In the Sky with Diamonds - EU's Fine on AliExpress, AI's Physical Reality, and Trust in Modern Trade #222
Plus additional Panama Canal surcharges and WAIC 2026
Four stories that matter in the last 10 days:
On July 23, Brussels fined Alibaba’s AliExpress a record €550 million ($629 million) under the Digital Services Act for failing to tackle sales of illegal, unsafe, and counterfeit products. The fine is more than four times the €120 million levied on Elon Musk‘s X and nearly three times the €200 million imposed on Temu, both for DSA violations. The Commission found that AliExpress‘s own recommender and advertising systems further spread illegal products, that counterfeit goods including unsafe toys and dangerous cosmetics still remained online, and that penalised traders continued selling on the platform because enforcement was ineffective.
AliExpress, which serves 193 million European users, called the fine “disproportionate” and said it will appeal. China’s Ministry of Commerce responded with a statement accusing the EU of erecting “digital barriers” under the guise of platform regulation and adopting “discriminatory measures to restrict and suppress the normal operations of Chinese e-commerce companies in Europe.”. The European Commission has set an October 20 deadline for AliExpress to propose remedial measures. For now, it seems that the EU is trying its best to protect itself from China’s overproduction, but even its citizens are questioning this decision.
The AI infrastructure boom is meeting physical reality. Oracle‘s “Project Jupiter“ a 2-gigawatt AI data centre for OpenAI in New Mexico, has hit repeated walls: A switch from gas turbines to a fuel-cell plan, at least one rejected pipeline route, significant opposition from the public, and an Attorney General investigation into allegedly fraudulent public comments/support letter. In Wisconsin, regulators are forcing tech firms to cover data center-related grid construction costs. New York enacted a statewide data centre moratorium. Over 300 data center-related bans or restrictions now exist across the US.
AI datacenters consume three to five times the power compared to traditional facilities, and so requires tens of billions of dollars in capex. S&P Global last week downgraded Oracle‘s credit rating, citing AI infrastructure spending and cash-flow pressure. The cloud is now considered heavy industry, and companies who have lived their entire lives digitally will have to wake up to the real world. We’ll cover more on this line of research, to understand the physical limitations of the AI infrastructure race, and what it means for materials and manufacturing.
Speaking of physical barriers, major ocean carriers including MSC, CMA CGM, and Hapag-Lloyd are rolling out Panama Canal surcharges as El Niño droughts threaten to severely restrict shipping capacity. CMA CGM will charge an additional $320 per TEU on cargo headed to the US East and Gulf Coasts from July 25. Hapag-Lloyd is adding $130 per TEU for Far East to North America routes from August 15. MSC is imposing $100 per TEU from August 19.
NOAA warned on July 9 that there is an 81% chance of a “very strong” El Niño this season. The Panama Canal Authority has already begun cutting the maximum authorised draft for Neopanamax vessels, dropping from 50 feet to 49.5 feet on July 3, with a further cut to 49 feet this Friday and to 48.5 feet by August 15. As we warned on tocco.earth regarding the imminent El Niño, climate volatility is now being actively priced into freight.
Still on the physical economy, our Tocco team published a deep dive last week on why trust, not capital or technology, remains the binding constraint in cross-border trade. Global merchandise trade reached $26.3 trillion in exports in 2025, and a single bulk cargo routinely involves $20 to $50 million at risk on one bill of lading. AI-assisted tools have improved document verification, but they cannot guarantee that a party will actually do what they promised.
Two recent cases in Vietnam, just weeks apart, prove the point. Police uncovered a ring that smuggled over 30,000 diamonds worth $50 million from Hong Kong. The former director of PNJ Lab allegedly issued fraudulent certificates, costing PNJ $255 million in market cap. The probe then expanded to SJC, the country’s largest precious metals firm, where executives allegedly disguised 3,400 smuggled stones as customer buybacks. In both cases, the trusted verification layer was the fraud. Read the full analysis on tocco.earth to understand what it means for trading, and what is NOT going to change for the 5000-year-old profession despite AI evolution
Enjoy your week. Stay sharp, and keep building.
Anh & Tri,
On behalf of the Tocco team
Further Readings · Material & Manufacturing News · 07.2026
(China 🇨🇳) Chinese AI is now in heavy physical industry. The 2026 World Artificial Intelligence Conference (WAIC) in Shanghai broke records with over 1,100 exhibitors and 300 world-first product debuts of with a heavy focus on “agent-native” hardware and robotics. Standouts included StepFun‘s agent-native operating system, PrimeBOT‘s transforming humanoid robots, and Unitree’s unmanned factory sandbox where autonomous humanoid robots build and other robots. Read the full rundown of the six major trends defining China’s new robotics landscape on tocco.earth.
(Saudi Arabia 🇸🇦 & United States 🇺🇸) The U.S. and Saudi Arabia have struck a multi-billion-dollar civil nuclear pact that bypasses standard UN nonproliferation safeguards. Under the new “123 Agreement,” Riyadh gains U.S. technology to build AP1000 reactors, enrich uranium, and reprocess nuclear waste. The deal also omits the IAEA Additional Protocol for unannounced inspections, unlike UAE’s 2009 U.S. agreement. While Washington sees the deal as a necessary wedge to keep Saudi Arabia from adopting Chinese or Russian nuclear infrastructure, experts warn that handing the world’s top oil exporter domestic enrichment capabilities without strict UN oversight risks accelerating a Middle Eastern arms race. Congress now has 90 session days to challenge the pact.
(Ukraine 🇺🇦) Ukraine is building a €1 billion satellite constellation to separate itself from commercial providers. Following the sudden shutdown of Starlink services during a critical 2022 counteroffensive, Ukrainian satcom startup Stetman partnered with Danish manufacturer GomSpace to develop a 360-satellite low Earth orbit (LEO) network designed specifically to resist electronic warfare. The joint venture (named UASAT) plans to launch its first 120 satellites in 2027 and have the full constellation operational by 2030.
(United States 🇺🇸) IBM is acquiring quantum R&D pioneer HRL Laboratories from Boeing and General Motors. While financial terms remain undisclosed, the deal brings HRL’s deep physical expertise in silicon-spin qubit engineering, quantum sensing, and advanced cryogenics strictly in-house for IBM. With IBM already pledging over $10 billion toward quantum infrastructure over the next five years, the acquisition highlights how tech giants are aggressively consolidating highly specialized hardware research to reach commercial-scale quantum systems.Both Boeing and GM will remain closely partnered with IBM to develop applied quantum use cases in materials science and industrial logistics.
(Europe 🇪🇺) The EU’s ban on destroying unsold apparel and footwear has officially taken effect, threatening the manufactured scarcity that underpins the luxury fashion model. The legislation strips brands of their quietest inventory management tool just as a concluding Hong Kong trial revealed that Chanel used to routinely shred up to 20,000 unsold items every six months. With the European Environment Agency estimating that up to 594,000 tonnes of textiles are destroyed annually in Europe before use, high-end houses must now choose between having their name on discount or finally do proper demand forecasting instead of simply burning off excess stock.