In a week packed with economic tension and geopolitical maneuvers, global markets are grappling with a new wave of uncertainty. At the center of the storm is China, which has raised tariffs on U.S. goods to a staggering 125%, escalating trade tensions to new heights. Beijing dismissed the ongoing tit-for-tat dynamic as “a joke,” signaling growing frustration and possibly a shift toward broader economic retaliation rather than reciprocal policy responses.

This move comes as former President Donald Trump, eyeing the upcoming U.S. election cycle, threatens Mexico with sanctions and tariffs over a water dispute, adding another layer of trade volatility in North America. The Federal Reserve, already walking a tightrope with inflation, received a warning shot from Boston Fed President Susan Collins, who noted that tariff-driven price increases could further delay the much-anticipated interest rate cuts.

Across the Atlantic, the mood is strikingly different. The UK economy has delivered a pleasant surprise, growing by 0.5%—far outpacing expectations and offering a political win for Chancellor Rachel Reeves. Yet, the labor market paints a more nuanced picture: UK recruiters are reporting the sharpest increase in jobseekers since the COVID-19 pandemic, suggesting lingering fragility beneath the surface.

In Asia, Japan’s Prime Minister is preparing to instruct his cabinet to compile an extra budget next week, signaling possible fiscal stimulus as global headwinds mount. Meanwhile, Chinese President Xi Jinping is reportedly set to host EU leaders in July, even as Chinese stock exchanges quietly restrict daily sales—moves that hint at both diplomatic outreach and domestic financial caution.

On the energy and corporate front, tensions with Iran are stirring again, with Tehran expressing interest in exploring an interim nuclear deal with the U.S.—a potential pivot in an otherwise stalemated diplomatic arena. In the private sector, Tesla has halted orders of U.S.-imported models in China, likely a reaction to the tariff storm, while tech giant Google laid off hundreds in its Android and Pixel groups, underscoring broader shifts in the global tech landscape.

Wall Street hasn’t escaped the turmoil either. Goldman Sachs has raised its U.S. junk bond and loan default forecasts, attributing the revision to the ripple effects of rising tariffs. JPMorgan, however, is thriving in the chaos, with its stock traders posting record revenues. Wells Fargo also reported a profit rise, buoyed by its wealth management division, though BlackRock fell short of inflow expectations amid trade jitters.

Elsewhere in the corporate world, Stellantis reported a 9% fall in Q1 vehicle shipments, and BP announced that its upstream production will drop in the same period—adding to the mixed signals from the global economy.

As EU nations agree to seek a 10% deviation from their gas storage goals, the broader theme is clear: energy insecurity, geopolitical tensions, and trade wars are reshaping global priorities. With a summer of uncertainty ahead, markets—and policymakers—are bracing for what comes next.