US.-China Trade War: Why the Trump Administration Is Now Eager to Talk

Recent developments suggest a notable shift in the Trump administration’s trade strategy: according to well-placed sources, U.S. economic and trade officials have been actively reaching out to China through multiple channels in an attempt to restart negotiations. This stands in stark contrast to Washington’s public narrative, which paints China as the party seeking talks. Chinese authorities, however, have repeatedly denied initiating such discussions.

Even within the White House, clarity on the ground reality seems lacking. In a CNN interview, Agriculture Secretary Brooke Rollins insisted that the U.S. is in daily contact with China, despite media confirmation that Beijing has denied ongoing talks. Rollins added that “China needs us more than we need them,” revealing more about Washington’s political messaging than any genuine diplomatic breakthrough.

Why Is the U.S. Eager to Re-Engage?

The U.S.’s sudden eagerness to reconnect with China stems from five key pressures—economic, political, diplomatic, personal, and strategic.

1. Economic Backlash from Tariffs

Trump’s 145% tariffs on Chinese goods have inflicted severe economic pain on the U.S. economy. Despite claims that China would absorb the costs, the burden has fallen heavily on American businesses and consumers. Prices on platforms like Shein and Temu have soared, with some import taxes exceeding product prices. Even Amazon drew criticism from the White House after attempting to highlight the impact of tariffs on consumer prices—prompting Trump to personally call Jeff Bezos to express displeasure.

The fallout: disrupted supply chains, soaring inflation, shrinking consumer spending, investment slowdowns, hiring freezes, and growing fears of a recession. Economists now estimate a 60% chance of a U.S. recession within the next year. As the “holiday president,” Trump risks becoming the one who “cancelled Christmas” due to price hikes on gifts and essentials.

2. Political Pressure from All Sides

Economic hardship has translated into political instability. Trump is facing bipartisan criticism—including from former allies like billionaire investor Bill Ackman, who warned the tariffs could trigger an “economic nuclear winter.” Elon Musk publicly clashed with trade hawk Peter Navarro, while Wall Street, once supportive, has turned sour after April’s market crash.

Even Trump’s base—middle- and low-income voters hoping for inflation relief—are feeling betrayed. His approval ratings hover at historic lows (39–45%), setting new post-WWII records for presidential unpopularity within the first 100 days of a term.

3. Diplomatic Isolation

Efforts to rally a global anti-China trade alliance have failed. Countries with deep economic ties to China—Japan, South Korea, Brazil, India, Australia, and others—have resisted U.S. pressure, valuing Chinese trade over American demands. Even key allies like Japan are distancing themselves from Washington’s unilateralism.

This strategic misstep has left the U.S. isolated, weakening both its leverage and its global credibility.

4. Trump’s Personal Regret

Trump has privately admitted that a 145% tariff was excessive—a product of impulse rather than strategy. Even during his 2024 campaign, he floated a 60% tariff, a figure many thought he would never implement. Now, he’s looking for a way to scale back without losing face. Treasury Secretary Besant, sensing the president’s regret, has begun preparing the public for a climbdown, calling the tariff impasse “unsustainable” and akin to a “trade embargo.”

5. China’s Firm and Measured Response

Most importantly, China has held firm. Contrary to Western expectations, Beijing has refused to yield under pressure, demonstrating resilience and confidence. Trump, who tends to respect strength and exploit weakness, now sees China as a formidable opponent unwilling to bow. As China continues to stand its ground, the U.S. is realizing that this trade war cannot be won through bluster or brute force.

Trump’s Exit Strategy: A Face-Saving Retreat

Trump is now attempting a strategic de-escalation while preserving his tough image. His new narrative? The tariffs will be “substantially lowered,” but “not eliminated.” This dual messaging—hardline rhetoric combined with policy softening—is part of a carefully calibrated exit plan.

Key tactics include:

Softening language: Trump now speaks of treating China “in a friendly manner” during talks, signaling openness to negotiation without looking weak.
Flipping the narrative: The White House insists China initiated talks, hoping to position the U.S. as the party in control.
Managing public expectations: Statements about “progress” in potential agreements are aimed at calming markets and preparing the public for eventual concessions.
Playing global chess: By hinting at a deal with China, the U.S. aims to pressure other nations into trade concessions—classic transactional diplomacy.

This is not a sincere outreach, but a tactical repositioning designed to minimize political damage while securing broader strategic wins.

China’s Likely Response: Principle and Pragmatism

Beijing’s stance remains consistent: “The door to dialogue is open, but we are prepared to fight if necessary.” China welcomes sincere negotiation but will not make unilateral concessions. Talks are important to reduce strategic miscalculations and offer global stability, but must be based on mutual respect.

China will assess Washington’s true intent through actions, not words. If the U.S. continues with coercive pressure while claiming to seek dialogue, Beijing will see through the charade. Any resolution must protect China’s core interests and national dignity.

What the U.S. Should Really Focus On

Instead of blaming China, the U.S. would do well to address its own structural challenges:

Modernize infrastructure
Boost domestic manufacturing competitiveness
Improve public education and workforce skills
Tackle domestic drug abuse
Reform its political and economic systems

China, meanwhile, has responded to U.S. pressure by doubling down on self-reliance, industrial upgrading, and long-term reform—an approach that has positioned it better in this second round of trade tensions.

Conclusion: A Trade War Without a Victory

The Trump administration’s pivot to dialogue underscores one truth: this trade war is unsustainable. Whether the outcome is a scaled-down deal, prolonged standoff, or a new status quo, it’s clear that brute force economics no longer work in a multipolar world. For the U.S., real strength lies not in tariffs or threats, but in fixing its own house first.

$2.9 Billion Defense Deals Signal UAE’s Shift: From Arms Importer to Global Competitor

Middle East’s Largest Arms Fair Reveals UAE’s Homegrown Defense Ambitions

Last week, the United Arab Emirates (UAE) hosted IDEX 2025, the Middle East’s biggest defense expo and one of the largest globally. With 1,565 companies from 65 nations and 41 country pavilions, the event spotlighted the UAE’s rapid rise in defense innovation. Local firms accounted for nearly 16% of exhibitors , led by EDGE Group, the UAE’s defense champion, which secured $2.9 billion in new contracts – mostly with UAE government entities.

Key Deals at IDEX 2025:

$1.2B aviation ammunition deal with UAE Ministry of Defense.
$524M naval support contract with EDGE subsidiary Maestral.
46 new defense solutions launched, including drones, missiles, and AI-powered systems.

From Buyer to Builder: UAE’s Defense Transformation

For decades, the UAE relied on foreign arms imports. From 2016–2020, it ranked as the world’s 9th-largest defense importer , buying 64% of its weapons from the U.S. (SIPRI data). But with a $22B+ annual defense budget , the Gulf nation is now:
1️⃣ Investing heavily in R&D and local manufacturing.
2️⃣ Building maintenance/repair capabilities to reduce foreign dependence.
3️⃣ Exporting homegrown tech – EDGE Group’s exports hit $2.3B by 2024 , projected to double in 2025.

Why the Shift?

Geopolitical Risks: U.S. export restrictions under Biden highlighted overreliance on Western partners.
Economic Vision: Moving beyond oil by creating a high-tech industrial base.

EDGE Group: UAE’s Answer to Global Defense Giants

EDGE has become a symbol of the UAE’s ambitions, offering:

Missiles & drones rivaling Turkish and Chinese systems.
NATO-compliant weapons like the Lahab 155mm howitzer (challenging French/German rivals).
Strategic partnerships with firms in Estonia, Poland, and Singapore for cutting-edge tech.

Recent Wins:

Supplied Caracal sniper rifles to NATO member Hungary.
Acquired majority stakes in Estonia’s Milrem Robotics (combat robots) and Poland’s Flaris (drone tech).

Implications for Global Defense Markets

The UAE’s strategy – blending joint ventures, acquisitions, and innovation – poses challenges for traditional players:
⚠️ Western Firms: Face rising competition in Gulf markets.
⚠️ Regional Rivals: Saudi Arabia and Egypt now emulate UAE’s model.

Financial Takeaway: The UAE’s defense pivot reflects a broader Middle East trend toward industrial self-reliance, creating new investment opportunities in dual-use technologies and regional supply chains.

The Shifting Global Order: The U.S., Europe, Ukraine, and the End of Unipolarity

Is Europe in Control of Its Own Future?

With growing speculation that the U.S. may scale back support for Ukraine and engage directly with Russia, a key question arises: Does Europe have the ability to influence this outcome? The reality is that Europe, as a collective entity, has limited options. In the grand geopolitical landscape, Ukraine is on the menu, while the U.S. and Russia are seated at the negotiating table. Europe, however, is neither a guest nor a dish being served—at least, not yet.

Europe’s Defense Dependence on the U.S.

For decades, European nations have relied on the U.S. for military security, maintaining relatively low defense spending. This dependency is a cornerstone of the U.S.-led unipolar order, often referred to as Pax Americana. Countries across the continent, as well as Canada, have long assumed that U.S. military support was an unconditional guarantee.

The Trade-Off: Economic Growth Over Military Strength

By outsourcing defense to the U.S., Europe has been able to focus on economic and social development. Governments have directed resources toward industrial growth, agriculture, and welfare programs funded by high taxes. However, this arrangement has come at a cost: Europe has little independent military leverage and often aligns with U.S. strategic decisions.

But today, this post-war arrangement is under strain. The U.S. faces increasing political resistance at home against maintaining the current global security structure. While powerful interest groups, including defense contractors and multinational corporations, continue to benefit, the average American voter sees little return. This discontent is amplified by economic grievances, such as European nations maintaining strong manufacturing industries while imposing trade barriers that disadvantage U.S. exports.

Diverging Economic Models and a Fractured Alliance

The weakening of the U.S.-led order is also driven by structural economic differences. The American model prioritizes low taxes, corporate growth, and a free-market approach, whereas Europe leans toward high-tax, high-welfare policies. When the distribution of benefits becomes unbalanced, tensions emerge within the alliance. External events, such as the Russia-Ukraine war, further accelerate these fractures.

While global shifts play a role, some of the current instability can be traced back to past U.S. foreign policy choices. The 2003 Iraq War, for instance, disrupted the Middle East, contributed to the rise of extremist groups, and triggered mass displacement. As a result, Europe bore the burden of millions of refugees, fueling political and social tensions. The rise of nationalist movements across Europe today is, in part, a response to these demographic and economic pressures.

Many of these geopolitical trends are linked to long-standing historical factors. The U.S.’s unconditional support for Israel, for example, has shaped its relationships in the Middle East, contributing to conflicts that have had far-reaching consequences. These historical patterns highlight how past decisions continue to shape present challenges.

Russia’s Strategic Calculations

When Russia launched its military operation in Ukraine in 2022, it did so with an awareness of the internal divisions within the U.S. and Europe. Russian leaders have long observed the ideological divides in Western nations—ranging from nationalist movements to left-wing skepticism of American global influence. While Russia may have correctly predicted the long-term decline of unipolar U.S. dominance, it underestimated Ukraine’s military resistance. As a result, the conflict has turned into a prolonged struggle, with Russia waiting for larger geopolitical shifts—such as potential leadership changes in the U.S.—to shift the balance in its favor.

The Russia-Ukraine conflict has accelerated shifts in global geopolitical structures, particularly in the transatlantic alliance. This conflict has highlighted long-standing differences between the U.S. and Europe, especially in defense spending. Trump has repeatedly called for NATO members to increase their military budgets, suggesting a target of 5% of GDP—far above the current 2% guideline. However, many European nations struggle to meet even the 2% target, with some of the strongest economies, such as Spain, allocating as little as 1.28% of GDP to defense. Given Europe’s current economic and fiscal challenges, significantly increasing military spending seems unlikely without increasing debt and deficits.

Europe’s Political Structure and Its Influence on Global Influence

Europe’s modern political system is characterized by decentralization. Most European nations have opted for smaller, more focused governance structures to enhance democratic efficiency and accountability. While this has strengthened domestic governance, it has also led to a fragmented geopolitical presence. As a result, individual European nations often lack the geopolitical weight to act independently, leading to reliance on larger allies such as the U.S.

To counterbalance this fragmentation, European nations have pursued greater integration through institutions like the European Union and the eurozone. However, deeper integration comes with challenges, including bureaucratic costs, regulatory complexities, and sovereignty trade-offs. For instance, issues such as immigration policies and economic regulations have sparked internal disagreements, contributing to events like Brexit.

Economic stability is often a prerequisite for political strength. The EU has strict fiscal policies, such as limiting national debt to 60% of GDP and budget deficits to 3% of GDP. Countries like Germany have embedded fiscal discipline, such as a constitutional “debt brake,” further restricting budget flexibility. Under these financial constraints, significantly increasing military expenditure remains a difficult proposition for most European nations.

Additionally, historical perspectives play a role. Many Europeans remain skeptical about the likelihood of direct Russian military aggression beyond Ukraine, which reduces the urgency for higher defense spending. The economic and political conditions in Europe make large-scale military expansion a challenging endeavor.

Trade tensions between the U.S. and Europe are another key issue. Trump has criticized Europe’s value-added tax (VAT) system, arguing that it creates an unfair trade advantage. VAT accounts for 20-30% of many European nations’ fiscal revenue and is a fundamental pillar of their economic model. Any major changes to VAT policies would require structural shifts in Europe’s taxation and welfare systems, which seems highly unlikely. These debates highlight deeper differences between the U.S. and Europe, where the former follows a lower-tax, lower-welfare model while the latter relies on higher taxation to support social services.

Europe’s post-war economic model has been heavily dependent on U.S. defense support, allowing nations to prioritize social welfare. However, as geopolitical and economic pressures mount—including energy security concerns, the rise of China’s manufacturing sector, and technological shifts such as AI—Europe must reassess its economic strategy. Countries like Germany, traditionally reliant on industrial exports, face significant challenges in maintaining competitiveness.

The political landscape in Europe is also evolving, with increasing support for both far-left and far-right movements that challenge the traditional establishment. These groups often advocate for rethinking European alliances, prioritizing national interests, and reassessing relations with Russia. Political changes in key nations, such as Italy and France, could further shift Europe’s policy direction, especially regarding defense and trade relations.

Europe stands at a crossroads, facing geopolitical, economic, and technological challenges that will shape its future. The continent’s ability to navigate these shifts depends on its economic resilience, political unity, and strategic alliances. As debates over defense spending, trade policies, and economic reforms continue, European nations must find a balanced approach that preserves stability while adapting to global changes. The coming years will be crucial in determining whether Europe can maintain its influence on the world stage or if it will become increasingly dependent on external forces.

China Accelerates the Growth of New Energy Storage Industry

China is taking significant steps to boost its new energy storage industry. On February 17, the Ministry of Industry and Information Technology, along with 7 other government agencies, issued the “Action Plan for High-Quality Development of the New Energy Storage Manufacturing Industry.” The plan aims to encourage regional diversification, improve resource efficiency, and unlock the full potential of the market.

As a key enabler of renewable energy integration, the new energy storage sector includes technologies for energy storage, information processing, and safety control. By 2027, the plan envisions a globally competitive industry, with an expanded network of leading enterprises. Key goals include aligning industry growth with market demand, enhancing product performance and safety, and broadening application areas across power, industry, energy, transportation, construction, telecommunications, and agriculture.

According to Zhu Keli, Executive Director of the China Information Association and Head of the National Research Institute of New Economy, developing the new energy storage industry will stimulate economic growth while advancing materials, equipment manufacturing, and storage solutions across the value chain.

Innovation Driving Industry Advancement

New energy storage refers to technologies other than pumped hydro storage that primarily store and release electricity. Similar to a large-scale “power bank,” these systems store surplus energy from wind and solar power and release it during peak demand, ensuring a stable power supply.

China’s new energy storage sector is experiencing rapid growth. As of the end of 2024, the country had a total installed new energy storage capacity of 73.76 gigawatts (GW) or 168 gigawatt-hours (GWh), a 20-fold increase since 2020 and a 130% rise from 2023.

However, intense price competition has led to challenges in maintaining sustainable growth and product quality. Zhu Keli emphasizes the need for deeper investment in fundamental research and technology breakthroughs. The government’s action plan supports advancements in multiple storage technologies, including lithium batteries, supercapacitors, sodium-ion batteries, and compressed air storage. The plan also encourages the development of next-generation storage solutions, such as hydrogen storage and hybrid energy storage systems.

To enhance safety and efficiency, the initiative promotes the integration of energy storage with advanced digital technologies, including artificial intelligence and digital twin simulations. It also focuses on strengthening supply chains for key components like power semiconductors, smart sensors, and high-efficiency power converters.

Strategic Industry Development in Key Regions

A well-structured industrial layout is essential for sustainable growth. The action plan encourages companies to establish facilities in regions rich in renewable energy and mineral resources, with strong infrastructure and transportation links. Key areas of focus include the Yangtze River Delta, Beijing-Tianjin-Hebei, the Greater Bay Area, Chengdu-Chongqing, Inner Mongolia, and the Taiwan Straits Economic Zone.

Local governments are also actively shaping the industry’s future. Since early 2024, multiple provinces and cities have introduced policies to promote new energy storage. For example, Beijing’s Carbon Peak Implementation Plan highlights the importance of advancing storage technology, while provinces such as Liaoning, Shanghai, and Chongqing have rolled out similar strategies to foster industry growth.

The plan also emphasizes resource security. Measures include supporting domestic exploration of lithium, cobalt, and nickel resources, improving supply chain coordination, and encouraging responsible overseas resource investments. Additionally, manufacturers are encouraged to adopt sustainable production methods, prioritize green design, and enhance recyclability.

Expanding Market Applications for New Energy Storage

The government is actively promoting wider adoption of new energy storage solutions. The action plan supports integrating storage with coal power plants for grid balancing and deploying storage in regions with abundant renewable energy but limited local consumption capacity.

A key focus is allowing independent energy storage providers to participate in the electricity market. This will enhance grid stability, optimize power distribution in densely populated and remote areas, and improve supply reliability.

On the consumer side, energy storage is being encouraged for critical industries such as data centers, telecom networks, industrial parks, and commercial facilities. The plan also promotes integrating solar power with storage systems in urban lighting, traffic management, smart carports, and rural infrastructure.

Looking ahead, the sector is set for strong expansion. According to a forecast by the Zhongguancun Energy Storage Industry Technology Alliance, China’s new energy storage capacity could reach between 116.3 GW and 131.3 GW by 2025, reinforcing its role as a cornerstone of the country’s renewable energy transition.

Trump’s Latest Interview: Trade Policies, Global Relations, and Economic Strategies

Overview of Trump’s Recent Interview

On February 11, 2025, U.S. President Donald Trump sat down for an interview with Fox News ahead of the Super Bowl. The discussion covered a wide range of topics, including trade policies, international relations, and economic strategies. Fox News anchor Bret Baier, known for his direct questioning, conducted the interview, addressing both Trump’s past decisions and his future plans.

Key Takeaways from the Interview

1. Lessons from His First Term

Acknowledged his initial lack of experience in Washington.
Claimed he had used unqualified personnel but is now better prepared.

2. Views on the U.S. Agency for International Development (USAID)

Stated that many of its projects were unreliable.
Described USAID as “fraudulent” and a “scam.”
Said he tasked Elon Musk with investigating the agency.

3. On Elon Musk’s Role

Reported that Musk provides him with updates.
Expressed admiration and trust in Musk.
Suggested Musk’s team would investigate the Department of Education and the military.
Mentioned Musk’s team consists of highly intelligent individuals.
Assured that Musk wouldn’t personally benefit from these tasks.

4. Trade Relations with Canada and Mexico

Criticized Canada over 30 times during the interview.
Proposed additional tariffs on Canada and Mexico.
Suggested Canada could become the 51st U.S. state.
Argued against “subsidizing” Canada due to trade imbalances.
Stated that if an agreement isn’t reached, the U.S. could impose tariffs of 50-100% on Canadian cars.

5. Tariffs and Economic Policy on China

Indicated current tariffs are just the beginning.
Linked tariffs to addressing fentanyl concerns.
Highlighted China’s dependence on U.S. trade.
Reaffirmed strong relations with Chinese leaders.
Avoided direct criticism of China, instead emphasizing economic discussions.

6. Domestic Political Unity

Questioned the legitimacy of Vice President Kamala Harris’s votes.
Stated that policy differences with Democrats prevent unity.
Suggested economic success is key to national cohesion.

7. Education Policy

Proposed decentralizing education by transferring control to states.
Criticized U.S. education rankings compared to countries like China and Nordic nations.
Claimed Republican-led states manage education better than Democratic-led states.

8. The Gaza Conflict

Stated that Gaza is now uninhabitable.
Proposed relocating Palestinian populations to nearby Middle Eastern nations.
Suggested transforming Gaza into a redevelopment project.
Claimed that funding and support could be secured from Middle Eastern countries.

9. Russia-Ukraine Conflict

Offered vague comments on peace talks.
Deflected questions on how he would negotiate with Russia.
Criticized NATO for inadequate financial contributions.
Suggested the U.S. should reclaim its financial aid to Ukraine through resources like rare earth minerals and oil.

10. U.S. Policy on Iran

Opposed past nuclear agreements with Iran.
Advocated renegotiating a long-term nuclear deal.
Claimed Iran is now in a weaker position and willing to negotiate.

11. Relationship with Congress

Claimed strong ties with Republican lawmakers.
Acknowledged the challenges of governing with a slim House majority.
Called for bipartisan support on tax cuts and government spending.

12. Defense Spending

Supported increasing defense budgets.
Did not elaborate on specific spending plans.
Expressed willingness to negotiate arms reduction with Russia and China.

13. Tariffs and Domestic Economic Impact

Avoided directly addressing inflation concerns.
Suggested tariffs could help reduce the budget deficit.
Proposed imposing new tariffs on steel, automobiles, semiconductors, and chips.

14. Future Leadership within the GOP

Praised Senator J.D. Vance but deemed it too early to discuss his potential as a successor.

Observations on Trump’s Approach

1. Campaign-Oriented Mindset

Continues to emphasize his past successes.
Frequently criticizes President Joe Biden.
Focuses on rhetoric used during his campaign.

2. Self-Promotion and Grand Claims

Frequently highlights his own leadership skills.
Positions himself as a top negotiator and strategist.
Attributes past economic successes solely to his administration.

3. Communication Style

Frequently changes topics and avoids direct answers.
Tends to shift discussions back to his accomplishments and criticisms of Biden.
Often brings up Canada as a target for criticism.

4. Gaps in Policy Details

Lacks clear explanations for tariffs, inflation, and foreign policy decisions.
Provides optimistic projections without specific implementation plans.

5. Approach to Foreign Relations

Takes a strong stance against U.S. allies like Canada and Mexico.
Expresses caution in dealings with Iran and North Korea.
Avoids direct confrontation with China and Russia, suggesting a more strategic approach.

Conclusion

Trump’s interview revealed a mix of aggressive trade policies, strategic foreign relations, and a continued emphasis on his past administration’s achievements. While he remains confident in his approach, his statements often lack clear policy details, particularly on economic and diplomatic challenges. His strategy appears focused on prioritizing short-term victories, especially in dealings with allied nations, while cautiously engaging with global superpowers (you guess who they are)

Canada’s Defeat? How Trump’s Tariff Strategy Works

U.S. President Donald Trump has temporarily suspended the 25% tariff on Canadian and Mexican imports but kept the 10% tariff on Chinese goods. Canadian Prime Minister Justin Trudeau reacted on social media, but let’s break down what this really means:

1. Canada Talks Tough but Acts Cautiously

Despite strong words, Canada quickly adjusted once Trump was elected. They tightened border controls and even shared their progress with him. Trudeau personally met Trump at Mar-a-Lago, showing Canada’s willingness to cooperate on trade issues.

2. Tariffs Hurt Canada More Than the U.S.

The U.S. economy is much larger than Canada’s, so tariffs hit Canada harder. The trade relationship is not balanced, making Canada more vulnerable.

3. Trump Used Non-Economic Reasons for Tariffs

Trump justified the tariffs on Canada by citing illegal immigration—an issue that isn’t directly trade-related. This gave him two advantages:

He could use executive power to enforce tariffs under the pretext of a “national emergency.”
He could define “solving” the immigration problem however he wanted. Since the U.S.-Canada border isn’t a major source of illegal immigration, Canada could easily comply by showing effort rather than making real policy changes.

4. Trudeau’s Political Troubles

Trudeau is facing declining support in Canada, especially due to his immigration policies. Many critics blame him for worsening U.S.-Canada relations, arguing that his left-leaning policies caused unnecessary conflicts with Trump.

5. The U.S.-Canada Trade Relationship Is Deeply Connected

Canada supplies the U.S. with essential resources like oil, making them economically intertwined. Many U.S. refineries are specifically designed to process Canadian oil, and Trump supports the fossil fuel industry. So, despite tensions, a complete trade breakdown was unlikely.

6. Canada’s Concession Puts Pressure on Mexico

By resolving its tariff dispute with Trump, Canada left Mexico alone in negotiations. Smaller economies like Mexico can only stand up to the U.S. if they unite, but Trump’s strategy was to divide and conquer. With Canada cooperating, Mexico had fewer options.

7. Trump’s Focus: Fossil Fuels and Automobiles

Trump mainly cares about two industries: fossil fuels and cars. The U.S. auto industry relies heavily on Mexico for manufacturing and supply chains. If tariffs hit Mexico too hard, U.S. car companies and jobs would suffer, making it a politically risky move for Trump.

8. Trump’s Strategy Was Carefully Planned

Trump knew what he was doing by targeting Canada and Mexico first:

He linked tariffs to issues like immigration and fentanyl, which align with his political promises.
He set a precedent for using tariffs in non-trade disputes.
He picked economically weaker countries that depend on U.S. trade.
He wanted to show both U.S. voters and other countries that his tough trade policies work.

9. A Political Win for Trump?

If Canada and Mexico back down, it strengthens Trump’s position. However, this success comes at a cost: damaging alliances and breaking international trade rules.

10. The Bigger Picture: China Is the Real Target

Trump’s trade war isn’t just about Canada and Mexico—they were the warm-up. His real focus is China. While Canada and Mexico could be pressured individually, China will require a different strategy.

Key Takeaways:

Trump’s tariff strategy won’t improve U.S. relations with other countries.
Countries affected by U.S. tariffs will look for alternative trade partners.
The old global trade system, led by the World Trade Organization, has been disrupted.
U.S. isolation from allies could create more opportunities for China.

Now, the big question is: how will China respond?

Why Did Chinese Stocks Surge During the Lunar New Year Holiday?

Last night, four major events caught global attention, with one standing out: the impressive surge of Chinese stocks listed in the U.S. While the broader U.S. stock market remained volatile, Chinese stocks saw a strong rally.

1. Chinese Stocks Surged—Fueled by AI Developments

The rally was largely driven by the growing influence of DeepSeek, a rising AI player, and Alibaba’s latest AI model. Yesterday, Alibaba announced the open-source release of Qwen2.5-Max, an AI model reportedly on par with GPT-3.5. This move reinforced China’s competitive edge in developing high-performance AI at lower costs, prompting global investors to reassess Chinese tech stocks.

The numbers speak for themselves:

The Nasdaq Golden Dragon China Index, which tracks Chinese stocks listed in the U.S., rose 4.33%.
Alibaba jumped 6.22%.
The China Internet ETF saw $105 million in net inflows, the highest since October 2023.

With markets reopening after the Lunar New Year, investors may want to keep an eye on Chinese AI and tech stocks, especially those focused on AI applications.

2. U.S. Tariff Threats—Trump’s Plan to Tax Canada and Mexico

U.S. President Donald Trump announced plans to impose a 25% tariff on imports from Canada and Mexico starting February 1 (tomorrow!). If implemented, this could have several effects on global markets:

Positive for U.S. Stocks: Higher tariffs make American-made products more competitive.
Stronger U.S. Dollar: Past tariff hikes have triggered capital inflows to the U.S.; after the 2018 China tariffs, the U.S. Dollar Index climbed 4.1%.
Market Uncertainty: Trade tensions often push investors toward safe-haven assets like the US dollar.
Potential Fed Response: If tariffs drive inflation higher, the Federal Reserve may consider interest rate hikes, further strengthening the dollar.

3. Trump Criticizes the Federal Reserve Over Interest Rates

Shortly after the Federal Reserve decided to keep interest rates unchanged, U.S. President Donald Trump took to social media to directly blame Fed Chairman Jerome Powell for mismanaging inflation. Trump has a history of criticizing Powell—during his previous term eight years ago, he would call him out almost every ten days for not cutting interest rates.

Trump’s reasoning is simple: lowering interest rates would weaken the U.S. dollar, making American exports more competitive, boosting employment, and driving up the stock market—all of which could increase his political support.

4. Rising Uncertainty Boosts Gold Prices

Market uncertainty is pushing investors toward safe-haven assets like gold. The possibility of new tariffs on major trading partners could lead to trade tensions, while ongoing geopolitical conflicts add to economic unpredictability. In response, central banks worldwide are increasing their gold reserves, making a continued rise in gold prices highly likely.

Currently, gold is trading at around $2,800 per ounce, not far from Goldman Sachs’ target of $2,910. With gold prices up 8% this year and silver surging nearly 12%, the bullish trend is expected to continue.

The Hidden Player in U.S. Politics: The Rise of UAE’s Lobbying Power

The UAE has emerged as a significant player in shaping U.S. foreign policy, leveraging its lobbying efforts and influence in the Middle East.

A Key Beneficiary of Lobbying in the Middle East

In recent years, the UAE has expanded its influence across the Middle East while playing an active role in U.S. foreign policy decisions. Despite pledging to exit the ongoing conflict in Yemen in 2020, the UAE continues to maintain significant military influence in the region. Alongside other Gulf nations, the UAE normalized relations with Israel through the Abraham Accords, marking a milestone in Middle Eastern diplomacy. Additionally, the UAE remains a key recipient of U.S. military support, purchasing billions of dollars in weapons annually. Culturally, the nation also hosted the 2020 Dubai Expo, a global event that showcased its growing global presence.

Between 2020 and 2021, 25 organizations registered under the Foreign Agents Registration Act (FARA) to represent the UAE’s interests in the U.S. These groups reported over 10,700 interactions with U.S. policymakers and received $64 million for their services.

A well-organized lobbying team based in the U.S. has been instrumental in shaping U.S. policy toward the Middle East. In November 2022, The Washington Post revealed a classified intelligence report detailing the UAE’s extensive efforts—both legal and illegal—to influence U.S. politics in favor of its interests. The report, compiled by the National Intelligence Council, flagged these activities as a national security concern.

Although the full details of the report remain classified, the UAE’s influence operations have been well-documented. While the UAE has long been a U.S. partner on key foreign policy issues, it has employed a variety of strategies—both ethical and otherwise—to expand its sway in Washington. A notable case involved George Nader, a Lebanese-American businessman who admitted to funneling millions of dollars into U.S. elections on behalf of the UAE.

UAE has hired former U.S. military officials as contractors, including individuals who held high-ranking positions such as generals and admirals. Notably, Jims (or James) Mattis, who later became the U.S. Secretary of Defense, advised the UAE military before taking on the role. These individuals were awarded lucrative contracts, raising concerns about potential conflicts of interest—especially when they returned to positions within the U.S. government.

In addition, UAE has spent billions of dollars purchasing U.S. military equipment, making it the third-largest recipient of U.S. weapons in the past five years, behind Afghanistan and Saudi Arabia. However, UAE forces operating in Yemen have faced serious accusations of war crimes, including civilian casualties and torture. Even after withdrawing troops from Yemen in 2020, the UAE has continued to support non-state armed groups through training, logistical aid, and financial backing.

The UAE’s involvement in U.S. political and military affairs has become a recognized national security concern. While military cooperation remains a cornerstone of U.S.-UAE relations, the 2020 Abraham Accords further enhanced the UAE’s diplomatic reach. These agreements normalized relations between Israel, the UAE, Bahrain, Morocco, and Sudan. While presented as efforts to promote peace in the Middle East, the accords have been criticized for increasing the militarization of U.S. foreign policy in the region rather than reducing it.

So…Where Does UAE Lobbying Money Go?

The UAE has invested heavily in lobbying efforts, with companies registered under the Foreign Agents Registration Act (FARA) reporting a total income of nearly $64.5 million for their work on behalf of UAE clients. While more than 20 firms were involved, just five received the majority of the funds. The top recipients were:

Akin Gump: $13.5 million
Brunswick Group: $12.2 million
The Camstoll Group: $10.5 million
Teneo Strategy: $7.2 million
The Harbour Group: $6.6 million

Akin Gump, the top earner, is also one of the biggest contributors to U.S. political campaigns. The firm reported donating nearly $1.1 million—about two-thirds of the $1.65 million total donated by all UAE lobbying firms in 2020 and 2021.

It’s important to note these donations are entirely legal, as no foreign funds were used, complying with Federal Election Commission rules that ban contributions from foreign nationals.

The largest recipient was Terry McAuliffe (D-Va.), who received a $200,000 donation from Terakeet on August 31, 2021. Other prominent Democratic politicians linked to UAE lobbying efforts include Senate Majority Leader Chuck Schumer (D-NY) and House Majority Leader Steny Hoyer (D-MD).

While most of the contributions favored Democratic candidates, the lobbying activity itself was bipartisan. Over 450 political campaigns from both parties received contributions from firms working for UAE clients.

In many cases, donations were made to lawmakers directly involved in meetings with UAE representatives. For instance, Akin Gump reported contributing $528,461 to the campaigns of 104 members of Congress they had engaged on behalf of UAE clients. One notable example involved Senator Todd Young (R-IN), who met with Akin Gump on April 15, 2021. Just a week later, the firm donated $5,000 to his campaign.

Despite extensive lobbying efforts by UAE representatives targeting nearly every Congressional office, their main focus has been on key committees. Specifically, lobbyists working for the UAE contacted staff from the Senate Foreign Relations Committee and the House Foreign Affairs Committee more than 200 times.

One of the most frequently contacted individuals was Lee Zeldin (R-NY), a member of the House Foreign Affairs Committee and co-chair of the House Israel Caucus. Zeldin is a vocal supporter of the Abraham Accords, which established peace between the UAE and Israel. Senior members of political parties and leaders of influential committees have also been primary targets of UAE lobbyists.

The UAE’s lobbying efforts extended beyond Congress to include significant outreach to the media. Reports show that UAE representatives reached out to over 500 media outlets, focusing on major publications such as The New York Times (95 contacts), Forbes (61 contacts), and The Wall Street Journal (43 contacts).

Think tanks were another target, with UAE lobbyists contacting them at least 90 times. Notably, the think tanks contacted most frequently—such as the Middle East Institute, the Atlantic Council, and the Center for Strategic and International Studies—have received millions of dollars in donations from the UAE.

Tesla, Xiaomi, and Other Automakers in China Issue Major Vehicle Recalls

On January 24, the China National Administration for Market Regulation’s Defective Product Recall Center website revealed multiple vehicle recalls from major automakers, including Tesla and Xiaomi. Notably, Xiaomi announced its first-ever vehicle recall since entering the automotive market.

Xiaomi Recalls Over 30,000 SU7 Electric Vehicles

Xiaomi is recalling approximately 31,000 SU7 Standard Edition electric vehicles, produced between February 6, 2024, and November 26, 2024. This recall includes three specific vehicle models:

BJ7000MBEVR2: 18,410 units
XMA7000MBEVR2: 12,117 units
XMA7000MBEVR5: 404 units

The issue stems from a software strategy problem that may cause timing synchronization errors. This could impact the smart parking assist system’s ability to detect static obstacles, increasing the risk of minor collisions or scrapes. Xiaomi will address this issue through a free over-the-air (OTA) software update, ensuring safety without requiring customers to visit a service center.

Xiaomi emphasized that user safety is its top priority, and although no physical parts need replacement, the recall follows strict regulatory procedures. This move aims to enhance the reliability of its smart parking assist system.

The recall also affects a batch of pre-launch test vehicles produced in February 2024. Xiaomi explained that these vehicles were part of extensive internal testing to ensure product quality before the SU7’s official release in March 2024.

Responding to questions about the delay in issuing the recall after an incident in November, Xiaomi stated it had immediately identified and resolved the issue with cloud services. However, further extensive testing and regulatory approval delayed the official announcement.

Xiaomi delivered over 135,000 vehicles in 2024 and has set an ambitious goal of 300,000 deliveries for 2025, as revealed by CEO Lei Jun in a New Year’s live stream.

Other Automakers Announce Recalls

On the same day, several other automakers in China also issued recall notices:

Tesla: Over 1.2 million Model S, Model X, Model 3, and Model Y vehicles due to potential software or hardware issues.
Chery Jaguar Land Rover: Nearly 110,000 Range Rover and Jaguar models due to safety concerns.
Hyundai: Over 69,000 Sorento and other models for defects related to manufacturing from 2010 to 2018.
SAIC Volkswagen: More than 330,000 Passat and Tiguan L models produced between 2015 and 2017.
Honda: Over 1.3 million vehicles, including CR-V and Civic models, for safety improvements.

These recalls reflect the industry’s commitment to addressing potential issues proactively, ensuring customer safety and trust.

AI & Government Layoffs: The Tech-Industrial Complex Shaping Trump’s America

Traditionally, it was said that American politics was influenced and dominated by the “military-industrial complex” – meaning that the United States’ geopolitics, foreign policy, and maintained international order reflected the interests of this complex. Trump’s political approach diverged dramatically from past practices, essentially abandoning the established model and reverting to an “isolationist” stance reminiscent of over a hundred years ago, focusing more on domestic concerns and avoiding military interventions in foreign affairs. The NATO alliance and regional military partnerships led by the US were also becoming unstable.

However, during Trump’s potential second White House term in 2024, a crucial new force emerged – what Biden termed the “tech-industrial complex” – where technology supersedes military power as the dominant force. The technological dimension joined the Trump/MAGA movement in a specific sequence: first Peter Thiel, then Elon Musk (representing the “tech right”), and finally Silicon Valley’s major corporations, entrepreneurs, and investors – from Zuckerberg and Bezos to Altman, Apple, and Google – who joined after Trump’s election.

These tech powers recognized that Trump fundamentally supports capital, deregulation, tax cuts, and mercantilism – allowing them to maximize their interests and shape America’s future under “Trump 2.0”. In this emerging order, the foundation shifts from military and defense to a global system powered by chips and artificial intelligence (with the understanding that these technologies can also have military applications).

Two recent US news stories illustrate this transformation, particularly regarding industry and investment within the tech-industrial complex.

On the second day of his White House tenure, Trump personally intervened to bring together Masayoshi Son (SoftBank), Larry Ellison (Oracle), and Sam Altman (OpenAI). These three announced the formation of a joint venture called “Stargate”, with a $500 billion investment aimed at building artificial intelligence infrastructure. Specifically, this primarily involves investing in data centers, with potential strategic investments along the AI ecosystem’s value chain, but the main focus remains data center infrastructure.

Recognizing this was a major investment project on Trump’s second day in office, he was extremely pleased, personally championing it and claiming the investment would create 100,000 jobs for the United States.

Can this be considered Trump’s achievement? Personally, while the AI trend has been ongoing for a couple of years and the Biden administration has been pushing industrial policies supporting key industries like semiconductors, the tech and industrial sectors still perceive the Biden/Democratic administration as overly regulatory and less friendly to businesses, capital, and technological innovation. If interviewed, most industry players would likely believe these industries would receive greater encouragement and development under a Trump administration.

At least in expectations, they believe a “golden age” has arrived.

For investment and entrepreneurship, expectations are crucial. Optimistic expectations motivate people to take more risks and be more willing to invest and start businesses.

Regardless of the US economic trajectory in the next one or two years, whether inflation can be controlled, or if manufacturing will truly return, for Silicon Valley entrepreneurs and investors in the new economy, the atmosphere has been set. People are indeed in a state of vibrant energy, eager to make significant moves. Undoubtedly, “Stargate” will intensify competitive pressures for all competitors, including Chinese entrepreneurs and businesses.

In this scenario, all parties emerge as winners. In fierce competition, OpenAI+Oracle welcome funding. SoftBank wants to ride the trend, repair relationships with investors, and prove itself again through the AI wave. Investors, despite being shrewd and visionary, also have a gambler’s side. So, they’re all in on AI, launching satellites as big as possible. Conveniently, Son has some connection with Trump and can leverage it. (During Trump’s first term, Son also launched a satellite by impulsively investing in WeWork).

As for Trump, he’s both a politician and the top investment attraction officer. He needs achievements, visual effects (“presence”), publicity, and demonstration. Thus, he’s naturally thrilled about “Stargate”. Especially since he recently discussed with Son investing $100-200 billion, giving this project a sense of immediate closure. However, what Trump values most isn’t the investment amount itself, but employment. He claims this will create 100,000 jobs (a number that can never be verified, nor needs to be).

The Japanese might feel somewhat conflicted. They see SoftBank still thriving in the US, leveraging American tech giants to invest in and build AI infrastructure and industrial chain positioning. Yet, a similar scenario is difficult to replicate in Japan—at least not at a comparable scale. Japan might believe it’s performing well in US-Japan alliance relations, but Trump won’t prioritize Japan—he’ll personally work to attract Japanese capital, industrial, and talent resources to the United States. This is an era of great power competition on geopolitical and economic foundations. Every country must determine whether they’re at the table or on the menu.

Of course, this job creation narrative has some issues, primarily because in an era where human technology is approaching Artificial General Intelligence (AGI) and Artificial Superintelligence (ASI), the relationship between AI and human labor is complex. It’s no longer simply about “new technology creating more jobs”, but about AI reconfiguring labor relations and productivity, potentially displacing or replacing human labor and pushing most workers to the lowest-value chain segments.

Regarding the investment by Softbank, OpenAI, and Oracle

Data centers themselves do not create many job opportunities, whether during the brief construction phase or in the operational stage, which requires minimal staffing.
While these data centers serve AI companies and may indirectly support the AI industry, several critical points emerge:
- First, the AI industry is capital and technology-intensive, not labor-intensive. It will not generate significant employment in absolute numbers.
- Second, the AI industry primarily requires high-end talent – highly educated elite engineers and technical specialists. This connects to the ongoing H-1B visa controversy in the United States, where: (1) Tech leaders like Musk advocate for more immigrant talent; (2) Trump’s base opposes this, viewing it as contrary to “America First” principles. This debate has created deep political divisions, with Vivek Ramaswamy’s recent political ousting being a notable example.
- Third, AI’s ultimate goal is developing artificial general intelligence (AGI) or superintelligence that will eventually replace most human labor, except for a few elite managers. Metaphorically, even the construction workers building these data centers are essentially helping to create the AI systems that will ultimately replace human workers. A poignant example is how autonomous driving companies hire human drivers to train AI, effectively teaching the technology that will eventually render those same workers unemployed. The underlying narrative suggests a transformative technological shift where AI progressively eliminates human labor across various sectors.

Therefore, this plan has no relevance to Trump’s MAGA base—white working-class individuals with high school or lower education—in the short, medium, or long term, and may even harm their interests. The primary beneficiaries are technology companies and capital.

It’s important to note that we’re examining this from a broader perspective of human society and historical trends in the 2020s, not making political criticism or value judgments. Artificial intelligence replacing human labor appears to be an inevitable future trend. If most people become unemployed due to AI, what solutions remain?

Therefore, government intervention becomes crucial. Potential strategies might include:

Creating employment opportunities
Implementing universal basic income

So a bold assertion emerges:

Future technology + capitalism = dystopia
Future technology + socialism = utopia

Similarly, an argument that “only socialism can save” a country (I’m not going to address which country) might stands from this perspective.

Trump issued an executive order to dismantle Diversity, Equity, and Inclusion (DEI) offices across federal government departments. The order mandates that DEI personnel begin paid leave by 5 PM Eastern Time on Wednesday and will subsequently be terminated. Additionally, agencies must shut down all DEI-related websites and social media accounts by the deadline.

DEI essentially provides special considerations and quotas for diverse and marginalized groups, including women, transgender individuals, and people of color, particularly in hiring, salary, and promotion processes. This is a core agenda of left-wing liberalism.

However, many argue that DEI has become excessive, potentially compromising fairness and efficiency. Critics contend that individuals might be hired based on gender, sexual orientation, or skin color rather than merit, which could be seen as a form of discrimination against more qualified candidates.

Educated metropolitan elites exposed to liberal ideologies tend to understand DEI’s principles, though they may not always agree with specific implementations. For many ordinary Americans, DEI represents a symptom of left-wing ideology and is viewed as a sign of social decay, with some even suggesting it’s part of a broader conspiracy to marginalize white populations.

Elon Musk’s “Department of Government Efficiency” (DOGE) aims to streamline government operations by reducing expenses, eliminating redundant regulations, simplifying structures, and optimizing processes. In practice, this often translates to workforce reduction.

From a corporate perspective, such efficiency drives are crucial. Reducing costs and increasing efficiency directly correlates with maximizing profits. Employees are seen primarily as tools for profit generation, and those perceived as surplus may be viewed as obstacles to financial performance.

The current global competitive landscape, compounded by artificial intelligence and automation, provides strong incentives for businesses to optimize workforce structures, potentially including replacing human labor with AI solutions.

Musk and his Silicon Valley peers are essentially applying corporate management strategies to reimagine federal government operations.

The DOGE on X platform gleefully announced the dissolution of the Diversity Officers Executive Council, noting that its webpage has been taken down. Elon Musk also enthusiastically reposted and commented, viewing the elimination as a DOGE achievement.

This council was a cross-agency federal government organization responsible for implementing and maintaining nationwide Diversity, Equity, Inclusion, and Accessibility (DEIA) strategies. Most federal DEI programs were created through Biden administration executive orders, making them an easy target for Trump, conservatives, and DOGE to dismantle.

It’s unclear whether Musk’s DOGE was directly involved in drafting the related executive order. However, it’s evident that DEI was already a prime target for elimination by Trump-aligned and mainstream Republican forces, with or without DOGE’s involvement.

In the United States, Diversity, Equity, and Inclusion (DEI) has been a significant direction and specialized field within human resources, even considered a critical component of corporate strategy. There are now MBA programs specifically focused on DEI. However, the current trend is shifting, with the federal government leading efforts to dismantle DEI initiatives, which is likely to influence local governments and private sectors to follow suit.

Consequently, professionals working in DEI should be concerned about job security in the coming years. A related field is “ESG” (Environmental, Social, and Governance), which is a Western-developed framework for assessing a company’s sustainability and ethical impact. The decline of DEI could have significant implications for ESG.

The government’s efficiency initiatives are not solely targeting DEI—they aim to dramatically reduce personnel across the federal government system, regardless of department or function—similar to Elon Musk’s approach when he acquired Twitter. Ultimately, Musk demonstrated that fewer people could accomplish the same or even more work.

In the ongoing technological evolution, the latest tech tools—from digitalization to artificial intelligence—will be powerful enablers. They can effectively improve human productivity and reduce the workforce needed to complete equivalent tasks. Artificial intelligence is precisely what pioneers like Masayoshi Son, Larry Ellison, Sam Altman, and other AI competitors are dedicated to pursuing.

Corporations fundamentally seek profit and capital return maximization, viewing personnel merely as a production factor. However, governments and private enterprises differ significantly. Public sectors must satisfy public interests, meet collective needs, and achieve broader societal goals. Labor efficiency is not just the primary objective of the public sector—it may not even be an objective at all.

While no one can accurately predict how far we are from artificial general intelligence (AGI) or superintelligence, or even provide universally accepted definitions, one undisputed fact remains: AI’s emergence will accelerate the potential replacement of human labor.

During this transition, profit-driven capitalists and businesses will undoubtedly embrace AI applications, substantially reducing human staff across various roles—from customer service and sales to middle management. As technological replacement expands, even low and medium-skilled jobs like drivers, delivery workers, service staff, and retail employees will be at risk.

Addressing potential widespread unemployment requires governmental intervention. Governments have two primary strategies:

Direct Income Provision: Implement universal basic income through tax and fiscal transfer mechanisms, redistributing profits generated by capital and technology to ordinary citizens.
Job Creation: Generate employment opportunities specifically to provide meaningful work. If private sectors cannot employ people, the government becomes the employer. Recognizing that humans are social beings who need purpose, community, and dignity, providing work that offers belonging and self-worth becomes crucial.

Ultimately, whether through income support or employment, the fundamental goal is ensuring social and political stability in an increasingly technology-driven landscape.

Lastly

In examining two recent news, what we’re seeing in the US is a new political-economic model pushed forward by middle and lower-class white voters: a “Technology-Industrial Complex” combined with conservative/right-wing economic principles.

Key characteristics include:

A foundational framework of free-market capitalism with small government, low taxes, and minimal welfare
Staunch opposition to socialism and left-wing economic theories
Technology companies and tech capital emerging as dominant forces, closely intertwined with political power and creating oligarchic and crony political structures

These tech enterprises not only directly influence government regulation of technological industries but can also potentially orchestrate large-scale downsizing and restructuring of government and public sector institutions.

This “Technology-Industrial Complex” paired with conservative economic ideology will likely lead to a “dystopian” future. While one potential outcome is social solidarity leading to revolutionary change, another bleak scenario suggests ordinary people might be reduced to surviving on minimal government subsidies while retreating into the metaverse, seeking meaning and value in virtual worlds.