Investors glimpsed a possible “glimmer of hope” last week, with the expiration of the deadline for reciprocal customs duties.
Last week was marked by an intense wave of information on several fronts: politics, macroeconomic, microeconomic and corporate. Analysts had a lot to digest: the deadline for reciprocal customs duties, the rebalancing of portfolios at the end of the month, the important meetings of central banks and political leaders, the leading American economic data and the key results of the second trimester of tech giants.
Investors glimpsed a possible “glimmer of hope” last week, with the expiration of the deadline for reciprocal customs duties. According to estimates, the average effective rate of American customs duties on imported products is between 15% and 18%, the low range reflecting the substitution effects (after the readjustment of imports in response to customs duties). Despite everything, customs duties have reached their highest level since 1934.
The Treasury Secretary Scott Bessent indicates that the United States has received around $ 100 billion in customs revenue since the start of the year, a figure that is expected to reach $ 300 billion by the end of 2025. In the longer term (2026-2036), customs revenues should reach $ 2,800 billion, or about $ 0.7% of GDP per year. However, economic models suggest that the US economy will be about 0.4% lower and prices will stabilize at around 1.8% will be approximately 0.4%.
Other agreements should follow. Mexico has succeeded in extending its commercial negotiations for an additional 90 days, and China should obtain a similar extension for tariff negotiations during meetings in Sweden. Most of the new customs duties will come into force on August 7 after midnight, which will allow customs time and the protection of American borders to adjust their perception systems. The seven -day period before the implementation leaves a room for maneuver for the continuation of negotiations for those who wish to reduce reciprocal customs duties.
In Western markets, Switzerland should act quickly to obtain better trade agreement after being taken over by an increase in customs duties of 39%. Swiss chocolate makers and watchmakers face significant risks for their largest consumption market in the world. At the same time, the Swiss pharmaceutical industry, which represented almost half of the Swiss exports to the United States in 2024, is at stake.
In emerging markets, Taiwan should sign an agreement on more favorable conditions, while India and Brazil, faced with customs duties of 25% and 50% respectively, are under pressure to find mutual agreement.
The devil also hides in the details of reciprocal customs duties, in particular their exemptions. In the case of Brazil, government estimates indicate that after exemptions, only 35.9% of its exports to the United States (in value) will be subject to high customs duty of 50% provided by the new decree, beef and coffee remaining among the main goods subject to this high import tax.
Likewise, the American decision to exempt refined copper imports considerably relieved national industries and copper exporting countries in Latin America, in particular Chile. The 50% customs duty will only apply to semi-finished copper products such as pipes, wires, stems, leaves and tubes, while less processed metals, including ore, concentrates and cathodes, will remain exempt.
Could all this agitation around customs duties be in vain? The United States Federal Court of Appeal began to examine the arguments relating to President Trump’s jurisdiction to impose customs duties under the International Emergency Emergency Powers (IEEPA), and a decision is expected “in the coming weeks”. Any decision will probably be brought before the United States Supreme Court, but if Trump ends up losing, it could upset the commercial policy and deprive his administration of one of his favorite means to exert an economic influence.
The Modus Operandi of political decision -makers remains that of “status quo”. In China, the Politburo meeting praised the resilience of GDP growth in the first half, which established 5.3% in annual shift, while stressing the persistence of risks and challenges. The leaders called for the pursuit of accommodating macroeconomic policies, but have refrained from announcing new major recovery measures, disappointing investors who hoped for additional measures.
Among the six central banks that met, only South Africa has adjusted its rates, lowering its key rate of 25 base points to 7.0%, in accordance with expectations. Governor Lesetja KGanyago welcomed the recent moderation of inflationary anticipations. Within the G10, two major central banks reported that they were moving towards a change in policy. The Bank of Japan has maintained its 0.5%key rate, but Governor Kazuo Ueda has set out two essential conditions for the next increase: that the outbreak of food prices reinforces inflationary anticipations and that concrete data are maintained after the tariff agreement between Japan and the United States. According to the latest Bloomberg survey, 42% of the 45 economists questioned are now counting on an increase in rates in October, against 32% previously. At the same time, the Open Market Federal Committee (FOMC) left its rates unchanged at 4.25-4.50% for the fifth consecutive meeting, but approached a relaxation. Governors Chris Waller and Michelle Bowman have expressed their disagreement, marking the first double dissent since 1993. The monetary policy press release adopted a more accommodating tone, stressing that growth was “moderate in the first semester” and suppressing the previous formulation that growth “progressed at a solid pace”. The president of the Federal Reserve (Fed), Jerome Powell, tempered this message by slightly more restrictive remarks, stressing that “almost all of the committee” believes that the economy “does not seem to be slowed inappropriately by a restrictive policy”.
It should be recalled that the main mission of the FOMC is to promote full employment and price stability, defined as an inflation of around 2%. Its two main indicators, inflation of personal consumption expenditure (PCE) and non -agricultural employment (NFP), were both published during the week. PCE data has shown to weaken consumption expenses in parallel with an increase in prices of property due to customs duties. The underlying inflation indicator favored by the Fed increased by 0.3% in monthly shift in June, one of the fastest increases of the year, while expenses have barely increased, households having reduced their purchases of goods exposed to customs duties and focusing on basic necessities. The employment report was more worrying: non -agricultural jobs increased only by 73,000 in June, well below expectations, and downward revisions brought back employment from the last two months to zero. Unemployment increased to 4.2%, even though the activity rate has dropped, suggesting that job seekers give up looking for work. The average growth in three months employment has thus established 35,000, well below 80,000 to 100,000 positions of positions necessary to prevent unemployment from increasing. Following the non -agricultural employment report, the Day to Day interest rate swaps market (OIS) adjusted to 87% the probability of a drop of 25 basic points in September.
Given the volume and complexity of events, it is practically impossible to fully assess the wider implications of the past week. President Trump spoke on social networks to give his opinion, declaring: “Too little, too late. Powell is a disaster. Lower the rates! The good news is that customs duties report billions in the United States. ” A more useful approach could consist in focusing on the reaction of asset classes, because market prices moves provide precious clues to the way the actors interpret and prioritize this flow of information.
Regarding the feeling of the market, our favorite indicator, the VIX, exceeded the level of 20, signaling potential difficulties to come while the confidence of investors crumbles. To determine which countries have best resisted the latest tariff measures, the exchange markets clearly designate the United States as the big winner, the dollar appreciates largely compared to the currencies of the G10 and the euro displaying a particularly mediocre performance. In emerging markets, Brazilian Real resisted the trend, probably supported by the Central Bank’s decision to maintain its master rate at 15% (see the week’s graph). The equity markets have reflected the deterioration of growth prospects, the global indices ending in the red, the underperforming industrial values and the Bloomberg World wide & Mid Cap backing over 2.0% over the week. At the same time, the curve of the rates of American state bonds has recovered, reflecting the growing fears of the market as to a possible entry of the American economy in a phase of stagflation.
Graph of the week: the United States considered to be the big winner of customs duties
Source: Bloomberg as of August 1, 2025. As an indication only.
