Briefings From the Dispatch

U.S. Court Strikes Down Tariffs

A U.S. trade court has deemed the “Liberation Day” tariffs – blanket 10% duties on all imports – illegal, ruling they exceeded presidential powers under IEEPA. The court found no valid emergency to justify the move, reaffirming congressional authority over trade. Targeted steel and auto tariffs under Section 232 remain for now.

G7 Meets in Banff Amid Strains

G7 finance ministers convened in Banff, Alberta, reaffirming support for Ukraine and warning of intensified sanctions against Russia if peace efforts stall. The final communiqué emphasized economic imbalances and non-market practices, subtly addressing concerns over China’s trade policies. 

Sovereign Wealth Fund Floated

SoftBank’s Masayoshi Son proposed a $300bn US-Japan sovereign wealth fund focused on tech and infrastructure. The plan, discussed with U.S. Treasury Secretary Scott Bessent, would be co-managed by both governments. Analysts remain divided citing
unclear funding mechanisms and political hurdles.

Economic Concept of the Week

Beyond articles and reports, we spotlight key ideas that cut across theory and practice through our Concept of the Week. Each week, we unpack a pivotal concept bridging academic insight with real-world relevance. 

Hysteresis
Hysteresis in economics refers to the long-lasting effects of temporary shocks where short-term downturns can lead to permanent declines in output or labour market participation.
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Geoeconomics
Geoeconomics explores how states use economic tools like trade, investment, and sanctions, to achieve geopolitical goals.
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Ecological Debt Swaps
Debt-for-nature swaps allow developing countries to reduce external debt in exchange for commitments to environmental conservation.
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From the Vault

The Credit Rating Saga: Echoes of 1919
When Moody's downgraded U.S. sovereign credit this past week, it marked the first action since 1919. Though a century apart, both instances are bound by a shared thread: fiscal strain in the aftermath of extraordinary government spending. In 1919, the U.S. faced a fiscal overhang of World War I, wth federal debt ballooning from $1.2 billion in 1916 to over $25 billion by 1919. Though the U.S. emerged victorious and economically ascendant, the lower rating reflected Moody's concern over how a peacetime economy would absorb such debt without the effects of inflation, default, or severe austerity. Fast forward to 2025, and the war is different: not one of tanks and trenches, but of partisan paralysis. U.S. debt is once again surging due to chronic deficit spending, an aging population, and rising borrowing costs. The inability to reform spending patterns has reinforced an age-old truism: a hegemon's credit is never just about its capacity to pay, but about the political will to act.
US-China Meetings – Nixon in Beijing
U.S. and Chinese officials convened in Geneva this past weekend, agreeing to a 90-day tariff reduction framework and announcing the launch of a new economic and trade consultation mechanism. While publicly framed as technical coordination, these developments signal a tacit recognition of the need to stabilise an increasingly adversarial interdependence. The talks mark a carefully managed pause and an attempt to solidify constraint as opposed to complete reconciliation. This dynamic mirrors the longer arc of U.S.-China economic engagement, beginning with President Nixon's 1972 visit to Beijing. That historic opening, set against Cold War bipolarity, inaugurated a strategic alignment that would later support decades of deepening trade and financial flows. But where 1972 was driven by mutual interest in balancing against a common rival, today's dialogue unfolds in an atmosphere of guarded calculation. As a result, the US-China decoupling narrative that has transformed the relationship from one of complementarity to calibrated vulnerability, is in vogue once more. It seems that trade has become less a mechanism of convergence than a tool of strategic bargaining.
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