• US military alert against China
• New wave of commercial tariffs
• Europe promising retaliation
• Industrial chains stalling
• And US fiscal risk exploding in the market
None of this happened in isolation.
Here's how it all connects
- The Pentagon issued its strongest warning in years about China
The US Defense Secretary said China is preparing to use military force and alter the balance of power in the Indo-Pacific, with a focus on Taiwan.
This type of statement usually precedes concrete military movements and the reinforcement of the American presence in the region.
- US announces new round of tariffs on steel and aluminum
Trump will double tariffs on these inputs, from 25% to 50%, starting June 4, claiming to defend the national industry.
The decision came after accusing China of breaking trade agreements.
Even without directly affecting the flow of Chinese steel, the gesture is read as part of a broader economic siege.
- China responded, but on a diplomatic and military level
During the Shangri-La Dialogue, the Chinese Defense Ministry accused the US of instigating conflicts in Asia.
The next day, he called Washington the “greatest threat to peace in the region.”
For Beijing, tariffs, speeches and military movements are part of a single containment strategy.
- Escalation hits the market: US fiscal risk soars
The US Treasury's 1-year CDS rose to 52 basis points, the highest level since 2011, disregarding the debt ceiling crisis in 2023.
The number shows that investors are already demanding more to finance the US, worried about the high deficit, political impasse and lack of a fiscal adjustment plan.
The US is isolating itself diplomatically, hampering global trade and ignoring its own fiscal imbalances.
🇪🇺 5. European Union reacts to tariffs and threatens retaliation
The European Commission said it was preparing trade countermeasures and that the new US tariffs were undermining progress in negotiations for a new transatlantic deal.
Until a few days ago, the US and Europe were getting closer. Now, the risk is of a complete setback and commercial isolation of the Americans.
- Industrial chains begin to feel the effects of the crisis
US Treasury Secretary Scott Bessent accused China of withholding strategic inputs for sectors such as defense, semiconductors, energy and heavy manufacturing.
These bottlenecks can cause production delays, put pressure on costs and affect companies around the world.
- The US government signals that it will not back down
The Commerce Secretary said the tariffs will not be reversed, and is sticking to a tough line despite pressure from China, Europe and domestic sectors.
There is no expectation of détente in the short term.
Summary: The problems are now all interconnected
• Military tension between the US and China
• New tariff escalation affecting strategic partners
• US fiscal risk is once again worrying the market.
• US trade isolation growing
• Global industry starting to grind to a halt