Global equities began the week on a cautious footing, with markets retreating modestly on Monday amid renewed trade tensions. Despite the headlines, market conditions remained orderly, reflecting a growing investor perception that tariff threats from Washington are primarily tactical rather than indicative of imminent policy shifts.
U.S. equities declined on Monday as investors returned from the Independence Day holiday to fresh tariff rhetoric. In a familiar pattern, the White House quickly softened its stance by issuing a temporary extension, shifting the implementation date for the duties from 9th July to 1st August. However, stocks declined when Donald Trump announced the latest salvo on trade; a new round of proposed tariffs targeting imports from 14 countries. Under the updated plan, goods from countries such as Japan, South Korea, and South Africa could face tariffs ranging from 25% to 40%, although Trump confirmed that no new increases would take effect this week as initially anticipated. Additional levies were also floated for BRICS nations such as China, India, Brazil, and Russia.
Markets stabilised on Tuesday as investors remained largely unperturbed by the latest tariff headlines, a marked contrast to the sharp sell-off seen when broad duties were first threatened. President Trump signalled flexibility, describing the August 1 deadline as final but expressed openness to further negotiations. The administration also confirmed that any new levies would replace existing duties especially in sensitive sectors such as automotive rather than stack additional costs. That clarification helped underpin the muted market reaction.
Trump’s unpredictable approach to trade policy has become so familiar that it’s earned its own acronym: TACO – “Trump Always Chickens Out”.
Also on Tuesday, President Trump announced a 50% tariff on copper imports into the U.S., delivering on an earlier threat linked to a national security investigation. The move reflects concerns that foreign copper shipments may pose a strategic risk, given the metal’s critical role in military equipment, electric vehicles, and construction. Similar reviews are underway in pharmaceuticals, semiconductors, and timber—underscoring the administration’s broader use of tariffs to protect and promote domestic industry.
Across Asia-Pacific, markets traded mixed to slightly higher as investors assessed the implications of the U.S. announcements. Many regional indices have recovered from April lows, supported by the belief that U.S. trade policy remains fluid and subject to delay.
Equities in the UK and Europe closed modestly higher on Tuesday. With UK stocks remaining isolated from tariff noise, sentiment also improved in Europe following reports that the U.S. had proposed maintaining a 10% baseline tariff on EU goods. However, caution persisted ahead of any formal agreement. German export data for May showed a larger-than-expected decline of 1.4%, with shipments to the U.S. down 7.7% as earlier front-loading faded. Meanwhile, Eurozone retail sales fell 0.7% in the same month, suggesting a shift in consumer behaviour towards saving. Nonetheless, purchasing power remains underpinned by recent ECB rate cuts and continued wage growth. Market attention now turns to the upcoming release of second-quarter GDP figures, which are expected to confirm a contraction, particularly in light of April’s 0.3% decline in services output.
Still to come this week, China inflation, U.S. initial jobless claims. UK GDP, industrial production and manufacturing production.
Kate Mimnagh, Portfolio Economist
