Trade and Geopolitical Update

Last week’s tentative memorandum of understanding (MOU) agreement between the U.S. and Iran has now stretched a full week without signatures from either side. A White House Situation Room meeting last Friday to review the MOU lasted over two hours but failed to produce a determination by the President. Meanwhile, the continued oil shock is hitting its most critical stage as Chevron’s CEO warns that prices will rise into June and July and the U.S. Strategic Petroleum Reserve (SPR) is on track to hit its lowest level since the early 1980s. The MOU, if signed, may end the war but not the energy crisis. ADNOC’s CEO estimates that full Hormuz flows will not return before Q1 or Q2 2027 even if the conflict resolves today.

Two additional conflicts are building on opposite sides of the globe: a newly-emboldened Indo-Pacific alliance to counter CCP aggression and a potential U.S-led regime change in Cuba. When combined with escalating military strikes and terrorist designations against Latin American cartels, the latter puts the Administration’s Donroe Doctrine front and center, coming into direct conflict with Brazil and Mexico while upending the Colombian and Peruvian presidential elections.

On the trade front, USTR Ambassador Jamieson Greer declared that the Washington consensus on China is “mostly over” and that tariffs will remain in place regardless of U.S. Western Hemispheric reshoring efforts. Greer’s comments can be applied broadly, whether to Canada and Mexico (USMCA bilaterals), Vietnam (new Section 301 IP investigation), or Brazil (25% Section 301 finding). As USTR prepares to replace existing Section 122 global tariffs with new Section 301 duties, Greer has released the findings of the forced labor investigation, with public hearings scheduled for July 7.

GEOPOLITICAL UPDATE

U.S. and Iranian negotiators seemingly reached agreement on the terms of a MOU last Tuesday, with U.S. officials saying the Iranians had the necessary approvals to sign. Further signs of hope came in the form of Iranian President Masoud Pezeshkian’s order to reconnect the country’s global internet access, severed for nearly three months. This is a tangible sign of Iran’s leadership preparing its population for a ceasefire, but like all aspects of the war, it is met with a counterpoint.

On Sunday, Iran International reported that President Pezeshkian had submitted a letter of resignation to the Office of the Supreme Leader, though the report was later denied by the IRGC-aligned Tasnim. Pezeshkian reportedly wrote that the government had been excluded from decision-making, making it impossible for him to execute the duties of his office. It remains unclear whether the report is accurate or whether Supreme Leader Mojtaba Khamenei would accept the resignation. In testimony before Congress yesterday, Secretary of State Marco Rubio pointed to Iran’s “fractured” leadership and the need for negotiating proxies as fundamentally complicating factors throughout the talks.

Meanwhile, President Trump’s deliberations over the MOU have been ambiguous. The MOU’s reported terms outline an end to the war, including in Lebanon, and the commencement of a 60-day window whereby:

• Shipping through the Strait of Hormuz will be “unrestricted” (no tolls)
• Iran will remove all mines from the Strait (within the first 30 days)
• U.S. naval blockade will lift in proportion to the restoration of commercial shipping
• Sanctions will be lifted allowing Iran to sell oil freely (still in question)
• Iranian commitment not to pursue a nuclear weapon (still in question)

Media reports following the White House Situation Room meeting on Friday suggest internal concern over the optics of unfreezing Iranian assets. The U.S.-confirmed parameters of the deal described a gradual release of assets upon progress during a 60-day negotiating window, but Iranian sources have asserted that $12 billion will be released immediately. Trump posted over the weekend that “No money will be exchanged until further notice.” The gap between the U.S.-confirmed framework and the Iranian-sourced version is noteworthy, but potentially public posturing by each side given their own domestic politics. Should the MOU be signed, the key metrics will be Hormuz reopening and nuclear disarmament.

President Trump has recently asserted that Iran’s stockpile of highly enriched uranium (“Nuclear Dust”) will be removed by both the U.S. and China in coordination with Iran and the International Atomic Energy Agency (IAEA). In testimony before the Senate Foreign Relations Committee yesterday, Secretary Rubio characterized the most necessary elements of any deal being the reopening of Hormuz, the disposal of enriched uranium, and “long-term limitations” on Iran’s nuclear program. To the latter point, Rubio confirmed that Iran was negotiating “aspects of their nuclear program that just a month ago, just a year ago, they were refusing to even mention.”

Amidst the back and forth, Qatar has emerged as a second formal mediator alongside Pakistan, with Iranian Parliament Speaker Ghalibaf and Foreign Minister Araghchi traveling to Doha last week for direct meetings. Qatar holds approximately $6 billion in frozen Iranian assets, giving Doha a structural role in the deal’s financial mechanics and the Administration a degree of separation. President Trump’s condition on Arab countries to sign onto the Abraham Accords, however, continues to create friction with all Gulf allies involved in the negotiations.

The latest hurdle, however, came Monday with Iranian media reporting that Tehran had suspended peace talks as a result of Israel’s ongoing attacks in Lebanon (a report Trump has called “false and erroneous”). Prime Minister Benjamin Netanyahu has sought to ramp up attacks on the suburbs of Beirut prior to a deal and insists that Israel retain its autonomy over its own security decisions in the region. The escalation came despite Lebanese parliament speaker Nabih Berri telling the Trump Administration that Hezbollah was prepared for a complete ceasefire. Even with this setback, Israeli and Lebanese military delegations attended meetings at the Pentagon last week and resumed the diplomatic track of the ceasefire yesterday at the State Department.

On the other side of his country, PM Netanyahu directed the Israeli military to take control of at least 70% of Gaza, testing the terms of the U.S.-brokered truce with Hamas. The Gaza directive and the Lebanon airstrikes are both exposing whether an MOU will have durability, leading to at least two tense conversations between Trump and Netanyahu. Should Israel continue operations in either theater after an MOU is signed, the framework will face immediate questions.

Iran’s public reaction to Israeli operations has tracked its historical bluster. Senior military adviser Mohsen Rezaei posted on X that “The patience of the armed forces of the Islamic Republic of Iran has its limits.” The IRGC simultaneously warned that it will step up fighting again. For his own part, President Trump expressed disinterest, telling NBC on Monday that “We’ve been talking too much… I think going silent would be very good, and that could be… for a long time.” Asked further by CNBC about the status of talks, Trump said, “I really don’t care. I couldn’t care less.”

Meanwhile, the U.S. has not let up on its pressure campaign despite the promise of diplomacy. Treasury Secretary Scott Bessent sanctioned the Persian Gulf Strait Authority last week, calling it “a joke,” and warned the U.S. will shut down Iranian airlines’ access to landing spots, refueling, and ticket sales. Bessent asserted that the U.S. naval blockade had simultaneously formed a “wall of steel” around Iran, leading to an Iranian economy and currency in “free fall.”

NATO

The Pentagon’s European drawdown extended into the air and naval domains last week. Washington told allies in a closed-door NATO policy directors meeting that it will gradually scale down the number of strategic bombers, fighter jets, drones, submarines, and warships dedicated to NATO. Pentagon adviser Alexander Velez-Green delivered the announcement, which two diplomats disclosed anonymously. The air and naval drawdowns are potentially more significant than the ground troop reductions as those assets provide far more strategic use for Europe’s security. In response, Germany has earmarked more than €108 billion for defense in 2026 and committed to 3.5% of its GDP by 2029.

Shipping

Shipowners working in collaboration with the U.S. military have traversed the Strait of Hormuz in recent weeks, often sailing “dark” by turning off their Automatic Identification Systems (AIS). U.S. military officials use radar, drones, and other tools to monitor traffic, helping avoid collisions and Iranian attacks. A small number of the crossings are taking place through a part of the Gulf that the U.S. cleared earlier this month as part of “Project Freedom.” While Project Freedom didn’t last, it left a relatively safe path through the Gulf as U.S. forces were able to clear this particular route of IRGC mines.

Ships successfully partnering with the U.S. included a Greek supertanker carrying two million barrels of crude off the Omani coast last week. The small number of ships using the U.S. designated path also included a Chinese-owned vessel, the Vicstar, carrying fertilizer from the United Arab Emirates according to Kpler records. On Monday, the IRGC stated that 15 vessels, including four oil tankers, had been allowed to transit the Strait through the Iranian passage route.

For now, shipowners are still expressing calm. Evangelos Marinakis, founder of Greek company Capital Maritime Group, said that shipping companies could afford to wait “one month more” in order for a peace agreement to be reached. Dynacom Tankers, one of Greece’s leading tanker operators and noted blockade runner, has already moved four empty vessels into the area as it prepares for a possible deal and the reopening of the Strait.

Insurers take divergent views of policies for such passages. Some offer higher rates if ships have a naval escort, for example, given they are more likely to be an Iranian target, according to broker McGill & Partners. Others quote lower premiums if there is an escort, because of the perceived greater protection. Premium rates overall are currently around 2.5% to 4% of the ship’s value, compared with a typical 0.25% in peacetime, according to McGill. As an additive, the U.S. previously announced a $40 billion reinsurance program, led by U.S. insurer Chubb, but the program is yet to be used. Ships that make it through safely get around 50% of their money back under the U.S. program.

Oil Shock

Chevron CEO Mike Wirth, speaking at a Bernstein conference, noted that “The buffers and the shock absorbers are being steadily drawn down, and the ability for the market to absorb this imbalance is drastically diminished today versus where we started. Over the next few weeks, we’re likely to see those pressures flow through more directly to physical prices, and there’s more upwards pressure that I would expect as we get into June and certainly into July.” ADNOC CEO Sultan al-Jaber separately warned that “It will take at least four months to get back to 80% of pre-conflict flows.”

That said, it is important to evaluate the negative energy outlook by its own metrics. Javier Blas notes that on April 16, the International Energy Agency made a headline-grabbing warning that Europe had “maybe 6 weeks or so of jet fuel left.” It is now week seven and planes are still flying. Since those headlines, European wholesale jet fuel prices have instead fallen approximately 30% to a three-month low. Robin Brooks of Brookings makes a similar argument, saying: “It’s 3 months of fearmongering on oil prices. What these voices never address is what’s already in the price. Brent is up 60% from before the war. Inventories are down, but markets are forward-looking. This got priced long ago.”

The IEA’s warning was not wrong about the risk, but market ingenuity has proven adaptive in preventing it. High prices mobilized an efficient market response by maximizing refinery output and rerouting U.S. and African imports, coupled with state intervention in the form of large-scale strategic reserve releases, rationing, and regulatory waivers. And while the Strait has not normalized, Bloomberg shipping data shows that 25% of the large oil tankers trapped in the Persian Gulf since the outset of the Iran war have now escaped. In a sign of just how robust and needed U.S. output has been, a new National Bureau of Economic Research (NBER) paper by Berkeley economist Lucas Davis pegs total shale revolution savings for the U.S. at $3.1–$4.3 trillion between 2007 and 2025, or $164–$227 billion per year.

To be sure, U.S. production and global SPR releases are reaching their limits. The world released 285 million barrels from strategic reserves in just 4 months. With one last push estimated in June, the reserves will be nearly dry. When strategic releases drop from 76 million barrels per month in June to an estimated 22 million in July, the traffic of Hormuz becomes imperative. Also looming is the Administration’s sanctions waiver of Russian oil, which expires on June 17 unless renewed by Treasury. Should the Strait remain semi-closed heading into July, the market will find a new price that is likely to be materially higher than state intervention and increased production have so far helped to suppress.

ECONOMIC OUTLOOK

U.S. equities recorded their ninth-straight week of gains at last Friday’s close, with the S&P 500 up 1.4% on the week. This is the S&P’s longest weekly winning streak since December of 2023 and represents a 16% increase since the end of March. The Nasdaq Composite has risen even more, up 25% during the same period. U.S. manufacturing also posted a final print of 55.1 in May, its strongest monthly expansion since 2022. Despite the uptick, exports declined for the eleventh consecutive month. Oil has also slid of late, with Brent down 11% last week and settling at a six-week low of $92.05 a barrel on Friday (~$96.00 today).

The market’s exuberance does not extend, however, to consumers. The share of Americans saying economic conditions are outright poor hit 49% and the percentage citing the economy or inflation as the country’s biggest problem (28% combined) has now surpassed those citing government dysfunction (26%) for the first time.

The data confirms the sentiment: the Conference Board Consumer Confidence Index dipped to 93.1 in May and the Present Situation Index fell 3.2 points to 121.2. April’s CPI read of 3.8% (core at 3.3%) foretold a similar PCE read of 3.8%, the highest since May 2023. Revised Q1 GDP dropped from 2.0% to 1.6% annualized and workers’ real wages turned negative for the first time in two years (CPI at 3.8%, average hourly earnings at 3.6%). Pantheon Macroeconomics’ Claus Vistesen expects an even more negative wage outlook in Europe, forecasting the Eurozone at “close to zero” in 2026 and France as potentially “deeply negative.”

The job market carries good and bad news. Openings surged to 7.62 million in April, above the 6.87 million consensus and the highest reading since May 2024. Layoffs fell, down 192,000 to 1.692 million, the lowest since January. But hires fell to 5.12 million, down 419,000 from March. In short, the outlook continues to suggest a flat “low hire low fire” U.S. jobs environment.

It is therefore no surprise that Americans are uncertain. A mixed job market, inflation ticking back up, and high interest rates are fueling their anxiety. A combined $1.25 trillion in credit card debt looms large for consumers already pushed to their financial limits. Middle-class households in particular are shifting to a “pattern of survival debt” said Bruce McClary of the National Foundation for Credit Counseling.

Rounding out the data, April import prices advanced 1.9% annually and export prices grew 8.8%, the largest increase since data collection began. PPI was also notably higher, rising 6.0% annually, the highest since December 2022 as services drove nearly 60% of the monthly increase.

Looking deeper at the numbers, the S&P 500’s equal-weighted index has been relatively flat since February and May 13-19 saw an 18% selloff in bleeding-edge stocks. What appears to be at the heart of the divergence between the market and consumers is the AI-driven trade. In fact, the Philadelphia Semiconductor Index is up 75% since January, its best start since the dot-com bubble.

Bloomberg’s Simon White highlighted the data’s contradicting narratives in two readings from the Bank of America Fund Manager Survey: 1) a record monthly jump in equity allocation going back over 25 years; and 2) inflation expectations at their highest level since the pandemic. Labor’s share of economic output hit an all-time low while the profit share hit a near-record high, explaining consumer pessimism as employment remains strong.

Fiscal Policy

Federal Reserve Governor Lisa Cook, whose case is still pending before the Supreme Court, recently warned that inflation is headed in the wrong direction and that she would be prepared to hike if the trend persists. Vice Chair Philip Jefferson holds the contrarian view and expects prices to cool this year. The market appears to be siding with Cook’s view and is pricing in a roughly three-in-four chance of a hike by December. Kevin Warsh inherits a deeply divided central bank when he chairs his first Federal Open Market Committee (FOMC) in just a few weeks. While Warsh may not be able to achieve the rate cuts President Trump desires in the near-term, we do expect him to roll back the Fed’s “forward guidance,” and potentially remove language on easing or tightening “bias.”

For its part, the European Central Bank (ECB) is placing economic blame on the Trump Administration, saying publicly that the President is risking the trigger of a global financial crisis. Euro area annual inflation accelerated to 3.2% in May, up from 3.0% in April, while unemployment held steady at 6.3%. Much of the risk for Europe, however, is self-inflicted. Case in point, bank deregulation in the U.S. has enabled the eight largest U.S. lenders to expand their balance sheets by 15%, with combined U.S.-UK balance sheet expansion of $1.3 trillion in two quarters. EU balance sheet capacity, by contrast, has shrunk by €1.3 trillion. In other words, over-regulation as well as green energy goals have at least contributed to Europe’s economic malaise.

Finally, the ECB reported yesterday that gold has now surpassed U.S. government bonds as the world’s leading reserve asset. Bullion accounted for 27% of central bank reserve assets in 2025 while U.S. Treasuries were at 22%. The shift reflects a trend that began with the Russian invasion of Ukraine and continues as countries seek additional avenues to hedge. As ECB president Christine Lagarde writes, “Geopolitical tensions continue to drive strong central bank demand for gold.”

Upcoming Data

Today:

• Australia Q1 GDP estimate
• S&P Global PMI: Brazil, Canada, China, Eurozone, France, Germany, India, Italy, Japan, UK, U.S.
• U.S. ADP May employment report; Beige Book published
• South Korea local elections (first since President Lee Jae Myung elected)
• OECD Economic Outlook
• Treasury Secretary Scott Bessent testimony before Senate Finance Committee; Secretary of State Marco Rubio testimony before House Foreign Affairs Committee and Senate Appropriations Committee

Thursday:

• S&P Global construction PMI: Eurozone, France, Germany, Italy, Singapore, UK
• Switzerland May CPI
• U.S. Q1 productivity and costs data; weekly jobless claims
• House Financial Services Committee hearing with prudential regulators (Fed, OCC, NCUA, FDIC)
• SEC Investor Advisory Committee meeting

Friday:

• Canada May labor force survey
• EU Q1 GDP estimate
• France April Industrial Production Index
• India Q4 GDP estimate and interest rate announcement
• U.S. BLS May jobs report; Federal Reserve consumer credit figures for April
• EU-western Balkans summit in Tivat

Sunday:

• OPEC and non-OPEC ministerial meeting
• Armenia parliamentary elections
• Kosovo parliamentary elections
• Peru presidential run-off elections

TRADE UPDATE

U.S. Customs and Border Protection (CBP) updated the Court of International Trade (CIT) last week on the progress of IEEPA tariff refunds, correcting the total amount disbursed to $20.6 billion against $85 billion in both potential and certified refunds accepted for processing in the Consolidated Administration and Processing of Entries (CAPE) system. An earlier CBP filing had cited $35 billion disbursed, a roughly $15 billion error that conflated accepted with completed. Total potential IEEPA refunds could reach as high as $166 billion. CBP Commissioner Rodney Scott is due to appear in person before CIT on June 9 given the court’s concerns with the Administration’s full compliance. Scott will also meet with the House Ways and Means Committee Republicans in a closed-door meeting tomorrow. As expected, the Department of Justice has officially appealed the Supreme Court’s IEEPA ruling. Though the appeal has little chance of success, it may further delay the pace of refunds moving forward.

USTR Ambassador Jamieson Greer recently floated the idea that Section 122 could be renewed after expiry, suggesting that the statute contains no explicit prohibition on renewal. This could potentially buy USTR additional time for its ongoing Section 301 investigations if they are not ready to replace Section 122 by the mid-July deadline.

Turning to Section 232, the White House announced yesterday that it will adjust certain metals tariffs to alleviate costs on American agriculture, housing, and manufacturing, and to bolster U.S. production and investment. Adjustments include:

• Articles made entirely or almost entirely of aluminum, steel, or copper will pay a flat 50% on their full value (e.g., steel coils and aluminum sheet)

• Derivative articles substantially made of steel, aluminum, or copper will pay a flat 25% on their full value

• Certain metal-intensive industrial equipment and electrical grid equipment will pay 15% through 2027

• Products made abroad but entirely with American steel, aluminum, and copper will be subject to lower tariffs of 10%

• Products made of 15% or less steel, aluminum, or copper will be exempt

Finally, USTR has released the findings of its forced labor Section 301 investigation, concluding that 60 countries have failed to enforce a prohibition on the importation of goods produced with forced labor, thereby creating an unreasonable burden for U.S. commerce. Ambassador Greer is proposing additional duties on all products of the investigated economies, except as provided in Annex A to the Federal Register notice.

Specifically, USTR lays out a 10% rate of additional duties for countries that have either imposed a forced labor import prohibition of have committed to impose such a prohibition through an Agreement on Reciprocal Trade (ART). For all other countries, USTR proposes a 12.5% rate. A textile mechanism carve-out will be applied to a certain volume of apparel and textile imports at a reduced Section 301 tariff rate. Hearing requests are due by June 22 and written comments by July 6, with hearings scheduled to take place on July 7.

USMCA

The first official USMCA Joint Review negotiating round opened in Mexico City last week and was led by Deputy USTR Jeffrey Goettman. USTR Greer did not travel due to a conflicting Cabinet meeting, instead holding a virtual meeting with Mexican Economy Secretary Marcelo Ebrard. The next round of talks will take place in Washington from June 16–17, followed by Mexico City the week of July 20.

Greer confirms that the substantive focus of the meetings is on rules of origin. Speaking at the Council on Foreign Relations (CFR) last week, Greer stated: “If we can reach an understanding with Mexico on tariffs for third parties… we can grant preferential treatment for Mexico. For national security strategy, we prefer to build our value chains in this hemisphere.”

As an important caveat, however, the Trump Administration is expected to propose that half of the components and materials in an automobile must come from U.S. sources to qualify for lower tariffs under the USMCA. This 50% U.S.-specific content requirement does not currently exist in the agreement. Instead, USMCA requires three-quarters of a vehicle’s materials to come from North American sources but has no U.S.-specific floor. The new proposal is the clear mechanism by which Greer’s “hemispheric value chains” statement meets the agreement’s revised text and is likely to generate domestic auto industry opposition, not to mention Mexican objections.

The BYD/Geely COMPAS plant bid in Aguascalientes is a direct target: a Chinese-linked plant producing vehicles from Chinese components in Mexico would not approach a 50% U.S. content threshold. Despite the U.S. threat, BYD and Geely remain among the finalists for the 230,000-unit Nissan-Mercedes COMPAS plant.

Outside of the trade negotiations, security and sovereignty remain an ongoing point of friction between the U.S. and Mexico. On Sunday, President Claudia Sheinbaum rallied her supporters in Mexico City against U.S.-led cartel interdictions. Sheinbaum claimed that since the deaths of two CIA agents on April 19, U.S. authorities have attempted to destabilize her government. Days after the CIA incident, the Department of Justice (DOJ) indicted 10 Mexican officials, including Rubén Rocha Moya, the governor of Sinaloa state. According to Sheinbaum, the indictments were an “unprecedented” show of U.S. “interference” by “sectors of the US far right positioning themselves ahead of their 2026 elections.”

Underneath Sheinbaum’s new hardline posture is a political vulnerability caused by Mexico’s stagnant economy. Q1 GDP contracted 0.8%, the worst first-quarter result since 2020. Sheinbaum’s approval now stands at 51%, a material drop in her domestic standing this year.

On the northern side of the border, U.S. talks with Canada may finally be coming off the backburner. After meeting with Ambassador Greer yesterday, Canada’s Trade Minister Dominic LeBlanc—who had previously only met in-person with Greer once in the last seven months—stated that “A strong, prosperous Canadian economy is good for North America, and we discussed how we can work together on a number of issues that strengthen the competitiveness of the North American economy.” LeBlanc further stated that Canada had made new and detailed proposals to the U.S., leading to progress in the negotiations.

This comes after Ambassador Greer’s remarks last week at CFR in which he accused Canada of taking retaliatory actions against the U.S. like those of China, concluding that it’s “hard to see necessarily where this ends.” Further, Canada’s new tax increase on streaming services prompted U.S. Ambassador to Canada Pete Hoekstra to accuse the Carney government of “making a bad situation worse.”

LeBlanc’s optimism appears to be coming from the top of government. In comments last week, Prime Minister Mark Carney offered his most U.S.-aligned statement this year, telling an audience that Canada “remains open to deeper integration, including options for ‘Fortress North America’ in selected sectors.” This is a notable shift for Carney. Combined with LeBlanc’s visit with Greer, we are beginning to see a thaw in relations that could very well lead to formal Joint Review negotiations.

The domestic challenges of Canada have likely pushed Carney and his government into a more conciliatory posture. On the political front, Alberta Premier Danielle Smith announced a nonbinding public vote on October 19 on whether to pursue a separation referendum, bypassing the court ruling that blocked the earlier petition. Alberta holds most of Canada’s known oil reserves and though the risk of separation is exceedingly low, any uncertainty it creates is an economic headache.

A more immediate issue for Carney is the technical recession Canada has unexpectedly entered, its first since 2020. Canadian real GDP fell 0.1% in Q1 2026 following a 1.0% contraction in Q4 2025, representing two consecutive quarters of negative growth. Economists had expected Q1 growth of 1.5%; the miss of 1.6 percentage points is among the largest single-quarter forecast errors in recent Canadian economic history. Canadian household savings fell to 3.5%, the lowest since Q1 2024, as consumer spending rose faster than incomes. The Canada Q1 contraction alongside Mexico’s 0.8% contraction vs. U.S. growth of 1.6% demonstrates the inherent asymmetry of the trilateral relationship.

Miscellaneous

• European Union: The EU is planning a high triple-digit million euro fine against Google under the Digital Markets Act (DMA); Under Secretary Helberg warned on X that targeting U.S. firms with “punitive measures would be a serious mistake corrosive to private investment and economic growth in Europe.”

• Brazil: On Monday, USTR proposed a 25% tariff on all Brazilian goods, with exemptions for products under Section 232 national security measures. The Federal Register notice findings identify unreasonable Brazilian acts, policies, and practices related to digital trade, electronic payment services, tariffs, anti-corruption enforcement, IP, ethanol market access, and deforestation. Ambassador Greer will continue to negotiate with President Luiz Inácio Lula da Silva and his government prior to the July 15 statutory deadline for acting.

• Greenland: U.S., Greenlandic, and Danish negotiators have been reportedly engaged in previously-confidential conversations for four months, with Washington seeking indefinite troop presence, military expansion, and investment veto rights. The talks provide context for President Trump’s renewed posts about Greenland over the last few days on Truth Social.

• India: A U.S. trade delegation arrived in India this week for three days’ worth of trade talks. India’s Commerce Secretary Rajesh Agrawal expects an Agreement on Reciprocal Trade (ART) to be signed between the two countries before July 24, but Indian sources remain frustrated with a lack of U.S. tariff clarity, particularly competitive positioning versus other ART partners. India and the U.S. separately signed a bilateral critical minerals framework.

• South Korea: The government committed that the first projects under its ART’s $350 billion investment fund will be announced in June.

• Taiwan: Taiwan’s ART tariff cuts were formalized last week, covering Section 232 auto parts and lumber, plus certain steel, aluminum, and copper derivatives pertaining to aircraft. The cuts are retroactive to May 1. Look for the retroactive provision and Section 232 carve-outs to be applied to other forthcoming ARTs currently in negotiation.

• Vietnam: USTR launched a formal Section 301 investigation on May 29 into Vietnam’s intellectual-property protection and enforcement regime, escalating what had already led USTR to designate Vietnam a “Priority Foreign Country” in its 2026 Special 301 Report on April 30. The probe will examine whether Vietnam’s actions and policies are an “unreasonable or discriminatory” burden on U.S. commerce. A public-comment phase runs through July 2. Vietnam’s response has been notably conciliatory as Hanoi affirmed that the investigation is lawful and pledged continued strengthening of IP protection.

DONROE DOCTRINE

Last week saw the Donroe Doctrine’s highest operational tempo of the year. Among the activity, Under Secretary Jacob Helberg traveled to Guyana, Panama, Costa Rica, the Philippines, and Singapore, advancing energy security and the Pax Silica Economic Security Zone. The 1,618-hectare Security Zone is a planned AI-native industrial hub inside New Clark City, part of a 16-country technology security coalition.
Also traveling last week was Assistant Secretary Caleb Orr, who completed a five-day El Salvador and Honduras commercial diplomacy mission.

Argentina

A wave of dollars flowing into Argentina has given President Javier Milei room to let the peso trade more freely, with the central bank’s foreign reserves hitting their highest level since 2019. The reserve recovery is the validation of Bessent’s previous currency swap. Meanwhile, the Iran war has led to a Vaca Muerta oil windfall (record 550,881 bpd) and the IMF disbursements have collectively rebuilt the buffer Milei needed to lift exchange controls, a precondition for full Argentine reintegration into global capital markets. Milei’s approval, however, remains in the mid-30s.

Brazil

Roughly a week after President Lula’s visit to the White House, President Trump welcomed conservative presidential candidate Flávio Bolsonaro to Washington last week. Bolsonaro reportedly requested Trump designate the Comando Vermelho and the Primeiro Comando da Capital (PCC), Brazil’s two most powerful criminal organizations, as foreign terrorist organizations. Days later, the Secretary of State Marco Rubio did just that, officially making the designation.

On Friday, President Lula posted a response to the U.S. designation while rebuking Bolsonaro’s involvement: “It is deplorable that once again members of the Bolsonaro family travel to the United States to advocate for foreign intervention in Brazil — by false patriots, involved with organized crime, who call on foreign authorities to interfere in Brazilian affairs.” Lula warned the U.S. that its unilateral designation could reduce intelligence sharing between the two and affect Brazil’s PIX payment network, which processes over $500 billion in annual transactions.

A Datafolha survey published on Friday shows Lula leading Bolsonaro 47% to 43% in a hypothetical runoff. The Banco Master scandal has hurt Bolsonaro, but the October race remains tight. The Administration is thus playing both sides of the presidential contest in unabashedly simultaneous fashion: a trade framework with the left-aligned Lula and terrorist designation with the right’s criminal governance platform. At stake is access to South America’s largest economy and its relationship with China. To date, China has been winning. Brazil was the largest recipient of Chinese foreign direct investment globally last year. Brazil’s share of China’s oil imports jumped from 10% to 18% since the war began as output hit a record of 4.1 million bpd, demonstrating how much is potentially at stake.

Indeed, Brazil’s IBGE official Q1 2026 GDP data released last week showed a 1.1% quarter-on-quarter expansion, beating the 1.0% Reuters consensus and representing the country’s strongest single-quarter since Q1 2024. But manufacturing data contracted in May to 49.1 from April’s 52.6 as total new orders fell for the fourteenth consecutive month. Brazilian supply-chains have become increasingly strained with delivery times lengthening at one of the steepest rates in nearly four years. Who Lula chooses as his partner in expansion will be closely watched. The potential for U.S./Brazil alignment is huge, a question not likely to be decided before Brazilian voters weigh in themselves in October.

Colombia

Colombia’s first-round presidential vote on May 31 produced no outright winner, sending the contest to a June 21 runoff between far-right outsider Abelardo de la Espriella and leftist senator Iván Cepeda. De la Espriella finished first with 43.7%; Cepeda, the chosen successor to outgoing President Gustavo Petro, took 40.9%; establishment center-right candidate Paloma Valencia received less than 7%. Valencia immediately endorsed de la Espriella, urging voters to reject “new communism.” Both Polymarket and Kalshi give de la Espriella 59% odds against about 40% for Cepeda.

Prior to Sunday’s vote, Ecuadorian President Daniel Noboa announced the elimination of his country’s “security” tariffs on Colombian goods following a video call with de la Espriella. Noboa’s security tariff had been imposed in February over alleged Colombian inaction on drug trafficking, escalating from 30% to 50% to 100% by May 1. Lifting it now, in direct coordination with a candidate rather than Colombia’s sitting government, drew accusations of “deliberate interference” in the election from Bogotá. De la Espriella said that if elected he would visit Noboa at the border to deepen bilateral trade, energy, and security cooperation, and the two agreed on the handover of Ecuadorian criminals in Colombian territory.

A de la Espriella presidency would immediately convert Colombia from a Petro-era irritant into a Donroe Doctrine-aligned partner. Counter-narcotics cooperation between Colombia and the U.S. would directly counter the sovereignty arguments of Brazil and Mexico. Petro and Cepeda have refused to accept the preliminary results, however, and are alleging irregularities. The questioning of election legitimacy moving into the run-off is a political stability dynamic worth monitoring.

Cuba

The Administration’s pressure on Grupo de Administración Empresarial S.A. (Gaesa) continues. Secretary Rubio, speaking at last week’s Cabinet meeting, said Cuba is “in a lot of trouble” and is “a failed state 90 miles from our shores,” creating a national security threat for the U.S. The threat has been verbalized by U.S. intelligence which said it believes Cuba has acquired more than 300 military drones from Russia and Iran since 2023.

The designation of Gaesa by Rubio under secondary sanctions and a deadline of June 5 for foreign firms to exit the island has had immediate impact. Sherritt International was the first to go but now Spanish hoteliers Melía and Iberostar’s Cuba Hotels & Resorts are reportedly following suit. Shuttered properties will include the Iberostar Grand Packard, the Iberostar Selection La Habana, and ten others across Holguín, Varadero, Ensenachos, and Esmeralda.

On the military pressure front, the USS Kearsarge and its amphibious ships carrying 2,500 Marines are off Virginia and preparing to join the USS Nimitz in the Caribbean. Many of the Navy’s largest warships are approaching 10 months at sea, far beyond the standard six to seven months, demonstrating the overwhelming magnitude of the Administration’s foreign policy agenda this year. Simultaneously, the 24th Marine Expeditionary Unit is deploying Littoral Combat Force-24 (LCF-24) to U.S. Southern Command’s (SOUTHCOM) area of responsibility, approximately 1,300 Marines and Sailors staged at the USS Fort Lauderdale amphibious transport dock. LCF-24 is equipped for maritime interdiction and quick reaction force missions including embassy reinforcement and the tactical recovery of aircraft and personnel.

In a surprising move, SOUTHCOM Commander General Francis L. Donovan met late last week with Cuban General Roberto Legrá Sotolongo, First Deputy Minister of the Chief of the General Staff, and other senior military leaders at the perimeter of Naval Station Guantánamo Bay. The brief exchange covered operational security matters as General Donovan led a perimeter security assessment of the base covering force protection. Donovan reiterated the U.S. priority of safety for his service members and their families, while assessing operational readiness.

Peru

Peruvians will vote on Sunday to determine the run-off in its consequential presidential election. Keiko Fujimori, the daughter of a jailed former autocrat, will face leftist Roberto Sánchez to become Peru’s 10th president in just 10 years and decide the direction of the country. Latin American presidential elections this year in Brazil, Colombia, and Peru will be hugely decisive towards the Administration’s Donroe Doctrine—signaling either U.S.-alignment or continued opposition in these countries.

Venezuela

Venezuela’s debt restructuring architecture is taking shape. Centerview Partners’ Matthieu Pigasse has been tapped to lead the restructuring of approximately $150 billion in Venezuelan debt, one of the largest in history. ConocoPhillips holds an $8.7 billion International Centre for Settlement of Investment Disputes (ICSID) award. An initial framework is expected by June. According to The New York Times, ExxonMobil is in advanced negotiations for oil production rights in up to six Venezuelan fields, while simultaneously pushing for durable contract terms. The Centerview restructuring will be foundational to fulsome return of the majors.

CHINA

Ambassador Greer delivered the most explicit available statement of the Administration’s China posture last week, saying “We’ve just come to terms with the fact that there is not going to be some giant comprehensive reform of the way the Chinese political system works.” In a follow-up when asked if the engagement-drives-reform era is over, Greer responded: “I would say, mostly.” Thus, the era that began with President Richard Nixon’s 1972 China opening and culminated with its entry into the WTO is all but over.

Turning back to the Beijing Summit, the Hoover Institution’s Elizabeth Economy offered her own postmortem in line with much of the media narrative: “There is a difference between the US losing credibility as a global leader and China successfully claiming it. Faced with this choice, the response of most other countries appears to be ‘none of the above.’”

Boards of Trade and Investment

Despite the pessimism, industry groups are eagerly weighing in to submit feedback to USTR for the new “Board of Trade” with China. The White House and Beijing both confirmed that the Board’s framework will cover $30 billion or more in exports from each country. Separately, the Board of Investment was defined by Ambassador Greer as “an opportunity to address discrete questions on investment…to make sure that, to the extent there’s mutual investment in China and the United States, it’s in the benefit of the US interest.” Greer, Secretary Bessent, and Chinese Vice Premier He Lifeng will run both boards jointly.

CCP Crackdowns

Four days after Trump departed Beijing, Xi hosted Russian President Vladimir Putin to Beijing and signed a 47-page “multipolar world” joint declaration. The agreement is driven by the reality of a Russian economy that imports more than 90% of its sanctions-targeted technology from China, among many other bilateral support systems that the two rely upon. At its core, this is a sign of autocratic government isolation, not dominance.

Doubling down, China is restricting overseas travel for top AI professionals at Alibaba and DeepSeek. Reading the obvious signals, capital has fled. An estimated $1 trillion in capital flowed out of China in 2025, the largest move since records began in 2006. Beijing has now imposed cross-border trading restrictions and fined Futu, Tiger Brokers, and Longbridge a combined $330 million in order to stem the flow. Further crackdowns included the expulsion of New York Times’ correspondent Vivian Wang, one of the paper’s last remaining reporters in the country. The Times’ China bureau has now been reduced to a single correspondent, down from approximately a dozen at its peak. NYT columnist Nicholas Kristof: “China is a major international power, but it displays a remarkable lack of self-confidence when it bars correspondents like this.”

It is no surprise then that the announcement of Nvidia’s Jensen Huang joining the Tsinghua University School of Economics and Management advisory board (chaired by Apple’s Tim Cook) was met with concern from U.S. China hawks last week. Huang joined the same week Beijing banned Nvidia’s gaming chip and continues to deny domestic firms’ access to the H200 chip.

Indo-Pacific Counter

The biggest Chinese news did not occur in Beijing, however. The Quad foreign ministers’ New Delhi meeting produced the Quad Critical Minerals Initiative Framework, a $20 billion government and private sector support architecture for mining, processing, and recycling across Quad projects. The framework directly targets China’s 70-90% control of global rare earth processing. Also announced was the first joint Quad infrastructure investment in the Pacific Islands: a port development project in Fiji, directly competing with China’s Belt and Road Initiative loan-financed port network. Other deliverables included deepened real-time maritime surveillance to track dark shipping across the Indo-Pacific.

Additionally, Secretary of War Pete Hegseth delivered headline remarks at last weekend’s Shangri-La Dialogue in Singapore, Asia’s premier defense summit. China’s defense minister skipped the summit for the second consecutive year, sending military scholars instead. Hegseth’s remarks affirmed the U.S. commitment to Taiwan’s security and were a clear signal of alliance with those nations countering Chinese aggression, particularly Vietnam (island fortification expansion) and Japan (remilitarization: arms export policy, new national intelligence agency). While China strengthens its Russian alliance, the U.S. is pointedly reorienting the rest of Asia to its Western alliance.

Chinese Investment

Continuing its newly hardline approach to China, Europe is expressing concern with Chinese investments in Morocco, which it believes is being used as a hub to flood the European market with subsidized goods. France’s Stéphane Séjourné, vice-president of the Commission, echoed President Emmanuel Macron’s earlier calls for more tools to counter China’s economic aggression, promoting measures that would protect entire sectors of European industry from Chinese competition.

The OECD has also weighed in, releasing a report earlier in the week that found subsidies and cheap loans provide China with an unfair competitive advantage for its auto, shipbuilding, and solar exports. Across 15 industrial sectors, the OECD attributed 60% of Chinese global market share gains to subsidies that outpace rivals’ alternatives by a factor of eight. OECD secretary-general Mathias Cormann: “Large and persistent industrial subsidies can distort global markets, creating unfair competitive advantages and contributing to excess supply capacity.”

Domestically, China is expanding into its western regions as Xinjiang’s average annual growth has climbed to 5.5% while Tibet’s has grown to 7%. Among the investments is a $167 billion hydroelectric dam on Tibet’s Yarlung Tsangpo River, which could produce more electricity than all of Britain. The west, which the CCP considers its “resource frontier,” includes large deposits of copper, lithium, rare earths, and uranium.

Finally, while U.S. firms are diverting manufacturing and supply chains away from China, the National Basketball Association (NBA) is returning. Following a social media post by the then-general manager of the Houston Rockets supporting Hong Kong’s protestors in 2019, the NBA lost various Chinese sponsors, broadcast rights, and in-country games. That fracture has seemingly been repaired, with NBA Commissioner Adam Silver focused on the hundreds of millions of dollars to be had in China, the league’s largest overseas market. Chinese state broadcaster CCTV has resumed regular season broadcasts and the NBA has signed a multiyear agreement with Las Vegas Sands subsidiary Sands China Ltd. to host two preseason games annually in Macau. This morning, news broke that Golden State Warriors star Stephen Curry signed an endorsement deal with Li Ning Co., a Chinese sportswear company that has been struggling in the consumer market. The NBA’s partnership validation provides the CCP with a powerful cultural symbol.

OUTLOOK / ANALYSIS

If an MOU with Iran is signed in the coming days and the Strait of Hormuz reopens on a 30-day clock, the energy crisis has a light at the end of the tunnel, but it is not over. Managed supply recovery will be paramount and take until at least Q1 2027 to normalize. Global trade negotiations, the standoff with Cuba, and domestic politics will all play a part in how quickly the consumer side of the economy responds.

The aftermath of the Beijing summit is best analyzed not through the deliverables achieved but the independent moves by each country since. While the media continues to focus on the Taiwan arms pause,  attention is better directed towards the China/Russia multipolar declaration and the Quad’s $20 billion framework. Since Beijing, the U.S. has publicly defended both Japan and Taiwan, while enshrining the Pax Silica 16-country coalition. Meanwhile, China is ramping up its restrictions on outbound flows while attempting to leverage global frustration with U.S. trade policy and the war in Iran. As IEEPA became Section 122 and now moves into Section 301, U.S. tariffs may be finally achieving long-term durability. The Board of Trade and the Board of Investment, as well as nominal purchasing agreements, will ensure the U.S./China relationship remains constructive in the near-term, but both sides are actively hedging their bets and seeking to shore up their evolving trade and geopolitical alliances.

The Donroe Doctrine’s most concentrated single-week of action since the Maduro capture produced a slew of foreign visits and provocations last week, not least of which were sanctions against Gaesa, a building military presence in the Caribbean, and tangential U.S. involvement in the domestic politics of Latin America. Elections in Colombia and Peru in the near-term, and Brazil this fall, will be seismic signals for the durability of the Administration’s Western Hemisphere strategy and the global reach of Chinese influence.

###