Trump Lost Before the Game Started

The recent visit of Donald Trump to China was presented as a major diplomatic engagement aimed at resetting communication between the world’s two largest economies. Yet, even before substantive discussions began, the visit exposed an uncomfortable geopolitical reality for Washington - the United States appeared to need China’s cooperation more than China needed American approval.

For years, Trump built his political narrative around confronting China. Tariffs, technology restrictions, sanctions, and economic pressure were all designed to slow Beijing’s rise and reinforce American dominance. However, global developments have revealed the limitations of pressure-driven diplomacy in an increasingly interconnected world.

The contradiction became particularly visible in the context of the Iran conflict. Senior American officials openly acknowledged that China possesses considerable leverage because of its close economic relationship with Tehran and its dependence on Iranian oil supplies. Washington’s indirect appeal for Beijing’s assistance in stabilizing the Strait of Hormuz was more than a diplomatic request; it was recognition that China has become an indispensable stakeholder in global crisis management.

Trade tensions further underline this strategic reversal. After years of tariff wars that disrupted supply chains and increased costs worldwide, both sides are now seeking mechanisms to preserve economic engagement. Discussions surrounding new trade and investment coordination frameworks suggest that confrontation alone failed to produce the decisive advantage Washington once expected.

At the same time, difficult issues remain unresolved. Differences over Taiwan, semiconductor restrictions, artificial intelligence, and human rights continue to shape relations between the two powers. Yet despite these disputes, the United States still finds itself compelled to engage Beijing on virtually every major global challenge.

This is where the symbolism of Trump’s visit becomes important. A leader who once projected China as an adversary to be economically isolated has now arrived seeking cooperation on trade stability, regional security, and technological governance. Diplomatically, the visit may produce positive optics. Strategically, it reflects a deeper shift in global politics.

Great powers can impose sanctions, launch tariff wars, and escalate rhetoric, but they cannot indefinitely ignore geopolitical realities. In today’s emerging multipolar order, influence increasingly belongs not to the loudest power, but to the one others cannot afford to bypass.

Trump Pushing China Towards Confrontation

Just before departing for China, US President Donald Trump imposed another round of sanctions targeting the movement of Iranian oil to China. Officially, Washington presents the move as part of its pressure campaign against Iran. In reality, the sanctions expose a far bigger strategic objective - tightening America’s economic grip around China.

This is not an isolated policy decision. Since returning to power, Trump has aggressively revived tariff wars, expanded restrictions on Chinese technology, intensified pressure on supply chains, and openly challenged Beijing’s growing influence across Asia and the Middle East. The latest sanctions simply add energy security to Washington’s expanding list of pressure tactics.

China’s economic machine depends heavily on uninterrupted energy imports. Iranian crude, often available at discounted prices, has remained an important component of China’s energy strategy despite Western sanctions. By attempting to choke these supplies, Washington is effectively signaling that no sector of the Chinese economy will remain outside the reach of American coercive power.

The message becomes even more provocative when discussions surrounding the Strait of Hormuz are taken into account. Any blockade or disruption in this critical maritime corridor would severely impact Chinese industry, exports, and economic stability. Whether openly stated or not, the strategic implication is unmistakable - the United States is demonstrating its capacity to threaten the economic lifelines of its principal global rival.

Washington may be dangerously misreading Beijing’s patience. Today, China is not a weak, inward-looking economy of the 1990s. It is a global economic giant, a technological competitor, and an emerging military power increasingly unwilling to bow before American pressure. Every new tariff, sanction, or strategic threat deepens Chinese mistrust and accelerates Beijing’s efforts to reduce dependence on Western-controlled financial and trade systems.

From a geopolitical perspective, Trump appears convinced that sustained pressure will force China into strategic compromise. Yet history often produces the opposite result. Major powers rarely surrender under humiliation; they retaliate when they conclude that confrontation has become unavoidable.

The danger is that Washington’s relentless pressure campaign may gradually transform economic rivalry into open geopolitical hostility. If that happens, the consequences will extend far beyond China and America, shaking global trade, energy markets, and already fragile international stability.

From Ultimatums to Outcomes: Reframing Iran Endgame

Donald Trump’s dismissal of Iran’s response as “totally unacceptable” signals a negotiating stance that leaves little room for outcomes. When diplomacy is reduced to demands for capitulation, escalation becomes less a risk and more an inevitability.

The challenge, however, is not just Washington’s posture. Iran, shaped by years of sanctions and strategic isolation, is equally unlikely to yield under pressure. This creates a familiar deadlock—where both sides talk past each other, and the costs are externalized to the region and the global economy.

A more credible pathway lies not in maximalist demands, but in sequenced reciprocity.

First, de-escalation must begin with restoring stability around the Strait of Hormuz. Ensuring uninterrupted maritime flow should be treated as a shared obligation, not a bargaining chip.

Second, sanctions relief should be structured, phased, and conditional—tied to verifiable commitments. This shifts the dynamic from coercion to compliance.

Third, both sides need to acknowledge that absolute victory is neither realistic nor necessary. Strategic restraint often delivers more durable outcomes than rhetorical dominance.

Finally, a framework for post-conflict stabilization—whether through indirect compensation, reconstruction channels, or multilateral engagement—can help rebuild minimal trust without forcing politically unviable concessions.

Diplomacy succeeds not when one side surrenders, but when both sides find a way to step back without losing face. Without that recalibration, the current trajectory risks becoming a prolonged and costly stalemate with no clear exit.

Selective Outrage or Strategic Compulsion?

The ongoing tensions involving Iran, United States, and Israel have once again exposed a troubling inconsistency in the Arab world’s diplomatic posture. While Gulf states react sharply to Iranian retaliation, their silence—or at best, muted response—towards US actions raises uncomfortable questions.

At first glance, this appears as selective outrage. But a deeper probe suggests something more structural. Key players like Saudi Arabia are navigating a narrow corridor shaped by security dependence, economic vulnerability, and regional rivalry. Hosting US military assets and relying on Washington’s security umbrella inevitably constrains their diplomatic choices. Public dissent is costly; alignment, even if reluctant, becomes pragmatic.

Yet, to argue that Arab foreign policy is entirely dictated by Washington would be misleading. The recent thaw between Riyadh and Tehran, alongside growing engagement with China and coordination with Russia on oil policy, indicates an evolving strategic autonomy. These states are no longer passive actors; they are recalibrating within limits.

The real driver, remains regime security and regional balance. For Gulf capitals, Iran is not merely a fellow Muslim state but a strategic competitor with influence across multiple fault lines. This perception shapes responses far more than ideological or religious solidarity, often sidelining platforms like the Organization of Islamic Cooperation into irrelevance.

The result is a policy framework that appears inconsistent but is, in fact, internally coherent. Arab states are neither fully aligned with Washington nor entirely independent of it—they are balancing. The question is not why this duality exists, but how long it can be sustained without eroding credibility in an increasingly polarized region.

UAE and Fractured Middle East

Since endorsing the Abraham Accords, the United Arab Emirates (UAE) has recast itself as a forward-looking state prioritizing economic opportunity over ideological rigidity. Normalization with Israel opened avenues in trade, technology, and finance, but it also stirred unease across sections of the Muslim world, where the move is still viewed as a departure from collective positioning on Palestine.

The discomfort is not merely rhetorical. Within parts of the Arab region, policy circles continue to debate whether such outreach weakens negotiating leverage on longstanding geopolitical disputes. Even in the United States—a principal architect of the accords—analysts have quietly flagged the risks of accelerated realignments that outpace regional stability.

Dubai’s rise as a global financial hub adds complexity to this equation. Increased capital flows, including those linked to Israeli networks, have energized its economy, but they also expose it to heightened scrutiny in an era of sanctions enforcement and financial transparency. Longstanding discussions in compliance circles about the emirate’s role in facilitating trade with Iran further underscore the delicate balance it must maintain.

Recent regional tensions have brought these vulnerabilities into sharper focus. Reports of attacks targeting strategic assets in Dubai—amid conflicting narratives about their origin—highlight a critical reality, economic hubs cannot remain insulated from geopolitical rivalries.

The UAE’s strategy reflects ambition and pragmatism, but also risk. In a region where alliances shift rapidly, economic integration without parallel security insulation may prove a fragile proposition.

PSX benchmark index up 5.0%WoW

Pakistan Stock Exchange (PSX) witnessed bullish momentum during the outgoing week, with the benchmark Index gaining 8,122 points or 5.0%WoW to close at 171,116 on Friday, May 08, 2026. Average daily trading volume decline by 9.7%WoW to 1.1 billion shares.

The dominant sentiment driver was easing of US-Iran tensions, with both sides reportedly edging towards a short-term memorandum to halt the conflict, leading international oil prices to ease by 18%WoW up to US$100.5/ barrel.

Earlier in the week, U.S. President Trump paused the 'Project Freedom' naval operation in the Strait of Hormuz after one day, following a request from Pakistan and other mediating countries, citing progress towards a final agreement with Tehran. Despite an intermittent exchange of fire between U. and Iranian forces near the Strait mid-week, Trump confirmed the ceasefire remained in effect. The IMF Executive Board meeting on Friday was scheduled to consider approval of the US$1.2 billion tranche under the EFF and RSF programs.

Pakistan’s foreign exchange reserves are expected to reach US$17 billion by end June 2026.

Pakistan's trade deficit increased by 4%YoY to US$4.1 billion in April 2026, taking 10MFY26 trade deficit to US$32.0 billion, up 20%YoY.

Cement dispatches rose 11%YoY to 3.9 million tons in April 2026, led by 20%YoY growth in local dispatches.

LSM index rose 11.1%YoY in March 2026, taking 9MFY26 growth to 6.5%YoY.

Foreign exchange reserves held by SBP increased to US$15.85 billion as of April 30.

Other major news flow during the week included: 1) Pakistan to issue US$250 million Panda bonds within 10 days, 2) GoP to end untargeted electricity subsidies, 3) Power consumers to get PKR1.75/ unit relief, 4) Government bars private OMCs from HSD imports, and 5) Pakistan rejects lowest spot LNG bids.

Top performing sectors were: Cement, Technology, and Inv. Companies, while laggards included: Textile Weaving, Leasing Companies, and Synthetic & Rayon.

Major selling was recorded by Insurance and Individuals of US$9.8 million and US$3.7 million respectively. Major buyers were Brokers and Mutual Funds with US$6.1 million and US$4.5 million respectively.

Top performing scrips of the week were: PIOC, JVDC, PIBTL, SSGC, and GADT, while laggards included: INDU, IBFL, MEHT, THALL, and ATRL.

According to AKD Securities, the IMF Executive Board's approval of US$1.2 billion tranche alongside the trajectory of US-Iran negotiations would remain near-term catalysts for market direction, with continued softening of oil prices to act as a supportive trigger.

Market continues to trade at attractive valuations. According to the brokerage house the benchmark Index is anticipated to reach 263,800 by end December 2026.

Top picks of the brokerage house include: OGDC, PPL, UBL, MEBL, HBL, FFC, ENGROH, PSO, LUCK, FCCL, INDU, ILP and SYS.

Decline of rules based maritime market

Assertive America doctrine forms part of a geopolitical mix ushering in an age of extremes for shipping to navigate.

Hellenic Chamber of Shipping board member Yannis Triphyllis initiated a debate between insurers that covered virtually all of the major challenges of the maritime market in the modern age.

In his welcome speech to the Marine Insurance Greece conference in Athens on May 06, Triphyllis claimed that, “Invasion of the Donbas was the starting gun for the unravelling of the rules-based market.”

Key to the discussion was a presentation by COO of the American Club, Daniel Tadros, who laid out the US vision of a new world order, which has the US at the center of the new global economic regime.

Tadros launched into his treatise with a quote from the second world war Admiral Yamamoto, of Japan, speaking after the attack on Pearl Harbour, “I fear that all we have done is to awaken a sleeping giant and fill him with a terrible resolve.”

“Now, fast forward to the last four or five years,” Tadros told the Maritime Insurance Greece audience, “The geopolitical competition with China, both commercially and as a matter of national security, has woken up the United States and has filled not just politicians, both Democrats and Republicans, but also the government, the military, everyone, with a resolve to rebuild the US Merchant Marine.”

Historically the US had been a world leader in shipping, owning 63% of the world’s tonnage, today that was down to less than 1%, the cutting of government subsidies, high labour costs all contributed to the rise of Japanese and South Korean prominence in shipbuilding.

In the last 15 years, China has surged ahead, not just in shipbuilding, which Tadros focused on, but in a number of key industries, including electric vehicles, green energy and through investments across the globe through the Belt and Road.

“The geopolitical competition and national security have created what many have called assertive US maritime trade policies,” said Tadros. The assertive policy can be seen in the tariff regime and other policies that are aimed at levelling US costs with their international competitors.

“In the Western Hemisphere, the United States is looking at combating China's influence, migration, combating cartels, expanding partnerships, and strengthening supply chains, including looking at the Venezuela region.”

The US is combating Chinese influence in Africa, Europe and the Middle East, and Washington is, “working furiously” to reach a peace deal in Ukraine, Tadros said.

According to the assertive America doctrine, a key issue is to avoid conflict between China and Taiwan, and to avoid conflict in the Middle East the US has taken action to remove its main destabilizing forces the Palestinians and the Iranians.

An effect of the assertive America policy was highlighted by George Karkas, MD of Gard Greece, “Developments in the Strait of Hormuz have been quite extraordinary. I actually heard from Mr. Rubio that 10 seafarers died,” in what Karkas said is “one of the most significant disruptions to global trade and energy markets in decades.”

The potential consequences of the disruptions could affect food supplies, energy, and the basic necessities of life for millions of people around the world. Since April, there have been some 20,000 seafarers stranded on between 2,000 and 3,000 ships imprisoned in the Arabian Gulf.

Shipping, as Karkas points out, is a major global success story, “Over time, we have built the framework of rules, standards, practices that work together and have made shipping safer, more efficient, and more accountable. Today, shipping is one of the most internationally governed industries in the world, and this matters. We see fewer lives lost at sea, fewer major casualties, and fewer pollution incidents than at any point in any modern history.”

This framework did not evolve through chance, it happened because it was “rooted” in the work of the United Nations and the IMO, he said. Now we are “entering an age of extremes,” according to Karkas, shifting from a bipolar to a multipolar world “marked by conflict, shifting alliances and fragmentation”.

Karkas showed that the maritime insurance industry has reduced the number of claims — shipping has become a safer industry overall — but that claims over a five-year average are now three times bigger, with the strongest increase in the last 10 years.

“So, we have fewer claims, but when things go wrong, they seem to go very wrong and become very costly. In short, we see far more extreme claims. Why is this happening? The reasons are probably many and complex, but part of the picture is no doubt politics and geopolitics,” said Karkas.

Karkas spoke about the criminalization of crew where nation states are more interested in extracting money than they are in justice for the accused. “If claims and verdicts, become more detached from reality and from the loss actually suffered, they end up undermining trust in the system," he said.

The system is under increasing pressure from risks, including climate change, extreme weather, the shadow fleet, which continues to be a systematic challenge for insurers, and not least the increase of more extreme claims.

Although not directly said by Karkas in his presentation, the global ramifications of the assertive America doctrine are a decay in a system of trust, which ultimately undermines the system as a whole.

Courtesy: Seatrade Maritime News