Tariff shockwaves and tentative diplomacy
Global markets opened to a fresh mix of trade-policy jolts and cautious optimism on the geopolitical front. Washington’s across-the-board tariff hikes are now live, European industry is feeling the bite, and technology supply chains are scrambling to adapt—yet hopes of a near-term Putin-Trump summit have given risk assets a momentary lift.
- Trade Policy Escalation – What’s Now in Force
- Scope and scale. As of 00:01 ET today, higher duties apply to almost every U.S. trading partner, lifting the averageS. tariff rate to 15.2 %, the highest since World War II.
- Country specifics.
- The EU, Japan and South Korea accepted a 15 % line-up on key exports such as autos, avoiding the punitive 25 % rate.
- Switzerland failed to win relief and now faces a 39 % blanket levy—the steepest imposed on any developed economy.
- India’s duties double to 50 % in three weeks, in part for its continued purchases of Russian energy.
- Macro backdrop. The administration is also preparing targeted levies on pharmaceuticals and semiconductors, reinforcing concerns about supply-chain costs and downstream inflation.
- Europe Under Pressure
Switzerland
- Bern’s seven-member Federal Council convened an emergency session today to map a response to the 39 % tariff, after last-ditch talks in Washington collapsed.
- The Swiss franc slipped to a seven-week low versus the euro, while local equities merely mirrored the broader European rebound, underlining exporter vulnerability.
- Industry groups are urging rapid support for manufacturers; political voices have even floated cancelling Switzerland’s F-35A fighter-jet order as leverage.
Germany
- Industrial production fell 9 % m/m in June, the steepest drop in almost a year, pushing second-quarter output down 1 % and raising the risk that GDP will be revised to a deeper contraction.
- Automakers and machinery producers blamed both U.S. tariff uncertainty and ongoing supply shortages, amplifying recessionary fears in Europe’s growth engine.
- Technology Supply Chain Realignment
- The White House unveiled plans for a 100 % tariff on all semiconductor imports, but offered exemptions to firms that commit sizable U.S. investments. Apple seized the moment, announcing an additional $100 bn manufacturing program onshore.
- Taiwan’s TSMC and South Korea’s Samsung and SK Hynix have already been told their chips will be exempt, provided current U.S. fab projects stay on track.
- The policy underlines a broader push to reshore electronics supply chains, though capacity constraints outside East Asia remain acute.
- Geopolitics & Market Sentiment
- Summit watch. Moscow confirmed that Presidents Putin and Trump aim to meet “within days,” with location details pending.
- Asset moves. News of possible cease-fire talks lifted European equities (Stoxx 600 +0.7 %) and strengthened the euro and zloty. Russian shares rallied over 5 %, led by Gazprom and Novatek, while Ukraine’s dollar bonds outperformed emerging-market peers.
- Tactical Takeaways for Clients
|
Theme |
Risk |
Opportunity |
|
Tariff Spiral |
Higher input costs for import-heavy sectors; potential consumer-price pass-through |
Favor domestically focused manufacturers and logistics firms that can capture reshoring demand |
|
European Weakness |
German industrial downturn challenges euro-area recovery |
Selective plays in infrastructure and defense spending beneficiaries as fiscal support rises |
|
Tech Re-Onshoring |
Near-term supply disruptions; tight advanced-node capacity |
U.S. semiconductor-equipment makers and materials suppliers positioned to win capex inflows |
|
Cease-Fire Hopes |
Geopolitical risk premium could whipsaw on mixed headlines |
Tactical long positions in Eastern-European FX and Ukraine reconstruction basket while monitoring summit progress |
The new tariff regime is now an economic reality, immediately hitting Swiss exporters and weighing on German industry, while simultaneously redrawing the global semiconductor map. Yet fragile hopes of a Russia-Ukraine settlement are lending risk assets a short respite. We maintain a defensive-but-opportunistic stance—favoring U.S. reshoring plays and selective European fiscal winners, while keeping hedges in place as trade and geopolitical headlines continue to dominate price action.
Prepared by Nour Hammoury, Chief Market Analyst at SquaredFinancial
Nour is an investor, independent market strategist, and financial advisor. He holds a BA in Finance and Banking Science from Al-Ahliyya Amman University and a CFTe in Economics from the International Federation of Technical Analysts. He has more than 15 years of experience in forex, stocks, and global economic developments, as well as central bank policies and intermarket analysis. He appears regularly on major international TV networks, such as BBC, Al-Jazeera, Al Hurra, CNBC, and Bloomberg, holding open discussions and sharing insights and readings of the markets and trends.
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