TL;DR

US, EU escalate tariff threats; CPI eyed for inflation risk; S&P 500, Nasdaq hit highs.

Highlights

• EU prepares up to €72B in tariffs on US goods if trade talks fail; US to impose 30% tariffs on EU and Mexico imports from Aug. 11.
• US stocks close higher (S&P 500 +0.14%, Nasdaq record), despite tariff escalation; trading volumes below average2.
• US Commerce imposes 17% antidumping tariff on Mexican tomato imports, likely raising US consumer prices3.
• June US CPI due Tuesday; consensus sees 2.6% y/y, with tariffs expected to lift inflation9.
• Port of Los Angeles sets June record as importers front-load ahead of tariff hikes, raising supply chain cost concerns8.
• Fed, FDIC, and OCC clarify US banks can hold crypto assets under strict risk/compliance rules4.
• The Trade Desk to join S&P 500 , replacing Ansys; TTD shares surge 15% post-market on index inclusion6.
• Supreme Court allows Trump administration to proceed with 1,400 Education Department layoffs; 24 states sue over $6.8B in frozen education grants1213.
• Trump presses Fed for rates below 1%; Fed maintains cautious stance with inflation above target7.
• Trump signals tougher Russia stance, pledges new arms for Ukraine, and threatens 100% secondary tariffs on Moscow14.
• Nvidia CEO notes AI-driven job risks and downplays direct impact of China chip tariffs5.

Commentary

US equity markets shrugged off escalating trade tensions, with the S&P 500 and Nasdaq both advancing as investors weighed President Trump’s threat of 30% tariffs on EU and Mexico imports starting August 12. The EU’s preparation of up to €72 billion in retaliatory tariffs underscores the risk of a broader trade conflict1, but below-average trading volumes suggest traders are waiting for clarity from upcoming macro data and earnings rather than repositioning aggressively2.

Inflation remains a central focus ahead of Tuesday’s CPI release, which is expected to show a re-acceleration to 2.6% y/y9. Tariff actions—including a new 17% duty on Mexican tomato imports—are already feeding through to consumer prices3, with analysts warning of additional upward pressure if further tariffs are enacted9. The Fed faces renewed political pressure to cut rates below 1%7, but with inflation above target, policymakers are likely to remain cautious, especially if Tuesday’s data confirms persistent price pressures9.

Supply chain dynamics are in flux, as evidenced by record throughput at the Port of Los Angeles8. Importers are accelerating shipments to beat tariff deadlines, but this could lead to volatility in logistics and retail inventories later in the year8. Meanwhile, The Trade Desk ’s addition to the S&P 500 is set to drive passive fund flows6, while regulatory clarity on crypto custody for banks offers incremental support for digital assets, though implementation will be tightly controlled4.

On the policy front, the Supreme Court’s green light for Education Department layoffs12 and ongoing lawsuits over frozen grants13 could impact public sector employment and state budgets. Geopolitical developments—including Trump’s tougher Russia stance14 and Nvidia’s commentary on AI and chip tariffs5—remain background risks but had limited immediate market impact.