Trump's Return: An Unexpected Win for Xi's China

Mexico's national oil company, Pemex, has affirmed its commitment to continue supplying oil to Cuba, defying growing pressure from the administration of U.S. President Donald Trump to sever ties with the island nation.

Pemex CEO Victor Rodriguez Padilla confirmed that the company has a contract to deliver refined fuel to Cuba running from 2023 and intends to honor it. According to Rodriguez, Pemex will maintain oil shipments as long as there is available crude.

Mexico's Official Stance on Shipments

The announcement follows recent statements from Mexican President Claudia Sheinbaum, who last week acknowledged a temporary suspension of oil exports to Cuba. However, she attributed the pause to general supply fluctuations rather than political pressure from Washington.

"Pemex makes decisions in the contractual relationship it has with Cuba," Sheinbaum stated, emphasizing Mexico's autonomy. "Suspending is a sovereign decision and is taken when necessary."

Escalating Pressure from Washington

The situation has intensified following an executive order signed by President Trump threatening punitive tariffs against any nation, including Mexico, that supplies oil to Cuba.

On Monday, Trump directly addressed the issue, telling reporters, "Mexico is going to cease sending them oil," and referred to Cuba as a "failed nation."

Mexico's Role as a Key Energy Supplier

Following the collapse of Nicolas Maduro's government in Venezuela, Mexico has emerged as a crucial energy lifeline for Cuba, which is grappling with a severe energy crisis.

Throughout 2024 and early 2025, Pemex exported between 17,000 and 20,000 barrels per day (bpd) of crude and refined products to the country. While the Mexican government has often framed these shipments as humanitarian aid, their value exceeded $1 billion by late 2025. A significant portion of these deliveries was managed through the subsidiary Gasolinas Bienestar.

Financial Scrutiny and Debt Concerns

The terms of these oil shipments have drawn scrutiny, particularly due to their subsidized nature and their effect on Pemex's own financial stability. The company has been supplying Cuba on what appear to be credit or service-exchange terms, even as it faces high debt levels with its own suppliers.

While officially logged as accounts receivable, these transactions are widely seen as aid, carrying a substantial risk of becoming unpayable and adding to Pemex's financial strain.

U.S. Treasury Secretary Scott Bessent has confirmed the government will not intervene to support Bitcoin in a market downturn, but it will continue to hold the vast amount of BTC acquired through asset seizures.

During a congressional hearing on Wednesday, Bessent outlined the Treasury's official stance, drawing a clear line against using public or private financial mechanisms to prop up cryptocurrency prices.

Figure 1: U.S. Treasury Secretary Scott Bessent testifies before Congress, clarifying the government's position on its Bitcoin holdings.

Treasury Secretary Rejects Market Intervention

The clarification came in response to pointed questions from California Congressman Brad Sherman, a known critic of the digital asset industry. Sherman asked if the Treasury or the Federal Open Market Committee had the authority to "bail out Bitcoin."

He further pressed Bessent on whether he would instruct private banks to acquire more Bitcoin or other cryptocurrencies, like "Trump Coin," by altering their reserve requirements.

Bessent’s response was unequivocal. "I am Secretary of the Treasury. I do not have the authority to do that," he stated. "And as chair of the Financial Stability Oversight Council (FSOC), I do not have that authority."

During the testimony, Bessent also highlighted the massive appreciation of the government's seized crypto assets. He noted that an initial $500 million worth of confiscated Bitcoin had surged in value to over $15 billion while in U.S. custody.

The Bitcoin Strategic Reserve: A Limited Mandate

Bessent's comments provide the latest update on the U.S. Bitcoin strategic reserve, a program established by an executive order from President Donald Trump in March 2025.

The initiative has faced criticism from some within the Bitcoin community, who argue its scope is too limited and does not go far enough to position the U.S. as a leader in digital assets.

The core constraint of the executive order is how the U.S. can add to its Bitcoin stockpile. The order stipulates that the strategic reserve can only grow through two channels:

• Asset forfeiture cases

• Budget-neutral strategies

This framework prevents the government from conducting open-market operations to purchase BTC, a move many crypto proponents had hoped for.

Figure 2: A social media post from Secretary Bessent in August 2025 outlines the Treasury's exploration of budget-neutral strategies for acquiring more Bitcoin for the national reserve.

How the US Can Still Acquire More Bitcoin

The concept of "budget-neutral" acquisition means the government can obtain more Bitcoin without adding new expenses to the federal budget. This could involve converting other existing reserve assets, such as petroleum or precious metals, directly into Bitcoin.

In August 2025, Bessent signaled that the Treasury was actively exploring these methods, backtracking on earlier comments.

According to Bitcoin advocate Samson Mow, direct government buying of BTC would create significant demand, likely driving up prices. He argues such a move could also serve as a powerful signal, encouraging other nations to establish their own strategic Bitcoin reserves. However, under the current policy, the U.S. will rely solely on seizures and asset conversions to build its holdings.

Supreme Court Challenge Looms for Tariff Regime

Former U.S. Trade Representative Robert Lighthizer predicts that the Supreme Court will likely overturn at least some of President Donald Trump's broad tariff policies. However, he emphasized that the administration is prepared to use other methods to keep its trade agenda on track.

Speaking at the Argus Americas Crude Summit in Houston, Texas, Lighthizer, who was a key architect of the White House's tariff strategy, stated that a court ruling against the current measures would not spell the end of the policy.

"My guess is that there'll be, to some extent, an overruling of what he did," Lighthizer said, adding that a decision is expected in the coming weeks.

Alternative Tools to Uphold Tariff Policy

The Trump administration has primarily used the International Emergency Economic Powers Act (IEEPA) of 1977 to impose tariffs on numerous global trading partners. Lighthizer acknowledged that continuing under this law is the preferred path.

"It's clearly easier and better if you can do it under IEEPA," he noted. "But if he can't, I think he'll have the same policy."

According to Lighthizer, if the Supreme Court restricts the use of IEEPA, the administration has other tools available to implement similar tariffs, even if the process becomes "a little more complicated."

Focus Shifts to USMCA Renewal with Canada and Mexico

Lighthizer also commented on the upcoming renewal of the U.S.-Mexico-Canada Agreement (USMCA), which he helped negotiate in 2020. He indicated that changes are necessary for the trade deal later this year.

He anticipates "some tweaks" in the agreement with Canada, particularly concerning agriculture. For Mexico, he expects more significant adjustments aimed at addressing "this issue of China's influence in Mexico."

Defending the Economic Impact of Tariffs

While direct energy imports have mostly avoided Trump's tariffs, the oil industry has voiced concerns that tariffs on steel imports have driven up drilling costs. This on-again, off-again tariff uncertainty has also created economic instability, making long-term planning difficult for energy companies.

Despite these concerns, Lighthizer insisted that Trump holds a "very favorable attitude" toward the energy sector. He argued that while tariffs may have increased steel costs, the long-term economic benefits from rebalancing trade deficits would be substantial. "The payoff will be pretty big," he said.

Lighthizer concluded by dismissing arguments that the tariffs contribute to inflation, labeling the policy a "great success." Acknowledging critiques of its implementation, he said, "You can say they could have done it in a less chaotic way. Maybe that's true, maybe it's not true."

Source: Bloomberg

The European Union is going back to the drawing board on its climate diplomacy after a difficult United Nations summit left the bloc feeling isolated and unable to secure more aggressive global action on emissions.

An internal EU document reveals that the 27-nation union is considering a new strategy that leans more heavily on its trade and financial power to achieve its climate goals. The move follows the COP30 summit in Brazil, where the EU struggled to build a coalition for its ambitious proposals.

A Bruising Summit: Why COP30 Was a Wake-Up Call

Negotiations at the COP30 event were already hampered by a major geopolitical setback when U.S. President Donald Trump withdrew the world's largest economy from the climate talks earlier that year.

While the summit ultimately produced a deal to triple adaptation finance for developing nations, it failed to deliver new commitments to phase out fossil fuels or accelerate emission cuts. These were core demands from the EU, which even considered walking out of the negotiations in the final hours.

The internal document notes that the EU faced "increasing difficulty in lining up international support" for its high level of ambition. It described a feeling of being "largely isolated in the final phases of negotiations" as geopolitical dynamics shifted.

Geopolitical Headwinds and Shifting Alliances

During the talks, the EU, along with climate-vulnerable island states and some Latin American countries, pushed hard to include language targeting fossil fuels in the final agreement. This effort was ultimately blocked by nations including Saudi Arabia, a top oil exporter.

However, the EU also faced criticism from another direction. Developing countries pointed out that the bloc resisted calls to increase climate funding until late in the negotiation process, undermining its position.

Andre Correa do Lago, Brazil's president of COP30, highlighted the fundamental disconnect in priorities. "The word 'ambition' doesn't belong to a vocabulary that only exists in the EU," he told Reuters. "When you say 'ambition' in the EU, it's mitigation. When you say 'ambition' in India, it's finance. When you say ambition in other countries, it's technology."

The New Playbook: Leveraging Trade and Finance

In response to these challenges, the EU is now assessing how to better integrate its economic leverage into its climate diplomacy. The paper suggests that a failure to strategically deploy its trade and development tools "limited the EU's ability to reinforce its positions and to shape incentives in the negotiating rooms and beyond."

EU climate ministers are set to discuss these new ideas at a meeting in Cyprus. A spokesperson for Cyprus, which holds the EU's rotating presidency and drafted the document, confirmed the talks are aimed at "strengthening the effectiveness of the COP31 negotiations."

This approach isn't entirely new. Many EU trade deals already feature climate incentives. For example, a recent trade agreement with India included 500 million euros ($590.90 million) to support India's emissions reduction efforts.

"We're in a new era which is more transactional," commented one EU diplomat, adding that some member states also want a clearer policy on when to reject future climate deals that fall short of the EU's standards.

Internal Divisions Complicate Global Stance

The EU's struggle on the global stage is mirrored by its own internal challenges. The bloc has found it difficult to maintain unified support for ambitious climate action among its member countries.

Just days before the COP30 summit began, the EU finally agreed on a new climate target after prolonged disagreements between governments over how far-reaching it should be. This internal friction complicates the EU's ability to project a strong, unified voice in international negotiations.

The European Union's three largest economies—Germany, France, and Italy—are set to lead a major initiative to build strategic stockpiles of critical minerals, a move designed to reduce the bloc's reliance on China for essential raw materials.

According to sources familiar with the strategy, the plan assigns specific responsibilities to each nation to streamline the effort.

A Three-Pronged Approach to Resource Security

Under the new framework, the division of labor is clear:

• Germany will be responsible for overseeing the sourcing of the critical minerals.

• France will manage efforts to secure financing for the EU's purchases.

• Italy will oversee the storage and logistics for the stockpiled metals and minerals.

This coordinated structure was outlined in a December meeting with EU officials. However, details regarding which producers Germany has approached or which banks might be involved in financing the purchases have not yet been made public.

The RESourceEU Action Plan Framework

This stockpiling initiative is a core component of the European Commission's wider RESourceEU Action Plan, which was formally adopted in early December. The plan aims to secure the EU’s supply of materials like rare earth elements, cobalt, and lithium.

The Commission stated the initiative provides concrete tools and financing to achieve several key goals:

• Protect European industry from geopolitical tensions and price volatility.

• Promote critical raw material projects both within Europe and abroad.

• Forge partnerships with allied countries to diversify supply chains.

Work on the coordinated EU approach to stockpiling began late last year, with a pilot scheme anticipated to become operational early this year.

Building a Resilient EU Supply Chain

To support these efforts, the Commission is establishing a European Critical Raw Materials Centre. This body will act as a "portfolio manager" for the EU, handling joint purchasing and managing the stockpiles to ensure resilient supply chains.

Looking ahead, the EU is also planning to enhance its internal circular economy. By early 2026, the Commission intends to introduce export restrictions on scrap and waste from permanent magnets to strengthen Europe's domestic recycling capacity. Similar measures are being considered for copper scrap if deemed necessary.

Beyond stockpiling and recycling, the EU is exploring direct investment to secure resources at their source. In November, European Commissioner Maros Sefcovic noted that the bloc is considering buying direct stakes in critical minerals projects in Australia as another way to secure long-term supply.