Indonesian President Prabowo Subianto unveiled ambitious economic growth and fiscal deficit targets for 2027 while promising reforms aimed at restoring investor confidence and strengthening state institutions. The announcement comes after months of market concerns over government spending plans, policy uncertainty, and weakening confidence in Southeast Asia’s largest economy.
Prabowo outlined a growth target of 5.8 percent to 6.5 percent for next year while aiming to lower the fiscal deficit to between 1.8 percent and 2.4 percent of gross domestic product. The government also expects inflation to remain under control and pledged to improve food security and attract greater investment.
Indonesia has faced growing scrutiny from investors and rating agencies this year. Credit rating outlooks were downgraded due to concerns about policymaking credibility, fiscal discipline, and transparency. Market fears intensified after discussions around possible changes to the country’s long standing fiscal deficit ceiling and rising state spending commitments.
Prabowo confirmed plans to establish a new state agency to oversee exports of major commodities including coal, palm oil, and nickel. The government says the move is intended to reduce revenue losses and strengthen national control over natural resources, but investors worry it could disrupt pricing systems and reduce private sector profitability.
Despite increasing state involvement in strategic sectors, Prabowo stressed that Indonesia still welcomes private companies and small businesses as partners in economic development. He called for cooperation between the government and the private sector to achieve long term prosperity.
Indonesia’s latest economic strategy reflects a balancing act between ambitious state led development goals and the need to maintain investor confidence. While the government aims to accelerate growth and strengthen control over key resources, markets remain cautious about rising fiscal risks and unpredictable policy changes.
The proposed commodity export agency could significantly reshape Indonesia’s role in global resource markets because the country is one of the world’s largest exporters of coal and palm oil. However, stronger government intervention may create uncertainty for foreign investors and commodity traders.
At the same time, maintaining fiscal discipline will be critical as Prabowo moves forward with large welfare programmes and economic reforms. The success of his agenda will likely depend on whether the government can reassure markets while delivering growth, stability, and stronger institutional credibility.
With information from Reuters.
Published on •Updated
Diplomats and MEPs reached an agreement late on Tuesday to implement the contentious EU-US agreement, which eliminates duties on most US industrial goods imported into Europe.
The negotiations concluded two weeks after US President Donald Trump threatened to impose 25% tariffs on EU cars if Europeans did not implement the agreement — clinched by Trump and European Commission President Ursula von der Leyen in Turnberry, Scotland, last summer — by 4 July.
The so-called “Turnberry Agreement,” criticised by MEPs as unbalanced, raises US tariffs on EU goods to as much as 15%.
“The EU and the United States share the world’s largest and most integrated economic relationship. Maintaining a stable, predictable and balanced transatlantic partnership is in the interest of both sides,” Cyprus trade Minister Michael Damianos said, adding: “Today, the European Union delivers on its commitments.”
MEPs had kept the deal frozen for several weeks following Trump’s threats over Greenland earlier this year. They also suspended it after the US adopted new tariffs following a Supreme Court ruling that declared illegal the tariffs imposed by the White House since Trump’s return to power.
Demanding clarity from the Americans, EU lawmakers finally agreed to enter into negotiations with the EU Cyprus presidency — representing EU member states — after the Commission assured them that the US would honour its side of the agreement and cap its tariffs at 15%, as agreed.
However, EU-US relations remain fragile and there is concern in Brussels that the US administration could still use tariffs to put political pressure on the EU if the bloc does not comply with the White House’s demands on other issues.
Trump’s threats over EU cars two weeks ago also targeted Germany, whose Chancellor Friedrich Merz has criticised the war in Iran launched by the Americans alongside Israel.
Trump has repeatedly called on European countries to deploy ships to help secure the Strait of Hormuz, a move Europeans have been reluctant to make.
Many disagreements also continue to strain EU–US relations over Ukraine — including the recent US extension of a sanctions waiver allowing purchases of Russian oil — and over NATO, which Trump has repeatedly threatened to leave.
On Tuesday night, MEPs tried to secure the deal by attaching conditions, risking US anger with additional provisions to which Washington had not agreed.
Under the Turnberry Agreement, the EU also committed to investing $600 billion across strategic sectors in the United States through 2028 and to purchasing $750 billion worth of US energy.
Russian President Vladimir Putin arrived in China on Tuesday evening for a two-day visit centred on talks with Chinese President Xi Jinping, as Moscow and Beijing draw closer amid war, sanctions and an increasingly fractured global order.
Putin’s visit is the second face-to-face meeting he has held with Xi in less than a year and coincides with the 25th anniversary of the 2001 Treaty of Good-Neighborliness and Friendly Cooperation, the agreement that formalised ties between Russia and China following decades of ideological rivalry and mutual suspicion.
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The visit comes just days after United States President Donald Trump left Beijing following his own two-day visit to the Chinese capital for meetings with Xi.
Both Moscow and Beijing are navigating tricky relations with Washington, with analysts saying the unpredictability of Trump’s foreign policy has had the effect of pushing Russia and China even closer together.
Their deepening partnership also comes against the backdrop of the war in Ukraine, mounting tensions around Iran, and disruption to shipping through the Strait of Hormuz – a crisis that has rattled global energy markets and renewed Beijing’s concerns over the security of its oil and gas supplies.
With one of the world’s most strategically vital waterways under threat, China has increasingly turned towards Russia as a reliable overland energy supplier.
Analysts say Xi’s decision to host Trump and Putin within the space of a week is no coincidence, reflecting Beijing’s attempt to cast itself as a trusted actor in an increasingly fragmented and volatile world order.
China and Russia have long occupied a complicated place in each other’s histories. Once bound together through communist ideology and shared opposition to Western capitalism, the Soviet Union and Maoist China later became bitter rivals, with tensions along their 4,300km (2,670-mile) border bringing the two countries close to conflict during the Cold War.
However, that border has since transformed from a frontier of insecurity into one of strategic cooperation and trade.
Neither Xi nor Putin is a frequent international traveller. Putin is the subject of an International Criminal Court (ICC) arrest warrant over the war in Ukraine, while Xi rarely leaves China other than for carefully choreographed state visits. But both leaders have invested heavily in maintaining personal ties with each other.
The two have repeatedly called each other “friends”, and their relationship has deepened, particularly since Russia’s invasion of Ukraine in 2022, which pushed Moscow further into international isolation and forced the Kremlin to look southeastwards for trade amid Western sanctions.
“Russia and China look confidently towards the future,” Putin said in remarks carried by Russian state media ahead of the visit.
He said the two countries were “actively developing cooperation in politics, economics, defence, expanding cultural exchanges, and fostering interpersonal interaction”.
“In essence, jointly doing everything to deepen bilateral cooperation and advance global development for the wellbeing of both nations,” Putin added.
China has become an economic lifeline for Russia as the country’s economy has shifted to a wartime footing, with two-way trade between the countries more than doubling between 2020 and 2024, when it reached $237bn for the year.
But the relationship is also uneven. While China is Russia’s largest trading partner, Russia accounts for only about four percent of China’s total international trade. China’s economy is also vastly larger, and Beijing holds considerably more leverage in negotiations between the two sides.
Since the invasion of Ukraine, Moscow has become increasingly reliant on Chinese technology and manufacturing. A recent Bloomberg report found Russia was sourcing more than 90 percent of its sanctioned technology imports from China, including components with military and dual-use applications vital to drone production and other defence industries.
China has also emerged as a crucial buyer of Russian oil and other energy products at a time when European markets have largely closed to Moscow in response to the Russia-Ukraine war. With Western sanctions restricting Russia’s options, the Kremlin has few viable alternatives to China’s scale of demand.
Analysts say the imbalance means Beijing is often able to negotiate from a position of strength, securing access to Russian oil and gas at discounted prices while expanding its influence over Moscow’s economic future.
While the relationship is uneven, it is not one-sided. Russia provides something increasingly valuable in a turbulent world: secure access to vast energy resources beyond vulnerable maritime trade routes.
The war surrounding Iran and disruptions in the Strait of Hormuz have heightened Beijing’s concerns over energy security, given China’s heavy dependence on imported oil and gas passing through contested shipping lanes.
That has renewed attention on the proposed Power of Siberia 2 pipeline, a long-delayed project expected to feature prominently in this week’s discussions.
If completed, the pipeline would transport 50 billion cubic metres of Russian gas annually to China via Mongolia, significantly expanding energy flows between the two countries.
But it is more than just an economic relationship. China also values Russia as a geopolitical partner. Both countries are permanent members of the United Nations Security Council and frequently align diplomatically in opposition to US-led policies.
While analysts say China has been careful not to become formally tied to Moscow through a rigid military alliance, the two countries have still gradually reinforced their partnership through increasingly regular joint military exercises, including the “Joint Sea” naval drills that began in 2012.
Last year, China and Russia launched fresh naval drills in the Sea of Japan near the Russian port of Vladivostok, with exercises focused on submarine rescue, anti-submarine warfare, air defence, missile defence and maritime combat operations. Analysts say the drills help signal strategic alignment between Beijing and Moscow without the mutual defence commitments of a formal alliance.
Experts say the strength of the partnership lies in its flexibility. While Western governments have often portrayed the relationship as fragile and driven largely by a shared opposition to the West, analysts say, it may prove more durable because it is rooted in shared economic and strategic interests rather than ideology alone.
As Chinese-made products are flooding the EU market and threatening thousands of jobs, the European Commission is stepping up its work to protect the bloc’s production from the risks of China’s excess production.
The move comes as data from Chinese customs showed that, in the first four months of 2026, Beijing accumulated a surplus of $113 billion with the EU-27, up from $91 billion over the same period in 2025. The surplus widened by $22 billion over 12 month, while the EU’s trade deficit with China had already reached €359.9 billion in 2025.
Pressure is also mounting on Brussels as Beijing has repeatedly threatened retaliation in recent weeks over several EU laws limiting access to the single market for Chinese companies.
On Friday, China also banned these companies from engaging with the Commission over EU foreign subsidy investigations.
To address the China issue and try to restore a level playing field, EU Commissioners are set to debate the matter on 29 May. What options does Europe have on the table?
1. Cutting dependence on Chinese components
The Financial Times reported on Monday that a plan to force EU companies to buy critical components from at least three different suppliers was in the pipeline at the European Commission.
The idea would be to set thresholds of around 30% to 40% for what can be bought from a single supplier, with the rest having to be sourced from at least three different suppliers, not all from the same country.
The proposal comes after China last year restricted exports of rare earths and chips, which are critical for key EU industries such as green tech, cars and defence.
2. Targeting strategic sectors with tariffs
In its economic security strategy presented last December, the European Commission also said it would present new tools by September 2026 to strengthen the protection of EU industry from unfair trade policies and overcapacities.
“We will fight tooth and nail for every European job, for every European company, for every open sector, if we see they are treated unfairly,” Maroš Šefčovič told Euronews.
A decision to impose new quotas and double tariffs on global steel imports, dominated by Chinese overcapacities, was already agreed by EU countries and the European Parliament in April.
Now the chemical industry is in the spotlight. Chinese chemical imports have surged 81% over five years. But the EU chemical sector also relies on exports abroad, including to China, the industry’s fourth export market, which makes any measure targeting China complicated.
“As an export-oriented industry, the European chemical industry generates over 30% of its sales abroad. That creates a risk of retaliation from third countries,” Philipp Sauer, trade expert at Cefic, the lobby group of the European chemical industry, told Euronews.
3. Hitting imports with anti-dumping or anti-subsidy duties
The Commission can also impose duties on Chinese companies when import prices fall below those at which they sell their products on their domestic market. It can also investigate companies for receiving unfair subsidies.
However, investigations can take up to 18 months, and cases are piling up at the Commission’s DG Trade, which has only around 140 officials to handle them.
Sauer said that between one third and half of all ongoing investigations relate to the chemical sector.
4. Using the Anti-Coercion Instrument
The Anti-Coercion Instrument is a last-resort tool — the so-called trade bazooka — which can be used in cases of economic pressure from a third country and would allow the EU to hit China with strong measures such as restricting access to licences or public procurement in the EU.
But its use would require the backing of a qualified majority of member states, which is not guaranteed.
Germany opposed tariffs adopted by the EU in 2024 against Chinese electric vehicles. Spanish Prime Minister Pedro Sánchez, who has visited China four times in three years, also supports closer ties with Beijing, seeking to secure major Chinese investment.
5. Unifying member states
At the same time, Brussels faces the risk that its decoupling strategy might face significant resistance from national governments. EU member states remain divided over how to approach China, which could in turn allow Beijing to play capitals against each other.
Such differences are already emerging in the information and communications technology (ICT) sector, where the EU has proposed a new mechanism requiring the phase-out of so-called high-risk suppliers, such as Huawei and ZTE, in strategic industries, starting with telecommunications.
The proposal, included in the revamp of the EU Cybersecurity Act, is sparking controversy among several European governments, most notably Spain and Germany, which have long worked with Chinese equipment now deeply embedded in their digital infrastructure.
This de-risking strategy has also raised financial concerns, since Chinese suppliers tend to be much cheaper than European alternatives such as Ericsson and Nokia, partly because they are publicly subsidised by Beijing.
European telecom operators have asked the EU for financial compensation to replace their Chinese equipment, following the example of the US “rip and replace” programme, but neither the EU nor national governments seem keen to put the money on the table.
In other words, the EU’s full decoupling from China might have high political and economic costs.
Whether European countries are willing to bear it remains to be seen.
Goldman Sachs warns AI-fueled market rally is becoming ‘one big trade’
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China agreed to buy at least $17 billion of U.S. agricultural products over the next three years, according to a White House fact sheet released Sunday following meetings between President Donald Trump and Chinese President Xi Jinping last week.
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Prime Minister Narendra Modi says his talks with the Dutch PM also focused on expanding cooperation in defence and security.
Published On 17 May 202617 May 2026
India’s Tata Electronics has signed a deal with Dutch technology giant ASML to build a major semiconductor plant in western India, as Prime Minister Narendra Modi visited the Netherlands during his European tour.
The agreement, announced on Saturday, will support the development of Tata’s semiconductor facility in Dholera, Gujarat – Modi’s home state.
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ASML, Europe’s largest technology company by market value, manufactures advanced lithography machines used to produce high-end microchips found in products ranging from mobile phones to cars.
The Dutch company said it would help “establish and ramp up” production at the plant by supplying its cutting-edge chipmaking tools.
Tata Electronics plans to invest $11bn in the facility, which is expected to manufacture chips for artificial intelligence, the automotive industry and other sectors.
ASML chief executive Christophe Fouquet said the company saw “many compelling opportunities” in India’s growing semiconductor industry.
“We are committed to establishing long-term partnerships in the region,” Fouquet said in a statement.
The deal comes as India and the Netherlands move to deepen economic ties, with New Delhi seeking foreign technology and investment to boost manufacturing and create jobs.
The European Union has increasingly viewed India – the world’s most populous country and one of its fastest-growing economies – as a key future market.
During his visit, Modi held talks with Dutch Prime Minister Rob Jetten and met King Willem-Alexander.
“My conversations with Prime Minister Rob Jetten were extensive and covered a wide range of topics,” Modi wrote on X.
“One of them was defense and security. I spoke about the possibility of drawing up an action plan for the defense industry as quickly as possible. We can also collaborate in sectors such as space travel, maritime systems, and maritime security.”
Modi also addressed members of the Indian diaspora and is expected to inspect centuries-old Chola copper plates being returned to India by Leiden University.
Indian and Dutch officials are also discussing a more flexible visa arrangement for Indian students and workers in the Netherlands.
Modi will next travel to Sweden for talks with Prime Minister Ulf Kristersson focused on trade, innovation and green technology cooperation. The visit marks his second trip to the country since attending the first India-Nordic summit in 2018.
United States President Donald Trump concluded his final round of discussions with Chinese President Xi Jinping in Beijing while attempting to present the visit as a major economic success. The summit came at a sensitive moment for both countries as tensions over trade, Taiwan, artificial intelligence technology, and the Iran conflict continue to shape relations between the world’s two largest economies.
Trump emphasized trade agreements and commercial cooperation during the visit, hoping to strengthen his political standing ahead of important midterm elections in the United States. China, however, used the occasion to deliver clear warnings regarding Taiwan and to criticize the ongoing Iran conflict, signaling that major strategic disagreements remain unresolved despite the positive diplomatic atmosphere.
During meetings at the Zhongnanhai leadership compound in Beijing, Trump promoted what he described as successful trade negotiations between Washington and Beijing. He stated that both sides had reached agreements that would benefit their economies and help stabilize commercial relations after years of tariff disputes and economic uncertainty.
The United States announced several proposed agreements involving agricultural exports, beef, and energy sales to China. Officials also discussed mechanisms to manage future trade disputes and identified billions of dollars in potential goods trade between the two countries.
One of the most closely watched announcements involved aircraft manufacturer Boeing. Trump claimed China had agreed to purchase 200 Boeing aircraft, marking China’s first major order of American commercial planes in nearly ten years. However, investors reacted negatively because markets had anticipated a significantly larger agreement. Boeing shares declined after the announcement, reflecting disappointment over the scale of the deal.
The summit also failed to produce a breakthrough regarding advanced artificial intelligence technology exports. Expectations had been growing that restrictions on the sale of advanced AI chips from NVIDIA to China might ease, especially after company chief executive Jensen Huang joined the trip. No major agreement emerged on that issue.
While Trump focused publicly on economic achievements, China used the summit to voice frustration over the war involving Iran. Beijing stated that the conflict should never have started and called for diplomatic efforts to restore peace.
The Iran crisis has become a major international concern because of its impact on global energy markets. Rising instability in the Middle East has pushed oil prices upward and increased fears about disruptions to energy supplies traveling through the Strait of Hormuz, one of the world’s most critical shipping routes.
China’s position reflects both economic and strategic interests. Beijing relies heavily on stable energy imports and also views Iran as an important geopolitical partner that can balance American influence in the Middle East. Analysts believe China is unlikely to pressure Tehran aggressively because maintaining strong relations with Iran supports Beijing’s broader strategic goals.
Although Trump stated that he and Xi shared similar views on Iran, Chinese officials avoided publicly endorsing Washington’s approach. This difference highlighted the continuing gap between the two powers on international security issues.
Despite the friendly diplomatic setting, Taiwan emerged as one of the summit’s most serious areas of tension. Xi warned that mishandling the Taiwan issue could lead to conflict, reinforcing Beijing’s longstanding position that the island is part of China.
Taiwan remains one of the most dangerous flashpoints in global politics. China has repeatedly stated that it does not rule out the use of military force to bring Taiwan under its control, while the United States continues to support Taiwan’s defensive capabilities under American law.
American officials maintained that United States policy toward Taiwan had not changed. Secretary of State Marco Rubio emphasized that Washington continues to support regional stability while maintaining its established position on Taiwan.
The issue remains highly sensitive because any military escalation involving Taiwan could severely disrupt global trade, semiconductor production, and international security across the Indo Pacific region.
One of the summit’s most important outcomes may simply be the continuation of the fragile trade truce reached during earlier talks between the two leaders. Previous negotiations had temporarily paused extremely high tariffs and reduced tensions over rare earth mineral exports that are essential for modern technology manufacturing.
However, uncertainty remains about whether the current trade arrangements will continue beyond the end of the year. American officials indicated that no final decision had been made regarding the future of tariff suspensions and broader economic cooperation.
This uncertainty reflects the deeper structural rivalry between the United States and China. While both countries benefit economically from stable trade relations, they remain competitors in technology, military influence, and geopolitical leadership.
Human rights issues also appeared during the summit. Trump reportedly raised the case of Hong Kong media businessman and democracy advocate Jimmy Lai, who was sentenced to prison under Hong Kong’s national security law.
American officials expressed hope that Lai could eventually be released, while China maintained that Hong Kong affairs are internal matters and rejected foreign criticism.
The discussion demonstrated that human rights disputes continue to complicate relations between Washington and Beijing even during periods of economic cooperation.
The Trump Xi summit demonstrated the increasingly complex nature of United States China relations. Both sides attempted to project stability and cooperation, particularly on trade and economic matters, yet major disagreements remained visible beneath the surface.
Trump sought to frame the visit as proof of economic leadership and diplomatic success. However, the relatively modest scale of announced agreements and the lack of major breakthroughs on technology exports limited market enthusiasm.
China, meanwhile, used the summit to reinforce its strategic priorities. Beijing signaled that Taiwan remains a non negotiable issue, defended its relationship with Iran, and resisted external pressure on human rights matters.
The summit ultimately reflected a broader reality in global politics. The United States and China are deeply interconnected economically, but they are also strategic rivals competing for influence across multiple regions and industries. Cooperation may continue in trade and commerce, but tensions over security, technology, and global power are unlikely to disappear soon.
With information from Reuters.
Before arriving for his high-stakes summit with Chinese leader Xi Jinping, United States President Donald Trump aimed to set expectations high.
He said he would urge Xi to “open up” China’s economy and announced a delegation of top business executives, including Tesla’s Elon Musk, Apple’s Tim Cook and Nvidia’s Jensen Huang, to accompany him.
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As Trump and Xi prepare to wrap up two days of meetings on Friday, the expectations for their summit’s outcome among observers generally are modest at best.
While Trump and Xi are anticipated to extend the one-year pause in their trade war agreed to in South Korea in October, the expectations are for a stabilisation – not revitalisation – in ties between the world’s two largest economies, which are locked in a rivalry that spans everything from trade and artificial intelligence to the status of Taiwan.
“It is important to be clear-eyed about the state of relations here,” Claire E Reade, a senior counsel at Arnold & Porter who previously worked on China at the Office of the US Trade Representative (USTR), told Al Jazeera.
“China does not trust the US, and China wants to beat the US in what it sees as long-term global competition,” Reade said.
“This limits what can be agreed.”
While Trump and Xi have yet to announce the final contours of any trade agreement, the US side has flagged various business deals in the pipeline.
In a pre-recorded interview with Fox News that aired on Thursday, Trump said that China would invest “hundreds of billions of dollars” in companies run by the CEOs in his delegation, without providing further details.
Trump also said that Beijing had agreed to purchase US oil and 200 Boeing aircraft.
Trump administration officials have said that the sides are also discussing the establishment of a “Board of Investment” to manage investments between the countries.
“A realistic ‘opening up’ of the Chinese market would likely focus first on sectors where the economic complementarity is most obvious,” Taiyi Sun, an associate professor of political science at Christopher Newport University in Newport News, Virginia, told Al Jazeera.
“Agricultural goods such as soybeans and beef, as well as high-value-added manufacturing products like Boeing aircraft, are natural areas for expansion because they match existing Chinese demand with American export strengths.”
Sun said a “gradual” opening for US firms in sectors such as financial services could also be possible.
“But those areas are politically and institutionally more sensitive inside China, so progress would likely be incremental rather than immediate,” he said.
Gabriel Wildau, a senior vice president at global business advisory firm Teneo, said both sides will be seeking to address supply-chain vulnerabilities exposed by their trade war.
“The Iran war has likely increased the US’s vulnerability to export controls on rare earths, given the need to rebuild the munition stocks depleted in that war,” Wildau told Al Jazeera.
“Washington will therefore be willing to offer tariff relief – or at least assurances not to impose new tariffs – in exchange for Beijing’s commitment to keep rare earth exports flowing.”
While Trump and Xi agreed to roll back some trade barriers at their summit in South Korea, US-Chinese business and trade remain severely constrained after a decade of tit-for-tat economic salvoes between the sides.
The average US tariff on Chinese goods stood at 47.5 percent after the South Korea summit, up from 3.1 percent before Trump’s first term, according to the Peterson Institute for International Economics.
China’s average tariff on US goods stood at 31.9 percent, up from 8.4 percent in 2018, according to the think tank.
Two-way goods trade amounted to about $415bn in 2025, down sharply from its 2022 peak of $690bn.
Carsten Holz, an expert on the Chinese economy at the Hong Kong University of Science and Technology, said China has less incentive to make concessions to the US than before, amid the rise of its domestic industries.
“Across many industrial sectors, PRC [People’s Republic of China] firms hold leading or controlling positions,” Holz told Al Jazeera.
“As a result, the PRC economy has little to gain from opening further to the US and is likely to only offer largely symbolic gestures.”
Deborah Elms, head of trade policy at the Hinrich Foundation in Singapore, voiced similar sentiments about the limits of US leverage.
“Basically, Trump expects China to buy more stuff from America and let US companies operate more freely in China,” Elms told Al Jazeera.
“What is he offering?” Elms said. “Very little, largely because Trump sees the bilateral relationship as one where the US has been fair and China has not.”
Reade, the former USTR official, said Xi would not agree to any measures that “harm Chinese interests in any way.”
“Instead, China will potentially give the US no-cost ‘gifts,’” Reade said, suggesting such measures could include the removal of trade barriers it placed on US beef.
“It may buy US goods it needs,” Reade said.
“If it allows purchases of US tech products, it will only be because it needs them right now,” she added, “But this does not interfere with China’s strategic plans to eliminate dependence on US technology over the longer term.”
As Trump meets Xi in Beijing for the first time in nine years, can trade war, Taiwan and Iran tensions be contained?
US President Donald Trump returns to Beijing after nine years to meet Chinese President Xi Jinping. The trade war, conflict in Iran, and rising fears over Taiwan shape the talks. With global tensions mounting, can the two leaders find common ground, or will rivalry push the world further into crisis?
In this episode:
Episode credits:
This episode was produced by Marcos Bartolomé and Sarí el-Khalili with Spencer Cline, Catherine Nouhan, Tuleen Barakat, Alexandra Locke, and our guest host, Kevin Hirten. It was edited by Tamara Khandaker.
Our sound designer is Alex Roldan. Our video editors are Hisham Abu Salah and Mohannad al-Melhem. Alexandra Locke is The Take’s executive producer.
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Published On 14 May 202614 May 2026
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BEIJING — President Trump arrived in Beijing on Wednesday for his hotly anticipated talks with Chinese President Xi Jinping on the Iran war, trade and U.S. arms sales to Taiwan.
The meat of the summit doesn’t start until Thursday, when the leaders hold bilateral talks, visit the Temple of Heaven, where Chinese emperors once prayed for bumper crops, and take part in a formal banquet. But the Chinese offered Trump a pomp-filled welcome, literally rolling out the red carpet for him after Air Force One landed in the Chinese capital.
The president was greeted by Chinese Vice President Han Zheng; Xie Feng, China’s ambassador to Washington; Ma Zhaoxu, executive vice minister of foreign affairs; and the U.S. envoy to Beijing, David Perdue.
The welcoming ceremony included a military honor guard, a military band and some 300 Chinese youths waving Chinese and American flags and chanting, “Welcome, welcome! Warm welcome!” as Trump made his way to his waiting limousine. The youth greeters were decked out in white and robin’s egg blue outfits that matched the paint job of the iconic presidential plane.
President Trump walks with China’s Vice President Han Zheng during an arrival ceremony Wednesday at Beijing Capital International Airport, as Eric and Lara Trump, Elon Musk, Secretary of State Marco Rubio, Defense Secretary Pete Hegseth and U.S. Trade Representative Jamieson Greer follow.
(Mark Schiefelbein / Associated Press)
“We’re the two superpowers,” Trump told reporters as he departed the White House on Tuesday for the long flight to Beijing. “We’re the strongest nation on Earth in terms of military. China’s considered second.”
While Trump likes to project a sense of strength, the visit occurs at a delicate moment for his presidency as his popularity at home has been weighed down by the U.S. and Israel’s war with Iran and rising inflation as a consequence of that conflict. The Republican president is seeking a win by signing deals with China to buy more American soybeans, beef and aircraft, saying he’ll be talking with Xi about trade “more than anything else.”
The Trump administration hopes to begin establishing a Board of Trade with China to address differences between the countries. The board could help prevent the trade war ignited last year after Trump’s tariff hikes, an action China countered through its control of rare earth minerals. That led to a one-year truce last October.
But Trump is visiting Beijing when Iran continues to dominate his domestic agenda. The war has led to the effective closure of the Strait of Hormuz, stranding oil and natural gas tankers and causing energy prices to spike to levels that could sabotage global economic growth. The U.S. president declared that Xi didn’t need to assist in resolving the conflict, even though Iran’s Foreign Minister Abbas Araghchi was in Beijing last week.
Fellow rescuers carry the coffins of two members of the civil defense who were reportedly killed in Israeli airstrikes in Nabatieh the previous day, during their funeral in the southern city of Sidon on May 13, 2026. Israel hammered south Lebanon with strikes on May 12 ahead of talks between the two countries in Washington, as Beirut reported 380 people killed in Israeli attacks since an April 17 ceasefire took effect.
(Mahmoud Zayyat/AFP via Getty Images)
“We have a lot of things to discuss. I wouldn’t say Iran is one of them, to be honest with you, because we have Iran very much under control,” Trump told reporters Tuesday.
The status of Taiwan also will be a major topic as China is displeased with U.S. plans to sell weapons to the self-governing island, which the Chinese government claims as part of its own territory.
Trump told reporters on Monday that he would be discussing with Xi an $11 billion weapons package for Taiwan that the U.S. administration authorized in December but has not yet begun fulfilling. The arms package is the largest ever approved for Taiwan.
But Trump has demonstrated greater ambivalence toward Taiwan, an approach that’s raising questions about whether the U.S. leader could be open to dialing back support for the island democracy.
The Taiwanese flag at Democracy Boulevard is lowered at the end of the day as the Chiang Kai-shek Memorial Hall is seen in the background in Taipei on May 13, 2026.
(I-Hwa Cheng/AFP via Getty Images)
At the same time, Taiwan — as the world’s leading chipmaker — has become essential for the development of artificial intelligence, with the U.S. importing more goods so far this year from Taiwan than China. Trump has sought to use Biden-era programs and his own deals to bring more chipmaking to America.
The Chinese Communist Party’s news outlet, People’s Daily, published a strongly worded editorial ahead of Trump’s arrival underscoring that Taiwan is “the first red line that cannot be crossed in China-U.S. relations” and is “the biggest point of risk” between the two nations.
Trump was already portraying the trip as a success before he even left White House grounds. He openly mused about Xi’s planned reciprocal visit to the U.S. later this year, lamenting that the White House ballroom under construction would not be completed in time to properly fete the Chinese leader.
“We’re going to have a great relationship for many, many decades to come,” Trump said of the U.S. and China.
Counter snipers and other security forces watch over Air Force One while refueling at Joint Base Elmendorf during a trip with US President Donald J. Trump in Anchorage, Alaska, on May 12, 2026. Donald Trump was due in Beijing on May 13, 2026 on the first visit to China by a US president in nearly a decade, as he seeks to ramp up trade despite potential friction over Taiwan and Iran.
(Brendan Smialowski/AFP via Getty Images)
Trump embarked on Air Force One for the big meeting with a coterie of aides, family members and business world titans, including Nvidia’s Jensen Huang and Tesla and SpaceX’s Elon Musk. While en route to Beijing, he posted on social media that his “first request” to Xi during the visit will be to ask the Chinese leader to bolster the presence of U.S. firms in China.
“I will be asking President Xi, a Leader of extraordinary distinction, to ‘open up’ China so that these brilliant people can work their magic, and help bring the People’s Republic to an even higher level!” Trump wrote.
Tajikistan’s President Emomali Rahmon and China’s President Xi Jinping attend a welcoming ceremony at the Great Hall of the People on Tuesday, in Beijing.
(Maxim Shemetov—Pool / Getty Images)
Despite Trump’s outward confidence, China appears to be entering the meeting from “a much stronger place,” said Scott Kennedy, a senior adviser on Chinese business and economics at the Center for Strategic and International Studies, a Washington think tank.
China would like to reduce tech restrictions on accessing computer chips and find ways to reduce tariffs, among other goals.
“But even if they don’t get much on any of those things, as long as there’s not a blow-up in the meeting and President Trump doesn’t go away and look to re-escalate, China basically comes out stronger,” Kennedy said.
U.S. Treasury Secretary Scott Bessent and Chinese Vice Premier He Lifeng met on Wednesday to discuss economic and trade issues at Incheon International Airport, just west of the South Korean capital of Seoul, according to the Chinese state run Xinhua News Agency.
Bystanders are kept back by police tape as they film the motorcade of President Donald Trump as he arrives at the Four Seasons Hotel on Wednesday in Beijing.
(Kevin Frayer / Getty Images)
Trump also intends to raise the idea of the U.S., China and Russia signing a pact that would set limits on the nuclear weapons each nation keeps in its arsenal, according to a senior Trump administration official who briefed reporters ahead of the trip. The official spoke on the condition of anonymity under ground rules set by the White House.
China has previously been cool to entering such a pact. Beijing’s arsenal, according to Pentagon estimates, exceeds more than 600 operational nuclear warheads and is far from parity with the U.S. and Russia, which each are estimated to have more than 5,000 nuclear warheads.
The last nuclear arms pact, known as the New START treaty, between Russia and the United States expired in February, removing any caps on the two largest atomic arsenals for the first time in more than a half-century. As the treaty was set to expire, Trump rejected a call by Russia to extend the two-country deal for another year and called for “a new, improved, and modernized” deal that includes China.
The Pentagon estimates China will have more than 1,000 operational nuclear warheads by 2030.
Madhani, Weissert and Boak write for the Associated Press. Boak reported from Washington. AP writers Darlene Superville in Washington, Huizhong Wu in Bangkok, Hyung-jin Kim in Seoul, South Korea, and Kanis Leung in Hong Kong contributed to this report.
Legal defeats at home leave the White House with dwindling leverage as trade talks begin in Beijing.
President Donald Trump heads into this week’s summit with Chinese President Xi Jinping with a major embarrassment back home: the legal foundation of his aggressive tariff strategy is rapidly eroding.
Trump expects to meet Xi in Beijing from May 14 to May 15 to discuss trade, the war in Iran and, possibly, Taiwan. But the meeting comes as federal courts rule against Trump’s sweeping tariff measures, including the 10% global duties and triple-digit levies on Chinese goods that the White House once promoted as a key source of leverage over Beijing.
The rulings, the most recent of which was on May 7, weaken one of Trump’s most aggressive economic weapons just as Washington, D.C., tries to navigate an increasingly fragile geopolitical landscape.
Trump has refused to concede defeat. In March, he defended the tariffs on his social platform, Truth Social. He argued that Section 122 of the Trade Act of 1974 “fully allowed” and “legally tested” the levies. Trump is the first president to invoke Section 122.
Now, his administration is looking to Section 301 of U.S. trade law as a potential path to impose tariffs with fewer legal vulnerabilities.
Section 301 is a provision of the Trade Act of 1974 that empowers the U.S. president to impose tariffs or other penalties on countries accused of unfair trade practices.
But analysts warn that the strategy may also face significant legal and procedural obstacles — worse than Section 122.
“Section 301 tariffs involve a more cumbersome investigatory process before they can be imposed. That is why Trump has preferred other statutes such as [The International Emergency Economic Powers Act] and Section 122, which he attempted to implement by simple executive order,” said Phillip Magness, senior fellow at the Independent Institute.
With Section 122 of IEEPA, the Trump administration sought to revive a long-dormant statutory provision and reinterpret Congress’s definition of “balance of payments” to justify using it against modern trade deficits. If Trump pivots to Section 301 as his next option, his powers are more restricted and must meet more onerous regulatory requirements.
Magness expects this will potentially trigger another wave of lawsuits.
“Trump will attempt to stretch the language of Section 301 as well, in which case there will probably be court challenges to some of his weaker Section 301 findings,” Magness said.
Since April of last year, hundreds of companies have challenged the tariffs in court, including Costco Wholesale Corp., Prada SpA, Staples Inc. and Bumble Bee Foods, along with foreign firms such as BYD Co., Kawasaki Motors and Yokohama Rubber Co.
The summit also unfolds against a dramatically altered geopolitical backdrop from the leaders’ last meeting in South Korea in October, when both sides agreed to temporarily pause an escalating trade war after China threatened restrictions on rare earth exports.
Since then, Trump has become increasingly consumed by the conflict with Iran — one of China’s closest Middle Eastern allies — a war that has contributed to a global energy crunch and redirected U.S. military resources away from Asia.
The conflict has also strained U.S. munitions stockpiles, fueling speculation among some Chinese analysts about Washington’s ability to defend Taiwan in a prolonged regional confrontation, according to reports from The New York Times.
The European Council says the move ‘sends a clear political signal of the EU’s commitment to re-engage with Syria and support its economic recovery’.
Published On 11 May 202611 May 2026
The European Council has terminated the partial suspension of a cooperation agreement with Syria, thereby restoring fuller trade ties with the country as it seeks to emerge from nearly 14 years of war.
The council said on Monday the move marked an important step towards strengthening relations between the European Union and Syria.
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The decision “sends a clear political signal of the EU’s commitment to re-engage with Syria and support its economic recovery”, the European Council added in a statement.
At the same time, the EU’s foreign ministers met in Brussels with top Syrian diplomat Asaad al-Shaibani, kicking off a high-level political dialogue 18 months after the removal of Syrian strongman Bashar al-Assad.
The 27-nation bloc has launched a new chapter with Syria after al-Assad was swept from power in December 2024.
European Commission chief Ursula von der Leyen promised after meeting interim Syrian President Ahmed al-Sharaa in Damascus in January that Europe would “do everything it can” to support Syria’s recovery.
The commission proposed that EU states fully reactivate the bloc’s cooperation agreement with Syria last month.
The deal, which abolished duties on imports of most industrial products from Syria, was partially suspended in 2011 when al-Assad’s regime cracked down on antigovernment protests at the start of a civil war.
Syria-EU trade had peaked in 2010 at more than 7 billion euros ($9.1bn at the 2010 exchange rate).
By 2023, EU imports from the country had dwindled to 103 million euros ($120m) while European exports to Syria stood at 265 million euros ($310m).
On the sensitive matter of Syrian refugee returns, Germany, home to the EU’s largest Syrian community at more than a million people, is on the front line.
Chancellor Friedrich Merz has embraced tougher migration policies as he seeks to counter the far right, and he triggered a backlash by declaring during a visit by Syria’s president last month that he hoped 80 percent of Syrian refugees would return home within three years.
He later clarified this was a figure put forward by al-Sharaa himself.
Pope Leo has called on global leaders to reduce international tensions and turn away from violence, delivering an emotional appeal during a visit to Pompei, Italy, on Friday. His remarks came just one day after he met U.S. Secretary of State Marco Rubio at the Vatican, where both sides discussed efforts to improve strained relations between Washington and the Holy See.
The meeting took place against a politically sensitive backdrop, with U.S. President Donald Trump having recently criticized the Pope over his comments on the Iran conflict. Pope Leo, the first U.S.-born pontiff and former Cardinal Robert Prevost, has increasingly spoken out on global conflicts in recent weeks after initially maintaining a relatively low public profile following his election in May 2025.
Speaking to worshippers in Pompei, the Pope urged prayers that world leaders would be inspired to “calm rancour and fratricidal hatreds” and to take responsibility for reducing global violence. He also warned against becoming desensitized to images of war, and criticized what he described as an international system that often prioritizes the arms trade over human life.
The Pope’s intervention highlights the growing moral and diplomatic role of the Vatican at a time of heightened global instability, particularly amid ongoing tensions involving Iran, the United States, and wider geopolitical rivalries. His criticism of the global arms economy directly challenges dominant security-driven foreign policy approaches, especially in Western capitals.
As the spiritual leader of more than 1.4 billion Catholics worldwide, Pope Leo’s statements carry significant symbolic and diplomatic weight. His increasingly vocal stance on war and governance also places him in a rare position of open tension with major political actors, including the U.S. administration.
The Vatican is expected to continue engaging diplomatically with U.S. officials despite emerging tensions, particularly following the Rubio meeting. Pope Leo is likely to maintain his public messaging on peace, conflict prevention, and criticism of the global arms trade, reinforcing the Holy See’s traditional role as a moral voice in international affairs. At the same time, reactions from Washington and other governments may further shape the evolving tone of Vatican–state relations in the coming months.
With information from Reuters.
Warring sides accuse each other of violations as attacks continue across front lines.
Published On 8 May 20268 May 2026
Russia and Ukraine have accused each other of breaching a short ceasefire announced by Moscow to coincide with Victory Day commemorations marking the Soviet Union’s defeat of Nazi Germany.
The Kremlin said its forces downed 264 Ukrainian drones early on Friday, with officials in Moscow reporting attempted attacks on the capital and in the Perm region in the Ural Mountains.
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The truce, declared from May 8 to May 10, was intended to cover annual celebrations that include a military parade in Moscow.
Russia had warned that any disruption would trigger a large-scale missile response against Kyiv, urging foreign diplomats to leave the Ukrainian capital before potential escalation.
In a separate announcement, the Russian transport ministry said on Friday that 13 airports in Russia’s south halted operations due to drone attacks.
“Operations at the regional centre in Rostov-on-Don, which manages air traffic in southern Russia, have been temporarily suspended after Ukrainian drone struck the administrative building of the ‘Southern Russia Air Navigation’ branch,” the ministry said.
There were no casualties, it added.
Victory Day commemorations mark the Soviet Union’s loss of 27 million people in World War II, as it drove Nazi forces back to Berlin, where Adolf Hitler died, and the Red Army’s Soviet Victory Banner was raised over the Reichstag in May 1945.
Ukrainian President Volodymyr Zelenskyy said Russian forces continued to attack positions overnight, dismissing the ceasefire as ineffective.
He said Russia had carried out more than 140 attacks on front-line positions by early morning, alongside 10 assaults and more than 850 drone attacks.
“As we did over the past 24 hours, Ukraine will respond in kind today as well. We will defend our positions and people’s lives,” Zelenskyy said.
Ukraine also reported striking a Russian oil facility in Yaroslavl, deep inside Russian territory, in what Kyiv described as retaliation for attacks on its cities.
“Ukraine’s long-range sanctions continued in response to Russian strikes on our cities and villages,” Zelenskyy said.
Kyiv had proposed an open-ended ceasefire beginning on May 6, which it said Russia ignored. Moscow did not adopt that proposal, and neither side accepted the other’s terms.
In remarks before the truce, Zelenskyy criticised Russia’s approach to the commemorations, saying Moscow sought a pause “to hold their parade, to go out onto the square safely for an hour once a year, and then continue killing, killing our people and waging war”.
“The Russians are already talking about strikes after May 9. Strange and certainly inappropriate of the Russian leadership,” he added.
“Just as 81 years ago, so now America can help peace with a just and strong stance against the aggressor,” Zelenskyy said. “And it is important that the American people now view Russia precisely in this way – as an aggressor.”
Brent crude rises amid clashes in critical waterway.
Published On 8 May 20268 May 2026
Oil prices have jumped after clashes between United States and Iran in the Strait of Hormuz pushed their tenuous ceasefire to the brink.
Futures for Brent crude rose as much as 7.5 percent during a volatile trading session on Thursday, before easing as Asia’s markets opened on Friday morning.
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The international benchmark stood at $101.12 per barrel as of 03:00 GMT, down from the day’s high of $103.70.
The latest rise came after the US and Iran exchanged fire in the critical strait, a conduit for about one-fifth of global oil and natural gas supplies, despite the truce announced between the sides on April 7.
US Central Command (CENTCOM) said it launched strikes on Iran after three US Navy guided-missile destroyers came under attack from Iranian missiles, drones and small boats in the strait.
Iran’s Khatam al-Anbiya Central Headquarters earlier accused the US of violating the ceasefire by attacking an Iranian oil tanker and another vessel in the vicinity of the waterway.
The Iranian military headquarters also accused the US of targeting civilian areas, including Qeshm Island.
US President Donald Trump on Thursday appeared to downplay the clashes, saying the ceasefire remained in effect, while Iran’s state-run Press TV said the situation had gone “back to normal”.
Shipping in the strait has been at a near standstill since late February amid the threat of Iranian attacks on the massive oil tankers that usually transport much of the world’s energy supplies.
Brent prices are up about 40 percent compared with before the war amid an estimated shortfall in daily production of 14.5 million barrels.
Asian stock markets opened lower on Friday amid the heightened tensions, with Japan’s benchmark Nikkei 225, South Korea’s KOSPI and Hong Kong’s Hang Seng Index each falling more than 1 percent.
On Wall Street, the benchmark S&P 500 fell about 0.4 percent overnight after hitting an all-time high the previous day.
NEW YORK — President Trump’s 10% global tariffs were declared unlawful by a federal trade court in a fresh blow to the administration’s economic agenda, several months after the U.S. Supreme Court vacated earlier levies he’d imposed.
A divided three-judge panel at the U.S. Court of International Trade in Manhattan on Thursday granted a request by a group of small businesses and two dozen mostly Democrat-led states to vacate the tariffs. Trump imposed the 10% duties in February under Section 122 of the Trade Act of 1974, which had never previously been invoked.
The court for now only immediately blocked the administration from enforcing the tariffs against the two companies that sued and Washington state, making clear that it was not issuing a so-called universal injunction. The panel found that the other states that sued lacked standing because they aren’t direct importers, instead arguing that they were harmed by having to pay higher prices for goods when businesses passed on tariff costs.
It wasn’t immediately clear what the ruling would mean for now for other importers that had been paying the contested levies.
The majority of the panel rejected the administration’s stance that “balance-of-payments deficits” — a key criterion for imposing the Section 122 tariffs — was “a malleable phrase.” They concluded that Trump’s proclamation imposing the levies failed to identify that such deficits existed within the meaning of the 1974 law, instead using “trade and current account deficits to stand in the place.”
The decision is the latest setback for the president’s effort to levy tariffs without input from Congress. Earlier duties — overturned by the Supreme Court on Feb. 20 — were issued under a different law, the International Emergency Economic Powers Act, or IEEPA. In that case, the justices ruled Trump had exceeded his authority, kicking off a legal scramble by importers for almost $170 billion in refunds.
The U.S. Justice Department could challenge the trade court’s latest ruling by taking the case to the U.S. Court of Appeals for the Federal Circuit, which ruled against the Trump administration during the last tariff fight.
Section 122 allows presidents to impose duties in situations where the U.S. faces what the law defines as “fundamental international payments problems.” Even before Trump issued the tariffs, economists and policy experts debated whether the president would be able to build a solid legal framework using the statute.
In a proclamation declaring the use of Section 122, Trump said that tariffs were justified because the U.S. runs a “large and serious” trade deficit. He also pointed to the negative net flows of income from investments Americans have overseas and other things that showed the U.S. balance-of-payments relationship with the rest of the world was deteriorating.
Under the law, presidents have the ability to impose tariffs on goods imported into the U.S. on a short-term basis to address concerns about how money is flowing in and out of the country. Those concerns include “large and serious United States balance-of-payments deficits” and an “imminent and significant depreciation of the dollar.”
Unlike other legal options Trump might pursue to impose tariffs, Section 122 can be invoked without waiting for a federal agency to conduct an investigation to determine whether the levies are justifiable. But they can still be challenged in court.
The small businesses and states that sued argued that Section 122 became outdated when the U.S. ditched the gold standard decades ago. They say Trump improperly conflated “balance-of-payments deficits” with U.S. trade deficits in order to justify using the law.
They also allege that Trump’s order announcing the Section 122 tariffs was “riddled with omissions and mischaracterizations” around the meaning of a balance-of-payments deficit. The trade deficit cited by Trump is just one part of calculating the country’s balance of payments position, the states say.
Under Section 122, the president can order import duties of as much as 15%. The executive action can last 150 days, at which point Congress would have to extend it. Trump has said he would aim to increase the rate to 15% from 10%.
The states argue that Trump’s new tariffs violate other requirements in Section 122, including that such duties not be discriminatory in their application. The states argue that Trump’s new tariffs improperly exempt some goods from Canada, Mexico, Costa Rica, the Dominican Republic, El Salvador, Guatemala, Honduras and Nicaragua.
According to the complaint, the Trump administration conceded during the previous litigation over his IEEPA tariffs that trade deficits “are conceptually distinct from balance-of-payments deficits.”
The clash over Section 122 emerged just as the legal fight over refunds from Trump’s IEEPA tariffs began to heat up. A different judge in the Court of International Trade, U.S. Judge Richard Eaton, is overseeing the massive refund effort and ordered Customs and Border Protection to give him regular updates on a largely automated process the government will use to issue most refunds.
Larson and Tillman write for Bloomberg.
A series of meetings will help determine whether the United States and Vietnam can preserve a trade relationship that has become central to supply chain resilience, U.S. business interests and Vietnam’s continued economic ascent. File Photo by Luong Thailinh/EPA
May 7 (UPI) — As Washington and Hanoi enter a dense stretch of trade diplomacy, the coming weeks will test whether one of the Indo-Pacific’s most pragmatic economic partnerships can sustain its momentum or become entangled in the very frictions it has worked to avoid.
A series of meetings — including Section 301 hearings on industrial capacity from Tuesday to Friday this week, forced labor discussions April 28 to May 1 and bilateral consultations next Monday and Tuesday, arrives at a pivotal juncture.
They will help determine whether the United States and Vietnam can preserve a trade relationship that has become central to supply chain resilience, U.S. business interests and Vietnam’s continued economic ascent.
At its core, the U.S.-Vietnam Comprehensive Strategic Partnership is grounded not in diplomacy alone, but also in economic logic.
Partnership built on complementarity
Over the past decade, Vietnam has emerged as one of the fastest-growing U.S. trading partners, driven by a convergence of structural interests. As American firms diversify production beyond China, Vietnam has become a preferred destination, offering cost competitiveness, political stability and deepening integration into global value chains.
U.S. data show Vietnam ran a $123.5 billion trade surplus with the United States last year — the fourth-largest imbalance after China, the European Union and Mexico. It is a figure that has drawn increasing scrutiny in Washington even as it reflects the depth of bilateral trade integration.
From electronics to apparel and consumer goods, Vietnam-based production is often embedded within supply chains designed and financed by U.S. and allied firms. American companies benefit from lower production costs and diversified risk, while Vietnamese exports sustain growth and employment at home.
Disrupting this ecosystem through blunt trade measures risks undermining the very businesses Washington seeks to protect.
Hanoi has consistently signaled a willingness to engage. It has approached trade tensions not with confrontation, but with negotiation — a posture that stands in contrast to more adversarial economic relationships. The upcoming consultations should reinforce that cooperative trajectory, not derail it.
Rethinking “overcapacity”
The debate over “overcapacity” has become a central issue in U.S. trade discussions, with concerns that the term is being applied broadly across different economic models.
In Vietnam’s case, officials and industry observers note that production growth is largely driven by market-based investment and global supply chain shifts rather than state-directed industrial surpluses.
“Vietnam’s overcapacity is much different from China’s,” said Murray Hiebert, head of research for Bower Group Asia. “China’s factories are producing huge surpluses that it dumps onto the world’s markets below market prices. Instead, Vietnam relies on foreign investment companies to produce for export.”
He noted that Vietnam’s export engine is overwhelmingly foreign-driven, with multinational firms, particularly from the United States and South Korea, accounting for roughly 80% of outbound shipments, while domestic producers contribute only about one-fifth.
“Vietnam’s economy is largely a manufacturing platform for foreign companies,” Hiebert said. “U.S. policymakers need to understand Vietnam did not create overcapacity by subsidizing manufacturing, but by courting foreign investors who used Vietnam as a low-cost base to serve global markets.”
Vietnam’s manufacturing expansion has been shaped by global supply chain realignment, accelerated by U.S.-China trade tensions and pandemic-era disruptions, rather than by state-led efforts to flood international markets. Many of the factories operating in Vietnam were relocated or expanded by multinational firms seeking to maintain access to U.S. consumers.
To conflate this model with subsidy-driven overproduction risks misdiagnosing the issue and penalizing a partner that has facilitated, rather than distorted, market outcomes.
Labor reforms and supply chain progress
Concerns over labor practices and supply chain integrity remain part of the policy conversation, particularly in the context of ongoing forced labor discussions. But these concerns should be weighed against Vietnam’s steady, if incremental, progress.
In recent years, Hanoi has undertaken significant labor reforms aligned with the International Labor Organization, including updates to its labor code, expanded worker representation rights and enhanced compliance mechanisms.
Vietnam has also prioritized traceability and transparency across key export sectors. From fisheries to manufacturing, authorities have invested in monitoring systems, strengthened inspections and improved regulatory oversight — steps aimed at meeting the expectations of international partners and markets.
This is an evolving process, not a completed one. But the trajectory is clear: Vietnam is moving toward higher standards, not retreating from them.
The case for market economy recognition
Another unresolved issue, Vietnam’s designation as a non-market economy under U.S. trade law, has become increasingly difficult to justify.
Vietnam operates within the framework of the World Trade Organization and has been recognized as a market economy by more than 70 countries. Its private sector has expanded rapidly, its regulatory environment continues to evolve and its integration into global markets is deepening.
Maintaining Vietnam’s current non-market economy designation under U.S. trade law has raised concerns among policymakers and business groups, who say it could affect the application of trade remedies and investor confidence. The issue comes as Washington seeks to expand economic partnerships across the Indo-Pacific.
Avoiding unintended consequences
Intellectual property has emerged as a new point of tension in U.S.-Vietnam trade relations. Ambassador Jamieson Greer, the U.S. trade representative, has designated Vietnam as a “Priority Foreign Country” — its most serious classification — in its latest intellectual property rights report, opening the door to a potential Section 301 investigation within 30 days.
The designation, the first of its kind in more than a decade, reflects ongoing U.S. concerns over Vietnam’s intellectual property protections and could affect the trajectory of current trade negotiations.
Sweeping trade measures designed to address structural concerns could disrupt supply chains, raise costs for American businesses and consumers, and weaken a partnership that has delivered measurable benefits. In an already fragile global economy, such outcomes would be counterproductive.
Vietnam’s own incentives align with stability. Its growth depends on open markets, foreign investment and compliance with international standards. That alignment should be viewed as a strategic asset.
Washington should avoid applying a China-centric lens to Vietnam’s trade profile, said Dan Harris, a partner at the law firm Harris Sliwoski. Treating Vietnam as an “overcapacity” case without clear evidence risks penalizing U.S. firms that relocated production there in line with Washington’s own push to reduce reliance on China and strengthen supply chain resilience.
“We will end up punishing the companies that did what we asked,” Harris warned.
He added that the broader strategic context matters: Vietnam’s long history of conflict and mistrust with China sets it apart from Beijing, even as it emerges as an increasingly important U.S. partner in the Indo-Pacific.
But the implications of Washington’s trade posture toward Hanoi extend far beyond economics. Vietnam’s export-driven growth, fueled primarily by multinational investment rather than state subsidies, has quietly elevated the country into a strategic linchpin in the Indo-Pacific.
A stable and prosperous Vietnam not only supports supply chain diversification, but also reinforces the rules-based order in the South China Sea.
Economic resilience in Vietnam is not peripheral to U.S. strategy. It is foundational to maintaining balance in contested Indo-Pacific waters. Trade policy cannot be divorced from strategic reality: A weakened Vietnamese economy would do more than disrupt production flows. It could undercut one of the region’s most important counterweights to China’s expanding maritime presence.
Balancing trade and security alignments
Rising risks of policy missteps could carry strategic costs. Analysts warn that overly punitive U.S. trade measures, particularly those misreading Vietnam’s market-driven model, may push Hanoi toward alternative economic alignments, reshaping regional supply chains and weakening U.S. influence in an increasingly competitive Indo-Pacific.
U.S. policymakers are weighing more targeted, cooperative measures in managing trade concerns with Vietnam, including a bilateral supply chain monitoring mechanism, expanded data-sharing on industrial capacity and the potential creation of a standing U.S.-Vietnam trade and standards working group.
The approach aims to address regulatory and transparency issues while maintaining stability in the broader economic partnership.
The challenge for Washington is alignment – translating economic logic into strategic necessity. That means recognizing Vietnam not as a trade problem to be managed, but rather as a partner whose economic trajectory is increasingly central to the region’s stability and security.
Beyond trade flows and investment figures, the U.S.-Vietnam economic relationship carries broader strategic significance. It reinforces a rules-based framework in the Indo-Pacific and supports cooperation across sectors ranging from technology to maritime security.
Any escalation in trade tensions between the United States and Vietnam could disrupt commercial ties and place broader strategic cooperation at risk, as both sides seek to sustain recent gains in economic and security engagement.
James Borton is a non-resident senior fellow at Johns Hopkins SAIS Foreign Policy Institute and the author of Harvesting the Waves: How Blue Parks Shape Policy, Politics, and Peacebuilding in the South China Sea. Borton is the editor-in-chief of the South China Sea NewsWire. The views and opinions expressed in this commentary are solely those of the author.
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EU Trade Commissioner Maroš Šefčovič on Tuesday urged the US to honour its side of the EU-US trade deal during a meeting in Paris with US Trade Representative Jamieson Greer.
Tensions have escalated in recent days over the implementation of the EU-US trade deal reached almost a year ago in Turnberry, Scotland, after US President Donald Trump threatened to impose 25% tariffs on EU cars, in breach of the agreement capping US tariffs on EU goods at 15%.
The agreement was further shaken in February after the White House introduced new tariffs following a US Supreme Court ruling declaring the 2025 tariffs illegal.
A European Commission spokesperson said Tuesday that during the 90-minute meeting with Greer, Šefčovič called for a “swift return” to the agreed Turnberry terms, meaning “a 15% all-inclusive tariff rate.”
The US currently imposes a 10% tariff on EU goods on top of duties already in place before Trump’s return to the White House in 2025, with rates varying across EU products. Combined duties can now reach as much as 30% on certain EU exports, such as cheese, exceeding the 15% cap established in the EU–US agreement.
During the meeting, Šefčovič also updated his counterpart on the EU’s implementation of the agreement, the spokesperson said, “to clarify” where the EU “stands.”
Washington wants Brussels to accelerate the EU legislative process needed to implement the deal, including the bloc’s commitment to cut tariffs on US industrial goods to zero.
But negotiations between EU governments and members of the European Parliament remain tense.
MEPs want to add safeguards that would make EU tariff cuts conditional on the US implementing its side of the agreement. They are also pushing for a “sunset clause” that would terminate the deal in March 2028 unless renewed.
The European Parliament’s position is backed by France, while Germany and other member states want to preserve the original agreement struck in July 2025 by Trump and European Commission President Ursula von der Leyen.
A round of negotiation is scheduled for Wednesday evening.
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The EU Trade Commissioner Maroš Šefčovič is scheduled to meet his US counterpart Jamieson Greer on Tuesday amid rising tensions between the bloc and the US following President Donald Trump’s announcement of a potential 25% tariff on EU automobiles.
The discussions, scheduled ahead of a G7 trade ministers’ meeting in Paris, were planned before President Trump’s latest tariff threat, Euronews has learned.
But they now give both sides an opportunity to ease tensions after Trump signalled measures that would breach the EU-US trade deal agreed last summer in Turnberry, Scotland, between Trump and Commission President Ursula von der Leyen, which caps US tariffs on EU goods at 15%.
On Monday, the Commission sought to project a sense of calm.
“It’s not the first time we have seen threats,” Commission spokesperson Thomas Regnier said, adding: “We remain very calm, focused on enforcing the joint statement in the interests of our companies, of our citizens.”
Trump’s threat came after German Chancellor Friedrich Merz criticised the US approach to the war in Iran, and after Washington announced the withdrawal of 5,000 US troops from Germany, further straining transatlantic relations.
German MEP Bernd Lange (S&D), chair of the European Parliament’s trade committee, told Euronews on Monday that Trump’s threats were aimed specifically at German car manufacturers.
The US president also accused the EU of moving too slowly to implement the agreement.
“Since day one we are implementing the Joint Statement [the EU-US deal] and we are fully committed to delivering on our shared commitments,” Regnier said, adding that the EU was seeking predictability in the EU-US trade relation.
The Turnberry deal is currently being negotiated between EU governments and lawmakers before it can enter into force on the EU side. Co-legislators must still agree on the modalities for cutting EU tariffs on US goods to zero, as outlined in the agreement.
MEPs have nonetheless introduced safeguards to ensure the EU is not the only party adhering to its commitments and to protect the bloc from future US threats.
The Commission reiterated Monday that if the US takes measures that are “inconsistent” with the trade deal, all “options” remain open.
Last year, during the trade dispute that followed Trump’s return to power, the EU executive prepared a package targeting €95 billion worth of US products, though the measures were later suspended.
At the time, several EU countries also urged the use of the bloc’s anti-coercion instrument, which enables the EU to respond to economic pressure from third countries with a wide range of trade defence tools, including restrictions on licences and intellectual property rights.
In an interview with Euronews, EU Trade Commissioner Maroš Šefčovič issued a firm warning that the European Union will not hesitate to defend its industries after Beijing signaled possible retaliation over new EU plans to bolster its industrial base.
China this week up the pressure on Brussels, threatening countermeasures unless the EU softens core elements of its “Made in Europe” proposal—designed to tighten market access for foreign companies—and its Cybersecurity Act, which could ultimately restrict Chinese telecom firms’ presence across the bloc.
Asked about China’s reaction to what the EU describes as much-needed measures to reinforce its sovereignty and restore a level playing field, Šefčovič told Euronews the EU will “always” defend the interests of its companies.
“We will fight tooth and nail for every European job, for every European company, for every open sector, if we see they are treated unfairly,” said Šefčovič in comments to Euronews in an exclusive interview Friday.
Relations between Brussels and Beijing have deteriorated sharply over the past year, with China tightening export controls on rare earths vital to Europe’s clean-tech and defence industries, as well as restricting chips essential to the automotive sector, intensifying pressure on already fragile supply chains across the bloc.
In response, the EU has pushed for legislative proposals in the domain of cybersecurity and single market rules for companies, prompting a sharp reaction from China which has accused the EU of unfair practices. Earlier this week, Beijing said the EU should not underestimate China’s “firm resolve” to safeguard its interests.
Šefčovič rejected the suggestion that recent developments signal a looming trade war but stressed that the EU does not operate under pressure and expects to be treated with respect. “We never threaten our partners, and we certainly don’t do it through the media,” he said. “What we need is strategic patience and a great deal of courage.”
He said a “war” is often easy to start, but difficult to exit. A Chinese official told Euronews Beijing does not wish for a trade spat to escalate, but said China is serious about what it considers discriminatory practices. The EU disputes discrimination.
The EU’s trade chief pointed to a ballooning trade deficit between the two sides as a cause for concern. The bloc’s trade gap with China surged to €359.3 billion in 2025, a level Šefčovič called “simply unsustainable” that does not show signs of improvement.
He also said policymakers, the European parliament and economic actors in the EU have delivered “a very strong economic and political reaction” to tackle the trade deficit.
So far, Brussels has failed to secure meaningful commitments from Beijing to rebalance trade relations. At the same time, EU officials are growing increasingly concerned that Chinese exports—shut out of the US market by higher tariffs—are being redirected towards Europe. Brussels also points to China’s overcapacity as a source of concern.
The EU is now pressing Beijing to enter serious negotiations and deliver concrete results.
“I invited the Chinese foreign minister to visit Brussels because I think we need a very thorough assessment of the current situation,” Šefčovič told Euronews. “What I want is constructive engagement.”
Faced with a surge in low-cost Chinese imports, the EU is relying on trade defence instruments to counter what it sees as dumped and heavily subsidised goods, while also monitoring efforts by Chinese firms to bypass restrictions by shifting production outside China. Šefčovič made clear the EU will not be pushed into retreat from those issues.
“There are very strong industrial policies in China. You have the same in the US, in Canada, in Japan and in Korea. So, nobody should be surprised if the European Union responds in kind—especially when it comes to public money and public funds.”
Islamabad, Pakistan – Pakistan has opened six overland transit routes for goods destined for Iran, formalising a road corridor through its territory as thousands of containers remain stranded at Karachi port because of the United States blockade of Iranian ports and ships trying to pass through the Strait of Hormuz.
The Ministry of Commerce issued the Transit of Goods through Territory of Pakistan Order 2026 on April 25, bringing it into immediate effect. The order allows goods originating from third countries to be transported through Pakistan and delivered to Iran by road.
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The announcement coincided with Iranian Foreign Minister Abbas Araghchi’s visit to Islamabad for talks with Prime Minister Shehbaz Sharif and army chief Asim Munir, the latest in a series of diplomatic engagements as Pakistan seeks to mediate an end to the two-month war between Washington and Tehran.
Federal Minister for Commerce Jam Kamal Khan described the initiative as “a significant step toward promoting regional trade and enhancing Pakistan’s role as a key trade corridor”.
Iran has not publicly commented on the move, and Al Jazeera’s query to the Iranian embassy in Islamabad went unanswered.
The notification does not extend to Indian-origin goods. A separate Commerce Ministry order issued in May 2025, following the India-Pakistan aerial war that month, bans the transit of goods from India through Pakistan by any mode and remains in force.
The six designated routes link Pakistan’s main ports, Karachi, Port Qasim and Gwadar, with two Iranian border crossings, Gabd and Taftan, passing through Balochistan via Turbat, Panjgur, Khuzdar, Quetta and Dalbandin.
The shortest route, the Gwadar-Gabd corridor, reduces travel time to the Iranian border to between two and three hours, compared with the 16 to 18 hours it takes from Karachi – Pakistan’s biggest port – to the Iranian border. The Gwadar-Gabd route could cut transport costs by 45 to 55 percent compared with costs from Karachi port, according to officials.
But for Iran, firms sending their goods to the country, and transporters, all routes into Iranian territory today are viable options, with the principal maritime passage they have traditionally used – the Strait of Hormuz – blockaded by the US Navy.
The current US-Iran war began on February 28, when US and Israeli forces launched attacks on Iran.
In the weeks that followed, Iran restricted commercial navigation through the Strait of Hormuz, the narrow waterway through which roughly a fifth of the world’s oil and gas passes during peacetime, disrupting one of the most critical arteries of global trade.
Pakistan brokered a ceasefire on April 8 and hosted the first round of direct US-Iran talks on April 11, in Islamabad. The negotiations lasted nearly a day but ended without a deal. Two days later, Washington imposed a naval blockade on Iranian ports, throttling Tehran’s maritime access.
A second round of talks has since stalled. US President Donald Trump cancelled a planned visit to Islamabad by special envoys Steve Witkoff and Jared Kushner last weekend.
Iran has ruled out direct negotiations with Washington while the blockade remains in place, though Araghchi told Pakistani officials that Tehran would continue engaging with Islamabad’s mediation efforts “until a result is achieved”.
The transit order appears to be a direct economic response to that impasse.
More than 3,000 containers destined for Iran have been stuck at Karachi port for several days, with vessels unable to collect the cargo. War-risk insurance premiums have surged from about 0.12 percent of a vessel’s value before the conflict to roughly 5 percent, making shipping to the region too expensive for many operators.
The corridor also signals a shift away from Afghanistan, whose relations with Pakistan have deteriorated sharply.
The two sides engaged in clashes in October 2025 and again in February and March this year, with skirmishes continuing along the northwestern and southwestern borders.
The Torkham and Chaman crossings have ceased to function as reliable commercial routes since tensions escalated, limiting Pakistan’s overland access to Central Asian markets.
“This is a paradigmatic shift. Pakistan’s relations with the Afghan Taliban, the de facto rulers in Kabul, have no reset switch,” Iftikhar Firdous, cofounder of The Khorasan Diary, told Al Jazeera.
“Kabul has been diversifying away from Pakistan towards Iran and Central Asia, but this move flips the equation. Pakistan can now bypass Afghanistan entirely for westbound trade. The impact on Kabul’s transit relevance and revenue is strategic, not immediate – but it is real.”
Firdous said the implications extend beyond bilateral ties.
“This corridor also reduces Pakistan’s reliance on longer maritime routes through the Gulf. Geopolitics, security, and infrastructure will ultimately determine which corridors dominate, but it places Pakistan as the main overland gateway for China-backed trade routes into West Asia and beyond,” he said.
Minhas Majeed Marwat, a Peshawar-based academic and geopolitical analyst, urged caution. “A cornered Afghanistan is a destabilised Afghanistan, and Pakistan knows better than most what that costs,” she wrote on X on April 27.
“The opportunity here is real. So is the risk. Security on the northwestern and southwestern borders remains the variable that could unravel everything. Pakistan is positioned well. It is not yet positioned safely. Those are different things.”