Not long after President Trump imposed a 25% penalty on India over its purchases of Russian oil and weapons, a new wave of tariffs – this time 50% on Indian goods – come into force. Economists warn that such steep trade barriers could weigh heavily on Indian workers, many of whom are employed in labour-intensive export facing industries. In response, Prime Minister Modi delivered a speech this week stressing economic self-reliance, urging greater domestic production and consumer spending. To cushion households and businesses from mounting pressures, the government is now planning a sizeable tax reform which involves lowering the goods and services tax in hopes of boosting demand and easing financial strain.
In the United States, durable goods orders slipped 2.8% in July, which was a smaller decline than the sharp 9.4% fall recorded in June. The figures suggest that earlier strength in May, when firms rushed to order ahead of new tariffs, has given way to a more subdued trend. Transportation equipment was the main drag, tumbling 9.7%, while core capital goods orders – a key gauge of business investment -rose 1.1%, signalling some resilience in underlying demand. While the results point to stabilisation in business sentiment, they are unlikely on their own to alter the Federal Reserve’s policy stance, which remains shaped by broader inflation and employment conditions and has for some time meant key lending rates have remained the same.
Meanwhile, reports indicate that the European Union may be preparing to accelerate plans to eliminate all tariffs on U.S. industrial goods – a strategy aimed at persuading President Trump to roll back his 27.5% levy on automobiles. As a potential sweetener, Brussels is also said to be weighing tariff reductions on selected seafood and agricultural products by the end of this week. Despite the positive sentiment of the report, markets reacted cautiously, with European equities dipping slightly after the news broke.
Yesterday, tech giant Nvidia had headlines calling it ‘chipped’. While the company documented a strong Q2 in terms of $60 billion stock buyback, its shares dropped after the bell due to a narrow revenue miss. The crucial data-centre segment, which includes sales of powerful chips used to develop artificial-intelligence models, moderately missed and left shares down about 3%.
Meanwhile, over in France, the minority government headed by Francois Bayrou is at risk of a no confidence vote next month following recently political disagreements over a debt reduction initiative and austerity budget. The timing is notable, coming less than a year after Michel Barnier’s resignation over similar fiscal disagreements. Investor unease was evident on Tuesday, as French bank stocks declined and sovereign borrowing costs edged higher.
Finally, Ireland’s Credit Union Consumer Sentiment Index inched higher in August 2025, rising to 61.1 from 59.1 in July. The improvement was modest, helped by the recently agreed US-EU trade deal, which has offered some stability to the broader outlook. Nonetheless, households remain anxious over rising grocery costs and higher utility bills, which continue to cloud sentiment. At 61.1, the August reading still trails the 64.9 average posted across the first eight months of the year.
Still to come this week we have Eurozone economic sentiment, Tokyo CPI, and Chinese manufacturing PMI.
Nicola Tune, Portfolio Specialist
