The major moment to watch this week is the next US tariff deadline, as the world of international trade waits to see if the White House follows through on its plans for new tariffs on a range of countries.
Aside from tariffs, Moscow is facing a separate deadline to agree a peace deal with Ukraine to avoid another package of sanctions, while the Bank of England (BoE) is expected to cut interest rates again later in the week.
Tariffs
On Thursday (7 August), new US tariffs are scheduled to enter force for a number of countries, absent any last-minute changes of plans.
While many deals have been reached – including the UK, EU, Japan, South Korea and China – some major agreements remain outstanding. India looks set to miss out, as does Russia. Switzerland and Taiwan are said to be scrambling to secure last-minute deals.
Trump has a history of pulling out at the last minute on tariffs and other measures, and has delayed this ‘deadline’ on multiple occasions. An appeals court decision, heard last week, might uphold an original federal decision striking down much of the programme. Barring either of these occurrences, however, Thursday looks like the day of reckoning for the global economy.
Over the weekend, the stock market fell in reaction to a poor US jobs report, showing that the US economy had created only 79,000 jobs last month. This was below the forecast of 109,000. The same report also revised down employment growth in May and June, with 250,000 less jobs created than previously thought.
In response to this, Trump fired Erika McEntarfer, commissioner of the Bureau of Labor Statistics, alleging without evidence that she had “rigged” the figures. Senior Democratic figures leapt on the announcement to slam the impact of tariff uncertainty on the US economy.
Deadline for Russia
On Friday (8 August), another Trump-related deadline arrives. The White House has given Russian president Vladmir Putin until this date to agree a peace deal with Ukraine. Otherwise, yet more sanctions will hit the Russian economy.
The Observer reported Trump’s relationship with Putin is at “breaking point”, despite the US president starting the year praising his Russian counterpart and denouncing Ukrainian leader Volodymyr Zelensky.
Over the weekend, the US moved two nuclear submarines to be "be positioned in the appropriate regions" in response to "highly provocative" comments by former Russian president Dmitry Medvedev. Medvedev and Trump have been engaged in a war of words for the last few weeks.
If confirmed, this would represent a remarkable U-turn on sanctions and support for Ukraine. European figures had rallied to Zelensky after a disastrous White House meeting in February and signs that Trump could break from support for the embattled nation. However, the possibility of the US upping the sanctions regime after the Friday deadline could mean more economic and trade turbulence for Russia.
BoE interest rates
After an up-and-down few months for the UK economy, the BoE’s next interest rate decision will come on Thursday.
City traders are betting on a further cut in interest rates of 0.25 points, bringing the BoE base rate down to 4%. While this would represent good news for UK chancellor Rachel Reeves, it also comes as the wider UK economy remains in less-than-stellar health. Tariff uncertainty and other factors are hitting UK growth, while unemployment levels have inched upwards in recent months.
One piece of good news for the financial world was the UK Supreme Court’s decision on car finance.
Shares in UK banks rose after the decision, which effectively denied compensation to millions of motorists for hidden commissions on car loans. There had been concerns of widespread compensation schemes if the Supreme Court had gone the other way, with calls for the Treasury to intervene to protect industry.
Other dates for the diary
· Monday: Final day of the England v India fifth test match
· Tuesday: Car sales figures from the Society of Motor Manufacturers and Traders (SMMT)
· Wednesday: 80th anniversary of the atomic bomb dropped on the city of Hiroshima by the US during the second world war
· Thursday: China monthly trade data released
· Friday: The UN Food and Agricultural Organization food price index released
· Saturday: Singapore national day
· Sunday: FA Community Shield between Liverpool and Crystal Palace
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