In the wake of the U.S. and China’s agreement to ease tariffs, global investors are digesting what many see as a symbolic resolution. Deutsche Bank analysts note that while the retreat from aggressive trade policies might seem superficial, it has surfaced deeper insights into the strategic and economic underpinnings of global power dynamics. The U.S. appears to have shifted toward sector-specific decoupling rather than a full-scale economic disengagement, highlighting its continued dependency on Chinese manufacturing. The current trade posture signals a preference for economic stability over geopolitical brinkmanship—a choice summarized as “stocking the shelves” rather than leaving them bare.
China, drawing from its historical experiences, particularly the trauma of its “Century of Humiliation,” has grown increasingly resistant to economic coercion. This defiance is underscored by its growing military and industrial clout, including the world’s largest navy and a dominant position in high-tech sectors like electric vehicles. While the rollback of tariffs has sparked a temporary wave of optimism, the structural imbalance between U.S. consumption and Chinese production remains unresolved. Deutsche Bank points to the contrasting realities: U.S. manufacturing now represents under 10% of its workforce, while China continues to expand at 22%.
Amid these developments, Washington is pushing forward with a new fiscal blueprint. House Republicans have unveiled a sweeping tax plan an extension of President Trump’s prior tax cuts—that could expand the national debt by over $36 trillion over the next decade. To help fund these measures, new levies such as a 5% remittance tax on funds sent abroad by migrant workers are being considered. The potential fiscal fallout has already triggered Moody’s to downgrade the U.S. credit rating from Aaa to Aa1, citing mounting debt concerns.
In commodities, oil prices dipped slightly as supply concerns re-emerged due to U.S.-Iran nuclear talks and expectations of increased OPEC+ output. Still, both Brent and WTI retained modest weekly gains, supported early by the temporary trade de-escalation. Meanwhile, gold found renewed strength as soft inflation data, including falling PPI and sluggish retail sales, reinforced expectations for multiple rate cuts by the Federal Reserve. Simultaneously, persistent geopolitical flare-ups from record drone attacks in Ukraine to humanitarian tensions in Gaza—kept the safe-haven appeal of gold intact.
As the economic landscape shifts, eyes remain on how global alliances evolve. With Treasury Secretary Scott Bessent warning of renewed tariffs for non-compliant partners and emerging economies positioning themselves in the U.S.-China rivalry, the Global South is no longer just an observer—it’s becoming an active participant in shaping the next phase of international order.
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