Executive summary
- India and Pakistan have agreed to a ceasefire, and despite initial breaches, it now seems to be holding.
- The Trump administration and China agreed to reduce tariffs for 90 days while talks continue. Markets rejoiced.
- The Trump administration continues to look into ending due process for immigrants to be deported and is making arrangements to deport undocumented immigrants to many countries around the world.
- Israel is set to start a major operation in Gaza soon.
- The nonprofit OpenAI will retain control of the for-profit arm after restructuring.
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Global Economy
After talks in Geneva, the US and China reached a trade deal. US tariffs on Chinese imports will move from 145% to 30%, and Chinese tariffs on US imports will go from 125% to 10%, for an initial 90 days. The US tariffs on Chinese imports comprise a 10% base and an additional 20% for China’s “role in the opioid crisis.” Here is the somewhat abstrusely worded joint statement. Treasury Secretary Scott Bessent said that, “the United States will continue a strategic rebalancing… but the consensus… is neither side wants a decoupling.”
Forecasters were broadly uncertain about what the aggregate level of US tariffs on China will be by the end of June. Forecasters assigned the following probabilities to the following buckets:
- (0% to 10%]: 10.5%
- (10% to 25%]: 19%
- (25% to 50%]: 62%
- (50% to 100%]: 7%
- 100%+: 1.5%
The S&P is up 2.7% this Monday. US imports are also expected to rebound, but some difficulties may be encountered because there are only so many ships and routes. Moreover, uncertainty about final tariff rates will continue to weigh on businesses.
Shipping volumes out of China have not yet been substantially affected by the trade war. As John Paul Hampstead of Freightwaves said, “The U.S. may be finding other sellers, but China is finding other buyers.” But US exports have been falling; agricultural exports have been hit particularly hard.
Before the trade deal between the US and China, ocean container shipping to the US was continuing to plummet. The Port of Seattle had no container ships at berth at one point last week. Container ships on their way to the US from China were lighter in the water than usual and were thus carrying less cargo than usual as well. Major container shipping companies were suspending at least six scheduled weekly routes between China and the US, eliminating the capacity to ship more than 1.3 million 40-foot containers a year. An opinion piece in the FT also anticipated a “Prohibition-era” smuggling market opportunity, and Chinese exporters were also shipping goods via other countries and undervaluing cargo to get around US tariffs.
After the deal, large-scale disruptions now seem likely to be more transitory, although the 90-day nature of the pause and policy uncertainty, in general, does make planning harder for US and other businesses. Demand for trucking services is still expected to fall dramatically in mid-to-late May, and store shelves are still expected to start to empty of goods soon after, but those situations will soon likely be reversed.
Before US-China tariffs were lowered, Goldman Sachs predicted that the annual core goods inflation in the US would be 6.3% in December 2025. The costs of insuring against a US government default, i.e., spreads on US sovereign credit default swaps (CDS), have been going up.
The US and the UK reached the outlines of a trade agreement that lowers tariffs on most British cars from 25% to 10% and eliminates tariffs on UK steel, aluminium and plane parts. In exchange, the UK lowered tariffs on some US goods. The US will still impose a 10% tariff on most goods imported into the US from the UK.
The finance ministers of 13 Asian states (ASEAN + China, Japan and South Korea) signed a joint statement in support of free trade. Because of US tariffs, these countries are reducing their dependence on the US and pursuing economic cooperation, despite their differences.
Geopolitics
India/Pakistan
Fighting between India and Pakistan escalated, but the two sides then agreed to a ceasefire. Despite accusations that the ceasefire was breached, it appears to be holding on the whole. The two countries will now hold talks on a broad range of issues, likely including the Indus Waters Treaty.
Earlier in the week, India launched civil defence drills—the first since 1971, when India and Pakistan fought a war. India also launched “Operation Sindoor,” involving airstrikes against what it called terrorist infrastructure in Kashmir. Pakistan likely downed at least two Indian fighter jets. Pakistan, meanwhile, carried out artillery strikes on India, particularly in the district of Poonch, close to the India-Pakistan border. More than a dozen civilians may have been killed.
India subsequently launched drone strikes on geographically dispersed Pakistani cities, including Lahore and Karachi. Pakistan responded in turn, targeting Indian cities such as Amritsar.
India and Pakistan both claim that the other side targeted military bases. India currently claims that 2 of its soldiers and at least 21 of its civilians were killed. Pakistan claims that 25-50 Indian soldiers were killed, although this is speculative, and that dozens of its own civilians were killed.
After these attacks, Pakistan Prime Minister Shehbaz Sharif called a meeting of the body that oversees the country’s nuclear arsenal.
US Vice-President JD Vance stated that the United States won’t intervene in the India-Pakistan conflict, saying that it is “none of our business”. He was likely referring to military intervention in these comments, because he also said that the US will continue to push for de-escalation through diplomatic channels, and Trump said that US mediation helped bring the two sides to a ceasefire.
Forecasters assign a 5% (range, 3% to 13%) to 1K fatalities being reached in the next 6 months, down from 9% two weeks ago. Conditional on that threshold being reached, they estimate a 1% (range, 0.3% to 3%) chance that a nuclear weapon will be used, giving an unconditional 0.05% chance.
Forecasters are broadly uncertain at 45% (range, 40% to 60%) about whether there will be a new or restored water treaty between India and Pakistan by the end of August. Regardless of India’s ability to impact the flow of water to Pakistan, failure to reinstate or re-negotiate a treaty leaves an open wound and an easy flashpoint for further hostilities.
X is censoring accounts in India at the government’s request.
United States
Stephen Miller, homeland security advisor and the White House deputy chief of staff for policy, said that, “we’re actively looking at” suspending due process—i.e., habeas corpus—for immigrants.
> Well, the Constitution is clear — and that of course is the supreme law of the land — that the privilege of the writ of habeas corpus can be suspended in a time of invasion. So, it’s an option we’re actively looking at. Look, a lot of it depends on whether the courts do the right thing or not.
Habeas corpus protects individuals against unlawful confinement by the government. It has been suspended only four times in US history: during the Civil War, in parts of South Carolina to address violence and rebellion by the Ku Klux Klan and other groups during the Reconstruction era, in two provinces in the Philippines in 1905, and in Hawaii after Pearl Harbor was bombed.
The Trump administration is exploring arrangements to deport undocumented immigrants to many countries, including Costa Rica, Panama, El Salvador, Guatemala, and Mexico, in North and Central America; Libya, Rwanda, Angola, Equatorial Guinea, Benin, and Eswatini, in Africa; and Ukraine and Moldova, in Europe. Some of these countries do not have good human rights records. The State Department’s travel advisory for Libya is at level 4: do not travel, “due to crime, terrorism, unexploded landmines, civil unrest, kidnapping and armed conflict.”
The Department of Agriculture is requesting that states share the personal data of recipients of food assistance under the SNAP programme, likely with the goal of facilitating the deportation of undocumented immigrants.
Secretary of Defense Hegseth ordered a reduction in the numbers of higher-ranking officers across the military: 20% of all four-star officers, 10% of all general and flag officers across the active-duty military, and 20% of all general officers in the National Guard. These cuts would eliminate about 180 officers. There are currently 38 four-star officers in the military; the military has had approximately 40 four-star officers since 1965. The number of general and flag officers in the military is set by Congress in Title 10 of the U.S. Code.
Hegseth has stated that the purposes of these purges include eliminating “redundant force structure to optimize and streamline leadership” and “maximizing strategic readiness.” In an interview last June, Hegseth said that he believes that more than a third of officers are “actively complicit” in politicizing the military.
Some forecasters noted that the proposed cuts to the officer corps were consistent with the efficiency theme throughout the administration as well as the principle of civilian control of the military, while others emphasized that this could be one step in a series of steps that could reshape military leadership to be more loyal to Trump. We expect that Hegseth will choose to purge primarily officers who have embraced DEI policies in the past; such purges would likely have the effect of increasing the percentage of Trump supporters among military officers.
The Trump administration continues to slash government spending on scientific research. Last week, the NIH laid off about 200 more staff, the NSF is being massively downsized and reorganized, and all funding for research at the EPA’s main science division has been halted. The White House’s proposed budget for 2026 includes deep budget cuts to agencies that conduct and fund scientific research: 56% at the NSF, 40% at the NIH, 55% at the EPA, 33% at the CDC, and 24% at NASA.
The FDA’s top official overseeing drug and food safety inspections is retiring, reportedly because of frustrations with staff cuts and the new FDA Commissioner. The FDA has chosen Dr. Vinay Prasad, a vocal critic of Covid booster vaccines, to be its new top vaccines official.
Food banks are facing record demand but have lost $1B in grants.
Trump has proposed raising taxes on the wealthy. Republicans in Congress strongly opposed the idea, which runs counter to traditional Republican goals.
Bill Gates announced that the Gates Foundation plans to give all its money away in the next 20 years. They have already given $100 billion. “He is committing the foundation to 20 more years of generous aid, more than $200 billion in total, targeting health and human development.”
The US government has been asking every organization that receives a US government contract, including, most recently, the city of Stockholm, to end any DEI policies they may have.
Europe
Russian President Vladimir Putin says there has been “no need” to use nuclear weapons in Ukraine and that he hopes their use won’t be necessary in the future. Although the fact that Putin sees the use of nuclear weapons as a last resort should lower our nuclear risk estimates, the statement also serves as an implicit threat that they could still be used in the future.
French President Emmanuel Macron said that “Coalition of the Willing” discussions about deploying troops to Ukraine continue.
On Saturday, Macron tweeted, “Calling President Trump together from Kyiv. Our joint call: there must be a 30-day ceasefire starting Monday, unconditional, that paves the way for a solid and lasting peace in Ukraine.” Russia ignored the calls for a ceasefire, launching more than 100 drones at Ukraine Sunday night. Instead, Putin proposed that the countries hold peace talks on Thursday in Turkey. President Zelensky agreed to attend in person, but EU foreign ministers stated that a 30-day ceasefire should be a precondition for the negotiations.
Ukraine is disrupting Russia’s internal travel with drone attacks.
Friedrich Merz of the Christian Democratic Union was elected chancellor of Germany in a second round of elections, after a defeat in the first round.
Cardinal Robert Prevost was elected Pope, taking the name Leo XIV. The Pope was born and raised in South Chicago, then spent the majority of his priesthood serving in Peru. His emphasis on caring for marginalized people is likely to extend the work of the late Pope Francis, though his views on some controversial issues within the church are not fully known.
UK police have arrested seven Iranian nationals, and one other person, in two separate counterterrorism investigations. No information was given regarding the targets or method of the alleged plots. We are tracking the chance of a big terrorist attack in Europe this year in this Manifold market, which currently sits at 16%.
Middle East
Trump will visit Saudi Arabia, Qatar and the UAE this week. Topics that will be discussed with Middle Eastern leaders likely include Israel-Gaza ceasefire talks, oil, trade and tariffs, investment deals, relaxing semiconductor export controls for some Gulf countries, Iran’s nuclear program, and nuclear power for Saudi Arabia. Trump may announce new chip export control rules for Gulf states during this trip. It was reported yesterday that Qatar is discussing donating a luxury plane to Trump for use first as a presidential plane, and later for his use through the Trump presidential library.
Last week, the US Special Envoy to the MIddle East, Steven Witkoff, said that he anticipated "a lot of announcements very very shortly” about “the expansion of the Abraham peace accords”. The countries that are most likely to pursue normalization of relations with Israel are thought to be Lebanon, Syria and potentially Saudi Arabia. It is possible that during Trump’s Middle East trip this week, he will announce that one or more Middle Eastern countries will start the process of normalizing relations with Israel. The inclusion of Saudi Arabia for normalization is in apparent contradiction to a rumor that the US is no longer demanding recognition of Israel as part of a deal for civil nuclear energy for Saudi Arabia.
Gaza
Israel is expanding its offensive in Gaza, with the aim of occupying large parts of the territory. The Israeli Cabinet approved plans to seize Gaza, keep its forces in Gaza for an indeterminate amount of time, and move hundreds of thousands of Palestinians from northern Gaza to southern Gaza. Israel’s Finance Minister Bezalel Smotrich said that victory would only come when Gaza is “completely destroyed” and its residents displaced to other countries. An Israeli official said that the plan would begin after Trump concludes his upcoming trip to the Middle East, which is scheduled for May 13-16.
Hamas gave up on engaging in negotiations with Israel, and the group executed Palestinians for looting as desperation grows under the Israeli blockade.
Edan Alexander, the last US citizen (dual US-Israeli citizen) held in Gaza, was released by Hamas. It is likely a play by Hamas to reduce US involvement in Gaza. The US has already been distancing itself from Israel in some respects, such as by not tying US peace with the Houthis to a demand not to strike Israel, by removing a Patriot air defense battery in the same period of time that the Ben Gurion Airport access road was struck by a ballistic missile, and by negotiating a nuclear deal with Iran that potentially won’t satisfy Israel’s demands. Israel relies on US support to help it to achieve its foreign policy goals.
Google Maps updated its satellite imagery of Gaza. The destruction is apparent.
The UNRWA reports that hundreds of thousands of Gazans eat only one meal every 2-3 days amid the Israeli siege. The US has some plans for private firms to deliver aid to Gaza, despite the UN’s alarm:
US ambassador to Israel Mike Huckabee said “distribution centres” protected by security contractors would provide food and other supplies to over a million people initially, as part of an effort to prevent Hamas stealing aid.
Syria
Syria saw sectarian killings of Druze and Alawites.
Yemen
The Houthis launched a missile targeting Ben Gurion international airport in Tel Aviv, Israel. It managed to bypass air defences, including Israel’s Arrow system and a US THAAD system. Israel responded by bombing the Houthis’ main cargo port, power stations, an international airport, and two cement factories.
Separately, the Houthis agreed a truce with the United States, mediated by Oman, apparently promising to refrain from attacking shipping lanes in the Red Sea. The US, in turn, will only respond to Houthi attacks that have an impact on Americans. However, the rebel group continues to target Israel, having just launched another missile and drone attack; the group also pledged to continue to attack Israeli ships.
The Prime Minister of Yemen’s government resigned, wanting the powers of a president to govern effectively.
Iran
The US and Iran held their fourth round of nuclear talks in Oman on Sunday. The US continues to demand a total elimination of Iran’s capacity to enrich uranium. Iranian Foreign Minister Abbas Aragchi insists that, “...the principle of enrichment itself is not even negotiable." Both sides agreed to continue negotiations, though a time and location have not yet been chosen.
All US B-2’s have left Diego Garcia, but four B-52’s remain. These changes reflect a substantially lowered risk of US military action targeting Iran’s nuclear weapons program or Houthi locations.
Africa
Several days of drone attacks by the paramilitary Rapid Support Forces (RSF) caused explosions in Port Sudan that damaged the city’s airport and port, through which most humanitarian aid enters Sudan, and other targets. The attacks on the Sudanese government’s wartime capital represent a significant escalation of the civil war that started in April 2023 and has involved support from several regional powers. The civil war has displaced over 12 million people, and half the population of Sudan faces acute hunger.
Biorisk
The US passed 1K measles cases. Measles cases across Europe were up 10-fold in 2024 compared to 2023.
A study in The Lancet estimated that cuts to PEPFAR could cost the lives of 500K children by 2030, and Nature estimated that an overall cessation of US foreign aid funding could result in roughly 25 million additional deaths over 15 years.
South Africa’s HIV programme is collapsing, as is HIV testing and outreach in the US itself as Trump funding cuts sweep the southern US. UNAIDS will greatly reduce its workforce as funding from the US and other donors disappears.
Trump issued an executive order that bans US and US federally funded gain-of-function research.
With climate change, the regions in which different pathogens are viable are changing and expanding. A deadly fungus, Aspergillus, is modelled to spread to the UK and Europe as climate change continues.
AI
Sam Altman appeared before the US Senate. He took quite a different tack to his appearance in 2023, this time arguing against regulations that could “slow down” the US in an AI race with China. Much of the discussion focused on this “race,” which others, such as Daniel Kokotajlo and Max Tegmark, have argued is in nobody's interest and is likely to lead to disaster.
After OpenAI announced that it would back down on removing control of the company from the nonprofit board, much about what the final arrangements of the restructuring will be remains unclear. Elon Musk plans to go ahead with his lawsuit against OpenAI, despite the nonprofit being set to retain control over the company. Zvi Mowshowitz notes about the language of OpenAI’s announcement:
OpenAI has ‘heard from the Attorney Generals’ of Delaware and California, and as a result the OpenAI nonprofit will retain control of OpenAI under their new plan, and both companies will retain the original mission.
Technically they are not admitting that their original plan was illegal and one of the biggest thefts in human history, but that is how you should in practice interpret the line “we made the decision for the nonprofit to retain control of OpenAI after hearing from civic leaders and engaging in constructive dialogue with the offices of the Attorney General of Delaware and the Attorney General of California.”
OpenAI reportedly plans to cut its revenue sharing with Microsoft after its restructuring. It also entered an agreement to buy Windsurf, an AI-assisted coding tool, for about $3 billion. And OpenAI and the FDA are in talks about using AI in drug evaluations.
A startup improved a small 32B model with “globally distributed reinforcement learning”. Beyond the specifics of this case, unlocking distributed training of models could unlock orders of magnitude of compute, though historically this approach has not produced useful results compared to datacenters.
The success rates of AI agents on longer-duration tasks “can be explained by … a constant rate of failing during each minute a human would take to do the task”.
More results were published on emergent misalignment, finding that this appears in base models, too. Emergent misalignment refers to a phenomenon that training AI models on insecure code appears to produce models that are also misaligned in other ways, for example, writing that humans should be enslaved by AIs or that Adolf Hitler was a misunderstood genius.
Researchers in China and the US have published a paper that describes a method they call “Absolute Zero,” by which an LLM can generate its own training data and curriculum to evolve its reasoning ability. Their Absolute Zero Reasoner (AZR) outperformed models trained on human-curated data on some benchmarks.
Physical Intelligence recently announced a new general-purpose, vision-language-action AI model for robotics, π0.5 AI, that enables a robot to perform household tasks in a location that it sees for the first time (see video). Last fall, the startup company announced that it had raised $400M from Bezos, OpenAI and others.
Anduril will acquire Ireland’s Klas tactical communications systems maker to support its AI-powered autonomous warfare systems.
A spokeswoman for the US Department of Commerce said the Trump administration will rescind and replace Biden’s global AI chip export controls.
Climate and Nature
Sea ice levels in the Arctic and Antarctic reached a new record low in February. Lower sea ice levels are expected to accelerate global warming and disrupt ocean currents, in addition to shrinking habitats for life that relies on the ice.
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