The Weekly Echo (29/07/25)

As we close in on August, the global economic stage is once again charged with tension, but this time, the markets seem almost unfazed. This week, we turn the spotlight on the U.S., where former President Trump has launched a fresh volley in his “America First” trade campaign, threatening steep tariffs on key allies and vital sectors including copper and pharmaceuticals.

The latest salvo targets 14 countries, from Japan and South Korea to South Africa and Thailand, reigniting fears of a renewed trade war. Yet despite the sharp tariff increases, some as high as 50%, markets are showing surprising resilience, leaving analysts to wonder if this is a tactical move ahead of the U.S. election or a sign of deeper shifts in global trade relations.

We’ll unpack the potential fallout on global supply chains, the pressure mounting on close U.S. allies, and why this could mark a new chapter in economic realignment, whether as a strategic bluff or the start of a broader decoupling.

The countdown to August 1 begins. Let’s dive in.

1. Trump’s Tariff Blitz Rekindles Trade Tensions but Markets Remain Calm

Major US trading partners face August 1 deadline amid revived “reciprocal” levies, new copper and pharma tariffs

Former President Donald Trump has reignited global trade anxieties after unveiling a new wave of “reciprocal” tariffs targeting 14 countries , including key allies Japan and South Korea,set to take effect on August 1. The tariffs, ranging from 25% to 50%, come alongside fresh duties on copper and pharmaceuticals, further expanding Trump’s assertive trade agenda.

What Triggered the Tariff Threat?

The latest move is part of Trump’s broader strategy to address what he calls “chronic trade imbalances” and protect American manufacturing. The former president sent formal letters to leaders in Japan and South Korea warning of 25% levies unless more favorable trade terms are reached. Other countries, including South Africa (30%), Thailand (36%), and Cambodia (36%), were also notified.

In near,identical letters posted on his Truth Social platform, Trump argued that the US goods trade deficits pose a “major threat” to economic and national security. The executive order confirmed the tariffs would be implemented after midnight on August 1, citing “recommendations from senior officials” and limited progress in trade talks.

While similar tariff announcements during Trump’s 2017–2020 presidency caused substantial market turbulence, this time financial markets barely blinked.

“Investors are taking the view that nothing is final and these letters merely mark another iteration on the journey towards trade deals,” ING analysts wrote.

What’s New This Time?

1. Copper Tariff Shock:
   In a surprise escalation, Trump said the US will impose a 50% tariff on copper imports, effective by the end of July. Copper futures spiked over 10%, trading above $5.50 per pound as supply fears spread. The US imports large volumes of refined copper from Chile, Canada, and Mexico, making the policy shift particularly disruptive for construction, tech, and electronics sectors.
   

2. Pharmaceuticals in the Crosshairs:
   A new 20% tariff on drug imports was also announced, with a 12–18 month transition window. Trump cited concerns about unfair pricing and foreign reliance. The move could raise costs for US consumers and healthcare systems already strained by inflation.
   

3. Mixed Market Reaction:
   Despite the sweeping scope of these announcements, equity markets remained relatively composed. The S&P 500 closed down just 0.1%, while tech,heavy Nasdaq edged higher. Safe havens like the dollar and gold flattened out after initial gains.
   

Why It Matters

1. Uncertainty for Global Trade:
   With existing 25–50% tariffs already applied to cars, steel, and aluminium, this new round introduces volatility across sectors previously less affected, including metals, healthcare, and consumer electronics.
   

2. Pressure on Key Allies:
   Japan and South Korea, already in complex negotiations with the US, are now forced to make quick decisions. Tokyo labeled the new threats as “regrettable,” while South Korea’s political crisis following its president’s impeachment has delayed trade dialogue.
   

3. Market Resilience vs Policy Volatility:
   Markets are betting Trump’s threats are tactical rather than final, especially with the US election approaching. But the possibility of implementation remains real, which could alter supply chain strategies, pricing models, and investment decisions globally.
   

4. Global Trade Reordering:
   The EU is scrambling to reach a temporary deal with the US to cap vehicle tariffs at 10% while longer,term negotiations continue. Meanwhile, China, Vietnam, and the UK have secured trade arrangements that may shield them, for now.
   

What to Watch Next

• August 1 deadline: Whether countries strike new deals before the date will determine the scale of disruption. Trump has left room for “adjustment” but says these are “more or less final offers.”
  

• Copper and pharma fallout: Industries reliant on these imports, from housing to healthcare, may face rising costs. Watch for corporate guidance revisions and earnings hits in Q3.
  

• Political undertones: With the election cycle heating up, Trump’s aggressive trade posture may be aimed as much at domestic voters as foreign governments. This may embolden further actions.
  

Final Thought

This latest tariff wave marks a sharp re,escalation in Trump’s “America First” trade doctrine. But unlike past cycles, the market’s muted reaction suggests a growing resilience, or perhaps complacency, toward policy shocks. The bigger question is whether this is a strategic bluff or a prelude to a broader decoupling of US supply chains. Either way, August 1 could be more than just a deadline it might be the start of a new phase in global economic realignment.

China’s Overproduction Crisis Raises Global Deflation Fears

Beijing Warns Manufacturers as Price War Spreads to Key Growth Sectors

China’s leadership has issued a stark warning to manufacturers and local officials amid a worsening price war that’s driving deflation across multiple industries. With data expected to confirm that factory gate prices have declined for a 33rd straight month, state media and top policymakers are calling out what they label “involution”,a destructive spiral of excessive competition.

What Sparked the Alarm?

While overcapacity has long dogged China’s traditional sectors like steel and cement, this time the concern is broader. Emerging industries,solar panels, batteries, EVs, and e,commerce,are now caught in a race to the bottom, as local governments pile into hot sectors, offering subsidies and tax breaks that fuel oversupply.

At the core of the issue is weak domestic demand, coupled with aggressive industrial output. This imbalance is feeding both domestic deflation and rising geopolitical tension, particularly with Western trading partners.

Key developments this week include:

• Public criticism by President Xi Jinping and top economic bodies of price,cutting practices
  

• A rare admission in Qiushi, the Party’s top policy journal, that overcapacity is real
  

• Signals that China may implement “supply,side reform” to manage the glut
  

Why It Matters Beyond China

1. Global Deflationary Pressure:
   As China exports more low,cost goods in a bid to offload excess supply, global manufacturers,especially in Europe and emerging markets,face margin pressure. This is likely to intensify trade disputes, particularly in EVs and solar tech.
   

2. Disrupted Trade Relations:
   The EU and U.S. are watching closely. With trade talks and a major diplomatic meeting in Beijing this month, China’s industrial model is once again under scrutiny. Calls to “cut capacity or shut plants” echo past interventions in steel (2015–18), but this time, the sectors involved are more fragmented and dynamic.
   

3. Policy Crossroads in Beijing:
   After decades of growth powered by investment and exports, China’s top economists now signal a shift. One proposal: include “consumption as a % of GDP” in the next five,year plan. But this would require deeper fiscal reform and a move away from production,based tax models,a difficult pivot.
   

4. Structural Vulnerabilities Exposed:
   Analysts at HSBC and Citi caution that Beijing’s dominance in supply chains may become a double,edged sword. Overreliance on capital expenditure and the absence of demand,side support create a fragile foundation. As the global economy slows, the risk of a deflation,export loop grows.
   

What to Watch Next

• New Industrial Policy: Will China tighten regulations, cap leverage, or directly cut production in targeted sectors like solar and EVs?
  

• Diplomatic Fallout: With the EU and U.S. increasingly vocal about unfair trade practices, expect stronger language,and possible tariffs,by year,end.
  

• Long,Term Economic Rebalancing: Can China shift from investment,led to consumption,led growth without triggering a deeper slowdown?
  

Final Thought

China’s price war isn’t just an internal crisis,it’s a signal to the world. A superpower hooked on overproduction, chasing market share at the expense of stability, is now facing the consequences of its own industrial success. Whether Beijing manages a soft correction or stumbles into deeper deflation may shape global markets well into 2025.

London IPO Market Hits 30,Year Low: What It Means for UK Capital Markets

London’s equity market has hit a worrying milestone: the slowest first half for IPO fundraising in 30 years, with just £160 million raised across five listings as of June 2025. That’s a 98% plunge from the frenzied activity of early 2021 and even deeper than post‑crisis doldrums in 2009. Is London losing its allure as a financial powerhouse?

1. Why the Plunge Happened

• US markets look safer: Companies such as AstraZeneca, Wise, and fintechs are shifting or considering US listings, attracted by deeper liquidity and higher valuations in New York.
  

• Investor fatigue: With just five flotations in six months, market makers and passive fund managers are steering clear , limiting market depth and trading volume.
  

• Regulatory red tape: The UK’s listing rulebook has long been seen as more onerous than its US and HK counterparts, discouraging issuers.

Liquidity refers to how easily shares can be bought and sold; low liquidity deters both investors and companies due to price impact risks.

2. What the UK Is Trying to Do

• Listing reforms: Chancellor Reeves and the FCA have proposed streamlined rules and easier SPAC access to make London more company,friendly.
  

• New platforms: The launch of the Pisces private markets platform aims to keep growing businesses within the UK ecosystem.
  

• Regulatory tweaks: Discussions are underway about reducing or abolishing stamp duty, which currently penalises share turnover.

SPACs, or special purpose acquisition companies, allow firms to go public via mergers rather than traditional IPOs , often faster and cheaper.

3. Business & Investor Perspectives

• Optimism tempered by caution: Investment Minister Gustafsson reports firms are “queuing up” to list in London again, but many admit pockets of opportunity do exist despite the drought.
  

• Liquidity concerns persist: The FCA issued a warning that up to 40% of trading now occurs off‑exchange via bilateral deals , potentially masking generally weak market activity.

4. Why It Matters

• Capital access: Without a vibrant IPO market, innovative firms may find it harder to raise growth capital or may be tempted to relocate abroad.
  

• Economic signal: A weak stock market reflects deeper structural issues in the UK economy , from productivity to corporate governance and risk appetite.
  

• Investor participation: Retail and institutional investors alike rely on IPOs for growth opportunities; without them, equity channels may close off.

Final Thought

London’s IPO malaise isn’t just a market hiccup,it’s a sign that the UK’s global financial competitiveness is under threat. Reviving IPOs will require more than regulatory tinkering; it demands sustained clarity, liquidity, and confidence from both issuers and investors.

As Washington and Hong Kong outpace London in listings, the next few quarters will test whether policy fixes and platforms like Pisces can reverse the trend,or if the City risks permanent shrinkage.

Thanks for Reading!

That’s everything for this week’s edition of The Weekly Echo.

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Stay curious and stay informed. Have a great week ahead,
Harry & Reika
Co,Founders, Echonomics

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