Tag: Trade

Trump Imposes 100% Tariff on China Over Rare-Earth Restrictions
China Dominates the Rare Earths Market. This U.S. Mine Is Trying to Change That. © Bridget Bennett for Poltico
President Donald Trump announced on Friday that the United States will slap an additional 100% tariff on all Chinese imports starting November 1, on top of existing duties, while imposing sweeping export controls on “any and all critical software.” The move, framed as retaliation for Beijing’s recent tightening of export restrictions on rare earth elements, sent shockwaves through global markets, wiping out nearly $2 trillion in stock value and reigniting fears of a full-blown decoupling between the world’s two largest economies. With bilateral trade already strained by springtime tariff spikes that peaked at 145% on U.S. goods into China, Trump’s latest salvo—potentially pushing effective rates above 130%—threatens to upend supply chains for everything from semiconductors to electric vehicles, at a time when the global rare earth market is forecasted to exceed $6 billion annually by decade’s end.
Trump’s announcement, delivered via a series of fiery Truth Social posts and reiterated during an Oval Office press availability, accused China of a “sinister and hostile” strategy to hold the world “hostage” through its dominance in rare earths—a group of 17 metals vital for high-tech manufacturing, defense systems, and green energy technologies. “It is impossible to believe that China would have taken such an action, but they have, and the rest is History,” Trump wrote, vowing that the tariffs could arrive “sooner” if Beijing escalates further. He also hinted at broader U.S. countermeasures, including restrictions on airplane parts and other exports, noting China’s reliance on Boeing components. The president stopped short of confirming the cancellation of his planned meeting with Chinese President Xi Jinping at the Asia-Pacific Economic Cooperation (APEC) summit in South Korea later this month, but earlier posts declared “no reason” for the sit-down, citing the “extraordinarily aggressive” timing of China’s moves—just days after a U.S.-brokered Middle East ceasefire.
Beijing’s Rare Earth Gambit: A Calculated Squeeze on Global Supply Chains
China’s actions, unveiled by the Ministry of Commerce on October 9, mark a significant hardening of its position in the ongoing trade skirmishes. Under “Announcement Number 61 of 2025,” Beijing expanded export licensing requirements to cover products containing more than 0.1% of rare earth elements sourced from China, even if manufactured abroad, effectively barring unlicensed shipments to foreign defense and semiconductor firms starting December 1. The curbs now encompass 12 of the 17 rare earths, including newly added holmium, erbium, thulium, europium, and ytterbium, alongside technologies for extraction, refining, and magnet production. Additional restrictions on lithium-ion batteries, graphite cathodes, and artificial diamonds take effect November 8.
These measures build on decades of state-backed dominance: China controls 61% of global rare earth mining and a staggering 92% of refining capacity, per the International Energy Agency, fueled by subsidies that have undercut competitors worldwide. Rare earths are indispensable for neodymium-iron-boron magnets in EV motors, fighter jet engines, and smartphone vibrators—sectors where U.S. firms like Tesla, Lockheed Martin, and Apple are heavily exposed. Analysts at the Center for Strategic and International Studies warn that the restrictions could disrupt U.S. defense supply chains, echoing 2010 when Beijing briefly cut off exports to Japan over territorial disputes. “This isn’t just trade policy; it’s economic warfare aimed at critical vulnerabilities,” said Dr. Elena Vasquez, a trade economist at the Peterson Institute for International Economics.
The timing appears deliberate, coming amid fragile progress in U.S.-China talks. After tit-for-tat hikes earlier this year drove tariffs to extreme levels—145% on U.S. imports to China and 125% in reverse—the two sides agreed in May to slash rates to 30% and 10%, respectively, pausing 24% of levies until November 10. Positive negotiations in Switzerland and the U.K. had raised hopes for a broader deal, but Beijing’s rare earth letter—sent to trading partners worldwide—has derailed that momentum. Trump decried it as a “moral disgrace” and a long-planned “lie in wait,” while posts on X from industry insiders echoed the surprise: “China’s rare earth curbs hit like a gut punch—right when talks were thawing,” one analyst tweeted.
Trump’s response was swift and unyielding. In his initial Truth Social broadside, he lambasted Beijing for “clogging global markets” and provoking “trade hostility” that has drawn ire from allies like the EU and Japan. The 100% tariff—layered atop the current 30% effective rate on $438.9 billion in annual Chinese imports—could add $439 billion in costs to U.S. businesses and consumers if fully implemented, according to Wells Fargo economists. Coupled with export controls on critical software—potentially targeting AI tools, cybersecurity suites, and enterprise systems from firms like Microsoft and Oracle—the measures aim to mirror China’s leverage in minerals with America’s edge in tech.
During a White House meeting on drug pricing, Trump doubled down, telling reporters the curbs were “shocking” and “very, very bad,” affecting “all countries without exception.” He floated expanding restrictions to “a lot more” items, including aviation parts, given China’s fleet of over 1,000 Boeing aircraft. On the Xi summit, Trump hedged: “I don’t know if we’re going to have it… but I’m going to be there regardless.” Earlier, he had signaled outright cancellation, writing, “now there seems to be no reason to do so.” Beijing has yet to respond formally, but state media like Global Times called the tariffs “economic bullying,” while separately imposing port fees on U.S. ships in retaliation for American “discriminatory” docking charges.
The broader U.S.-China economic ties add layers of complexity. Last year, China ranked as the third-largest U.S. trading partner, with a $295.4 billion deficit. Ongoing flashpoints include TikTok’s U.S. operations—requiring Beijing’s blessing for a ByteDance divestiture—and visa restrictions on Chinese students. Trump’s moves could jeopardize these, even as they bolster his domestic base ahead of midterms.
Market Mayhem: Stocks Plunge, Safe Havens Surge Amid Trade Fears
Inline Market Movers
Wall Street’s reaction was visceral. The S&P 500 .SPX -2.70% ▼ cratered 2.7% on Friday, shedding Dow Jones Industrial Average .DJI -2.25% ▼ 878 points, while the Nasdaq Composite .IXIC -3.60% ▼—its worst day since March—as tech giants like Nvidia NVDA -6.00% ▼ and Apple AAPL -4.00% ▼, reliant on Chinese rare earths for chips and devices, bore the brunt. The sell-off erased $1.9 trillion in market cap, with X users dubbing it “the day markets fell” amid a “perfect storm” of U.S. shutdown fears, tariff threats, and Fed signaling confusion. Crypto markets fared worse: Bitcoin BTC -7.50% ▼, Ethereum ETH -12.00% ▼, and liquidations hit $19 billion, per SoSoValue data, as leveraged longs unwound en masse.

Safe havens rallied. Gold surged 2.1% to $2,650 per ounce, while U.S. rare earth miners like MP Materials jumped 8%, buoyed by prospects of domestic substitution. Globally, the Shanghai Composite dipped 1.9%, and the Hang Seng fell 2.4%, reflecting spillover risks. Semiconductor firms like ASML braced for fallout, with shares down 4.2%, as China’s curbs threaten the $500 billion chip industry’s raw materials.
Economists warn of deeper scars. The global rare earth market, valued at $3.95 billion in 2024, is projected to hit $6.28 billion by 2030 at an 8% CAGR, driven by EV and renewable demand—but tariffs could inflate prices 20-30%, per Grand View Research. U.S. consumers might face $1,000 annual household cost hikes, akin to 2018’s trade war, while exporters like Boeing could lose $10 billion in orders. “This risks a vicious cycle: higher costs, slower growth, and fragmented innovation,” said JPMorgan’s Michael Feroli.
Economic Stakes: From EVs to National Security
The rare earth flashpoint underscores the trade war’s evolution from tariffs to strategic chokepoints. China’s monopoly—forged through subsidies and lax environmental rules—has long irked Washington, prompting the CHIPS Act’s $52 billion in domestic incentives. Yet, U.S. refining capacity remains nascent, covering just 15% of needs. Trump’s software controls, meanwhile, target China’s AI ambitions, potentially stalling Huawei and Baidu’s advancements.
For Beijing, the curbs safeguard “national security,” but they invite blowback. Exports of rare earths generated $5.2 billion last year; restrictions could shave 2% off GDP growth if retaliation spirals, per Oxford Economics. Allies like Australia and Canada, ramping up mines, stand to gain, but short-term disruptions loom for Europe’s auto sector, where 40% of EV magnets are Chinese-sourced.
X chatter reflects the angst: “Trump’s tariff nukes markets—China’s rare earth play was checkmate,” one trader posted, while another quipped, “Trade war 2.0: Now with extra monopoly drama.” Broader ripple effects include a 0.5% hit to U.S. GDP in 2026, per Federal Reserve models, and stalled WTO reforms.
As November 1 looms, the onus falls on diplomacy—or its absence. Trump’s APEC attendance keeps the Xi channel ajar, but observers like Al Jazeera’s Ahmed Fouad doubt a breakthrough: “Beijing’s holding aces in minerals; Washington in tech—stalemate seems likely.” A Reuters analysis pegs escalation odds at 60%, potentially costing $500 billion in lost trade.
For businesses, the message is clear: Diversify now. “Potentially painful” in the short term, Trump insists, but “very good… for the U.S.A.” in the end. Yet, as markets reel and supply chains fray, the world watches a high-stakes poker game where both players hold loaded dice—and rare earths are the wild card.
October 11, 2025
Beijing’s Cutbacks Shake America’s Soybean Trade
In the heart of the Midwest, where golden fields stretch toward the horizon under a crisp autumn sky, the hum of combines should signal prosperity. Instead, for America’s soybean farmers, harvest season has become a grim countdown to financial ruin. As they reap what the U.S. Department of Agriculture (USDA) projects to be a record 4.2 billion bushel crop this year, their largest buyer—China—has vanished from the market, leaving silos overflowing and prices plummeting to five-year lows around $9.50 per bushel.
China hasn’t booked any U.S. soybean purchases in months; farmers warn of ‘bloodbath’
The trade war between the United States and China, now in its second year under President Donald Trump’s renewed tariff regime, has turned soybeans into collateral damage. Beijing’s retaliatory 25% tariffs on U.S. agricultural imports have priced American beans out of the Chinese market, where they once commanded over half of the $24.5 billion in annual U.S. soybean exports. From January through August 2025, Chinese imports of U.S. soybeans totaled a mere 200 million bushels—down from nearly 1 billion bushels in the same period of 2024, according to USDA trade data. That’s a 80% plunge, robbing Midwestern farmers of billions in revenue and forcing a scramble for alternative markets that may never fully compensate.
“We’ll see the bottom drop out if we don’t get a deal with China soon,” warns Ron Kindred, a veteran farmer managing 1,700 acres of corn and soybeans in central Illinois. Halfway through his harvest, Kindred has locked in contracts for just 40% of his crop at prices already eroding below $10 per bushel in local elevators. The remaining 60% sits in limbo, a high-stakes bet on a breakthrough in Washington-Beijing negotiations. “There’s no urgency on China’s side, and the farm community’s clock is ticking louder every day,” he adds.
Kindred’s plight echoes across the soybean belt, from Illinois prairies to Iowa’s rolling hills. Rising input costs—fertilizer up 20-30% year-over-year, equipment maintenance strained by inflation, and a glut of both corn and soybeans flooding domestic markets—were squeezing margins even before the trade spat escalated. Now, with China’s boycott, the USDA estimates average losses of up to $64 per acre for Illinois growers alone, the nation’s top soybean-producing state with 6.2 million acres planted this year. University of Illinois Extension economists project total state-level shortfalls could exceed $400 million if export volumes don’t rebound by spring 2026.
Enter the Trump administration’s lifeline: a proposed $10-14 billion farmer aid package, building on December 2024’s $10 billion relief bill. The Wall Street Journal reported last week that President Trump, speaking at the White House on October 6, vowed to “do some farm stuff this week” to cushion the blow. Aides say he’s slated to huddle with Agriculture Secretary Brooke Rollins as early as Friday to finalize funding sources, leaning heavily on the $215 billion in tariff revenues collected during fiscal 2025 (October 2024-September 2025), per U.S. Treasury figures. “The president is deploying every tool in the toolbox to keep our farmers farming,” a USDA spokesman told Reuters.
Yet for many in the heartland, the aid feels like a temporary fix for a structural crisis. Soybean farmers, who backed Trump overwhelmingly in 2024 (with 62% of rural voters in key swing states like Iowa and Wisconsin casting ballots for him, per Edison Research exit polls), are voicing frustration laced with loyalty. “We voted for strong trade deals, not handouts,” says Scott Gaffner, a third-generation farmer in southern Illinois tending 600 acres. His crop, typically destined for Chinese ports, now languishes in on-farm silos as he frets over fixed costs like diesel fuel and seed that have surged 15% since planting. “We’re not just anxious; we’re angry. When the administration’s jetting off to Spain for TikTok talks while our harvest rots, it feels like we’re the last priority.”
Gaffner’s son, Cody, the would-be fourth generation on the land, echoes the generational stakes. “If I return after college, it’ll be with a second job just to make ends meet,” the 22-year-old says. Their story underscores a broader ripple: Rural economies, where agriculture drives 20-25% of GDP in states like Illinois and Iowa, are buckling. Tractor sales at CNH Industrial, a Decatur, Illinois-based giant, plunged 20% in the first half of 2025, CEO Gerrit Marx revealed in an August interview at the Farm Progress Show. “The good news only flows when China places orders,” Marx said, a sentiment that hung heavy over the event in the self-proclaimed “soy capital of the world”—a title now whispered to be shifting south to Brazil.
Dean Buchholz, a DeKalb County, Illinois, peer of Gaffner’s, is already waving the white flag. After decades in the fields, skyrocketing fertilizer bills and sub-$10 soybean futures have convinced him to retire. “I figured I’d farm till they buried me,” the 58-year-old says. “But with debt piling up and health acting up, it’s time to rent out the acres. This trade war’s the final straw.”
Desperate Diplomacy: Chasing Markets in Unlikely Corners
With China—home to the world’s largest hog herd and importer of 61% of global traded soybeans over the past five years, per the American Soybean Association—off the table, U.S. agribusiness is on a global charm offensive. Trade missions to Nigeria, memorandums with Vietnam, and a 50% surge in sales to Bangladesh (up to 400,000 metric tons through July 2025) highlight the scramble. Yet these “base hits,” as Iowa farmer Robb Ewoldt calls them, pale against China’s home-run demand.
Ewoldt, who farms 2,000 acres near Des Moines, jetted to Rome in January to woo a Tunisian poultry giant. “They grilled me: Can we count on steady U.S. supply, or will you switch crops and jack up prices?” he recalls. Tunisia’s imports, while growing, total under 100,000 tons annually—barely a blip. “It helps long-term, but right now, we’re cash-strapped. My operation burns a million bucks a year; without sales, we’re dipping into reserves just to cover debt service.”
Across the Mississippi, Morey Hill has logged thousands of miles this year, from Cambodia’s fish ponds to Morocco’s chicken coops. In Phnom Penh last week, the Iowa grower evangelized to importers about swapping low-protein “fish meal” for U.S. soybean meal, touting yields that could fatten local aquaculture 20-30%. “We’ve got success stories—Vietnam’s up 25% year-over-year to 1.2 million tons,” Hill says. But even aggregated, the EU and Mexico (combined $5 billion in sales) plus risers like Egypt, Thailand, and Malaysia can’t fill the void: Total U.S. soybean exports dipped 8% to 18.9 million metric tons through July, USDA Census Bureau data shows.
Industry lobbies are pulling levers too. The U.S. Soybean Export Council sponsored a June Vietnam mission yielding $1.4 billion in MOUs for ag products, including soy. August brought Latin American buyers to Illinois for farm tours, though exports to Peru and Nicaragua remain negligible. In Nigeria, a modest 64,000 tons shipped last year hasn’t translated to 2025 bookings yet. And Secretary Rollins’ September tweet hailing Taiwan’s “$10 billion” four-year ag commitment? It’s a rebrand of existing $3.8 billion annual flows, not new money, USDA clarifications confirm.
“There’s talk of India, Southeast Asia, North Africa as future markets,” says Ryan Frieders, a 49-year-old Waterman, Illinois, farmer who joined a February trek to Turkey and Saudi Arabia. “But nothing explodes overnight to replace China.” Frieders, facing $8-10 per acre losses per University of Illinois models, plans to bin most of his harvest, gambling on futures prices rebounding above $11 by Q1 2026.
The Shadow of South America and Tariff Games
As U.S. beans languish, Brazil and Argentina feast. China, pivoting since 2018’s first trade war, now sources 80% of its needs from South America. Last month, Argentine President Javier Milei’s temporary export tax suspension lured $500 million in Chinese cargoes, traders at the Chicago Mercantile Exchange report. U.S. beans traded at $0.80-$0.90 per bushel cheaper than Brazilian equivalents for September-October shipment, but Beijing’s 23% tariff tacks on $2 per bushel—enough to divert 5 million metric tons southward.
“The frustration is overwhelming,” says Caleb Ragland, 39, Kentucky farmer and American Soybean Association president. On Truth Social Wednesday, Trump himself griped: “Our Soybean Farmers are hurting because China, for ‘negotiating’ reasons, isn’t buying.” He teased soybeans as a centerpiece in his upcoming summit with Xi Jinping in four weeks. Treasury Secretary Scott Bessent, speaking Thursday, promised a Tuesday announcement on aid, potentially including a $20 billion swap line for Milei—irking U.S. growers who see it as subsidizing their rivals.
On Friday, soybean futures closed at $9.42 per bushel on the CME, down 2% weekly amid harvest pressure and zero Chinese bookings. Analysts at Zaner Ag Hedge forecast a “bloodbath” if no deal materializes by November: Storage costs could add $0.50 per bushel, while on-farm debt—$450 billion industry-wide, per Farm Credit Administration—balloons.
The trade war’s winners? South American exporters, grinning from bumper crops (Brazil’s output hits 155 million metric tons this year, USDA estimates), and U.S. tariff coffers, flush for bailouts. Losers abound: From Decatur’s processing plants, once buzzing with Chinese-bound shipments, to the 1.2 million farm jobs at risk nationwide, per the American Farm Bureau Federation.
For Kindred, Gaffner, and their ilk, the math is merciless. “We want trade, not aid,” Gaffner insists. “China’s building routes elsewhere; once they’re hooked on Brazil, we might never claw it back. That’s not just my farm—it’s the next generations, the rural towns, the whole engine of America’s breadbasket.”
As combines roll on, the Midwest holds its breath. A Xi-Trump handshake could flood elevators with orders; stalemate risks a cascade of foreclosures and fallow fields. In this high-stakes harvest, soybeans aren’t just seeds—they’re the fragile thread binding U.S. farmers to their future.
October 8, 2025

Private Equity Titans Target New Investment Opportunities in Japan

In the shadow of Mount Fuji, where ancient traditions meet cutting-edge innovation, a quiet revolution is underway in Japan’s corporate landscape. Private equity heavyweights from Wall Street to Singapore are descending on the world’s fourth-largest economy, drawn by a potent cocktail of undervalued assets, rock-bottom borrowing costs, and a government-mandated push for shareholder value. What was once dismissed as a sclerotic market riddled with inefficient conglomerates is now the hottest ticket in global buyouts, with deal values surging and fundraising hitting decade highs.

The numbers tell a compelling story. According to Preqin Pro data, Japan-focused private equity funds raised a robust $8 billion in 2024, matching the previous year’s haul and dwarfing the $5 billion annual average over the prior decade. This capital stockpiling signals unbridled optimism: firms are amassing dry powder faster than they can deploy it, betting on a pipeline of bargains that could redefine returns in an era of elevated U.S. interest rates and frothy valuations elsewhere.

Historical trends underscore the momentum. From 2015 to 2024, aggregate capital raised for Japan-focused funds climbed steadily, peaking at $8.0 billion in both 2023 and 2024, with the number of funds closing each year hovering between 25 and 46. The 2024 vintage saw 41 funds close, raising $8.0 billion – a testament to investor appetite that has grown from a modest $1.6 billion across 27 funds in 2016. “The stockpiling of capital raised but not yet invested indicates that private equity sees more opportunities in Japan,” notes Hajime Koyanagi, general manager of the investment strategy department at Nihon M&A Center, a leading Japanese advisory firm.

On the investment front, the surge is even more pronounced. S&P Global Market Intelligence reports that private equity- and venture capital-backed investments in Japan ballooned 40.8% year-over-year to $17.90 billion in 2024, accounting for 15.6% of all such activity in the Asia-Pacific region – up from 10.6% in 2023. This marked the highest share for Japan in the period, with deal counts reaching 1,045 in 2024, following 978 in 2023. Year-to-date through October 2025, Deloitte data shows 192 deals already inked, on pace to eclipse last year’s total of 292.

Japan’s slice of APAC PE/VC pie has steadily expanded: from 4.1% in 2019 to 15.6% in 2024, per S&P Global. “Momentum is expected to continue in 2025, pushing private equity transaction value – and the competition among firms hunting deals – even higher this year,” Koyanagi predicts. Bain & Co.’s Azusa Owa, a Japan-based partner, echoes this: “Japan is fundamentally a very attractive market from a return perspective.” Between 2010 and 2024, Japanese PE deals delivered 2.4 times the invested capital in dollar terms – the highest globally, outpacing the U.S.’s 2.3x multiple, even accounting for yen depreciation.

Low-Hanging Fruit in a Yen-Fueled Bargain Basement

At the heart of the frenzy is a simple thesis: Japan’s 3,900-plus publicly listed companies are awash in cash but starved of ambition. Many operate as sprawling keiretsu-style conglomerates, hoarding underperforming units, shunning price hikes amid decades of deflationary scars, and carrying debt loads lighter than a feather – averaging just 20-30% debt-to-equity ratios, versus 50-60% in the U.S. For PE firms accustomed to leveraging deals with high-yield debt, this is catnip. Leveraged buyout financing in Japan runs a mere 3-4%, compared to 8-9% stateside, courtesy of the Bank of Japan’s ultra-loose policy.

“Japan seems like fresh territory to hunt for bargains, especially given the relatively weak yen,” observes Megumi Kiyozuka, president of Tokyo-based Sunrise Capital. Last year, Kiyozuka targeted $500 million for his latest fund but capped it there after global limited partners clamored to pour in up to $2 billion – before he’d even left Japan. It’s a far cry from 2013, when he crisscrossed the globe, pitching to 200 investors to scrape together $200 million from a pair of skeptics. “Years ago, people declined to invest in Japan because they said it was inefficient. Now everyone says they like Japan because it’s inefficient,” Kiyozuka quips. “It’s the same reason, but it can be used as a reason to decline or to invest.”

Corporate Japan, long insulated by cross-shareholdings and lifetime employment norms, is cracking open. The Tokyo Stock Exchange’s 2023 mandate – requiring firms trading below book value to disclose improvement plans – has lit a fire under laggards. A fresh government guideline urges boards to “seriously consider” takeover bids, while activist investors like Elliott Management and Oasis Management have amassed stakes in blue-chips from Toshiba to Nissan, demanding spin-offs and buybacks.

The result? A torrent of take-privates, carve-outs, and growth capital rounds. “There are dramatic changes in corporate Japan,” says Teppei Takanabe, co-head of investment banking at Goldman Sachs in Japan. “They have become sensitive to shareholder return, capital efficiency and reconstruction of their business portfolio.” Smaller family-run enterprises, grappling with a “succession crisis” among aging owners, are increasingly amenable to sales, per Satoshi Ishiguro, an executive director at Daiwa Corporate Advisory.

Gavin Geminder, global head of private equity at KPMG LLP, highlights the financing edge: “There’s no economy in Asia with the type of interest rate environment that Japan has, so borrowing money is obviously super-cheap.” Add in paths to value creation – like internationalizing tech-heavy portfolios or juicing razor-thin margins – and the allure intensifies. “Japanese corporates have incredible technology, but they have perhaps struggled to market it outside of Japan,” says Nick Wall, a Tokyo-based partner at Allen & Overy Shearman Sterling LLP. “Private equity definitely sees opportunities there.”

The big players are voting with their checkbooks. KKR & Co., which views Japan as its premier non-U.S. deployment market, kicked off 2024 with a bang: a $3.9 billion acquisition of a 33.57% stake in Fuji Soft Inc., the largest PE deal in Japan last year. The follow-on $2.6 billion bid to privatize the software developer ranked third. Eiji Yatagawa, KKR’s Japan private equity head, recalls a landmark 2017 play: snapping up Kokusai Electric from Hitachi for ¥257 billion ($1.7 billion), streamlining it into a semiconductor pure-play, and flipping it via IPO in 2023 at ¥424 billion – a tidy multiple.

Bain Capital tallied over $10 billion in Japanese deals in 2024 alone. Blackstone and Sweden’s EQT AB, in a summer sprint, each unveiled ~$3 billion take-privates of public firms within weeks. Hillhouse Investment Management and Rava Partners teamed for the $2.8 billion privatization of real estate developer SAMTY Holdings Co. Ltd., the year’s second-biggest splash. Warburg Pincus and Hillhouse are staffing up with Japan specialists and plotting brick-and-mortar expansions.

Domestic heavyweights aren’t sitting idle. Japan-based firms snagged two of 2024’s top 10 deals: a $388 million buyout of auto retailer BigMotor Co. (rebranded WECARS) and a $211.7 million pour into AI startup Sakana AI K.K. The full 2024 leaderboard, per S&P Global, reads like a who’s-who of cross-border ambition:

Target	Buyer/Investor	Announced Date	Transaction Value ($M)
Fuji Soft Inc.	KKR & Co. Inc.	08/09/24	3,901
SAMTY HOLDINGS Co. Ltd.	Hillhouse Investment Management Ltd. & Rava Partners	10/11/24	2,773
Alfresa Corp.	MKR & Co.	07/03/24	2,669
Infocom Corp.	Blackstone Inc.	06/18/24	688
BGF Holdings Japan Ltd.	Carlyle Group Inc. & ITOCHU Corp.	04/18/24	608
Transom Co. Ltd.	Bain Capital Private Equity LP	04/17/24	383
Sakana AI K.K.	Blackstone Inc.	09/14/24	211

Sectors span consumer (e.g., Sakana AI), healthcare (Alfresa), industrials (BigMotor), real estate (SAMTY), and TMT (Fuji Soft). “More and more foreign funds are making inroads into Japan as they see more room for Japanese companies to improve extremely low productivity,” Koyanagi adds.

Not all is golden. The PE model draws fire for prioritizing short-term gains – asset stripping, cost-slashing – over long-term health. “It does make sense that in an economy like Japan – where companies have historically not been focused on maximizing profits – private equity can sometimes help sharpen that focus,” concedes Ludovic Phalippou, finance professor at Oxford’s Saïd Business School. Yet, “the pressure to increase returns can lead to cost-cutting or strategies that don’t necessarily improve outcomes for customers or employees. In either case, however, PE fund managers do well, because they charge extraordinary fees.”

Japan’s scorecard isn’t spotless. KKR’s 2019 Marelli Holdings merger – blending Japanese and Italian auto-parts assets – cratered amid COVID and EV disruptions, triggering Japanese rehabilitation proceedings and U.S. Chapter 11. The firm absorbed a $2 billion writedown before injecting $650 million to nurse it back. “That was definitely a very challenging situation,” Yatagawa admits. “We believe we did everything we could.”

Perception has shifted, too. Once branded “vultures,” PE suitors now enjoy red-carpet treatment, aided by succession woes and reform winds. But maturity brings thorns: Exit timelines are stretching, with just 44% of 2018-2020 deals sold or IPO’d within five years, versus 54% for 2015-2017 vintages (Bain data). “Deal opportunity and availability is evolving, however not as fast as money is raised,” Owa warns. “Some funds who raised money struggle to use it.” This mismatch risks bid-up valuations, spurring demand for mezzanine debt, per Takanabe.

Atsuhiko Sakamoto, Blackstone’s Japan PE chief, tempers the hype: “The boom is just expectations. Reality hasn’t caught up with the hype yet. I’m very excited about the next few years.” Wall of Allen & Overy, a Japan veteran since the ’90s, marvels at the thaw: “In the ’90s, one of the things you heard a lot from foreign investors is, ‘I’d love to invest in Japan but there aren’t any assets to buy.’ And that is changing.”

Barring geopolitical shocks, 2025 shapes up as a banner year. Geminder of KPMG forecasts “a record year for Japan,” fueled by cheap debt, activist tailwinds, and middle-market bounty. Ishiguro of Daiwa sees the aversion to PE fading: “Japan’s business community is overcoming a longstanding aversion to partnering with or selling to private equity.”

As Eiji Yatagawa of KKR puts it, “Japan is still in the very early stage of its private equity history. This industry evolution still has a long way to go.” For global titans, the Land of the Rising Sun is no longer a sideshow – it’s the main event, where inefficiency meets opportunity, and bargains await the bold.

October 8, 2025

UK and US Move to Bolster Financial Ties in Advance of Trump Visit
U.S. President Donald Trump, centre right, and British Prime Minister Keir Starmer arrive at Trump International Golf Links in Aberdeenshire, Scotland, Monday, July 28, 2025. © Jane Barlow/Pool Photo via AP, file
Donald Trump flies into Britain on Tuesday evening for a three-day state visit, with the US and UK promising to boost financial ties, including by exploring closer alignment of their capital markets.
UK Prime Minister Sir Keir Starmer wants to use Trump’s visit to showcase Britain as an inward investment hotspot, with US private equity company Blackstone pledging to invest £100bn in British assets over the next decade. US officials said there would be at least $10bn of investment deals in the technology sector, an agreement on nuclear co-operation and an exploration of “how the deep connections between our leading financial hubs can be maintained into the future”. But Trump’s arrival could throw up problems for Starmer.
The US president is unpopular in Britain and his schedule has been designed to shield him from any public or political protest. Trump will not address the UK parliament and is expected to travel by helicopter from the US ambassador’s residence in London to Windsor Castle and later to Starmer’s country retreat at Chequers. Trump has not yet finalised a deal, agreed with Starmer in May, to exempt British steel exports from US tariffs, although they do benefit from lower 25 per cent levies compared with the 50 per cent applied to other countries.
British officials were in Washington on Monday holding urgent talks with US trade officials to try to conclude a deal that would exempt Scotch whisky from a 10 per cent tariff imposed on other UK exports.
A senior US official said the White House was not “tracking” any announcement to reduce US tariffs on whisky, in a sign that an agreement was unlikely. But the official suggested it may well be discussed. Meanwhile, US officials would not be drawn on whether Trump would endorse Tommy Robinson, a far-right activist who is admired by figures on the American right and who organised a “Unite the Kingdom” rally in London on Saturday, attended by between 110,000 and 150,000 people.
Asked whether he would speak out in support of Robinson, whose real name is Stephen Yaxley-Lennon, or even meet him, a US official said: “I don’t have anything on that right now.” For Trump, the highlight of the visit is expected to be a stay with King Charles and Queen Camilla at Windsor Castle, where he will be feted with a fly-past by military jets, a carriage procession and a state banquet.
But Starmer will try to use the visit to focus on financial, tech and nuclear co-operation, in an attempt to bolster his claims to have a “growth agenda” and to move on from a series of scandals that have rocked his government. Starmer is facing a wave of anger among Labour MPs and questions over his judgment after sacking his US ambassador Lord Peter Mandelson last week over his links to the convicted paedophile Jeffrey Epstein.
Trump is likely to be grilled over his own connections to Epstein at a press conference on Thursday, his last official business before returning to the US.
The state visit will be preceded on Tuesday by talks in Downing Street between UK chancellor Rachel Reeves and US Treasury secretary Scott Bessent over closer financial co-operation.
By aligning UK standards more closely with the US, Reeves would be hoping to increase access to the world’s deepest and most liquid financial markets, as well as attract greater American investment into Britain.
Stock Widget
The push follows a period of intense political anxiety over an exodus of London-listed companies to the New York Stock Exchange and Nasdaq, as businesses seek higher valuations on the other side of the Atlantic. Trump will bring leading figures from Big Tech including OpenAI’s Sam Altman and chipmaker Nvidia’s NVDA +2.45% ▲ Jensen Huang on his delegation, while companies such as Rolls-Royce RYCEY +1.80% ▲, GSK GSK +1.35% ▲ and Microsoft MSFT +1.95% ▲ will attend a business roundtable at Chequers.

US officials did not indicate to what extent Trump would press Starmer on Britain’s Online Safety Act, which has been a source of tension between Washington and London as some US tech companies have decried it as censorship.
“How that may or may not play into the bilateral discussion that will take place with the prime minister is yet unknown. It may well arise, but it may not,” a senior US official said. “Free speech in the UK, but free speech elsewhere, is something that we in this administration are very much focused on,” they added.
Stock Widget
Blackstone BX +2.65% ▲ is making its commitment to Britain as part of a broader $500bn investment push across Europe, which co-founder Stephen Schwarzman told The Financial Times aimed to profit from economic reforms and a revival of growth. Blackstone’s top leaders like Schwarzman and president Jonathan Gray have long considered the UK a key market for the $1.2tn in assets investment group, and they have strong ties with Downing Street.

Blackstone is already one of the largest foreign investors in the UK, with billions put into digital infrastructure and ecommerce warehouses, among other things. It also has large corporate investments including Merlin Entertainments, the owner of Legoland, and was a major shareholder in the London Stock Exchange’s parent company until fully divesting its shares last year.
September 15, 2025
Trump Abandons Tariff Threats on China Following Summit with Putin
U.S. President Donald Trump and Russian President Vladimir Putin walk on the tarmac after they arrived at Joint Base Elmendorf-Richardson in Anchorage, Alaska, on Aug.15, 2025. © Andrew Caballero-reynolds/AFP via Getty Images
President Donald Trump said after his Aug. 15 summit with Russian President Vladimir Putin that progress made in the talks means that he will not immediately consider imposing additional tariffs on countries such as China for buying Russian oil—but hinted that he might have to “in two or three weeks.”
Trump has warned that if Russia does not move toward ending the war in Ukraine, the United States will impose sanctions directly on Moscow. He has also threatened secondary sanctions—penalties on countries such as China and India that continue to buy Russian oil despite U.S. pressure.
China and India are the largest buyers of Russian oil, providing Putin and his military with revenue that allows the Kremlin to keep the war against Ukraine going. Trump already hit India with an additional 25 percent tariff on Indian goods—bringing the total to 50 percent—explicitly citing its ongoing purchases of Russian oil as the reason.
Even though China is the biggest single buyer of Russian oil, Trump has not imposed similar tariffs or penalties on Beijing. Were he to ramp up Russia-related sanctions and tariffs, China and its slowing economy would suffer a sharp blow. Such a move would risk breaking a fragile U.S.–China trade truce, agreed to in order to give the two sides time to negotiate a broader deal.
Trump was asked by Fox News’s Sean Hannity, in an interview on Aug. 15, for his thoughts on the secondary tariffs against China and other buyers of Russian oil.
“Well, because of what happened today, I think I don’t have to think about that,” Trump replied.
“Now, I may have to think about it in two weeks or three weeks or something, but we don’t have to think about that right now. I think, you know, the meeting went very well.”
At the height of their trade fight earlier this year, the United States hit Chinese imports with 145 percent tariffs, prompting Beijing to retaliate with 125 percent duties. The two sides have since scaled back, with current rates down to 10 percent on the United States and 30 percent on China.
After a two-day meeting in Sweden in late July, the world’s two largest economies signaled that they may extend the temporary trade truce to keep talks going. With the agreement set to expire on Aug. 12, Trump signed an executive order granting a 90-day extension of the tariff pause on China to permit further negotiations.
At their Alaska summit, Trump and Putin said they agreed on numerous points but fell short of securing a deal that would bring about a cease-fire in Ukraine, something Trump has been pushing for.
Trump said on Aug. 16 that Ukrainian President Volodymyr Zelenskyy will travel to Washington early next week for a meeting in the Oval Office.
“If all works out, we will then schedule a meeting with President Putin,” Trump said in a post on Truth Social.
The meeting, set for Aug. 18, has been confirmed by Zelenskyy, who said in a post on X that “Ukraine reaffirms its readiness to work with maximum effort to achieve peace.”
We had a long and substantive conversation with @POTUS. We started with one-on-one talks before inviting European leaders to join us. This call lasted for more than an hour and a half, including about an hour of our bilateral conversation with President Trump.

Ukraine reaffirms… pic.twitter.com/64IPVhtFaB
— Volodymyr Zelenskyy / Володимир Зеленський (@ZelenskyyUa) August 16, 2025

Both Trump and Putin said the Aug. 15 meeting set the stage for continued dialogue and stronger prospects for a peace deal.
In his interview with Hannity, the U.S. president said that there was agreement on many points, but that there were “one or two pretty significant items” left to settle, with the president expressing confidence that they can be resolved.
“Now it’s really up to President Zelenskyy to get it done, and I would also say the European nations, they have to get involved a little bit,” Trump said.
August 18, 2025
China’s complex relationship with Nvidia’s H20 chip is marked by both its potential benefits and significant concerns
Stock Widget
Chinese authorities have intensified scrutiny of domestic tech giants, including Tencent TCEHY -2.30% ▼, ByteDance, and Baidu BIDU -1.85% ▼, over their purchases of Nvidia’s NVDA -3.45% ▼ H20 AI chips, raising concerns about data security and urging companies to prioritize domestic alternatives. The regulatory pressure also extends to AMD AMD -2.10% ▼, while domestic chipmakers like SMIC 981.HK +5.20% ▲ benefit from the push toward technological self-sufficiency. Major Chinese firms like Alibaba BABA -1.95% ▼ face difficult decisions as they navigate between proven U.S. technology and regulatory pressure to adopt domestic alternatives.

The Cyberspace Administration of China (CAC) and other regulatory bodies have held meetings with these firms and smaller tech companies in recent weeks, questioning the necessity of relying on U.S.-made chips when local options are available. This development threatens Nvidia’s recently restored access to the Chinese market and could generate billions in revenue for the U.S. government through a novel export deal, while highlighting China’s push for technological self-sufficiency in the global AI race.
The CAC’s recent actions mark a significant escalation in China’s oversight of foreign AI technology. According to Reuters, Chinese officials have summoned major internet firms, including Tencent, ByteDance, and Baidu, to explain their reasons for purchasing Nvidia’s H20 chips, designed specifically for the Chinese market to comply with U.S. export restrictions. One source indicated that authorities expressed concerns about potential information risks, particularly the possibility that materials submitted by Nvidia for U.S. government review could contain sensitive client data. “The regulators are worried about what Nvidia might be sharing with U.S. authorities,” the source said, speaking on condition of anonymity due to the private nature of the meetings.
While no outright ban on H20 purchases has been issued, Bloomberg News reported on August 12, 2025, that Chinese authorities have sent official notices discouraging the use of H20 chips for government or national security-related projects, affecting both state-owned enterprises and private companies. A separate report by The Information claimed that the CAC directed over a dozen tech firms, including Alibaba, to suspend Nvidia chip purchases entirely, citing data security concerns. These directives followed the Trump administration’s decision in July 2025 to reverse export curbs on the H20, allowing Nvidia to resume sales in China after a ban earlier this year.

The CAC’s concerns were amplified by state-controlled media, with outlets like Yuyuan Tantian, affiliated with CCTV, publishing articles on platforms like WeChat that criticized the H20 chips for alleged security risks, lack of technological advancement, and environmental inefficiencies. Nvidia, in a statement on August 12, 2025, refuted these claims, asserting that the H20 is “not a military product or for government infrastructure” and emphasizing that China has ample domestic chip alternatives for its needs. Tencent, ByteDance, Baidu, and Alibaba did not respond to requests for comment, and the CAC remained silent on the matter.
The scrutiny of Nvidia’s H20 chips comes amid heightened U.S.-China tensions over AI technology. The H20, a less-advanced version of Nvidia’s flagship AI chips, was developed to navigate U.S. export controls imposed in late 2023, which restricted sales of more powerful chips like the A100 and H100 to China. The Trump administration’s reversal of the H20 ban in July 2025 was part of a broader deal with Nvidia and AMD, announced last week, requiring the companies to remit 15% of their China sales revenue for certain advanced chips to the U.S. government. According to posts on X, this arrangement could generate billions of dollars for Washington, with Nvidia’s China sales alone accounting for $17 billion—or 13% of its total revenue—in its fiscal year ending January 26, 2025.
However, China’s renewed guidance could jeopardize this revenue stream. By discouraging H20 purchases, Beijing is signaling its intent to reduce reliance on U.S. technology, a move that aligns with its broader “Made in China 2025” initiative to achieve technological self-sufficiency. Domestic chipmakers like Huawei and SMIC are ramping up production of AI accelerators, with Huawei’s Ascend series emerging as a viable rival to the H20. SMIC’s stock rose 5% on August 12, 2025, reflecting investor optimism about growing demand for locally produced chips.
The regulatory pressure also extends to AMD, with Bloomberg reporting that China’s guidance affects its MI308 chip, though no specific notices targeting AMD were confirmed. AMD did not respond to inquiries outside regular business hours. The uncertainty surrounding foreign chip purchases has sparked speculation on X that Nvidia and AMD may raise prices for their chips in China to offset the 15% revenue share to the U.S. government, potentially further incentivizing Chinese firms to pivot to domestic alternatives.
The global AI chip market, projected to reach $400 billion by 2027, is a critical battleground for U.S. and Chinese tech giants. Nvidia has long dominated the market, with its GPUs powering AI applications worldwide. In China, the company’s H20 chip was a lifeline after U.S. sanctions curtailed sales of its more advanced models. However, Beijing’s push for domestic alternatives threatens Nvidia’s market share, which accounted for 13% of its revenue in the last fiscal year.
China’s domestic chip industry, while growing, faces challenges due to U.S. sanctions on advanced chipmaking equipment, such as lithography machines critical for producing cutting-edge processors. Despite these constraints, companies like Huawei have made significant strides, with posts on X highlighting the performance of Huawei’s Ascend chips in AI workloads. “Huawei’s chips are closing the gap with Nvidia’s H20,” tweeted one tech analyst, reflecting growing confidence in China’s capabilities.
For Chinese tech giants, the CAC’s directives create a delicate balancing act. Companies like Tencent, ByteDance, and Baidu rely on AI chips to power their cloud computing, search, and social media platforms. While Nvidia’s H20 offers proven performance, the regulatory pressure to adopt domestic chips could force a shift, even if local alternatives lag in certain applications. Smaller tech firms, less equipped to navigate regulatory scrutiny, may face greater challenges in securing reliable chip supplies.
At the heart of China’s caution is a deep-seated concern about data security and U.S. influence. The CAC’s meetings with Nvidia representatives last month focused on whether the H20 chip posed backdoor risks that could compromise Chinese user data and privacy. These concerns echo broader fears in Beijing that U.S. technology could be used to monitor or manipulate Chinese systems, a sentiment amplified by state media.
Conversely, Washington has its own worries about China’s access to advanced AI chips. U.S. President Donald Trump’s suggestion on August 11, 2025, that Nvidia might be allowed to sell a scaled-down version of its Blackwell chip in China reflects a pragmatic approach to balancing economic interests with national security. However, this proposal has sparked debate, with critics arguing that even less-advanced U.S. chips could enhance China’s military capabilities. China’s foreign ministry responded on August 12, 2025, urging the U.S. to maintain a stable global chip supply chain, signaling its desire to avoid further escalation.
China’s cautious stance on Nvidia’s H20 chips underscores the broader geopolitical tug-of-war over AI technology. For Nvidia, the regulatory hurdles threaten a critical market, forcing the company to navigate a complex landscape of compliance and competition. The 15% revenue-sharing deal with the U.S. government adds further pressure, potentially increasing costs for Chinese buyers and accelerating the shift to domestic alternatives.
For Chinese tech firms, the CAC’s guidance reflects a broader push for technological independence, but it also risks disrupting their AI development timelines. While Huawei and SMIC are making strides, scaling production to meet domestic demand remains a challenge, particularly given U.S. restrictions on advanced manufacturing equipment. The global chip supply chain, already strained by sanctions and trade disputes, faces further uncertainty as both nations vie for dominance.
As the AI race intensifies, the outcome of this standoff will have far-reaching implications. For now, China’s scrutiny of Nvidia’s H20 chips signals a bold step toward self-reliance, while the U.S. grapples with balancing economic gains against strategic concerns. The global tech industry, caught in the crossfire, awaits clarity on how this high-stakes rivalry will reshape the future of AI.
August 13, 2025
Ford’s “Made in America” Approach Backfires Amid Trump’s Tariffs
President Donald Trump’s aggressive new trade policies—designed to bolster domestic manufacturing—are hitting Ford Motor Company harder than many anticipated. Despite building roughly 80% of the vehicles it sells in the U.S. domestically, Ford is projecting a net $2 billion tariff-related drag on earnings for 2025, up from a prior estimate of $1.5 billion.
Big Three Automakers Earnings Loss – 3D Chart
Big Three to Lose $7 Billion in Earnings
Ford, GM, and Stellantis—the so-called Big Three—now expect a combined $7 billion earnings hit this year

3D column chart showing earnings losses for Big Three automakers: Ford $2 billion, GM $3.5 billion, Stellantis $1.5 billion, totaling $7 billion in losses.

Despite its domestic-heavy production footprint, Ford isn’t insulated. It reported an $800 million tariff hit in Q2, contributing to a net loss of $36 million, and revised its full‑year earnings forecast to $6.5 billion–$7.5 billion, down from previous guidance of $7.0 billion–$8.5 billion.
Made-in-America Isn’t Enough
Even though Ford produces nearly four in five U.S.-sold vehicles locally, much of its parts and materials—like steel, aluminum, and EV components—are sourced internationally. Under the White House’s new trade regime:
Foreign-made vehicle imports face new 25% tariffs, while automakers allied with USMCA countries can benefit from reduced levies as long as supplier sourcing meets content rules.
Ford continues to face steep tariffs on materials and parts—particularly aluminum and steel—which squeeze margins despite local assembly.
Ford Motor Co. CEO Jim Farley poses next to a new 2021 Ford F-150 pickup truck at the Rouge Complex in Dearborn, Michigan, U.S. September 17, 2020. © REUTERS/Rebecca Cook/File Photo
CEO Jim Farley warned the tariffs could “blow a hole in the U.S. industry” and force difficult choices in product planning and pricing strategy.
Thanks to trade agreements with the EU, Japan, and South Korea, many foreign automakers now pay only 15% tariffs, significantly less than the 25% levied on imports from Canada and Mexico or on non‑compliant parts.
Stellantis CEO Antonio Filosa noted that 8 million of the 16 million vehicles sold annually in the U.S.—made in Mexico or Canada with many U.S. components—now face higher tariffs than fully compliant imports from abroad.
Stellantis North America COO and Jeep CEO Antonio Filosa speaks during the Stellantis press conference at the Automobility LA 2024 car show, Los Angeles, California, U.S., Nov. 21, 2024. © AFP Photo
In Q1 2025, Ford’s revenue declined 5% to $40.7 billion but still beat expectations, and net income dropped from $1.3 billion to $471 million.
- Offset strategies include:
  - Transporting compliant vehicles from Mexico through bonded channels to avoid tariffs
  - Halting exports to China
  - Implementing internal cost reductions totaling about $1 billion planned for 2025
As of late July, Ford reinstated full‑year guidance, projecting $6.5 billion–$7.5 billion in adjusted EBIT, and affirmed $2 billion in tariff-related costs for the year.
Big Three Carmakers Earnings – Accurate Data
Analysts predict lower earnings at the Big Three carmakers
General Motors
Ford
Stellantis

Bar chart showing Big Three automakers’ net income from 2018 to 2026, with actual data through 2023 and analyst forecasts for 2024-2026.

A recent study estimates the entire auto industry could incur up to $108 billion in tariff costs, with the Big Three alone losing roughly $41.7 billion in 2025. Bernstein analysts forecast up to a 60% decline in free cash flow for the trio, due to rising production costs and shrinking margins.
Consumer pricing will likely rise: average new vehicle prices could increase by 4–8% by year-end, with some models seeing hikes up to $2,000, driven by imported parts tariffs and material cost inflation.
US Car Sales by Assembly Location
On average only half the cars sold in America are made there
US car sales by country of assembly % (US companies starred)
US
Canada/Mexico
Imported
0 20 40 60 80 100
Horizontal stacked bar chart showing percentage of US car sales by assembly location for different manufacturers. US companies are marked with asterisks.

Ford’s commitment to “Made in America” now looks paradoxical. The company is suffering disproportionately from a tariff regime meant to favor U.S. businesses—because its deep integration with global parts supplies exposes it to amplified cost burdens. Farley’s characterization of Ford as “the most American company with a $2 billion liability” captures the irony and urgency of the moment.
Unless Washington revises or harmonizes its trade policies—particularly with key neighbors Mexico and Canada—the pain for Ford and its peers could deepen. Meanwhile, international competitors may seize market share just as consumer prices edge upward.
August 1, 2025
Trump Threatens 35% Tariff on Some Canadian Goods
In a sharp escalation of trade tensions, President Donald Trump has announced a 35% tariff on select Canadian imports, effective August 1, tightening pressure on Canada over issues ranging from fentanyl trafficking to retaliatory trade measures. Crucially, goods compliant with the United States–Mexico–Canada Agreement (USMCA) are exempted—at least for now.
Trump’s move targets products he claims are part of Canada’s inadequate response to the fentanyl crisis flooding into the U.S. He also cites longstanding Canadian barriers, particularly in dairy and agricultural sectors—some carrying “400%” duties as he alleged, hurting U.S. producers.
In a letter to Canadian Prime Minister Mark Carney shared publicly on Truth Social, Trump warned that tariff rates could rise further or be adjusted downward depending on Ottawa’s actions. He also pledged to penalize any “transshipment” efforts intended to avoid the new levies.
U.S. officials clarified that the 35% tariff applies only to non-USMCA-compliant goods, preserving preferential treatment for those that adhere to the trilateral agreement. This means most automotive parts and other USMCA-certified items remain tariff-free—but non-compliant sectors such as certain foods, potash, and energy may face the full burden.
The distinction provides Canada’s businesses with a temporary buffer, but uncertainty looms—particularly around goods whose compliance status is under review.
Financial markets responded swiftly: U.S. stock futures and Treasury yields slipped on worries over trade escalation. The Canadian dollar also dropped to a two-week low, reflecting investor anxiety .
Canadian exporters in non-USMCA sectors are bracing for disruption. Ottawa is considering retaliatory measures and invoking rule-based solutions under WTO frameworks and NAFTA-era mechanisms. Prime Minister Carney has indicated ongoing efforts to mitigate both the fentanyl flow and tariff fallout before the July 21 economic and security pact deadline.
The tariff threats form part of a broader U.S. strategy: Trump has issued similar warnings to over 20 countries, with proposals ranging from 15%–20% tariffs, including a temporary 50% levy on Brazilian goods. Several countries are now scrambling to negotiate carve-outs or exemptions to avoid steep duties.
The prevailing argument in Washington: these trade measures are aimed at correcting “unsustainable trade imbalances” that pose economic and national security risks .
“Carving out USMCA-compliant goods softens the blow but leaves too much uncertainty,” notes Alicia Fernandez, trade economist at NorthStar Insights. “We’re likely headed toward tit-for-tat tariffs and escalating legal dispute.”
Trump’s 35% tariff threat on Canadian goods—while sparing USMCA-compliant items—signifies a targeted yet volatile escalation in the U.S.–Canada trade relationship. With critical deadlines approaching and retaliatory steps underway, this confrontation may reshape North American trade policy well beyond August.
July 11, 2025
U.S. Tariffs Dominate Headlines, but EU-China Trade Tensions Quietly Escalate
While the United States’ aggressive tariff strategies continue to dominate global trade headlines, a quieter but increasingly tense economic confrontation is unfolding between China and the European Union — one that could have lasting implications for global markets, supply chains, and industrial policy.
Behind the scenes, tit-for-tat measures between Brussels and Beijing have intensified in recent months, exposing a fractured relationship marred by accusations of unfair trade practices, overcapacity, and geopolitical divergence.
The European Union recently restricted Chinese companies from participating in public tenders for medical devices, citing concerns over procurement transparency and national security. China quickly retaliated by imposing import curbs on European medical products, marking a fresh escalation in the long-simmering standoff.
Simultaneously, China made good on its long-threatened tariffs on EU-made brandy, a move widely interpreted as a retaliatory response to the EU’s 2024 imposition of anti-subsidy duties on Chinese electric vehicles (EVs).
Both sides have since ramped up their criticism and countermeasures, with diplomatic language growing sharper and economic cooperation increasingly fraught.
“EU-China trade relations are now quite poor,” said Marc Julienne, director of the Center of Asian Studies at the French Institute of International Relations (Ifri), speaking to CNBC earlier this week. “What was once a domain of great opportunity and enthusiasm has now become more about managing risk.”
This sentiment is echoed across European policy circles. Grzegorz Stec, a senior analyst at the Mercator Institute for China Studies, noted that the two economies are increasingly on a collision course, especially on issues like industrial policy, trade diversion, and market access.
“Beijing’s increasingly urgent need to export contradicts the EU’s desire to protect its own industrial base,” Stec said, referencing China’s ongoing struggle with overcapacity and sluggish domestic demand. These structural issues have compelled Chinese exporters to look outward, often at prices and volumes that European officials say distort competition and threaten homegrown industries.
Beijing’s recent tariffs on European brandy are being described by analysts as “economic weaponization” — part of a broader strategy to pressure Brussels into scaling back scrutiny and protectionist measures. The Chinese investigation into European spirits began shortly after the EU initiated its own probe into Chinese EV subsidies.
This pattern of retaliatory trade policy is not new in global geopolitics, but the stakes are growing. Europe’s trade deficit with China continues to widen, and concerns are mounting over the environment for foreign firms in China, which many say has become increasingly restrictive and opaque.
Interestingly, some experts argue that U.S. tariffs under President Donald Trump could have served as a catalyst for closer EU-China cooperation. Instead, both parties have grown more entrenched in their respective trade positions.
“If anything, the EU and China should have used the U.S. pressure as a common ground for negotiation,” Julienne said. “But instead, geopolitical divergence and mutual distrust prevailed.”
Jean-Marc Fenet, senior fellow at the ESSEC Institute for Geopolitics & Business, believes part of the reason is that China feels it has already ‘won’ its tariff standoff with Washington, reducing the urgency to compromise with Brussels.
“Beijing no longer sees the need for a unified front with the EU,” Fenet said. “In fact, there’s growing concern in Beijing that the EU may fall in line with Washington’s harder stance on China.”
The China-U.S. trade framework agreement announced in June — covering contentious areas such as rare earth exports and technology regulations — only reinforced that perception. Earlier this year, Beijing had already moved to restrict exports of critical rare earth elements and magnets, leveraging its dominance in materials vital to the automotive, energy, and defense sectors.
With an upcoming EU-China Summit scheduled for July 24 in Beijing, hopes are low for a breakthrough. Sources confirm that European Commission President Ursula von der Leyen and Chinese President Xi Jinping are expected to meet, but even senior officials are bracing for a tense and possibly unproductive dialogue.
“The significant hardening of the European Commission’s trade stance, and the bolstering of protectionist tools in recent years, suggest more frictions ahead,” Fenet said.
Indeed, trade experts warn of a long and bumpy road for EU-China relations. As the EU pursues greater economic autonomy and retools industrial policy to protect key sectors, Beijing is unlikely to ease its assertive stance, particularly as it looks to export its way out of structural economic stagnation.
“The overcapacity issues, paired with China’s use of rare earths as leverage in EV tariff talks, suggest that this trade conflict has only just begun,” said Stec.
The brewing tension between two of the world’s largest economies — the EU (GDP $19 trillion) and China (GDP $17.5 trillion) — threatens to disrupt multiple industries, from luxury goods and automobiles to healthcare and green technology.
Companies operating across both markets may face regulatory uncertainty, new tariffs, and a rising compliance burden. Investor sentiment may also sour, particularly in sectors heavily reliant on EU-China trade flows.
As of July 11, European stock markets remain volatile, with the Euro Stoxx 50 down 0.8% over the past week. Chinese markets, meanwhile, have been weighed down by weak domestic data and trade anxiety, with the Shanghai Composite dipping 1.2% this week.
July 11, 2025
Ford is still struggling to secure enough rare-earth magnets due to a supply shortage
Detroit, MI – Ford Motor Co. is facing a persistent supply shortage of rare-earth magnets—critical components for EV motors and various automotive systems—despite a recent U.S.–China agreement intended to ease export restrictions. The situation remains dire, forcing Ford into a “hand-to-mouth” rhythm to keep its production lines running.
Last May, Ford halted production of its Explorer SUV at the Chicago Assembly plant for several days after its magnet supplier ran dry. These powerful rare-earth magnets—made from metals like neodymium, dysprosium, and terbium—are essential not only for EV motors but also for braking, steering, and seating systems.
Lisa Drake, Ford’s VP of Industrial Planning for EVs, remarked that the company “still needs to move things around” to avert fresh shutdowns, admitting the operation remains “hand to mouth”. CEO Jim Farley echoed the concern in a recent Bloomberg interview: “It’s day-to-day… We have had to shut down factories. It’s hand-to-mouth right now.”
Since April, China—which dominates 90% of global rare-earth magnet refinement—has enforced stricter export licensing rules on these metals, requiring detailed disclosures and slowing approval processes, WSJ reported.
Although a temporary six-month agreement was struck in June to accelerate exports, affected automakers—including Ford—report little meaningful relief. Many export licenses continue to dribble in, primarily favoring larger, state-affiliated firms.
Ford’s stock slipped nearly 1% on news of the supply disruptions—though year-to-date gains remain near 7%. At the same time, domestic mining and processing firms like MP Materials (NYSE: MP) and Freeport-McMoRan (NYSE: FCX) enjoyed surging stock prices as investors bet on a long-term shift toward U.S. production of critical minerals.
Ford’s CFO recently disclosed that design improvements could cut annual rare-earth usage by up to 500,000 pounds, and the new hybrid systems already consume 50% less neodymium per vehicle. While the automaker is mapping raw-material sourcing directly back to mines, those efforts will take years to offset immediate shortages.
Analyst Michelle Krebs of AutoForecast Solutions warns, “Every OEM assumed they could scale battery production linearly. The rare-earth situation proves how quickly geopolitical factors can disrupt those plans”.
Continued supply volatility; potential further single-shift delays or plant pauses if authorization backlogs persist. Push for non-Chinese magnet sources (Canada, Australia, U.S.) and increased recycling, but industrial-scale capacity remains 2–3 years off. Deep investment in domestic mining and refining will diminish supply chain chokepoints—but remains a strategic and political challenge.
Ford remains committed to its 2 million EVs-per-year goal by 2026, but acknowledges that resolving this bottleneck is crucial for meeting that target.
The magnet logjam is more than an automotive hiccup—it’s a flashpoint in global industrial policy. “China’s dominance in rare earths is a geopolitical weapon,” says an analyst at the Center for Strategic and International Studies. “There’s no quick fix—this is a wake-up call”.
Even with diplomatic progress and asset-light design pivots, Ford remains locked in a daily scramble for magnets that may define its EV production trajectory—and automobile manufacturing’s broader global supply resilience.
July 1, 2025
Trump is defending the interests of the oil giants concerning climate regulations in EU trade discussions
Former U.S. President Donald Trump is intervening in current transatlantic trade negotiations to bolster American oil giants by pressuring the European Union to relax its landmark climate regulations—moves that threaten to weaken global environmental commitments.
In recent trade discussions ahead of the July 9 deadline, Trump officials have floated proposals aimed at diluting the EU’s Corporate Sustainability Due Diligence Directive (CSDDD) and methane emissions mandates, both central to Brussels’ aggressive climate stance. These rules impose rigorous environmental and human rights oversight on companies and require verified methane caps for fossil fuel imports by 2030—a move the U.S. energy sector says could drive them out of the European market.
Executives from ExxonMobil, including CEO Darren Woods, explicitly lobbied Trump to use trade leverage against Brussels. Private sources confirm U.S. negotiators are now urging the EU to soften or delay these regulations in exchange for tariffs relief.
Trump has dangled a steep 50% tariff threat on EU exports if the EU doesn’t step back on its climate rules—a key tactic in forcing concessions. Meanwhile, Brussels, eager to avert a damaging tariff spike, is considering trade-off proposals such as increasing imports of U.S. LNG and adjusting methane oversight frameworks to qualify U.S. gas under equivalency schemes.
This duel underscores a broader conflict between climate ambition and trade power: Trump’s approach aims to fuse energy dominance with economic leverage, while the EU seeks to uphold its Green Deal principles.
Following reports of these contentious trade maneuvers, European carbon credit futures slipped approximately 1.2%, signaling investor anxiety over potential dilution of climate policy. Analysts caution that even talk of loosening methane or sustainability rules could erode confidence in the EU’s green market framework—while bolstering U.S. oil and gas margins temporarily.
Environmental groups have sounded the alarm, labeling the U.S. push “a direct attack on the Paris Agreement,” warning that any weakening of EU standards could unravel global climate governance.
EU Commission President Ursula von der Leyen has reaffirmed the EU’s “sovereign right” to set its own environmental rules and cautioned against ceding core Green Deal elements just to avert U.S. tariffs.
Yet internal EU divisions bite: some leaders argue for flexibility to secure broader trade benefits, while others—like France’s Stéphanie Yon-Courtin—warn that concessions risk setting a dangerous precedent on environmental sovereignty.
EU negotiators will decide whether to carve out limited flexibilities—such as pragmatic methane measurement standards or delayed rollout of the CSDDD—to soften U.S. trade pressure. If no deal is struck, Brussels is reportedly readying retaliatory tariffs worth up to €95 billion. This clash may redefine transatlantic relations—showing whether trade imperatives outweigh climate leadership at a critical geopolitical juncture.
Trump’s alignment with Big Oil in EU trade talks reveals more than one-off bargaining—it spotlights a strategic confrontation over whether commercial leverage can override environmental clarity. The outcome will signal how far Washington and Brussels are willing to bend in balancing market access against the planet’s future.
June 27, 2025
China is an obstacle to a U.S.-Vietnam trade agreement
China’s giant logistics machine was humming inside rows of metal warehouses near Ho Chi Minh City in southern Vietnam this month. Hundreds of workers packed cosmetics, clothes and shoes for Shein, the Chinese fast-fashion retailer. Recruiters needing to fill hundreds more jobs were interviewing candidates outside.
At another industrial park, owned by the supply chain arm of Alibaba, the Chinese e-commerce giant, trucks drove in and out at a steady clip.
This kind of activity, powered by Chinese money, has brought jobs to Vietnam. It is one of the forces that have made Vietnam a thriving destination for companies around the world looking for alternatives to China’s factories.
But as President Trump’s trade war is turning supply chains upside down, China’s role is emerging as the biggest obstacle for Vietnam as it tries to avoid a 46 percent tariff.
Vietnamese officials are rushing to secure a deal before a 90-day pause on the new tariffs ends in early July. They met with administration officials in Washington this week for a second round of talks. The talks will resume next month, Vietnamese officials said.
The Trump administration wants Vietnam to do more to crack down on companies that are rerouting goods from China to Vietnam to avoid tariffs, a practice known as transshipment.
But the administration is also taking a view of the issue that goes beyond the usual definition of transshipment as it tries to wean the American economy off its dependence on Chinese imports. That puts countries that rely on China to make goods they export under heavy pressure.
For Vietnam, the challenge is proving that what it sends to the United States was made in Vietnam and not in China. In a sign of the awkward position it finds itself in, Peter Navarro, a top trade adviser to Mr. Trump, recently called Vietnam “a colony of China.”
Vietnam was a big beneficiary of tariffs that Mr. Trump placed on Chinese goods during his first presidency. Its trade surplus with the United States swelled to $123.5 billion in 2024, from $38.3 billion in 2017.
The reordering of trade flows accelerated in April, when China was facing 145 percent tariffs, Vietnamese imports from China ballooned to $15 billion while its exports to the United States totaled $12 billion. Beijing and Washington have since reached a temporary deal to slash the tariffs.
“The priority for Trump is for Vietnam to fix the transshipment problem and make sure that the two countries can sign something that shows Vietnam is taking action,” said Adam Sitkoff, the executive director of the American Chamber of Commerce in Hanoi.
In response, Vietnam created a special task force this month to “aggressively crack down on smuggling, trade fraud” and “the export of goods falsely labeled as ‘Made in Vietnam,’” and its finance ministry has met with U.S. Customs and Border Protection to talk about working together and sharing information.
Despite the efforts, Trump officials have said it is not enough.
“It has become very difficult for Vietnam to justify to the U.S. government that this isn’t just rerouting Chinese goods,” said Priyanka Kishore, an economist in Singapore and the founder of Asia Decoded, a consulting firm.
“China is Vietnam’s biggest intermediate goods supplier, so if you are pushing your exports to the U.S. up, you would see an increase in imports from China,” Ms. Kishore said.
Vietnam and other Asian countries depend on China for the supplies used to make finished goods. So as production shifts from factories in China to factories elsewhere, much of the spike in exports from China to its neighbors may be raw materials used by factories.
Still, some Vietnamese imports from China are undeniably finished goods shipped through Vietnam to other countries with their origin in China disguised, which is universally considered illegal.
There is little data on exactly how much falls into the category of transshipment, Ms. Kishore said. By one estimate, rerouting activity increased to 16.5 percent of exports to the United States after Mr. Trump’s first-term tariffs on China, driven in part by Chinese-owned companies.
The prohibitively high tariffs on Chinese goods last month caused more manufacturers to seek options in Vietnam. After Mr. Trump ended a loophole that let Americans buy cheap goods from China tax free, Shein offered guidance and subsidies to factories to move operations to Vietnam. Shein did not respond to a request for comment.
Much of that activity has been the legitimate movement of the supply chain as companies shift their production out of China and into places where tariffs are lower.
But the Trump administration is taking a hard line. “China uses Vietnam to transship to evade the tariffs,” Mr. Navarro said. The goal is to put a fence around China’s exports.
“The United States seems to be arguing that anything that comes from China is by default transshipment, so you tar and feather every single product that comes from China,” said Deborah Elms, the head of trade policy at the Hinrich Foundation, an organization that focuses on trade.
Stopping illegal transshipment is one thing; disconnecting supply chains from China would be much more complicated. Most of the things that Americans buy have raw materials from China — whether it is the plastic in their children’s toys, the rubber in their shoes or the thread in their shirts.
“Asian governments are being asked to redefine supply chains to something that might be decades in the making in exchange for what? It’s a little unclear,” Ms. Elms said.
For Vietnam’s textile and garment industry, taking China out of the equation would be hugely problematic. Factories import around 60 percent of the fabrics they use from China, according to Tran Nhu Tung, the vice chairman of the Vietnam Textile and Apparel Association.
“Without China, we cannot make products,” he said. “Vietnam would have no material to produce to make the finished goods. And without the U.S., Vietnam cannot export the finished goods. So the Vietnamese government has to find a balance between China and the U.S., and it’s very difficult for them to do this.”
To try to sweeten any deal with the Trump administration, Vietnam has offered to increase its purchase of American goods like agricultural products and Boeing aircraft, and curb the shipment of Chinese goods to the United States.
But the flood of investment and hiring by Chinese companies continues to complicate things.
In the southern province of Long An, where many shoe and textile factories are based, Shein is on a hiring drive.
On a recent Friday, Huy Phong, a recruiter, hung an advertisement for jobs on the fence outside a Shein warehouse soliciting work to load goods and sort, classify and package fashion items like handbags, clothing and footwear. The pay: $385 to $578 a month. Shein needs 2,000 workers for its warehouse and has hired only half that number so far, he said.
Finding workers was hard. A lot of warehouses and logistics companies were recruiting.
Nearby, Duong Minh Giang was leaving his interview feeling dismayed. He said the job would entail handling raw materials from China like thread and chemical dye to store at the warehouse and send to nearby factories to make clothes.
“But I don’t think I will take the job,” he said. “The salary is low.”
May 24, 2025