IMF: Global Growth Outlook Brightens as Tariff Pressures Ease and AI Investment Surges

China hits 5% growth | USDA to resume Food Price Outlook | Trump escalates Europe tariff threat, ties relief to Greenland deal | China buys canola

LINKS

Link: The Week Ahead, Jan. 18: Davos 2026: Trump’s Presence Sharpens
          Focus on Trade, Power and Global Risk

Link: Weekend Updates, Jan. 17: EU Parliament Freezes Transatlantic
          Trade Pact Amid Escalating Trump Tariff Threats

Link: Video: Wiesemeyer’s Perspectives, Jan. 16
Link: Audio: Wiesemeyer’s Perspectives, Jan. 16
 

Updates: Policy/News/Markets, Jan. 19, 2026

UP FRONT

 TOP STORIES 

— Global growth outlook brightens: The IMF raised its 2026 global growth forecast to 3.3%, citing fading tariff shocks and a powerful AI investment boom, while warning that inflation and asset-valuation risks could emerge if tech optimism runs too far.

— China meets growth target despite tariffs: China hit its 5% growth goal in 2025 as exports surged to non-U.S. markets, producing a record $1.19 trillion trade surplus and defying expectations of a tariff-driven slowdown.

— USDA resumes food inflation reporting: USDA will release its first Food Price Outlook since September on Jan. 23, rolling months of missing data into a single update that could reset expectations for grocery and restaurant inflation.

— Trump escalates Europe tariff standoff: The White House threatened new tariffs on European countries unless they agree to a Greenland deal, prompting the EU to consider retaliation worth roughly $108 billion and raising risks of a renewed transatlantic trade war.

— Canada weighs Arctic troop deployment: Ottawa is considering sending troops to Greenland for NATO exercises to support Denmark’s sovereignty, a move that could further inflame tensions with Washington.

— Canada pivots toward China on trade: A tariff-relief deal with China underscores Canada’s effort to diversify away from U.S. trade volatility, easing pressure on farm exports but raising concerns in autos and EVs.

— Markets react to trade risk: European stocks and U.S. futures slid, gold hit new highs, and safe havens rallied as investors digested fresh tariff threats tied to Greenland.

— China canola thaw reshapes feed markets: China’s return to buying Canadian canola signals a trade reset that could tighten North American meal supplies and push U.S. feed costs higher.

— Farm policy relief, but not profitability: Analysis shows USDA’s Farmer Bridge Assistance payments help rice growers cover operating costs for 2026 but fall short of restoring full profitability.

— Oil prices ease on Iran, watch Europe: Crude slipped as Iran tensions cooled, while traders focused on potential demand fallout from U.S./Europe trade escalation.

— Trump downplays USMCA: The president’s dismissive rhetoric appears aimed at leverage ahead of the 2026 review, even as businesses and analysts argue the pact underpins North America’s integrated economy.

— Mexico probes U.S. pork imports: Mexico launched an anti-dumping investigation into U.S. pork despite record import volumes and prices, a move U.S. exporters say contradicts market realities.

— China’s universities surge in rankings: Heavy state investment has propelled Chinese institutions ahead of U.S. peers in global research rankings, intensifying concerns over American funding constraints.

— Virginia redistricting push advances: Democrats moved closer to mid-decade redistricting that could put up to four GOP House seats in play for 2026.

— UP/NS rail merger hits setback: Regulators flagged major gaps in Union Pacific’s merger filing with Norfolk Southern, ensuring deeper scrutiny and a longer approval process.

— Immigration backlash grows: Trump faces early signs of voter unease over aggressive enforcement tactics after an ICE shooting, exposing potential political vulnerability ahead of the midterms.

— Weather watch: Heavy lake-effect snow threatens the Great Lakes region, while freeze warnings extend into parts of the Deep South and Florida.

TOP STORIES— Global growth outlook brightens as tariff pressures ease and AI investment surgesIMF lifts 2026 growth forecast, citing resilience to U.S. trade policy and a powerful boost from artificial intelligence — while warning of inflation and valuation risks ahead The International Monetary Fund (IMF) nudged up its global growth outlook for 2026, arguing that the world economy is proving more resilient to U.S. trade disruptions than previously feared and is benefiting from a sustained boom in artificial intelligence investment. In its updated World Economic Outlook, the IMF now sees global GDP growth at 3.3% in 2026, a 0.2 percentage-point upgrade from its October forecast. Growth in 2025 is also pegged at 3.3%, slightly higher than previously estimated, while 2027 growth remains unchanged at 3.2%. IMF Chief Economist Pierre-Olivier Gourinchas said the global economy has “shaken off” much of the tariff shock from 2025, as companies rerouted supply chains and trade deals lowered some of the steepest U.S. duties imposed under Donald Trump. The Fund now assumes an effective U.S. tariff rate of 18.5%, down sharply from about 25% in its April 2025 forecast. AI as a growth engine—and a risk. A major driver behind the upgrade is massive AI-related investment, particularly in the United States. The IMF raised its U.S. 2026 growth forecast to 2.4%, citing heavy spending on data centers, advanced chips, and power infrastructure. U.S. growth in 2027 was trimmed slightly to 2.0%. Similar tech-driven momentum is showing up elsewhere. Spain’s 2026 growth forecast was lifted to 2.3%, while the IMF held Britain at 1.3%, noting AI investment support in both economies. Still, Gourinchas cautioned that the AI boom could stoke inflation if investment continues at a breakneck pace — or trigger a market correction if lofty productivity expectations fail to materialize. The IMF flags AI as both a potential upside and a downside risk, alongside geopolitical tensions and renewed trade frictions. Trade, courts, and China. The IMF warned that an expected Supreme Court of the United States ruling against Trump’s emergency-based tariffs could inject fresh uncertainty if the administration seeks to reimpose duties under other trade laws. China’s outlook also improved modestly. The IMF now expects 4.5% growth in 2026, up 0.3 percentage point from October, helped by a temporary reduction in U.S. tariffs on Chinese goods and continued diversion of exports toward Southeast Asia and Europe. However, Gourinchas warned Beijing risks new protectionist backlash unless it shifts toward a more consumption-driven growth model. Europe, Japan, and Brazil. The IMF raised euro zone growth to 1.3% in 2026, citing higher German public spending and stronger momentum in Spain and Ireland, though defense spending gains are expected to show up later. Japan also received a small upgrade due to fiscal stimulus, while Brazil was a notable laggard, with its 2026 forecast cut to 1.6% amid tighter monetary policy to rein in inflation. Inflation easing, policy space growing. Globally, inflation is projected to keep falling — from 4.1% in 2025 to 3.8% in 2026 and 3.4% in 2027 — giving central banks room to adopt more accommodative stances that could further support growth. Bottom Line: the IMF sees a world economy adapting faster than expected to tariffs and trade shocks, with AI investment emerging as a powerful—if still uncertain—force shaping the global outlook. —China hits 5% growth target as exports offset trade war fearsGlobal demand surge helps Beijing defy expectations of tariff-driven slowdown China’s economy grew at a solid pace last year, buoyed by a sharp rise in exports that countered widespread expectations that U.S. tariffs would significantly drag on growth. According to data released Monday by the National Bureau of Statistics of China, China’s gross domestic product expanded 5% in real terms (adjusted for deflation) in 2025. The outcome met Beijing’s official growth target and matched the 5% real growth recorded in 2024. At the start of last year, many economists anticipated that escalating U.S. tariffs would hit Chinese exports and weaken overall economic momentum. Instead, China redirected shipments to a broad range of global markets, more than compensating for a decline in trade with the United States. That resilience showed up clearly in the trade data. China’s customs agency reported a record $1.19 trillion trade surplus for 2025, driven by a 5.5% increase in exports, highlighting the central role foreign demand played in sustaining growth even as geopolitical and trade tensions persisted. —USDA to restart food inflation updates after shutdown hiatusFirst Food Price Outlook since September will incorporate months of delayed data, offering a clearer read on grocery inflation trends USDA is set to release its long-delayed Food Price Outlook report on Friday, Jan. 23, marking the first update on U.S. food price inflation since September. The October, November, and December editions of the report were canceled during the federal government shutdown, leaving policymakers, markets, and consumers without USDA’s official guidance through the end of 2025. The upcoming release will incorporate additional data that has been published in recent weeks, effectively rolling several months of inflation developments into a single update. As a result, Friday’s report (link) is expected to provide the most comprehensive snapshot yet of recent food price trends — covering grocery and restaurant inflation, category-level movements, and revised forecasts — at a time when food costs remain a politically and economically sensitive issue. —Trump escalates Europe tariff threat, ties relief to Greenland dealWhite House signals willingness to absorb trade war costs as EU weighs retaliation worth roughly $108 billionPresident Donald Trump said the U.S. will impose a 10% tariff on goods from eight European countries starting Feb. 1, with duties set to rise to 25% in June unless European governments agree to a deal involving the “purchase of Greenland.” Presumably this tariff would come on top of the rates Trump already negotiated in trade deals last year (10% for Britain, 15% for the European Union). The announcement has triggered urgent consultations in Brussels and sharpened fears of a transatlantic trade confrontation. European Union leaders will convene an emergency meeting Thursday to map out possible countermeasures. Options under review include up to €93 billion in retaliatory levies — roughly $108 billion at current exchange rates — as well as activation of the bloc’s anti-coercion instrument, a legal tool designed to respond to economic pressure from third countries. This is the EU’s so-called trade “bazooka,” allowing the bloc to impose tariffs and investment limits on offending nations – an instrument that Europe didn’t dare to activate last summer. French President Emmanuel Macron has announced that he would ask for the instrument to now be activated. But Chancellor Friedrich Merz indicated Germany is less willing than France to unleash the European Union’s strongest trade countermeasure. The White House has shown little inclination to soften its stance. Treasury Secretary Scott Bessent doubled down on the administration’s message, saying the U.S. will not back away and arguing that Europe is “too weak to ensure its own security.” His comments reinforced the administration’s view that trade pressure can be leveraged to extract broader geopolitical concessions. Why this matters:•Scale: A potential $100 billion-plus EU response would rank among the largest retaliation packages the bloc has ever contemplated.• Timing: The stepped-up tariff schedule —1 0% in February, 25% by June — compresses the window for negotiations and raises the risk of rapid escalation.• Precedent: Linking tariff relief to a territorial or strategic demand (Greenland) marks an unusually explicit fusion of trade policy and geopolitics. European officials say any response will aim to be proportionate while preserving leverage for talks. But with Washington signaling resolve and Brussels preparing its heaviest tools, markets and exporters on both sides of the Atlantic are bracing for a volatile spring. Meanwhile, the president of the largest party in the European Parliament, Manfred Weber from the EPP, has indicated that they would not vote in favor of ratifying the trade deal with the U.S., which means that the EU levying 0% tariffs on U.S. products will not be voted on given the threats regarding Greenland, according to Weber. Quote of note from ING Economics: “At this point, the outcome of these new trade tensions is unclear, but what has long been evident is that there is no such thing as trade or tariff certainty anymore… The new tariff announcement effectively reopens the trade war between the EU and the U.S., despite a temporary truce reached in late July. This next phase brings higher stakes and a far tougher approach and serves as a painful reminder, not only of how the relationship between the U.S. and Europe has changed, but also that tariffs have become a multi-purpose policy tool. The rationale for higher tariffs is now even more political and less economic than in the first half of 2025.”  —Canada considers Arctic troop deployment as Trump escalates Greenland pressureOttawa weighs NATO exercise role in Greenland to back Denmark and reinforce Arctic security Canada is considering sending a small contingent of troops to Greenland to participate in Danish-led NATO military exercises, a move intended to signal alliance solidarity with Denmark as Donald Trump intensifies threats to annex the Arctic territory and impose tariffs on European allies. According to senior government officials cited by The Globe and Mail, the Canadian Armed Forces have prepared plans but are awaiting final political approval from Prime Minister Mark Carney. If approved, Canadian soldiers could deploy as early as this week. Canada already has a limited military presence in Greenland — three CF-18 fighter jets and a Cormorant helicopter — participating in a NORAD exercise with the United States. The proposed deployment would expand Canada’s role by joining Danish-led North Atlantic Treaty Organization exercises alongside forces from Germany, the United Kingdom, France, Denmark, the Netherlands, Norway, Sweden and Finland. Officials say the move is designed to underscore NATO’s commitment to Arctic security and support Denmark’s sovereignty over Greenland. However, they acknowledge the decision could further irritate Trump, who has warned of new tariffs against countries that send troops to Greenland as part of these shows of solidarity. Speaking in Doha, Carney described Trump’s use of economic coercion to press for control of Greenland as a troubling escalation. He argued that NATO — rather than unilateral U.S. action — is fully capable of ensuring the island’s security, particularly given its strategic location and mineral resources. Carney said he has discussed strengthening NATO’s Arctic “security umbrella” with Secretary-General Mark Rutte. Trump has defended his push to acquire Greenland by claiming Denmark lacks the capacity to defend the territory against potential Russian or Chinese encroachment, a claim rejected by Carney and criticized by U.S. lawmakers from both parties. Carney drew parallels to Russia’s invasion of Ukraine, warning that threats to sovereignty — even economic ones — must be taken seriously. The prospective Canadian deployment would fall under Operation Arctic Endurance, a Danish-led NATO exercise and forward presence meant to reaffirm allied commitment to the sovereignty and territorial integrity of Denmark and Greenland amid rising geopolitical tensions in the Arctic. —Canada signals strategic pivot toward China as U.S. trade ties grow uncertainCarney’s tariff deal underscores Ottawa’s willingness to diversify away from Washington amid Trump-era volatility Prime Minister Mark Carney has signaled a notable shift in Canada’s foreign and trade policy, striking a tariff-relief deal with China that reflects growing unease about Canada’s economic dependence on the United States and the unpredictability of trade under President Donald Trump. The agreement eases Canada’s steep tariffs on Chinese electric vehicles (EVs) in exchange for sharp reductions in Chinese retaliatory tariffs on key Canadian agricultural exports, including canola seed, canola meal, peas, lobster, and crab. (See Ag Markets section for analysis of what this could mean for U.S. feed markets and news from Reuters that a sale has already been made.) Analysts say the move marks a pragmatic recalibration of Canada’s China policy — driven less by ideology than by risk management as North American trade relations wobble. Carney framed the deal as realism, not rapprochement. “We take the world as it is, not as we wish it to be,” he said, arguing that Canada must exercise its own agency as global trade patterns fragment. He added that Canada’s relationship with China has become “more predictable” than its relationship with the United States — an unusually blunt assessment of ties with Canada’s largest trading partner. What the deal does•EV tariffs: Canada will cut levies on Chinese EVs from 100% to 6.1% for the first 49,000 vehicles per year, with the quota rising to 70,000 over five years.• Agriculture: China will reduce tariffs on Canadian canola seed from 84% to ~15% by March 1, and suspend tariffs on canola meal, peas, lobster, and crab at least through year-end.• Other provisions: China also committed to removing visa requirements for Canadian visitors, though Beijing described the outcome as a “preliminary joint agreement.” Supporters, particularly in farm provinces, welcomed the relief. Saskatchewan Premier Scott Moe called it “very good news” for producers battered by China’s earlier retaliation. Critics, led by Ontario Premier Doug Ford, warned the EV provisions could undermine Canada’s auto sector by opening the door to cheaper Chinese vehicles without firm guarantees of domestic investment. Pressure from Washington looms large. Trade experts widely interpret the deal as a hedge against U.S. policy risk. Since returning to office, Trump has imposed tariffs on Canadian metals and autos and repeatedly questioned the value of the United States–Mexico–Canada Agreement (USMCA), now under mandatory review. Ottawa fears the review could end without a durable framework, forcing Canada to seek alternatives. (See Trade Policy section for more on this topic.) Options: Eric Miller of the Rideau Potomac Strategy Group said the China deal reflects contingency planning: Canada may need options if North American free trade weakens or collapses altogether. Mixed U.S. reaction U.S. Trade Representative Jamieson Greer labeled the agreement “problematic,” warning Canada could regret easing EV tariffs. Trump, by contrast, praised the move, saying countries should make deals with China if they can — consistent with his openness to Chinese manufacturing investment in North America. The EV angle also has competitive implications. Analysts estimate Chinese automakers could capture roughly 10% of Canada’s EV market, increasing pressure on U.S.-based producers such as Tesla, which are seeking to expand in Canada. A broader recalibration. Carney argues that access to affordable Chinese EVs could lower prices for Canadian consumers and potentially attract Chinese investment into Canada’s auto supply chain, though details remain sparse. The deal also comes as Trump prepares for high-level engagement with Beijing, including meetings with Xi Jinping, underscoring the fluidity of U.S./China relations despite tough rhetoric. For Canada, the message is clear: with U.S. trade policy increasingly volatile, Ottawa is diversifying its economic relationships — even when that means reopening doors it once tried to close.

FINANCIAL MARKETS

—Equities today: European equities and U.S. futures dropped more than 1%, with the STOXX Europe 600 heading for its worst session in two months. Losses were led by luxury shares and German automakers; BMW AG slid about 3.5%. Safe havens outperformed. Gold surged to a new high above $4,660 an ounce, while the Swiss franc strengthened and the dollar eased roughly 0.2%. U.S. cash markets were closed for a public holiday. Investors grew more anxious after Trump warned of levies on countries opposing his Greenland bid, raising the risk of renewed trade retaliation. European officials signaled they were unlikely to back down, deepening the selloff as the session progressed.

AG MARKETS

—Reuters: China’s canola thaw signals trade reset after Carney visit

First Canadian shipment since October halt points to tariff cuts, reshapes competition with Australia

A Chinese importer has purchased a Panamax cargo of roughly 60,000 metric tons of Canadian canola — the first such deal since China effectively halted imports last October — signaling a tentative reset in bilateral trade following Canadian Prime Minister Mark Carney’s visit to Beijing, according to Reuters.

Two traders with direct knowledge of the transaction said the cargo is expected to ship after March. The purchase comes amid expectations that Beijing will sharply reduce anti-dumping tariffs on Canadian canola seed to about 15% by March 1, down from a combined rate of roughly 84%. Carney said the cuts are part of an initial trade arrangement that also eases tariffs on Chinese electric vehicles. China’s commerce ministry later said it would adjust its anti-dumping measures on Canadian rapeseed, without providing details.

“Lower duty on Canadian canola is almost a done deal after the Canadian PM visit. It makes sense to buy now,” one international oilseed trader told Reuters.

The move could undercut rival supplier Australia, which had stepped in after Canada was sidelined. State-owned COFCO has bought about 500,000 tons of Australian canola in recent months, traders said. Australia’s sales had rebounded after China imposed duties on Canada—its first in roughly five years — following biosecurity curbs that disrupted trade in 2020.

Market reaction was swift: Zhengzhou rapeseed meal futures slid 2.4% on Monday to a more-than-one-year low on expectations of increased supply.

China’s clampdown on Canadian canola began with an anti-dumping probe that led to preliminary duties of 75.8% in August, effectively freezing shipments amid broader diplomatic tensions. The fallout rippled through China’s processing sector. Monthly imports dropped to zero in October for the first time in two decades, and inventories at crushing plants were exhausted, according to consultancy MySteel. Beijing is expected to issue a final ruling in the investigation before March 9.

Canola (rapeseed) is crushed into cooking oil, with the protein-rich meal used for livestock feed — making any resumption of flows critical for China’s crushing industry and a potential boost for Canadian farmers (see next item).
 

—Canada/China canola deal adds new tightness risk to U.S. feed markets

Expanded Chinese buying of Canadian canola could redirect meal supplies away from the U.S., nudging protein feed costs higher and increasing near-term price volatility

Canada’s new trade deal with China that reduces tariffs on Canadian canola (seed and meal) and related ag products is likely to have measurable effects on U.S. feed markets, particularly through impacts on feed ingredient supply and pricing.

Here’s how the link works and the potential implications for U.S. feed markets:

What the Canada/China deal changes: Canada and China agreed to slash tariffs on Canadian canola seed (from high double-digit/anti-dumping levels to around ~15%) and lift or reduce duties on canola meal as part of broader tariff concessions tied to other sectors.

Impact on U.S. feed markets

1. Reduced Canadian export barriers may tighten North American canola meal availability

Canola meal — the high-protein byproduct used in livestock and poultry rations — is a key feed ingredient that the U.S. imports nearly all from Canada.

If China re-enters as a stronger buyer of Canadian canola meal, that can redirect supplies that otherwise might go into U.S. markets, tightening U.S. canola meal availability.

2. U.S. feed prices could rise if Canadian supplies divert to China

With China lowering tariffs and likely increasing purchases, regional supplies of canola meal and seed could tighten in North America, which tends to raise local prices for protein feeds (especially canola meal).

Early reporting suggests this could push up U.S. feed costs starting around March, particularly for dairy, hog, and poultry sectors that use canola meal as a supplement.

3. Substitution effects among feed ingredients

Canola meal competes with other protein feeds (especially soybean meal, the dominant U.S. oilseed meal), so tighter canola meal supply may shift demand — and prices — for soymeal.

Grain and oilseed markets are interconnected, so price increases in one feed ingredient often bleed into others as livestock producers substitute between feedstuffs.

4. Short-term volatility

Market uncertainty during the initial phase of resumed China buying could create price volatility in North American and global oilseed meal markets.

U.S. feed market context. The U.S. has been a good customer for imported canola meal for feed inputs, with Canada historically supplying nearly all of the meal imported into the U.S.

China’s re-entry as a buyer tends to deepen global competition for the same pool of canola supplies, which alters the supply/demand balance for feed ingredients.

Bottom Line: The Canada/China canola tariff cuts are likely to tighten supply and exert upward pressure on U.S. feed ingredient prices, primarily through competition for canola meal. The exact magnitude will depend on how much (and when) additional volume China imports and how U.S. users adjust their feed formulas, but market price signals indicate a near-term tightening effect.
 

FARM POLICY

—FBA payments offer short-term lifeline for southern rice growers, study finds

USDA’s one-time bridge aid improves cash flow for 2026 planting but falls short of covering full production costs across most regions

A new economic analysis finds that USDA’s Farmer Bridge Assistance (FBA) program could play a critical role in helping Southern U.S. rice producers finance their 2026 crop — though it is unlikely to restore profitability on a full-cost basis in most regions.

The analysis, published by Southern Ag Today(link) and written by  

Brad Watkins, professor, Univ. of Arkansas, evaluates how the FBA program affects rice returns across major Southern growing areas, using 2025 pre-season enterprise budgets.

What the FBA program provides. Developed by USDA through its Farm Service Agency, the Farmer Bridge Assistance program is designed as a one-time, commodity-specific payment to help producers weather a period of low prices, high input costs, and trade uncertainty.

Key program details include:

• Payment basis: 2025 planted acres reported to FSA

• Timing: Payments expected by February 28, 2026

• Purpose: Serve as a financial bridge until benefits from the One Big Beautiful Bill Act begin in October 2026

• Rice payment rate: $132.89 per acre, announced by USDA on December 31, 2025

How the analysis was conducted. The study draws on 2025 Cooperative Extension rice budgets from:

Arkansas

Louisiana

Mississippi

Missouri

Texas

Seven rice-producing regions were evaluated:

Eastern Arkansas

Mississippi Delta

Southeast Missouri

Northeast Louisiana

Southwest Louisiana

Texas Gulf East

Texas Gulf West

For Southwest Louisiana and Texas Gulf West, results were calculated both for a first crop alone and for a first crop plus ratoon production.

Findings without FBA support. Before accounting for FBA payments, the study shows:

• Returns to both operating costs and total costs are negative in nearly all regions

• Louisiana is the exception, where lower herbicide, fertilizer, and seed costs result in comparatively stronger margins

• Outside Louisiana, most regions face losses even before considering fixed costs, highlighting the severity of current economic pressures on rice production.

Impact once FBA is included. When the $132.89/acre FBA payment is added:

• Returns to total costs remain mostly negative, again with Louisiana as the primary exception

• Returns to operating costs improve substantially, becoming positive or near breakeven in many non-Louisiana regions

While the payments do not restore overall profitability, they materially improve cash flow.

Why it matters for 2026 planting decisions. The author cautions that these results are based on pre-season budget estimates, not realized 2025 outcomes. Still, the implications are significant:

• The FBA program is unlikely to cover full production costs for most rice producers

• However, it does help cover operating expenses, such as seed, fertilizer, chemicals, and fuel

• This improvement could be decisive in enabling producers to secure operating loans and move forward with planting a 2026 rice crop

Bottom Line: According to the analysis, Farmer Bridge Assistance functions less as a profit-restoration tool and more as a liquidity backstop. In a period of compressed margins, it may not save balance sheets—but it could keep rice acres in production across much of the Southern U.S. heading into 2026.

ENERGY MARKETS & POLICY

—Monday: Oil slips as Iran tensions ease, focus shifts to Greenland standoff

Crude prices dip as geopolitical risk premium softens on Iran, while traders eye U.S./Europe fallout over Greenland and fresh supply disruptions

Oil prices edged lower Monday after signs that civil unrest in Iran has subsided, reducing fears of an imminent U.S. strike that could disrupt supplies from the major producer. Attention in energy markets is now turning to an escalating U.S./Europe dispute over Greenland and its potential impact on global demand.

Brent crude was trading at $63.79 a barrel, down 40 cents (0.62%), while U.S. West Texas Intermediate (WTI) for February fell 44 cents (0.74%) to $59.00. The more actively traded March WTI contract slipped 36 cents (0.61%) to $58.98 as the February contract approaches expiry. U.S. markets were closed Monday for Martin Luther King Jr. Day, limiting trading volumes.

Iranian authorities say a violent crackdown has quelled protests that reportedly killed 5,000 people, while President Donald Trump appeared to step back from earlier intervention threats.

Meanwhile, European Union leaders are set to meet in Brussels on Thursday for an emergency summit after Trump warned of new tariffs on several EU countries unless the United States is allowed to purchase Greenland.

Adding to market unease are risks to Russian infrastructure and distillate supplies amid forecasts for colder weather across North America and Europe.

On the supply side, Tengizchevroil, led by Chevron, said it temporarily halted production at Kazakhstan’s Tengiz and Korolev oilfields as a precaution after a power distribution issue.

TRADE POLICY

—Trump shrugs off USMCA as leverage, not policy — even as U.S. industry defends it

The president’s dismissive rhetoric reflects industrial nationalism, tariff strategy, and negotiating posture, while most analysts argue the pact underpins North America’s $2 trillion integrated economy

President Donald Trump is taking an openly dismissive tone toward the United States-Mexico-Canada Agreement (USMCA) just months ahead of its formal review, calling the pact “irrelevant” and claiming it offers “no real advantage” to the United States. The remarks mark a sharp rhetorical break from his first-term promotion of the deal and have raised questions about whether the posture is substantive — or strategic.

Why Trump Is downplaying USMCA. Analysts point to several overlapping motivations behind Trump’s negative stance:

1) Industrial nationalism and reshoring politics

Trump’s comments at a Michigan auto plant fit squarely within his broader message that the U.S. should “make it here.” By arguing that America doesn’t need vehicles or parts from Mexico or Canada, he reinforces a domestic manufacturing narrative aimed at union workers and industrial swing states — even if it understates current supply-chain realities.

2) Tariffs-first economic strategy

Since 2025, Trump has relied heavily on tariffs on steel, aluminum, vehicles, and other goods from both partners. Downplaying USMCA helps justify those measures and signals that trade rules won’t constrain tariff authority, particularly as the Supreme Court weighs challenges to his emergency tariff powers.

3) Negotiating leverage ahead of review

Declaring indifference to the pact strengthens Trump’s hand going into the 2026 review. By suggesting the U.S. could walk away — or prefers bilateral deals — he pressures Canada and Mexico to concede on issues like autos, energy, labor enforcement, and dispute settlement.

4) Skepticism of multilateral frameworks

Consistent with his long-held preference for bilateral deals, Trump has framed USMCA as unnecessary bureaucracy rather than leverage. Casting it as expendable aligns with his view that the U.S. economy is strong enough to dictate terms country by country.

Why most analysts — and U.S. businesses — say USMCA works

Despite the rhetoric, most trade economists and corporate leaders argue the agreement is foundational to North American competitiveness:

Deeply integrated supply chains

The U.S., Mexico, and Canada operate a single production platform in autos, machinery, aerospace, agriculture, and energy. Reuters has reported that the Detroit Three rely heavily on cross-border parts flows, with executives calling the integration a “big strength,” not a vulnerability.

Lower costs, higher competitiveness

Industry groups estimate USMCA delivers tens of billions of dollars in annual savings by allowing regional specialization while keeping production close to U.S. markets — an advantage over Asia-centric supply chains.

Jobs and investment certainty

The pact governs roughly $2 trillion in annual trade and provides predictable rules that underpin long-term investment decisions in factories, logistics, and energy infrastructure across all three countries.

Strong U.S. corporate support

Major automakers — including Tesla, Ford, and Toyota — have urged extension of USMCA, arguing it is essential to American auto production and export competitiveness.

Mexico’s response: calm, not confrontational. Mexican President Claudia Sheinbaum has sought to lower the temperature, emphasizing that the three economies are “very integrated” and noting that some of the strongest defenders of USMCA are U.S. businesses themselves. She has expressed confidence that the trade relationship will continue and signaled optimism about the review process, even as she avoids public sparring with Trump.

Meanwhile, Trump’s claim that the USMCA “expires very shortly” is not true, as even if Mexico, the United States and Canada don’t agree to extend the pact during the upcoming review process, it would not be terminated until 2036.

Bottom Line: Trump’s dismissive language appears less about abandoning USMCA outright and more about using uncertainty as leverage — with tariffs, reshoring rhetoric, and bilateral threats as pressure tools. In contrast, most analysts and corporate stakeholders see the agreement as a cornerstone of North American industrial strength, one that the U.S. economy benefits from as much as — if not more than — its neighbors.

—Mexico anti-dumping probe targets U.S. Pork as exports hit record highs

USMEF says Mexico’s investigation ignores demand-driven trade and the country’s heavy reliance on U.S. hams and shoulders

Mexico has launched an anti-dumping and anti-subsidy investigation into U.S. pork hams and shoulders, a move that comes as U.S. pork exports to Mexico are reaching record levels and commanding higher prices — a dynamic U.S. industry officials argue is fundamentally inconsistent with dumping claims.

Mexico is by far the most important foreign market for U.S. pork, particularly for bone-in hams — the exact products under investigation, according to Erin Borror, vice president of economic analysis at the U.S. Meat Export Federation (USMEF).In 2025, total U.S. pork and variety-meat exports to Mexico are expected to exceed 1.2 million metric tons, valued at roughly $2.8 billion, both all-time highs. Mexico accounted for about 42% of total U.S. pork export volume last year.

USMEF stresses that pricing trends undermine any allegation of dumping. U.S. pork production peaked in 2020 and has since been relatively stable, while Mexican demand has continued to grow, pulling larger volumes of U.S. product at higher prices. That pattern, Borror said, reflects strong demand rather than below-cost sales.

Mexico’s domestic supply constraints are also central to the trade relationship. Disease challenges such as PRRS and PED have limited Mexican pork production, increasing reliance on imports to supply its large processing sector. Continuous shipments of fresh, bone-in hams from the United States have become a key input for Mexican processors, helping explain the scale and persistence of imports.

USMEF said it is working closely with the National Pork Producers Council and the Office of the United States Trade Representative to support exporters and demonstrate that market forces — not unfair trade practices — are driving U.S. pork shipments to Mexico.

CHINA

—China’s research universities leap ahead as U.S. funding pressures mount

Heavy state investment and scale advantages propel Chinese institutions to the top of global research rankings, while U.S. budget cuts blunt momentum despite rising output

Chinese universities have surged to the top of global research rankings, overtaking long-dominant U.S. institutions at a moment when federal research funding in the United States is under strain. Rankings that emphasize both the volume and quality of scholarly output now place Zhejiang University at No. 1 worldwide, with seven other Chinese universities in the top ten, according to reporting by the New York Times.

By contrast, Harvard University, long regarded as the world’s most productive academic institution, has slipped to third place. While overall U.S. research output continues to grow, Chinese institutions are expanding faster—enough to reshape the global academic hierarchy.

Why China is pulling ahead. Several forces are driving the shift:

•Massive state investment: Beijing has poured sustained funding into higher education and basic research for more than a decade. Flagship universities benefit from multiyear budget certainty, large-scale laboratory construction, and aggressive recruitment of top domestic and overseas talent.

•Scale and focus: China’s leading universities operate at enormous scale, producing vast numbers of peer-reviewed papers, patents, and citations—metrics heavily weighted in global rankings.

• Strategic alignment: Research priorities are closely aligned with national goals in artificial intelligence, materials science, energy, biotechnology, and advanced manufacturing, accelerating output in high-impact fields.

The U.S. side of the ledger. In the United States, the story is more mixed:

•Federal funding cuts and uncertainty: Recent reductions and delays in federal research appropriations have constrained long-term planning at universities, particularly for basic science that relies on steady public support.

•Rising output, slower growth: U.S. universities are still producing more research overall than in prior years, but growth has been outpaced by China’s rapid expansion.

•Institutional fragmentation: Unlike China’s centralized strategy, U.S. research funding is spread across agencies and subject to annual political battles, adding volatility.

Why it matters. The rankings shift has implications beyond academic prestige:

•Innovation leadership: Universities are engines of patents, startups, and workforce training. Faster growth in Chinese research capacity could translate into long-term advantages in critical technologies.

• Talent flows: Global students and researchers increasingly follow funding and facilities, raising concerns about brain drain if U.S. support remains uneven.

•Policy pressure: The results are intensifying calls in Washington to stabilize and expand federal research funding to preserve U.S. leadership in science and innovation.

In short, analysts say the rise of Chinese universities reflects not a collapse of U.S. research, but a relative shift driven by sustained investment and strategic focus in China — versus tightening budgets and uncertainty in the United States.

POLITICS & ELECTIONS

—Virginia Democrats move toward mid-decade redistricting with eye on GOP House seats

Proposed constitutional amendment would allow lawmakers to redraw congressional maps before 2026, potentially reshaping up to four Republican-held districts if voters approve

Democrats in Virginia advanced a constitutional amendment that could significantly alter the state’s congressional map ahead of the 2026 midterm elections. The Democratic-controlled General Assembly approved the measure along party lines, with the state Senate passing it 21–18 after earlier House of Delegates approval.

If ultimately approved by voters in an expected April referendum, the amendment would allow the legislature to redraw U.S. House district lines before the next census cycle. Current state law — adopted via a 2020 voter referendum — limits redistricting to once per decade and assigns map-drawing authority to a bipartisan independent commission.

The proposed change would let lawmakers bypass that commission and initiate early redistricting if other states engage in similar non-census map changes. Democrats argue the move is a defensive response to Republican-led mid-decade redistricting efforts in states such as Texas and North Carolina, which they say have tilted the congressional playing field.

Republicans counter that the amendment undermines the voter-approved independent commission and politicizes the redistricting process.

If enacted, Democrats believe the new authority could put as many as four GOP-held House seats in play, potentially altering Virginia’s congressional delegation in the 2026 elections.

TRANSPORTATION & LOGISTICS

— STB flags major gaps in UP/NS merger filing, raising stakes for rail industry

Regulators say Union Pacific failed to justify competitive impacts and disclose key contract terms, reinforcing view that deal is a “significant” transaction

According to Railroad Weekly, the U.S. rail sector is now dominated by two intertwined storylines — and the proposed merger between Union Pacific and Norfolk Southern remains at the center of both.

The merger effort hit a notable setback Friday when the Surface Transportation Board ruled that the companies’ application was incomplete, siding with objections raised by rival railroads and other stakeholders. The decision does not kill the deal, but it materially slows the process and raises the regulatory bar Union Pacific must clear.

Key deficiencies identified by the STB. The Board said the filing failed to include required analysis and disclosures needed to assess competitive harm, including:

Missing market-share analysis

UP did not provide estimates of how much freight a combined UP–NS system would divert from trucks or from competing railroads — a core requirement for evaluating industrywide impacts.

Undisclosed “walk-away” conditions

Regulators flagged the absence of key contractual terms between UP and NS, most notably the definition of what constitutes a “materially burdensome regulatory condition.”

This matters because UP reserves the right to abandon the transaction if the STB imposes concessions it deems too onerous — yet the application did not specify what those limits are.

Concerns over St. Louis terminal control

The Board raised separate objections related to UP’s influence over a terminal and switching railroad critical to freight service in the St. Louis region. While UP has proposed relinquishing control by selling shares to other railroads at “fair market value,” the STB said it cannot rule out anticompetitive effects even under that arrangement.

“Significant,” not “minor”

Perhaps most consequentially, the STB rejected Union Pacific’s effort to characterize the deal as a “minor” transaction. Citing unresolved competitive risks, the Board said the merger must instead be treated as “significant,” triggering a far more rigorous review process and potentially broader conditions.

Railroad Weekly notes this classification alone meaningfully changes the trajectory of the deal: it increases scrutiny, lengthens timelines, and strengthens the hand of opponents seeking concessions on access, rates, and network competition.

What it means for the rail sector

The ruling underscores that regulators remain deeply skeptical of further consolidation among Class I railroads — especially deals that could reshape competitive balance between rail, trucking, and regional carriers.

For Union Pacific, the message is clear: the Board expects far more transparency, specificity, and competitive modeling before the merger can move forward.

For the broader rail industry, the decision signals that any future mega-mergers will face a similarly exacting standard — and that labeling them “minor” is unlikely to succeed when network control and market power are at stake.

Quote of note: “My wife didn’t want to marry me either. But it happened.” — Union Pacific CEO Jim Vena, anticipating an eventual merger between BNSF and CSX

LABOR & IMMIGRATION POLICY

—Immigration crackdown tests Trump’s political armor after ICE shooting

Polling slippage, right-leaning media backlash, and midterm jitters emerge as a Minnesota killing refocuses scrutiny on enforcement tactics 

President Donald Trump is encountering fresh political headwinds over immigration, an issue long central to his appeal, as public unease grows following the fatal shooting of a Minnesota woman by an officer with Immigration and Customs Enforcement.

Multiple polls now show erosion in support for the administration’s hard-line approach. A Reuters/Ipsos survey put approval of Trump’s immigration handling at its lowest point since his return to office, while AP/NORC found approval of immigration enforcement down sharply from spring highs. A CNN/SSRS poll reported a majority of respondents believe ICE actions are making cities less safe.

The shift follows the Minneapolis shooting of 37-year-old Renee Good by ICE officer Jonathan Ross, a flashpoint that sparked protests nationwide. Administration officials say the officer acted in self-defense, with Homeland Security Secretary Kristi Noem labeling Good’s actions “domestic terrorism.” But voters are skeptical: a Quinnipiac University poll found a majority —s panning Democrats, independents, and a slice of Republicans —s ay the shooting was unjustified.

Notably, cracks are appearing on the right. Conservative voices such as Bill O’Reilly urged de-escalation, while Joe Rogan questioned whether enforcement had veered toward “papers-please” tactics. Even among Republicans, the Reuters/Ipsos poll found a sizable share favor limiting harm to others even if it reduces arrests — signaling discomfort with the optics and intensity of current operations.

Strategists from both parties see risk and opportunity heading into the midterms. Democrats argue the moment exposes overreach and moral costs, while some caution against broad calls to abolish ICE, urging a narrower focus on abuses. Republicans counter that Democrats could overplay their hand, predicting voter sentiment will swing back if the party is framed as anti-law-enforcement.

White House aides maintain the president is delivering on his campaign promise of mass deportations and that public opinion will stabilize as messaging improves. GOP strategists say the durability of the backlash will hinge on what comes next — additional incidents, media coverage, and how Democrats choose to frame the debate.

For now, immigration remains a defining strength for Trump, but one that is showing signs of vulnerability as enforcement tactics face intensified scrutiny.

WEATHER

— NWS outlook: Heavy snow downwind of the Great Lakes… …Freeze warnings in effect for portions of southern Georgia down to

central Florida.