What you need to know

In the increasingly acrimonious divorce between the United States and the People’s Republic of China, both sides are escalating their demands while urging allies and neighbors to take sides.

As we previously reported, China has restricted the export of critical rare earth minerals to the U.S. It has also prohibited the import of Boeing parts—a move that appears self-defeating, given the reliance of its domestic and international aviation sectors on the U.S. aerospace giant. Beijing also shows little inclination to reduce its retaliatory tariffs, which remain somewhat lower than the sweeping levies imposed by Washington on Chinese goods.

The United States has, for its part, intensified scrutiny of its supply chain for critical mineral imports. President Donald Trump has ordered a formal investigation into the national security risks posed by reliance on foreign sources of rare earths and other essential inputs. The Presidential directive reflects long-standing concerns over U.S. supply chain vulnerabilities, particularly as China tightens its grip on a sector it dominates. Rare earths—vital for everything from consumer electronics to advanced weaponry—are overwhelmingly refined in China, which controls over 90% of global processing capacity. In response to U.S. tariffs, China has introduced fresh export restrictions on key rare earth materials, now subject to government approval for overseas shipment.

Further escalating tensions, Hong Kong has suspended parcel deliveries to and from the United States. The move follows new U.S. regulations eliminating long-standing exemptions for low-value shipments, replacing them with steep new tariffs. Hong Kong authorities decried the policy as punitive and warned consumers to expect higher costs, with parcels now routed through private couriers. Maritime shipments have already ceased, and a halt to air mail will follow on 27 April. Letter post will continue unaffected. Washington has framed the tariff hikes—set to reach $200 per parcel by June—as a crackdown on online retailers exploiting tax loopholes.

Meanwhile, Boeing shares fell after reports surfaced that Chinese regulators had instructed domestic airlines to suspend all new aircraft deliveries from the U.S. manufacturer. The move, if confirmed, would deal a serious blow to Boeing, already contending with years of financial losses, safety controversies and dwindling orders from China since 2018. While officials and the company offered no public comment, Trump claimed online that China had walked away from a previously agreed deal. Deliveries are especially critical for Boeing, as they trigger final payments. A growing inventory of undelivered planes—especially to buyers in China and India—adds to the pressure on Boeing. The suspension comes at a delicate moment for Boeing, which remains one of the U.S. economy’s largest exporters and a significant employer.

Amid the turmoil, China’s economy delivered a surprise in early 2025, posting stronger-than-expected growth. Official data show gross domestic product expanded by 5.4% in the first quarter, buoyed by an export surge ahead of new U.S. tariffs taking effect. Chinese officials acknowledged external headwinds and tepid domestic demand but insisted the economy remains fundamentally sound.

Chinese retail sales and factory output both exceeded expectations. Even so, economists remain cautious. UBS and Goldman Sachs have lowered their annual growth forecasts, citing the likely impact of elevated tariffs. Beijing is expected to respond with fiscal and monetary stimulus. At the same time, it is quietly shifting trade focus away from the U.S. and toward Southeast Asia, which has become China’s largest export market. The appointment of a new trade envoy and recent overseas visits by Xi Jinping suggest a broader diplomatic push to position China as a more dependable partner in an increasingly polarized global economy.

Birth pangs in the birthplace of civilization

President Donald Trump has again warned Iran that failure to abandon its nuclear ambitions will invite a severe response, including potential strikes on nuclear facilities.

Trump claimed that Iran is nearing nuclear capability—a view shared by the International Atomic Energy Agency.

A second round of nuclear talks between the two sides is scheduled for Saturday in Rome, Italy. U.S. Vice President J.D. Vance will also be in Rome, although it is unclear whether he will participate directly in the negotiations, which are being led by U.S. envoy Steve Witkoff.

Italian Prime Minister Giorgia Meloni, widely seen as Trump’s closest European ally, is hosting the talks. Italy had felt sidelined during the 2015 nuclear negotiations and is now positioning itself as a European representative in the current round. Iran seeks sanctions relief while avoiding U.S. military retaliation. French Foreign Minister Jean-Noël Barrot said on Monday that France, Germany, and Britain must remain vigilant to ensure any agreement aligns with European security interests.

It’s now the U.S. vs China, everyone else needs to pick a side

Indonesia’s Defense Minister Sjafrie Sjamsoeddin has assured Australia that Jakarta has no plans to allow Russian aircraft to be based in its eastern province of Papua, rejecting claims that Moscow had made such a request. The defense publication Janes reported that Russia had sought access to the region, which lies just 1,200km (750 miles) from Darwin in northern Australia. Australian Defense Minister Richard Marles said his Indonesian counterpart called the report “incorrect.”

Darwin hosts a U.S. Marine Corps rotational force and is undergoing upgrades to accommodate U.S. bombers. Australian Prime Minister Anthony Albanese confirmed that his government had raised the issue with Indonesia, which became a political flashpoint on Tuesday amid the federal election campaign.

Even if such a request had been made, it would likely be rejected. Indonesia has traditionally resisted foreign basing arrangements and steered clear of aligning with great powers. The Non-Aligned Movement was basically founded at the 1955 Bandung Conference in Indonesia, and non-alignment has been a foreign policy constant in Indonesia since then.

While Australia has been strengthening defense ties with Jakarta, Russia has also increased its outreach. Russian Defense Minister Sergei Shoigu visited Indonesia in February, and the two countries conducted joint naval exercises in the Java Sea in November.

On Tuesday, China accused the United States of launching sophisticated cyberattacks on critical infrastructure during the Asian Winter Games held in February. The allegations, made by police in the northeastern city of Harbin, also implicated the University of California and Virginia Tech, according to state news agency Xinhua. U.S. National Security Agency officials were named and accused of having “repeatedly” targeted essential industries. The Chinese Ministry of Foreign Affairs later repeated the accusations and urged the U.S. to take responsibility.

In March, the U.S. indicted a group of Chinese hackers allegedly responsible for intrusions into the Defense Intelligence Agency, the Department of Commerce, and the foreign ministries of Taiwan, South Korea, Indonesia, and India.

Washington has regularly accused Chinese state-backed actors of cyber operations targeting vital infrastructure.

The United States flew long-range B-1B bombers over South Korea on Tuesday in a show of force, following recent threats from North Korean leader Kim Jong Un to resist U.S. efforts to end Pyongyang’s nuclear program. North Korea has routinely reacted angrily to such deployments, which it views as direct threats to its regime.

The South Korean Ministry of Defense confirmed that its F-35 and F-16 fighters also took part in the drills. Camp Humphreys, a major U.S. base in South Korea, hosts 28,500 American troops. Last week, Kim’s sister accused the U.S. and its Asian allies of attempting to “denuclearize” North Korea, a term she used derisively.

The Philippine military said on Tuesday that its upcoming joint exercises with the United States would serve as a rehearsal for national defense. The U.S. is deploying some 9,000 troops, while 5,000 Filipino soldiers will participate alongside 200 Australians and observers from Japan’s Self-Defense Forces. Brigadier General Michael Logico described the drills as a “full battle test,” though they will involve fewer troops than last year’s exercise.

The exercises will span from Palawan to the Luzon islands in the north, near contested waters in the South China Sea. Tensions between the Philippines and China have flared in recent months over disputed atolls and shoals that both countries claim within Manila’s Exclusive Economic Zone.

America First

South Korea announced on Tuesday a $23.25 billion package to support its semiconductor industry, amid mounting concern over U.S. tariffs. The package—26% larger than last year’s allocation—will include low-interest loans, subsidies, and infrastructure investments such as new underground power transmission systems.

Both the South Korean government and private industry worry they are falling behind global rivals such as Taiwan, which dominates production of cutting-edge semiconductors used in artificial intelligence and military systems. Samsung, the world’s largest memory chipmaker, is based in South Korea. The country is also a major exporter of semiconductors and automobiles to the U.S., which has announced a 25% tariff on South Korean imports—though this has been temporarily suspended for 90 days.