Trump’s Tariff Tactics: Why Global Stock Markets Are Unconvinced

On July 7, 2025, President Donald Trump announced new tariffs on 14 countries, including Japan, South Korea, and Malaysia. These tariffs will be between 25% and 40% and will take effect on August 1. Despite the seriousness of this announcement, global markets mostly shrugged it off.

Asian markets reacted mildly. For instance, Japan’s Nikkei 225 index rose by 0.3%, while South Korea’s Kospi increased by 1.8%. European markets also showed little change, with the Stoxx 600 index dipping slightly but remaining stable overall. In contrast, stock futures on Wall Street were looking up after a downturn the day before.

One reason for the calm reaction may be Trump’s more flexible approach. He mentioned that while the August 1 deadline is firm, he’s open to discussions with the affected countries. This has led to a sense of cautious optimism among investors.

AJ Bell analyst Dan Coatsworth referred to this mindset as the “TACO” trade, which stands for “Trump Always Chickens Out.” He noted that the recent updates on tariffs have eased some market fears. Paul Ashworth, chief economist at Capital Economics, pointed out that if no deals are struck, U.S. import tariffs could rise significantly by the end of 2024. However, he believes the current tariff situation won’t significantly impact consumer prices.

In Europe, hopes for a trade deal with the U.S. are also influencing market reactions. An EU diplomat suggested that Trump may soon reach out to the European Union to negotiate terms. The potential agreement could involve a baseline tariff of 10% and exemptions for certain products.

Investors remain watchful, with some predicting that comprehensive trade deals might take a long time to finalize. Toni Meadows from BRI Wealth Management cautioned that while markets seem relaxed now, reciprocal tariffs will eventually impact economic activity.

As we look toward the future, the interplay between tariffs and trade deals will be key. According to a recent Pew Research study, 65% of Americans believe that trade agreements hurt the U.S. economy, highlighting a growing concern about these policies. The results suggest that trade will be a significant issue in the upcoming elections.

In summary, while the initial reaction to Trump’s tariffs has been subdued, the path forward remains uncertain. Investors are watching closely to see how negotiations unfold and what their impact will be on the global economy. For ongoing updates, check out CNBC’s analysis.

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