US-EU Tariff Reductions
The United States is lowering tariffs on key European Union goods from 25% to 15%, with plans to further reduce auto tariffs once they pass matching tariff cut legislation. Steel and aluminum tariffs will remain unchanged, according to Trump Trade Adviser Peter Navarro.
→ In response, the EU will eliminate tariffs on all US industrial goods and provide preferential market access for US seafood and agriculture while purchasing/investing in US LNG, oil, nuclear products, and AI chips, to deepen the economic ties between these two countries.
India Faces Potential Tariff Hike
Navarro indicated that India could face doubled tariffs for purchasing the Russian oil, starting August 27, 2025, while China said it will stand firmly to “uphold the multilateral trading system,” aiming to ease some tension from Trump over India’s export goods.
Federal Reserve’s Mixed Signals
The Federal Reserve is divided on monetary policy. Some officials, like Hammack and Goolsbee, prioritize controlling high inflation, suggesting a cautious approach to rate cuts or even not seeing any rate cut next month. Others, like Collins, show openness to easing soon, while Bostic expects limited action this year and Bullard projects 100 bps cuts in 2026. The Fed appears to want to balance inflation control with economic stability, leaning toward maintaining or slightly easing restrictive policy in the near term.
Currently, economists see around a 75.5% probability of a 25-basis-point rate cut at the Fed’s next meeting, down from the previous 80% after the FED speeches last night, while many are still highly anticipating what the FED chair Jerome Powell will say in Jackson Hole tonight.
