WASHINGTON, DC – JULY 7: An aide picks up a web page from a letter to Japan and South Korea, signed by U.S. President Donald Trump, saying 25% tariffs starting on August 1st, throughout the day by day press briefing within the Brady Press Briefing Room on the White Home on July 7, 2025 in Washington, DC.
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U.S. President Donald Trump slapped punitive tariff charges on 14 buying and selling companions on Monday — however world markets are to date shrugging off the brand new insurance policies.
The president introduced on Monday that he had despatched letters to the leaders of Japan, South Korea, Malaysia, Kazakhstan, South Africa, Laos, Myanmar, Bosnia and Herzegovina, Tunisia, Indonesia, Bangladesh, Serbia, Cambodia and Thailand. Every letter laid out new tariff charges on items despatched from the person nation to the US.
The brand new charges, starting from 25% to 40%, will come into impact on Aug. 1.
Asia-Pacific markets — a number of of that are set to be immediately impacted by the brand new tariffs — staged a muted response Tuesday. Japan’s benchmark Nikkei 225 index ended the day 0.3% greater, whereas South Korea’s Kospi gained 1.8%.
European markets have been additionally subdued, buying and selling broadly flat on Tuesday within the first buying and selling session since Trump made his bulletins late Monday. The pan-European Stoxx 600 index was 0.09% decrease shortly after noon in London, after shifting between slight losses and positive aspects via the morning.
On Wall Avenue, inventory futures have been broadly greater forward of Tuesday’s buying and selling session, coming off of a shedding session on Monday.
It is a drastically totally different response to the wild swings seen in April, when Trump’s preliminary “reciprocal tariffs” announcement sparked a world selloff.
Return of the ‘TACO’ commerce
One motive is more likely to be due to Trump’s seemingly extra versatile strategy to the brand new insurance policies. Chatting with reporters on Monday, he labeled the Aug. 1 deadline “agency, however not 100% agency.”
“If [the affected countries] name up they usually say we would love to do one thing a distinct manner, we’ll be open to that,” the president stated.
In accordance with AJ Bell Funding Analyst Dan Coatsworth, markets are relying on Trump to again down on his tariffs regime.
“The ‘TACO’ (Trump All the time Chickens Out) commerce is again on the desk because the Trump administration’s newest bulletins on tariffs provided some reduction to monetary markets,” he stated in a Tuesday morning observe, including that the most recent developments eliminated the “speedy cliff edge” of a July 9 tariff deadline.
Nevertheless, the replace additionally will increase the interval of uncertainty that governments, companies and shoppers are contending with.
The truth that some key U.S. buying and selling companions — together with the European Union, India and Taiwan — didn’t obtain letters on Monday may both imply they’re near sealing preliminary offers — or will get letters shortly, Paul Ashworth, chief North America economist at Capital Economics, stated in a Monday observe.
With out offers, the efficient tariff price on U.S. imports will rise from 15.5% to 17.3%, he stated. On the finish 2024, it was at 2.5%.
“Given the very muted affect of tariffs on U.S. client costs to this point and that the tariff revenues at the moment are being recycled because of the Republican Megabill that Congress simply handed, the fallout must be manageable,” he stated.
Europe commerce deal optimism
In Europe, the muted response from shares may be attributed to confidence {that a} EU-U.S. commerce deal might be struck, averting the 20% tariff price the White Home had deliberate to impose on the bloc’s items.
An EU diplomat advised CNBC on Monday that the European Union may obtain a letter from Trump later this week, giving the bloc extra time to safe a framework settlement with the White Home. This broad settlement is more likely to embrace a ten% baseline tariff and might even see sure items — comparable to plane and spirits — given exceptions. The diplomat conceded, nevertheless, that it was “finally all as much as Trump.”
It was additionally extensively reported on Monday that EU Fee President Ursula von der Leyen had a “good trade” with Trump over the weekend.
Kiran Ganesh, multi-asset strategist at UBS World Wealth Administration’s Chief Funding Workplace, advised CNBC on Tuesday morning that it was notable the EU had not obtained a letter — probably as a result of a deal is shut, reassuring buyers.
“Total, the market usually appears to be snug with the concept that tariffs will in all probability settle near the present efficient price (15%), albeit with doubtless decrease country-level tariffs and extra sector-level (semis, pharma, minerals) tariffs to come back,” Ganesh stated in an electronic mail.
“So general, nothing within the letters may have modified the market’s view about the place tariffs are going to finish up, or the trail by which we get there (threats and negotiations).”

Buyers had already priced in the truth that many commerce offers wouldn’t be reached earlier than the July deadline, in accordance with Toni Meadows, head of funding at London’s BRI Wealth Administration — however he steered that some buyers could also be being complacent.
“One complete commerce deal may take months, even years, to barter so the market did not imagine that 90 partial offers in 90 days was ever attainable,” he advised CNBC in an electronic mail.
“At current buyers appear snug using Trump’s seesaw path to coverage setting, however reciprocal tariffs are a tax on exercise and it’s too early to guage the precise affect on the economic system. Maybe issues will change if we begin to see a direct hyperlink in financial numbers.”
The U.S. administration mustn’t suppose that buyers will all the time be this sanguine, he added.
“The deadline extension doesn’t give sufficient time for correct negotiations and shortly after that we’ve got the same old pantomime with regard to the U.S. debt ceiling to deal with.”
— CNBC’s Ganesh Rao contributed to this report.