by Patrick Fearon-Hernandez, CFA, and Thomas Wash

[Posted: 9:30 AM ET] | PDF

Our Comment today opens with more evidence of growing friction between the European Union and China. We next review several other international and US developments that could affect the financial markets today, including plans for an unexpectedly large output boost by a key group of oil exporters and news of another major US tech company succumbing to Trump administration pressure for lower prices on its services to the federal government.

European Union-China-Russia: New reports say Beijing wants to cancel the second half of a two-day summit with EU officials scheduled for later this month in China. The souring Chinese mood on the summit provides added evidence that the short-lived EU-China rapprochement has now run its course. As we have argued before, Brussels and Beijing had hoped that the rapprochement would insulate them from President Trump’s trade policy pressures, but the effort has faltered due to the two sides’ own economic and political frictions.

• One key political dispute between Brussels and Beijing is China’s continued support for Russia in its invasion of Ukraine.
• Signaling that Beijing won’t back down on that issue, Trade Minister Wang Yi said on a trip to Europe this week that China doesn’t want Russia to lose its war against Ukraine because if it did, the US could shift its diplomatic and military energy toward the broad Asia-Pacific region and China. Wang insisted Beijing isn’t helping Russia militarily or financially, but at the very least, it is providing the Kremlin with political support and dual-use goods with both military and civilian uses.
• Separately, China implemented its threatened import tariffs against EU brandy on Friday. Those tariffs are widely seen as retaliation for the EU’s own various anti-dumping tariffs and investigations against Chinese imports.

US Tariff Policy: President Trump on Friday said he would send his “take-it-or-leave-it” tariff rate offers to 12 countries on Monday, although he declined to name the countries or the offered rates. The unilateral offers would come just two days before Trump’s July 9 deadline for trade deals to be completed before his big “reciprocal” tariffs snap back into place. Trump also threatened to impose an additional 10% duty on imports from the BRICS countries, which have called for policies to reduce the dominance of the dollar in world markets.

• Resorting to the take-it-or-leave-it approach suggests that Trump now sees that his boast to strike dozens of trade deals over the 90-day suspension period was overly ambitious. As we and other observers noted at the time the reciprocal tariffs were suspended and the dozens of trade negotiations kicked off, history has shown that trade deals typically require many months or even years of detailed talks.
• An important question now is what Trump may have learned from his inability to push through all the trade deals he promised. His inability to force the EU, Japan, China, and India to quickly capitulate could give Trump a better sense of the US’s relative economic power. That could change Trump’s calculus in future disputes and/or force him to take a broader view of the US’s “cards” in future negotiations.

Global Oil Market: Saudi Arabia, Russia, the United Arab Emirates, and five other members of the “OPEC+” group of major oil exporters on Saturday said they will collectively boost output by 548,000 barrels per day starting in August. The group has been gradually reversing its output cut of 2.2 million bpd from two years ago, but the announced production increase for next month was bigger than expected. The increase will raise concerns about excess supply and potentially cap or push down global oil prices in the second half of 2025.

China: The Chinese government has reportedly been buying up huge amounts of nickel to boost its state reserves amid growing trade tensions with the US. According to the reports, Beijing has bought up to 100,000 tons of the metal since December, essentially doubling its reserves as it seeks to ensure supplies for the production of stainless steel, electric-vehicle batteries, and other products. The report underscores Beijing’s strategy to secure its supplies of key minerals and leverage those minerals, such as rare earths, where it has a near monopoly on global production.

South Korea: At the behest of the newly installed center-left president, Lee Jae-myung, the National Assembly has approved new fiscal stimulus measures valued at about $20 billion. The new measures include cash handouts and coupons for citizens to spur private consumption, financial aid for troubled households or small businesses, and new investments in infrastructure for AI. The aim is to arrest a worsening slowdown in economic growth, but by our calculations, the new spending will only amount to about 1.1% of last year’s gross domestic product.

US Politics: On Saturday, Tesla CEO and former Trump ally Elon Musk said he’s formed a new “America Party” aimed at slashing government spending and reining in the national debt. It’s not clear how much Musk will really focus on the new party, but with his vast financial resources, he and the party could affect the 2026 mid-term elections, where he’s vowed to challenge the Republican lawmakers who voted for Trump’s deficit-expanding “big, beautiful” budget bill. Fearing retaliation by Trump, investors have driven Tesla shares sharply lower so far today.

US Fiscal Policy: The Wall Street Journal today says Oracle has agreed to give the federal government a 75% discount on its database and analytics software licenses through November, as well as a “substantial” discount on its cloud services. That makes Oracle the latest tech firm to succumb to Trump administration pressure for lower prices. That administration initiative has been much quieter than the “Department of Government Efficiency” effort to shed government workers, but it has notched some significant successes.

US Treasury Market: The Financial Times today reports that crypto companies and investors are rapidly buying up tokenized versions of money market and US Treasury mutual funds. Total assets held in tokenized Treasury products have reportedly jumped to $7.4 billion, up 80% so far this year. The surge in part reflects the interest of crypto traders, who find the funds a better place to park funds than stablecoins. Other investors like the product as an easy-to-trade form of collateral in crypto derivatives transactions.

US Venture Capital Industry: New data from PitchBook shows that fully 64% of all US venture capital investments in the first half of 2025 went to artificial-intelligence firms. Globally, 53% of all venture investment in the period went to AI. Even more striking, these investments have been extremely concentrated, with one-third of US investments going to just five firms in the first half. The figures underscore how investors of all stripes continue to expect extraordinary returns from AI in the future.

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