Trump sends out tariff letters, extends levy deadline - what’s moving markets

Investing.com - U.S. stock futures hover around both sides of the flatline in the wake of U.S. President Donald Trump’s latest salvo in his aggressive tariff agenda. Trump sends out letters to more than a dozen nations laying out the elevated tariffs they now face, but postponed the deadline for imposing the heightened levies. Elsewhere, China warns the Trump administration against refueling easing trade tensions.

1. Futures mixed

U.S. stock index futures traded in a mixed fashion on Tuesday. At 06:18 ET (10:18 GMT), Dow Jones Futures fell 66 points, or 0.2%, while S&P 500 Futures were mostly unchanged, and Nasdaq 100 Futures rose 31 points, or 0.1%.

The main averages on Wall Street ended lower on Monday, with analysts suggesting that some traders were moving to book profits after Trump’s decision to issue letters to several different countries detailing their new rate of U.S. import levies and effectively pushing back an impending tariff deadline.

Still, a belief among some market participants that Trump is willing to be flexible on tariff negotiations, as well as signs of resilient growth and cooling inflation, underpinned sentiment and helped soothe fears around the impact of the announcement, analysts at Vital Knowledge said in a note.

“While stocks suffered some pressure on Monday and tariff fears rose, bulls remain in control of the narrative,” they added.

2. Trump sends out tariff letters

Tariffs once again took center stage on Monday following Trump’s decision to send letters to 14 different nations warning of an impending increase in duties.

Although many rates were not as high as Trump initially unveiled at his “Liberation Day” event in early April, they were still greater than the baseline 10% levy now in effect.

Trump set a fresh tariff deadline of August 1 for the countries — including major suppliers Japan and South Korea — and warned these nations not to roll out retaliatory measures. The announcement extends a previous delay to the heightened duties that was set to expire on July 9, and seemingly ratchets up the pressure on these countries to quickly reach a pact with the White House.

However, when asked if the August 1 deadline was unmovable, Trump suggested that it was "firm, but not 100% firm."

"If they call up and they say we’d like to do something a different way, we’re going to be open to that," the president said.

Notably, the higher tariffs will not combine with previously announced sector tariffs such as those on automobiles, steel, and aluminum. Crucially, letters were not sent to India and the European Union, which analysts and media reports interpreted as an indication that possible trade deals may be imminent.

Japan, who along with South Korea faces a 25% tax on products sent to the U.S., signaled that it remained open to negotiations with Washington, with Prime Minister Shigeru Ishiba pledging to continue seeking a beneficial deal.

South Korean Trade Minister Yeo han-koo, meanwhile, met with U.S. Commerce Secretary Howard Lutnick on Monday and discussed possible exemptions or reductions in key auto and steel tariffs, Seoul’s trade ministry said.

3. China issues tariff warning to U.S.

Elsewhere, China warned Trump not to reignite a longstanding spat over tariffs, underlining the fragility of a recently-agreed trade truce between the world’s two biggest economies.

In June, the U.S. and China reiterated a "framework" trade deal following a marathon round of discussions in London, although many of its details have remained unclear, exacerbating doubts around the staying power of the detente.

China now has until August 12 to reach an agreement with Trump to prevent him from reinstating soaring tariff rates set during a tit-for-tat trade spat in April and May. Should they be imposed once again, U.S. tariffs on China would be over 100%.

A commentary in the People’s Daily, the official newspaper of the ruling Communist Party in China, called for further "dialogue and cooperation," adding that these are "the only correct path."

But the article, which was signed using the term the paper uses to express foreign policy views, stood by its claim that Trump’s tariffs amount to "bullying," and criticized smaller economies who were aiming to strike deals with the U.S. A retaliation was also threatened to any country that makes supply chain pacts with the U.S. that cut out China.

4. Crude drops

Crude prices slipped as traders eyed uncertainty over the potential impact of Trump’s tariff hikes, along with lingering concerns from rising OPEC+ output.

At 03:40 ET, Brent futures had inched down 0.1% to $69.54 a barrel and U.S. West Texas Intermediate crude futures fell 0.2% to $67.76 a barrel.

Trump’s tariffs have prompted uncertainty across the market and concerns they could have a negative effect on the global economy and, consequently, on oil demand.

Elsewhere, the Organization of the Petroleum Exporting Countries and its allies, a group known as OPEC+, announced on Saturday that it will increase oil production by 548,000 barrels per day (bpd) in August. The hike was larger than the 411,000 bpd increases already implemented for May, June, and July.

5. Amazon Prime Day event begins

Amazon (NASDAQ:AMZN) is due to kick off its Prime Day on Tuesday, with estimates predicting a spike in digital shopping during the longer-than-usual four-day sales event.

Online spending is anticipated to soar to $23.8 billion across U.S. retailers during Prime Day, according to a forecast from Adobe (NASDAQ:ADBE) Analytics on Monday. Sales are seen jumping by 28.4% compared to last year’s event, which was two days long.

Executives have said the extension was due to Prime members saying they needed more time to shop for deals.

During Amazon’s previous Prime Day in July 2024, American consumers spent $14.2 billion, or a rise of 11% year-over-year, according to figures from Adobe Analytics cited by Reuters. But Prime Day has faced intensifying pressure from similar sales events from rivals like Walmart (NYSE:WMT), Target (NYSE:TGT) and, more recently, ByteDance’s TikTok Shop.

Competition to draw in younger buyers keen to snap up back-to-school and back-to-college merchandise at cheaper prices has been especially fierce. Amazon’s Prime service has even offered a discounted subscription rate and other perks to people aged 18 to 24.