The world continues to ride the Trump rollercoaster. This week he has cut back joint exercises with South Korea, threatened ally Oman and imposed yet more tariffs. But he has also signalled a deal on Canadian tariffs and Western oil firms are starting to see the benefits of his action in Venezuela. South Korea received the news from Trump's social media, where he complained over lack of support for his war with Iran. His envoys continued their diplomatic efforts in the Middle East, unsurprisingly without any progress.

The other story of the summer is the escalation in the Russia-Ukraine conflict, with both countries striking deep into each other's territories. Russian air attacks on Ukraine have been particularly brutal, and are causing more civilian casualties than at any time since March 2022. Ukraine is continuing its diplomatic push for air defence munitions and its campaign on Russian oil infrastructure and Wildberries' warehouses is putting the Russian economy under increasing pressure.

Trade & Supply Chains·Global

US puts tariffs of up to 100% on imported drones

Trump signed a proclamation on 13 August imposing tariffs of up to 100% on imported drones and their parts, using Section 232 national security powers. The top rate covers drones above 25 kilograms, those with thermal imaging, docking stations and certain critical components. Smaller drones and other parts have a 25% rate. The EU, Japan, South Korea, Switzerland, Liechtenstein and Taiwan pay 15% and the United Kingdom 10%, but only where hardware, software and technology originates there or in the United States. Commerce Secretary Howard Lutnick found the United States too dependent on foreign suppliers, such as Chinese manufacturer DJI. Even if assembly moves to the US as a result of these tariffs, the magnets and batteries and other components are likely to remain Chinese, and US consumers will pay the price.

Defence & Security·Asia-Pacific

Trump cuts back exercises with South Korea

Trump ordered the Pentagon on 16 August to substantially reduce Ulchi Freedom Shield, the annual US-South Korean exercise, hours before it started. He called the drills costly and hostile towards North Korea, cited his positive relationship with Kim Jong Un, and gave Seoul's refusal to join US action against Iran as a further reason. Foreign Minister Cho Hyun said Seoul had no advance warning and learned of it from the President's social media post. President Lee Jae Myung said the exercises are defensive and that his country must prepare for the worst case. The two governments then agreed to end the exercise on 21 August instead of 27 August and to scale back combined field training. Drills were cut similarly in 2018, during Trump's first term engagement with North Korea. This move will alarm US allies, but Trump's erratic and emotional diplomacy is not new. Japan, Australia and European members of NATO are already funding more national capability and leaning less on American commitments. However, US re-engagement with North Korea could be an opportunity to reverse its increasingly important support for Russia in Ukraine.

Resource Security·Europe & Eurasia

Ukraine continues campaign against Russian oil infrastructure

Ukrainian drones forced Russia's largest Black Sea crude export terminal to stop work on 14 August. Sheskharis, at the port of Novorossiysk, handles about 700,000 barrels a day. A tanker due to load turned back to open sea, and the port suspended both loading and crude intake once its storage tanks filled. Three grain terminals at the same port had halted two days earlier. Ukraine has hit 11 of Russia's 34 large refineries this month, including shutting down the Orsk plant for six months. The sustained campaign has led to fuel shortages and pushed prices up dramatically in the last two months. Several cities have introduced petrol rationing. Alongside the continuing attacks against Wildberries' warehouses and distribution hubs, Ukrainian efforts are having significant impacts on the Russian economy.

Also this week

July was Ukraine's worst month for civilian casualties since 2022. Despite Ukrainian successes, Russia continues to escalate the conflict inside Ukraine. The UN Human Rights Monitoring Mission in Ukraine reported on 14 August that July brought more civilian deaths and injuries than any month since March 2022. Long-range missiles and drones caused nearly two fifths of the total, mostly in cities well behind the front line. Conflict & Instability · Europe & Eurasia

NATO jets shoot down a Russian drone over Romania. A Spanish F-18 on NATO air policing duty downed a drone over Galati county on 16 August, the fourth over Romania this year. Romania identified it as a Russian Geran-2. Russian incursions into NATO airspace are becoming more common and NATO is increasing the visibility and comms around its defensive deployments. Defence & Security · Europe & Eurasia

EU transaction bans reach 33 more Russian banks. Bans under the EU's 21st sanctions package took effect on 13 August, covering 33 further Russian banks. The package also reaches into firms in India, Central Asia and the Gulf. Sanctions & Export Controls · Europe & Eurasia

US-Iran talks stalled and missiles reach the UAE. The 60-day memorandum between Washington and Tehran expired on 17 August with no deal. Trump said he was in no hurry, while also threatening ally Oman over its engagement with Iran over Hormuz. The UAE then reported two Iranian ballistic missiles on 18 August. Tensions and clumsy diplomacy continue, as do oil and gas price rises. Conflict & Instability · Middle East & North Africa

Israel continues to strike southern Lebanon. Lebanon's health ministry said strikes on 15 August killed 11 people, including three children in the village of Ansar. Netanyahu's office said Hezbollah had wounded Israeli soldiers first. US diplomacy is not yet making much progress in Israel, on Lebanon or Gaza. Conflict & Instability · Middle East & North Africa

US pauses 50% tariffs on Canada. Trump announced a three-day suspension of 50% duties on Canadian electronics, machinery, furniture and dairy shortly before a midnight deadline, and said a deal had been reached subject to documents being finalised. Nothing is signed yet, but this will be good news for Canadian exporters. Trade & Supply Chains · Americas

China and Indonesia joint exercises east of Taiwan. Chinese and Indonesian warships ran communication and replenishment exercises east of Taiwan on 13 August, the first time China has trained there with a foreign navy. Jakarta called it routine but the region is watching closely. Defence & Security · Asia-Pacific

BP and Gulf firms take a Venezuelan offshore gas concession. BP took operatorship of the Loran phase two gas project on 14 August, with Abu Dhabi's XRG and Qatar's UCC taking equal stakes. It is among the first large Western returns since Maduro's removal, and a test of whether such terms survive the political realities in Caracas. Resource Security · Americas

Hichilema wins a second term in Zambia. The Electoral Commission of Zambia declared Hakainde Hichilema the winner on 18 August with about 62% of the vote. The EU observation mission raised concerns over campaign violence and intimidation. Continuity suits copper investors. Politics & Governance · Sub-Saharan Africa