Trump threatens extra 10% tariffs on BRICS...US fines firm for illegal Huawei shipments...China places restrictions on EU medical device imports

Trump threatens extra 10% tariffs on BRICS

President Donald Trump said the US 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, reports Reuters. With forums such as the G7 and G20 groups of major economies hamstrung by divisions and the disruptive "America First" approach of the US 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's tariff policies.

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.

US fines firm for illegal Huawei shipments

The United States government has fined California-based Alpha and Omega Semiconductor Ltd. (AOS) $4.25 million for illegally shipping power chips and modules to Huawei Technologies Co. Ltd. in violation of strict export controls imposed on the Chinese telecom giant, reports Caixin. The Commerce Department’s Bureau of Industry and Security (BIS) said on Thursday that AOS had made 15 unauthorized shipments of around 1,650 power controllers and modules to Huawei in 2019. The shipments occurred despite Huawei’s inclusion on the US “Entity List,” which subjects listed firms to rigorous export restrictions.

According to the BIS, AOS “knew or had reason to know” that 11 or the 15 shipments were illegal or likely to be illegal, in violation of US Export Administration Regulations (EAR). The fine must be paid within 30 days or AOS could lose its ability to obtain future export licenses.

Huawei was first added to the Entity List in May 2019, requiring US firms to obtain BIS authorization before supplying any US-origin technology exceeding a 25% content threshold. The measure was aimed to cut Huawei’s access to critical American tech amid rising national security concerns.

China places restrictions on EU medical device imports

China's finance ministry said on Sunday it was restricting government purchases of medical devices from the European Union that exceed RMB 45 million ($6.3 million) in value, in retaliation to Brussels' own curbs last month, reports Reuters. Tensions between Beijing and Brussels have been rising, with the European Union imposing tariffs on China-built electric vehicles and Beijing slapping duties on imported brandy from the bloc.

The European Union said last month it was barring Chinese companies from participating in EU public tenders for medical devices worth €60 billion ($70 billion) or more per year after concluding that EU firms were not given fair access in China.

The measure announced by the European Commission was the first under the EU's International Procurement Instrument, which entered into force in 2022 and is designed to ensure reciprocal market access.

China to power grid with record renewable energy

China expects to add a record 500 gigawatts (GW) in renewable energy capacity to its national grid this year as the rapid rise of artificial intelligence (AI) increases demand for electricity to power computing centres, reports the South China Morning Post. According to a report from the State Grid Energy Research Institute on Friday, over a quarter of that new capacity—or a record 140GW—will come from wind power.

The increase in wind power capacity is equivalent to about six times the capacity of the Three Gorges Dam and is 77% more than the amount added last year.

Meanwhile, newly installed solar power capacity is expected to reach 380GW this year, up 35.5% from last year.

China reroutes exports via Southeast Asia

Chinese businesses are sending increasing volumes of goods to the US via south-east Asia in a bid to evade the tariff wall erected by Donald Trump as part of his trade war, data suggests, reports the Financial Times. The value of Chinese exports to the US dropped by 43% year on year in May, according to figures published by the US census bureau—equivalent to $15 billion-worth of goods.

But the country’s overall exports rose by 4.8% in the same period, official Chinese data showed, as the shortfall in trade with the US was offset by a 15% increase in shipping to the Association of Southeast Asian Nations trade bloc and a 12% rise to the EU.

This week Washington struck a trade deal with Vietnam that includes a 40% levy on goods that are trans-shipped through the country, in a move that was widely thought to be targeting Chinese re-exports to the US.

Decoupling continues

Donald Trump has announced that the US will impose an additional 10% tariff on any countries aligning themselves with the "Anti-American policies" of the BRICS group of developing nations. The US has also fined a firm for supplying Huawei with power chips and modules in 2019, and China has imposed restrictions on government purchases of medical devices from the European Union that exceed RMB 45 million ($6.3 million) in value, in retaliation for Brussels’ own curbs last month.

These three factors are among the many that signal a deepening process of decoupling between China and the rest of the world, and to some degree the US and other parts of the world. It seems we’re seeing a race to the bottom in relation to the economic solidity and isolation of these two major economies, and the question is which has more depth and can therefore last the longest.

The answer is that it is likely the US, particularly given the dollar’s importance to the global economic system. While current policies are undercutting this importance, it is not something that can be totally undermined quickly, and the current direction is also reversible. Whereas on the China side, the current direction stems, as always, from decisions made by the Center, and that is something that is much less likely to see major change.