Ah, the financial markets. A place of sober analysis, rational decisions, and certainly no knee-jerk reactions to geopolitical theatrics. Or so one might hope. In the ever-unfolding saga of global trade, former President Donald Trump has once again stepped onto the world stage, not with a peace treaty, but with a fresh batch of tariff threats and a side of mixed signals that leave economists scratching their heads and investors reaching for their antacids. The latest act? A grand announcement of new tariffs, ranging from a modest 10% to a whopping 70%, set to kick in on August 1, 2025. Letters, we are told, are already being dispatched to a dozen or so “major trade partners,” with full coverage expected by July 9th, 2025. Because nothing says “stable economic policy” like a looming deadline and a wide range of potential import duties.
Yet, amidst this predictable unpredictability, the U.S. stock market, particularly its larger constituents, seems to be performing a peculiar dance. While global counterparts often flinch, American indices have, at times, soared to new heights, seemingly immune to the very policies that threaten to upend supply chains and inflate consumer prices. It’s a testament to either profound resilience, an advanced stage of desensitization, or perhaps, a collective belief that these tariffs are merely opening bids in a high-stakes negotiation, rather than actual policy. As one analyst dryly observed, “60 or 70% tariffs will likely just be another negotiating ploy, but they may be taken badly by share markets.”
The Tariff Rollercoaster: A Familiar Ride
The current tariff pronouncements are a familiar refrain from the Trump playbook. Just recently, he signed tariff letters targeting 12 countries with rates up to 70 percent, a “significant development in U.S. trade policy” that is being “closely watched”. These new tariffs, effective August 1, are part of Trump’s stated strategy to secure “better trade agreements” and ensure a “more equitable playing field” for American businesses. The rates, he declared, would “fluctuate between 10% and 70%, contingent on the country and the specific goods being imported”. It’s a bespoke approach to economic leverage, where the exact cost of doing business with the U.S. remains a delightful mystery until the last possible moment.
Adding to the intrigue, Trump also announced a new trade deal with Vietnam, which was touted as “great news for stock market investors” and a potential “tailwind” [15 from original alerts]. This deal reportedly sets a 20% tariff on Vietnamese imports, significantly lower than the previously threatened 46% [11 from original alerts]. So, while some nations face the prospect of a 70% import tax, others get a discount, creating a truly level playing field, provided you’re on the right side of the negotiating table. On his media platform, Truth Social, Trump expressed his “satisfaction” with the Vietnam deal, perhaps enjoying the market’s attempts to decipher his latest moves [21 from original alerts].
Meanwhile, the European Union is reportedly scrambling to secure a 10% tariff deal with the U.S. to avoid the specter of 50% duties, with a July 9th deadline looming large [23 from original alerts]. And not to be outdone, China has already taken retaliatory action, imposing anti-dumping tariffs of up to 34.9% on EU cognac imports, effective July 5th. This tit-for-tat dynamic, a hallmark of Trump’s trade approach, continues to keep global markets on edge, even if U.S. investors appear to have developed a remarkable tolerance for the drama.
Market’s Peculiar Resilience (or Selective Amnesia)
Despite the constant drumbeat of tariff threats and the very real prospect of escalating trade wars, the U.S. stock market has shown a perplexing fortitude. By the end of June 2025, the S&P 500 had topped its all-time high, boasting a year-to-date return of over 6%. On July 3rd, both the S&P 500 (+0.8%) and the tech-heavy Nasdaq Composite (+1%) closed at fresh record highs, buoyed by a stronger-than-expected jobs report. The Dow Jones Industrial Average also added 0.8%, or nearly 350 points, on the same day. This bullish sentiment persisted even as “world shares mostly fell” on July 4th due to the looming tariff deadline, with European indices like Germany’s DAX shedding 0.8% and Paris’s CAC 40 falling 1.1% in early trading.
Analysts are grappling with this apparent disconnect. Stephen Innes, managing partner at SPI Asset Management, noted that “Asian markets slipped into Friday like someone entering a dark alley with one eye over their shoulder — because while US equities danced higher on a sweet spotted post-payroll sugar rush, the mood in Asia was far less celebratory.” His reasoning? “That familiar, twitchy unease every time Trump gets near the tariff trigger.” Indeed, while U.S. stock futures on July 4th were slightly lower (S&P 500 and Dow futures both down 0.5% in early European trading), the overall trend for U.S. markets has been upward, leading some to suggest that investors are simply “becoming desensitized to tariff news”.
However, the market’s memory isn’t entirely wiped clean. We need only look back to April 2025, when Trump’s initial announcement of sweeping new tariffs—a flat 10% duty on all imports, with higher “reciprocal tariffs” like 34% for China and 20% for the EU—triggered a “historic global market sell-off”. The Dow Jones Industrial Average plummeted a combined 3,910 points over two days, including a 5.5% drop on Friday, April 4th, marking its worst performance since June 2020. The S&P 500 fell nearly 11% in just two sessions, and the Nasdaq officially entered a bear market, shedding over 20% from its peak. A staggering $6.6 trillion was wiped from the U.S. stock market in those two days alone. Yet, when Trump announced a “pause” on some tariff increases on April 9th, the market staged a dramatic rally, with the S&P 500 surging 9.52%, the Dow 7.87%, and the Nasdaq a remarkable 12.16%. It seems the market is always ready for a sequel, especially if it involves a dramatic reversal.
Corporate Casualties & Strategic Dodges
While the major indices might be shrugging off the latest tariff pronouncements, individual companies, particularly those with deep international ties, are feeling the pinch. Tesla (TSLA), for instance, has been a poster child for tariff-induced volatility. On July 1st, its shares slumped nearly 4.5% in pre-market trading after President Trump criticized the company for allegedly benefiting “excessively from government subsidies on EVs”. This follows a 2.56% drop to $233.29 on April 7th, attributed to 54% tariffs on Chinese imports impacting its battery supply chain, coupled with retaliatory tariffs in China, a market where Tesla earns a significant 22% of its revenue. Historically, Tesla shares fell 22% during the 2018-2019 U.S.-China trade war. Conversely, when Trump proposed cutting China tariffs from 145% to 80% on May 9th, Tesla shares jumped 5% to $299.02, demonstrating the profound impact of trade policy on its bottom line. Even Apple (AAPL) saw its stock lower in pre-market on July 1st, partly due to tariff risks alongside concerns about its AI capabilities.
European luxury goods makers are also caught in the crossfire. Following China’s announcement of tariffs up to 34.9% on EU cognac, Pernod Ricard (PERP) shares initially fell 2.3% on the Paris Stock Exchange on July 4th, with competitor Remy Cointreau (RCOP) dropping 3.7%. However, a fascinating twist emerged: major cognac producers, including Pernod Ricard and Remy Cointreau, were largely spared from the steepest duties, provided they agreed to a “Minimum Import Price” (MIP) commitment. This strategic maneuver, hailed as a “masterclass in risk mitigation” by AInvest, allowed Pernod Ricard to avoid a “margin-crushing 34.9%-39% tariff” and maintain its foothold in China’s booming luxury market. It seems even in trade wars, there’s always a loophole for those willing to play ball.
The Fed’s Dilemma and the Inflationary Cloud
The specter of tariffs also casts a long shadow over monetary policy. The Federal Reserve, tasked with balancing employment and inflation, finds itself in a precarious position. Goldman Sachs analysts noted on July 3rd that the effective U.S. tariff rate has already risen by approximately 10 percentage points to 13%, with an additional 4 percentage points to 17% expected. They anticipate that companies will pass on about 70% of these direct tariff costs to consumers through higher prices, leading to a “modest drag on economic growth and a one-time boost to inflation”. This inflationary pressure is a significant concern, with Fed officials reportedly “wary of cutting interest rates” despite external pressure, waiting to see if “tariff-driven price hikes might evolve into more persistent cost-of-living pressures”.
U.S. Bank’s chief equity strategist, Terry Sandven, acknowledged the “abundance of policy changes including tariffs, tax reform, deficit spending, the debt ceiling, border policy, and geopolitical tensions,” noting that “periods of change like this are often associated with investor uncertainty, angst and volatility”. Yet, he also observed that “investors have proven resilient”. The market seems to be operating on a peculiar diet, as Investopedia analysts quipped, “The key to the year will be how much spinach markets must eat (tariffs) before the candy comes later (tax cut extensions, deregulation, and more Federal Reserve [Fed] rate cuts).” The question remains: how much spinach can the market stomach before it demands its dessert?
Conclusion: The Show Must Go On
In the grand theater of global economics, Donald Trump continues to be the undisputed showman. His latest round of tariff announcements, ranging from the mundane to the truly eye-watering, coupled with strategic trade deals and the occasional White House UFC fight announcement [2, 5, 13, 16 from original alerts], ensures that the market never suffers from a lack of headlines. While analysts warn of “risk off tone” and the potential for the rally to “come to an abrupt halt” if Trump doesn’t “perform his usual ‘TACO’ and cave in at the last minute”, the U.S. stock market, particularly its large-cap tech darlings, seems to find a way to dance through the chaos.
The contradictory signals—record highs alongside record tariff threats, trade deals alongside trade wars—have become the new normal. Investors, it seems, have adapted, learning to distinguish between genuine economic threats and negotiating tactics, or perhaps, simply betting on the enduring strength of the American consumer and corporate earnings. Whatever the underlying psychology, one thing is clear: as long as the show goes on, the market will keep watching, occasionally flinching, but mostly, just trying to figure out the next act in Trump’s tariff tango.
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.