07.07.25 - Who receives a letter

Donald Trump has confirmed that letters outlining new unilateral tariffs will be delivered to 12 key trading partners starting today, Monday at noon Washington time. These letters are said to include “take it or leave it” offers, essentially marking the final stage of negotiations.

The deadline to reach a deal remains set for July 9, with tariffs scheduled to take effect on August 1.
Trump has warned that countries failing to strike an agreement could face tariffs reverting to the levels proposed back in April. Meanwhile, Treasury Secretary Scott Bessent suggested that some countries may be granted limited flexibility to finalize agreements, but no official extensions have been confirmed. Major partners like the EU, Japan, and South Korea are still negotiating under growing pressure.

Markets: Most equity indices are trading sideways, US Futures slightly negative, US yields up together with the US dollar, commodities (metals) fall slightly while cryptos remain stable.

My view: The August 1 start date gives markets more time, but not more certainty. What matters most is the tariff rate each country finds when they open their letter. I believe markets are still underestimating Trump’s determination. Should tariffs be implemented as outlined, Trump mentioned a 70% tariff rate last week again, the market reaction could be swift and negative. However, in the days ahead, any last-minute deals may spark short-term relief rallies.

One more factor to keep in mind: investor sentiment has reached “Extreme Greed”, a classic contrarian signal that often precedes market turning points.

Become a member to access more valuable market updates like this.