Stock markets maintain a composed response to Trump's tariff maneuvers
In a significant development, President Trump has postponed the scheduled increase in tariffs on EU goods from July 9 to August 1, 2025. This extension offers the EU additional time to negotiate a deal with the US to avoid tariff hikes, but it also prolongs economic uncertainty for European businesses.
The potential tariff increases could reach up to 50% if no agreement is reached, affecting a wide range of goods including French cheese and German electronics. The US administration is applying "maximum pressure" to finalize trade agreements, and while talks have progressed, the EU is still preparing retaliatory tariffs on American exports if no deal is reached.
The EU is showing flexibility in its negotiations, using the recent US-UK trade deal as a model. This deal involves maintaining a 10% tariff in exchange for trade concessions. However, the situation remains challenging due to internal divisions within the EU on negotiation strategies and the uncertainty of how the US will treat the EU — as a partner or in a less favorable manner.
The delay in the tariff increase has given the EU more time, but it also increases economic pressure to reach a compromise. The EuroStoxx 50, the leading index for the Eurozone, gained 0.1%, and the German benchmark index, DAX, rose by 0.11% to 24,099.89 points in the first trading minutes.
Meanwhile, in other trade news, the trade conflict with the US remains a stalemate. Brazilian President Luiz Inácio Lula da Silva has rejected Trump's threats against the BRICS countries, saying the world has changed and does not want an emperor. Trump has threatened additional tariffs of ten percent for each country that joins the "anti-American policy of the BRICS."
In related markets news, US markets paid tribute to their previous rally at the start of the week, but trading was mostly upwards at the Asian trading places. The MDax fell by 0.15% to 30,699.23 points in the first trading minutes.
In positive news, Daimler Truck benefited from a billion-dollar share buyback program, causing its shares to rise by around one percent. The Euro's exchange rate has recovered significantly from the losses it suffered at the start of the week, trading at $1.1756 on Tuesday morning.
Stephen Innes of SPI Asset Management commented that the markets have learned to deal with Trump's rhetoric of threats and subsequent concessions. The Trump administration does not seem interested in further escalating trade disputes, according to Thomas Gitzel, chief economist of VP Bank.
Higher surcharges may apply for some product categories, especially cars and car parts, according to Gitzel. Despite the delay, the new deadline for tariffs serves to increase pressure on trading partners, as per Gitzel. The markets will continue to monitor the situation closely as negotiations between the US and the EU progress.
- The delay in the tariff increase, coinciding with ongoing negotiations between the US and the EU, has raised concerns about increased financial pressure on European businesses involved in investing in goods such as French cheese and German electronics.
- The recent US-UK trade deal, which involves a 10% tariff and trade concessions, is being used by the EU as a model in their negotiations with the US, despite internal divisions within the EU on negotiation strategies and the uncertainty of how the US will treat the EU.
- The potential tariff increases could reach up to 50%, affecting various business sectors, and the EU is still preparing retaliatory tariffs on American exports if no agreement is reached. This situation is being closely monitored by general-news outlets and financial markets, as the economic impact could have widespread ramifications.
