Bassanese Bites: Crying wolf? – July 14 2025
Global week in review
Global stocks edged lower last week as concerns around US President Trump’s tariff strategy returned.
Tariffs are back
Global equities tried hard last week to ignore the flurry of tariff announcements from US President Donald Trump. Trump announced a 50% tariff on copper and Brazil, 35% on Canada and threatened 30% tariffs on Europe and Mexico.
Most of these are still “threatened” tariff levels that will apply on 1 August if satisfactory trade deals are not finalised. But at best, it now seems that the minimum tariff countries will face will be around 15-20% and not the 10% universal tariff that has applied since Trump postponed his 2 April “liberation day” tariffs.
Markets are still hoping deals will be struck and lower tariffs will eventually be put in place. But countries are mulling their options – strike back, strike a deal or do nothing to test if Trump is bluffing?
After all, it should not be forgotten that large tariffs on major trading partners are a tax on US consumers and business. We are yet to see the price impacts but they are likely coming.
If all countries face large tariffs, moreover, they are less likely to lose competitiveness against other countries exporting to the US. Meanwhile, with the US close to full employment and few expecting large tariffs to last much longer under Trump, it’s hard to expect much import replacement to take place either.
Therefore, the key issue returns: will the tariffs be large enough to tip the US economy into recession? And if this does start to become a serious risk, will Trump eventually chicken out? With ultimate tariff levels still to be determined and Trump’s form in pulling back, the worst-case scenario is still not yet my base case.
Global market trends
It was a mixed performance across global equity markets last week, with emerging markets and Europe holding up better than the US and Japan.
