Market Update - Tariff deadline pushed back to 1 August, resulting in further uncertainty for global financial markets

Highlights: President Trump has sent letters to multiple countries announcing higher tariffs from 1 August, while many others are still waiting to either receive letters or reach a trade deal. The US will now impose 25 per cent tariffs on imports from Japan and South Korea if no agreement is found by the new 1 August deadline. Around a dozen other countries, including Malaysia, Kazakhstan, South Africa, and Myanmar, are also facing new tariffs ranging from 25 per cent to 40 per cent. The market reaction is mixed as the higher rates are a negative, but the extended negotiating time is a plus.

• President Trump also warned that any country aligning with BRICS policies seen as “anti-American” or supporting de-dollarization could face an extra 10 per cent tariff. He made clear that retaliation by other countries would trigger even higher tariffs. The EU is trying to rush to a framework agreement this week in an attempt to lock in the 10 per cent rate ahead of 1 August
• Negotiations Still Possible: Treasury Secretary Bessent described the new tariff letters as open invitations to negotiate, not ultimatums. He noted a surge in last-minute trade offers and emphasised that countries can avoid tariffs by moving production to the US
• The global market reaction is mixed. US stocks fell around -1 per cent but the possibility for negotiations is putting some Asian markets in the green today. The JPY weakened but KRW retraced its initial weakness, and shares of Japanese automakers have been volatile. The announcements come as investors are already watching rising US debt levels and higher long-term borrowing costs, so there is some mild pressure on bonds, though Fed rate cut expectations have not materially moved on the news
• The new tariffs could raise the risk of upward pressure on inflation while weighing on corporate profit margins. That said, much of the hit to 2025 US earnings expectations has already been priced in, with very conservative earnings growth assumptions for Q2. In the short term, investors will clearly watch for new sector and country-specific headlines