US policy remains a major source of uncertainty for the global economy.
But as other countries respond, signs are emerging of a deeper transformation – and of a reconfiguration of global-trade and financial flows.
July 9 marked the end of a 90-day pause on sweeping US tariff proposals that had triggered market turmoil when first announced in April. Although the pause was extended to August 1, hopes of de-escalation faded after the US signaled new tariffs for more than 20 countries that were broadly in line with those initial April proposals.
These include a renewed threat of a 35% tariff on imports from Canada, a 30% tariff on imports from the EU and Mexico, a 25% tariff on imports from Japan and South Korea, and a potential 50% tariff on all imports from Brazil.
The US administration also flagged new levies on imported copper, and hinted at a tariff of 200% on pharmaceutical imports if US producers fail to move production back to the US within an unspecified transition period.
Notably, the announcements did not trigger a repeat of April’s market turmoil.
The S&P 500 index slipped just 0.2% last week, while equities in Japan and South Korea actually rose slightly, reflecting market skepticism about whether the full slate of threatened trade measures will be enacted. However, with investors now facing a broadening tariff front, that sense of relative calm may be tested as the implications of further escalation are weighed.
What happens next remains uncertain. While trading partners may seek bilateral deals with the US to avoid the harshest measures, some analysts have voiced concern that muted market reactions may encourage US policymakers to escalate further – risking sharper disruptions ahead.
What seems clear is that policy uncertainty is now interacting with a broader global economic realignment in ways that are still unfolding. WEF
