Tariff Week ⌛️

A ton of new #Tariffs updates this week, but nothing as shocking as April’s Liberation Day…

First, essentially all #Tariffs were delayed until August 1st. This would be the start date for counties that received updated #Tariffs letters as well as the “reciprocal” #Tariffs from April for countries that didn’t.

The White House insists August 1st will be the final #Tariffs extension, but that’s also what they said about July 9th just last week…

Second, as mentioned above, 20 countries received #Tariffs update letters with mostly minor adjustments from the earlier “reciprocal” #Tariffs－if any adjustments at all. We didn’t really see the point of the letters given the extremely minor adjustments and all “reciprocal” #Tariffs were extended anyways. These continue to trickle out and we may see more over the next few weeks.

Finally, third, some additional industry specific #Tariffs were announced. This includes 50% #Tariffs on copper also starting August 1. In addition, there were some threat to increase #Tariffs on pharmaceuticals to as high as 200%…

However, unsurprisingly, markets moved very little on the news. The #Tariffs rates really barely changed and is effectively just another 3 week delay.

Markets also don’t seem to believe the August 1 deadline. The White House has continued to walk back its #Tariff threats ever since the April 4th announcement.

If this is the pinnacle (constant threats, but trade restrictive #Tariffs never actually imposed), we agree with the market optimism. The 10% baseline #Tariffs will likely increase costs some, but unlikely to drastically shift demand and #Inflation long-term.

However, we are cautious markets may not be pricing in a worse case scenario.

We think even other countries currently negotiating may not be taking the #Tariffs threats very seriously at this point. If the White House’s threats fail to produce urgency for our trading partners, we wouldn’t be surprised to see a scenario where the August deadline (or some later extension down the road) is not extended just to prove a point.

This could cause some market shock. Recovering consumer and business sentiment may reverse without the current expectation that harsh #Tariffs are not actually going to be implemented. While we wouldn’t expect a pullback of the magnitude in April initially, we could still see a market correction with further downside if not walked back quickly by the White House.

Overall, we remain cautiously optimistic, but continue to monitor economic data to see how resilient consumers and businesses will remains with the ongoing #Tariffs uncertainty remaining an overhang.