Most Markets Rise As Trump Sends Tariff Letters, Delays Deadline

Key points

Trump unveils 25pc tariffs on Japan, South Korea
Tesla shares fall on Musk’s political ambition
Oil prices rise on the back of strong demand

ISLAMABAD: Most stocks rose Tuesday as traders cautiously welcomed Donald Trump’s extension of his tariff deadline and indication he could push it back further, though uncertainty over US trade policy capped gains.

Days before the three-month pause on his “Liberation Day” tariffs was set to expire, the US president said he would give governments an extra three weeks to hammer out deals to avoid paying sky-high levies for exports to the world’s biggest economy.

That came as he sent out letters to over a dozen countries — including top trading partners Japan and South Korea — setting out what he had decided to charge if they did not reach agreements by the new August 1 target date.

Negotiation tactic

Investors tentatively welcomed the delay amid hopes officials will be able to reach deals with Washington, with some observers seeing the latest move by the president as a negotiation tactic, according to AFP.

The letters said Tokyo and Seoul would be hit with 25 per cent tariffs, while Indonesia, Bangladesh, Thailand, South Africa and Malaysia faced duties ranging from 25 per cent to 40 per cent.

When asked if the new deadline was set in stone, the president said: “I would say firm, but not 100 per cent firm.”

When asked whether the letters were his final offer, he replied: “I would say final — but if they call with a different offer, and I like it, then we’ll do it.”

While Wall Street’s three main indexes ended down — with the S&P 500 and Nasdaq back from record highs — Asian markets mostly rose.

Tokyo and Seoul advanced, while there were also gains in Hong Kong, Shanghai and Singapore. Sydney, Wellington and Taipei fell. Manila and Jakarta were flat.

The White House has for weeks said that numerous deals were in the pipeline, with Treasury Secretary Scott Bessent claiming Monday that “we are going to have several announcements in the next 48 hours”.

“Chilling message to others”

But so far only two have been finalised, with Vietnam and Britain, while China reached a framework to slash eye-watering tit-for-tat levies.

Asia Society Policy Institute Vice President Wendy Cutler said the levies on Japan and South Korea “will send a chilling message to others”.

“Both have been close partners on economic security matters,” she said, adding that companies from both countries had made “significant manufacturing investments in the US in recent years”.

For his part, Japan’s Prime Minister Shigeru Ishiba said Sunday that he “won’t easily compromise”.

Uncertainty among investors

National Australia Bank’s Tapas Strickland said there remained a lot of uncertainty among investors.

“If the agreement with Vietnam is anything to go by, then countries… the US has a trade deficit with look destined to have a 20 per cent tariff, and those… the US has a trade surplus with a 10 per cent tariff,” he wrote in a commentary.

“That could mean eventual tariff rates settle higher than what the current consensus is, which is broadly for a 10 per cent across-the-board tariff with a higher tariff on China.

“Without further clarity, though, markets will have trouble pricing these different scenarios, especially given Trump’s quick reversal following the market reaction in response to the initial Liberation Day tariffs.”

According to Reuters, oil prices rose as signs of strong demand offset the impact of a higher-than-expected OPEC+ output hike for August and concerns about possible tariff impacts.

Brent crude futures rose $1.28, or 1.9 per cent, to settle at $69.58. US West Texas Intermediate crude gained 93 cents or 1.4 per cent, to settle at $67.93.

Also, electric vehicle maker Tesla shares fell 6.8 per cent after CEO Elon Musk announced the formation of a US political party named the “American Party.”