The concept of "soft power," as defined by political scientist Joseph Nye, refers to a country's ability to achieve its objectives through the appeal of its culture, values, and political institutions, rather than through coercion or direct payments. In practice, foreign policy often combines these tools, ranging from cultural influence to economic pressure and military force. So, what is the current direction of the US tariff campaign? Trump is trying to combine diplomatic moves with economic tools, which may be less constructive in the long run but show short-term strength.
US Trade Representative Jamieson Greer publicly confirmed that the administration is ready to raise global tariffs from the current 10% to 15% "where appropriate." The White House initially imposed a temporary 10% tariff on a broad range of imports for a period of 150 days, based on US trade law provisions. Meanwhile, the intention to maintain higher tariffs on China (ranging from 35% to 50%) remains in place. A meeting between President Trump and President Xi Jinping, scheduled for late March to early April, should clarify the conditions for extending the current tariff truce.
The legal logic behind these actions is clear. After a recent Supreme Court ruling limiting the application of the IEEPA (International Emergency Economic Powers Act) for widespread, universal tariffs, the administration was forced to pivot to alternative regulatory bases. This includes provisions from the Trade Act of 1974, which allow for temporary measures in the event of balance-of-payments issues. This enables quick tariff imposition for 150 days but removes the White House's previous flexibility and opens the door for legal and international disputes if the measures are deemed excessive or disproportionate.
It is important to note that the announcement of tariff hikes does not automatically result in uniform pressure on all partners. Greer emphasized that the US does not intend to automatically raise tariffs against countries with existing trade agreements, including the EU and the UK. However, some nations may face stricter regimes. For businesses and markets, this creates a dual dynamic:
- On the one hand, the introduction of a 10% tariff and the potential increase to 15% raises uncertainty and increases operational risks for importers.
- On the other hand, the temporary nature and procedural justification of the new measures provide market participants with a window to adapt and find legal and commercial paths to mitigate the impact.
The shift from arbitrary, quickly implemented policies to a more procedural model slows down maneuverability but makes the measures more resilient to immediate legal challenges. The US is trying to strike a balance between demonstrating firmness in response to the domestic demand for "job protection" and negotiating at a high level, where success hinges on the appeal and trust of its partners.
Different story with China
Beijing is actively expanding its international contacts. Since Trump's declaration of "America's Liberation Day," Xi Jinping and his representatives have held talks with more than 20 countries at various levels. In a recent meeting with German Chancellor Friedrich Merz, Xi called for more active engagement on strategic issues. He emphasized strengthening trust between Beijing and Berlin and expanding their joint efforts to support multilateralism and free trade. Chinese media outlets portray this dialogue as a step toward deeper bilateral coordination in the face of complex global conditions, ranging from trade disagreements to issues of technological security.
Merz, on his part, made it clear that he intends to discuss contentious trade topics directly with Beijing. The chancellor emphasized that Germany advocates for a "dialogue on equal terms," with leaders of about 30 major German companies, including Volkswagen, Siemens, and BMW, accompanying him to the talks. For Berlin, this mission is both an economic and political message. German companies are seeking clarity and predictability in the Chinese market, while the government is trying to balance economic interests with values. Amid cooling relations with several traditional partners, European leaders have recently ramped up engagement with China. Representatives from France, the UK, Finland, Spain, and Ireland have already visited Beijing.
At the same time, the European Union is growing increasingly concerned about new US tariffs. According to Brussels, around 7% of EU exports will exceed the 15% limit set by previous agreements with the US, leading to an additional tariff burden of around €4.2 billion. The European Commission underscores the need to uphold existing agreements and minimize the impact on trade. In the midst of these geopolitical and trade maneuvers, another issue is emerging on the European economic and financial agenda – the possible early resignation of Christine Lagarde. A Bloomberg survey indicated that most experts expect her departure in 2026.
The frontrunners to succeed her at the European Central Bank are Klaas Knot and Pablo Hernandez de Cos, depending on whether the change takes place earlier or later. Lagarde herself notes that the "base scenario" is to complete her term, but markets and politicians are already considering succession options, knowing that leadership changes at the ECB will inevitably influence policy expectations and the euro.
Compounding the picture, the IMF has issued warnings that the latest escalation of US tariffs could slow economic activity more than previously anticipated and undermine growth stability. The Fund also highlights risks tied to high debt burdens and fiscal deficits, stressing the importance of maintaining central bank independence.
In sum, Europe is balancing between maintaining economic ties with its largest trading partner and defending its own interests. Rhetorical calls for "cooperation on equal terms" coexist with real challenges: tariff revisions, potential retaliatory measures, and leadership changes at key institutions. This complex landscape means that every new declaration requires careful consideration in terms of practical implementation and its impact on business decisions.
Nvidia as mirror of AI infrastructure
Nvidia has reaffirmed its status as a key supplier of infrastructure for artificial intelligence. The fourth-quarter earnings report, released after the closing bell, exceeded revenue and profit expectations. Management then provided a first-quarter forecast in the range of $76.44–79.56 billion, significantly higher than Wall Street's consensus of $72.8 billion. Importantly, this guidance does not account for potential revenue from sales to China, leaving room for additional earnings if export and regulatory issues are resolved.
The main growth driver remains the data center services business, which brought in $62.3 billion, outperforming analysts' forecast of $60.2 billion. Nvidia breaks down this revenue into several segments:
- Computing power
- Graphics accelerators
- Processors and networking equipment
Revenue from computing solutions grew by 58% year-over-year, while networking equipment sales skyrocketed by 263%, reaching $11 billion. These numbers reflect a massive expansion of computing capabilities among hyperscalers and corporate clients, explaining why major cloud players (Amazon, Google, Meta, Microsoft) plan to invest hundreds of billions of dollars into AI infrastructure in 2026.
In Nvidia's product lineup, attention is focused on new chips. Nvidia is set to host its GTC 2026 conference in San Jose in the coming weeks, where new announcements are expected. The company has also expanded its long-term partnership with Meta, with Nvidia supplying the social media giant with Blackwell and Rubin processors. Furthermore, Nvidia will launch a large installation of autonomous servers based on Grace, signaling deeper integration into the ecosystems of the largest clients.
Market reaction has been measured. On the news, shares jumped by about 3% in after-hours trading, but some of those gains later retraced. Year-to-date, the stock has only added a few percentage points, outperforming AMD and Broadcom but lagging behind Intel's strong rally.
Gene Munster, managing partner at Deepwater, points out that the key question for the market is not today's quarters but the growth outlook for 2027–2028:
- If the industry is approaching its "fifth phase" of maturity, growth rates may slow down.
- If this is just the early stage of adoption, the potential remains high.
There are also structural risks. The gaming segment reported $3.7 billion in revenue, falling short of the expected $4 billion, and competition in the PC chip market is pushing Nvidia to potentially develop its own laptop processor. This move would intensify competition with Intel, AMD, and Qualcomm and strengthen Nvidia's position among gamers and mobile users, but it won't generate the same margin contribution as the data center business. The broader macro context supports the view of centralized investment in AI. A significant portion of capital expenditures in the US is focused on data centers, semiconductors, IT equipment, and energy to power data centers. Outside these "anchor" sectors, investment activity is slowing.
The transformative effect of AI is compensating for declines in other sectors, contributing an estimated 0.3–0.7 percentage points to US GDP growth — equivalent to about 0.6 percentage points to the overall economy. Nvidia remains a central beneficiary of the AI computing infrastructure investment wave, but the future of its stock price will depend not only on quarterly results but also on how investors assess demand trajectories post-2026. Will the growth rate slow down, or will large corporate orders continue to drive expansion?
February 26
February 26, 3:30 AM / Australia / *** / Capital Expenditure Growth in Construction (Q4) / Previous: 0.3% / Actual: 2.1% / Forecast: 1.6% / AUD/USD – down
Private investments in buildings and structures accelerated to 2.1% in Q3 2025, supported by projects in the wholesale trade, hospitality, and manufacturing sectors. This growth was mainly concentrated in non-resource sectors, accompanied by inventory replenishment among corporate clients. The forecast for Q4 is a slowdown to 1.6%, which would be a negative signal for the Australian dollar.
February 26, 8:00 AM / Japan / ** / Leading Economic Index (Dec) / Previous: 109.9 / Actual: 109.9 / Forecast: 110.2 / USD/JPY – down
Japan's leading economic index held steady at 109.9 in November, reflecting improved consumer sentiment and relatively low price pressures. The forecast for December suggests a further rebound in leading indicators. If the December LEI confirms the expected 110.2, it would strengthen the case for a sustainable recovery and support the Japanese yen.
February 26, 1:00 PM / Eurozone / ** / Economic Sentiment Index (ESI) (Feb) / Previous: 97.2 / Actual: 99.4 / Forecast: 99.8 / EUR/USD – up
In January, the ESI climbed to 99.4 after a period of weakness, reflecting improved confidence in services and among manufacturers. Expectations are rising among both consumers and producers, with inflation expectations easing. The February forecast indicates further improvement. If the index rises, it will support expectations of increased domestic demand and provide a boost to the euro.
February 26, 1:00 PM / Eurozone / ** / Consumer Confidence Index (Feb) / Previous: -13.2 / Actual: -12.4 / Forecast: -12.2 / EUR/USD – up
In January, consumer confidence in the Eurozone improved to -12.4, recovering from a deeper negative reading, though still below the long-term average. Consumers are slightly more optimistic about their income and spending plans, but caution remains. The February forecast points to a further, albeit moderate, improvement. If confirmed, it would support expectations of growing consumption and bolster the euro.
February 26, 4:30 PM / Canada / ** / Trade Balance of Goods and Services (Q4) / Previous: 21.6B / Actual: 9.7B / Forecast: 7.7B / USD/CAD – up
In Q3, Canada's trade surplus in goods and services shrank to 9.7B CAD amid a recovery in imports and moderate export growth. Typically, a shrinking surplus supports the Canadian dollar, but if the Q4 surplus narrows to the forecast level, it may be seen as a factor supporting the US dollar and lead to a strengthening of USD against CAD.
February 26, 4:30 PM / US / ** / Weekly Initial Jobless Claims / Previous: 229K / Actual: 206K / Forecast: 215K / USDX (6-currency index) – down
Last week, initial claims in the US dropped to 206K, confirming the resilience of the labor market after seasonal fluctuations. Continuing claims rose slightly. The forecast indicates a small increase in claims. If so, it would weaken signs of tightness in the labor market and exert downward pressure on the US dollar index.
February 26, 4:30 AM / Japan / Speech by Hajime Takata, Bank of Japan Board Member / USD/JPY
February 26, 11:30 AM / Eurozone / Speech by ECB President Christine Lagarde / EUR/USD
February 26, 12:00 PM / UK / Speech by Bank of England Deputy Governor for Monetary Policy Clare Lombardelli / GBP/USD
February 26, 6:00 PM / US / Speech by Federal Reserve Governor Michelle Bowman / USDX
There will also be speeches from representatives of major central banks during these times. Their comments typically spark volatility in the currency market, as they may indicate future policy directions regarding interest rates.
The economic calendar is available via the link. All indicators are presented year?on?year (y/y). Monthly figures are noted as (m/m). Trade balance, exports, and imports are shown in the country's currency. The asterisk * denotes (by increasing number) the importance of the release for assets available on the InstaForex platform. Please note that all publication times are given in Moscow Time (GMT+3). You can open a trading account here. Also see InstaForex market video news. To keep instruments at hand, we recommend downloading the MobileTrader app.
