President Donald Trump has announced new tariffs on 14 countries, set to take effect on August 1. The countries affected include Japan, South Korea, Malaysia, Kazakhstan, South Africa, Laos, Myanmar, Bosnia and Herzegovina, Tunisia, Indonesia, Bangladesh, Serbia, Cambodia, and Thailand. The tariff rates range from 25% to 40% on goods imported into the United States from these nations.
Despite the significant tariff increases, global stock markets have shown resilience. Asia-Pacific markets, directly impacted by these new tariffs, remained steady. Japan’s benchmark index ended the day 0.3% higher, while South Korea’s index saw a 1.8% gain.
European stocks also closed higher on Tuesday, with the pan-European index rising by 0.33%. However, on Wall Street, stocks continued their downturn from the previous session, as President Trump reiterated there would be no exceptions to the August 1 start date for the tariffs. Analysts attribute the market’s composed response to President Trump’s signals of flexibility regarding the new tariffs.
Trump’s new tariffs prompt concerns
Speaking to reporters on Monday, he described the August 1 deadline as “firm, but not 100% firm,” indicating some room for negotiation. “If the affected countries call up and they say we’d like to do something a different way, we’re going to be open to that,” Trump remarked.
According to Dan Coatsworth, an investment analyst at AJ Bell, markets are hoping that Trump will back down from his stringent tariffs regime. Coatsworth noted that markets had been somewhat reassured by the flexibility shown in the new announcements, relieving the “immediate cliff edge” of a previous July 9 deadline. Notable U.S. trading partners, including the European Union, India, and Taiwan, did not receive tariff letters on Monday.
This could imply that these nations are either nearing preliminary deals with the U.S. or might receive similar letters shortly, as suggested by Paul Ashworth, chief North America economist at Capital Economics. In Europe, confidence is building that a trade agreement with the U.S. might be achieved, potentially avoiding the planned 20% tariffs on European goods. According to an EU diplomat, negotiations could lead to a 10% baseline tariff, with certain items like aircraft and spirits possibly exempted.
While markets have taken the latest tariff announcement in stride, analysts warn that sustained uncertainty and the complexities of trade negotiations could eventually impact economic stability. Investors remain cautious but are currently managing the news with relative composure.
