What you need to know

Trade talks in London

Trade negotiations between the United States and China resumed for a second day in London, as senior economic officials from the world’s two largest economies sought to ease a protracted dispute that has expanded from tariff battles to export restrictions on rare-earth minerals. The row threatens to disrupt global supply chains and weigh on global economic growth.

Washington and Beijing are attempting to revive a tentative truce previously brokered on 12 May in Geneva that briefly tempered trade tensions and steadied markets.

The focus has shifted to rare-earth minerals, with the U.S. urging China to provide a symbolic commitment to resume exports.

Chinese customs data show that exports to the U.S. fell by 34.5% year-on-year in May, measured in value terms. This is the steepest decline since February 2020, when the onset of the COVID-19 pandemic disrupted global trade.

In the U.S., both business sentiment and consumer confidence have deteriorated markedly. First-quarter gross domestic product shrank, driven in part by a record surge in imports, as American consumers brought forward purchases in anticipation of higher prices.

However, the effect on U.S. inflation has so far been limited, and the labor market has remained relatively strong.

Move fast and break things

Marines deploy to Los Angeles amid immigration unrest

Roughly 700 Marines have been deployed to the Los Angeles area to protect federal buildings and personnel following days of protests over immigration enforcement, which prompted President Donald Trump to federalize National Guard troops, the U.S. military announced on Monday.

The Marines, drawn from the 2nd Battalion, 7th Marines, 1st Marine Division, based at Twentynine Palms, California, will not engage directly with demonstrators, according to U.S. Northern Command, which oversees military operations across North America.

The deployment marks the first time in more than 30 years that Marines have been sent into a U.S. city to help manage civil unrest. U.S. Northern Command stated that 2,100 National Guard troops and 700 Marines would operate under Task Force 51, the designated joint headquarters. These forces have received training in crowd control, de-escalation tactics and the standing rules for the use of force.

California Governor Gavin Newsom confirmed via social media that he had been informed of the additional mobilization.

On Monday, California filed a lawsuit against the Trump administration in federal court in San Francisco, arguing that the federal activation of National Guard forces without gubernatorial consent was an unconstitutional encroachment on state authority. The lawsuit calls for the revocation of President Trump’s order.

The last instance of Marine deployment in response to civil unrest was during the 1992 Los Angeles riots, sparked by the acquittal of four police officers involved in the beating of Rodney King. On that occasion, President George H.W. Bush acted at the request of then-Governor Pete Wilson.

Earlier on Monday, thousands gathered for a rally organized by the California chapter of the Service Employees International Union, demanding the release of David Huerta, its president. Huerta had been arrested on Friday during a protest against a raid by Immigration and Customs Enforcement agents in downtown Los Angeles. He was charged with conspiracy to impede a law enforcement officer and appeared in court in handcuffs, dressed in black. He was released on bail later in the day.

By Tuesday morning, protests in central Los Angeles appeared to be winding down, with the Los Angeles Police Department regaining control of the streets.

Birth pangs in the birthplace of civilization

One more round of U.S.–Iran nuclear talks

The sixth round of nuclear negotiations between the United States and Iran is expected to take place on Sunday, 15 June, in Muscat, Oman. The meeting will involve Iran’s Foreign Minister Abbas Araghchi and U.S. Presidential Envoy Steve Witkoff.

It comes three days after the White House-imposed deadline for progress expires on 12 June.

Judging by comments made yesterday by President Donald Trump, the session is expected to serve primarily as a forum for receiving Iran’s long-awaited counteroffer—one he suggested is unlikely to be acceptable.

Tehran has formally rejected the latest U.S. draft agreement, calling it “unacceptable,” particularly its restrictions on uranium enrichment.

Iranian officials have pledged to submit a “reasonable, logical and balanced” counter-proposal via Omani intermediaries.

The principal sticking point remains Iran’s insistence on retaining its domestic enrichment program. Supreme Leader Ayatollah Ali Khamenei has reiterated that enrichment is “the key to our nuclear programme,” and has rejected U.S. demands for its suspension. Trump, acting as chief U.S. negotiator, maintains a hard line: “No uranium enrichment… we can’t have enrichment” under any deal.

The International Atomic Energy Agency (IAEA) has several times recently voiced concern over Iran’s acceleration toward enrichment levels approaching weapons-grade. France, Germany and the United Kingdom are said to be preparing a resolution at the agency’s upcoming board meeting that would formally accuse Iran of violating its obligations, potentially paving the way for the reimposition of United Nations sanctions.

Perhaps in return, Iranian state media have reported that Tehran is preparing to reveal classified details of Israel’s Soreq nuclear research facility, apparently in an effort to shift scrutiny away from its own program.

On Monday, Trump held a call with Israeli Prime Minister Benjamin Netanyahu. Although no official summary was released, the conversation is believed to have focused on the nuclear talks.

Meanwhile, the Israeli military has today launched strikes against Houthi targets in the Yemeni port of Hodeidah. Following evacuation warnings on Sunday, Israeli naval forces carried out bombardments from offshore positions, avoiding the use of air power.

Iran has reinforced its air defenses around its principal declared nuclear facilities, many of which are now located deep underground, reportedly as far as 800 meters below the surface.

While these depths likely place them beyond the reach of conventional or nuclear warheads, military planners in the U.S. and Israel are believed to be evaluating options that would collapse access tunnels, air shafts, and entrances, effectively isolating these complexes and rendering them inoperable.

It's now the US vs China, everyone else needs to pick a side

Russia-Ukraine air war expands as Russia inches forward on the ground

In recent days, the war in Ukraine has intensified markedly, both on the battlefield and in the skies.

Ukraine has broadened its campaign of deep strikes inside Russian territory, targeting critical military infrastructure with increasing precision.

Separately, Ukrainian special forces claimed to have damaged two Russian fighter jets—a MiG-31K and either a Su-30 or Su-34—at Savasleyka airbase in the Nizhny Novgorod region, several hundred kilometers from the front lines.

On the ground, Russian forces have maintained pressure on Ukrainian positions across multiple axes, particularly in Donetsk and Zaporizhzhia oblasts, as well as in the Kherson and Kupiansk sectors. Despite repeated offensives northeast of Pokrovsk and southwest of Velyka Novosilka, Russian troops have made only minor progress, with Ukrainian defenses mostly holding firm.

Russia’s aerial bombardment of Ukrainian cities has meanwhile reached new levels of severity.

On 6 June alone, six civilians were killed and nearly 80 injured across multiple locations. In Sumy, FPV drone strikes on power infrastructure left over 20,000 residents without electricity.

Yesterday, Ukraine faced what its air force described as the largest overnight drone assault since the war began, with approximately 479 drones launched, of which around 460 were reportedly intercepted.

Russia’s growing reliance on AI-enabled loitering munitions, launched in coordinated waves to probe and overwhelm Ukrainian air defenses, signals a shift toward attritional warfare in the sky (not just on the ground). The war’s geographic scope is expanding, with Ukraine seeking to disrupt Russian command-and-control and aerospace operations far from the front, while Russia continues to degrade Ukraine’s infrastructure and erode civilian morale.

NATO fears of Russian threat

NATO Secretary-General Mark Rutte yesterday warned that Russia may target NATO territory within the next five years.

At present, Russian military production outpaces that of the entire alliance, generating more munitions in three months than NATO members produce in a year.

Rutte again called on member states to raise defense spending from the current 2% of GDP target to as much as 5%, with 3.5% allocated to core military capabilities and 1.5% to infrastructure and cyber defense.

Germany’s intelligence chief, Bruno Kahl, echoed concerns that Moscow is probing NATO’s cohesion. He warned of the potential use of covert operatives (so-called “little green men”) to sow uncertainty without crossing thresholds that would trigger full mobilization. Kahl suggested that Russia may believe Western resolve, particularly under Article 5 of the NATO treaty, is eroding. He reaffirmed Germany’s intent to provide Ukraine with long-range missile systems and enhanced defensive support.

European defense leaders, including Germany’s military establishment and the chief executive of Sweden’s Saab, have cautioned that increased budgets are being undermined by procurement delays.

To address the shortfall, the European Defence Industrial Strategy and parallel NATO initiatives have proposed allocating up to 50% of defense budgets to procurement by 2030, and leveraging a €1.5 billion fund to accelerate joint weapons manufacturing.

European Commission President Ursula von der Leyen has urged use of the EU’s emergency budget clause to bypass fiscal rules and redirect substantial funding toward defense, in light of President Vladimir Putin’s transformation of the Russian economy into a high-output military-industrial complex.

Since the February 2022 invasion of Ukraine, Moscow has retooled the Russian economy, putting it on a footing that will allow it to maintain a long term war footing.

Center of Gravity sign up link: https://www.namea-group.com/the-daily-brief