Global markets have largely shrugged off news that U.S. President Donald Trump has imposed new tariff rates on goods from fourteen countries. The tariffs, outlined in letters sent to leaders of Japan, South Korea, Malaysia, Kazakhstan, South Africa, Laos, Myanmar, Bosnia and Herzegovina, Tunisia, Indonesia, Bangladesh, Serbia, Cambodia and Thailand, range from 25% to 40% and are scheduled to take effect on August 1. However, Trump has described the deadline as “firm, but not 100% firm,” suggesting a more flexible approach.
Asia-Pacific and European equity markets displayed muted reactions. Japan’s Nikkei 225 index closed 0.3% higher, and South Korea’s Kospi gained 1.8%. The pan-European Stoxx 600 index was up 0.33%. On Wall Street, however, stocks extended losses after Trump offered no exceptions to the August 1 tariff start date.
Analysts suggest the market’s calm stems from expectations that Trump may ultimately back down, a sentiment described as the return of the ‘TACO’ (Trump Always Chickens Out) trade. Furthermore, the fact that key U.S. trading partners like the European Union have not received similar letters has fuelled optimism that trade deals may be close. UBS Global Wealth Management’s Chief Investment Office noted the EU’s omission could signal an impending agreement, reassuring investors that tariffs will settle near the current effective rate of 15%.
