North America: The Tariff War Reignites the Global Race for Strategic Resources

This month, trade tensions in North America escalated sharply, with the US decision to impose 50% tariffs on Canadian steel and automobiles beginning next January, prompting immediate retaliatory measures from Ottawa. This confrontation unfolds against a backdrop of growing US protectionism, which has already seen Washington impose tariffs on 60 nations in July.

In parallel, the global race to secure supply chains is intensifying. The United States has invested heavily in critical-mineral projects in Australia and strengthened its ties with Rwanda for tungsten supply. Japan, for its part, is preparing a framework to secure its own rare-earth supplies and is considering a defensive instrument against economic coercion. In Europe, the debate over a firmer stance toward China is gaining momentum, with an influential Dutch think-tank calling for tougher tariff barriers. Finally, parallel economic diplomacy is taking shape, notably through the Shanghai Cooperation Organisation (SCO), which offers Russia and Iran a space to circumvent Western sanctions.

US-Canada Trade Escalation Reignites the Tariff War

The trade relationship between the United States and Canada deteriorated sharply this month. The Trump administration announced its intention to impose 50% tariffs on imports of cars and steel from Canada, a measure set to take effect on 1 January (Financial Times, 24/08). The decision was described as an escalation in an already tense trade war between the two neighbours. Ottawa responded by announcing retaliatory tariffs on roughly $20 billion worth of US goods, although the precise details were not immediately released (unconfirmed signal, r/Economics, 25/08).

These tensions are having tangible consequences for market access. US spirits exports to Canada have already plunged 70% between March and December 2025, after most Canadian provinces pulled these products from their shelves. Over the same period, US spirits exports to the rest of the world rose by 2.5%, illustrating the targeted impact of this trade conflict (Bloomberg Markets, 22/08). President Trump's decision to cut tariffs on beef imports was interpreted by some analysts as an acknowledgment that tariff policies are contributing to rising prices for American consumers (Bloomberg Markets, 27/08).

This aggressive policy is not limited to Canada. On 24 July, Washington had already imposed new tariffs on 60 nations, including EU members, citing shortcomings in the fight against forced labour. This justification is contested, notably because the United States has not itself ratified the fundamental International Labour Organization (ILO) conventions on the subject (EU Observer, 06/08). These actions confirm a trend toward the "weaponisation" of US law for trade and geopolitical ends.

The Race for Critical Minerals and Supply-Chain Resilience Intensifies

Faced with Chinese dominance, Western powers and their allies are accelerating efforts to diversify their supply chains for strategic raw materials. The most notable initiative of the period is the US investment of $400 million, via Pentagon debt financing, in the Australian mining company Sunrise Energy Metals. This financing aims to develop the production of scandium, a rare-earth element crucial for aerospace and defence (Bloomberg Markets, 11/08). Along the same lines, the Nyakabingo tungsten mine in Rwanda, operated by Trinity Metals, has become a key supplier for Washington, providing up to 20% of US primary tungsten-concentrate consumption and integrating directly into the American defence supply chain (France24 (English), 11/08).

The CEO of REalloys, a company working with the US military on a mining project at a US military base, nonetheless tempered expectations, stressing that it would take several years for US critical-mineral capacity to rival that of China (Bloomberg Markets, 13/08).

Japan is following suit with a structured approach. The Ministry of the Environment plans to create in 2027 a bureau dedicated to securing critical-mineral supply. The emphasis will be on recycling via "urban mines" (extraction from discarded products) and the development of partnerships in Southeast Asia, in order to reduce the country's heavy dependence on imports, notably from China (Adnkronos, 14/08). This initiative is part of a broader effort to strengthen Japanese economic security.

Economic Powers Refine Their Defensive Tools Against China and Coercion

The hardening of geopolitical competition is pushing states to strengthen their trade-defence arsenal. In the Netherlands, the Scientific Council for Government Policy (WRR), an influential think-tank, recommended that the government advocate for the EU to adopt a firmer trade stance toward China. In a report presented on 27 August, the WRR warns that Chinese product prices are on average 30% lower than those of European products, a consequence of a policy of massive exports against a backdrop of weak Chinese domestic demand (EU Observer, 27/08). This recommendation for stricter tariffs and controls signals a potential shift in European trade policy.

In Japan, leading academic experts are urging the government to equip itself with measures to counter economic coercion. They suggest in particular drawing on the European Union's Anti-Coercion Instrument (ACI). Kazuto Suzuki, a professor at the University of Tokyo, believes that Japan "must consider a similar framework," an idea deemed pertinent in the context of the revision of the country's strategic security documents in the face of China (Adnkronos, 05/08).

Economic Diplomacy: Sanctions, Circumvention, and New Fronts

The game of sanctions and counter-sanctions continues to shape international economic relations. The Shanghai Cooperation Organisation (SCO), meeting in Bishkek, is increasingly asserting itself as a hub for circumventing Western measures. For Russia and Iran, this bloc offers a platform to mitigate the impact of sanctions and build an economic space less dependent on the dollar and Western financial systems (France 24, 31/08). This phenomenon is corroborated by revelations that bankers at Gazprombank Luxembourg reportedly made millions in profits by taking advantage of the disruptions created by EU sanctions (Financial Times, 26/08).

The European Union, for its part, adopted on 23 July its 21st package of sanctions against Russia, targeting 218 new individuals and entities, financial and cryptocurrency services, and suspending the automatic adjustment of the oil price cap (Council of the EU, 23/07). At the same time, Washington continues to ratchet up pressure on Cuba, which is going through its worst economic crisis in decades (France24 (English), 06/08).

Other Signals and Trends

• Zambia and the Global Gateway: The EU expressed concern over "serious irregularities" during the presidential election in Zambia. The credibility of the vote is a major stake for Brussels, as Zambia is a key country for the Global Gateway programme (EU Observer, 20/08).
• FDI in India: The Indian state of Andhra Pradesh saw its foreign direct investment (FDI) inflows increase sixfold during the 2025-2026 fiscal year, a performance attributed by the central government to attractive pro-business policies (Deccan Chronicle, 05/08).
• Indonesia and the nickel paradox: Indonesia, the world's largest nickel producer, faces a major contradiction. Its processing industry, essential for electric-vehicle batteries, depends heavily on "captive" coal-fired power plants, which undermines its decarbonisation goals and the competitiveness of its products in Western markets attentive to environmental standards (dialogue.earth, 13/08).

To Watch

• US-Canada tariffs: The entry into force of the 50% tariffs on Canadian cars and steel is set for 1 January 2027. Markets will closely watch the details of the Canadian response and attempts at de-escalation.
• EU trade policy: The follow-up to the Dutch WRR report will be a key indicator of the EU's willingness—and notably that of traditionally free-trade countries such as the Netherlands—to harden its tone toward China.