Most of President Trump’s tariffs, which have been the cornerstone of his economic policy through his presidency to date and have roiled the global economy and international markets in the past several months have been declared illegal by a US trade court. The court judged that his imposition of the levies under the guise of a national emergency or to deal with the fentanyl issue was not legitimate in a decision that has been welcomed by markets, with US assets jumping on the news. It is too soon to declare that this means that the drama of the past several months about tariffs being declared and then subsequently rolled back is over – the White House has already pushed back against the ruling, and the government is appealing the ruling. And while the ruling does block the tariffs unless the appeals court allows them to remain during the appeal process, the Trump administration has tested the limits of judicial authority before over the past several months. Nevertheless, it appears that a new stage in the trade war is now here and indeed could be less severe going forward.
The UAE has begun trade talks with the EU in what could prove to be the most significant Comprehensive Economic Partnership Argeement (CEPA) yet for the UAE given the size of the union’s economy. Trade representatives from both countries’ governments met in Dubai yesterday along with officials from leading private sector businesses on both sides. There are already significant trade flows between the UAE and the EU, with the EU accounting for 8.3% of total non-oil trade for the UAE last year at around USD 68bn. A new CEPA would help remove any remaining frictions or barriers between the two and facilitate a more rapid growth in non-oil trade and investment flows, with the UAE already earmarked to develop an AI data centre in France, among other commitments. The strategy from the UAE of pursuing new trade agreements this year has been in sharp contrast to that under the second Trump presidency.
M3 money supply in Saudi Arabia was up 9.3% y/y in April, compared with the 8.2% growth logged in March. Net foreign assets at SAMA fell to SAR 1559.5bn in April, down from SAR 1617.1bn the previous month.
Industrial production in India expanded by 2.7% m/m in April, compared with the 3.9% logged the previous month, itself an upward revision from 3.0% on the initial print. April’s growth was far stronger than the predicted 1.0% expansion, confounding expectations that tariffs would have weighed on output through their impact on exports. There was strong growth across a range of categories, with capital goods production up 20.3% y/y, consumer durables up 6.4%, and manufacturing up 3.4%. Q1 GDP figures are due for release tomorrow, with a robust 6.8% y/y expansion predicted, compared with 6.2% in Q4 2024.
Today’s Economic Data and Events
16:30 US initial jobless claims, week to May 24. Forecast: 230,000
17:00 South Africa SARB interest rate announcement. Forecast: 7.25%
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