Markets Shaken by Trump Tariff Escalation and Negotiation Hints: Global markets have experienced notable volatility
from Wall Street to Asia, following U.S. President Donald Trump’s announcement
of a new round of tariffs on several countries amid conflicting signals between escalation and de-escalation.

Contents

Pressure on Stocks and Currencies

New Tariff Measures

Temporary Calm

Limited Deals and Alliances

Fed Watch

Possible Extension and Oil Gains

Pressure on Stocks and Currencies

U.S. stocks retreated from record highs, with the S&P 500 falling nearly 1%,
led by sharp losses in major companies, notably Tesla,
which dropped 7% after Elon Musk announced the formation of a political party. U.S. Treasury bonds also fell,
especially long-term ones.
At the same time, emerging markets came under pressure after Trump threatened
tariffs on countries supporting what he described as the “anti-American policies” of the BRICS bloc.
In Asia, equities fluctuated in a narrow range, with the MSCI regional index making slight gains
in South Korea and Japan despite being targeted by new tariffs.
Toyota Motor shares rose 0.5%, along with other Japanese automakers.
In currency markets, the South Korean won strengthened, the Japanese yen remained weak,
the dollar index fell 0.1%,
and the euro rose on reports of a U.S. proposal to the EU involving a 10% tariff cap.

New Tariff Measures

In the first batch of warning letters, Trump imposed new tariffs: 25% on imports from Japan, South Korea, and Malaysia;
32% in Indonesia, 35% in Bangladesh, 36% in Thailand and Cambodia, and 40% in Laos and Myanmar.
South Africa faces a 30% tariff, with similar measures on Kazakhstan.
According to White House Press Secretary Karoline Leavitt,
about 12 countries will receive formal notifications on Monday, with more to follow.

Temporary Calm

Despite the harsh tone, Trump signaled on Monday evening that he remains open to
further trade negotiations and postponed implementing the tariffs until after August 1.
He added that the notices are “not 100% final.” Analysts viewed this as a market-calming gesture, especially for Asia.
Chief Asia Economist at HSBC, Frederic Neumann, commented:
“Investors treat the announcements as negotiating tactics rather than final decisions.”

Limited Deals and Alliances

Due to tight deadlines, few countries reached trade agreements with Washington.
However, Trump announced framework deals with the UK and Vietnam and a temporary truce with China.
Nick Twidale, Chief Market Analyst at AT Global Markets, said: “We’ll see more volatility in the coming days.
The market reacts to every Trump announcement in real-time, as seen in Asian trading.”
Meanwhile, India is seeking a temporary deal. Still,
it has informed the U.S. it will not cross red lines, such as allowing imports of genetically modified
crops or opening its dairy and automotive sectors further to American products.

Fed Watch

Despite economic resilience and strong labor markets, the Federal Reserve remains cautious about the tariffs’ impact.
Investors await the Fed’s June meeting minutes, which are due Wednesday.
Researchers from the New York and San Francisco Fed branches, including John Williams,
estimate a 9% chance of interest rates hitting the “zero lower bound” again within seven years due to growing uncertainty.

Possible Extension and Oil Gains

Garfield Reynolds of Markets Live stated: “Markets see tariffs as negotiation tools rather than real threats.
That’s why investors continue to buy the dips.”
Ian Lyngen and Vail Hartman of BMO Capital Markets noted that delaying tariffs until the end of July
is an “indirect extension” of the original freeze. “Without this window, economic outlooks would be far bleaker.”
Amid this turbulence, oil prices rose after Saudi Arabia increased prices for its main crude grade sold to Asian buyers,
signaling confidence in the market’s capacity to absorb extra OPEC+ barrels.

Markets Shaken by Trump’s Tariff Escalation and Negotiation Hints

Markets Shaken by Trump Tariff Escalation and Negotiation Hints

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