“Illicit trade threatens public safety, undermines intellectual property rights, and hampers economic growth, and the risks could increase as counterfeiters leverage new technologies and techniques to avoid detection,” said OECD Secretary-General Mathias Cormann.

More recent national data for the US confirms the trend. According to US Customs and Border Protection, the total number of goods seized at the US borders for intellectual property rights violations more than doubled from 2020 to 2024, and the total manufacturer’s suggested retail price of these goods increased by 415%.

The OECD/EUIPO report describes increasingly sophisticated assembly, logistics, and distribution methods. Counterfeiters are adopting “localization” strategies to place final assembly closer to target markets, using international waterways such as the Danube River. With their reduced oversight, free trade zones “play a pivotal role in this trend,” the authors added.

Product diversification runs hand-in-hand with greater reliance on e-commerce for distribution. Designed to combat the illicit trade in pharmaceuticals, vaccines, medical devices, and everyday consumer products that pose risks to health and safety, the World Customs Organization’s Operation Stop III, conducted last December by 111 customs administrations, found that 71% of cases involved parcels ordered over the internet, “confirming how easily unsafe goods bypass normal import checks,” said David Gammill, founder of Gammill Law Accident & Injury Lawyers, a California-based law firm.

China leads the production rankings, accounting for 45% of all reported seizures in 2021. Additional major players hail from elsewhere in Asia, the Middle East, and Latin America.

“We already know that economic growth in the first quarter of 2025 was very strong. That’s a solid starting point,” says Miguel Cardoso, chief economist for Spain at BBVA Research. First-quarter GDP, published at the end of April, was 0.6%, quarter on quarter.

Over the past five years, Spain has drawn international attention for its robust growth compared with neighboring countries. A combination of strong domestic demand—driven by tourism, immigration, and public spending—has fueled a much-needed expansion while the country’s standard of living has edged closer to that of wealthier European nations.

Since 2021, when Spain began recovering from a steep contraction, GDP growth has consistently outpaced the broader eurozone. Last year, it notched 3.2% compared to 0.7% for the eurozone.

The International Monetary Fund (IMF) projects Spain’s growth will remain above the eurozone average at 2.5% in 2025, 1.8% in 2026, and a medium-term potential of around 1.7% for subsequent years, but warns of downside risks including escalating trade tensions, increasing domestic political uncertainty, and demographic aging.

Early on, some economists predicted that Spain’s streak of outperformance would be short, citing structural challenges such as a limited infrastructure capacity, persistently high unemployment, an aging population, and a shortage of innovation-driven, highvalue jobs. So far, however, those forecasts have proven incorrect.

In late April, a power blackout occurred across the Iberian Peninsula, demonstrating one aspect of weak infrastructure in both Spain and Portugal. Spain has poor connections to the European grid, which make it difficult to share power and balance supply and demand, especially when renewable energy generation fluctuates.

The day-long blackout “will probably subtract between 0.1% to 0.2% from GDP growth in second-quarter 2025,” Cardoso predicts, “depending on whether firms can recover anywhere between 75% to 90% of lost production.”

Most economists express cautious optimism, anticipating that the impact on Spain of the Trump tariffs and global trade tensions, while not negligible, will remain relatively contained.

“Spain’s direct exposure to US tariffs is very limited. Exports of goods to the US represent just 1% to 1.5% of Spain’s GDP,” Cardoso notes. “That’s three to four times less than Germany’s exposure.”

Exports to the US are concentrated in specific products such as olive oil. According to the EU, Spain exported over 118,000 metric tons of the liquid to the US during the 2023-2024 crop year, with higher volumes expected in the current season thanks to increased availability and lower prices.

The bigger concern lies in the economy’s indirect exposure to a potential recession in Germany, Europe’s economic powerhouse. “A recession in Germany would be very bad for Spain’s tourism sector,” Cardoso warns.

In recent years, tourism has been one of the key drivers of Spain’s economic growth. In 2024, the country welcomed a record 94 million international visitors, narrowing the gap with France, which remains the world’s top destination with 100 million. For economists, the question has been when the supply of tourism-related services—such as hotels, bars, and restaurants—would begin to show strain under rising demand.

So far, however, tourism continues to expand, stretching into off-peak seasons and reaching less traditional destinations.

“Data through March show that foreign spending in Spain is still growing at double-digit rates. Credit card spending by foreigners rose 12% to 13% year-on-year in the first quarter,” Cardoso notes.

Tourism patterns are also shifting, he says, as travelers take shorter, more frequent trips rather than the traditional, fixed-period family holidays. The change is enabling a more efficient use of tourism infrastructure, he says.

But growth in demand could still hit a limit in the number of hotels, restaurants, and other structures available.

“There are already signs of price pressures, and infrastructure will soon reach its limits,” says Sergi Jiménez-Martín, professor of Economics at Pompeu Fabra University in Barcelona. “I wouldn’t mind seeing a negative shock to tourism, as it could ultimately benefit the economy by encouraging more semi-skilled youth and immigrants to shift into other industries.”

Tourism is a low-productivity, lowvalue-added sector, he argues, and redirecting employment toward other areas could lead to a more efficient and healthier economy.

Another element behind Spain’s recent outperformance is immigration.

“The Spanish economy expanded significantly, partly because the Covid-19 shock was so severe but also because of strong population growth, with about 2 million new residents, mostly from Latin America,” Jiménez-Martin says. Shared language and cultural ties have helped make immigration a net benefit for the economy, he adds, and while the new residents have often been low- or middle-qualified workers, a more promising expansion would be in different high-value growth sectors.

The pharmaceutical industry stands out as a success story. Accounting for some 1.5% of GDP and employing about 170,000 people in high-value jobs, it plays a still-small but promising role in the economy.

Spain is already one of the world leaders in clinical research. Since last year, it has ranked first in Europe, conducting nearly 1,000 clinical trials annually and surpassing Germany for the first time. Coming as countries like Germany and Belgium are seeing declines, this growth is driven by tax incentives, a cost-effective and skilled workforce, and a relatively fast regulatory process.

“Spain has some of the world’s fastest approval times,” says Oscar Salamanca, CEO of Ápices CRO, which provides support for clinical trials, and president of the Spanish Association of Contract Research Organizations (ACRO). “The time to treat the first patient is usually 90 to 100 days, compared to up to 300 in other countries. Costs are also much lower: up to five times less than in the US and two to three times lower than in much of Europe.”

These advantages have attracted global pharmaceutical giants like Novartis, Roche, and AstraZeneca, to establish research centers in Spain: particularly in Madrid and Barcelona, with additional hubs in Valencia, Seville, Málaga, and Santiago de Compostela.

While tourism and pharmaceuticals, each in its own way, point toward future economic growth, a relatively low level of investment—mostly due to regulation and uncertainties—has many economists worrying that high public debt and an uncertain political landscape will cause Spain to hit its infrastructural limits in the coming years.

The government of Prime Minister Pedro Sánchez is a coalition between the socialist PSOE and other political forces to its left, including the main Catalan nationalist party. A new general election is to be held by August 2027.

Public debt level as a percentage of GDP was 101.8% at the end of last year. According to the latest IMF report, Spain’s debt remains vulnerable to growth and financing cost shocks.

“Given still-high debt and the economy’s strong cyclical position,” the IMF recommended in its April report, “there is a case for frontloading the authorities’ planned adjustment, strengthening the national fiscal framework to ensure that regions contribute to the consolidation effort, and adopting employmentfriendly measures to address the projected growing gap between pension expenditures and social security contributions.”

Among the IMF’s suggested moves are harmonizing VAT rates and strengthening green taxation: measures that could replace a less effective banking tax that was introduced three years ago and could now be phased out.

The IMF praised Spain’s financial system and the stability of its banks. BBVA’s plan to merge with smaller rival Banco de Sabadell moved one step forward on April 30, when the National Authority for Markets and Competition (CNMC) approved the deal under certain conditions, although other authorizations are still required.

While Spain has undoubtedly been a post-Covid success story, the IMF stressed that to stay on this positive trajectory, maintaining sound fiscal and regulatory policies and avoiding missteps that could derail progress will be essential.

According to the Trump administration, the reason for the decision was to save federal money, “one penny at a time.” In 2024, the US Mint reported that the pro- duction of every single penny cost the government 3.7 cents, almost four times its face value. All in all, to make

3.2 billion pennies last year, the federal government lost

$85.3 million. It estimates it can save $56 million a year just in production costs.

The penny will remain legal tender and will continue to be widely accepted across the country as long as people continue using cash. Last year, YouGov reported that cash remains “the most commonly used form of payment,” with 67% of Americans favoring it. But Capital One consumer statistics projects that about half of the US population will use no cash at all in 2025.

The one-cent coin is made of copper-plated zinc but was originally all copper. It has been in circulation since the US Mint was created in 1792. Lately, however, and despite the 114 billion currently in circulation, the Treasury says that pennies are “severely underutilized” and easily lost, thrown away, or abandoned in jars in people’s homes.

Officials expect that businesses will start rounding up to the nearest nickel—worth five cents—and gradually elimi- nate cents in cash transactions. But the transition may not be as uncomplicated as that.

“People using cash in stores are still entitled to their change,” notes Jay Zagorsky, senior lecturer in markets, pub- lic policy, and law at Boston University’s Questrom School of Business. “The problem with the decision to stop minting the penny is that it impacts only the supply of pennies, not the demand. This issue needs to be solved with an official national policy. The US Congress needs to pass a law in this regard.” The US is not the first country to abolish its smallest- denomination coins. The EU and Canada have been winding down their pennies for over a decade, while New Zealand and Australia stopped production more than 30 years ago, in 1990 and 1992, respectively.

Mexican President Claudia Sheinbaum has called the bill “unacceptable” and vowed to negotiate with the US. “We don’t want there to be a tax,” she said at a press conference. “We’re going to keep working so there is no tax on the remittances our compatriots send to their families in Mexico.”

Over 80% of remittances from the US to other countries are used for consumption, especially daily groceries, health, housing, and education; and any tax would adversely affect the receiv- ing country’s economy. A report by the Inter-American Dialogue warned that the tax could lead to a 7% decrease in remittances, impact trade, increase migration, and reduce control over foreign currency transfers.

Latin America and the Caribbean received $160.9 billion in remittances in 2024, with Mexico alone accounting for $64.7 billion. In the Central American Northern Triangle of El Salvador, Guatemala, and Honduras, heavily represented among undocumented persons entering the US, remittances make up 20% to 27% of national GDP. The tax would cost the three countries almost $2 billion a year, based on 2024 figures.

Honduran Deputy Foreign Minister Antonio Garcia described the tax as “a bucket of cold water” for Honduran migrants.

Caribbean governments have pointed out that the bill threatens to lower international reserves of dollars. This has been a long-term problem in the region and has prompted some credit card issuers to lower limits to $100 for new applications.

The bill has until September 30 to pass and could face legal opposition over provisions that affect vulnerable communities and international treaties. Proponents suggest that the tax gives the US a slice of the estimated $905 billion remittance industry. A remittance tax would not be unprecedented, however. Oklahoma imposed the first state tax on international transfers—1% on every $500 sent—in 2009.

After 14 years of war, 90% of the Syrian population live beneath the poverty line. Since the Assad regime fell in December, removing the sanctions to kickstart the economy has been a top priority of transitional President Ahmed al-Sharaa, the leader of the victorious rebellion; but Syria has been under severe US restrictions since 1979 and lifting them won’t be simple.

The principal strictures are the 2019 Caesar Syria Civilian Protection Act and the 2003 Syria Accountability and Lebanese Sovereignty Restoration Act (SALSA). Only Congress can fully repeal them, and that will take months, at best. The executive branch can issue temporary waivers, as the Treasury Department did in May, but the real impact on Syrian corporates and finan- cial institutions remains limited.

“Only the full cancellation of US Caesar and SALSA laws, and not just their temporary suspension, could open the door for long-term investment,” argues Samir Aita, president of the Circle of Arab Economists, a Paris-based think tank.

For Syrian banks, which remain largely cut off from global financial networks, rejoining the Swift system for transfer and reporting correspondent banking relationships is first on the agenda. “The Syrian market is very promising; it is almost virgin,” says Ali Awdeh, head of research at the Union of Arab Banks, “but honestly, no banks from the Arab region or elsewhere will dare to enter this market until there is a full lifting of US sanctions.” In Europe, the process is less complicated. Last month, the European Council lifted sanctions on several Syrian companies operating in key sectors like oil production, agriculture, finance, construction, telecoms, and media. Depending on how the situation in Syria develops, other companies could be delisted in the coming months. Restrictions will remain, however, for industries that pose security concerns, such as weapon sales.

Currently, JBS is valued at roughly $16 billion, with $77.2 billion in revenue as of full-year 2024, compared to a $19.8 billion market cap for Tyson Foods on $53.3 billion in revenue.

But despite the seemingly positive outcome for JBS’ shareholders, the Pilgrim’s Pride parent company’s dual listing remains a contentious topic both internally and externally.

Recently, US Senator Elizabeth Warren raised concerns that JBS’s $5 million donation to the Trump-Vance Inaugural Committee helped get the dual listing approved.

The concerns come on the back of a long history of questionable practices by Joesley and Wesley Batista, the founders and largest shareholders of the company. Back in 2017, the brothers—estimated to be worth roughly $5 billion each—faced six months of incarceration in their home country, Brazil, on bribery charges.

Mighty Earth CEO Glenn Hurowitz also adds that the JBS’ listing raises sustainabilty concerns. “Listing on the NYSE is meant to be a signal to investors that a company is serious about transparency, but JBS has shown its only playbook is hiding the true scale of its destruction, climate emissions, and human rights abuses.”

The dual listing also faced shareholder pushback, passing with just 52% of votes, with claims the plan introduces a dual-class structure that boosts the Batista brothers’ voting power to nearly 85%, up from about 48%. “Investors [ultimately] chose to focus on the stock’s upside potential rather than on governance concerns,” said Igor Guedes, an analyst at Genial Investimentos. 

Scene 2 came and went on June 6, when Trump missed what was supposed to be a deadline to approve or reject a deal. Scene 3 is now expected before June 18, the date by which the two companies agreed to complete the deal—unless they decide to extend it.

Whether the final curtain in this cliffhanger drama gets extended yet again is still to be known. Meanwhile, interested parties from steelworkers and their families to U.S. Steel stockholders to Pennsylvania elected officials are pondering an assortment of critical but still up-in-the-air details. And other non-US companies are picking up some cautionary lessons about seeking US acquisitions in the Trump era.

With an executive order in January, outgoing President Joe Biden had blocked the U.S. Steel sale, which would have been one of the largest US acquisitions ever by a Japanese company, on national security grounds. Then in April, in a highly unusual move, Trump ordered the Committee on Foreign Investment in the United States to try again to make a recommendation on a Nippon Steel and U.S. Steel tie-up. CFIUS had failed to agree on a recommendation last fall and kicked the decision up to the Biden White House.

Trump received the committee’s recommendation on May 21, giving him 15 days—until June 6—to decide to overturn Biden’s executive order. He didn’t, although his social media post, and statements made at a rally at U.S. Steel’s nearly 90-year-old Mon Valley Works–Irvin Plant outside Pittsburgh,indicated he was prepared to do so.

Instead, the White House claimed he had only asked CFIUS for guidance, not a recommendation, and that the real deadline is June 18. Biden, in his executive order, had given Nippon Steel and U.S. Steel until then to abandon their deal, which means that to push it through, they must conclude it by that date.

What the president didn’t do was backtrack on his claim that a historic deal was within reach.

U.S. Steel will continue to be “controlled by the USA,” he declared at the rally; “otherwise, I wouldn’t have done the deal,” which he claimed to have brokered. Nippon Steel would plow $14 billion into its new properties, amounting to essentially the entire purchase price, including $2.2 billion to increase steel production in Mons Valley and another $7 billion for modernizing plants in other parts of the country, creating at least 70,000 jobs. Further, there would be no layoffs and the new owner would keep all current blast furnaces in full operation for at least 10 years.

“You’re not going to have to worry about that,” the president assured a community that has depended upon U.S. Steel for generations. “They’re going to be here a lot longer than that.”

Trump’s pronouncement left steelworkers, shareholders, analysts, and even Nippon Steel executives trying to tie up some important loose ends, however. Published reports indicated that the acquisition price of $55 per share that the two companies shook hands on in December 2023 was unchanged, and that the deal would still be a 100% acquisition, as Nippon Steel had always preferred: not an “investment,” as Trump earlier suggested.

But the biggest mystery involves the actual control structure the deal would put in place at U.S. Steel.

Republican Sen. David McCormick of Pennsylvania told reporters following Trump’s remarks that the company will continue to have an American CEO and an American-majority board of directors and that the US government will hold a “golden share,” meaning it will have the right to approve some of the board members. That in turn “will allow the United States to ensure production levels aren’t cut and things like that,” he said.

No material terms have emerged from the closely guarded Nippon Steel-U.S. Steel talks as to how this mechanism would be set up, however.

A “golden share” generally means a block of shares that lets the party holding them outvote all other shareholders. But such arrangements, while common in Germany and some other parts of Europe, are “not typical” in foreign acquisitions of US companies, notes Antonia Tzinova, leader of the CFIUS and Industrial Security Team at law firm Holland & Knight, and are generally resisted by the acquirer.

If the parties have something other than a classic golden share in mind, they have not disclosed it—and that constitutes an additional mystery. Trump said that he had not yet seen a formal deal, despite his having received a report on it from CFIUS. If a new deal has been agreed to, Tzinova points out, U.S. Steel has a legal obligation to reveal it to its shareholders.

And to the United Steelworkers, which represent U.S. Steel employees, union officials say.

“Neither President Trump nor Senator McCormick have offered any detail concerning the ‘planned partnership’ or the nature of ‘control by the USA’ of U.S. Steel following the closing of a transaction,” a union official said in a memo to the company—even though those details could affect U.S. Steel’s contract with the union.

The two companies have pursued the sale doggedly for a year and a half; as if to underscore the urgency for a Japanese producer of acquiring U.S. operations, Trump announced shortly after his remarks in Mons Valley that Washington would be doubling tariffs on imported steel. But pushing through even a deal that makes economic sense is more difficult in the present era, Tzinova says.

Nothing about Nippon Steel’s initial proposal to buy U.S. Steel was very unusual, she notes, just its timing. Coming when a presidential election cycle was already under way, the deal quickly became a political issue. The lesson for non-US acquirers: avoid announcing a deal during an election year.

But Nippon Steel could have helped its cause, Tzinova adds, if it had lobbied more heavily and reached out more expansively to all the stakeholders involved. Those stakeholders would include the union and its members, local businesses for whom U.S. Steel is an economic anchor, and state governments. United Steelworkers President David McCall noted pointedly after Trump’s remarks that the union, which strongly opposed the sale, had not been included in the two companies’ discussions with the administration.

That’s another lesson non-US investors will have to learn going forward, Tzinova advises.

Much of the disruption begins in the US, where President Donald Trump’s abrupt, aggressive shift in trade policy has injected a new volatility into global markets. His “Liberation Day” tariff package, unveiled April 2, aimed to revive domestic manufacturing by imposing steep duties on imports, promising a new “golden age of America” powered by reshored jobs and greater market access for US goods abroad.

Rather than resetting the global playing field, Trump’s trade shock has set off a cascade of recalibrations. The US dollar has weakened, its role as a reserve currency is being reevaluated, and foreign investors are quietly retreating from US assets. At its lowest point in early May, the US dollar index had fallen 8.9% year-to-date before partially recovering. Treasury bonds, once a byword for safety, are being shed at an accelerating pace.

“We have been arguing over the last few months that the market is reducing its willingness to fund the US twin deficits,” George Saravelos, global head of foreign exchange research at Deutsche Bank, wrote in a recent note. “We worry this is brewing a major problem for the dollar—and potentially the US bond market too.”

As the US continues one-on-one tariff negotiations with China and more than 100 other governments, other countries aren’t waiting for Washington to set the rules. From Latin America to Asia and the Middle East, trade alliances are being redrawn and export strategies are shifting. The map of global commerce is changing in real time.

Call it the Great Realignment.

For over 50 years, the US has occupied a peculiar place in the global trading landscape, importing vast volumes of consumer goods and relying on foreign capital to finance the resulting trade deficits. Foreign governments bought trillions in US Treasury bonds, cementing the dollar’s dominance as a global reserve currency. That “exorbitant privilege,” as it’s sometimes called, is now under pressure.

“China doesn’t mind the decoupling; it’s only the speed that is upsetting them.”

Andrew Polk, Trivium China

Washington’s pivot toward tariffs and economic nationalism is forcing allies and rivals alike to reconsider their exposure to the US system.

“Unpredictable and maximalist US policies, such as claims on territory owned by traditional US allies, serve to increase concerns about coercion and lead states to insure against it,” Deutsche Bank’s macro strategists, Oliver Hardy and colleagues, wrote in a May note, “e.g., by reducing reliance on the US financial system and the dollar as a medium of exchange and store of value. Moreover, as alternatives become more developed, the opportunity cost of moving away from US financial networks declines.”

The US-China dynamic remains central. After the US imposed 145% tariffs on Chinese goods, Beijing responded with 125% levies on US exports. A 90-day truce was agreed to in Geneva in May, scaling back tariffs to 30% and 10%, respectively. While the deal provides temporary relief, it has not erased concerns that the world’s two largest economies may be heading toward a long-term decoupling.

Other governments aren’t standing still. Even as the US pursues a broad slate of trade talks, it has announced only one new agreement so far—a framework deal with Britain, signed in May, many details of which have yet to be worked out. Meanwhile, many countries are accelerating their own trade diversification strategies to hedge against further disruptions.

The effects of this realignment are already playing out on the ground, nowhere more clearly than in Latin America, where some of the biggest beneficiaries of the Trump policy are located. As US trade relationships grow more uncertain, many of its former hemispheric partners are deepening ties with China and other global players to safeguard their export markets.

Even before the current tariffs were announced, Chinese imports of US agricultural products had declined 14% to $29.25 billion in 2024, which followed a 20% decline in 2023, a legacy of the first Trump Administration’s earlier round of tariff hikes targeting Beijing. By contrast, Brazil exported $49.7 billion in agriculture to China last year, with soybeans the main export crop. Eyeing an opportunity to replace US farm exports to China, Brazil sent a 150-member trade delegation, its largest ever, to Beijing in May, headed by President Luiz Inácio Lula da Silva, and opened a new office in Beijing to promote coffee and other exports.

Meanwhile, China signed a letter of intent with Argentine exporters to buy $900 million worth of soybeans, corn, and vegetable oil to avoid sourcing them from US farmers, putting further pressure on Washington.

It’s not only the Chinese who are shopping for South America’s agricultural products.

“There are increasing opportunities for Latin American countries to strengthen trade links with both Asia and Europe,” says Andrés Abadía, chief Latin America economist at Pantheon Macroeconomics. The EU signed an agreement with the Mercosur countries—Argentina, Brazil, Paraguay, and Uruguay—in December, he notes, creating a free trade area between the two blocs, a market encompassing a quarter of global GDP. The pact, when ratified, will remove 90% of tariffs on agricultural exports to Europe and the EU’s industrial exports to Mercosur countries.

The new attention is welcome in Latin America—up to a point.

Asian countries are strengthening trade ties with the economies of Peru, Chile, and Colombia. But with Chinese exports to the US becoming problematic, more cheap goods from China could be entering the Latin American region, “which could cause problems, especially for emerging Latin American manufacturing sectors,” Abadía warns.

The first signs of this shift emerged in April, when China reported a 21% decline in goods shipments to the US. At the same time, exports to Latin America were $43.8 billion, more than double the $21.2 billion reported in the same period in 2024. Chinese exports to Europe rose to $46 billion in April, up from $43 billion in April 2024.

The Europeans are also concerned about a flood of cheap Chinese imports. In April, European Commission President Ursula von der Leyen spoke with Chinese Premier Li Qiang about preventing a repeat of the wave of Chinese goods that washed over the EU during the first Trump presidency. There is a need for “a negotiated resolution” to the growing trade imbalance, von der Leyen warned. In an apparent olive branch to the Europeans, China lifted sanctions on several members of the European Parliament.

The European Union is also trying to broaden its trade relations elsewhere by putting finishing touches on a free trade deal with India, which it hopes to conclude by the end of this year.

“We both stand to gain from a world of cooperation and working together,” von der Leyen said when she met with Indian Prime Minister Narendra Modi in New Delhi in February to discuss the agreement. The EU is India’s largest trade partner, importing $77 billion worth of goods in 2024, eclipsing both the US and China.

Canada offers another example of diversification away from the US. While Canadian goods exports to the US fell 6.6% in March, the biggest drop since the start of the pandemic, exports to other countries rose 24.8%, driven by commodities like oil and gold, which nearly offset the loss from the US market. A big part of the export decline consisted of a decrease in automobile shipments, which now face a 25% tariff.

Not only did Canadians buy fewer US goods, but fewer Canadians chose to vacation in their neighbor to the south in response to President Trump’s comments about annexing Canada as the 51st US state. In March, the number of Canadians crossing the border by car fell 32% compared to a year earlier, according to Statistics Canada; air travel fell 13.5% in the same period.

Canada’s new prime minister, Mark Carney, visited Trump in Washington in early May, but they did not announce any progress on a trade deal.

China has been taking steps to prepare for a trade war with the US ever since Trump’s first term, notes Andrew Polk, cofounder of Trivium China, a business consultancy in Beijing.

“They have already reordered their trade flows and will do more with Europe and Southeast Asia,” he observes. “They don’t mind the decoupling all that much; it’s only the speed with which it happened that is upsetting them.”

As noted earlier, China is quickly replacing the US as a source of agricultural products, with increased imports from Latin America, Canada, and Australia. The Chinese are keenly aware that midwestern US farm states tend to vote Republican and hope the loss of business will bring pressure to bear on the Administration.

But China is also eager to develop new markets to replace the US, which imported $438 billion worth of Chinese products last year. Soon after Trump declared “Liberation Day” in April, putting heavy tariffs not only on China but on exports from Vietnam and Cambodia, Premier Xi Jinping visited Vietnam, Malaysia, and Cambodia to demonstrate that China is a more reliable partner, signing 45 cooperation agreements covering trade, infrastructure, science and technology, and supply chains.

Southeast Asian countries are in a bind since they depend on China for investment and inputs and the US as a market for their finished goods.

The Trump Administration is attempting to crack down on the practice of transshipment, whereby partially finished Chinese goods are sent to Vietnam and Cambodia and then re-exported after minor changes. Trump announced a 45% tariff on Vietnamese products, for example, but paused it for 90 days while a trade deal is being negotiated. US imports from Vietnam in April were up 34% from a year earlier, driven by US companies frontloading orders ahead of the new tariffs.

Washington, of course, would like to isolate China economically from other Asian countries. But Rajiv Biswas, CEO of Asia-Pacific Economics, a Singaporebased consultancy, doesn’t think that policy is likely to succeed.

“China is such an important market for many countries, I don’t think any of the countries in East Asia want to choose sides,” he says, noting that while Australia is a close security partner of the US, China buys one-third of the country’s exports. “They’re very uncomfortable with the situation where they’re being asked to pick.”

Similarly, while China and Japan have their political differences, China is Japan’s largest trade partner and Japan is China’s second largest.

And when Chinese businesses suffered a virtual shutdown in trade, Beijing responded with an economic stimulus plan that included a 10-basis-point cut to the key policy interest rate, a reduction in banks’ reserve requirements—freeing up $138 billion in additional liquidity—and a mortgage rate cut to support home purchases.

Historically, China has allowed the yuan to weaken against the dollar to blunt the impact of US tariffs. That dynamic briefly held in early 2025, when the yuan dipped to 7.33 to the dollar after Trump’s tariff plans were unveiled. But as the dollar began its own slide, the picture shifted. By later May, the yuan had appreciated to 7.20, reflecting broader pressure on the greenback.

The dollar’s decline has spurred rapid shifts in capital flows. Japanese investors—long major holders of US Treasuries—began selling off US assets and repatriating funds, driving up the yen. The Taiwan dollar surged more than 9% in two days of trading in May, its sharpest rise since 1988, as insurers and exporters moved assets back home.

One of the more surprising developments has been the strength of the euro, which gained as much as 12% against the dollar—from it’s January low—following April’s tariff announcement. Traditionally seen as too fragmented to rival the dollar’s safe-haven status, beset as it has been by budget crises in Greece, Italy, and elsewhere, the eurozone is now benefiting from both renewed investor confidence and signs of economic stabilization.

“The strength of the euro against the dollar is based on both the deterioration in the economic outlook for the US economy and the improvement in the prospects for Germany,” Jane Foley, senior FX strategist at Rabobank, said in March. “There are certainly signs of a shift away from dollar assets.”

The ripple effects are already hitting the corporate world. Multinationals reliant on a strong dollar could see earnings erode. European and Asian companies that purchase dollar-denominated commodities, like oil, are facing higher costs. And for emerging markets, the shift could reverse the 1997 Asian financial crisis dynamic. Back then, capital fled the region; today, it’s flowing in.

Currencies across Southeast Asia and surrounding markets—including in Singapore, South Korea, Malaysia, Thailand, Hong Kong, and Taiwan—are gaining momentum as investors diversify away from the US market. In a twist of economic irony, the weakening dollar may help Trump achieve one of his primary goals: a reduction in US imports.

But when it comes to exports, the forging of new trade regimes around the world may leave him knocking at the door.

Despite its strength in AI research, however, Canada has been slow to scale the technology commercially.

“This is a positive and important first step,” says Adegboyega Ojo, Canada research chair in Governance and Artificial Intelligence at Carleton University’s School of Public Policy and Administration. “The creation of the Ministry of AI and Digital Innovation signals the new government’s intention to prioritize AI development as part of its broader ambition to build an economy of the future.”

Recent announcements by Canadian telecom giants Telus and Bell of investments in AI infrastructure are also encouraging, Ojo adds, as they should attract private sector investment and strengthen the country’s AI ecosystem.

Still, the challenge ahead could exceed the scope of the current blueprint, Ojo cautions: “The new minister may need to take on a broader coordination role beyond the government’s plans to expand AI infrastructure, invest in training, promote adoption and commercialization, and streamline AI procurement through the AI procurement through the [proposed] Office of Digital Transformation.” That, Ojo argues, will include working closely with counterparts in other ministries and departments as well as across provincial and territorial governments to ensure that AI is deployed strategically in areas where it can generate the greatest economic value, promote social inclusion, and support environmental sustainability. “To address the need for coordination effectively, the government will need to set bold and measurable goals that align AI deployment with national priorities,” he says. “This is what AI-driven transformation is really about.”