Analysts suggest Trump's upcoming tariffs are more negotiation tactics than significant policy changes. As the August 1 deadline approaches, global governments, including the EU, are reacting cautiously, with countermeasures delayed in hopes of reaching diplomatic solutions. Analysts, including those from Deutsche Bank and UBS, caution about the potential economic risks, including a U.S. recession, if the tariffs are implemented as announced. Historical precedents show that market reactions to such deadlines may lean towards skepticism given past instances of delays and adjustments.
In the early hours of Saturday Mr Trump's stationary cupboard was opened again and a letter was sent to the EU and Mexico informing them that they would face 30% tariffs on August 1st.
The market will generally think this is mostly a negotiating tactic and that we're unlikely to see such rates.
The European Commission president Ursula von der Leyen, for example, announced on Sunday a delay to countermeasures that had been due to come into effect this week in response to America's sanctions on steel and aluminum.
UBS warns that if the tariffs are actually imposed, it could significantly raise the risk of a U.S. recession.
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