US imposes 10% global tariffs; Meta signs $60B chip deal with AMD
Fazen Markets Research
AI-Enhanced Analysis
Overview
The US has implemented a new 10% global tariff on a broad range of imports under Section 122 of the Trade Act of 1974. The levy is effective immediately and is scheduled to last at least 150 days. Separately, Meta has agreed to buy $60 billion of AI chips from Advanced Micro Devices (AMD), including supply commitments, custom CPUs and a performance-based equity warrant.
Key takeaways:
- 10% blanket tariff now in effect for 150 days under Section 122 (Trade Act of 1974).
- White House officials are working on a formal order that would raise the rate to 15%.
- Meta–AMD deal: $60bn in chip purchases, six gigawatts of supply, option/warrant to acquire up to 160 million AMD shares at $0.01 exercise price as purchases occur.
- Market reactions: AMD shares moved strongly in pre-market trade; European indices drifted lower; oil and crypto reacted to geopolitical and macro risks.
What changed: 10% global tariff and scope
The tariff is a 10% duty applied under Section 122 of the Trade Act of 1974. Section 122 permits a presidential tariff action for up to 150 days in response to specific balance-of-payments conditions and related international payments problems. The current order includes exemptions for some North American trade pact goods (USMCA) and selected agricultural items.
Quotable statement: "The 10% tariff is effective immediately under Section 122 and is designed to remain in place for at least 150 days," with White House officials preparing a potential increase to 15%.
Implications:
- Exporters to the US face immediate margin pressure and greater pricing uncertainty.
- Countries that previously negotiated concessions (notably the UK and several EU partners) now face renewed trade ambiguity.
- Governments and exporters must reassess contracts, landed costs and forward hedges for the next 3–6 months.
Meta and AMD: $60bn AI chip agreement
Meta has committed to buying $60 billion of AI chips and associated processors from AMD. The agreement includes:
- Supply commitment: six gigawatts of chips over the deal term, beginning with one gigawatt of the MI450 hardware in H2 of the year.
- CPUs: two generations of central processors, including a custom CPU variant optimized for Meta’s performance and energy targets.
- Equity component: a performance-based warrant allowing Meta to acquire up to 160 million AMD shares in tranches at an exercise price of $0.01 as processor purchases transpire.
Quotable statement: "Meta’s multi-billion dollar commitment to AMD both secures AI infrastructure capacity and diversifies Meta’s supplier mix beyond a single vendor."
Investor impact:
- AMD (AMD) showed notable pre-market strength on the announcement (shares up ~10% pre-market).
- The deal intensifies competition in AI hardware markets dominated by large incumbents, including Nvidia.
- For investors, the agreement signals large cloud and hyperscaler demand for next-generation inference and training hardware.
Markets and asset moves
Equities and indices: European markets opened lower following the tariff announcement. Snapshot moves included:
- FTSE 100: down ~0.25%
- FTSE MIB (Italy): down ~0.4%
- DAX (Germany): down ~0.2%
- CAC 40 (France): down ~0.1%
- Stoxx Europe 600: down ~0.2%
Banks: Major UK bank stocks (Lloyds, NatWest, Barclays) fell between 1.5–2% on renewed credit-quality concerns.
Commodities and FX:
- Oil: US crude reached $67.28/bbl while Brent touched $72.50/bbl, both near seven-month highs amid heightened Middle East tensions ahead of diplomatic talks.
- Bitcoin (BTC): trading near $63,149, down ~2% intraday and down roughly 20% for the month; strong bids noted in the $60,000–$63,000 band.
Credit and defaults: The default rate for European corporates was 4.4% at end-2025. Last year saw $3.9bn in European high-yield defaults and $9bn in leveraged loan defaults—figures that remain low on a historical basis but warrant monitoring given rising risk sentiment.
Credit risks and banking sector signals
Senior banking executives have warned of a potential uptick in bad loans if competition and easing underwriting standards accelerate. Market-sector consequences include:
- Pressure on net interest income (NII) if banks expand riskier lending to chase yield.
- Increased volatility in bank equities and possible contagion to credit spreads if defaults rise.
Quotable statement summarizing risk: "Signs of looser underwriting and competitive pressure in banking markets elevate the chance of non-performing loan deterioration if macro conditions worsen."
Trade policy, diplomacy, and corporate planning
The tariff action increases policy uncertainty for corporates with cross-border supply chains. Immediate operational and financial steps firms should consider:
- Re-price export contracts and review Incoterms for shipments to the US.
- Reassess procurement and nearshoring options to mitigate tariff exposure.
- Increase scenario planning for a potential 15% tariff or additional national-security investigations targeting strategic sectors (batteries, telecoms equipment, industrial chemicals).
For UK exporters, the sudden change in US tariff policy complicates margins and forecasting; trade bodies are recommending intensified engagement with US counterparts and contingency planning for possible retaliatory measures.
What investors and traders should watch next
- Any formal US order raising the tariff to 15% or expanding exemptions.
- AMD (AMD) delivery updates and cadence for the MI450 gigawatt supply, and any consequential guidance revisions from chipmakers.
- Bank credit indicators: corporate delinquencies, syndicated loan spreads and high-yield issuance.
- Oil market developments tied to US–Iran talks and regional risk premiums.
- US macro signals and the State of the Union address for clarity on trade strategy and potential sector-specific tariff investigations.
Quick reference: Key data points
- Tariff rate: 10% in effect; potential to be raised to 15%.
- Section 122 duration: at least 150 days.
- Meta–AMD deal: $60bn in chip purchases; six gigawatts total supply; one gigawatt of MI450 in H2; warrant to acquire up to 160 million AMD shares at $0.01 exercise price.
- US goods trade deficit cited in policy papers: $1.2 trillion; current account deficit: ~4% of GDP.
- Oil: US crude $67.28/bbl; Brent $72.50/bbl.
- Bitcoin (BTC): ~$63,149, down ~2% intraday and ~20% month-to-date.
- European corporate default rate: 4.4% at end-2025; $3.9bn high-yield defaults in 2025; $9bn leveraged loan defaults in 2025.
- FedEx litigation exposure cited relative to estimated $175bn levies.
Bottom line
The concurrent arrival of a 10% global tariff and a major corporate AI procurement agreement underscores a bifurcated market theme: policy-driven global trade risk on one side and accelerated private-sector capital deployment into AI infrastructure on the other. Traders and institutional investors should prioritize scenario planning for tariff escalation, monitor supply-chain reconfiguration signals, and follow hardware vendors’ delivery and margin updates closely.
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