In more than two weeks, the full impact of President Trump’s tariff regime will take effect (eventually).
Over the past week, the White House has written to Governments around the world inform them of export hikes If they don’t reach an agreement with the United States, they will face them, saying the sanctions will take effect on August 1.
Of course, international markets have been staring at similar deadlines in the past, only being postponed at the eleventh hour.
As a result, Wall Street learned to take on the threat of the Oval Office with a little salt – JPMorgan CEO Jamie Dimon is both complacent.
Analysts are not the only ones – so are foreign governments Prepare further chicken, Jim Reid of Deutsche Bank wealth this morning.
“In the early hours of Saturday, Mr. Trump’s fixed cabinet was opened again and sent a letter to the EU and Mexico informing them that they would face 30% tariffs on August 1. To be fair, a month ago, Trump threatened the EU with 50% tariffs in Trump, so you might say it was an improvement,” Reid noted. ”
“The market usually thinks this is primarily a negotiation strategy and we are unlikely to see such rates.”
The EU’s response has been measured. For example, European Commission President Ursula von der Leyen announced on Sunday that it had delayed its countermeasures that would take effect this week in response to U.S. sanctions on steel and aluminum.
“Unless there is a negotiated solution, the United States has sent us a letter that will take effect, so we will also extend the suspension of countermeasures until early August,” von der Leyen told reporters this weekend.
“At the same time, we will continue to prepare for countermeasures so that we can be fully prepared for us.”
Therefore, the market and government will “hope and expect diplomatic capabilities to win,” Reed added.
But he continued: “At some stage, there is a bluff that can call someone. Trump is under less pressure at the moment to retreat from his climax and the relatively stable bond market. If, on August 1, huge tariffs do come into play, we may have a larger market reaction.”
Just another strategy
Goldman Sachs analyst Sven Jari Stehn wrote over the weekend that President Trump’s 30% tariff announcement was a “surprise” given the issue A more constructive tone Two parties Crashed in the past.
However, Steen added that even the threat of the White House using threats again to speed up the trade deal could undermine such concerns.
He wrote: “President Trump’s threat is likely to be a negotiating strategy, and we currently insist that the “framework agreement” that can reach current tariff rates, including 10% and 25% of all commodities in steel/aluminum and automobiles.
“But we still hope that the U.S. imposes a 25% tariff on key commodities, including pharmaceuticals, which will increase the EU’s U.S. tariff rate at 16pp.”
Analysts at banks at European headquarters are willing to agree.
As UBS Chief Investment Officer, Mark Haefele is in the process of wealth This morning: “If the government imposes the tariffs on August 1 and keeps them at these levels, the likelihood of U.S. profits and recession will increase.
“So, we believe that the government is using the latest round of tariff escalations to maximize its negotiated leverage and will eventually downgrade, especially in new events where new bond and stock markets are increasing.”
