NARVA, Estonia — Right on the Russian border, Europe’s first commercial-scale rare-earth magnet factory is starting to supply automotive and green tech customers from a forgotten corner of Estonia. The project represents an act of defiance against Russian aggression. It’s a bid to counter China’s chokehold over critical minerals that is Beijing’s trump card in its escalating trade war with the United States. And it’s a vote of optimism regarding European industry, its backers say. “The future of Europe’s competitiveness is here,” Estonian Prime Minister Kristen Michal said at the opening of the factory last month. On the day of the ceremony, Russian military jets intruded into Estonian airspace. The first phase of the new factory, owned by Neo Performance Materials, will be capable of producing magnets for 1 million electric vehicles and 1,000 generators for the wind industry annually. These magnets make electric systems more efficient, and demand is picking up rapidly.  European Commission President Ursula von der Leyen even brought a magnet made in Narva to the G7 summit in Canada in June, where she handed it to Prime Minister Mark Carney, in recognition of Neo’s Canadian roots.  As they are made with rare earth elements — metals whose extraction and refining is dominated by China — there was no commercial-scale production in Europe before Neo set its sights on this city right on the Russian border.   Just east of the factory, a fortress sits on each bank of the Narva River, which forms the EU and NATO’s border with Russia.   But it’s not just European industry that is counting on the plant run by Neo. Estonia and the rusting province around Narva also see it as vital to their futures.  MAKING A COMEBACK  Estonia’s third-largest city feels forgotten, peripheral and decidedly unfashionable. The local textile industry collapsed so long ago that locals barely remember it. The colorful Hanseatic hipster capital Tallinn feels distant, with its Michelin-starred restaurants, pricey craft beer and tech startup scene.   “Narva used to be a quiet place at the end of Europe. Young people were moving away,” said Aivar Virunen, the plant’s production manager and Neo’s first employee in Narva. A lifelong resident and former machine engineer in the oil shale sector, he’s excited about the promise of a revival.  Ida-Virumaa, the province Narva is a part of, is the old industrial heartland of Estonia. The region, home to approximately 130,000 people, is centered on the shale oil industry. Or used to be.  The local tar sands offered Estonia de facto energy independence from Russia — in contrast to neighboring Latvia and Lithuania — at the cost of relying on a polluting source of energy and heating.   By 2035, Tallinn wants to have phased out shale oil. For over a decade the industry has been in slow decline as the sprawling plants built during Soviet occupation times have rarely undergone renovation, let alone expansion.   For Narva, the shale exit means that thousands of people in the mining and energy production sectors are set to lose their jobs.  “Of my colleagues, 30 percent come from the oil shale industry,” Virunen explained. “But also, others are coming from all over Estonia,” he said, adding 14 nationalities are already represented on the factory floor.  MOVING FAST  The digital metamorphosis that has occurred in the Estonian government over recent decades is now being implemented in Narva with Neo’s factory. What started with a so-called Tiger’s Leap by the state to connect every school in the country to the internet as early as 1996, led — along with the birth of Skype, Wise and Bolt — to a highly skilled workforce.  “We evaluated lots of places,” Neo CEO Rahim Suleman told POLITICO. The company went with Narva when it “looked at the kind of digital capabilities and the speed upon we could do this,” he explained, referring to the quick permitting of the project.  On a budget of €100 million, Neo received €17 million from the EU’s Just Transition Fund, meant to entice investments to deindustrializing regions that need to move jobs away from fossil fuel industries. In Estonia only Ida-Virumaa qualifies for the subsidies, to the tune of €340 million.  Neo’s factory — only the first phase of a potentially much larger footprint in Narva — will support 300 jobs, with the potential to grow to about 1,000. It will source its supplies of neodymium, a rare earth used in permanent magnets, from Australia. The permitting process was so fast that new EU-wide rules on industrial permitting — the Net-Zero Industry Act and the Critical Raw Materials Act — didn’t influence it.   Maive Rute, herself Estonian, one of the European Commission’s most senior civil servants on industrial policy, said the Narva facility “proves that Europe can not only invent but also produce. It can produce sustainably, and it can lead” the way in the green transition.  BORDER RISK  What could go wrong?  Narva and its environs, with their large Russian-speaking population, could be next in Moscow’s sights after Crimea, Donbass and the rest of Ukraine. Should Russian President Vladimir Putin order his troops into Estonia, the town would be one of their first targets.  But Neo isn’t worried about that, Suleman said. “We’re not a geopolitical company. We have another facility nearby, so we were already exposed longer to Estonia’s way of doing business,” he told POLITICO.  “Let’s state the obvious: It’s a NATO country. We’re confident in the alliance’s response and we hope for the existing war to end as soon as possible.”  As for Estonia, hosting a factory that is unique outside Asia is precisely the type of deeper integration the country continuously seeks with the EU and NATO. It was occupied by Moscow for almost six decades during the Cold War, subjected to indiscriminate deportations and russification. Acutely aware of Russia’s imperialist tendencies, Tallinn has always viewed any policy through a lens of security and deterrence — even in the case of factories.  Becoming a cog in Europe’s push to electrify the car industry and grow the wind power sector is very much in line with that approach — almost as much as adopting the euro or swapping the Russian power grid for the European one.  “With this investment, Estonia is now at the very heart of Europe’s rare earth magnet manufacturing,” Michal said. “This plant proves that it’s possible for international capital, European support and Estonian know-how to come together.”  Graphic by Lucia Mackenzie. This story has been updated.

President Donald Trump has settled on tariff rates for most of the country’s largest trading partners. The rest of the world stands in limbo. A White House official confirmed that Trump plans to sign new executive orders on Thursday imposing higher tariff rates on several countries that have been unable to reach negotiated trade agreements by his self-imposed Friday deadline. It could include a number of America’s biggest trading partners, including Canada, Mexico and Taiwan. That’s sent their leaders, as well as officials from other sizable economies scrambling to try and secure a last-minute deal or extension — although most are downbeat about that prospect. “U.S. trade negotiators are squeezing Taiwan like a lemon,” said a person familiar with U.S.-Taiwan trade talks granted anonymity because of their sensitivity. “The U.S. wants it all in terms of access to Taiwan’s markets.” Unlike with his previous tariff deadlines, the White House insists Trump will follow through this time, and not issue another extension, which he’s done twice since first rolling out his “reciprocal” tariffs on dozens of trading partners on April 2. “THE AUGUST FIRST DEADLINE IS THE AUGUST FIRST DEADLINE — IT STANDS STRONG, AND WILL NOT BE EXTENDED. A BIG DAY FOR AMERICA!!!” Trump posted on his social media platform, Truth Social, on Wednesday. Later Wednesday, the president made a dizzying series of other trade moves, rolling out executive orders raising tariffs on Brazil to 50 percent, setting new tariffs on semi-finished copper products and ending a tariff exemption for low-value packages from overseas. He also announced a preliminary agreement with South Korea, setting duties on the country’s products to 15 percent in exchange for pledges to invest more than $350 billion in the U.S., purchase more than $100 billion worth of U.S. energy and lower tariff barriers. He announced another agreement with Pakistan, “whereby Pakistan and the United States will work together on developing their massive Oil Reserves,” though he didn’t say anything about lowering their tariff rate. The president has already used the threat of steep new tariffs to reach preliminary trade and investment agreements with Japan, the European Union, the United Kingdom, South Korea and several fast-growing Southeast Asian countries, setting rates between 15 percent and 20 percent. The administration has also maintained a detente with China, although Trump has yet to decide whether to extend a separate, Aug. 12 deadline for duties to spike back up to around 80 percent. The president plans to sign new executive orders by midnight Thursday to impose those agreed upon duties and avoid tariffs snapping back to the original levels he announced back in April, the White House confirmed. It’s not yet clear, the official said, whether Trump will hold a public event to declare victory in the global trade war he launched months ago or simply sign the new executive orders in private before they are released. In interviews, officials and representatives from six countries that have not yet struck an agreement with the president to lower their April 2 rates said they are pessimistic they will be able to finalize a deal between now and then, despite concessions they’ve offered to the administration. All of them said that the higher tariff rates would be punishing for businesses in their countries that rely on exports to the U.S. “There’s not a hell of a lot they can do,” said Mark Linscott, a former U.S. trade negotiator. “I mean, if you’re too small to be given the attention to try to negotiate a lower tariff, you’re kind of stuck with just taking what the administration dishes out and then after that, seeing how you can mitigate that.” Treasury Secretary Scott Bessent on Tuesday echoed that scenario, though he sought to play down the impact. “I would think that it’s not the end of the world if these snap back tariffs are on for anywhere from a few days to a few weeks, as long as the countries are moving forward and trying to negotiate in good faith,” Bessent said in an interview on CNBC. Trump briefly imposed “reciprocal” tariffs of between 10 and 50 percent on nearly 60 trading partners in early April, before pausing them for 90 days. He then extended the deadline from July 8 to Aug. 1, while sending letters threatening different — and in some cases, even steeper duties — to more than two dozen partners. Thirty-two of the countries that were initially hit with the duties in April did not receive a letter from Trump. On Wednesday morning, Trump announced he plans to impose a 25 percent tariff on Indian goods, which did not initially receive a letter setting a tariff rate. In true Trumpian fashion, he later suggested there may still be some negotiating wiggle room with New Delhi before Friday. Another 22 countries received a letter setting new tariff rates effective Aug. 1 and don’t appear on track to make a deal. The list includes major trading partners whose negotiations with the Trump administration have stalled, including Taiwan, and smaller countries facing soaring tariff rates as high as 50 percent, like Lesotho and Madagascar. It also includes the two countries the United States trades with most — North American neighbors Canada and Mexico. Canadian Prime Minister Mark Carney sent his top aide and other leading trade officials to Washington for talks this week. And Mexican President Claudia Sheinbaum said earlier this week that she still hoped to reach an agreement by Friday. But “it’s extremely wishful thinking,” said Pedro Casas Alatriste, the executive vice president and CEO of the American Chamber of Commerce in Mexico, though he added, “I still have a little percentage of hope that something might happen.” The lack of urgency stems in large part from the fact that most products coming from Canada and Mexico currently do not face a tariff if they’re compliant with the U.S.-Mexico-Canada Agreement, a renegotiated version of the NAFTA trade deal that Trump signed during his first term. “Canada has a very important USMCA exemption that is in the self-interest of the U.S. to maintain and could give Canada a bit more breathing room to work toward the right deal versus a rush deal,” said one Canadian official. White House officials have been candid that they are primarily focused, at this point, on negotiating deals with a handful of big countries, while dictating new tariff rates to the rest of the world. “We’re now negotiating with various other countries and the rest we’re just sending out the bill to, the bill, we send a letter saying you pay a certain tariff,” the president told reporters Wednesday at the White House. “Obviously that’s most of them because you have, as you know, hundreds of countries, a lot of countries out there.” But negotiations with some major economies have bogged down. Trade negotiators for Taiwan have been working for months to try to stave off a 32 percent tariff, pursuing a two-pronged strategy of trade talks backed by pledges to ramp up purchases of U.S. products including agricultural commodities, liquified natural gas and weapons to reduce its $73 billion trade deficit with the U.S. Talks continue this week in Washington but so far there’s been no breakthrough That places Taiwan’s President Lai Ching-te in a position of political double jeopardy — submit to onerous trade terms and risk blowback from key segments of his constituency or refuse the administration’s terms and risk alienating Trump at a time when it faces a potential Chinese invasion risk as early as 2027. “For Taiwan the danger of displeasing Donald Trump is existential,” said the person familiar with those negotiations. “I think every leader is facing this dilemma of negotiating directly with the president and anticipating that he will push for further concessions than what have been discussed at the negotiator level,” Linscott said. “And, if a deal is struck, [Trump] will then make some pretty substantial claims in terms of what the U.S. got.” The Trump administration’s justification for hiking tariff rates up to 50 percent on some countries is based on the fact that the U.S. buys far more from those places than it sells to them. That’s a challenge for tiny countries like Lesotho and Madagascar in southern Africa, which send textiles to the U.S. through the African Growth and Opportunity Act, but import little in the way of American goods. It’s also presented problems for larger trading partners like Switzerland, whose government does not impose duties on U.S. industrial products but has a large trade imbalance because of the all the pharmaceuticals, high-end machinery and other Swiss goods it sells in the U.S. Rahul Sahgal, the CEO of the American-Swiss Chamber of Commerce, said that many of the country’s consumer businesses, like the sneaker brand On, haven’t been deeply harmed by the 10 percent tariff, but that would change if the tariff jumped to 31 percent, which would be far more difficult for companies to absorb. While the Swiss have continued to negotiate with the Trump administration, Sahgal pointed out it would be nearly impossible for the country’s population of just 8.8 million people — about the number of people living in New York City — to consume enough American imports to rebalance the two countries’ trade relationship. “Even if we were to eat a steak every day and every third, drink a bottle of bourbon and buy a Harley Davidson, it would hardly change the trade balance,” Sahgal said.

LONDON — Much like cricket, trade talks with India have been a long game, with plenty of sticky wickets along the way. As India’s cricket team goes head-to-head with England at Old Trafford on Thursday, Prime Minister Keir Starmer and his Indian counterpart Narendra Modi flaunted their newly inked free trade agreement at Chequers, Starmer’s country residence. The parallel did not go unnoticed by the two leaders. “For both of us cricket is not just a game but a passion — and also a great metaphor for our partnership,” Modi told reporters shortly after the deal was signed. “There may be a swing and a miss at times, but we always play with a straight bat. We are committed to building a high-scoring, solid partnership.” The ceremony marked the symbolic end to three years of sometimes fraught head-to-head negotiations between India and Britain’s trade teams. While far from what British negotiators envisaged when they began the talks, the U.K. has managed to chalk up a fair few wins, with some stand-out sectors emerging triumphant. Indian negotiators can also boast of a few victories. From Scotch whisky to business mobility, we’ve set out the biggest wins on either side in our FTA scoreboard. UK WINNERS Scotch whisky producers One of the biggest wins on the U.K. side is reduced tariffs for Scotch whisky. Under the FTA, Indian tariffs on the tipple will be slashed in half, from 150 percent to 75 percent, then dropped even further to 40 percent over the next decade.  India is the world’s biggest whisky market by volume and the tariff reduction has been described as a “game changer” by the industry. Announcing the deal, Starmer said it would give U.K. whisky producers “an advantage over international competitors in reaching the Indian market.” India is the world’s biggest whisky market by volume and the tariff reduction has been described as a “game changer” by the industry. | Neil Hall/EPA “The deal will support long term investment and jobs in our distilleries in Speyside and our bottling plant at Kilmalid and help deliver growth in both Scotland and India over the next decade,” said Jean-Etienne Gourgues, CEO at Chivas Brothers.  Automakers There’s also good news for British automakers — which have had quite a ride over the past few months thanks to U.S. President Donald Trump’s punitive tariff regime. Tariffs of up to 110 percent on British cars will drop to 10 percent after five or ten years depending on the type of car. As a result, the government expects exports of U.K. motor vehicles to increase by 310 percent — or £890 million — in the long run.  Mike Hawes, chief executive of the Society of Motor Manufacturers & Traders (SMMT), which represents the British automotive industry, said the deal represented a “significant achievement, partially liberalising the Indian automotive market for the first time.”   He called for rapid ratification of the deal and renewed efforts to agree “fair and workable solutions” on the administration of the tariff rate quotas. Lawyers Just days after the deal was first struck on May 6, India’s legal regulator approved new rules permitting foreign legal firms and lawyers to practise there on a reciprocal basis. It was seen by the sector as a key win coming in parallel with the deal.  The Bar Council of India first signaled the move in 2023, but received fierce opposition from domestic legal firms. “This is an important development for our two professions,” said Richard Atkinson, president of the U.K.’s Law Society at the time, although some strict conditions still apply.  Services firms  The deal’s financial services chapter is a first for India. New Delhi promises that Britain’s financial and business services firms can’t be treated differently to Indian companies. It guarantees India cannot impose limitations on investment or the number of British financial services firms that can operate in the country. India’s penchant for data localization — meaning services firms like banks and consultancies need to set up servers in India if they’re processing Indian nationals’ info — isn’t addressed in the deal since the country’s parliament is still working through new data privacy and security laws. Yet there are provisions to allow further negotiations with the U.K. if India moves to liberalize the flow of data in the future. INDIAN WINNERS Workers on secondment to the UK One of the most contentious areas of the trade deal — and most sought after on the Indian side — are new provisions on business mobility. The U.K. has promised that an existing visa route for some temporary workers that’s not currently available to India — and capped at 1,800 people — will now be open to Indian employees (although the cap won’t be lifted). Most controversially for some, the U.K. and India have separately agreed to negotiate a Double Contributions Convention, which means that neither Indian nor British workers will be required to pay national insurance contributions in both their home country and the one they are working in. Details of the agreement are still being ironed out but both sides have agreed to strike the deal in side letters. In promotional material published alongside the deal, the U.K. government insists the measures will have no impact on immigration. “All visa routes that have been locked in through the agreement are only available for temporary stays, and none of the routes provide a path to permanent settlement,” it notes. Farmers The U.K. has agreed to remove tariffs on imports of Indian food, with the exception of sugar, milled rice, pork, chicken and eggs, which will continue to be subject to the current duties in place. In its impact assessment, the government notes that food imports will still have to comply with U.K. food and animal welfare standards. The U.K. has agreed to remove tariffs on imports of Indian food, with the exception of sugar, milled rice, pork, chicken and eggs, which will continue to be subject to the current duties in place. | Farooq Khan/EPA Meanwhile, campaigners welcomed the absence of any intellectual property clause in the agreement that would have limited Indian farmers’ ability to save and exchange their seeds.  Patented, genetically modified seeds and restrictions on their use have been identified as a one of several factors contributing to the high level of farmer suicides in the country. “We hope that following this deal, the U.K. government will commit to safeguarding farmers’ rights in all future trade agreements, as farmer seed systems are vital for smallholder farmers in India and in many other countries across the world,” said Hannah Conway, trade and agriculture policy adviser at Transform Trade. Drugmakers Under the deal, Indian generic medicines and medical devices can be exported duty free to the U.K., in a move welcomed by the country’s officials. Last year the U.K. imported medicinal and pharmaceutical products worth around £667.4 million from India. “Given the U.K.’s shift away from reliance on Chinese imports post-Brexit and Covid-19, Indian manufacturers are poised to emerge as a favoured, cost-effective alternative, especially with zero-duty pricing for medical devices,” a commerce ministry official told the Indian news agency PTI. Meanwhile, India will also welcome the absence of any data exclusivity clauses related to pharmaceuticals in the deal’s intellectual property chapter, which could have posed a threat to the country’s generic drugs sector, the world’s largest by volume. Textiles manufacturers The trade deal removes tariffs on Indian textiles exported to the U.K., with imports expected to rise by around 85 percent to £2.9 billion, according to the government’s impact assessment. The U.K. imported Indian clothing worth £877.3 million last year. As a result, the government projects that the U.K. textiles, apparel and leather goods industry is expected to lose £114 million — the biggest projected decline of any industry. “This in turn is projected to lead to resources shifting away from adversely affected sectors to other sectors that exhibit a larger increase in exports,” it said. 

Law enforcement agents in four countries carried out coordinated raids on Wednesday targeting fraudulent Chinese imports to the EU, the European Public Prosecutor’s Office announced Thursday. The EPPO-led investigation alleges that criminal networks defrauded the EU of an estimated €700 million through large-scale customs and VAT fraud involving textiles, shoes, e-scooters, e-bikes and other goods imported from China, the EPPO said in a statement. The proceeds were then laundered and sent back to China, it said. Authorities conducted 101 searches on Wednesday across Bulgaria, Greece, France and Spain, the EPPO said.  Ten suspects, including two customs officers, were arrested, and law enforcement seized €5.8 million in various currencies, 27 vehicles, luxury items, 11 properties, and thousands of shipping containers and e-vehicles, according to the EPPO. The goods in the scheme were mainly brought in through the Piraeus Port in Greece, investigators said. In 2019, the EU’s anti-fraud investigators found that customs officials at the Chinese-owned Piraeus failed to stop fraudulent imports.  The imports were substantially undervalued or misclassified to evade customs duties, and their destinations were falsified to avoid paying VAT in the country of entry. EPPO alleges the goods were then transported using false documents to France, Italy, Poland, Portugal and Spain, where they were sold on the black market.