In my last newsletter, I raised the question as to whether we were living through a transformational moment or more of the same. Now, weeks later, the answer seems stark: we are witnessing profound and accelerating movement across the globe including emerging and complex dynamics in the Middle East, ever-increasing stakes in Ukraine, and heightened tensions with China. Meanwhile, in the U.S., anxiety around trade and the economy continue to grow, and is being compounded by the ongoing political friction.
On October 13, President Donald Trump touched down in Israel to celebrate an emerging dynamic in the Middle East. The president’s trip came days after Israel and Hamas announced a ceasefire. As a key condition of the ceasefire, on October 13, Hamas released all remaining Israeli hostages in exchange for Israel’s release of Palestinian detainees. This action marks the most significant breakthrough in months of stalled peace negotiations. While a welcome sign two years into the conflict, the deal remains conditional and highly fragile.
The war in Ukraine has entered a precarious new phase, with President Trump set to meet with Ukrainian President Volodymyr Zelensky later today, and he will again meet with Russian President Vladimir Putin to discuss the end of the Ukraine war. Russia’s offensive continues to gain limited but bloody ground, while Moscow is escalating its campaign to cripple Ukraine’s energy and civilian infrastructure before winter. The stakes continue to rise as global support for Ukraine’s defense is tested. China’s quiet but active support for Russia is complicating NATO’s strategy. Beijing is materially aiding Moscow, most notably through a surge in exports of fiber-optic cables and batteries that are essential for Russia’s drone capabilities. This growing alignment between Beijing and Moscow represents a major geopolitical shift.
China has aggressively and shrewdly moved a number of pieces on the geopolitical chessboard. On October 9, China announced new restrictions on rare earth mineral exports which sparked alarm as countries race for supplies. This move comes amid a broader effort to compete for global talent, highlighted by the recent launch of China’s new K visa for high-skilled international STEM workers, created after the Trump administration announced a new $100,000 fee for U.S. employers who hire workers on the U.S. H-1B visa, an initiative the U.S. Chamber of Commerce sued to block on Thursday.
The United States and China competition is also being felt in their deferred but ongoing tariff war. The August 12 reciprocal tariffs – which threatened to push rates past the 100% mark for both nations – were postponed. The new deadline for the tariffs to “snap back” is now November 10. After president Xi’s recent announcement of broad Chinese export controls, president Trump followed up with threats to revamp the 100% tariffs as early as November 1. While the postponement eased any immediate market shocks, tit-for-tat threats continue to complicate negotiations. Both leaders are set to meet in person before any new tariffs are officially announced, with the lower, pre-pause tariffs remaining in place for now.
Further adding to U.S. economic uncertainty, national level tariffs did go into effect for dozens of countries in August. Their legality, through the International Emergency Economic Powers Act (IEEPA), is currently under review by the U.S. Supreme Court, with arguments scheduled for November 5. If the court rules against the Trump administration, the tariff policy could be overturned, potentially prompting retroactive refunds on some customs duties already paid.
As these trade skirmishes play out, Americans’ confidence in the U.S. economy continues to wane. Outside of resilience in select sectors, like AI investment, the United States is already feeling the effect of tariffs on growth and consumer prices. The OECD is projecting a slowdown to 1.5% GDP growth in 2026. Meanwhile, KPMG anticipates that most companies hit by tariffs plan to raise prices in the next six months. A new Ipsos poll finds that nearly 50% of Americans already do not have money left over after paying their bills.
The U.S. agriculture sector has been particularly hard hit with both increasing input costs and fewer international exports. American soybean farmers, in particular, are impacted after Chinese buyers did not make a single purchase this year—an unheard-of anomaly in the last two decades. Despite economic impacts at home, on October 9, U.S. Treasury Secretary Scott Bessent announced a $20 billion bailout for Argentina—a major soybean exporter and direct competitor to American farmers.
In North America, the U.S. formalized 25% tariffs on all imports from Mexico and 35% for Canada (with lower rates for energy and exemptions for USMCA-compliant goods) in August. This comes as China has significantly expanded its trade footprint in Mexico over the last couple of years. On October 9, Mexican President Claudia Sheinbaum announced that Mexico’s Congress would pause proposed tariff hikes for goods from China, a move analysts initially saw as an attempt to placate President Trump as negotiations with Mexico continue.
Canadian Prime Minister Mark Carney is negotiating as well – most recently holding a bilateral meeting in Washington with President Trump on October 7. There, Carney announced that both countries had “come a long way” over the course of the last few months. While negotiations remain ongoing, the string of pressure points between the two countries have led analysts to conclude that “shared values and shared objectives…can come undone.”
Ongoing North American trade tensions are now encouraging broader expressions of solidarity between Mexico and Canada. During their bilateral meetings at the G7 in June and again during Carney’s trip to Mexico in September, both countries vowed to strengthen bilateral ties. On September 18, Sheinbaum and Carney announced a Comprehensive Strategic Partnership, which includes new maritime routes to avoid passing goods through the United States. Potentially seen by the U.S. as an alternative to more comprehensive North American economic integration, President Trump indicated on October 6 that he might pursue separate, bilateral agreements during the USMCA review rather than the current trilateral framework.
All three countries are currently preparing for the contentious 2026 USMCA review, which will begin next July. As of September, the North American nations had opened their domestic consultation processes. The Trump administration is expected to focus on specific concessions around auto content rules and supply chain security but also emphasize less economically focused topics like migration and drug trafficking. Much is still to be seen as all three countries prepare for negotiations next year, but at this point, no outcome is fully off the table.
Finally, on the security front, organized criminal groups in Latin America and the Caribbean increasingly find themselves in the Trump administration’s crosshairs. On October 2, a Pentagon memo noted President Trump’s declaration that the United States is in an armed conflict with drug cartels. This follows the president’s repeated threats to invade Mexico, most recently in August. Relatedly, the United States has launched a number of recent airstrikes in the Caribbean Sea against boats allegedly trafficking drugs, causing backlash from Latin American leaders, including Colombian President Gustavo Petro, and earlier this week President Trump acknowledged that he had authorized covert CIA action in Venezuela.
Clearly uncertainty and volatility remain central features of the current and complex geopolitical environment, and that’s a good reason to stay in touch. Hope you will follow me via Facebook, Twitter, or LinkedIn.
Editor's Note: The above commentary was penned by Antonio Garza, former U.S. Ambassador to Mexico. The commentary first appeared on his website. It appears in the Rio Grande Guardian International News Service with the permission of the author.
