Ah, July 2025. A time for beach vacations, questionable summer blockbusters, and, of course, the perennial return of Donald J. Trump’s tariff-a-palooza. Just when you thought the global trade landscape might settle into something resembling predictability, the former (and potentially future) President has once again graced us with a fresh barrage of trade threats, ultimatums, and policy pronouncements. The question, as always, isn’t *if* he’ll threaten, but *how* the markets will react to this latest installment of the geopolitical reality show. And, dear reader, the answer, increasingly, is with a collective, resounding shrug. Or perhaps, a knowing wink.
The Tariff Tango: EU & Mexico Edition
The latest headline-grabber arrived on July 14, 2025, with President Trump announcing a sweeping 30% tariff on imports from the European Union and Mexico, set to take effect on August 1. This, naturally, threw months of “painstaking talks” with Brussels into disarray, as European Commission chief Ursula von der Leyen scrambled to reiterate the EU’s desire for a negotiated solution. European markets, ever the sensitive souls, initially reacted with a predictable dip on Monday, July 14. Germany’s benchmark DAX tumbled nearly 0.9%, while France’s CAC 40, Italy’s FTSE MIB, and Spain’s IBEX 35 each shed between 0.7% and 0.8%. The pan-European STOXX 600 index dipped approximately 0.5%.
Across the pond, US stock futures also showed early signs of distress on Monday, July 14. S&P 500 futures and Nasdaq Composite futures both dropped more than 0.5% in pre-market trading, while Dow Jones Industrial Average futures were down 140 points, or 0.3%, after an overnight slide of over 200 points. However, much like a seasoned actor who knows their lines, the US market quickly recovered its composure. By the close of trading on Monday, Wall Street had actually ended with gains. The Dow Jones Industrial Average rose 0.2% (+88.14 points) to close at 44,459.65. The Nasdaq climbed 0.27% (+54.8 points) to 20,640.33, and the S&P 500 eked out a 0.14% gain (+8.81 points) to 6,268.56.
This remarkable resilience, or perhaps, outright defiance, is not lost on analysts. “The market is betting that by August 1st these tariffs are not going to be implemented at these levels,” quipped Peter Cardillo of Spartan Capital Securities. Indeed, the consensus among many market watchers is that these grand pronouncements are merely “negotiating ploys” – a classic “escalate to de-escalate” strategy. Deutsche Bank analysts, with a touch of weary familiarity, noted that “the market has not treated the recent tariff escalation as a negative catalyst at all, as it was very predictable, with the expectation that a relent will come eventually.” This phenomenon has even earned its own moniker: the “TACO theory,” short for “Trump Always Chickens Out.” It seems investors have, by now, become “inured to the tariff drama, arguably to the point of complacency.”
The Russian Roulette of Tariffs
Not content with merely rattling traditional trade partners, President Trump also turned his attention to the ongoing conflict in Ukraine. On July 14, he issued a 50-day ultimatum to Russia: reach a peace deal, or face “very severe tariffs,” including a staggering 100% secondary tariff on all Russian imports. This threat, delivered during a meeting with NATO Secretary General Mark Rutte, was accompanied by the announcement of a new weapons deal to send Patriot missile systems to Ukraine.
One might expect such a bold declaration to send shockwaves through global commodity markets, particularly oil, given Russia’s significant role as an energy exporter. However, the market, displaying its newfound skepticism, largely yawned. ICE Brent crude oil prices actually fell over 1.6% on July 14, settling below $70/bbl. The prevailing sentiment? The market isn’t “buying” the secondary tariff threat, attributing the muted reaction to “the lack of any immediate action and the belief that these threats won’t be carried out.” Even the USD/RUB pair saw only a modest 0.14% increase on the day. It appears that even the prospect of a 100% tariff isn’t enough to stir the market from its seasoned indifference when the source is, well, predictable. As ING Think’s Warren Patterson dryly observed, “Given Trump’s desire for low oil prices, we don’t believe Trump would be keen to follow through with this threat.”
A Tomato Too Far & Brazilian Blues
Beyond the geopolitical grandstanding, the Trump administration also quietly implemented a more immediate, albeit less dramatic, tariff: a 17% duty on fresh tomatoes from Mexico, effective July 14. This move, ending a long-standing suspension agreement, aims to “protect and revive” the US domestic tomato industry. While this specific tariff didn’t trigger major stock market tremors, it’s expected to hit American consumers’ wallets, potentially raising tomato prices by 6-10%. Mexican officials, understandably miffed, called the move “unjust” and “against the interests not only of Mexican producers but also of the US industry.”
And let’s not forget Brazil, which found itself in the crosshairs of a 50% tariff on all imports, including copper, announced on July 9 and slated for August 1. This was reportedly a response to perceived “unfair trade practices” and even anger over the “mistreatment” of former Brazilian President Jair Bolsonaro, a political ally. US stock futures did initially dip on July 10, with Dow futures down 0.3%, S&P 500 futures down 0.2%, and Nasdaq 100 futures down 0.2%. Brazilian stocks also fell, though the Brazilian Real managed to rebound. The commodities market, however, took note, with LME copper prices falling below $9,600/t on July 14 in anticipation of the tariffs. Even so, the market’s overall reaction to these varied threats has been characterized as “relatively modest.”
The Market’s Unflappable Facade: TACO Theory in Action
The consistent theme emerging from this latest round of tariff announcements is the market’s remarkable ability to absorb, process, and ultimately discount, the “Trump effect.” Analysts like Mark Haefele at UBS Global Wealth Management maintain a base case that the US effective tariff rate will likely settle around 15%, which, in his view, “will allow the S&P 500 to rise further over the coming 12 months.” This speaks volumes about the market’s learned behavior: it has “mostly adjusted to the unpredictability of Trump’s rapidly shifting tariffs.”
While some economists still warn of potential inflation spikes and demand hits if these tariffs were to be fully implemented, the prevailing sentiment is that these are negotiating tactics rather than firm policy. The market has seen this play before, and it appears to be betting on the “escalate to de-escalate” script. The fact that US indices closed higher on Monday, July 14, despite a flurry of significant tariff threats, underscores this point. It’s a testament to Wall Street’s ability to compartmentalize, to filter out the noise, and to focus on the underlying belief that, eventually, a “deal” will materialize, or the threats will simply fade. The volatility index, VIX, remained relatively subdued, holding under 20, further indicating a lack of widespread panic.
In a world increasingly accustomed to rapid-fire policy pronouncements via social media, the financial markets have seemingly developed a thick skin. They’re no longer easily spooked by the bluster, preferring to wait for the actual implementation, or more often, the inevitable softening of the stance. It’s a high-stakes poker game, and for now, the market seems to be calling Trump’s bluff, or at least, expecting a more palatable hand to be dealt before August 1. Meanwhile, Bitcoin, ever the maverick, continues its own ascent, topping $123,205 on July 14, perhaps serving as a digital safe haven for those who prefer to sidestep the traditional market’s nuanced interpretations of political drama.
DISCLAIMER: We read Trump’s posts so you don’t have to. This is comedy meets market data, not financial advice. Not political advice either – we just like charts and chaos.
Elana Harper is a seasoned financial editor and market analyst with over a decade of experience covering global equities, economic trends, and corporate earnings. Known for her sharp insights, Elana specializes in making complex financial topics accessible to a broad audience. She now serves as the Senior Financial Editor at Stock Market Watch, where she oversees daily market coverage and political commentary.