Balance of Power

Welcome to Balance of Power, bringing you the latest in global politics. If you haven’t yet, sign up here.

Taiwan is again turning its silicon chips into geopolitical bargaining chips.

In June, the world’s leading semiconductor-manufacturing hub blacklisted Chinese tech companies Huawei and SMIC, barring Taiwanese firms from doing business with them without government approval.

It marked the first time Taiwan imposed chip restrictions on major Chinese firms, and followed President Lai Ching-te’s pledge to close export-control loopholes as part of broader concessions to the US in tariff negotiations.

While it remains unclear how the curbs will affect the companies concerned, and how Beijing might retaliate, the move highlights Lai’s intention to further diversify Taiwan’s economic ties away from China — and his willingness to confront Beijing despite the risks.

Lai in Taipei in October. Photographer: An Rong Xu/Bloomberg

There are other signs of a hardening stance.

Lai is on a national tour delivering speeches urging the archipelago’s 23 million residents to unite against growing pressure from China, which considers Taiwan its territory.

On Sunday, he said that Beijing “does not own Taiwan” after asserting it “is of course an independent country.” Yesterday, he said China’s goal is to dominate the western Pacific.

Although not the first time a Taiwanese leader has made similar declarations, China is likely to view these statements as testing a red line and may use them as a pretext for further pressure.

Taiwan has additionally become more transparent about its military exchanges with the US and key security partners. In a rare disclosure last month, Taipei revealed a meeting between its defense minister and a visiting delegation of US lawmakers.

Beijing responded the next day by dispatching the largest number of military aircraft near Taiwan’s main island in over eight months.

What remains to be seen is how far China is willing to escalate in asserting its rights to the democratic territory.

For Lai, the question is whether his government can navigate the fallout of drawing closer to Washington while preventing regional tensions from boiling over. — Yian Lee

Dancers perform during Taiwan’s National Day celebration in Taipei in October. Photographer: An Rong Xu/Bloomberg

Global Must Reads

The US is halting the transfer of artillery rounds and air-defense systems to Ukraine, depriving the country of much-needed materiel as it endures intensified missile and drone attacks from Russia. The White House confirmed a Politico report on the stoppage, which said the move came after a review of US munitions stockpiles suggested they had fallen too low.

Emmanuel Macron and Vladimir Putin agreed to coordinate their approach on Iran in the first phone call between the French and Russian presidents since 2022, marking a rare overture from a European leader to the Kremlin. The call came as the five permanent members of the UN Security Council — the US, China, Britain, France and Russia — seek a common Iran stance. Israel, meanwhile, urged China to use its economic and political sway to rein in Tehran’s nuclear ambitions.

US President Donald Trump said Israel has agreed to the conditions needed for a 60-day ceasefire in Gaza and the plan would now be presented to Hamas. International pressure to halt the war has grown after an earlier truce ended in mid-March, with aid agencies warning that the 2 million residents of the strip, much of which has been destroyed in the conflict, are at risk of famine.

WATCH: Trump said Israel has agreed to the conditions needed for a 60-day ceasefire in Gaza. Dan Williams reports on Bloomberg TV.

Japan’s effort to maintain a friendly approach to trade negotiations is being tested as Trump ramps up pressure for a deal ahead of a July 9 deadline, raising the risk that Tokyo could become an easy target in his push for quick wins. Federal Reserve Chair Jerome Powell repeated that the US central bank probably would have trimmed interest rates further this year absent the barrage of tariffs.

Trump’s multitrillion-dollar tax bill is running into Republican resistance in the House as moderate and ultraconservative GOP lawmakers threaten to defy the president and sink his domestic agenda. The Senate version of the bill squeaked through on Vice President JD Vance’s tie-breaking vote, and House Speaker Mike Johnson can afford to lose the backing of only three Republicans in the face of unified Democratic opposition.

Keir Starmer dramatically abandoned his flagship welfare reforms to avoid a historic defeat, leaving the UK prime minister’s authority badly damaged and his government facing a widening fiscal hole.

Brazilian President Luiz Inácio Lula da Silva picked a fight with lawmakers over taxation of the rich, offering an early glimpse of political and economic debates that are set to rage through next year’s election.

Zohran Mamdani clinched the Democratic nomination for New York City mayor yesterday, with a Bloomberg analysis suggesting his success was underpinned by a coalition of younger and middle-class voters across Manhattan, Queens and Brooklyn.

The 14th Dalai Lama, who turns 90 on Sunday, confirmed that the centuries-old institution will continue after his death and that his office has the “sole authority” to find his successor as spiritual leader of Tibetan Buddhism, potentially heightening tensions with Beijing.

The Dalai Lama at a ceremony in India on Monday. Photographer: Sanjay Baid/AFP/Getty Images

Sign up for the Washington Edition newsletter for news from the US capital and watch Balance of Power at 1 and 5 p.m. ET weekdays on Bloomberg Television.

Chart of the Day

European Central Bank officials are starting to fret that a rapid appreciation of the euro could derail efforts to anchor inflation at their 2% target. The common currency is up about 14% against the US dollar this year — helping curb price gains that now precisely match the ECB goal. The danger, however, is that the rally propels the euro to levels that cause inflation to undershoot the target, damaging competitiveness.

And Finally

Late one Friday night in May, a truck carrying sound equipment for legendary Mexican band Los Ángeles Azules was pulled over along the Mexico-Puebla highway. What looked like police at the checkpoint were in fact bandits, and they drew their guns and seized the expensive cargo. The band publicized the incident on social media and President Claudia Sheinbaum raised it at a press briefing, where she called in the National Guard to investigate. Hundreds of similar incidents take place on the nation’s highways every week, and most victims suffer the cost of stolen goods without hope for recovery or justice.

Global Must Reads

Chart of the Day

And Finally

More from Bloomberg