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What do Trump's revised tariff rates mean for global markets?

President Trump delays reciprocal tariffs until August while adjusting rates for 14 countries, triggering market volatility and currency declines.

Red cap Source: Adobe images

Trump pushes back tariff timeline with revised rates

President Trump announced overnight a significant shift in his trade policy, postponing the implementation of reciprocal tariffs from 9 July to 1 August. The revised plan includes adjusted tariff rates for 14 countries, with the White House indicating more announcements will follow.

The latest development has created considerable uncertainty across global markets. The timing change suggests the administration is still fine-tuning its approach to international trade relationships.

Strategic tariff approach targets countries and sectors

The latest tariff announcement covers 14 countries with rates ranging from 25% to 40%. Japan's rate increased from 24% to 25%, while Cambodia saw a significant reduction from 49% to 36%.

Notable exclusions from this round include major trading partners such as the European Union, Taiwan, and India, suggesting these economies maybe still under trade negotiations. China, Mexico, and Canada are expected to have separate discussions due to existing trade agreements.

Beyond country-specific measures, the Trump administration is expected to announce sector-specific levies in due course. So far, automobiles, steel and aluminium already face specific tariffs. The probe on other sectors have begun with current investigations covering industries such as semiconductors, pharmaceutical goods, copper, and timber. When combined with country-specific tariffs, the impact on prices of goods and services can be far more severe than current levels suggest.

Figure 1: Reciprocal tariffs assigned

Tariff rates Source: White House
Tariff rates Source: White House

Figure 2: Year-to-May trade deficit by country

Year-to-May trade deficit by country Source: US Census Bureau
Year-to-May trade deficit by country Source: US Census Bureau

Market reaction remains contained despite uncertainty

US equity markets responded negatively to the tariff announcement, with the Dow Jones falling 422 points or 0.9%. The Nasdaq 100 declined by 0.8%, reflecting investor concerns about trade disruptions. Export-focused companies bore the brunt of the selling pressure. Toyota Motor's ADR declined 4% in US trading.

The VIX volatility index spiked to 18.5 before settling at 17.8, indicating heightened market anxiety. Gold prices remained relatively stable despite the uncertainty.

Currency markets showed more dramatic moves, with affected countries' currencies weakening sharply against the US dollar. The South African Rand plunged 1.95%, while the Japanese Yen and Korean Won dropped 1.2% and 1.0% respectively.

However, compared to the market's reaction in April following the Liberation Day announcements, which triggered a sell-off of over 6% and 8% in a day for the S&P 500 and Nikkei 225 indices respectively, the moves we have seen are relatively small. This suggests markets may be becoming more accustomed to flip flops in Trump's policies or welcomed the delayed implementation as this provided three more weeks for countries to negotiate.

Technical analysis reveals key market levels

The US Tech 100 index sits at a crucial technical juncture following yesterday's decline. The pullback has brought the index back to the upper boundary of its ascending channel from mid-May.

Support at 22,500 represents a critical level for the index. Failure to hold above this point could trigger a deeper correction towards 21,500 support.

A decisive rebound from current levels could see the index test the psychological resistance at 23,000. This level would represent a continuation of the recent upward trend.

Figure 3: US Tech 100 index (daily) price chart

US Tech 100 index (daily) price chart Source: TradingView, as of 8 July 2025. Past performance is not a reliable indicator of future performance.
US Tech 100 index (daily) price chart Source: TradingView, as of 8 July 2025. Past performance is not a reliable indicator of future performance.

The Japan 225 index shows a robust uptrend, trading comfortably above its 200-day simple moving average. The ascending channel's lower boundary from mid-May provides solid support around 38,930, though upside potential remains capped by the recent peak at 40,858. This technical setup suggests the index maintains bullish momentum despite short-term headwinds from tariff concerns.

Figure 4: Japan 225 index (daily) price chart

Japan 225 index (daily) price chart Source: TradingView, as of 8 July 2025. Past performance is not a reliable indicator of future performance.
Japan 225 index (daily) price chart Source: TradingView, as of 8 July 2025. Past performance is not a reliable indicator of future performance.

The USD/JPY pair faces a critical decision point at the 146 resistance level. This level has capped advances on three occasions over the past three months.

A break above 146 would likely propel the pair towards 148 before encountering selling pressure. This move would signal renewed dollar strength against the yen. Conversely, a decline below 142.5 could trigger a test of April's low at 139.9. Such a move would indicate tariff concerns are weighing on dollar sentiment.

Figure 5: USD/JPY (daily) price chart

USD/JPY (daily) price chart Source: TradingView, as of 8 July 2025. Past performance is not a reliable indicator of future performance.
USD/JPY (daily) price chart Source: TradingView, as of 8 July 2025. Past performance is not a reliable indicator of future performance.

This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.

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