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Tariff policy returned to the spotlight last week as the White House sent letters to 23 countries with updated reciprocal tariff rates and a deferred August 1 negotiation deadline. Notable inclusions were larger U.S. trading partners such as Canada, Japan, South Korea, and Brazil. The administration also levied 50% tariffs on copper, while delaying additional sectoral tariffs. Global equities pulled back broadly in reaction to the announcements, posting small negative returns. Bond yields ended slightly up, with the 10-year U.S. Treasury sitting near its mid-2025 range at 4.4%.
Market Outlook
In our view, we are past peak tariff uncertainty, but last week’s events reinforced there will still be bumps ahead. With the budget package passed, the administration has shifted its focus back to trade deals, and it appears the letters are intended to jump start stalled negotiations. The market’s relatively muted reaction suggests that these new tariff rates will be negotiated to more reasonable levels. This week marks the unofficial start of second-quarter earnings season, and companies may provide insights as to the impact of the bill’s updated business tax incentives and tariff policy changes.
Chart of the Week
Earnings revisions have seen a slight uptick heading into second-quarter earnings season, which suggests that analyst sentiment is improving.
Given clarity around the recently passed budget and tax bill, we believe guidance will be important for investors.
Tax benefits may be offset by the tariffs, which may ultimately pressure profit margins in the short term.
