Trump told reporters over the weekend that his administration would send letters to several foreign governments as early as Monday spelling out their tariff rates if they don’t reach a deal before Wednesday — the culmination of a 90-day negotiating period set by the White House during which goods from most countries have been taxed at a baseline 10 per cent.
He also said on Sunday that he would impose an additional 10 per cent in tariffs against the BRICS bloc of developing nations, which had condemned tariffs increases at its summit in Brazil. In addition to Brazil, the BRICS countries also include Russia, India, China and South Africa.
With the 90-day pause in US tariffs against a long list of nations set to expire, the threat of more severe tariffs hangs over the global economy once again.
White House press secretary Karoline Leavitt holds a trade letter sent to Japan on Monday.Credit: Bloomberg
“Just bringing back that meaty topic back into focus, after a strong week last week, has given a little bit of a pause in the market,” said Bill Northey, senior investment director at US Bank Asset Management.
The near-term outlook will likely hinge on several key factors like the extent to which trading partners are included in Trump letters, the rate of tariffs, and the effective date of such tariffs, according to analysts at Nomura.
Loading
Last week, the Trump administration announced that it reached a deal with Vietnam that would allow US goods to enter the country duty-free, while Vietnamese exports to the US would face a 20 per cent levy. That was a decline from the 46 per cent tax on Vietnamese imports he proposed in April.
“The type of deal struck with Vietnam may be a blueprint for similar countries in the region with economies heavily reliant on large trade deficits with the US,” said Jason Pride, chief of investment strategy and research at Glenmede.
All of the sectors in the S&P 500 index were in the red, with technology, financial and consumer-related stocks among the biggest weights on the market.
Apple fell 2.2 per cent, JPMorgan Chase dropped 2 per cent and Home Depot slid 1.7 per cent.
Molina Healthcare fell 3.5 per cent after the insurer lowered its profit guidance due to rapidly accelerating costs. UnitedHealth Group also recently reported a spike in costs that forced it to cut its forecast, sending its stock tumbling in April.
Bond yields mostly rose. The yield on the 10-year Treasury rose to 4.39 per cent from 4.34 per cent late Thursday.
The downbeat start to the week follows a strong run for stocks, which pushed further into record heights last week after a better-than-expected US jobs report.
Stock indexes in Europe were mostly higher. Asian markets closed mostly lower.
Oil prices fluctuated after OPEC+ agreed on Saturday to raise production in August by 548,000 barrels per day.
The Market Recap newsletter is a wrap of the day’s trading. Get it each weekday afternoon.
