American and Chinese negotiators have agreed to a framework trade agreement in London, undoing some of the damage that occurred after the May agreement in Geneva. The most important bargaining points is access to Chinese rare earth minerals, and access to U.S. microchips. The U.S. is losing its leverage as Chinese development of advanced chips continues, but the U.S. is dependent on Chinese rare earths for almost all technology. While rare earths are available in many places, the Chinese have strategically built up the sector over decades, putting them well ahead of the competition. Meanwhile, as much of the world is moving towards recognizing a Palestinian state, Israel is putting in place measures to make it impractical and the U.S. ambassador to Israel pours cold water on the very idea of a state anywhere in historic Palestine. |
Center of Gravity
What you need to know
U.S. and China reach framework to revive trade truce
After two days of negotiations in London, U.S. and Chinese officials agreed in principle to a framework intended to revive their stalled trade truce and ease tensions between the world’s two largest economies. The proposed deal, which is similar to the accord reached in Geneva in May, is now awaiting formal approval by President Donald Trump and Chinese President Xi Jinping.
The framework reportedly includes mutual commitments to scale back tariffs and export controls, with a particular focus on rare earth minerals. These are critical inputs for sectors ranging from defense to automotive manufacturing.
The U.S. aims to restore access to Chinese rare earth exports, while China has pressed for the easing of American restrictions on advanced technology and chip-related goods.
Commerce Secretary Howard Lutnick and Treasury Secretary Scott Bessent led the U.S. delegation, while Vice Premier He Lifeng, a close confidant of Xi, led the Chinese team.
Officials declined to release full details, though Lutnick confirmed that the deal would roll back measures imposed after China delayed export licenses for rare earths.
These tensions escalated when the U.S. responded with new technology bans and visa restrictions on Chinese students.
The negotiations highlighted China’s strategic leverage as the dominant player in the rare earth supply chain, and its increasing willingness to use that dominance as a bargaining chip.
While officials called the London meeting a step forward, political mistrust remains deep, and the absence of concrete terms may signal further contention ahead.
Markets responded positively. European stocks climbed, with London’s FTSE 100 nearing record highs. Mining and industrial shares led gains, driven by hopes that a full-scale trade war might be averted.
However, the 10-year U.S. Treasury yield rose slightly, which is a worrying sign for the U.S. national debt, since this means interest payments will be higher for the U.S. government. It signals that bond buyers are less confident in U.S. economic and geopolitical strength.
The road to a broader agreement remains uncertain. The U.S. appears willing to lift some restrictions on lower-end microchips, but will maintain curbs on high-performance AI chips and advanced semiconductor design tools. Meanwhile, Beijing continues to support Huawei as a technological champion despite U.S. efforts to isolate it from global supply chains.
As both sides return to their capitals for approval of the framework, the outcome will hinge on whether each government is willing to compromise on its core strategic priorities. A resolution on rare earths may offer short-term relief, but the deeper technology and resource rivalry will persist.
Although rare earth minerals can be found in numerous locations worldwide, China has been strategically building up its control over the sector, from extraction to processing to export via extensive global supply chain networks. This long term planning has given it a vital point of leverage over the U.S. in these negotiations, despite China’s overall dire economic outlook.
Known Unknowns: The impact of U.S. tariffs on international trade & especially the U.S. bond market. How far the U.S. will take ‘maximum pressure’ on Iran - will it lead to military action. Relations of new Syrian government with international community & ability to maintain stability inside Syria. China’s triggers for military action against Taiwan. U.S. responses to China’s ‘grey zone’ warfare in the South China Sea and north Asia. Ukraine’s ability to withstand Russia’s war of attrition. The potential for the jihadist insurgency in Africa’s Sahel region to consolidate and spread.
U.S. Foreign & Trade Policy
American first
China and 53 African countries, along with the African Union Commission, jointly called on the United States to return to resolving trade disputes through “fair and respectful dialogue”, following a meeting in Changsha between Chinese Foreign Minister Wang Yi and African officials.
The statement criticized recent U.S. tariffs (announced on 2 April) including steep levies of up to 50% on exports from African nations such as Lesotho, Madagascar, Mauritius, Botswana, and South Africa.
The China-Africa bloc expressed strong opposition to any compromise deals that come at the expense of third parties (such as African countries) and reaffirmed support for equal and reciprocal negotiations. China also offered to implement zero-tariff measures for all 53 African nations with which it maintains diplomatic ties (excluding Eswatini, which recognizes Taiwan).
Amid dramatically slowing domestic growth, China has intensified engagement with Africa, both to support its state-owned infrastructure firms, gain access to resources, and to expand markets for electric vehicles and solar technology.
The Middle East
Birth pangs in the birthplace of civilization
Palestinian Authority outlines reform plan as France prepares summit
France has received a letter from the Palestinian Authority containing what it described as “concrete and unprecedented commitments” to reform, ahead of a summit in New York focused on Palestinian statehood. The letter, signed by Palestinian Authority President Mahmoud Abbas, includes a condemnation of the Hamas-led assault on Israel on 7 October 2023, a demand for the immediate release of hostages, and pledges to hold elections and restructure the Authority, according to excerpts shared with local media.
“Hamas will no longer govern Gaza and must relinquish its weapons and military infrastructure to the Palestinian Security Forces, who will oversee their removal from the occupied Palestinian territories, with backing from Arab and international actors,” Abbas was quoted as writing by the Élysée Palace.
The Palestinian Authority is trying to assert itself as the natural governing body for Palestinians, and wishes to return to Gaza (from which Hamas ejected it in 2006). However, while there is broad Arab and European support for this plan, Israel has consistently rejected it and the U.S. seems increasingly opposed to the very idea of a Palestinian state.
The message arrives as speculation mounts over whether President Emmanuel Macron might move to recognize the State of Palestine during a summit co-hosted by France and Saudi Arabia next week.
France said Abbas committed to organizing presidential and parliamentary elections within a year in an effort to “rejuvenate Palestinian governance.”
Given the continuing popularity of Hamas and other radical groups in the West Bank, and the huge decline in support for the Palestinian Authority, it is unclear whether Abbas’ Fatah party would win such elections.
Abbas, 89, has led the Palestinian Authority since the death of Yasser Arafat in 2004 and has remained in office despite growing criticism over his legitimacy.
In language uncharacteristically sharp for a senior Palestinian figure, Abbas referred to Hamas as “sons of dogs,” reiterating his demand for the release of hostages and the group’s disarmament.
If France proceeds, it would become the most prominent Western country to recognize Palestinian statehood. In 2024, Spain, Ireland, and Norway extended formal recognition, prompting a sharp diplomatic backlash from Israel.
Western states sanction Israeli ministers over inflammatory conduct
The United Kingdom, Canada, and other Western partners imposed sanctions on Tuesday on two Israeli cabinet ministers, citing repeated incitement of violence against Palestinians. The move reflects growing international censure of Israel’s actions in the West Bank and Gaza.
The sanctions target National Security Minister Itamar Ben Gvir and Finance Minister Bezalel Smotrich, who will face travel bans and asset freezes, the British government confirmed.
Both men are leaders of far-right parties that underpin Prime Minister Benjamin Netanyahu’s fragile coalition.
Their inflammatory rhetoric on Gaza and the West Bank has drawn widespread rebuke.
The coordinated measures were announced in a joint statement by the foreign ministers of Australia, Canada, New Zealand, Norway, and the United Kingdom. “We remain firmly committed to the two-state solution as the only viable path to long-term peace, security, and dignity for both Israelis and Palestinians, but that goal is imperiled by escalating settler violence and continued settlement expansion,” the statement read.
Hours after the sanctions announcements, Smotrich cancelled waivers that allowed Palestinian banks to interact with the Israeli financial system. This will have a devastating effect on the Palestinian economy.
U.S. envoy signals shift away from Palestinian statehood
Mike Huckabee, the U.S. ambassador to Israel, stated that Washington is no longer pursuing the goal of an independent Palestinian state, marking what observers regard as the clearest disavowal to date of a long-standing tenet of U.S. Middle East diplomacy.
Yesterday, Huckabee was asked whether a Palestinian state remains a U.S. policy objective. “I don’t think so,” he replied. Appointed by President Donald Trump, the former Arkansas governor went further, suggesting that any future Palestinian entity could be established within a Muslim-majority country, rather than on territory currently held by Israel.
“Unless there are significant cultural changes, there’s no room for it,” Huckabee was quoted as saying. Such changes, he added, are unlikely to occur “in our lifetime.” In a separate interview, Huckabee remarked, “Muslim countries have 644 times more land than Israel. So if there is genuine demand for a Palestinian state, perhaps one of them would offer to host it.”
Pressed about Palestinian aspirations in the West Bank, where roughly 3 million Palestinians live under Israeli occupation, Huckabee used terminology favored by Israeli officials: “Does it have to be in Judea and Samaria?”
Trump, during his first term, adopted a muted stance on the two-state solution and has given few indications of his position during his second term.
Pale Blue Dot
The planet will be fine, it’s the people who should be worried
May heat and drought data deepen global climate concerns
Spring has been exceptionally dry in northwestern Europe, and May 2025 ranked as the second-warmest on record globally, according to the Copernicus Climate Change Service.
Drought conditions have taken hold across much of Europe, including the United Kingdom, with water shortages expected unless significant rainfall arrives this summer. Farmers have begun reporting crop failures.
New data from Copernicus show that the global average surface air temperature in May was 15.79°C (60.42°F), 0.53°C (0.95°F) above the 1991–2020 baseline. The figure is also 1.4°C (2.52°F) above the 1850–1900 pre-industrial benchmark.
This breaks a 21-month stretch in which global temperatures remained above 1.5°C (2.7°F) relative to pre-industrial levels in all but one month.
Each of the past ten years ranks among the ten warmest since global records began in 1850.
Dry conditions persist across many parts of the world. In May 2025, much of northern and central Europe, southern Russia, Ukraine, and Türkiye recorded below-average rainfall. Northwestern Europe reported the lowest levels of precipitation and soil moisture since at least 1979. Similar dryness was observed across North America, the Horn of Africa, central Asia, southern Australia, southern Africa, and much of South America.
The month also saw exceptionally warm sea surface temperatures in the northeastern Atlantic, the highest ever recorded in that region, according to Copernicus.
New climate data point to escalating extremes across the globe. Scientists are urging the introduction of a new Category 6 designation for hurricanes, with recent storms surpassing 192 mph (309 kmh), well beyond the upper bounds of the normally-used scale. The Arctic is experiencing similar pressure: May brought record-high spring temperatures to Iceland and Greenland, with anomalies reaching 13°C (55.4°F), threatening cold-adapted ecosystems.
Worldwide, May 2025 ranked as the second-warmest May on record. Drought conditions in northwestern Europe are worsening, raising concerns over water supplies and agricultural productivity.
The World Meteorological Organization forecasts neutral El Niño–Southern Oscillation conditions through the summer, but warns of a rising probability of a La Niña phase later in the year.
Ocean warming remains a particular concern. May’s global sea surface temperature averaged 20.79°C (69.42°F), the second-highest ever recorded. As oceans heat, their ability to absorb carbon dioxide and excess heat diminishes, compounding global warming. The loss of Antarctic sea ice is already affecting emperor penguin colonies, which face sharply declining breeding habitats.
On land, hailstorms in the central U.S. are becoming more frequent and destructive. Researchers estimate they now cause around $10 billion in annual damage. Wildfires, too, are growing in intensity. Canada’s 2025 fire season has burned more than 3.2 million hectares so far, sending plumes of smoke across North America and into Europe, deteriorating air quality and displacing thousands.
Urban areas are not exempt. San Antonio, Texas, has seen its average summer temperature rise by 4°F (2.2°C) since 1970, emblematic of a broader warming trend across U.S. cities that is straining public health infrastructure. A global survey of ocean scientists has warned that marine biodiversity faces mounting threats from warming waters, pollution, and overfishing.
International climate diplomacy continues, with upcoming discussions at the 2025 G7 summit expected to press for stronger global responses to the worsening crisis.
Center of Gravity sign up link: https://www.namea-group.com/the-daily-brief
What happened today:
1184 BC – Traditional date of the fall of Troy. 1776 – Continental Congress appoints Thomas Jefferson and others to draft Declaration of Independence. 1901 – New Zealand annexes the Cook Islands. 1955 – First draft of the European Convention on Human Rights becomes effective. 1963 – Buddhist monk Thích Quảng Đức self-immolates in Saigon in protest of religious persecution. 1971 – United States ends trade embargo against China, beginning normalization. 1993 – U.S. Supreme Court rules in favor of Native American religious rights in Church of Lukumi Babalu Aye v. Hialeah.
