US stock futures flounder amid tech weakness, Fed caution
Investing.com - An increase in U.S. tariffs since the start of the year is having a "major impact" on the global economy, according to analysts at UBS.
A pause to President Donald Trump’s punishing "reciprocal" tariffs on a range of countries is due to expire on July 9, leaving investors uncertain around the trajectory of the levies in the weeks to come.
Currently, a baseline 10% duty is in effect, although in specific cases the rate could climb to as high as 70%. Trump has said that the White House will soon begin to send out letters to U.S trading partners outlining their new tariff rates.
But White House officials have suggested that the heightened tariffs would not kick in until August 1, granting some nations a three-week reprieve to possibly negotiate trade deals. Trump has claimed that agreements with several countries could be unveiled in the coming days, after having previously announced preliminary pacts with the United Kingdom (TADAWUL:4280) and Vietnam as well as a trade truce with China.
Even though the reciprocal tariffs have yet to take effect, the weighted average U.S. import levy now stands at 16%, up roughly 2% compared to the beginning of 2025, according to analysis from UBS. The brokerage noted that this would equate to a $500 billion tax on U.S. importers.
Globally, hard economic data was "deteriorating faster" than soft figures were improving in May, the analysts said, as a boost wanes from an effort by many companies to lock in orders before Trump’s "Liberation Day" tariff announcements in early April.
"The tariff frontrunning dynamics imply a pull-forward in demand that should lead to weaker growth later. But the averages could also be obscuring the impact uncertainty and tariff disruption are already having on consumers and businesses," the analysts wrote in a note.