11 July 2025
Jonathan Sparks
Chief Investment Officer, UK, HSBC Private Bank and Premier Wealth
This week was supposed to be the big one: the end of the 90-day pause of “Liberation Day” tariffs. Well before yesterday’s deadline, in the minds of investors. July 9th downgraded from a potential flashpoint in markets to a near non-event.
In most cases, the deadline for a deal was extended to August 1st, buying more time for a deal to be struck. This includes a deal with the EU, where progress has been more positive than feared – this deal was supposed to be one of the trickiest. As is turns out, investors are now having to weight up President Trump’s proposal to tariff Japan and South Korea at 25% on goods. And on Thursday Brazil was hit with the threat of of 50% tariffs on goods, tied more towards domestic politics than balanced trade. Trump hasn’t held back in his criticism of the BRICs, using tariffs as a tool to dissuade countries from trading with the bloc.
All in all, it’s hard for investors to shrug tariffs that impact such a large swath of global trade. Alongside letters threatening new duties on steel, autos, pharmaceuticals and semiconductors in over 20 countries, the moves mark the most aggressive US trade posture in decades. Trump has also signalled forthcoming “section 232” reviews on semiconductors and pharmaceuticals, keeping corporate procurement teams on alert.
Yet, at the same time, investors are reluctant to make big calls before these tariffs have come into effect. Instead, many will reason that there is still time for many of these tariffs to be averted, likely particularly hopeful that deal can be struck with South Korea and Japan.
In the meantime, economic growth is far from falling off a cliff. In fact, some data has beaten expectations, and the US labour market is still holding up pretty well. Falling inflation and past rates cuts should help households that have seen very modest tangible downside to their outgoings from tariffs so far. If anything, falling oil prices have had more of an impact.
We are certainly not out of the woods, but despite all the twists and turns the fundamental economic backdrop this year has been supportive enough to invest. And that’s not to mention the big AI story that continues to rumble on in the background – just look at the Nasdaq breaking new highs, following 30%+ gains since the April lows.
On balance, we stick with our approach to stay in the market, but diversify and manage risks through diversification and volatility strategies.
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