by Patrick Fearon-Hernandez, CFA, and Thomas Wash

[Posted: 9:30 AM ET] | PDF

Our Comment today opens with news that the European Union is preparing to ratchet up its retaliation against the Trump administration’s tariffs. We next review several other international and US developments with the potential to affect the financial markets today, including the likely fall of the Dutch government and another interesting nuclear energy deal for artificial intelligence in the US.

European Union-United States: Just days after President Trump said he would raise the US import tariffs on steel and aluminum to 50% from their current 25%, an EU spokesman announced yesterday that the bloc is preparing an expanded list of countermeasures against US goods and services if the current US-EU trade negotiations falter. The statement is a reminder that the tariff war still has the potential to spiral out of control, despite the recent cooldown amid US trade talks with various economies.

European Union-China: The EU yesterday confirmed that it will use its new International Procurement Instrument to restrict imports of Chinese medical devices in retaliation for discriminating practices in China’s public procurement systems. Even though the EU and China have tried to increase trade cooperation recently to offset President Trump’s aggressive tariff policies against them, the EU’s announcement will likely set that effort back significantly.

Netherlands: Far-right firebrand Geert Wilders today said he will withdraw his Freedom Party from the governing coalition because of the other coalition parties’ failure to accept his plan to stem asylum applications. The three small parties remaining in the coalition don’t have a majority in parliament, so it appears that Prime Minister Schoof will have to call new elections, which would likely be held in September. The result could be months of political uncertainty in the Netherlands and a new test of strength for Europe’s far right.

United Kingdom: Prime Minister Starmer yesterday unveiled a Strategic Defense Review calling for a major program of defense rebuilding in the UK. Although Starmer refused to commit to specific defense spending targets, his plan envisions several major initiatives, including nearly doubling the UK’s fleet of destroyers and frigates, investing in 12 new nuclear-powered attack submarines, and modernizing the country’s nuclear arsenal. In response, key British defense stocks appreciated sharply yesterday.

Russia: Officials in Moscow last weekend installed an elaborate statue of dictator Josef Stalin in one of the subway system’s busiest stations, marking the government’s latest step to revive his legacy. President Putin, Russia’s current authoritarian leader, also recently signed a decree renaming Volgograd’s airport Stalingrad, as the city was known during World War II. The moves show that even long after Putin has consolidated his political position in Russia, he continues to develop the country’s authoritarian system.

South Korea: According to exit polls, Lee Jae-myung of the leftist Democratic Party is leading today’s presidential voting with about 51.7% of the vote. Lee’s main challenger, conservative former Labor Minister Kim Moon-soo is currently projected to get 39.3%. If Lee wins as expected, South Korean foreign policy could become somewhat more accommodating to China and North Korea, while relations with the US regarding trade and security could become more fraught. The result could be more challenging conditions for South Korean stocks.

US Nuclear Energy Industry: Meta Platforms has signed a 20-year purchase agreement for the electricity from one of Constellation Energy’s nuclear plants in Illinois, providing energy for Meta’s artificial-intelligence efforts and helping fund Constellation’s relicensing and upgrades to the plant. The deal echoes the contract last year in which Microsoft signed a long-term deal for AI energy from Constellation’s plant at Three Mile Island in Pennsylvania. Today’s agreement will likely help rekindle interest in nuclear power and help boost uranium prices again after a soft period.

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