The White House promised "90 deals in 90 days" after US President Donald Trump paused the process of levying "reciprocal tariffs" in April. When the initial 9 July deadline passed on Wednesday, there was just two deals struck – one with the UK and one with Vietnam. The 9 July deadline has also been pushed back to 2 August. The extension of the deadline from Wednesday until 1 August is also not really that firm, as there is a possibility of further delays to come. This is part of the reason why equity markets have shrugged off this week’s announcements. This process still has a long way to run.
The White House’s latest round of tariff letters – sent to more than 20 countries – threatens levies ranging from 20% to 50% on a wide array of imports unless bilateral trade deals are reached. The move, part of Mr Trump’s broader “America First” economic doctrine, has drawn mixed reactions from allies and adversaries alike.
Allies on edge
Japan and South Korea, two of America’s closest allies in Asia, were among the first to receive updated tariff letters. Japan’s tariff rate was raised from 24% to 25%, prompting Prime Minister Shigeru Ishiba to call the move “truly regrettable”. Tokyo has vowed to continue negotiations but warned that the tariffs could strain the broader US-Japan alliance.
South Korea, facing a 25% tariff, has accelerated talks with US officials. Trade Minister Yeo Han-Koo reportedly requested exemptions for key sectors such as automobiles and steel. Malaysia, Laos, and Thailand – also targeted – have expressed concern but remain engaged in talks.
Emerging economies in the crosshairs
A second wave of tariff letters targeted smaller economies, including the Philippines (20%), Sri Lanka (30%), Algeria (at least 30%), and Libya (at least 30%). Trump’s message was blunt: negotiate or face tariffs. The Philippines, a key Southeast Asian partner, expressed disappointment but stopped short of retaliatory threats.
Brazil, however, received the harshest treatment – a 50% tariff – amid Trump’s criticism of the country’s handling of former President Jair Bolsonaro’s legal troubles. The move has been widely interpreted as politically motivated, with Brazilian officials vowed to fight the tariffs at the World Trade Organisation (WTO).
A shock for Canada
Canada, the US’s largest trading partner, saw its political class stunned by a 35% blanket tariff announced on 10 July. Mr Trump cited Canada’s “failure to stop the drugs from pouring into our country” and said retaliatory tariffs were justification for this. Prime Minister Mark Carney has called the move “unjustified and harmful,” while Foreign Minister Anita Anand said negotiations are ongoing in hopes of reaching a deal before the August deadline.
A delicate dance with the European Union
The European Union (EU), which narrowly avoided a tariff letter earlier this month, remains in tense negotiations with Washington. President Trump threatened a 50% tariff on EU goods if no agreement is reached. European Commission President Ursula von der Leyen has pushed for a “bare-bones” deal, acknowledging that a comprehensive agreement is unlikely before the 1 August deadline.
EU Trade Commissioner Maroš Šefčovič said the bloc is prepared to retaliate, if necessary, but emphasised that “all instruments are on the table” to avoid an escalation.
Sector-specific shockwaves
Beyond country-specific tariffs, President Trump has announced sectoral levies that could reshape global supply chains. A 50% tariff on copper imports is set to begin on 1 August, targeting major exporters such as Chile, Canada, and Peru. The administration argues the move is necessary to protect domestic mining and clean energy industries.
More controversially, Mr Trump has proposed a 200% tariff on imported pharmaceuticals, citing national security concerns. Drugmakers have warned of potential shortages and price hikes, while lobbying for a phased implementation. Commerce Secretary Howard Lutnick confirmed that final decisions on drug tariffs will be made by the end of July.
Market reaction
Despite the sweeping nature of Donald Trump’s tariff agenda, markets have remained relatively calm – at least for now. The S&P 500 has rallied more than 28% since the first announcement roiled markets at the start of April, buoyed by investor optimism that most countries will strike deals before the deadline. The VIX volatility index, dubbed Wall Street’s “fear gauge”, remains near yearly lows. The VIX measures expected price fluctuations or volatility in the S&P 500 Index options over the next 30 days and is used as a measure of market sentiment.
However, volatility could spike if tariffs are implemented en masse. Export-heavy sectors such as semiconductors, pharmaceuticals, and industrial metals have already seen equity price fluctuations. Shares of major drugmakers dipped briefly after Mr Trump’s pharmaceutical tariff comments but later recovered.
A global gamble
Mr Trump’s reciprocal tariff strategy is a high-stakes gamble aimed at reshaping global trade in America’s favour. While some countries have signalled a willingness to negotiate, others are bracing for a negative impact. With less than three weeks to go to the “final” deadline, the world is watching – and waiting.
As President Trump himself posted on his Truth Social website: “TARIFFS WILL START BEING PAID ON AUGUST 1, 2025. There has been no change to this date, and there will be no change.”
We will know whether that holds true or if there will be another Trump capitulation in a few weeks’ time. Hopefully the market will get the clarity it wants on future trade policy sooner rather than later.
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