In the grand theater of global finance, few acts command attention quite like a Donald J. Trump policy announcement. It’s a performance art piece, really, where the script is written on the fly, and the market’s reaction is less about fundamental shifts and more about the collective sigh of relief (or exasperation) that a new, slightly less apocalyptic, scenario has emerged. The latest installment, a freshly minted trade deal with the European Union, has once again proven that when it comes to the former (and potentially future) President, the only constant is the delightful, bewildering inconsistency.
This past Monday, July 29, 2025, Wall Street, ever the stoic observer of political theatrics, offered a reaction that could best be described as a polite nod. Despite President Trump triumphantly announcing a “biggest trade deal ever” with the EU, the market’s response was, shall we say, muted. The S&P 500, that venerable barometer of American corporate prowess, managed a negligible gain of just +0.02% to close at 6,389.77 points, after hitting a new all-time high earlier in the session. Not exactly a champagne-popping, ticker-tape parade kind of day for a “biggest deal ever.”
Meanwhile, the tech-heavy Nasdaq Composite, ever the darling of speculative euphoria, fared slightly better, eking out a +0.33% gain to close at a new record of 21,178.58. The venerable Dow Jones Industrial Average, perhaps feeling the weight of blue-chip responsibility, actually dipped 64.36 points, or -0.14%, settling at 44,837.56. Pre-market trading on Tuesday, July 29, 2025, saw futures for the S&P 500 up around +0.17% to +0.3% and Nasdaq futures rising +0.25% to +0.5%, while Dow futures nudged up +0.1% to +0.18%, suggesting a continuation of this cautious optimism, or perhaps just a collective shrug.
The EU “Deal”: A Masterclass in Muted Enthusiasm
The core of this week’s market non-event was the U.S.-EU trade framework. Announced by President Trump and European Commission President Ursula von der Leyen, the deal set a 15% U.S. import tariff on most EU goods, notably averting the previously threatened 30% duties. In a move that surely warmed the hearts of American energy producers, the EU also agreed to purchase a cool $750 billion in American energy supplies and commit to $600 billion in new investments through 2028. One might think such a substantial agreement would ignite a market bonfire, but alas, Wall Street’s reaction was akin to watching paint dry, albeit very expensive paint.
Analysts, ever the purveyors of nuanced takes, offered a spectrum of reactions. Paul Stanley, chief investment officer at Granite Bay Wealth Management, noted that the deal “removes a significant layer of uncertainty from markets,” suggesting that “falling uncertainty is positive” and allows markets to “focus more on fundamentals”. This is, of course, after years of said uncertainty being *introduced* by the very same trade policy. It’s a classic case of celebrating the cessation of self-inflicted wounds. Investment bank Oppenheimer, for its part, reinstated its bullish stance on the S&P 500, raising its year-end 2025 target to 7,100 points, an 11.1% upside from last Friday’s close, specifically because the reciprocal tariff plan (which had previously led them to lower their forecast) was suspended. Ah, the sweet relief of a policy pivot.
However, not everyone was convinced this was a grand victory. While U.S. markets remained largely unfazed, Europe told a different story. The Euro plummeted over 1% against the U.S. dollar on Monday, its sharpest one-day fall since May. German Chancellor Friedrich Merz warned that the new tariffs would cause “significant damage” to Germany, Europe, and even the U.S.. It seems some partners aren’t quite as thrilled to accept a 15% tariff as a “win.” Eswar Prasad, an economist at Cornell University, cautiously called the trade deals a “qualified win” for Trump, but added that some terms “seem more promising in the abstract than they might prove in reality over time”. In other words, the devil, as always, is in the details – details that often remain conveniently murky.
Tariffs: The Gift That Keeps on Taking (from American Wallets)
The EU deal, while framed as a de-escalation, is merely one facet of President Trump’s broader, more aggressive tariff strategy. He has been quite vocal about establishing a “new global baseline” of 15% to 20% tariffs for any country not willing to renegotiate trade terms. This isn’t just about the EU; it’s a global proposition. And while the administration touts these tariffs as a means to reduce the budget deficit and bolster domestic manufacturing, the economic reality often paints a less rosy picture.
A new analysis from the Washington Center for Equitable Growth suggests that Trump’s tariffs could increase U.S. factory costs by a significant 2% to 4.5%. Chris Bangert-Drowns, a researcher there, ominously warned that such increases could “crimp already-thin profit margins, potentially leading to stagnation in wages, layoffs, or even plant closures”. Indeed, the Labor Department reported a loss of 14,000 U.S. manufacturing jobs following an April tariff rollout. This echoes past experiences, where the tariffs imposed on Chinese goods in 2018 had a net negative effect on manufacturing jobs, with modest gains from shielding domestic producers being “more than offset” by rising production costs and retaliatory tariffs.
And who, pray tell, ultimately foots the bill for these grand economic experiments? Surprise! It’s the American consumer. The Budget Lab at Yale University estimates that households could lose up to $2,400 annually due to the tariffs. Another analysis from February 2025 by the same lab found that if the U.S. were to match other countries’ tariff and value-added tax rates, U.S. consumers could see price levels rise by 1.7% to 2.1%, potentially costing American households $5,200 annually. Mark Zandi, chief economist at Moody’s Analytics, noted that the effective U.S. tariff rate has already surged to 17.5% from approximately 2.5% at the start of the year. His blunt assessment? “I wouldn’t take a victory lap. The economic damage caused by the higher tariffs will mount in the coming months”. Morgan Stanley analysts, while not predicting a recession, anticipate “slow growth and firm inflation” as the most likely outcome. It seems the “Art of the Deal” might just be the art of making everything a bit more expensive for everyone.
The Perpetual Policy Pivot: A Trader’s Delight?
The market’s enduring fascination, and occasional exasperation, with Trump’s trade policies stems from their inherent unpredictability. One day, tariffs are threatened; the next, a “deal” is announced that still includes tariffs, just slightly lower ones than initially proposed. This constant state of flux, while perhaps designed to keep trading partners on their toes, certainly keeps investors guessing. J.P. Morgan Global Research noted that the “uncertainty associated with tariff increases and the general thrust of the Trump administration’s policies are now depressing business sentiment, which will directly weigh on spending and hiring”. It’s a high-stakes game of chicken, where the global economy is the vehicle and business confidence is the fuel.
The Federal Reserve, ever the adult in the room, finds itself in a precarious position. President Trump has consistently urged the Fed to cut interest rates, but Fed Chair Jerome Powell has maintained a cautious stance, worried about potential inflation threats from the administration’s tariff increases. While the Fed still projects two rate cuts in the closing months of 2025, the ongoing trade skirmishes add a layer of complexity to their decision-making. It’s a delicate dance between political pressure and economic reality, and the market watches with bated breath, often shrugging off major trade news to focus on the Fed’s next move or the latest round of tech earnings from giants like Microsoft, Meta Platforms, Amazon, and Apple, all reporting this week.
In conclusion, President Trump’s impact on stock markets remains a fascinating study in contradiction. His announcements, often delivered with maximal fanfare on platforms like Truth Social, continue to generate headlines. Yet, the market’s reaction is increasingly characterized by a weary pragmatism, digesting the news and quickly moving on to more tangible economic signals like earnings reports and Fed policy. The “Art of the Deal” might secure some “qualified wins,” but it also ensures a persistent undercurrent of uncertainty and a steady stream of increased costs for American businesses and consumers. As for the stock market, it continues its upward march, seemingly in spite of, or perhaps just accustomed to, the perpetual policy pivot. It’s a wild ride, and investors, it seems, are just trying to keep their hands and feet inside the vehicle at all times.
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.