Good morning.

The U.S. is escalating its push to bring pharmaceutical manufacturing back home.

The White House has imposed 100% tariffs on imported patented medicines, aiming to reduce reliance on foreign supply chains and strengthen domestic production. However, companies can significantly lower or avoid these tariffs by committing to U.S. manufacturing or agreeing to government pricing deals.

While major drugmakers have already secured exemptions, smaller firms face a higher risk, with analysts warning the policy is designed to force companies to shift operations domestically.

Let’s dive into today’s edition.

A U.S.–Iran ceasefire was expected to reopen the Strait of Hormuz and stabilize global energy flows after weeks of disruption. The waterway, which carries roughly one-fifth of global oil and LNG, was central to easing pressure on markets and supply chains.

Partial Passage: But the truce has not translated into normal operations. Shipping remains tightly restricted, with transit still controlled and uncertainty around safe passage keeping operators on the sidelines. Traffic through the strait is running at a fraction of normal levels. From a typical 120–140 daily vessel transits, only a handful of ships are now passing, with capacity capped at roughly 10–15 vessels per day.

Uncertain Times: More than 600 vessels remain stranded, including hundreds of tankers, as companies avoid the route.

Conditional Opening: Sultan Al Jaber, chief executive of Abu Dhabi National Oil Company (ADNOC), wrote on LinkedIn that the Strait of Hormuz is “not open,” warning that passage through the waterway remains subject to “permission, conditions and political leverage.”

The White House has expanded tariffs on imported steel, aluminum, and copper, widening the scope of Section 232 measures and changing how duties are calculated. The new framework applies tariffs based on the full value of imported products rather than discounted foreign pricing.

Key Metals: Under the revised structure, steel, aluminum, and copper products such as coils and sheets will face tariffs of up to 50%. Derivative goods made from these metals will be subject to 25% tariffs, while certain industrial and grid equipment will face a reduced 15% rate through 2027.

Domestic Power: Products manufactured abroad using U.S.-origin steel, aluminum, or copper will face lower duties of around 10%, while items with minimal metal content are exempt. The administration said the policy is aimed at strengthening domestic production and reducing reliance on imports.

Big Picture: The changes are expected to raise input costs across industries while accelerating investment in domestic metals capacity, reinforcing the role of tariffs in reshaping U.S. industrial supply chains.

CK Hutchison has launched arbitration proceedings against A.P. Moller-Maersk following the seizure of its port assets in Panama, escalating a dispute that has drawn in both corporate and geopolitical tensions.

What’s the issue? The conflict dates back to January, when Panama’s Supreme Court ruled Hutchison’s contracts to operate two terminals at either end of the Panama Canal unconstitutional. The company has since filed claims against both the Panamanian government and Maersk, accusing the latter of aligning with authorities to undermine its long-term concession.

Bigger Problems: The arbitration, to be heard in London, adds complexity to Hutchison’s broader plans to divest port assets as part of a $23 billion deal involving global investors. While the financial impact is expected to be limited, analysts say the dispute injects uncertainty into strategic transactions.

The case also reflects rising geopolitical friction, with the ruling seen as part of broader efforts to curb Chinese influence in critical infrastructure such as the Panama Canal, a key artery for global trade.

U.S. import volumes remain largely stable despite ongoing disruptions in global shipping networks, with major ports continuing to handle steady cargo flows. However, rising freight rates are emerging as a key pressure point for retailers and supply chains.

Rising Costs: Ocean freight costs have climbed sharply, with Shanghai–New York rates up 32.5% and Shanghai–Los Angeles up 32.8% since late February. Spot rates have reached $3,671 per container to New York and $2,910 to Los Angeles, reflecting tighter capacity across major trade routes.

Despite stable volumes, logistics disruptions are forcing rerouting and creating equipment imbalances across ports, adding complexity to global shipping flows. Retailers are working closely with carriers to manage delays and maintain inventory pipelines.

Future Outlook: Import volumes are expected to moderate, with projections indicating an 8.3% decline to 1.97 million TEUs. Analysts say that while volumes remain resilient for now, sustained freight volatility could reshape shipping patterns and sourcing strategies.

The U.S. and European Union are nearing an agreement to coordinate on securing critical minerals, as both sides move to reduce dependence on China-dominated supply chains. The deal is expected to focus on strengthening access and stabilizing supply across key resources.

What’s the deal: The proposed framework includes measures such as minimum price guarantees to support non-Chinese suppliers, alongside joint investments, shared standards, and coordinated responses to potential supply disruptions.

The agreement is expected to cover the entire value chain — from exploration and extraction to processing, refining, and recycling — signaling a broader industrial strategy rather than a narrow trade pact

China has introduced sweeping new rules to protect its supply chains, giving authorities broad powers to retaliate against foreign entities that restrict trade or disrupt critical flows. The directive marks a shift toward treating supply chains as a national security asset rather than purely economic infrastructure.

Protective Laws: Under the framework, government agencies can launch security probes into foreign governments, organizations, or companies that impose “discriminatory” measures against China. Authorities can respond by restricting trade in goods, technology, and services, as well as imposing additional fees or limiting market access.

The rules also establish an early-warning system to monitor risks across key sectors, including raw materials, equipment, and critical technologies. Foreign firms could face restrictions on investment, operations, or entry into China if deemed a threat to supply chain stability.

Global maritime piracy incidents dropped to their lowest level since 1991 in the first quarter of 2026, reflecting stronger enforcement and coordination across shipping lanes. The International Maritime Bureau reported just 16 incidents, down from 45 a year earlier.

Pirate Attacks: Despite the sharp decline, risks remain. Pirates successfully boarded vessels in 94% of reported attacks, with 14 ships boarded, one hijacked, and one attempted attack during the quarter. Bulk carriers accounted for roughly half of all incidents.

Risky Areas: Southeast Asia continues to dominate the risk landscape, accounting for nearly three-quarters of global incidents, with the Singapore Strait alone responsible for about half. While activity there has declined significantly year-on-year, it remains the world’s primary piracy hotspot.

U.S. trucking rates have climbed to their highest levels since 2022, adding fresh pressure to inflation as fuel costs surge. The spike comes amid rising transportation expenses across supply chains.

What’s Happening? Diesel prices have jumped nearly 50% since the start of the U.S.–Israel war against Iran in late February, sharply increasing operating costs for carriers. The surge has forced trucking operators to adjust pricing to offset higher fuel expenses.

Increasing Costs: In response, trucking companies have pushed per-mile fuel surcharges to around $0.70–$0.80 per mile, the highest since 2022, according to Truckstop.com data. Each $1 increase in diesel prices adds roughly $0.20 per mile to shipping costs, forcing carriers to pass through rising expenses to shippers.

Chinese semiconductor firms are reporting record revenues, driven by surging demand for AI-related chips and a government-backed push for self-sufficiency amid U.S. export restrictions. Companies across the sector are benefiting from domestic demand as China accelerates efforts to localize its chip supply chain.

Rising Chips: Semiconductor Manufacturing International Corporation reported a 16% rise in 2025 revenue to a record $9.3 billion, with forecasts pointing to further growth. Hua Hong Semiconductor and other players also posted record sales, while newer entrants are seeing triple-digit growth driven by demand for AI infrastructure.

Demand Drivers: The surge is being fueled by strong demand for chips used in AI data centers, electric vehicles, and memory applications, alongside supply constraints in key segments. U.S. export controls — particularly on advanced chips — have accelerated China’s push to replace imports with domestic alternatives.