Stocks slip on hotter than expected Trump tariffs; USD surged
·
Trump’s latest tariffs range from 20%-40%;
potential Chinese tariffs of 40% and various other sectoral tariffs of 25%-50%
may imply an average 22.5% tariff rate
·
This 22.5% tariff rate is higher than the Fed's
estimates of 15.5% as the base case scenario.
·
Trump may again extend his tariffs deadline to
September-December’25-ahead of the US Festival shopping season.
·
Overall, Fed’s uncertainty may linger, but Fed may
start cutting rates from September’25 by @25 bps.
On Monday, July 7, 2025, all focus of the market
was on Trump’s Truth social on his big & beautiful tariffs announcements.
Trump targeted several countries, including BRICS member South Africa and BRICS
partner countries Malaysia and Kazakhstan, as part of his perceived strategy to
address trade imbalances and assert U.S. economic leverage. These announcements
align with his broader threats against BRICS nations, particularly regarding
their potential de-dollarization efforts. President Donald Trump’s recent
tariff announcements, made via Truth Social on July 7, 2025, target several
countries, including BRICS member South Africa and BRICS partner countries
Malaysia and Kazakhstan, as part of his strategy to address trade imbalances
and assert U.S. economic leverage. These announcements align with his broader
threats against BRICS nations, particularly regarding their potential
de-dollarization efforts.
Status of
Trump tariffs tantrum wef from August 1, 2025 (postponed from earlier deadline
of July 9)
Japan:
·
Minimum rate of 25%
and potentially higher 40% tariffs on alleged transshipments; Japan: Talks have
stalled, with Trump threatening 30–35% tariffs
South
Korea:
·
Minimum rate of 25%
and potentially higher 40% tariffs on alleged transshipments;
·
South Korea: Trade
talks with the US will be a chance to advance both countries’ key industries
through a Renaissance Partnership.
·
South Korea: We will step up trade negotiations
with the US to win mutually beneficial results and clear up uncertainties
caused by tariffs
Vietnam:
·
A deal lowers
tariffs from 46% to 20%, with Vietnam allowing more U.S. goods and reducing
transshipped Chinese goods.
·
Minimum rate of
20% on original Vietnamese goods and 40% on perceived transshipment (Chinese
goods rerouted through Vietnam).
Vietnam’s
Trade Deal with the U.S.
On July 2, 2025, Trump announced via Truth Social a
trade agreement with Vietnam, the second country (after the UK) to secure a
deal following his April 2 “Liberation Day” tariffs. The deal sets a 20% tariff
on Vietnamese exports to the U.S., reduced from a threatened 46%, and a 40%
tariff on transshipped goods (e.g., Chinese products labeled “Made in Vietnam”
to bypass U.S. tariffs). In return, Vietnam grants U.S. goods tariff-free
access to its markets, particularly for large-engine vehicles like SUVs.
The agreement, described as a “framework” by
Vietnamese state media, followed a call between Trump and Vietnam’s General
Secretary To Lam. Vietnam committed to “preferential market access” for U.S.
goods and aims to curb transshipment, addressing U.S. concerns about Chinese
goods rerouted through Vietnam.
Vietnam’s $136.6 billion in U.S. merchandise
exports (2024)- including electronics, apparel, and footwear- accounts for ~30%
of its GDP, making it vulnerable to Trump tariffs. The 20% rate, while lower than
the initial 46%, will still raise costs for U.S. consumers (e.g., an 8% price
hike on a $95 pair of shoes). Vietnam was not included in the July 7 letters,
as its July 2 deal preempted further escalation. However, the 40% transshipment
tariff targets Vietnam’s role as a conduit for Chinese goods, with estimates
suggesting 7–16% of its exports involve transshipment, not the one-third
claimed by Trump advisor Peter Navarro.
Vietnam, a BRICS partner, avoided the additional
10% tariff through its trade deal, unlike South Africa (30%), Malaysia (25%),
and Kazakhstan (25%). The deal aligns with Trump’s push to reduce Chinese
influence in supply chains, as Vietnam’s $123 billion trade surplus with the
U.S. (2024) partly stems from Chinese firms relocating there to skirt U.S.
tariffs. Trump is cautious about Vietnam tariffs as Vietnamese goods are
essential for ordinary Americans; otherwise, they may not afford a pair of
decent office shoes and dresses.
Tariff
Details for South Africa, Malaysia, and Kazakhstan:
·
South Africa (BRICS Member): A 30% tariff on all goods exported to the U.S.
will take effect on August 1, 2025. This rate remains unchanged from the 30%
reciprocal tariff announced on April 2, 2025, before the 90-day pause. South
Africa, a key supplier of platinum (accounting for roughly half of U.S. imports
last year), faces significant economic pressure due to its $8.9 billion trade
surplus with the U.S. in 2024.
·
Malaysia (BRICS Partner): A 25% tariff will be imposed starting August 1,
2025, slightly increased from the 24% rate set in April. Malaysia, a major
exporter of semiconductors ($18 billion to the U.S. last year) and participant
in China’s Belt and Road Initiative, had a $24.9 billion trade surplus with the
U.S. in 2024.
·
Kazakhstan (BRICS Partner): A 25% tariff will apply from August 1, 2025,
reduced from the 27% rate announced in April. Kazakhstan, which exports crude
oil and metal alloys to the U.S., had a smaller $1.3 billion trade surplus in
2024. Its alignment with BRICS and China’s Belt and Road Initiative makes it a
target.
·
Laos and Myanmar (Non-BRICS): Both face a 40% tariff starting August 1, 2025,
reduced from 48% for Laos and 44% for Myanmar. These countries, while not
formal BRICS members, are part of Southeast Asia’s economic sphere and have
ties to China’s regional initiatives. Laos exports optical fibers and clothing,
while Myanmar exports mattresses and bedding, with trade surpluses of $763
million and $577 million, respectively, in 2024.
·
Tunisia will receive a 25% tariff from August 1st
Trump’s letters sent on July 7 indicate failed
talks with these countries, with Trump unilaterally setting rates rather than
securing bilateral deals. White House Press Secretary Karoline Leavitt noted
that Trump would sign an executive order extending the deadline to August 1 for
some countries negotiating in “good faith,” but South Africa, Malaysia, and
Kazakhstan were not granted extensions, as evidenced by the tariff letters. Approximately
12–15 letters were expected to be sent on July 7, targeting additional countries
beyond the seven announced (Japan, South Korea, South Africa, Malaysia,
Kazakhstan, Laos, and Myanmar). The full list remains undisclosed.
Counter-Tariff
Warning: Trump’s letters explicitly
warn that if South Africa, Malaysia, Kazakhstan, or any targeted country
retaliates with counter-tariffs on U.S. goods, the U.S. will increase its
tariffs by an equivalent amount. For example, the letters state, “If for any
reason you decide to raise your Tariffs, then, whatever the number you choose
to raise them by, will be added onto the 25% [or respective rate] that we
charge.” This mirrors warnings issued to Japan and South Korea, signaling a
broader policy to deter retaliatory measures.
Additional
10% Tariff Threat: Trump’s July 6,
2025, Truth Social post threatened an additional 10% tariff on BRICS nations
(including South Africa) and their partners (like Malaysia and Kazakhstan) for
supporting “anti-American policies,” such as de-dollarization or alternative
payment systems. This threat was made during the BRICS summit in Rio de
Janeiro, where leaders criticized U.S. tariffs and discussed local currency
trade. South Africa’s 30% tariff and Malaysia and Kazakhstan’s 25% tariffs may
already reflect this punitive approach, given their BRICS affiliation.
Economic
and Geopolitical Implications:
South
Africa: The 30% tariff threatens
its platinum exports, critical for U.S. industries, and could exacerbate
economic challenges in a country reliant on IMF loans. As a BRICS member, South
Africa’s leadership has criticized U.S. tariffs, with Brazilian President Lula
da Silva calling them “irresponsible” at the Rio summit.
Malaysia
and Kazakhstan: Their 25%
tariffs target key exports like semiconductors (Malaysia) and oil/alloys
(Kazakhstan). Their BRICS partner status and Belt and Road (BRI) ties make them
vulnerable to further escalation if they align closer with China or Russia.
Economic
Impact: The U.S. imported $351
billion in goods from the seven countries (including Japan and South Korea) in
2024, with South Africa, Malaysia, and Kazakhstan contributing $35.1 billion.
Higher tariffs could raise U.S. consumer prices, with estimates suggesting a
$1,200 annual cost per household. Markets reacted negatively.
Tariff War
Risks: Retaliation by South
Africa, Malaysia, or Kazakhstan could trigger higher U.S. tariffs; tariffs, escalating trade tensions. Brazil’s
Lula da Silva emphasized the “law of reciprocity,” suggesting BRICS nations may
respond with counter-tariffs, risking a trade war.
The tariffs reflect Trump’s hardline stance against
BRICS and their partners, particularly over de-dollarization concerns. South
Africa’s unchanged 30% rate and Malaysia and Kazakhstan’s lower-than-expected
rates (25% vs. 26% and 27%) suggest selective pressure, possibly tied to BRICS
alignment. The August 1 implementation date aligns with the extended tariff
deadline, but the lack of negotiation progress indicates these rates are likely
final unless last-minute deals emerge. The threat of additional tariffs for
BRICS-related activities could further complicate trade relations, especially
if South Africa or others.
United
Kingdom: A deal maintains a 10% tariff, with
preferential treatment for autos (lowered from 25% to 10% for the first 100,000
vehicles, limited based) but retains 25% sectoral tariffs on steel and
aluminum.
China: A framework agreement reduces tariffs from 145% to
40% (20%+Fentanyl 20%) for 90 days, with China easing export restrictions on
rare earths; the US has eased chip design software; Negotiations continue for a
broader deal
Trump’s
Make in America thrust at the Tariff gunpoint.
On July 7, Trump posted letters on Truth Social to
seven countries, including BRICS member South Africa (30% tariff), BRICS
partners Malaysia and Kazakhstan (25% each), and non-BRICS China savvy nations,
Laos and Myanmar (40% each), Japan, and South Korea (25% each). These tariffs,
effective August 1, include a clause increasing U.S. tariffs to match any
counter-tariffs imposed by these countries. Trump also encouraged almost all
the nations exporting consumer goods to the US, but now facing higher tariffs
to manufacture goods in the US without any tariffs. Trump also promised all
help and quick services including speedy regulatory approvals for setting
factories/production facilities in the US.
Responses from
BRICS and EU:
·
Brazil:
President Lula da Silva called Trump’s 10% tariff threat “a big mistake” and
“irresponsible” on July 7, hinting at reciprocal counter-tariffs. Brazil, with
a $7.2 billion trade surplus, likely benefits from the August 1 deadline extension,
as it has not received a tariff letter.
·
China: The
Chinese Foreign Ministry condemned Trump’s tariffs as “coercion and pressure,”
stating, “there are no winners in a trade war.” China’s temporary 10% tariff
framework (down from 145%) may extend to August 1, but its yuan-based trade
push risks further tariffs.
·
EU: European
Commission President Ursula von der Leyen, on July 7, stressed that Europe
“must show strength” and “unity” in U.S. trade talks, following a “good
exchange” with Trump. The EU, facing a potential 50% tariff, seeks exemptions
for key sectors and likely benefits from the August 1 extension.
August 1
Deadline Extension:
On July 7, White House Press Secretary Karoline
Leavitt announced that Trump would sign an executive order extending the July 9
deadline to August 1 for countries negotiating in “good faith” (e.g., EU,
India, Canada, Brazil, and China). Vietnam’s deal secures its 20% tariff, while
South Africa, Malaysia, and Kazakhstan face fixed 25–30% tariffs due to stalled
talks. Additional letters expected on July 8 may target other BRICS members/countries.
Economic
and Geopolitical Implications:
·
Vietnam: The 20%
tariff, though lower than 46%, could reduce Vietnam’s GDP growth by 1.2% (from
8% to 5% in 2025), impacting industries like footwear (25% of Nike’s U.S.
supply) and electronics. The 40% transshipment tariff pressures Vietnam to
tighten controls on Chinese goods, straining its balancing act with China, a
key investor and neighbor.
·
BRICS: South Africa’s 30% tariff and Malaysia
and Kazakhstan’s 25% tariffs target their $35.1 billion combined U.S. trade
surplus, reflecting Trump’s focus on BRICS’ de-dollarization. China and
Brazil’s pushback risks escalating trade tensions if counter-tariffs are imposed.
·
EU and Global
Trade: The EU’s $209 billion trade surplus and Vietnam’s $123 billion surplus
highlight their stakes in avoiding high tariffs. A trade war could cost the
U.S. $432 billion in GDP and raise consumer prices by $1,200 per household
annually.
·
De-Dollarization:
Trump’s tariffs aim to deter BRICS’ local currency initiatives, but China’s Xi
Jinping, visiting Vietnam soon, may leverage anti-U.S. sentiment to deepen
economic ties, potentially accelerating de-dollarization.
Legal
Uncertainty: The U.S. Court
of International Trade’s ruling against Trump’s use of the International
Emergency Economic Powers Act (IEEPA) for tariffs, under a Federal Circuit stay
until a July 31 appeal, creates uncertainty for all tariffs, including
Vietnam’s.
Outlook: If
new Trump tariffs are implemented at all from August 1, 2025
·
Vietnam’s trade
deal mitigates the 46% tariff threat, but the 20% rate and 40% transshipment
penalty will raise U.S. consumer prices and challenge Vietnam’s export-driven
economy. Its BRICS partner status keeps it vulnerable to the 10% tariff threat
if de-dollarization efforts intensify.
·
South Africa,
Malaysia, and Kazakhstan face higher tariffs (25–30%) without extensions, while
Brazil, China, and the EU leverage the August 1 deadline for better terms. New
tariff letters on July 8 may escalate pressure on other BRICS members.
·
Trump’s strategy
uses tariffs to counter BRICS’ influence and protect U.S. workers, as Leavitt
noted, but unified responses from China, Brazil, and the EU, plus Vietnam’s
delicate China-U.S. balance, risk a broader trade conflict.
Economic Challenges:
The tariffs have raised concerns about economic
impacts, with estimates suggesting an average tax increase of $1,200 per U.S.
household in 2025 and a potential 0.9% GDP reduction if fully implemented with
retaliatory measures.
Legal
challenges add uncertainty: The
U.S. Court of International Trade ruled Trump’s use of the International
Emergency Economic Powers Act (IEEPA) for “fentanyl” and reciprocal tariffs
unconstitutional, but a stay by the Federal Circuit keeps tariffs in place
pending a July 31 appeal hearing.
President
Trump has escalated his tariff threats against BRICS nations (Brazil, Russia, India, China, South Africa,
Egypt, Ethiopia, Indonesia, Iran, and the UAE) and countries aligning with
their policies, particularly in response to their discussions on reducing
reliance on the U.S. dollar (USD). On July 6, 2025, Trump announced via Truth
Social that any country aligning with the “anti-American policies” of BRICS
will face an additional 10% tariff, with “no exceptions.” This threat was made
during a BRICS summit in Rio de Janeiro, where leaders criticized U.S. tariff
policies for disrupting global trade and supply chains. Overall, BRICS nations
are also worried about the recent US pattern of using the USD as a weapon in
scoring geopolitical issues.
The term “anti-American policies” was not
explicitly defined but likely refers to BRICS’ efforts to promote trade in
local currencies, explore alternative payment systems, replace US-controlled
SWIFT, or reform global financial institutions like the IMF, which challenge
U.S. economic dominance. Various BRICS countries are also exploring the idea of
a common currency (using the Gold standard) and common trade like in the
EU/EUR. Trump has repeatedly threatened a 100% tariff on BRICS nations if they
create a new currency or back any alternative to replace the U.S. dollar as the
global reserve currency. This threat, first issued on November 30, 2024, was
reiterated on January 30 and February 13, 2025.
Trump said: “We require a commitment from these Countries that
they will neither create a new BRICS Currency, nor back any other Currency to
replace the mighty U.S. Dollar or, they will face 100% Tariffs, and should expect
to say goodbye to selling into the wonderful U.S. Economy.”
The threat targets BRICS’ discussions on
de-dollarization, spurred by U.S. sanctions on Russia and Iran, which have
pushed members to explore alternatives like the Chinese Yuan or a potential BRICS
payment system to bypass SWIFT. At the July 6–7, 2025, BRICS summit in Rio de
Janeiro, leaders issued a joint statement expressing “serious concerns” about
unilateral tariffs, implicitly criticizing Trump’s policies. They also backed
initiatives to enhance cross-border payments in local currencies and supported
a BRICS Multilateral Guarantees initiative to lower financing costs.
Brazil, the current BRICS president, and other
members like Russia and China have downplayed plans for a common currency, focusing
instead on reducing dollar dependency through local currency trade. Russia’s
Dmitry Peskov stated in January 2025 that talks on a BRICS currency “are not
taking place now,” emphasizing joint investments instead. The BRICS tariff
threats are part of Trump’s broader trade strategy, with the July 9 deadline
marking the end of a 90-day pause on steep tariffs announced on April 2, 2025.
As of July 7, Trump confirmed that letters detailing country-specific tariff
rates (10% to 70%) are being sent to dozens of countries, including BRICS
members, starting July 7, effective August 1 unless deals are reached.
BRICS countries like India and China are
negotiating trade deals to avoid higher tariffs. India is close to a “mini
trade deal” with a 10% average tariff, while China has a temporary framework
reducing tariffs from 145% to 10% for 90 days. These negotiations may be
complicated by the additional 10% tariff threat for BRICS-aligned policies.
Treasury Secretary Scott Bessent indicated
flexibility, noting that countries negotiating in “good faith” could see
extensions beyond July 9, potentially to August 1 or Labor Day. However,
Trump’s hardline stance suggests limited willingness to extend deadlines for
BRICS nations perceived as challenging U.S. interests.
Trump’s threats could backfire, accelerating
de-dollarization by pushing BRICS nations toward alternatives like the yuan or
gold. The U.S. dollar’s dominance (58% of global foreign exchange reserves)
remains secure in the near term, but coercive tariffs may weaken its long-term
role.
China’s Foreign Ministry opposed using tariffs as
“a tool to coerce others,” signaling potential retaliation. Other BRICS
members, like India, advocate that diplomacy to clarify those diversifying
trade mechanisms is not anti-American but a move toward multipolarity. South Africa and Brazil have publicly stated that no
plans exist for a BRICS currency, focusing instead on local currency trade.
India’s Prime Minister Narendra Modi, has cautioned against BRICS appearing as
a replacement for global institutions, indicating a cautious approach. Russia,
minimally affected due to low U.S. exports since the 2022 Ukraine war,
continues to push for alternative payment systems, while China promotes the
yuan and digital currencies like e-CNY.
The additional 10% tariff threat adds uncertainty
to ongoing trade talks as the July 9 deadline looms. While some BRICS nations
like India and China may secure temporary deals, others face higher tariffs
from August 1. The 100% tariff threat remains conditional on de-dollarization
moves, which BRICS leaders currently downplay. Trump’s strategy appears to
combine negotiation leverage with punitive measures to maintain U.S. economic
dominance, but risks escalating trade wars and alienating key partners. The
legal challenge to his use of the International Emergency Economic Powers Act
(IEEPA), pending a July 31 appeal, could further complicate tariff
implementation.
Ongoing/stalled
Trump Tariff Negotiations:
·
European Union: The EU has agreed to a 10% tariff on many exports but seeks exemptions
for pharmaceuticals, alcohol, semiconductors, and aircraft. Talks are ongoing,
with a 25%-50% tariff looming if no deal is reached by July 9; the US may have
offered the EU a 10% tariff deal with caveats. The EU could secure baseline tariff exemptions for aircraft and spirits
in a US trade deal. The EU is exploring a potential deal on cars to offset US
car exports against imports.
·
India:
Indian officials extended their stay in Washington to negotiate, seeking an exemption
from a 26% tariff. The U.S. pushes for market access in agriculture, dairy, and
energy, but India resists, particularly on genetically modified crops. A deal
is not yet finalized, but a mini deal may happen; India may also get 10%
minimum tariffs in exchange for almost 0% tariffs on US goods and limited
access to US farm products into the Country.
·
Canada:
Trade talks resumed after Canada scrapped a digital services tax following
Trump's threat to end negotiations. A deal is targeted for July 9
·
Other Countries: About 100 smaller nations are expected to face a 10% tariff, with
little negotiation progress. Countries like Lesotho, Cambodia, and Madagascar
face higher tariffs (up to 50%) due to limited negotiating power.
On April 2, 2025, Trump imposed steep reciprocal
tariffs (up to 50%) on nearly all trading partners, dubbing it "Liberation
Day" after decades of perceived trade abuse by almost all US trading
partners. A week later, after both Wall Street and Main Street panicked, Trump
announced a 90-day reciprocal tariff pause till July 9, reducing most tariffs
to a 10% baseline to allow negotiations for bilateral trade deals. This pause
expires on July 9, 2025, after which country-specific tariffs could revert to
higher rates (10% to 70%) unless deals are reached or the deadline is extended.
Now, Trump is again extending the tariff deadline to August 1, 2025.
Earlier, Trump had signaled he may not extend the July 9
deadline, stating in a Fox News interview that letters will be sent to
countries (starting July 4 or 5) specifying tariff rates effective August 1,
ranging from 10% to 70%. He emphasized a hardline approach, saying, “I don’t
think I’ll need to [extend],” though he added, “I could, no big deal. However,
White House officials, including Treasury Secretary Bessent and Press Secretary
Karoline Leavitt, have suggested flexibility. Bessent predicted a “flurry” of
deals before July 9 and indicated that countries negotiating in “good faith”
might see extensions, potentially until Labor Day. Leavitt noted the deadline
is “not critical” for such nation.
Trump has acknowledged the complexity of
negotiating with over 170 countries, shifting toward sending letters to set
tariff rates rather than pursuing detailed bilateral deals for all. He plans to
notify 10–12 countries daily starting around July 4, with rates based on how
they “treat” the U.S. The administration’s approach appears to blend
negotiation with unilateral tariff impositions, maintaining pressure on trading
partners but risking economic uncertainty and retaliatory tariffs.
Trump’s
Truths and media bytes:
·
I am pleased to
announce that the UNITED STATES TARIFF Letters, and/or Deals, with various
Countries from around the World, will be delivered starting at noon (Eastern),
Monday, July 7th. Thank you for your attention to this matter! DONALD J. TRUMP,
President of The United States of America.
·
Any Country
aligning themselves with the anti-American policies of BRICS will be charged an
ADDITIONAL 10% Tariff. There will be no exceptions to this policy. Thank you
for your attention to this matter!
Conclusions
Trump kept around 20-25% tariff rates for most of
the countries, while close allies/trading partners like the EU may get 10% and
permanent adversary countries like China may get 40% (including 20% Fentanyl
tariffs). The potential weighted average tariff rate after Trump’s latest
tariffs, effective August 1, 2025, and various sectoral tariffs (25%-50%) may
be around 22.5%; China alone constitutes around 15% of total US merchandise
imports. This is slightly lower than the 27.5% weighted average tariffs announced
on April 2, Liberation Day and in line with 19.5% FROM April’25 (Trump 2.0).
But it’s still significantly higher than 2.5% weighted average rates till
January’25 (pre-Trump 2.0).
Trump extended his new tariffs rhetoric to the August
1 deadline by which various affected countries may have an opportunity to offer
a better deal to the US for getting lower tariffs. Although Trump should not
further extend his tariff deadline as it may keep the Fed on the sidelines till
December’25, considering the looming festival season (X-Mas), various US
retailers and importers may have already placed orders to big exporters like
China, Vietnam etc. Thus, Trump may not distort the supply chain further till
at least September’25 or even December’25.
So, if Trump does not get a better deal, he may
again extend the tariff deadline to September or even December’25. Although
Trump always maintains that exporters like China pay his tariffs, not US
importers, it’s laughable. Tariffs are import duties to be paid by importers
when foreign goods enter the US. Higher tariffs are usually borne by importers
and consumers. But in this case, as the US is the world’s biggest consumer
(departmental stores), exporters may have to sacrifice some margin either from
their own pockets or to be compensated partly by their respective government
(export subsidies).
The Fed is assuming Trump tariffs may be borne
equally by exporters, importers, and US consumers at 1/3rd each. But
Trump’s weighted average tariffs at present rates may be around 22.5%, which
would be much higher than the Fed’s best-case scenario of 15.5% and closer to the
base case scenario of 25.5%. Overall, Fed’s uncertainty may remain at around
22.5% weighted average tariffs vs 2.5% prior, the cost of living may be higher
if exporters and importers do not absorb at least 70% of the higher tariffs. If
they attempt to retain market share, their margin (EBITDA) will be affected to
some extent; if not the US economy may head towards a stagflation-like scenario
due to subdued discretionary consumer spending.
Bottom line
Trump’s higher tariffs around 222.5% may cause both
subdued consumer spending and corporate report card, both of which are negative
for Main Street as well as Wall Street.
Market
impact
Wall Street gained almost 0.8% on Thursday, July 3,
on Trump’s tax cut/BBB bill optimism, easing of tariff war tensions and fading
concern of a hard landing after the expected NFP/BLS job report for June’25.
Techs helped on easing of tech war tensions after the Trump administration
withdrew export restrictions on chip-design software to China. Chip-design
stocks like Cadence Design and Synopsys surged, while Datadog soared after its
imminent inclusion in the S&P 500. While a few mini trade deals have been
secured, the goal of “90 deals in 90 days” has not materialized, with only
three mini agreements finalized.
After the long weekend holiday, Wall Street Futures
stumbled Monday, July 7, on escalated Trump trade war tensions as Trump imposed
higher-than-expected tariffs on various countries. Trump imposed a 25% tariff
on imported goods from South Korea and Japan, slated to start from August 1. USD surged, while Gold slipped.
At the same time, Trump imposed additional levies
on 12 other countries, with tariff rates ranging from 25% to 40%. Countries
affected include South Africa (30%), Indonesia (32%), Thailand (36%), Malaysia
(25%), Myanmar (40%), Laos (40%), and Kazakhstan (25%). Bangladesh and Serbia
will face a 35% tariff. These measures are set to take effect from August 1,
2025.
On early Tuesday, July 8, Wall Street Futures were
almost flat, while Gold slipped further after a report that the US has proposed
a deal to the EU that would retain a 10% baseline tariff, with exceptions for
sensitive sectors such as aircraft and spirits. The market got some relief in
the extended timeline for negotiations, as the new tariffs are not set to take
effect until August 1st, allowing more time to reach agreements.
Technical
outlook: DJ-30, NQ-100, SPX-500 and Gold
Looking
ahead, whatever may be the narrative, technically Dow Future (CMP: 44800) now has to sustain over 45000 for a
further rally towards 45300/45800* and only sustaining above 45800, may further
rally to 46100/46500-47100/47200 in the coming days; otherwise sustaining below
44950, DJ-30 may again fall to 44200/43900-43400/42400 and
41700/41200-40700/39900 in the coming days.
Similarly,
NQ-100 Future (23000) now has
to sustain over 23100 for a further rally to 23200/23600-23800/24000 and
24100/24450-24700/25000 in the coming days; otherwise, sustaining below 22900,
NQ-100 may again fall to 2400/22200-21900/20900-20700/20200 and
19890/18300-17400/16400in the coming days.
Looking
ahead, whatever may be the fundamental narrative, technically SPX-500 (CMP: 6275) now has to sustain over 6400-6450 for
a further rally to 6525/7000-7500/8300 in the coming days; otherwise,
sustaining below 6350/6300-6250/6200, SPX-500may again fall to
6000/5800-5600/5300 in the coming days.
Technically
Gold (CMP: 3350) has to sustain over 3375-3395 for a
further rally to 3405/3425*-3450/3505*, and even 3525/3555 in the coming days;
otherwise sustaining below 3365-3360, Gold may again fall to 3340/3320-3300*/3280
and 3255/3225-3200/3165* and further to
3130/3115*-3075/3015-2990/2975-2960*/2900* and 2800/2750 in the coming days.
