Global stock markets reacted calmly on Tuesday to President Donald Trump’s announcement of new tariffs on 14 countries. The tariffs, ranging from 25% to 40%, are set to take effect on August 1. However, Trump left the door open for negotiations, stating that the deadline was “firm, but not 100% firm.”
Despite the potential economic consequences, Asia-Pacific indexes showed slight gains.
Japan’s benchmark index ended the day 0.3% higher, while South Korea’s gained 1.8%. European markets also closed higher, with the pan-European index up 0.33%. On Wall Street, stocks extended their losses from the previous session, as President Trump offered no exceptions to his August 1 tariff start date.
Dan Coatsworth, an analyst at AJ Bell Investment, commented that markets are counting on Trump to reconsider his stance. Some significant U.S. trading partners like the European Union, India, and Taiwan did not receive letters on Monday.
Markets react to Trump tariff plans
Paul Ashworth, chief North America economist at Capital Economics, speculated this could mean they are either close to sealing preliminary deals or will receive letters shortly. In Europe, confidence that an EU-U.S. trade deal will be struck appeared high. An EU diplomat told reporters on Monday that the European Union might receive a letter from Trump later this week, allowing more time to secure a framework agreement.
Kiran Ganesh, multi-asset strategist at UBS Global Wealth Management, noted that the absence of a letter to the EU could be reassuring for investors. “Overall, the market generally seems comfortable with the idea that tariffs will probably settle close to the current effective rate (15%), albeit with likely lower country-level tariffs and more sector-specific tariffs,” Ganesh said. Toni Meadows, head of investment at London’s BRI Wealth Management, remarked that some investors might be complacent.
“One comprehensive trade deal could take months, even years, to negotiate, so the market didn’t believe that 90 partial deals in 90 days was ever possible,” he said. Meadows added, “The deadline extension does not allow sufficient time for proper negotiations, and shortly after that, we have the usual concerns regarding the U.S. debt ceiling.”
As investors continue to monitor announcements concerning trade deals and tariffs, the relatively muted market reaction suggests that they view Trump’s new tariffs more as negotiating tactics than firm policy. However, analysts warn against complacency, as volatility could arise from any sudden changes in trade policy.
