Shares decline due to Trump's fresh tariff measures overshadowing corporate revenues
The U.S. has reinstated tariffs on several countries starting from August 7, 2025, following a temporary halt during negotiations. President Donald Trump signed an executive order codifying the tariffs, which range from 10% to 41% for nearly 70 countries.
Notable among the affected nations are India, which faces a new 25% tariff, and countries like Japan, South Korea, and parts of Southeast Asia with tariffs ranging between 25-40%. China, on the other hand, continues to face tariffs up to 145%, while Canada and Mexico have separate tariff regimes.
The steep tariffs on China, in particular, have escalated trade war concerns, with retaliatory tariffs from China reaching 84%. This has impacted global trade flows and investor confidence significantly. J.P. Morgan estimates that tariffs on China alone represent an enormous $400 billion tax on U.S. businesses and consumers, influencing currency movements, such as expectations for yuan devaluation.
The trade policies have introduced volatility and uncertainty in stock markets, with ongoing tariff adjustments influencing investor sentiment. Equities went into retreat at the end of the week due to concerns about the impact on the global economy.
Despite the global trade tensions, some tech giants have continued to thrive. Microsoft and Meta posted bumper results for the period, while Amazon's quarterly profits jumped 35 percent. However, Amazon's outlook for the next three months disappointed investors.
Key investments in AI technology are paying off for Amazon, a fact validated by Dan Ives, a Wedbush tech analyst. He believes the results seen by Microsoft and Meta validate the use cases and unprecedented spending trajectory for the AI Revolution on both the enterprise and consumer fronts.
Meanwhile, Apple posted double-digit quarterly revenue growth that beat expectations on Thursday. The Swiss government is also negotiating to avoid a 39% toll on its key pharmaceutical industry, while the Taiwan dollar spiked above 30 to the greenback for the first time since June.
In a positive development, China is in talks with Washington to extend a fragile truce in place since May. Some countries have reached deals, including Japan, the European Union, Britain, and South Korea, but most are yet to do so.
The central position is progressively leaning to the Fed keeping rates on hold in the September meeting, while US interest rate traders have lowered the implied probability for a cut from the Fed in September. The yen remained under pressure as the Bank of Japan holds off hiking rates and Fed expectations sink.
As the tariff measures take effect next week, providing a minor reprieve, the global economy and stock markets continue to navigate these complex and unsettled trade conditions, affecting economic growth prospects and market dynamics worldwide.
Technology companies, such as Microsoft and Meta, have continued to thrive despite global trade tensions, as they posted impressive financial results recently. However, the stock market has shown volatility due to concerns about the impact of tariffs on the economy and investor sentiment, with overnight retreats observed at the end of some weeks.
