Global indigestion

Despite promised blowback from Europe, Donald Trump formally raised steel and aluminum tariffs to 50% from 25% on Tuesday. The move by the president raises trade tensions at a time when the US is locked in negotiations with numerous trading partners over his so-called “reciprocal” duties before a July 9 deadline. While those tariffs have been deemed by US courts to likely be illegal, they remain in place as litigation over them proceeds. The steel levies aren’t implicated by the rulings.

Still, the latest trade volley from the White House may eventually follow a pattern leaders the world over have come to understand: one in which Trump, 78, makes outsized threats and even follows through for a time, only to back off. Wall Street calls this “Trump Always Chickens Out,” or TACO, and some traders have made good money betting on his eventual retreats. The problem though is that Trump’s strategy is causing global indigestion: data increasingly show his game of chicken has tipped the world economy into a downturn—with the US among the hardest hit.

The Paris-based Organization for Economic Cooperation and Development slashed its global forecasts for the second time this year, citing the impact of the Republican’s chaotic tariff onslaught. The combination of trade barriers and uncertainty are hitting confidence and holding back investment, the OECD said. It also warned that protectionism is adding to inflationary pressures. The OECD now forecasts global economic growth to slow to 2.9% this year from 3.3% in 2024. It expects the rate of expansion in the US will tumble further, to 1.6% from 2.8%—an outlook that is significantly lower than its projection in March.

But for now at least, things are looking ok in the US jobs market, according to numbers released by the Trump administration on Tuesday. Wall Street traders drove stocks higher as government data showed an unexpected rise in job openings. Here’s your markets wrap. —Jordan Parker Erb and David E. Rovella

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Ukraine said it attacked the Crimean Bridge with explosives as Russia closed traffic on the Black Sea span linking the occupied Ukrainian peninsula with Russia. Agents planted mines on underwater supports and detonated them on Tuesday, the Ukrainian Security Service, known as the SBU, said in a statement on Telegram. The attack comes amid an increase in Kyiv’s strikes on Russian military and infrastructure targets, including one of Ukraine’s most audacious aerial attacks inside the country.

NATO is asking European member states to expand ground-based air-defense capabilities fivefold as the alliance races to fill a key gap in response to the threat of Russian aggression. The ramp-up is to be discussed at a gathering of NATO defense ministers in Brussels on Thursday, where they are already set to approve one of the most ambitious commitments to raising weapons stocks since the Cold War. The boost in weaponry is part of broader ambitions to raise defense spending across the alliance. As Trump has backed away from European allies while at times warming to the Kremlin, the rest of NATO has been coalescing around a target of spending 5% of economic output: 3.5% on core defense and another 1.5% in defense-related outlays on areas including infrastructure, cyber defense and civilian preparedness.

South Korea’s opposition candidate Lee Jae-myung was elected president. With almost 95% of the ballots counted, Lee, a left-leaning former labor activist, had won 48.8% of the vote while the ruling People Power Party’s candidate Kim Moon-soo had 42.0%, according to the National Election Commission. The election is expected to mark a turning point for South Korea after six months of chaos following ousted leader Yoon Suk Yeol’s botched attempt to revive martial law. Yoon’s December move shocked the world, spooked markets and triggered the nation’s worst constitutional crisis in decades.

The Dutch government collapsed after far-right lawmaker Geert Wilders pulled his Freedom Party out of the country’s ruling coalition, likely triggering a snap election. Wilders left over the refusal of his three coalition partners to agree to his plans to curb migration, which included closing the border to asylum seekers, temporarily halting family reunification and returning asylum seekers to Syria.

Alternative assets are a “costly delusion.” That’s according to investment consultant Richard Ennis, who argues that “alts” like hedge funds and private equity drain billions of dollars from portfolios and will eventually come undone. In a study to be published in the Journal of Portfolio Management, Ennis found that big endowments—estimated to hold 65% of assets in alternative investments—fare worse than pensions, which have a 35% exposure. When compared with a market index that he designed with a specific stock-bond mix to mimic funds’ risk profile, endowments have trailed by 2.4 percentage points annually in the 16 years through June 2024. Over the same period, pensions undershot their benchmark by 1 percentage point a year.

Meta is to buy nuclear power from Constellation as artificial intelligence sends power demand soaring. The parent company of Facebook, Instagram and WhatsApp signed a 20-year contract to buy 1,121 megawatts from an Illinois plant starting in mid-2027, when a state subsidy expires. Under the deal, Constellation will invest in boosting the plant’s output; the company is also considering plans to build another reactor as well. Nuclear power has emerged as one of the biggest winners from the AI-fueled surge in electricity demand; Meta’s electricity consumption nearly tripled from 2019 to 2023.

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