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Trump's tariff blitz: why markets are different this time
Economy
As the US military conflict with Iran enters its sixth month, President Donald Trump has returned to a more familiar battleground – global trade.
On Friday, Trump launched a new tariff blitz against 60 trading partners, including the European Union, China, the United Kingdom, and Canada. The latest wave of tariffs took effect at 12:01 AM ET on Friday, replacing the temporary 10% base tariff that expired on July 24, and range from 10% to 12.5%.
The initial market reaction was muted – the move was largely expected by investors. This contrasts with the shock and awe response to the announcement of the massive "Liberation Day" tariffs in April 2025, which sent markets reeling. However, analysts say the circumstances are markedly different this time: the campaign is unfolding against the backdrop of a more challenging global economic environment and is based on a separate legal framework, threatening to exert prolonged pressure on markets.
"The significance this time is twofold," said Emma Moriarty, portfolio manager at CG Asset Management. "Not only does it demonstrate the Trump administration's commitment to tariffs, but it also comes amid a global energy shock and growing supply chain disruptions. The message for markets should be clear: we need to prepare for a low-growth, high-inflation scenario."
The measures are being introduced as global markets grapple with the aftermath of fighting in the Middle East, which sent oil prices back above $100 per barrel last week amid fading hopes for a ceasefire.
The new offensive is being implemented through Section 301 of the 1974 Trade Act, following the Supreme Court's February ruling that previous tariffs were illegal. Officials cite the alleged use of forced labor. Countries that have adopted or committed to implementing bans will face a 10% tariff, while others will face a 12.5% levy. The tariffs affect 99.4% of American imports.
Martin Jacob, a professor at IESE Business School in Barcelona, noted that the return of tariffs hints at the White House's desire to maintain import duties as a "permanent element" of US economic policy.
"These latest measures represent more than just another short-term negotiating salvo," he added.
Matthew Ryan, head of market strategy at Ebury, stated that the longevity of the new tariffs threatens to develop into a persistent structural pressure point on markets.
"The move to Section 301 removes the legal vulnerability that allowed the Supreme Court to strike down the previous round of import taxes. "Now markets may have to price tariffs as a structural drag on global growth, rather than a temporary risk that can be addressed through negotiations," he said.
Ryan added that attention now turns to the Fed's meeting this week: the recent surge in oil prices raises the likelihood that the regulator could raise rates later this year, moving away from its previous expectations of keeping rates unchanged until the end of the year.