US president Donald Trump has forged ahead with his tariff agenda, unveiling new levies set to come into effect on 7 August.
Trump’s executive order, which was signed last night, outlined updated tariff rates for 67 countries, ranging between 10% and 41%. Countries not listed in the order will face a baseline 10% tariff rate, in line with Trump’s original ‘Liberation Day’ announcement.
Russ Mould, investment director at AJ Bell, said: “Equity markets were flashing red as Trump’s tariff regime hits another milestone.
“The fact Trump hasn’t chickened out and pushed back the 1 August deadline to 1 September has soured the tone on the market. Europe and Asia were in a grumpy mood and futures prices imply Wall Street will follow suit later today.”
So far, there hasn’t been a repeat of the sharp market sell-off seen immediately after the 2 April ‘Liberation Day’ speech last year.
“However, it’s fair to say there is a broad negative tone at the end of the trading week and recent upwards market momentum has evaporated,” said Mould.
Canada is one of a handful of countries slapped with a higher levy of 35% – up from an earlier 25% – for goods not covered under the United States-Mexico-Canada Agreement (USMCA). The White House claimed this is in response to the flow of illicit drugs across the northern border.
Canada’s prime minister Mark Carney responded that Canada accounts for just 1% of US fentanyl imports and has been working intensively to further reduce these volumes.
Daniel Casali, chief of investment strategy at Evelyn Partners, said the “big unknown” is what tariff rate China can expect, with a 12 August deadline looming.
Diplomatic talks between China and the US are ongoing, with meetings held in Geneva, London and Stockholm. China is prioritising securing a continued freeze on US semiconductor export controls, while the US is demanding greater access for American firms, action on fentanyl and increased Chinese purchases of US goods.
Meanwhile, Mexico has a 90-day extension to negotiate a better agreement.
Nigel Green, chief executive of deVere Group, said “multipolarity now defines the direction of global trade”, with the tariffs forcing countries to rewire their trade, capital and strategic priorities.
“The world is moving toward multiple centres of economic power and influence,” he said.
Other major trading partners, such as the UK, Japan and the EU secured their own trade agreements with the US in recent weeks, keeping levies to between 10% and 15%.
Trump is expected, however, to set separate tariffs on imports of pharmaceuticals, semiconductors and critical minerals in the coming weeks.
Mould said that pharmaceutical stocks AstraZeneca and GSK could be blamed for the FTSE 100’s decline, noting that investors in the healthcare sector got “a dose of the blues” after Trump wrote to various company bosses outlining how they should cut US prescription drug prices or face a crackdown.
“Widespread share price declines among pharma stocks are the market’s way of saying it doesn’t like the prospect of Trump effectively declaring war with the sector,” he said.
The tariffs will likely revive fears of renewed price increases for consumers, according to Chris Beauchamp, chief market analyst at IG.
“Signs of reviving inflation have meant that a September rate cut [in the US] looks less and less likely and, with most of the big events out of the way, the time looks ripe for a rerun of last August’s swift outburst of volatility.”
Mould said today’s news is “merely the next episode in Trump’s tariff story – it’s unwelcome, hence the market dip; but it’s not entirely unexpected, hence the lack of a full market crash”.