Trade War, AI Equity, Iran Conflict: US Challenges

The trade war with China has entered a new phase. More than a year after Trump's 'Liberation Day' tariffs, the EU, Canada and other partners are no longer simply adapting to American measures — they are building their own. Brussels is evaluating tariffs, domestic subsidies and export controls on Chinese goods in clean energy, electric vehicles and strategic materials. Canada's Mark Carney made a separate trip to Beijing to build bilateral ties as a hedge. China responded by deepening its existing trade agreement with south-east Asian nations and retaining — as its strongest retaliatory card — near-monopoly control over lithium, cobalt, rare earths, and pharmaceutical precursors. Analysts note that Trump's scattershot approach, which raised tariffs broadly rather than targeting China's specific bottlenecks, risks alienating the European allies whose cooperation the strategy requires to be durable.

At the White House, Trump proposed that the federal government take a direct equity stake in major AI companies, framing it as a 'partnership' that would give the American public a share in the sector's returns. The proposal, floated on Friday, was without immediate legislative detail but landed in the context of growing concern — reinforced by a sharp stock-market reading the day before, when strong jobs data fuelled rate-hike fears and sent tech stocks sharply lower — that the AI investment cycle may be building a bubble. The Pentagon simultaneously announced it is recruiting Wall Street bankers for a $200 billion strategic investment programme, signalling that the administration is moving to institutionalise the government-private sector capital relationship it wants for strategic industries.

The US-Iran war passed the 100-day mark with no resolution in sight, and with the alliance with Israel showing visible strain. Trump is seeking a phased end to the conflict and has been pushing Netanyahu toward a narrower endgame; Netanyahu's priorities — particularly on Lebanon and the future of Iran's nuclear programme — diverge from Washington's. Lebanon has now become the most active front in the conflict, with negotiations stalled and fighting intensifying. On June 6, Iran fired seven ballistic missiles toward Kuwait and Bahrain; US forces intercepted six and the seventh failed to reach its target. Kuwait's defence ministry said its systems tracked 30 ballistic missiles and drones in the same attack, calling it 'heinous Iranian aggression targeting civilian and vital facilities.' The US simultaneously raised its counter-intelligence threat assessment for Israel to 'critical' over spy concerns — an unusual public designation against an ally that adds another layer of visible friction to the relationship.

Iran separately told the IAEA that US and Israeli strikes were responsible for a partial loss of nuclear oversight — a claim that complicates the diplomatic track and the Lebanese president's separate call for Iran to stop exploiting Lebanon as a battlefield.

Former NATO Military Committee chairman Admiral Rob Bauer confirmed this week that in autumn 2022, as roughly 20,000 Russian troops faced capture on the west bank of the Dnipro, Moscow had telephoned Paris, London and Washington threatening nuclear weapon use. The US warned Russia through those channels that the response would be conventional military destruction — a confirmation that closes years of speculation about the backchannel that preceded Russia's withdrawal from Kherson.

In domestic politics, Democrat Xavier Becerra — former Health and Human Services Secretary and California attorney general — has advanced to the November general election in the California governor's race, AP projected, following the June 2 primary. His opponent in the runoff is still contested between Republican former Fox News host Steve Hilton and Democrat billionaire Tom Steyer. New York's state legislature passed a bill to temporarily ban large data centres, citing energy and environmental concerns. The Trump Justice Department placed federal monitors on California's ballot-counting process, and the administration argued in federal court that judges cannot block a controversy over White House ballroom events.

On arms sales, the US approved an $842 million deal to supply Denmark with 200 JASSM-ER cruise missiles and a $1.5 billion sale of MH-60R Seahawk helicopters to New Zealand. A US envoy urged Taiwan to accelerate spending on unmanned systems. NATO is discussing a €70 billion military aid package for Ukraine ahead of the Ankara summit.