US Stocks Hit New Highs as Tariff Deadline Looms
In little more than a week, US President Donald Trump’s 90-day pause on “reciprocal” tariffs is due to expire. Although the White House has expressed potential flexibility over its deadline, next Wednesday, the 9 July, could bring the reimposition of sky-high tariffs.
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Tariff Deadline Draws Close
A week after President Trump’s “liberation day” announcement in April, the President announced a 90-day pause on his new tariff rates in order to give time for countries to negotiate trading deals with the US.
At the time, White House trade adviser Peter Navarro stated that the administration would “run 90 deals in 90 days”. Later, in June, Commerce Secretary Howard Lutnick said, “you’re going to see deal after deal, they’re going to start coming next week and the week after and the week after.”
However, with eight days of the tariff reprieve remaining, the US has thus far only reached limited agreements with China and the United Kingdom.
With time running out, the prospect of Washington reimposing high duties on many of its trading partners brings with it a degree of uncertainty. It’s unclear what will happen when the deadline is reached.
Nevertheless, there have been suggestions from the White House that there could be a degree flexibility over the deadlines.
“We could extend it. We could make it shorter,” was Trump’s response last week when asked about the timeframe for the US and the EU to conclude a trade deal. “Perhaps it could be extended, but that’s a decision for the president to make,” said White House press secretary Karoline Leavitt the day before when talking of the nearing deadline.
Trade Talks Continue
With the 9 July approaching, Washington remains engaged in talks with many of its trading partners. Here is the latest on some of the discussions:
- On Friday, Trump said he was cutting off trade talks with Canada due to a disagreement over its digital services tax, which would target big tech companies. Ottawa was quick to scrap the levy in order to revive negotiations.
- Similarly, on Monday evening, Trump took aim at Japan on social media over claims that the country won’t buy US-grown rice, suggesting that the US could impose higher tariffs on Japanese exports as a result.
- According to reports, India could be on track to finalise an interim trade agreement with the US this week to avoid tariffs.
Stocks Set New Highs
Despite tariff uncertainty, US stock markets have capped a remarkable turnaround since Trump’s “liberation day” announcement, in what has been an eventful three months on Wall Street.
On Friday, the S&P 500 and the Nasdaq Composite closed at record highs. On Monday, both indices extended their gains by 0.52% and 0.47% respectively, notching fresh record highs. The Dow Jones also rose on Monday by 0.63%.
Meanwhile, the US dollar has continued its downward slide. In the first six months of the year, the US Dollar Index, which measures the greenback against a basket of foreign currencies, has dropped 10.9%.
Elsewhere, last week’s ceasefire between Iran and Israel has helped ease oil prices, which had spiked during the conflict. On Tuesday morning, global benchmark Brent crude was trading at under $67 a barrel, its lowest level since 11 June, just before Iran and Israel began exchanging military strikes.
This weekend, OPEC+ will meet and is expected to agree to a production hike of 411,000 barrels a day in August. This would be the fourth consecutive month that the group of oil producing nations has increased output.
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