Global markets advanced cautiously on Tuesday after U.S. President Donald Trump extended his tariff deadline, offering governments an additional three weeks to reach trade deals and avoid steep levies on exports to the world’s largest economy.
Just days before his “Liberation Day” tariffs were set to resume, Trump issued letters to more than a dozen countries, including Japan and South Korea, detailing proposed tariffs if agreements are not reached by the new August 1 deadline. The letters indicated that Japan and South Korea could face 25% tariffs, while Indonesia, Bangladesh, Thailand, South Africa, and Malaysia could see duties ranging from 25% to 40%.
When asked about the firmness of the new deadline, Trump said it was “firm, but not 100% firm,” adding that he would consider alternative offers if presented.
Investors viewed the extension as a potential negotiation tactic, with hopes that new deals could be finalised to avoid the tariffs. However, uncertainty over U.S. trade policy capped market gains, with National Australia Bank’s Tapas Strickland noting that markets may struggle to price scenarios without further clarity, given past abrupt policy shifts.
While Wall Street’s main indexes closed lower—pulling the S&P 500 and Nasdaq back from record highs—Asian markets posted gains, with Tokyo, Seoul, Hong Kong, Shanghai, Wellington, Manila, Jakarta, Mumbai, and Singapore all advancing. European markets opened higher, with London and Frankfurt gaining while Paris remained flat.
Thus far, the U.S. has finalised agreements with Vietnam and the United Kingdom, while reaching a framework arrangement with China to reduce reciprocal tariffs.
Wendy Cutler of the Asia Society Policy Institute warned that the proposed tariffs on Japan and South Korea could send a “chilling message” to other U.S. trade partners, noting the significant manufacturing investments the two countries have made in the U.S.
Japan’s Prime Minister Shigeru Ishiba indicated over the weekend that Japan “won’t easily compromise” on the tariff issue, while U.S. Treasury Secretary Scott Bessent suggested that additional trade deal announcements could follow in the coming days.
Key Market Figures (as of 0810 GMT):
- Tokyo (Nikkei 225): +0.3% at 39,688.81 (close)
- Hong Kong (Hang Seng): +1.1% at 24,148.07 (close)
- Shanghai (Composite): +0.7% at 3,497.48 (close)
- London (FTSE 100): +0.1% at 8,814.50
- Euro/dollar: $1.1765 (up from $1.1710)
- Pound/dollar: $1.3646 (up from $1.3602)
- Dollar/yen: 146.03 yen (down from 146.13 yen)
- Euro/pound: 86.20 pence (up from 86.09 pence)
- WTI crude: -0.3% at $67.76 per barrel
- Brent crude: -0.1% at $69.52 per barrel
- New York (Dow): -0.9% at 44,406.36 (close)
