Investors head into Trump tariff deadline benumbed and blase
'The market has gotten much more comfortable, more sanguine, when it comes to tariff news,' said Jeff Blazek, co-chief investment officer of multi-asset at Neuberger Berman in New York.
'The markets think that there is enough 'squishiness' in the deadlines – absent any major surprise – to not be too unsettled by more tariff news and believe that the worst-case scenarios are off the table now.'
Both the tariff levels and effective dates have become moving targets. Trump said on Friday that tariffs ranging up to 70% could go into effect on August 1, levels far higher than the 10%-50% range he announced in April.
So far, the U.S. administration has a limited deal with Britain and an in-principle agreement with Vietnam.
Deals that had been anticipated with India and Japan have failed to materialize, and there have been setbacks in talks with the European Union.
World stocks are meanwhile at record highs, up 11% since April 2. They fell 14% in three trading sessions after that announcement but have since rallied 24%.
"If Liberation Day was the earthquake, the tariff letters will be the aftershocks. They won't quite have the same impact on markets even if they are higher than the earlier 10%," said Rong Ren Goh, a portfolio manager in the fixed income team at Eastspring Investments in Singapore.
"This financial system is so inundated with liquidity that it is hard to cash up or delever at the risk of lagging the markets, with April serving as a painful reminder for many who derisked and were then forced to chase the relentless recovery in the subsequent weeks."
Investors have also been distracted by weeks of wrangling in Congress over Trump's massive tax and spending package, which he signed into law on Friday.
Stock markets have celebrated the passage of the bill, which makes Trump's 2017 tax cuts permanent, while bond investors are wary the measures could add more than $3 trillion to the nation's $36.2 trillion debt.
The S&P 500 and Nasdaq indexes closed at record highs on Friday, notching a third week of gains. Europe's STOXX 600 benchmark is up 9% in three months.
But the risks of tariff-related inflation have weighed on U.S.
Treasuries and the dollar, and jostled expectations for Federal Reserve policy. Rate futures show traders no longer expect a Fed rate cut this month and are pricing in a total of just two quarter-point reductions by year-end.
The dollar has suffered a knock to its haven reputation from the dithering on tariffs. The dollar index, which reflects the U.S. currency's performance against a basket of six others, has had its worst first half of the year since 1973, declining some 11%. It has fallen by 6.6% since April 2 alone.
"The markets are discounting a return to tariff levels of 35%, 40% or higher, and anticipating an across-the-board level of 10% or so,' said John Pantekidis, chief investment officer at TwinFocus in Boston.
Pantekidis is cautiously optimistic about the outlook for U.S. stocks this year, but the one variable he is watching closely is interest rate levels.
For now he expects to see interest rates dip in the second half, 'but if the bond market worries about the impact of the bill and rates go up, that's a different scenario.'
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
France 24
an hour ago
- France 24
Trump steps up pressure for deals as US tariff deadline nears
Trump is due to send a first batch of letters to up to 15 trading partners from noon local time (1600 GMT), warning that US levies on imports will snap back to elevated levels if foreign governments fail to reach agreements with Washington. The duties will not bounce back until August 1, Treasury Secretary Scott Bessent said over the weekend, a move that appears to give more room for dealmaking. Trump imposed a 10 percent tariff on imports from almost all trading partners in early April, but some economies including the European Union were slated to have this rate increase further. As markets plunged at the time, Trump halted the steeper levies to allow for talks. That pause expires on Wednesday. "We are going to have several announcements in the next 48 hours," Bessent told CNBC in an interview Monday. "We've had a lot of people change their tune in terms of negotiations. So my mailbox was full last night with a lot of new offers, a lot of new proposals," Bessent said. He reiterated that higher tariff rates for countries would not return until August 1. There was no immediate response from the White House on whether Trump would formally extend the Wednesday deadline. Asked about the letters Trump plans to send out, Bessent said these would inform partners of the tariff rate their products face when trading with the United States, unless they want to "come back and try to negotiate." Limited results? While the Trump administration has signaled hopes of striking dozens of deals by early July, there have been limited results so far. Washington has unveiled pacts only with Britain and Vietnam, while the United States and China agreed to temporarily lower tariff levels on each other's products that earlier reached three-digits. Bessent told CNBC Monday that he would "be meeting with my Chinese counterpart sometime in the next couple of weeks." The two sides have so far held high-level talks in Geneva and London. But Washington and Beijing's pause on tit-for-tat tariffs is due to expire in mid-August. On whether he was disappointed in the number of trade deals achieved so far, Trump's trade adviser Peter Navarro maintained that he is "happy with the progress we've had." "Every country that we run a major deficit with is fully engaged," he told CNBC on Monday. On Sunday night, Trump wrote on his Truth Social platform that Washington would deliver "tariff letters" or deals to various countries on Monday. In a separate post that night, Trump threatened another 10 percent tariff on countries aligning themselves with the emerging BRICS nations, accusing them of "Anti-American policies" after they slammed his duties at a summit. For now, partners are still rushing to avert Trump's tariffs altogether. The European Commission said that EU chief Ursula von der Leyen had a "good exchange" with Trump on trade when the pair spoke Sunday. Japan's Prime Minister Shigeru Ishiba, however, said Sunday that he "won't easily compromise" in trade talks with Washington.
France 24
2 hours ago
- France 24
BRICS' criticism brings Trump 10% tariff threat
The 11-nation grouping -- which also includes US allies Brazil, Saudi Arabia, and Indonesia -- is concluding a two-day summit in Rio de Janeiro. On Sunday, BRICS leaders described Trump's stop-start tariff wars as "indiscriminate", damaging, and illegal, drawing a quick rebuke from the pugilistic US president. "Any Country aligning themselves with the Anti-American policies of BRICS, will be charged an ADDITIONAL 10% Tariff. There will be no exceptions to this policy," Trump wrote on social media. BRICS members account for about half the world's population and 40 percent of global economic output. Conceived two decades ago as a forum for fast-growing economies, the BRICS have come to be seen as a Chinese-driven counterbalance to US influence. But it is an expanding and often divergent grouping -- bringing together arch US foes like Iran and Russia, with some of Washington's closest allies in Latin America, the Middle East, Africa, and Asia. Some US allies inside the bloc had tried to blunt criticism by not mentioning Trump by name in their summit statement. Saudi Arabia -- one of the world's biggest purchasers of US high-tech weapons -- even kept its foreign minister away from Sunday's talks and a BRICS "family photo" of leaders, seemingly to avoid Washington's ire. But such diplomatic gestures were lost on the US president. In April, Trump threatened a slew of punitive duties, before backing off in the face of a fierce market sell-off. Now he is threatening to impose unilateral levies on trading partners unless they reach "deals" by August 1, with BRICS nations seemingly getting higher tariffs than planned. It cannot have helped that BRICS leaders also condemned the recent US and Israeli bombing of Iran's nuclear facilities -- a show of solidarity with fellow member Iran. Beijing on Monday insisted BRICS was not seeking confrontation with the United States. "China has repeatedly stated its position that trade and tariff wars have no winners and protectionism offers no way forward," foreign ministry spokeswoman Mao Ning said. Beijing also defended the bloc as "an important platform for cooperation between emerging markets and developing countries". "It advocates openness, inclusivity, and win-win cooperation," Mao said. "It does not engage in camp confrontation and is not targeted at any country," she said. The political punch of this year's summit has been depleted by the absence of China's Xi Jinping, who skipped the meeting for the first time in his 12 years as president. The Chinese leader is not the only notable absentee. Russian President Vladimir Putin, charged with war crimes in Ukraine, also opted to stay away, participating via video link. He told counterparts that BRICS had become a key player in global governance. © 2025 AFP
Euronews
6 hours ago
- Euronews
Trump says Musk ‘gone off the rails' after America Party announcement
The ongoing feud between Elon Musk and Donald Trump continued on Sunday, when the US president again slammed the South African-born billionaire and his plan to introduce a third major political party. Speaking to reporters ahead of his return to Washington from New Jersey, Trump dismissed Musk's move as 'ridiculous' and defended his own party's track record. 'The Democrats have lost their way, but it's always been a two-party system,' he said. 'I think starting a third party just adds to confusion. It really seems to have been developed for two parties.' Trump also wrote on his Truth Social platform on Sunday, stating, "I am saddened to watch Elon Musk go completely 'off the rails,' essentially becoming a train wreck over the past five weeks." Musk has announced the formation of a new political party following a public fallout with Trump over sweeping tax and spending reforms, saying he established the America Party on Saturday. Musk, who was once a close ally of Trump during his leadership of the Department of Government Efficiency (DOGE), broke ranks with the president after the passage of a controversial tax and spending legislation Trump dubbed "Big Beautiful Bill", signed into law on Friday. Trump's "Big Beautiful Bill" eliminated tax incentives for electric vehicles, which is bound to affect Musk, who owns the electric car-making company Tesla. The legislation aims to increase funding for border security, defence and energy production, while drawing criticism for cutting healthcare and food assistance programmes. As the legislation progressed through Congress, Musk warned he would create a new political entity if what he called an 'insane spending bill' became law. 'When it comes to bankrupting our country with waste and graft, we live in a one-party system, not a democracy,' Musk posted on X, the social media platform he owns. 'Today, the America Party is formed to give you back your freedom.' Was America Party actually registered? Although third parties have historically struggled in the US, Musk's significant financial injections into political favourites — including an estimated $250 million (€213 million) spent supporting Trump in the 2024 election — could influence the 2026 midterms, particularly if he devotes considerable resources to the endeavour. However, the move may also pose risks for Musk, whose companies, including Tesla and SpaceX, benefit from substantial government contracts. Tesla shares saw declines amid renewed tensions between the duo. It remains unclear whether Musk has formally registered the America Party. As of Sunday, the Federal Election Commission listed several entities using variations of 'America Party,' 'DOGE,' or 'X,' although none appeared to be official. Some filings featured dubious contact details, such as untraceable ProtonMail addresses or email addresses like 'wentsnowboarding@ Musk spent Sunday engaging with users on X, inviting feedback on the party and suggesting plans to play a role in the upcoming congressional elections. He previously warned he would target every lawmaker who supported Trump's bill. 'The Republican Party has a clean sweep of the executive, legislative and judicial branches and still had the nerve to massively increase the size of government, expanding the national debt by a record $5 trillion,' Musk wrote. Musk's reversal is also notable as he had stated just weeks ago that he intended to reduce his political involvement.
