Global investors were jolted over the weekend as U.S. President Donald Trump threatened 30% tariffs on imports from Mexico and the EU, effective August 1, marking a renewed escalation in global trade tensions.
📉 Markets React Cautiously:
The S&P 500 ended the week down just 0.3%, holding near record highs.
The pan-European STOXX 600 fell 1% on Friday, its biggest daily drop in 3+ months.
The VIX (“fear gauge”) rose back above 16 after dipping to its lowest level in five months.
⚠️ Tariff Timeline:
Trump’s threats follow weeks of stalled negotiations with key allies.
Earlier in the week, new tariffs were also announced targeting Japan, South Korea, Canada, Brazil, and a 50% levy on copper.
The U.S. is also weighing tariffs on pharmaceuticals and semiconductors.
💬 Investor & Strategist Insights:
Michael Brown (Pepperstone): Sees an “escalate-to-de-escalate” tactic aimed at extracting concessions.
Karl Schamotta (Corpay): Warns that Trump’s protectionist agenda is not yet priced in — predicting a “moment of capitulation” in markets or the White House.
Citi’s Scott Chronert: Equity gains may not hold without positive trade news before August 1.
📊 Tariff Impact:
U.S. weighted average tariff rate is now ~16%, up from 2.5% at the start of 2025.
Could rise to ~18% if all proposed country-specific tariffs take effect, UBS estimates.
🔄 Outlook:
Markets remain on edge but less reactive than earlier in the year. The next few weeks will be critical in determining whether Trump’s tariff strategy leads to deals or deeper disruption.
