Global markets shrug off Trump tariff deadline
Global investors have remained largely indifferent ahead of U.S. President Donald Trump’s Wednesday tariff deadline, showing little concern over the potential trade shocks that once rattled financial markets.
Despite the expiry of a 90-day pause on tariffs announced in April, markets appear to have priced in a range of benign outcomes, reflecting a shift in sentiment.
According to Reuters, Trump announced on Friday that the first batch of tariff letters would be sent to 12 countries on Monday, with duties possibly reaching up to 70 per cent starting August 1. This is significantly higher than the 10 to 50 per cent range initially mentioned. Yet, global stocks have rallied, suggesting investors are no longer easily spooked by tariff uncertainty.
“The market has gotten much more comfortable, more sanguine when it comes to tariff news,” Jeff Blazek, co-chief investment officer of multi-asset at Neuberger Berman in New York, told Reuters. “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.”
Trump’s administration has made limited progress in striking new trade deals. While it secured a modest agreement with Britain and a tentative pact with Vietnam, deals with India and Japan have stalled, and negotiations with the European Union have hit setbacks.
Reuters added that global stocks, as measured by the MSCI World Index, are now at record highs, having surged by 24 per cent since April 2, even though they initially dropped by 14 per cent in the immediate aftermath of Trump’s “Liberation Day” tariff announcement.
“If Liberation Day was the earthquake, the tariff letters will be the aftershocks,” Rong Ren Goh, a portfolio manager at Eastspring Investments in Singapore, told Reuters. “They won’t quite have the same impact on markets even if they are higher than the earlier 10 per cent.”
Market optimism has been further fuelled by the recent signing of a major U.S. tax and spending package, which makes Trump’s 2017 tax cuts permanent. While equity markets have responded positively, bond investors are more cautious, as the package could add over $3tn to America’s existing $36.2tn debt burden.
The S&P 500 and Nasdaq indices closed at all-time highs on Friday, extending a three-week streak of gains. Meanwhile, Europe’s STOXX 600 index has climbed nine per cent over the past three months.
However, there are lingering concerns in the fixed-income market. Tariff-related inflation fears and the implications of rising debt have weakened U.S. Treasuries and pressured the dollar. The U.S. dollar index, which tracks the greenback against a basket of six major currencies, has declined by 11 per cent so far in 2025, the worst first-half performance since 1973.
“The markets are discounting a return to tariff levels of 35 per cent, 40 per cent or higher, and anticipating an across-the-board level of 10 per cent or so,” John Pantekidis, chief investment officer at TwinFocus in Boston, told Reuters.
Pantekidis added that while the outlook for U.S. equities remains broadly positive, rising interest rates could derail momentum if concerns about government spending and inflation intensify.
Despite the looming tariff letters and unresolved trade negotiations, investors seem to be leaning on market resilience and ample global liquidity to navigate the second half of the year.
