland Security Secretary Kristi Noem signed an agreement that will facilitate deportations of immigrants by the Trump administration. The agreement will allow ICE access to the contact information of undocumented immigrants in tax data; "The agreement will allow ICE to submit names and addresses of immigrants inside the U.S. illegally to the IRS for cross-verification against tax records."

The Social Security Administration (SSA) has experienced a few difficulties recently. The agency wrongly informed some people that their benefits had ended. The SSA planned to stop allowing people to apply for benefits over the phone, but then partially walked back that change. And the agency's website has crashed repeatedly, reportedly starting soon after DOGE closed the SSA's Office of Transformation, which maintains the website. The most recent former SSA commissioner has warned that DOGE cuts are likely to cause the system to collapse. Over 20% of the US population receives benefits from the SSA, and many rely upon it as their sole source of income.

Trump will not prosecute crypto fraud, and close allies might have monetarily benefitted from his tariff policy changes through S&P 500 options.

Asia

Taiwan has, for the first time, filed charges against a Chinese ship captain for allegedly intentionally damaging undersea cables back in February. The captain was part of the crew of the Togo-registered and Chinese-crewed Hong Tai 58 ship. Taiwan has reported five cases of sea-cable malfunctions this year (so far), compared with three each in 2024 and 2023.

Taiwan fears that PLA drills may escalate into a real attack ”‘with no time to respond”, and a US admiral has warned that the PLA is conducting “dress rehearsals” for an invasion of Taiwan.

Chinese President Xi Jinping fired the People’s Liberation Army’s number-two general, He Weidong, allegedly for corruption. It is the first time that such a high-ranking general has been fired since 1967.

A senior Chinese official has linked Chinese cyberattacks targeting critical infrastructure in the US to increasing US support for Taiwan. “China wants U.S. officials to know that, yes, they do have this capability, and they are willing to use it.”

A Bangladeshi court sent 70 pro-Awami League lawyers to jail, on seemingly trumped-up charges.

A Pakistani think tank is looking at using a tactical nuke to force a ceasefire with India in a potential conflict.

Europe

US billionaire Steven Witkoff is Trump’s envoy for the Middle East. He is currently focusing on Iran’s nuclear programme, Hamas and Gaza, but he has also been tasked with meeting with Putin to resolve the war in Ukraine. He appears to be operating with a skeleton staff and has no previous experience with any of these issues; however, he does have financial ties to Abu Dhabi’s and Qatar’s sovereign wealth funds. Russia is intentionally slow-walking the negotiations, and our forecasters believe that Putin has no desire to agree to a ceasefire. The White House continues to show no sign that it will up the pressure on Russia in any way other than rhetorically. Forecasters estimate that there is a 23% (6% to 40%) chance that a month-long comprehensive ceasefire will be achieved before the end of the year in Ukraine.

Republika Srpska, the Serbian part of Bosnia, may try to secede again and join Serbia—which is bad news, because the previous Bosnian war in the 1990s was particularly bloody.

Zelensky said that at least 155 Chinese citizens are fighting for Russia in Ukraine.

European defence ministers met to discuss the possible deployment of a reassurance force to Ukraine following the completion of any peace deal, but some are wary about pressing ahead without a so-called US backstop.

The UK parliament was recalled on Saturday to pass emergency legislation to give the government powers to prevent British Steel’s Scunthorpe plant from closing its blast furnaces.

Biorisk

The number of US dairy herds that have had confirmed H5N1 infections has hit 1,000.

Squirrels might be natural reservoirs for mpox.

Hungary is culling thousands of cattle after a new outbreak of foot-and-mouth disease. It poses no danger to humans. Hungarian officials are claiming that the outbreak might be the result of a biological attack.

RFK Jr. endorsed the measles, mumps and rubella vaccine. There are currently more than 700 cases of measles in the US in 2025. 97% of those infected are unvaccinated. Three people have died so far, two of which were children.