• The European Union is set to escalate its revenge for President Donald Trump’s latest tariff threats, which include a 30% across-the-board tariff on EU exports that takes effect on August 1. The EU has a second list of retaliatory actions in the pipeline, targeting US products worth €72 billion ($84 billion) like Boeing aircraft, automobiles, and bourbon. This as the EU-US trade talks remain suspended, and the EU is mulling potential coordination with other impacted nations like Canada and Japan to address Trump’s belligerent trade policy. A 30% tariff for an extended period can reduce Eurozone GDP by 1.2%, warns Goldman Sachs.

• Meanwhile, China recorded a record $586-billion trade surplus in the first half of the year, driven by a stabilization of exports amid a sharp fall in shipments to the US. Chinese factories have managed to diversify markets, with exports to Southeast Asian nations soaring. This shift has also impacted China’s energy imports, with naphtha imports poised to hit record highs this year as some cracker operators switch back from US propane and ethane on trade war disruptions.

• In commodity markets, gold rallied as Trump’s new tariff announcements – a 19% tariff on Indonesia, looming tariffs on pharmaceuticals and semiconductors, and an investigation into Brazil’s “unfair” trade practices – fueled fears of a global trade war, boosting demand for the safe-haven asset. Oil inventories have swelled globally, particularly in the Asia-Pacific, yet prices have stayed strong, with Morgan Stanley noting that a lot of the build is outside OECD countries, which are “key for price formation.”