Global Financial Markets Are Shaking: The US Spending Law and Tariff Policy

Instability in global financial markets is intensifying. US President Donald Trump's signing of a bill that foresees large government spending, and the approaching July 9 deadline for concluding international trade agreements, is raising concerns among investors. This situation is of great importance for developing economies like Uzbekistan, which rely on foreign trade.

The US Congress approved a massive 869-page spending bill. Through this law, the US government avoided default, but the national debt will increase by at least $3.4 trillion. The main areas of spending are the military sector and border security.

This law has heightened investor concerns about inflation and financial stability. The US dollar weakened against major currencies, falling to an index level of 96.94 — one of the worst half-year results since 1973.

President Trump intends to sign bilateral trade agreements with countries trading with the US by July 9. Otherwise, these countries may face high tariffs on goods exported to the US.

So far, the US has only reached a new agreement with Vietnam, while only framework agreements exist with China and the United Kingdom. Negotiations with India are nearing completion, but talks with Japan and South Korea have almost stalled.

European markets, in particular the STOXX 600 index, fell by 0.5%. In the US, markets were closed due to Independence Day (July 4), but S&P 500 futures fell by 0.6%.

There is also concern in Asian markets. The value of export-oriented stocks in Japan and South Korea fell. This situation may reduce regional economic activity.

One of Uzbekistan’s main trading partners is China, another is South Korea. The US's strengthening of tariff policies toward these countries could impact global supply chains, changing prices and delivery times. This could lead to changes in import and export costs for Uzbek enterprises.

Moreover, large US government spending may increase global inflation. This could prompt central banks to raise interest rates, affecting the cost of credit. For developing countries like Uzbekistan, conditions for attracting foreign investment may become more complicated. Read 'Zamin' on Telegram!