Global Trade Tensions Shake Markets as New Tariff Cycle Begins

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Global markets turned cautious this week following announcements of sweeping U.S. tariff increases on major trading partners, including the EU and Mexico, set to take effect August 1. Investors responded by rerating risk curves across asset classes. U.S. futures slipped and bond yields drifted lower, reflecting concerns that protectionist policies could disrupt supply chains and dampen export growth. Currency markets followed suit, with the dollar gaining ground amid its safe-haven status.

Emerging economies—particularly those with export-heavy and manufacturing-led growth models—are being closely watched. India's equity indices, led by technology stocks that rely on offshore earnings, faced renewed volatility. The rupee weakened sharply, prompting speculation that the Reserve Bank of India may intervene to stabilize currency markets. Meanwhile, India's bond yields remain under pressure, as global fund flows shift toward U.S. assets anticipated to benefit from rate divergence.