WTO RAISES ITS FORECAST FOR 2025 AND WARNS OF A WEAKER 2026 (07.10.2025)
The latest report from the World Trade Organisation (WTO) projects a significantly more favourable global merchandise trade performance for 2025 than in previous estimates. Volume growth now stands at 2.4%, up from 0.9% in August and 0.2% in April, as a result of a 4.9% increase in the first half of the year that far exceeded forecasts.
This strength, however, is considered temporary. For 2026, the WTO anticipates a slowdown to 0.5%, from 1.8% estimated in August, suggesting a temporary shift in the impact of political uncertainty and tariff increases. Despite this, the overall balance for 2025-2026 is slightly more favourable than the previous one, with a cumulative forecast of 2.9% compared to the previous 2.3%.
The upward revision in trade responds to a more benign macro environment, disinflation and fiscal support, and the strong pull of AI-related goods. These products grew strongly in the first half of 2025 and, despite their lower relative weight, accounted for a substantial part of the total increase, reflecting a structural investment wave in digital infrastructure and a productive reorganisation with Asia as the main supply hub.
The conjunctural momentum was reinforced by frontloading in North America, with imports brought forward in anticipation of tariff risks, an effect that would fade with the normalisation of inventories and moderation of GDP, reducing the regional contribution in 2025 and 2026. In contrast, Asia and Africa would lead exports, and less developed countries would increase their purchases significantly. In services, the cycle is moderating due to lower traction in transport and travel, although digital delivery services remain in the lead, sustained by demand for AI solutions, digital transformation and cybersecurity.
https://www.wto.org/english/news_e/news25_e/stat_07oct25_e.pdf
CHINA TIGHTENS CONTROLS ON EXPORTS OF RARE EARTHS AND RELATED TECHNOLOGICAL EQUIPMENT (09.10.2025)
China has announced tighter controls on the export of rare earths and, particularly significantly, on technologies related to their processing. The Ministry of Commerce has specified that the technology used in extraction, smelting and separation, as well as the equipment and knowledge necessary for the manufacture of high-performance magnets, will be subject to express authorisation by the government. The new framework restricts access by foreign companies linked to the defence industry and subjects applications related to advanced semiconductors to case-by-case assessment.
The decision comes after several months of apparent distension in the trade war initiated by the Donald Trump administration, a period in which certain licences had been reactivated and the truce reached in May had been extended. Its timing, on the previous days of a meeting between Xi Jinping and Trump at a regional summit in South Korea, suggests a strategic use of export policy as a bargaining chip with the United States.
Rare earths and other critical minerals are essential inputs for the production of magnets that power civil and military technologies, including wind turbines, medical devices and electric vehicles. China’s specific weight in these chains is decisive: the country dominates processing and accounts for most of the world’s refined production, giving it a structural advantage in managing bottlenecks and setting conditions for access.
The regulatory reinforcement also incorporates a sensitive component by emphasising so-called dual-use items, which are susceptible to both civilian and military applications. Since Russia’s invasion of Ukraine in 2022, various Western powers have accused Beijing of indirectly facilitating Moscow’s access to such products, a claim that the Chinese authorities have repeatedly rejected. At the same time, shipments of rare earth magnets have slowed amid growing tensions, increasing uncertainty among Western manufacturers and reigniting risks to supply continuity.
USTR REACTIVATES GLOBAL DEBATE ON STEEL OVERCAPACITY (17.10.2025)
Washington is promoting a new phase of coordination against global steel overcapacity. At the ministerial meeting of the Global Forum on Steel Excess Capacity, Ambassador Jamieson Greer supported the creation of a joint framework to address distortions and called on like-minded partners to take comparable measures to restore a level playing field for workers and producers.
The intervention was well received by the US steel industry. Associations such as AISI, SSINA, the Steel Manufacturers Association and the Committee on Pipe and Tube Imports applauded the leadership shown and agreed on the diagnosis: current trade rules are not sufficient to discipline policies that fuel overcapacity, with special mention of China. Therefore, they called for a new framework for action that combines innovative approaches and verifiable commitments to address causes and effects.
The tone of the sector suggests broad support for a coordinated response that includes trade and regulatory tools, as well as cooperation between governments to stabilise the steel value chain. The stated priority is to protect domestic employment and investment, reduce non-market practices and strengthen the resilience of the sector, aligning like-minded countries in a common action plan.
THE EU WANTS TO COORDINATE TARIFFS AGAINST CHINA WITH THE G7 OVER RARE EARTH (19.10.2025)
The European Union is preparing a coordinated response with the G7, including the option of tariffs, in response to Beijing’s new controls on rare earth exports, which China justifies on national security grounds and which are in addition to previous restrictions on graphite, germanium and gallium. The Chinese scheme introduces compulsory licences for importers of minerals, refined metals, alloys and components used in magnets, immediately increasing regulatory complexity for European buyers. Brussels is seeking the support of its partners in the European Parliament to coordinate a joint response that protects the general European interest and avoids collateral effects on industry, without ruling out a tougher stance in line with the US position, which already applies tariffs of over 50% and is considering new rounds.
The context accentuates European vulnerability: China accounts for nearly 70% of extraction and around 90% of global rare earth refining capacity, so any restrictions have a direct impact on supply chains critical to technological deployment and the green transition. The European Commission, which for years has been promoting a strategy of ‘risk reduction’ without severing ties, interprets the move as a qualitative leap in an already tense relationship, with possible elements of retaliation against EU measures on steel. In addition, Beijing is incorporating clauses that discourage resale by third countries, limiting commercial room for manoeuvre and forcing the EU to accelerate alternative sourcing and strengthen coordination with like-minded partners.
At the same time, diplomacy is intensifying. Trade Commissioner Maroš Šefčovič has announced contacts with his Chinese counterpart for next week to discuss the new licensing framework, while several European capitals, such as Copenhagen, are advocating a more robust and transatlantic stance. The geopolitical agenda adds pressure: at the end of the month, Xi Jinping and Donald Trump will meet in South Korea in a climate marked by trade countermeasures and signs of regulatory tightening. In this scenario, the EU aims to combine firmness and pragmatism: preserving industrial competitiveness, ensuring the predictability of strategic material supplies and, if necessary, activating defensive instruments coordinated with the G7 to contain the escalation and restore more balanced competitive conditions.
US CONSIDERS SUSPENDING NICARAGUA FROM CAFTA AND IMPOSING 100% TARIFFS ON ITS EXPORTS (20.10.2025)
The US is considering severe trade sanctions against Nicaragua following an investigation by the Office of the US Trade Representative (USTR) under Section 301. The report concludes that the Ortega-Murillo government’s policies on labour rights, human rights and the rule of law are ‘unreasonable’ and restrict trade. Among the options proposed are: suspending all or part of Nicaragua’s benefits under CAFTA-DR (Free Trade Agreement between the United States, Central America and the Dominican Republic) and applying tariffs of up to 100% on all or certain Nicaraguan exports, with immediate or gradual implementation over 12 months.
The United States describes practices such as confiscation of NGO and company assets, political use of the justice system and arbitrary customs procedures that make trade more expensive and slow down trade. It also warns that more than half of Nicaraguan exports depend on the US market and that the US has a bilateral deficit with Nicaragua within CAFTA-DR. If confirmed, the Trade Representative, under presidential direction, could take ‘all appropriate and feasible action’ to eliminate these practices.
However, Nicaraguan opponents described the proposed measures as the toughest yet and see them as legitimate pressure on the regime, although they warn of their potential impact on workers and exporters. If implemented, Nicaragua would face the suspension of preferences, widespread tariff increases and a blow to investment in its main trading partner.
EE-UU evalúa suspender a Nicaragua del CAFTA e imponer aranceles del 100% a sus exportaciones
THE EUROPEAN CENTRAL BANK (ECB) WARNS OF DOLLAR RISKS FOR EUROPEAN BANKS IN A VOLATILE TARIFF ENVIRONMENT (21.10.2025)
The ECB’s chief economist, Philip Lane, warned that a tightening of dollar funding, which is key to global markets, could put pressure on eurozone banks in a context of tariff turbulence and tensions with US economic policy. Although European banks have weathered recent episodes well, their exposure to the dollar remains high and sudden changes in these positions could translate into a credit restriction for the real economy.
Lane stressed that banks have strengthened their dollar liquidity buffers: the liquidity coverage ratio (LCR) in that currency has risen from below the regulatory threshold to over 110% today, which helped them withstand April, when Treasury sales coincided with the depreciation of the greenback, reducing their usual hedging. Even so, the episode has altered the “algebra” of liquidity management for the rest of the year and raises the risk of tensions on both sides of the balance sheet.
Given the dependence on dollar funding obtained from US banks and funds, which is more volatile than deposits, the ECB’s supervision division is calling for monitoring and reducing mismatches between assets and liabilities in that currency. There has even been talk of pooling dollar reserves among central banks outside the US, although this would be of limited effectiveness in the face of a gigantic dollar lending market. The main safety net continues to be the Federal Reserve’s swap lines with other central banks, activated since the last crisis to provide dollars when the market closes.
US AND CANADA CONSIDER TRADE AGREEMENT AHEAD OF APEC (21.10.2025)
Canadian Prime Minister Mark Carney urged caution in response to a report in The Globe and Mail suggesting that a sectoral trade agreement with the United States, focusing on steel and aluminium, could be ready for signing at the APEC summit in South Korea at the end of the month. ‘I wouldn’t overstate it,’ Carney said, confirming that talks are ongoing and that he plans to meet with President Donald Trump at the summit. The White House and the Department of Trade did not comment on the report.
According to the newspaper, Ottawa and Washington are working on an understanding that would ease some of the tariff pressure imposed by the US earlier this year on steel, aluminium and cars, although sources consulted suggest that there is no willingness at this stage to include cars or the long-running softwood lumber dispute. For steel, Canada would likely have to accept quotas in exchange for a reduced US tariff; in addition, critical minerals would be left out of these talks.
It is important to note that Canada has recently offered tariff relief for certain steel and aluminium imports from both the US and China, in order to alleviate the impact on local industries hit by a double trade war. In political and economic terms, a limited agreement on metals would help de-escalate bilateral tensions and give breathing space to manufacturers on both sides of the border, but it would leave the more complex issues for later: automobiles, wood and coordination on strategic value chains (e.g., critical minerals). Carney had already indicated after a visit to Washington that there was a ‘convergence of views’ with Trump on the future of the steel and aluminium sectors, but Ottawa’s message now is one of caution until it sees a final text and conditions, including the level of quotas and the timetable for dismantling tariffs, which can be submitted for approval at APEC.
SPANISH EXPORTS TO THE US PLUMMETED BY MORE THAN 30% IN AUGUST, AFTER THE NEW TARIFFS CAME INTO FORCE (23.10.2025)
Spanish exports to the United States plummeted in August with the entry into force of the new tariff on European goods. The decline, of more than a third compared to the previous month, reduced the weight of the US market in the total and left the monthly value below one billion euros. Spanish purchases from the US also moderated, after months of advance imports and in an environment of high regulatory uncertainty.
The setback was not only bilateral: the month was weak for the foreign sector as a whole, with declines towards European partners and weakness in Asia. China did not act as a refuge, and India did not compensate either. In contrast, Latin America provided oxygen and gained relative weight; Oceania and Africa also held up, albeit with less intensity, with Algeria’s rebound following the normalisation of relations standing out. Among specific destinations, Malta and Singapore performed well, while France, Belgium, Israel and Ireland lost momentum.
At the same time, total imports fell less than exports, widening the monthly trade deficit. In the year to August, foreign sales barely advanced compared to purchases, which did grow, leading to a significant deterioration in the external balance. The largest imbalances continue to be concentrated in China, the United States and Germany, while Spain maintains significant surpluses with France, Portugal and the United Kingdom. Despite this context, the Spanish economy continues to be among the fastest growing in its environment, with domestic demand as the driving force and business margin to diversify markets and strengthen supply chains.
TRUMP TO MEET XI ON 30 OCTOBER AT APEC SUMMIT (SOUTH KOREA) (23.10.2025)
Trump and Xi will meet on 30 October in Busan, on the sidelines of the APEC summit, in their first face-to-face meeting since 2019. The White House has not disclosed the agenda, but Trump has hinted that he will seek broad agreements on trade and nuclear energy and will address China’s purchase of Russian oil. The meeting comes amid escalating tensions, with US tariffs of 100% on Chinese exports set to take effect two days later in response to Beijing’s new controls on rare earths and related technologies.
The meeting comes with markets watching for possible signs of distension or, conversely, confirmation of a hard line. A gesture of moderation on tariffs or controls could ease tensions in critical supply chains from semiconductors to magnets for clean technologies, while a clash would reinforce the risk of partial decoupling. Trump’s tour also includes meetings with the leaders of Malaysia, Japan and South Korea, which could shape regional coordination on technology and trade.
Trump to meet with Xi on 30 October – POLITICO
FIRST MEETING OF THE EU-NEW ZEALAND FTA TRADE COMMITTEE (25.10.2025)
The EU and New Zealand held the first meeting of the Trade Committee of their Free Trade Agreement and noted tangible progress in the relationship: bilateral trade reached a record high during the first year of implementation. Both sides committed to strengthening cooperation to defend rules-based trade, deepening the Agreement’s institutional mechanisms, consultative groups, civil society forum, arbitrators, and opening new chapters in areas such as Maori trade and sustainable food systems.
The statement emphasises sustainability and the climate agenda: exchanges on environmental policy, coordination on the circular economy and cooperation were agreed so that the implementation of the European Deforestation Regulation does not have a disproportionate impact on New Zealand producers. Convergence in multilateral forums, WTO reform, a moratorium on tariffs on electronic transmissions, fisheries, and the relevance of trade for decarbonisation were also highlighted, linking to the High-Level Dialogue on Climate.
In economic and technological matters, the parties will prioritise the reduction of non-tariff barriers through mutual recognition, the securing of supply chains for critical materials, including participation in strategic EU projects and the development of recycling in New Zealand, and digital cooperation on cross-border identity and credentials. The agenda builds on the momentum of the business ecosystem following the first EU-New Zealand Summit and sets the Committee meeting in Brussels in 2026 as the next milestone.
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In Madrid, 31 October 2025
International Trade and Sanctions Department
Lupicinio International Law Firm
