Key Points

• U.S.-China Tariff Truce Extended: Washington and Beijing agreed to pause 24% tariffs for 90 days while retaining a 10% levy, aiming for a year-end leaders’ summit despite unresolved disputes over tech controls and trade balances.
• RBA Cuts Rates to 2-Year Low: Australia’s central bank lowered its benchmark rate to 3.6% and downgraded 2025 GDP growth to 1.7%, citing weaker domestic demand and easing inflation.
• Spain Challenges U.S. on Defense and China: Madrid rejects U.S. fighter jet purchases, resists NATO’s 5% defense target, and deepens economic ties with Beijing, risking tensions with Washington.
• Trump Reverses on Intel CEO: President Trump shifted from calling for Lip-Bu Tan’s resignation to praising him after a White House meeting, amid intensified U.S.-China semiconductor competition.

U.S.-China Tariff Truce Extended Amid Stalled Talks

The U.S. and China agreed to extend their tariff truce by 90 days to mid-November, pausing 24% duties on each other’s goods while retaining a 10% levy, as major sticking points continue to delay a final trade deal. Beijing will also maintain its suspension of restrictions on targeted foreign firms, while Washington presses for increased Chinese purchases of U.S. goods, particularly soybeans. Technology export controls and rare earth supply remain key negotiating levers.

Analysts expect further extensions until a planned Trump-Xi summit later this year, though core structural issues, including industrial subsidies, are unlikely to be resolved quickly.

Australia Cuts Rates to 2-Year Low, Trims 2025 Growth Outlook

The Reserve Bank of Australia lowered its benchmark interest rate by 25 basis points to 3.6%, the lowest since April 2023, while downgrading 2025 GDP growth expectations to 1.7% from 2.1%. The move follows a sharper-than-expected drop in inflation to 2.1% in Q2, near the bottom of the RBA’s target range. The central bank cited weaker public demand and productivity growth as key drags, though it noted minimal impact from recent global trade tensions.

Analysts anticipate another cut in November, with rates potentially falling to 2.85% by mid-2026 as policymakers prioritize supporting a slowing economy.

Spain Risks U.S. Ire Over Defense Spending and China Ties

Spain is openly challenging Washington by rejecting U.S. F-35 fighter jet purchases, resisting NATO’s 5% defense spending target, and deepening economic engagement with China. Prime Minister Pedro Sánchez’s stance has drawn sharp criticism from President Trump, who warned of potential economic repercussions, though Spain remains shielded by EU trade agreements. Analysts say Sánchez’s approach reflects both domestic political strategy and a desire to assert European defense autonomy, but risks straining bilateral ties—particularly amid U.S. concerns over Madrid’s cooperation with Huawei.

While EU membership offers some protection, the gamble could have significant political and economic consequences.

Trump Reverses Stance on Intel CEO Amid U.S.-China Chip Tensions

President Trump praised Intel CEO Lip-Bu Tan as a “success” following a White House meeting, just days after demanding his resignation over alleged conflicts tied to China. The shift comes as Washington intensifies its strategic maneuvering in the semiconductor sector, with Nvidia recently agreeing to a 15% revenue share from China sales in exchange for export licenses.

Tan, who took over Intel in March, faces the challenge of reviving the company’s lagging AI presence while managing cost cuts and stalled manufacturing projects. Intel shares rose 2% in after-hours trading, reflecting investor relief over easing political pressure.

Conclusion

This week’s developments underscore the complex interplay between geopolitics, central bank policy, and corporate strategy in shaping global markets.

The U.S.-China tariff extension offers short-term relief but leaves structural disputes unresolved.

Australia’s rate cut signals a pivot toward growth support amid easing inflation, while Spain’s defiance on defense and China ties highlights growing divergences within the West.

In the corporate sphere, Trump’s reversal on Intel’s CEO reflects both the volatility of political-business relations and the strategic weight of the semiconductor sector.

Investors face a landscape where diplomacy, policy shifts, and sectoral leadership will remain critical drivers of market sentiment.

Investment Insights

• U.S.-China Tariff Truce: Extended negotiations reduce near-term trade risk but unresolved structural issues keep supply chain and tariff volatility on the table.
• Australia Rate Cut: Looser monetary policy could support domestic equities and housing, but slower GDP growth warrants a selective approach to cyclical sectors.
• Spain’s Foreign Policy Stance: Rising transatlantic frictions may influence EU trade dynamics; investors should watch for sector-specific risks tied to defense and China exposure.
• Trump–Intel Reversal: Highlights the semiconductor sector’s strategic role in U.S.-China competition; potential policy shifts could create both upside and compliance risks for chipmakers.

Economic Calendar

Disclaimer: This newsletter provides financial insights for informational purposes only. It does not constitute financial advice or recommendations for investment decisions.