US President Donald Trump shakes hands with Indian Prime Minister Narendra Modi in the Oval Office of the White House in Washington, DC, on Feb. 13, 2025.
Jim Watson | AFP | Getty Images
In the frenzied run-up to Friday, August 1— the day when U.S. President Donald Trump’s new tariffs come into effect (no more delays!) — America’s major trading partners such as Japan, the European Union and now, South Korea, have come to an agreement with the country. All of them will be subject to 15% tariffs on U.S. imports of their goods.
But India? Not only has there not been a deal yet, Trump unilaterally imposed a 25% tariff on the South Asian country — a higher-than-expected number, as analysts had widely expected India to secure a favorable deal with America. Worse, the tariff will exist alongside an additional “penalty,” which Trump said is the price India has to pay for its military and energy transactions with Russia.
In doing so, Trump’s actions seem to be suggesting that the White House’s trade policies is not based simply on the balance of trade, as Trump is fond of bringing up, or even how much he likes you — see his admiration of the U.K.’s King Charles and the country’s 10% tariff rate.
It’s also about who your friends are. Essentially, Trump appears to be implying that, even if you are an up-and-coming influential figure, if you hang out with the uncool kids (who invade and bomb other countries), you can’t sit with us.
Perhaps Trump can afford to alienate allies because the U.S. economy is still unexpectedly strong. It expanded 3% in the second quarter, much higher than the 2.3% Dow Jones estimate, and Magnificent Seven earnings are handily topping estimates. Much has been discussed about the decline of American exceptionalism, but, for now, the U.S. is still the queen bee.
What you need to know today
The Federal Reserve holds interest rates. The Federal Open Market Committee voted 9-2 on the decision — the first time since late 1993 that multiple governors cast “no” votes. Chair Jerome Powell said the Fed still needs to see the effects of tariffs on inflation.
India to pay 25% tariffs on exports to the U.S. On top of that, Trump said Wednesday that the South Asian country will also face a “penalty” for buying military equipment and energy from Russia. Separately, South Korea has reached a deal with the U.S. that will see it subject to a 15% tariff rate, Trump announced.
Meta Platforms and Microsoft beat earnings expectations. Year on year, Meta’s revenue grew 22%, while that of Microsoft increased 18%. During extended trading, Microsoft shares jumped more than 8% to put the company’s market cap above $4 trillion.
U.S. stocks are weighed by Fed conference. The S&P 500 fell Wednesday on Powell’s comment that a September rate decision is still in the air. However, futures rose later in the day stateside on comfortable earnings beats by Meta and Microsoft. The Stoxx Europe 600 closed flat.
[PRO] Investors are aggressively borrowing money to buy stocks. It’s a sign of market exuberance, according to Jim Reid, head of macro and thematic research at Deutsche Bank, who added that this pace was last seen during market bubbles.
And finally…
Foxconn Hon Hai Technology Group signage during the Nvidia GPU Technology Conference (GTC) in San Jose, California, US, on Thursday, March 20, 2025.
David Paul Morris | Bloomberg | Getty Images
iPhone maker Foxconn joins $1 trillion AI data center market with new alliance
Foxconn on Wednesday said it is taking a stake in TECO Electric & Machinery Co., as it looks to supercharge its efforts to become a key player in building artificial intelligence data centers.
The Taiwanese firm, formally known as Hon Hai, is looking to replicate the success it has had in consumer electronics in the world of AI. It’s a play that could unlock Foxconn’s access to a potential $1 trillion of spending by companies on data centers in the coming years, according to Counterpoint Research.
— Arjun Kharpal
