US-China trade and tech war escalates with de-escalation signals; regulatory tightening and selective openness; new fronts in Arctic and AI

US restores Hong Kong's special trade status; IEA warns $6.5T rare earth risk; US lawmakers fold chip control bills into NDAA; US House approves $500M military aid to Taiwan; bipartisan Senate bill targets pharma supply chains. Trump accuses China of election interference. Nvidia H200 shipments trivial; Huawei substitution accelerates. ASML CFO confirms China 20% of 2026 revenue; MATCH Act threatens DUV sales. China's rare earth controls approach Nov 10 deadline; dysprosium/terbium prices surge eightfold. China considers tighter export controls on AI models and chips, consulting Alibaba, ByteDance, Zhipu AI; now also targeting AI model weights and training data for export controls, directly responding to Kimi K3's open-weight success. Potential restrictions on TSMC/Qualcomm producing Chinese-designed chips. China's heavy rare earth exports to Japan and US at zero in June. Rare earth magnet exports to US still 20% below pre-trade war levels. US imposes new visa curbs on Chinese journalists; Beijing threatens retaliation. Jingye threatens BITs claim after UK nationalizes British Steel. China's foreign ministry warns UK over investor confidence. EU fines AliExpress €550M under Digital Services Act. US and China to hold first official AI talks in September. US Congress grills BIS over H200 sales to Chinese blacklisted firms, deepening enforcement rift. Arctic competition: US Coast Guard monitors Chinese icebreakers in Bering Sea for first time in 2026. Bessent warns China could face sanctions over AI IP theft—new escalation beyond chip controls. CSIS analyst argues rare earth clampdown backfired, accelerating allied diversification. Rubio and Wang Yi held talks at ASEAN meeting amid SCS tensions. Trump administration directly accuses Moonshot AI of smuggling Nvidia Blackwell chips via Thailand and mass distillation—imminent sanctions threat. US restarts export controls on CNC machine tools, widening tech chokepoint beyond chips. Senate panel advances bill to block Chinese vehicles, potentially barring Mercedes-Benz due to Chinese ownership. China signs 29 nations into rival AI bloc at WAIC, Xi debuts; GLM-5.2 open-weight released. Critical minerals report details China's selective rare earth licensing system, price disparity (yttrium $7.88/kg in China vs $1,175 in Europe). New bipartisan bill targets Chinese AI companies for IP theft. Beijing seeks opinions on $30B tariff cuts with US—positive de-escalation signal. China retaliates against EU Russia sanctions by blacklisting 14 European entities (including Rheinmetall)—escalating tit-for-tat export controls. China's rare-earth restrictions push Japan to mine Pacific seabed at 5,569m depth. US-China AI safety dialogue threatened by Moonshot sanctions. AI distillation emerges as new flashpoint—Anthropic accuses Moonshot of industrial-scale IP theft. Bipartisan lawmakers target Chinese solar 'blue wafers' mislabeled to dodge tariffs. US announces new Section 301 tariffs on 60+ countries including China (10-12.5%), replacing expired temporary duties—major trade escalation. US favors selective bans over blanket restrictions on Chinese open-weight AI models, despite private lobbying by Anthropic/OpenAI. Tech giants (Nvidia, Microsoft, Meta, OpenAI) publicly oppose AI curbs, warning overregulation could cede ground to China. China accuses US of 'AI hegemonism' and threatens retaliation over Moonshot distillation allegations. DOJ appears open to export control declinations even for China cases—pragmatic shift. US pledges to cap replacement tariffs at 20%. China opposes new US forced labour tariffs, calls for cancellation. Brazil and China strengthen trade ties amid US tariffs. New: Trump administration bans Chinese hardware (robots, power inverters) citing AI race and Unitree backdoor—widens chokepoint beyond chips. Nvidia Blackwell export probe intensifies; BIS scrutinizes Moonshot Thailand shipments. US looks to boost anti-China spending by hundreds of millions ($175.8M for undersea cables, $340M+ counter-China projects). Dario Amodei calls for harder chip bans but acknowledges they accelerate China self-sufficiency. BIOSECURE Act raises IP risk for pharma deals in China. How tariffs reshape industrial metals: copper to US, China exports nickel/tin/zinc, iron ore dependent on weak construction. China exports lowering inflation in non-US developed markets—disinflationary effect challenges tariff efficacy.