European markets fall amid 30% EU tariff plans

• European markets fall amid 30% EU tariff plans.
• Bitcoin and silver soar.
• Chinese exports on the rise despite tariffs.

Donald Trump has once again done his best to dampen market sentiment, with mainland European stocks in the red and their US counterparts likely to follow suit. This comes after Trump’s tariffs letters reached the EU (30%) and Mexico (30%), building on the 35% tax announced for Canadian imports last week. We now have less than three-weeks until the 1 August deadline comes into play, and the EU are already warning of a prospective 21 billion euros worth of goods that they would target in return. Nonetheless, there is a clear desire to strike a deal, even if that means keeping the 10% tariff and seeking concessions on the sector specific taxes on the likes of the auto sector.

While US equity markets have been struggling for directional conviction over the past week, we have seen plenty of strength for non-fiat assets as traders jump seek shelter from a heady concoction of soaring debt and growing tariff concerns. This weekend saw bitcoin soar to $122k, with the crypto poster child finally breaking out after two months on consolidation around the $100-108k range. With 10-year bond yields pushing higher in Europe, Canada, and the US, fears over the cost of borrowing and growing debt burdens continue to provide a bullish backdrop for the likes of bitcoin and gold. The pop higher for silver provides another such example of resurgent demand for non-fiat assets, with the metal rising above $39 for the first time since 2011. Notably, the rise in US debt coupled with higher stimulative spending does provide the basis for a more optimistic outlook for silver given its industrial use cases.

Chinese trade data brought a surprisingly bullish assessment despite the tariff headwinds faced by the world’s second-largesttwo months economy. With exports up 5.8% over the year to June, Chinese firms have been able to increase their global sales despite a 16.1% decline in shipments to the US. Instead, it has been their neighbours that have picked up the slack, with China seeing a 17% bump in exports to South-East Asian countries. What remains to be seen is just how much of that activity reflects products being sent to the US indirectly through third party economies. Trump’s insistence of a 40% tariff on transshipments through Vietnam highlight the efforts needed to stop Chinese firms circumnavigating US controls.