Market Update: US trade tariffs: despite recent announcements, much uncertainty remains

Highlights: The US has set a 10 per cent global baseline tariff, with reciprocal rates ranging from 10–41 per cent and a new 40 per cent duty on transshipments. Trade deals now cover 69 nations, but only seven have full frameworks, leaving 62 countries still facing potential tariffs. While tariffs may slow growth and pressure margins, secular trends, including the technology revolution, reshoring of jobs, and re-industrialization, continue to support US economic resilience and reduce recession risk. So while the weak jobs report this week caused more growth concerns, we would not exaggerate this. In addition, the figures may ease inflation concerns and have already increased the market’s rate cut expectations, so we rather foresee some sector rotation and temporary volatility than a big negative impact.

• Key agreements have been reached with the EU, the UK and Japan, while China, Mexico, and Canada are in negotiation extensions that will shape the outcome of US trade policy in the months ahead
• Uncertainty about trade has diminished but is not over: there are more deadlines to come, e.g. the August deadline for a trade agreement between the US and China, as well as a slew of section 232 investigations that could mean elevated tariffs on a range of sectors such as pharmaceuticals and semiconductors
• We maintain our US equity market overweight. Corporate results remain strong, with 66 per cent of the S&P 500 reporting and 82 per cent beating expectations. Q2 earnings growth has accelerated to 10.6per cent year over year, lifting 2025 earnings projections to nearly 10per cent, supporting our US equity overweight
• Structural themes remain powerful long-term drivers for US equity markets as the technology and AI revolution, the reindustrialisation of the US economy, and reshoring of key industries reinforce our constructive outlook for US equities. Policy clarity is improving, but volatility persists. Hence, we maintain our preference for active management, volatility strategies and diversification
• We remain neutral on fixed income but continue to add high quality bonds for income and stability, using an active management approach to find selective opportunities in higher yielding segments
• As for USD, increased clarity on trade policies and the passage of the Big Beautiful Bill (with the removal of section 899) make the debate about de-dollarisation less compelling. At the same time, any cyclical headwinds and rate cuts could be negatives. So we expect volatile side-ways trading for USD