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What We’re Watching: “Big Beautiful” bill heads for the Senate, UK gives up Chagos Islands, Taiwan pivots to drones
Leading Republican senators during their weekly briefing in the US Capitol in Washington, D.C., USA, on May 20, 2025.
House passes Trump’s tax agenda, but senators will now have their say
By a margin of just one vote, the US House early on Thursday passed a budget bill containing President Donald Trump’s tax agenda, which centers on making his 2017 tax cuts permanent. Some last-minute changes to the bill helped to get it over the line: House Republicans increased the SALT-cap to $40,000 and accelerated the introduction of work requirements for Medicaid. But can the GOP get the bill through the US Senate? Lawmakers in the upper chamber are already plotting changes to the legislation...
You can Chagos your own way: UK hands islands back to Mauritius, leases back base
More than two centuries after taking the Chagos Islands from France, the United Kingdom relinquished the Indian Ocean archipelago to Mauritius, but will continue to lease a US-UK military base there, on the island of Diego Garcia, for another 99 years. The UK says the deal, which creates a 24-mile buffer zone around the base, is meant to ensure its long-term security amid growing Chinese aggression in the area. US Secretary of State Marco Rubio welcomed the deal.
Taiwan adds new drone units as part of shifting military strategy
Ever wary of a potential Chinese invasion, Taiwan announced that it will introduce its first-ever drone units this year. The move is part of Taipei’s evolving strategy of effectively deterring Beijing rather than preparing for a direct fight. “Overall, the cross-strait military balance still tilts toward China’s favor, since China spends a lot more on defense,” says Eurasia Group regional expert Ava Shen. “So it’s more pragmatic for Taiwan to be a ‘porcupine,’ so to speak.”Then-Bank of England Governor Mark Carney shakes hands with then-Chinese Premier Li Keqiang before the 1+6 Round Table Dialogue meeting at the Diaoyutai State Guesthouse, in Beijing, China, on September 12, 2017.
Amid a trade war and annexation threats, most eyes are on the US-Canada relationship right now. But the future of Canada’s relationship with China, the world’s second-largest economy, is also an open question, and observers wonder what rookie Prime Minister Mark Carney is going to make of it.
During Canada’s recent election, Carney said China was the country’s biggest security threat. On trade, the Liberal Party’s platform mentioned the Southeast Asian grouping ASEAN and the South American trade bloc MERCOSUR as potential partners for new trade deals, but not China. In fact, the party’s only mention of the superpower was in the context of security, and the necessity of being prepared to “face a hostile Russia or emboldened China.”
Some have called on Carney to build a stronger relationship with China — Canada’s second largest trade partner — particularly in the face of economic threats from Donald Trump, but his government seems wary of deepening ties with Beijing while Trump is trying to decouple the US from China.
The US and Canada have a trade relationship worth roughly $1 trillion a year, and they share a border, deep cultural ties, and a longstanding security relationship. The Trump administration, which is waging its own trade war with China, has made it clear that other countries must choose between Washington and Beijing. For now, it looks like Canada is siding with its neighbor.
US President Donald Trump announces he has selected the path forward for his ambitious Golden Dome missile defense shield, in the Oval Office of the White House in Washington, D.C., USA, on Tuesday, May 20, 2025.
Donald Trump wants to protect the United States from ballistic and hypersonic missiles with a “Golden Dome,” and Canada, officially, wants in. The details of the program and Canada’s role are still to be determined, but Trump says the total cost will be $175 billion (the Congressional Budget Office says more) and the project will be completed by the end of his term. Experts wonder whether such a defense system is even possible, given the technological difficulty of intercepting ICBMs and space-based launches. But the US president says Canada will pay its “fair share.”
Canada is reportedly integrating the dome talks into broader negotiations about trade and security. And it has some leverage — money, for starters, but also land on which to base missile detection equipment and over which to shoot down projectiles.
Trump has long maligned Canada for being a laggard on defense spending. Participating in the Golden Dome could serve to rehabilitate that image a bit, and nudge trade negotiations in the right direction. But joining the program could face opposition in Canada, especially after the Liberals have spent months bashing the Trump administration as unreliable partners and threats to Canadian sovereignty.
Canadian Prime Minister Mark Carney gives a thumbs up as he departs after meeting with US President Donald Trump at the White House in Washington, D.C., USA, on May 6, 2025.
Canada’s new prime minister, Mark Carney, won the election largely by adopting a pugnacious “elbows up” posture against the Trump administration. But now that he’s in office, he’s adopted a more diplomatic posture. His meeting at the Oval Office two weeks ago was remarkably civilized. He even called Donald Trump a “transformative president,” though a careful observer will note the ambiguity attached to the characterization. The meeting was a prelude to future talks on trade and a renegotiation of the USMCA.
But Carney’s apparent change of heart caused problems for him last week, when Canada had reportedly dropped its retaliatory tariffs against the US. Some hawkish Canadians, including opposition Conservatives, cried foul, suggesting Carney had campaigned on being tough with Trump only to back down after winning. Whether or not the claim is accurate, it won’t stop government opponents from running with the narrative.
What’s really happened: Canada’s retaliatory tariffs are still largely in place, and Finance Minister François-Philippe Champagne says that 70% of tariffs for “end use” goods remain. The government has, however, temporarily paused some tariffs on food and beverage processing items, medical supplies and equipment, and vehicles.
The moves suggest the government is out to walk a fine line: standing up to Trump while also not provoking him and — critically — listening to domestic industries and consumers who aren’t eager to pay higher prices for essential American-made inputs simply to retaliate against the US.
The upshot: Carney isn’t in election-mode anymore. He’s governing, and watching his elbows. The strategy is to avoid antagonizing Trump, trying to bargain with him, while making it clear that Canada is not for sale and will never become the 51st state. It’s not quite what Carney ran on, but he seems to be betting that it has a better shot at working than waving a red cape in front of a bull.
What We’re Watching: Putin celebrates in Kursk, “Death camp” discovery in Mexico, & DRC seeks US help against China
Russian President Vladimir Putin visits the Kursk-II nuclear power plant under construction, in the Kursk region, Russia, on May 21, 2025.
Putin takes a victory lap
Russian President Vladimir Putin visited Kursk on Tuesday for the first time since the Kremlin declared that it had ejected Ukrainian fighters from the Russian region. It’s another flex for a leader who signals no interest in halting the war in Ukraine. The next challenge for Moscow: Can its army secure major battlefield gains this summer to further boost its bargaining position?
Activists press Mexico’s government on cartel “death camp”
Pressure is growing on Mexico’s government to take action against drug cartels that have kidnapped, tortured, and killed tens of thousands of people over the last two decades, after relatives of some of the 120,000 disappeared persons learnt this week about a “death camp” in the western state of Colima. Authorities discovered mass graves there 18 months ago, but only just passed on the information to victims’ families. Taking on these gangs is a complex task for President Claudia Sheinbaum, as local authorities lack the manpower and firepower to quell them.
US vs China in the DRC
Felix Tshisekedi, president of the Democratic Republic of Congo, has picked a fight with China over its cobalt and wants US help. The sub-Saharan nation banned exports of the metal – an essential input for the battery, defense, and aerospace industries – in February, but China’s top cobalt producer, COMC, is now pushing the DRC to lift the ban. The DRC produces about three-quarters of the world’s cobalt, and is seeking to engage the Trump administration to find new investment partners in a bid to limit Chinese influence in its cobalt trade.
Israeli Prime Minister Benjamin Netanyahu and European Union foreign policy chief Federica Mogherini brief the media at the European Council in Brussels, Belgium, on December 11, 2017.
Israel under fresh pressure
The UK and EU threatened Tuesday to revise trade ties with Israel unless PM Benjamin Netanyahu stops the new offensive in the Gaza Strip and allows sufficient humanitarian aid into the besieged enclave. This comes after the UK, Canada, and France threatened Israel on Monday with “concrete measures,” like sanctions. Netanyahu and his far right coalition allies say they are intent on destroying Hamas, though critics warn Israel is becoming a “pariah.”
The Morales of the story: Bolivian heavyweight to defy election exclusion
Bolivia’s socialist powerbroker Evo Morales, who governed from 2006 until he was ousted in protests in 2019, is officially ineligible to run in this August’s presidential election because of term limits. Yet he has pledged to mobilize his supporters to defy this rule, setting up a potentially destabilizing contest as his once-formidable leftwing MAS movement splinters into rival factions.
Democratic donors try a pivot to podcast
Faced with the vast array of conservative or MAGA-friendly online influencers who helped Donald Trump to win the 2024 election, Democrats and their donors are now trying to cultivate a creator economy of their own ahead of the 2026 midterms. There’s lots of money and pitches, but can you really create a viable ecosystem of influencers overnight? Authenticity, the heartbeat of any political campaign, is hard to create in a lab. You’re either a born killer or you’re not.
Canada's Prime Minister Mark Carney leaves his office on Parliament Hill after his second day in office, on April 30, 202.
G7 Finance Ministers meet in Canada
Finance ministers from the G7 group of advanced democracies meet on Tuesday, with Trump’s huge “Liberation Day” tariffs still looming large. Can they really reach a common position on key issues such as commerce, climate, AI, and Ukraine? It’ll be a good bellwether for the upcoming G7 leaders summit next month.
No big breakthrough in Trump-Putin Ukraine phone call.
After the two leaders spoke Monday, Trump said bilateral ceasefire negotiations between Ukraine and Russia, apparently without US involvement, would begin “immediately.” But Putin said only that he’s ready to begin to draw up a memorandum that could lay the groundwork for a “possible” agreement. Is the US losing interest in brokering an end to the war?
Milei gets a boost in Buenos Aires election
Argentina’s radical, cost-cutting president Javier Milei got a boost after his party won the most legislative seats in the national capital. Later this year, Argentina heads into midterm elections, the first nationwide referendum on Milei’s approach since he won the presidency in 2023.