Trump Threatens Extra 10% Tariffs On BRICS As Leaders Meet In Brazil

Economic

Political

Summary:

President Donald Trumpsaid the U.S. will impose an additional 10% tariff on any countries aligning themselves with the "Anti-American policies" of the BRICS group of developing nations.

Key points:

● Trump says countries aligning with 'Anti-American policies' of BRICS to face extra tariffs.

● Lula draws parallel with Cold War's Non-Aligned Movement.

● Group condemns rising tariffs, attacks on Iran and Gaza.

● Putin online, Modi and Ramaphosa present.

President Donald Trumpsaid the U.S. will impose an additional 10% tariff on any countries aligning themselves with the "Anti-American policies" of the BRICS group of developing nations, whose leaders kicked off a summit in Brazil on Sunday.

With forums such as the G7 and G20 groups of major economies hamstrung by divisions and the disruptive "America First" approach of the U.S. president, the BRICS is presenting itself as a haven for multilateral diplomacy amid violent conflicts and trade wars.

In a joint statement from the opening of the BRICS summit in Rio de Janeiro released on Sunday afternoon, the group warned the rise in tariffs threatened global trade, continuing its veiled criticism of Trump'stariffpolicies.

Hours later, Trump warned he would punish countries seeking to join with the grouping.

"Any Country aligning themselves with the Anti-American policies of BRICS, will be charged an ADDITIONAL 10% Tariff. There will be no exceptions to this policy. Thank you for your attention to this matter!" Trump said in a post on Truth Social.

Trump did not clarify or expand on the "Anti-American policies" reference in his post.

Trump's administration is seeking to finalize dozens of trade deals with a wide range of countries before his July 9 deadline for the imposition of significant "retaliatory tariffs".

The original BRICS group gathered leaders from Brazil, Russia, India and China at its first summit in 2009. The bloc later added South Africa and last year included Egypt, Ethiopia, Indonesia, Iran, and the United Arab Emirates as members. Saudi Arabia has held off formally joining, according to sources, while another 30 nations have expressed interest in participating in the BRICS, either as full members or partners.

Indonesia's senior economic minister, Airlangga Hartarto, is in Brazil for the BRICS summit and is scheduled to go to the U.S. on Monday to oversee tariff talks, an official told Reuters. India's foreign ministry did not immediately respond to a request for comment.

In opening remarks to the summit earlier, Brazil's President Luiz Inacio Lula da Silva drew a parallel with the Cold War's Non-Aligned Movement, a group of developing nations that resisted joining either side of a polarized global order.

"BRICS is the heir to the Non-Aligned Movement," Lula told leaders. "With multilateralism under attack, our autonomy is in check once again."

BRICS nations now represent more than half the world's population and 40% of its economic output, Lula noted in remarks on Saturday to business leaders, warning of rising protectionism.

GROWING CLOUT, COMPLEXITY

Expansion of the bloc has added diplomatic weight to the gathering, which aspires to speak for developing nations across the Global South, strengthening calls for reforming global institutions such as the United Nations Security Council and the International Monetary Fund.

"If international governance does not reflect the new multipolar reality of the 21st century, it is up to BRICS to help bring it up to date," Lula said in his remarks, which highlighted the failure of U.S.-led wars in the Middle East.

Russian PresidentVladimir Putinis attending online due to an arrest warrant from the International Criminal Court related to his war in Ukraine. Still, several heads of state were gathered for discussions at Rio's Museum of Modern Art on Sunday and Monday, including Indian Prime Minister Narendra Modi and South African President Cyril Ramaphosa.

However, there are questions about the shared goals of an increasingly heterogeneous BRICS group, which has grown to include regional rivals along with major emerging economies.

In the joint statement, the leaders called attacks against Iran's "civilian infrastructure and peaceful nuclear facilities" a "violation of international law."

The group expressed "grave concern" for the Palestinian people over Israeli attacks on Gaza, and condemned what the joint statement called a "terrorist attack" in India-administered Kashmir.

The group voiced its support for Ethiopia and Iran to join the World Trade Organization, while calling to urgently restore its ability to resolve trade disputes.

The leaders' joint statement backed plans to pilot a BRICS Multilateral Guarantees initiative within the group's New Development Bank to lower financing costs and boost investment in member states, as first reported by Reuters last week.

In a separate statement following a discussion of artificial intelligence, the leaders called for protections against unauthorized use of AI to avoid excessive data collection and allow mechanisms for fair payment.

Brazil, which also hosts the United Nations climate summit in November, has seized on both gatherings to highlight how seriously developing nations are tackling climate change, while Trump has slammed the brakes on U.S. climate initiatives.

Source: Reuters

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Economic

China Signals Retaliatory Resolve While Preserving Strategic Flexibility

Beijing has formally retaliated against the European Union’s recent curbs on Chinese medical device access to public procurement contracts by announcing reciprocal restrictions. The Ministry of Finance stated that EU-based firms will be barred from participating in procurement for specific categories of medical devices in China. However, the Ministry of Commerce clarified that products manufactured within China by EU companies are exempt demonstrating that the measure is deliberately narrow and leaves room for continued cooperation with multinationals that have invested in local operations.

This selective approach provides strategic ambiguity: while signaling discontent with the EU’s policies, it avoids full-scale escalation. Firms like Siemens Healthineers AG and Royal Philips NV, which have localized production inside China, appear insulated from the brunt of the policy shift. The distinction reinforces that China is balancing between defending its trade interests and maintaining economic openness for global partners with onshore commitments.

Trade Frictions Escalate on Multiple Fronts

This move arrives amid broader EU-China tensions involving Chinese electric vehicles and Beijing’s perceived support for Moscow following the invasion of Ukraine. In parallel to the medical device retaliation, China has initiated an anti-dumping investigation targeting European liquors and imposed five-year tariffs on European brandy. Yet here too, the Chinese government provided carve-outs excluding producers that agreed to maintain minimum pricing. This pattern of limited but symbolically potent trade responses suggests a calibrated strategy rather than indiscriminate escalation.

Henry Gao, a legal scholar at Singapore Management University, described Beijing’s actions as measured, viewing them as proportional responses to EU actions in the same sector. The logic appears reciprocal rather than aggressively punitive, reflecting a correlational relationship between EU curbs and China’s actions. The effect is to apply political pressure ahead of the upcoming EU-China summit while signaling openness to future negotiation.

Upcoming Summit Shaped by Trade Tensions and Political Calculations

The timing of this trade retaliation adds uncertainty ahead of a highly anticipated summit between Chinese and EU leaders in Beijing. The summit, originally slated as a two-day event, may now be reduced to a single day, according to Bloomberg sources a move that signals growing diplomatic discomfort.

Chinese officials appear to be preparing for a less conciliatory posture than in past summits. According to Cui Hongjian, a former diplomat, China’s approach is defensive, showing readiness to cooperate if tensions ease but also determination to respond if provoked. This shift reflects a maturing diplomatic stance where economic pressure is employed selectively to gain leverage without undermining broader ties.

EV Dispute and Rare Earths Add Complexity to EU-China Relations

Beyond medical devices and liquors, the EU’s imposition of steep tariffs on Chinese electric vehicles continues to loom over the relationship. The EU argues that state subsidies distort market competition. China has responded by pressing for negotiations on setting minimum prices for EV exports. State-affiliated sources claim that technical discussions are nearing completion, but final political agreement remains pending.

At the same time, China’s increasing control over rare earth exports a sector vital to Europe’s green technology aspirations has drawn further concern from EU leaders. While not formally linked to retaliatory trade measures, the strategic tightening of rare earth supplies could indirectly influence trade negotiations and shape the EU’s willingness to compromise.

Structural Grievances Resurface as Strategic Considerations Deepen

The EU’s long-standing complaint is that its companies face unequal treatment in China, often being denied access to public contracts or burdened with regulatory obstacles. These structural concerns have persisted despite several rounds of dialogue. The current friction reflects deeper systemic misalignments between China’s state-influenced economic model and the EU’s calls for reciprocity and transparency.

China’s current strategy of offering carve-outs for localized production reveals a preference for incentivizing investment and integration over confrontation. Yet, this strategy also risks deepening the bifurcation of global trade rules and standards, as companies may feel compelled to establish operations inside China to avoid punitive barriers.

Delicate Balancing Act Ahead of Crucial Diplomatic Moment

As the China-EU summit approaches, both sides face a narrowing path to constructive engagement. China’s retaliatory actions, while limited in scope, demonstrate it is prepared to challenge what it views as protectionist behavior, yet still aims to retain economic ties with key European stakeholders. The pattern of partial exemptions, strategic retaliations, and ongoing negotiations reveals a complex interplay of diplomatic signaling, domestic economic safeguarding, and geopolitical positioning.

Whether the summit marks a step toward de-escalation or further divergence will likely depend on whether both sides can find common ground on the broader principles shaping their trade relationship not just sector-specific disputes.

Source: Bloomberg

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Economic

Surprise Upswing in German Industrial Production Defies Forecasts

Germany’s industrial sector delivered a stronger-than-expected performance in May, with output rising by 1.2% compared to the previous month, according to the federal statistics office. Analysts surveyed by Reuters had anticipated stagnation, with no monthly change. This positive deviation points to resilience in key segments of the German economy, particularly in automotive manufacturing and energy production.

The three-month rolling average, which smooths short-term volatility, further confirmed the trend. Industrial output from March through May increased by 1.4% compared to the previous three-month period, suggesting that the recent monthly gain was not an isolated spike but part of a broader rebound in productive activity.

April Output Revised Down but Does Not Diminish Positive Momentum

While the upward revision in May offers encouraging signs, the statistics office simultaneously revised April’s output drop downward from a provisional 1.4% decline to a more pronounced 1.6%. This adjustment underscores the sector’s recent volatility and the challenges it continues to face from fluctuating external demand and persistent structural pressures. However, May’s rebound more than offsets the revision, indicating a tentative shift toward recovery.

Despite the surge in output, recent industrial order data raises concerns about the durability of this recovery. New orders fell by 1.4% in May, interrupting the momentum built in previous months. The drop was primarily driven by weaker demand from eurozone trading partners, which introduces a potential lagging effect on future production levels.

The divergence between output and order volumes highlights a short-term mismatch: manufacturers may be fulfilling backlogs or ramping up supply in anticipation of delayed demand recovery. However, if the contraction in orders persists, it may eventually translate into lower production in the coming months. This dynamic points to a temporal correlation rather than a direct cause-effect chain, where current output gains reflect past demand, while new orders signal future challenges.

Germany’s May industrial production data suggests a tentative rebound, driven by automotive and energy activity. However, the simultaneous fall in new orders, especially from within the eurozone, tempers enthusiasm and calls for a more measured outlook. For now, the production upswing serves as a positive signal for Europe’s largest economy, but sustained recovery will depend on restoring broader demand conditions across the region.

Source: Bloomberg

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Cryptocurrency

Economic

Ethereum’s Transformation From Experiment to Financial Backbone

Over the past decade, Ethereum has evolved from a developer-focused blockchain experiment into a foundational technology increasingly integrated into institutional finance. At the recent Ethereum Community Conference (EthCC) held in Cannes, this transformation was made visibly and symbolically clear. The conference drew cryptocurrency founders, developers, and institutional players into a venue typically reserved for cinematic premieres now repurposed to spotlight the architecture of Ethereum-based finance.

The choice of Cannes as a venue was more than symbolic. According to Bettina Boon Falleur, the long-time organizer of EthCC, the location’s prestige, paired with the conference’s heightened technical depth, underscored Ethereum’s rising stature in the global financial ecosystem. The event served as a platform not for speculative discussions on price movements, but for strategic deliberations about how Ethereum can modernize back-end systems across financial institutions.

Institutional Embrace Marks a New Phase for Ethereum

One of the clearest signals of Ethereum’s growing institutional relevance came from Robinhood. The firm became the first publicly traded US brokerage to unveil tokenized stock offerings on-chain. This rollout, presented at a Belle Époque-style mansion overlooking the Riviera, outlined a new crypto strategy: allowing European users to trade tokenized US equities and ETFs via Arbitrum, a Layer 2 scaling solution built atop Ethereum.

Robinhood’s announcement triggered a sharp rally in its stock, pushing it past the $100 mark for the first time. The surge, exceeding 30% in a week, illustrates the market’s enthusiastic response to Ethereum-aligned innovation, especially as Robinhood was recently excluded from the S&P 500 rebalancing. Other blockchain-linked firms also experienced strong gains. BitMine Immersion Technologies saw a staggering 1,200% rise following its decision to use Ether as a reserve asset. Bit Digital, which pivoted to Ethereum staking, gained over 34%, while SharpLink Gaming jumped more than 28% after adding $20 million in Ether to its balance sheet.

The upward trend extended into ETF flows. Although Ether-tracking ETFs still lag behind their Bitcoin counterparts with only $11 billion in total assets compared to Bitcoin’s $138 billion they’ve seen renewed inflows, indicating rising institutional comfort with Ethereum. This reaffirms a correlational relationship between institutional product development and investor sentiment, as regulatory clarity and technological utility converge to drive adoption.

Functionality Over Frenzy: Institutions Bet on Infrastructure

Ethereum’s appeal among institutions is not driven by hype but by its proven utility. The blockchain’s integration into core transaction systems is accelerating, enabling faster, cheaper, and more flexible financial mechanisms. Paul Brody, EY’s global blockchain leader, emphasized this point, noting that Ethereum’s growing use in payment rails, savings platforms, and cross-border transfers reflects its real-world utility beyond speculative trading.

This shift from speculative enthusiasm to foundational integration is evident in projects like Deutsche Bank’s new platform on zkSync, another Ethereum-based network focused on tokenizing assets in a privacy-conscious and regulation-compliant manner. These developments demonstrate Ethereum’s ability to support regulatory-grade financial systems, positioning it not as a fringe experiment but as an institutional-grade ledger.

Race for Tokenized Equity: Coinbase, Kraken, and the Expanding Frontier

Other crypto-native firms are also racing to stake claims in this evolving landscape. Coinbase is seeking SEC approval to offer tokenized public equities, aiming to compete directly with traditional brokers. Kraken, meanwhile, plans to introduce 24/7 tokenized equity trading in select global markets. These initiatives reflect the growing belief that Ethereum can bridge the gap between traditional and digital finance, enabling round-the-clock access to legacy assets.

BlackRock’s BUIDL fund, launched on Ethereum, exemplifies this trend. The fund allows qualified investors to earn on-chain yield with real-time USDC redemptions, offering a glimpse of how future financial products might operate in tokenized environments.

Stablecoins and Ethereum’s Core Role in Liquidity Systems

Stablecoins remain central to Ethereum’s role in the financial system. Circle’s USDC, the second-largest stablecoin, continues to account for 65% of transaction volume on Ethereum. Ethereum, despite competition from faster blockchains like Solana, still commands nearly 50% of the stablecoin market. This reflects the blockchain’s long-standing reliability and the trust institutions place in its technical stability.

Vitalik Buterin, Ethereum’s co-founder, addressed this perception at EthCC. He noted that institutions often value Ethereum’s consistency and resilience over raw speed. While newer blockchains boast higher throughput and lower fees, Ethereum’s durability, security, and censorship resistance make it the preferred choice for high-stakes, regulated environments.

Trust Through Stability: What Institutions Value Most

The emphasis on long-term trust and impartial execution was echoed by Tomasz Stańczak, the newly appointed co-executive director of the Ethereum Foundation. Institutions, he explained, are drawn to Ethereum because it guarantees neutral execution, fair treatment of orders, and predictable functionality. These traits become especially important as tokenized assets and stablecoins move closer to mainstream adoption.

Recent legislative support, such as the passage of the GENIUS Act in the US Senate and Circle’s upcoming IPO, have further cemented Ethereum’s infrastructural role. These developments reflect an institutional preference for systems that align with regulatory expectations without compromising decentralization or privacy.

Ethereum’s Core Values as Competitive Advantage

The foundational values of Ethereum neutrality, security, and censorship resistance are becoming its most important features in the institutional race. As Falleur stated, the builders at EthCC are not chasing the next price spike. Instead, they are designing Ethereum to support a future where a billion users interact with financial systems powered by open infrastructure.

The question moving forward is whether Ethereum can scale while preserving its foundational ideals. As Buterin put it, success alone is not enough; Ethereum must also remain worthy of that success by fostering openness, freedom, and universal accessibility.

The week concluded not with another technical keynote but with a symbolic gesture: the rAAVE party at Villa Montana. Overlooking the glittering coastline of Cannes, Ethereum’s founding community mingled with rising DeFi innovators like Stani Kulechov and Sergey Nazarov. In that moment on balconies once reserved for movie stars Ethereum’s institutional future felt inevitable, marking its shift from decentralized experiment to financial pillar.

Source: CNBC

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Economic

Tariff Effects May Prolong Inflation Rather Than Cause a Temporary Surge

Federal Reserve Bank of Atlanta President Raphael Bostic has issued a public warning that recent shifts in US trade policy, particularly the imposition of tariffs, could result in sustained inflation rather than a short-term price spike. According to Bostic, these developments are likely to maintain elevated price levels for a year or more, especially as companies factor in cost adjustments from policy changes and volatile global conditions.

Despite mounting pressure from former President Donald Trump for the Federal Reserve to lower interest rates, Bostic has expressed firm support for Chairman Jerome Powell’s wait-and-see approach. Emphasizing caution, Bostic stated that monetary policy should not be adjusted hastily and that the full effects of tariff-related price changes must first be observed before altering the current policy stance. He reiterated that this period does not justify substantial changes to interest rate settings.

Inflation Figures Remain Above Target but Do Not Yet Fully Capture Tariff Impact

Inflation data from March through May has remained above the Fed’s 2 percent target, but Bostic believes the current numbers understate the long-term effects of trade policies. He explained that many firms are postponing price increases until tariffs are finalized, suggesting that the full inflationary impact may only become visible in the coming months. This cautious interpretation reflects a lag in how cost pressures pass through to consumer prices.

Although Bostic does not hold a voting seat on the Federal Open Market Committee (FOMC) this year, his insights add to the internal Fed discourse, especially as markets continue to speculate about future rate cuts. His comments arrive ahead of the next FOMC meeting scheduled for July 29-30 and just days before a key tariff suspension agreement is set to expire on July 9. The looming expiration of the 90-day delay on retaliatory tariffs injects additional uncertainty into the Fed’s inflation outlook.

Strong Labor Market Data Undermines Case for Immediate Monetary Easing

Hours before Bostic’s statement, the June nonfarm payroll report revealed a significant increase in job creation alongside a declining unemployment rate, which exceeded economists’ expectations. This robust labor market performance further diminishes the likelihood of an imminent rate cut, reinforcing the narrative that the US economy does not currently warrant monetary stimulus despite persistent inflation pressures.

The connection between tariffs and inflation, as emphasized by Bostic, suggests a direct causal relationship. Trade restrictions increase the cost of imported goods and inputs, which then elevate production costs for domestic firms. However, the delay in observable price increases indicates a lag effect, where the initial policy does not result in immediate consumer-level inflation but gradually builds as firms adjust pricing strategies. The timeline and magnitude of this pass-through are critical for policymakers as they evaluate the appropriate timing for any monetary policy adjustments.

Bostic’s remarks reflect the Federal Reserve’s broader effort to remain data-driven and independent from political pressure. While the economy shows resilience in job growth, underlying inflation risks, especially those tied to trade policy, require a longer observation window. The Fed’s strategic patience, as supported by Bostic, underscores the importance of understanding delayed cost transmission mechanisms and their influence on price stability.

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Political

A Clash of Powerhouses: Musk’s Political Gambit Triggers Market Anxiety and Presidential Rebuke

The long-simmering tensions between U.S. President Donald Trump and Tesla CEO Elon Musk reignited this week as Musk declared the formation of a new political force the “America Party.” In response, Trump dismissed the idea as “ridiculous,” reiterating his belief in a two-party system and intensifying a feud that now threatens not only the political landscape but also the financial performance of Musk’s companies.

Musk’s announcement on Saturday came in the wake of Trump’s approval of a sweeping tax-and-spend bill that Musk had publicly opposed. Though Musk provided no specifics or official filings for the new party, he emphasized his intent to disrupt the bipartisan status quo, citing a poll on X (formerly Twitter) showing majority support for a third-party initiative.

Tesla Under Pressure as Politics Overshadow Profits

Markets reacted swiftly to the announcement. Tesla stock, already down more than 20% year-to-date, dropped nearly 5% in Asia’s early Monday trade through alternative platform Blue Ocean. Analysts, including Wedbush’s Daniel Ives, warned of investor fatigue, noting that Musk’s deepening political involvement could pull focus from Tesla’s core business at a time when it faces mounting global challenges.

Ives emphasized that this “political gamble” is likely to add strain to Tesla’s already underperforming stock. The company’s second-quarter global sales fell 13%, and European sales plummeted nearly 30% year-on-year in May, marking five straight months of decline in the region. In China, while Tesla managed a modest monthly delivery gain, domestic competitors like BYD and Xiaomi are rapidly eating into its market share with innovative and affordable electric vehicles.

Trump Strikes Back: From Personal Jabs to EV Subsidy Cuts

Trump wasted no time countering Musk’s political move. On Truth Social, he mocked Musk for “going off the rails” and expressed satisfaction that his latest budget eliminates electric vehicle subsidies hitting Tesla where it hurts. Treasury Secretary Scott Bessent joined the criticism, suggesting that Musk’s business boards were likely “not thrilled” with his political detour and would prefer he return to corporate leadership.

Musk’s departure from Trump’s administration in May, where he briefly led a federal spending reform initiative, marked a dramatic shift in their relationship. While he initially backed off public confrontations, Musk reignited hostilities last week, calling Trump’s spending bill “insane” and detrimental to future-oriented industries.

Third-Party Turbulence: A Political Distraction or Strategic Move?

Despite historical struggles for third parties in U.S. presidential races Ross Perot’s 8% in 1996 being the most recent benchmark Musk sees potential in capturing swing votes in Congress to break legislative deadlock. Critics argue this is a costly distraction for a CEO whose companies require his undivided attention.

However, not all financial voices are alarmed. Jason Hsu of Rayliant Global Advisors praised the move as “genius,” suggesting it may ultimately enhance Musk’s political leverage and shield his companies from political headwinds. Still, he acknowledged that investor nerves are fraying in the short term due to perceived risk and uncertainty.

The Musk-Trump feud underscores a broader trend of billionaire entrepreneurs crossing into political domains. While such moves might strengthen personal influence, they carry tangible risks for shareholders and companies under public scrutiny. With Tesla’s performance under strain and its CEO increasingly embroiled in political disruption, the next steps could redefine both his corporate empire and his political legacy. Whether Musk’s America Party gains real traction remains to be seen, but for now, it’s clear the conflict with Trump is moving markets and not in Tesla’s favor.

Source: Bloomberg

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Economic

Tit-for-Tat Trade Measures Deepen EU-China Tensions Before July Summit

China has retaliated against the European Union by excluding EU-based companies from public procurement of certain medical devices, further complicating already fragile ties just ahead of a high-level summit between both sides. The move, announced by China’s Ministry of Finance on Sunday, comes as the EU continues to crack down on Chinese imports most notably electric vehicles citing unfair state subsidies.

However, Beijing stopped short of applying the procurement ban to European companies manufacturing within China. This exception benefits firms like Siemens Healthineers and Royal Philips, which have heavily localized operations in the country. The Ministry of Commerce confirmed the exclusion would only apply to products physically made in Europe, not to those produced within China, signaling a narrowly targeted response.

Symbolic Retaliation or Strategic Posture?

Experts interpret China’s action as a strategic “tit-for-tat” aimed at signaling displeasure without triggering immediate escalation. Professor Henry Gao of Singapore Management University called it a "narrow response," while Chinese state-affiliated experts described it as a “reciprocal response” meant to pressure the EU toward creating a more balanced market environment.

This move follows China’s recent imposition of five-year anti-dumping duties on European brandy, sparing major cognac producers that agreed to minimum pricing, and its announcement of an ongoing probe into European liquor imports. Such carve-outs raise questions about whether Beijing is primarily seeking to de-escalate or simply applying pressure in a calculated manner.

A Summit Shadowed by Broader Tensions

The timing is sensitive: EU and Chinese leaders are scheduled to meet in Beijing later this month. But the mood is far from cooperative. China reportedly plans to shorten the summit to a single day, in contrast to the usual multi-day format, underscoring the rising diplomatic chill. Beyond trade, the EU has grown increasingly concerned about Beijing’s alignment with Russia since the invasion of Ukraine and China's grip on rare earth exports elements critical to EU industry.

Cui Hongjian, a former Chinese diplomat, noted that while China is still open to diplomatic engagement, it is also signaling that it will respond decisively to any perceived aggression. “It’s not like the past, when China always tried to pursue a fruitful summit,” he said. “Now, China is ready for any kind of summit.”

Electric Vehicle Battle Nears Conclusion

A major flashpoint remains the EU’s ongoing tariff case against Chinese electric vehicle (EV) exports. Brussels argues that Chinese EV makers receive disproportionate subsidies, giving them an unfair edge in global markets. While negotiations are continuing, with China’s Commerce Ministry indicating talks are in their “final stages,” the outcome remains uncertain. A state-affiliated source recently claimed technical negotiations are nearly complete, but no official confirmation has followed.

Implications and Outlook

Beijing’s selective retaliation strategy reveals its desire to strike a balance: signaling resolve without triggering full-scale trade warfare. The exemptions for localized production suggest China still values European investment, but also wants leverage as it pushes back against what it sees as discriminatory policies.

The upcoming EU-China summit will be a critical test of how far either side is willing to go in reconciling economic and political differences. As both powers navigate complex global headwinds including their relationships with the United States this latest trade flare-up adds uncertainty to already precarious diplomatic relations.