Global investors are heading into U.S. President Donald Trump's Wednesday deadline for trade tariffs palpably unexcited and prepared for a range of benign scenarios that they believe are already priced in, News.Az reports citing Reuters.
Just days before the end of a 90-day pause he announced on his April 2 "Liberation Day" tariffs, Trump said the first batch of letters outlining the tariff levels they would face on exports to the United States would be sent to 12 countries on Monday.
Investors who have been tracking this date for months expect more details to emerge in the coming days and protracted uncertainty too, anticipating Trump will not be able to complete deals with all of America's trading partners in the coming week.
And they are not overly concerned.
The market has gotten much more comfortable, more sanguine, when it comes to tariff news,” said Jeff Blazek, co-chief investment officer of multi-asset at Neuberger Berman in New York.
“The markets think that there is enough ‘squishiness’ in the deadlines – absent any major surprise – to not be too unsettled by more tariff news and believe that the worst-case scenarios are off the table now.”
Both the tariff levels and effective dates have become moving targets. Trump said on Friday that tariffs ranging up to 70% could go into effect on August 1, levels far higher than the 10%-50% range he announced in April.
So far, the U.S. administration has a limited deal with Britain and an in-principle agreement with Vietnam.
Deals that had been anticipated with India and Japan have failed to materialize, and there have been setbacks in talks with the European Union.
World stocks opens new tab are meanwhile at record highs, up 11% since April 2. They fell 14% in three trading sessions after that announcement but have since rallied 24%.
"If Liberation Day was the earthquake, the tariff letters will be the aftershocks. They won’t quite have the same impact on markets even if they are higher than the earlier 10%," said Rong Ren Goh, a portfolio manager in the fixed income team at Eastspring Investments in Singapore.
"This financial system is so inundated with liquidity that it is hard to cash up or delever at the risk of lagging the markets, with April serving as a painful reminder for many who derisked and were then forced to chase the relentless recovery in the subsequent weeks."
