What’s A ‘Secondary Tariff’ Like The One Trump Imposed On India?

Economic

Summary:

In his second term as US president, Donald Trump has used tariffs as a blanket solution to pursue a wide range of goals...

In his second term as US president, Donald Trump has used tariffs as a blanket solution to pursue a wide range of goals: increasing domestic manufacturing and foreign market access, boosting federal revenue, and even punishing the government of Brazil for prosecuting his political ally, former President Jair Bolsonaro. Now he’s deployed a tool he calls a “secondary tariff” in an effort to get countries to distance themselves from US adversaries.

Such a tariff on imports from India took effect on Aug. 27. On top of a 25% levy on goods from India imposed earlier, Trump added an additional 25% tariff to penalize India for buying oil from Russia.

The idea behind “secondary tariffs” is to use a weapon against one country to penalize or try to influence a different country. The concept is similar to the one behind so-called secondary sanctions.

The US uses secondary sanctions to multiply the effect of its primary sanctions on countries or entities. Secondary sanctions target commercial activity involving a party under primary sanctions but occurring outside US legal jurisdiction. They are meant to force companies, banks and individuals to make a tough choice: continue doing business with the sanctioned entity or with the US, but not both.

Unlike primary sanctions, which can be enforced by fines and the seizure of US-held assets, secondary sanctions rely on the centrality of the US financial system to the world economy and the widespread use of the dollar as the global reserve currency to work. A company or individual who violates a secondary sanction could be hit by US export controls or be placed on the Treasury Department’s Specially Designated Nationals and Blocked Persons List, which would prevent Americans from doing business with it.

The “secondary tariff” Trump imposed on imports from India isn’t aimed at magnifying the impact of a primary tariff, as the name might suggest. US tariffs on energy from Russia are irrelevant given that such imports were banned in 2022 after the country’s full-scale invasion of Ukraine. Instead, the extra 25% tariff on imports from India appears to be aimed at compelling its government to adopt a similar ban, with the larger goal of pushing Russia to stop its war.

In March, Trump created a mechanism for imposing tariffs on imports from countries that buy oil from Venezuela, whose regime, he said, poses a threat to US national security.

Ships on the water have identifying transponders that allow third parties to track their location in real time via satellite. That enables analysts in and out of government to, for example, follow oil tankers loading in Russia and unloading in India.

Source: Bloomberg

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Adam

Cryptocurrency

Risk assets stumble as rate cut certainty evaporates

The cryptocurrency market has endured a sharp correction over the past two trading sessions as traders begin to question the certainty of aggressive Federal Reserve (Fed) rate cut optimism in September ahead of Friday's inflation data release. Bitcoin has retreated 4% falling below the psychologically important $110,000 level, while ether has suffered more pronounced losses of 8%.

This shift reflects broader concerns about persistent inflation pressures that could force the Fed to maintain a more cautious approach.

Whale activity and ETF flows signal bitcoin to ether rotation

Despite the broader market turmoil, sophisticated investors are orchestrating a strategic pivot from bitcoin towards ether. This rotation includes high-profile whale transactions, most notably one bitcoin whale liquidating $2 billion worth of holdings to establish substantial ether positions. The migration reflects rising institutional interests in ether as corporates look to grow their crypto treasury.

Exchange-traded fund (ETF) flows corroborate this institutional shift. Bitcoin spot ETFs recorded substantial net outflows totalling $1.2 billion between 15-22 August, though yesterday's $219 million inflow suggests bargain hunters emerged following the price decline.

Ether's ETF story presents a markedly different narrative, with $151 million of net inflows since 15 August. This divergence reinforces whale observations, indicating professional investors are becoming increasingly discriminating in their cryptocurrency allocations.

Options markets signal divided sentiment

Derivatives markets offer additional insight into trader psychology, with Deribit options data exposing sharply divided opinions on bitcoin's near-term trajectory. Call options expiring 26 September with $140,000 strikes command similar open interest to $95,000 put options.

This suggests genuine uncertainty rather than directional conviction, with the $45,000 spread between these levels highlighting expectations for continued extreme volatility. Options traders are clearly preparing for substantial moves in either direction.

Ether's options landscape appears more constructive, with heavy call option clustering around $4,000 and $4,500 strikes and much lower put interests. The concentration of call interest at these levels may create technical support.

Figure 1: Divided views on BTC for options expiring on 26 September

IG as of 26 August 2025

Figure 2: Elevated interest in ETH call options at $4000 & $4500 expiring on 26 September

IG as of 26 August 2025

Technical charts reveal bitcoin weakness, ether resilience

Bitcoin's technical deterioration has accelerated, with the relative strength index (RSI) plunging below the neutral 50 level. This breakdown typically signals building bearish momentum and often precedes more substantial declines.

The current price action fits Elliott Wave Theory's corrective Wave A pattern, suggesting this selloff may represent just the initial phase of a deeper pullback. The $110,000 psychological support level has provided temporary respite but looks increasingly vulnerable.

Should this level fail, attention turns to the 38.2% Fibonacci retracement around $105,400, derived from the recent rally peak at $124,496. Any recovery attempts will likely encounter stiff resistance near $117,400, a level that acted as resistance last week.

Figure 3: Bitcoin (daily) price chart

as of 26 August 2025. Past performance is not a reliable indicator of future performance.

While ether has declined alongside bitcoin, several technical indicators suggest underlying strength persists. The RSI remains above 50, indicating bullish momentum hasn't been extinguished, whilst ether continues trading above all major moving averages.

The 20-day moving average near current levels represents the first line of defence. A successful hold here could signal the corrective phase has concluded, potentially enabling another assault on fresh record highs.

However, failure to maintain this support would shift focus towards August's low around $4,060, where longer-term investors might emerge to provide more substantial buying interest. Any recovery attempts will need to clear previous resistance levels to confirm the uptrend remains intact.

Figure 4: Ether (daily) price chart

as of 26 August 2025. Past performance is not a reliable indicator of future performance.

Key data releases threaten further crypto volatility

Friday's core PCE release stands as this week's most significant market catalyst, with the potential to dramatically reshape cryptocurrency trajectories. Recent inflation readings have delivered unwelcome surprises, with core Consumer Price Index and Producer Price Index both exceeding forecasts. Producer prices recorded their sharpest monthly increase since March 2022 as businesses adjust pricing to accommodate higher tariff-related costs. This development raises genuine concerns that core PCE could breach the 0.3% monthly consensus estimate.

Next week's employment data will add another layer of complexity to Fed policy deliberations. JOLTS job openings and non-farm payrolls could dramatically shift expectations for September's Federal Open Market Committee (FOMC) meeting.

An above-consensus inflation reading combined with robust employment data may derail the Fed's rate cut decision on 17 September, causing risky assets to tumble further. Conversely, softer readings could rapidly restore appetite for equities and cryptocurrencies.

Source: ig

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Adam

Economic

We have written a few commentaries over the last year describing how retail, not institutional, investors are driving markets higher. To wit, there is ample evidence that with each market dip, retail investors are not selling, instead buying unrelentingly.

In May, we wrote the following: Typically, institutional investors are right; however, over the last few years, retail has proven to be the smarter money. However, it’s worth considering that if retail investors are still the “dumb money” and professionals the “smart money”, the graph below has significant implications.

The scatter plot from Goldman Sachs shows the average sector weightings of large-cap mutual funds and hedge funds, i.e., institutional investors, versus how the sectors are weighted in the broad Russell 3000 index. As shown, the “smart money” is most enthusiastic about the healthcare and industrials sectors.

Healthcare valuations are trading at 20-year lows versus the S&P 500, as investors have shunned some value sectors. Instead, the Magnificent Seven, high-growth technology, crypto-related companies, and power grid infrastructure stocks have garnered the most investment flows. Despite the popularity of technology stocks, both hedge funds and mutual funds are holding less than the market weights in the technology sector.

More simply, retail is exceedingly enthusiastic about technology and not biting on cheap healthcare valuations. At the same time, as we show, professionals are shunning technology in favor of healthcare. Again, we must ask - Smart Money or Dumb Money: Who Will be Right

Smart Money Loves Healthcare: But Are They Now Dumb?_1

Home Prices Weaken Furthering Arguments For A Rate Cut

The well-followed Case-Shiller 20-city house price index fell for the fourth month in a row. With the latest data, national home prices are up a mere 2.14% on a year-over-year basis. Interestingly, those cities that have been lagging in home price increases, like Chicago and New York, saw gains of 6% and 7%, year over year, respectively.

Conversely, the "hot" markets like Tampa, Phoenix, Denver, and Dallas are all reporting negative price changes over the last year. As the second graph below shows, price declines are somewhat rare. The only two prior instances were before and during the 2008 Financial Crisis and shortly after the steep run during the pandemic.

The data is very important for Fed policy for two reasons. First, home prices contribute to shelter prices, which account for about 40% of CPI. Given that CPI still shows shelter prices rising by about 4% annually, while rental prices are flat to falling and home prices are declining, this will exert negative pressure on CPI to counter tariffs.

Second, housing-related activity contributes about 15% to GDP. Given that housing is weakening inflation and dampening the economy, the recent Case-Shiller home price data should provide further rationale for the Fed to cut rates.

Smart Money Loves Healthcare: But Are They Now Dumb?_2

Smart Money Loves Healthcare: But Are They Now Dumb?_3

Source: investing

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James Whitman

Political

President Donald Trump's top economic adviser Kevin Hassett said Wednesday that Federal Reserve Board of Governors member Lisa Cook should go on leave from the central bank even as she plans to file a lawsuit challenging her removal by Trump.

"If I were her in her circumstance, I would take leave," Hassett told reporters outside the White House.

"I think it's the honorable thing to do," he continued, after a reporter asked about whether Cook should be presumed innocent of allegations of mortgage fraud raised by another Trump-appointed official.

Hassett also defended Trump's ability to remove a Fed governor "for cause," which is the legal requirement for a president to fire a board member at the central bank.

Cook, the first Black woman to serve as a Fed governor, is expected to soon file a lawsuit over Trump's move, her attorney, Abbe Lowell, said Tuesday.

Trump's " attempt to fire her, based solely on a referral letter, lacks any factual or legal basis," Lowell said in a statement.

The Fed said Tuesday that "Cook has indicated through her personal attorney that she will promptly challenge this action in court and seek a judicial decision that would confirm her ability to continue to fulfill her responsibilities as a Senate-confirmed member of the Board of Governors of the Federal Reserve System."

The battle over Cook's removal could end with the Supreme Court issuing a final decision on the matter.

Source: CNBC

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Damon

Central Bank

New York Fed President John Williams announced on August 27 that the upcoming Federal Open Market Committee meeting will be "live," indicating potential interest rate adjustments.

This announcement follows Chair Jerome Powell's remarks on rising employment risks, prompting market speculation about a possible rate cut in September.

Fed Officials Hint at Significant September Rate Decision

John Williams and Jerome Powell's recent statements have sparked interest in the upcoming Federal Open Market Committee meeting. Williams emphasized every meeting as "live," indicating ongoing evaluations and potential changes in monetary policy. Powell reiterated concerns about employment risks influencing policy decisions.

Market anticipation is growing around a possible interest rate cut in September. The current stance is termed "moderately restrictive," suggesting room for easing while maintaining economic stability. Investors are preparing for shifts in interest rates as economic assessments continue.

From my perspective, I definitely think every meeting is live. We are making risks more balanced. - John Williams, President, Federal Reserve Bank of New York

Source: CryptoSlate

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Winkelmann

Economic

Forex

GDP growth in NZ is on course to outpace Australia over the next few years. Even so, economic and labour market conditions in Australia look set to remain firmer than in NZ for some time yet.

Trading places.

When we last peeked over the Tasman in late 2024, the Australian economy was enjoying more robust economic conditions than New Zealand, with firmer GDP growth and a stronger labour market.Jump forward a year and we are now moving into a new phase of the economic cycle, with economic growth in New Zealand set to outpace Australia over the next few years.

These diverging economic trends in New Zealand and Australia in large part reflect differences in monetary policy. The Reserve Bank of New Zealand’s earlier aggressive tightening of policy meant that we experienced a sharper downturn in growth in recent years. However, now that inflation has dropped back, the RBNZ has also been able to cut rates faster, with a 250bp reduction in the Official Cash Rate to date and a likely 50bps more to come before the end of 2025. Over time, that will help to boost both domestic demand and employment.

In contrast, the Reserve Bank of Australia took a more gradual approach to tightening policy which helped to support growth and the labour market in previous years. However, its easing cycle has also been more gradual—with Australia’s cash rate having only been cut by 75bps since the start of this year, interest rates across the Tasman remain at mildly restrictive levels.But despite the slower pace of monetary easing and cooling economic growth, Australia’s economy and labour market have remained firmer than in New Zealand, and that’s set to continue for some time yet.

Source: ACTIONFOREX

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Adam

Stocks

Economic

Tech Pullback Pauses Market Rally as Nvidia Faces High-Stakes Earnings Test

Nasdaq 100: Goldilocks Setup or Market Overheat? Nvidia Earnings Hold the Key_1

Daily NVIDIA Corporation

U.S. equities have stalled this month, led by a retreat in the tech sector following a torrid run in the first half of the year. At the center of the market’s hesitation is Nvidia, set to report earnings Wednesday after the close. With a $4.4 trillion market cap—now 8% of the S&P 500—its results could influence broader indexes, especially as options data suggests a potential 0.9% move in the S&P 500 based on the outcome.

Is Nvidia’s Growth Still Durable at Mega-Cap Scale?

Analysts expect Nvidia to report 53% year-over-year revenue growth in Q2, totaling $45.9 billion. Though slower than the triple-digit gains seen in the past five quarters, it’s a figure few companies at this scale can match. Still, expectations are sky-high. Traders are watching whether the company can continue delivering growth while managing its dominant market position.

Can Nvidia Maintain Its Technological Edge?

Nvidia’s AI supremacy hinges on its Blackwell chips, which pulled in $27 billion in Q1 and accounted for 70% of data center revenue—up sharply from $11 billion the prior quarter. Future releases like Blackwell Ultra and Rubin are expected to extend that lead. But competition is intensifying, and the pressure is on for Nvidia to prove it can stay ahead in a crowded field.

Is Hyperscaler Spending a Durable Revenue Stream?

Roughly $320 billion is expected to be spent this year on AI infrastructure by hyperscalers like Microsoft, Amazon, Google, and Meta. Nvidia is set to capture about half of that spend. About 34% of its total sales last year came from just three major clients. While concentration is a risk, it currently ensures robust, recurring demand—so long as hyperscaler budgets hold.

How Could U.S.-China Chip Deals Affect Guidance?

Nvidia has struck a key revenue-sharing agreement with the U.S. government, allowing it to export H20 chips to China in exchange for a 15% royalty on China-based sales. That chip alone could contribute as much as $8 billion per quarter, depending on execution. CEO Jensen Huang’s successful negotiation here is seen as a strategic win, but geopolitical risks remain elevated.

Market Outlook: High Stakes for Nvidia, Broader Indexes

With Nvidia now a critical driver of market sentiment, Wednesday’s results could ripple well beyond tech. Any shortfall or cautious forecast may pressure the broader market.

Conversely, another strong quarter could reignite bullish momentum. Traders should monitor hyperscaler capex commentary, AI chip demand signals, and geopolitical developments closely as catalysts for post-earnings moves.