In recent days, US President Donald Trump has turned his attention firmly back towards tariffs. Read more about the latest news and the market reaction below.
Trump Threatens Secondary Tariffs on Russia
On Monday, US President Donald Trump threatened secondary tariffs on Russian exports unless a peace deal is reached by September.
“We’re very, very unhappy with them, and we’re going to be doing very severe tariffs, if you don’t have a deal in 50 days, tariffs at about 100%, they call them secondary tariffs,” said the President whilst meeting with Nato secretary general Mark Rutte.
Unlike normal tariffs, which directly target a country’s exports, secondary tariffs against Russia would instead impose duties on countries and entities which purchase Russian exports.
Such a move is designed to weaken the Russian economy but also risks provoking other nations. China and India are two of the largest importers of Russian energy and, consequently, could find themselves on the receiving end of these duties if they are introduced.
Trump Threatens 30% Tariffs on EU
Last week, Trump delayed the imposition of his “reciprocal” tariffs until 1 August to give additional time for countries to negotiate trade agreements with the US.
In the meantime, the president has been sending letters to trading partners outlining the tariffs which will take effect from 1 August if no agreement is struck.
On Friday, such a letter was sent to European Commission President Ursula von der Leyen, in which Trump threatened to impose tariffs of 30% on EU exports after the 1 August deadline.
In the letter, Trump also warned against retaliation. The president threatened that, if the EU retaliated with its own import duties, Washington would raise tariffs by a similar percentage above the 30%.
Von der Leyen said that the EU would “continue working towards an agreement by August 1” but also stressed that it was prepared to “take all necessary steps to safeguard EU interests, including the adoption of proportionate countermeasures if required”.
Mexico and Canada were also recipients of similar letters last week, threatening tariffs of 30% and 35% respectively after 1 August.
US Markets Appear Unfazed
Despite the fresh bout of tariff threats, US markets appear unfazed.
The S&P 500 and Nasdaq Composite both continue to hover around all-time highs, with both indices posting modest gains of 0.14% and 0.27% respectively on Monday. The Dow Jones also rose by 0.20%.
Such a muted reaction might suggest that – due to the on again, off again nature of Trump’s tariff proposals – markets merely view the threats as a negotiation tactic.
The oil market also didn’t seem particularly concerned about Trump’s threat of secondary tariffs on Russia, which exports more than 7 million barrels a day.
Whilst global benchmark Brent crude initially rose in trading on Monday, it closed the session down 1.7% and continued its decline early on Tuesday morning.
China Q2 Growth Beats Expectations
China reported better than expected economic growth in the second quarter of the year despite trade tensions with the US.
Gross Domestic Product (GDP) grew 5.2% year on year in Q2. Whilst this represented a slowdown from the 5.4% achieved in Q1, it was higher than the 5.1% which had been expected.
However, headwinds persist. Besides ongoing uncertainty regarding trade, the Chinese economy faces a prolonged property crisis, weak domestic demand and deflationary pressure.
Whilst China’s economy has proved resilient in the first half of the year, some economists foresee a weaker second half.
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