Trump's trade gambit triggers tariff tensions across world

Kuwait Times

a day ago

Rising jobless claims fuel Fed rate cut bets as BoE eases rates
KUWAIT: Markets reacted to a wave of economic developments this week, led by President Trump nominating Fed critic Stephen Miran to a vacant board seat, boosting expectations for a September rate cut amid soft US data, including weaker services PMI and rising jobless claims.
Trade tensions escalated with a 25 percent tariff hike on Indian imports over Russian oil purchases and threats of 100 percent semiconductor tariffs, while Apple pledged $100 billion in new US investments. Moreover, US jobless claims rose above forecasts, with continued claims hitting a near four year high, adding to pressure for a Fed rate cut in September.
Meanwhile, in the UK the Bank of England cut rates to 4.00 percent in a narrow vote, balancing high inflation and weak growth, while Switzerland saw core inflation rise despite muted headline CPI. In Asia-Pacific, China's services PMI hit a 14-month high on stronger demand, and New Zealand's unemployment rose as participation fell, reinforcing a dovish policy outlook.
Trump's announcements
President Donald Trump announced that he will nominate Stephen Miran, chair of the White House Council of Economic Advisers, a close ally and key architect of his tariff policies who disputes Fed chair Jay Powell's view that tariffs are inflationary, to temporarily fill the Federal Reserve board seat vacated by Adriana Kugler until January, a move that would give a vocal critic of Powell a vote on the Federal Open Market Committee and is expected to reinforce Trump's push for interest rate cuts of up to three percentage points.
Miran, who holds a Harvard PhD in economics, previously served at the Treasury Department and is likely to align with Trump appointees Christopher Waller and Michelle Bowman, both of whom opposed the Fed's recent decision to keep rates steady, and his nomination comes as JPMorgan and other economists anticipate a September rate cut following signs of a sharp summer hiring slowdown, while Trump simultaneously ordered an additional 25 percent tariff on Indian imports raising total duties to 50 percent in response to India's purchases of Russian oil, prompting condemnation from New Delhi as unfair and unjustified and widening a rift between the two countries just weeks after they were nearing a trade deal.
The tariff announcement followed a meeting in Moscow between senior US envoy Steve Witkoff and Vladimir Putin, after which Trump said he was open to meeting both Putin and Ukrainian president Volodymyr Zelensky. Additionally, Trump threatened a 100 percent tariff on semiconductor imports with exemptions for firms expanding US manufacturing. The carve-out supports AI chip designer Nvidia and TSMC, which have pledged multi-billion-dollar US capacity expansions.
In the Oval Office, Apple CEO Tim Cook pledged an additional $100 billion in US investment over four years, raising the total to $600 billion; initial partners include Corning, TSMC and Samsung. This came ahead of reciprocal tariffs on trading partners from the EU to Japan taking effect last Thursday. After the announcement, TSMC shares rose by over 4 percent, Samsung gained 2 percent, and Apple advanced 3 percent in after-hours trading. Apple estimates that under 5 percent of iPhone components are US-sourced and expects $1.1 billion in Q3 tariff-related costs. Currently markets are pricing in 91 percent probability of 25 bps of a rate cut for the Fed upcoming meeting.
US ISM Services PMI
In the US, the ISM Services PMI dropped to 50.1 in July 2025 from 50.8 in June, missing expectations of 51.5 and indicating near stagnation in the US services sector. Seasonal and weather factors contributed to the slowdown, with declines in business activity, new orders, and inventories.
Price pressures surged to their highest level since October 2022, driven by tariff-related issues, especially in commodities. Employment contracted further, while backlogs continued to shrink. Supplier deliveries slowed slightly, and both exports and imports shifted into contraction, reflecting the negative impact of ongoing tariff tensions on global trade.
US unemployment claims
The number of new weekly unemployment claims—a key indicator of the US labor market—rose sharply last week to 226,000, up by 7,000 from the previous week and exceeding Dow Jones' forecast of 221,000, as announced by the US Department of Labor on August 7, with the prior week's figure also revised upward from 218,000 to 219,000; and although the four-week moving average declined slightly to 220,750, the more troubling development is that continued unemployment claims—reflecting individuals receiving benefits for more than two weeks—climbed by 38,000 to 1.974 million (the highest level in nearly four years since November 2021), signaling increasing difficulty for job seekers in securing new employment, which, when combined with last week's weak July jobs report, is fueling expectations that the Federal Reserve may respond with an interest rate cut in September amid rising concerns over deteriorating labor market conditions. The Greenback was last seen trading at 98.180
BoE monetary policy report
The Bank of England, in a closely split 5–4 vote by its nine-member Monetary Policy Committee (MPC), decided on Thursday to cut its key interest rates from 4.25 percent to 4 percent, marking its fifth rate cut since the July 2024 general election and signaling a continuation of what it calls a 'gradual and careful' approach to monetary easing, a move that, while widely anticipated by markets, drew significant attention due to the internal division among policymakers, with four members preferring to hold rates, four favoring a 25-basis-point cut, and one advocating a larger 50-basis-point cut ultimately resolved by a second round of voting, this decision came against a backdrop of stubborn inflation, as June's CPI climbed to a hotter-than-expected 3.6 percent, sluggish economic performance including a 0.1 percent GDP contraction in May, and a weakening labor market, all of which the BOE acknowledged in its statement emphasizing the ongoing need to eliminate persistent inflationary pressures to sustainably return inflation to its 2 percent target; while the British pound rose 0.5 percent following the announcement, BOE Governor Andrew Bailey cautioned against cutting rates too aggressively, stating it is essential not to act too quickly or deeply, though he noted that headline inflation likely won't persist, and although economists largely agree that rates will continue trending downward into 2026with forecasts by some leading institutions are expecting a decline to 3.00 percent, below the 3.50 percent priced by markets. Uncertainty remains due to the conflicting signals from inflation, employment, and growth data, which led to the rare two-round voting process and reinforced the BOE's commitment to a cautious pace of easing. The GBP/USD was last seen trading at 1.3449
Switzerland CPI m/m
Swiss inflation edged up to 0.2 percent year-on-year in July, slightly above the 0.1 percent forecast, driven by higher prices in restaurants, hotels, and energy, while food and transport costs fell. Core inflation rose to 0.8 percent, a four-month high, signaling underlying price pressures despite overall muted consumer price movement. On a monthly basis, prices remained flat, missing expectations for a 0.2 percent drop. The mixed inflation picture, rising core prices but stagnant headline inflation, reflects ongoing disinflationary trends, supported by external pressures and weak domestic demand. These developments may reinforce expectations that the Swiss National Bank will maintain or deepen its negative interest rate stance. The USD/CHF currency pair was last seen trading at 0.8080
Chinese Services PMI
China's services sector showed renewed strength in July, with the Caixin General Services PMI rising to 52.6 from June's nine-month low of 50.6, surpassing expectations of 50.4. This marked the fastest expansion since May 2024, driven by a pickup in foreign demand and a rebound in tourism. Employment saw its sharpest increase since July 2024, while backlogs of work rose modestly. On the price front, rising input costs for materials, fuel, and wages led to the first increase in selling prices in six months. Business sentiment also improved, reaching its highest point since March, amid optimism for improved global trade conditions. The USD/CNY currency pair was last seen trading at 7.1886
New Zealand unemployment change q/q
New Zealand's unemployment rate rose to 5.2 percent in Q2 from 5.1 percent in Q1, below the 5.3 percent consensus. Employment contracted by 0.1 percent QoQ after a 0.1 percent gain in Q1. The labor force participation rate declined to 70.5 percent from 70.8 percent. Since June 2022, the unemployment rate has risen 1.9 percentage points and the underutilization rate 3.5 points. In the RBNZ's Q3 monetary conditions survey, two-year inflation expectations eased to 2.28 percent from 2.29 percent, and one-year expectations fell to 2.37 percent from 2.41 percent, both within the 1-3 percent policy target. Statistics New Zealand labor market spokesperson Jason Attewell highlighted the marked shift in conditions over the last three years.
The NZD/USD currency pair was last seen trading at 0.5957.
Kuwait
Kuwaiti dinar
USD/KWD closed last week at 0.30535