Quote of the day

“Pacific nations see the climate challenge as an existential threat not only to them but to all of humanity.”  

That’s what friend of Intrigue, Solomon Islands politician, and chair of the Pacific nation’s foreign relations committee Peter Kenilorea Jr (son of the first post-independence PM) told Intrigue in response to the ICJ’s historic climate change ruling last week. (P.S. — scroll down to the poll to find out what your fellow Intriguers think about that case)

Another deadline approaches

It's time for a quick trade update, because the president's extended deadline expires this Friday (1 August), at which point capitals without a deal theoretically face higher US tariffs.

Lots is happening as we speak, so here’s what you need to know:

1. 🇨🇳 China

Beijing and DC today (Monday) kick off their third round of talks in Stockholm. And word is we'll likely just see another extension of their 90-day truce (which ends 12 August) rather than anything transactional (like China's old pledges to buy more US soybeans) let alone structural (like China curbing its own vast industrial over-capacity).

So why kick the can down the road again? This de-escalated stand-off, while painful, is still both a) manageable (shipping flows attest to that), but also b) necessary to unwind their deep interdependence, whether on China's rare earths, or America's chips.

So we’re unlikely to see any big updates until Trump and Xi potentially meet at (or just before) Korea's APEC summit in October. That takes us to the world’s second-largest economy…

2. 🇪🇺 The EU

Just days out from the US deadline, the EU's Ursula von der Leyen flew to meet President Trump in Scotland yesterday (Sunday), with both putting the odds of any deal at 50/50.

Even 50/50 felt high when you recall the EU’s quickest deal (with Korea) took 2.5 years. But the two emerged overnight with a high-level (detail-free) update that enables a) a Trump win via future EU investments and purchases, b) a von der Leyen win by avoiding a full trade war and instead halving the threatened US tariffs to 15%, then they both c) delay the much harder talks. Though these 15% US tariffs on the EU are still seven or eight times higher than the status quo ante, so an inflationary hit ahead feels inevitable.

The EU also seems to have learned from history here: you’ll recall under Trump 1.0, it skirted US tariffs by pledging to buy more US soy and gas, though the market winds were already blowing that way. The bloc is now likewise pledging to buy stuff it already wants: US energy and arms. That’s a little like boldly pledging to watch more Netflix.

The EU has presumably also learned from…

3. 🇯🇵 Japan

President Trump’s big Japan deal last week featured more market access for US cars and rice in return for a capped 15% tariff on Japan plus a yuuuge $550B investment pledge (the EU then likewise got 15% and pledged $600B in unspecified investments).

But surprisingly, Tokyo's cabinet office then piped up on Friday, saying there's actually no written deal, won't be one, and that according to what Tokyo did agree:

• Japan's rice purchases will still just be as needed (ie, potentially zero)

• US cars still have to meet Japanese safety standards (ie, no major change), and

• Any investments will be "up to" $550B (ie, theoretically 'zero' fits that definition).

We say 'surprisingly' because you might think Japan should've just let the president fire off that tweet then take his lower tariffs. So why didn't it? Trump’s tweet suggested Japan’s investment would be 90% in America's favour, which presumably didn't go down too well among the voters who just dunked on Japan's ruling party a week ago.

Still, the lesson for other capitals might’ve been to a) offer big, long-term pledges in hopes of getting immediate tariff relief, then b) just let the president sell it how he wants. And that’s what the EU has now done (it’s staying notably silent on his claims that EU members are now “agreeing to open up their countries to trade at zero tariff”).

But maybe there’s another lesson on display…?

4. 🌏 Stability

The president's recent deals with Vietnam^*, Indonesia, and the Philippines all landed relatively high at 19% or 20%. And sure, that likely reflects their own limited leverage plus a calculation that ~20% is probably manageable for their lower-cost export bases.

But it also reflects an assessment that whatever extra percentage point or two these leaders might’ve shaved off, it still wouldn’t be worth the risk of higher US tariffs from Friday, nor the bigger risk: more uncertainty. Hanoi, Jakarta, and Manila (plus Brussels too) all know that the firms they’re trying to lure need stability before they’ll invest.

Intrigue’s Take

So… is President Trump's strategy working? The US is now generating record customs revenues, and could double that share of federal revenue to 4 or ~5%. Plus there've been a few US factory announcements along the way, whether from AstraZeneca, LVMH, or UCB.

But at what cost? Trade flows remain relatively resilient, the S&P500 has recovered to new records, and some big multinationals are seemingly spreading tariff costs across foreign markets rather than stinging US consumers and risking a presidential rebuke.

Yet… that resilience partly just reflects Trump’s strategy reversal (particularly his escalatory cycle with China). And those firms not passing tariffs straight on to US consumers are also the few giants with the wherewithal of global brand recognition, footprints, and margins.

So then there’s the fact that, instead of 90 deals in 90 days, we've now seen four-ish deals in 118 days (UK, Philippines, Indonesia, and now the EU): the China deal was more a de-escalation, while the Japan and ^*Vietnam deals are both still TBC.

So, Trump might claim some economic victories here (possible investments, market access, and higher protections for domestic producers) and there’ll be a victory lap if any more deals land this week (Brazil, Canada, and India are all in the mix).

But there are also the parallel drops in America’s global standing, and what this in turn means for broader US strategy: eg, those same Indo-Pacific swing states critical for any US competition with China will now see that same race in a new, sharper, Liberation Day light.

Sound even smarter:

• A US appeals court is scheduled for oral hearings this Thursday into whether President Trump’s tariffs are lawful.

Meanwhile, elsewhere…

Extra Intrigue

🤣 Your weekly roundup of the world’s lighter news

• Aussie cops have charged a man for stealing 53 right-foot shoes from a mall.

• US citizens can now donate via PayPal and Venmo to reduce US public debt.

• A Philippine bride and groom have tied the knot in a flooded church after deciding they wouldn’t let heavy typhoon rains ruin their special day.

• Irish authorities have issued a dress code banning tour guides from going nude.

• And a Moroccan animal park has opened the world’s first zipline that flies visitors right over the top of live alligators. We’ve seen enough movies to know how this ends.

Diplo-beef of the day

What’s the easiest way to make a diplomat cry… Maybe get their rank wrong? Parachute a useless political appointee into their embassy? Or there’s the Moscow method of (ahem) ✌️using✌️ your home’s restroom to show that Russian spies paid a visit.

Well Algeria is giving a bold new strategy a go: revoking airport fast-track privileges for French diplomats! Why? Algeria accuses France of obstructing Algeria’s diplomatic pouch (the official mail service connecting embassies to HQ) as part of an ongoing spat which escalated when Paris embraced rival Morocco’s plan to control the disputed territory of Western Sahara (Algeria backs a local independence movement instead).

Bonus fun fact about those ‘diplomat’ airport queues: they can take longer than the regular queue, but some diplomats will just stand there and wait the extra 30 minutes anyway, lest any passer-by not glance their way and think oooooh look they’re a diplomat.

Today’s poll

Yesterday’s poll: What do you think about this ICJ opinion on climate change?

😮 It's a major turning point (27%)
🥱 Meh, the ICJ has no real power (69%)
✍️ Other (write us!) (4%)

Your two cents:

• 🥱 E.F: “The ICJ has no real authority and no ability to tell anyone what to do, especially the big players like America and China. Overplaying their hand will just hurt their own legitimacy.”

• 😮 R.B: “The edifice of justice is constructed brick by brick, and climate justice is no exception. The generations that care most about climate justice will use the ICJ ruling as domestic legal inspiration.”

• ✍️ D.D: “It’s not that ICJ has no real power, it’s that no one is going to do anything meaningful about global warming because it requires real sacrifice.”