Trump to Send Tariff Letters to 12-15 Countries Starting July 7
Uncertainty Grows Ahead of Mutual Tariff Suspension Expiry on July 8
Besant: "Several Trade Agreements Within 48 Hours"
Tesla Shares Drop 7% After Musk Announces New Political Party
All three major indexes on the New York Stock Exchange fell on July 7 (local time). The declines reflected heightened caution over trade policy uncertainty, coming just one day before the expiration of the mutual tariff suspension measures on July 8. Tesla shares plunged by about 7% after CEO Elon Musk, whose relationship with President Donald Trump has completely broken down following criticism of Trump’s tax cut bill, announced the launch of a new political party.
As of 10:28 a.m. on the same day, the Dow Jones Industrial Average, which focuses on blue-chip stocks, was down 196.19 points (0.44%) from the previous trading day at 44,632.34. The S&P 500 Index, which tracks large-cap stocks, had dropped 26 points (0.41%) to 6,253.35, while the tech-heavy Nasdaq Index was trading at 20,492.43, down 108.67 points (0.53%).
Uncertainty over trade policy is dampening investor sentiment. President Donald Trump has repeatedly increased pressure by warning that he will send letters to various countries listing their respective tariff rates. On the previous day, Trump said, "I plan to send out the letters on Monday (the 7th), and it could be 12 countries, maybe 15," adding, "Some will be sent on Tuesday (the 8th) and Wednesday (the 9th)." This is three more countries than the 12 initially mentioned as targets for the letters. He went on to say, "I think we will finish negotiations with most countries by July 9," and added, "It will be either a letter or a deal."
U.S. Treasury Secretary Scott Besant said in a CNBC interview that "many people have changed their positions regarding the negotiations," and stated that several trade agreements would be announced within the next 48 hours. He explained, "My inbox was filled with numerous new proposals and offers last night," and added, "The next few days will be very busy."
With the expiration of the mutual tariff suspension imminent, President Trump and his aides are maximizing pressure on other countries, urging further concessions and swift agreements. On April 2, the United States announced country-specific mutual tariffs, imposing an additional tariff on top of the basic 10% rate, differentiated by country, and applied a 90-day suspension period. During this period, the U.S. held negotiations with various countries aiming for trade agreements, and the suspension measure will end at 12:01 a.m. on July 9. Currently, the United States has concluded trade agreements with only two countries: the United Kingdom and Vietnam.
However, the new tariff rates will be imposed starting August 1. U.S. Secretary of Commerce Howard Lutnick stated, "The tariffs will take effect from August 1," and added, "The President is setting the tariff rates and negotiations right now." Even after receiving the U.S. tariff letters, countries are expected to have about three more weeks for negotiations.
Seth Carpenter, Global Chief Economist at Morgan Stanley, analyzed, "Short-term agreements are limited in scope and leave many questions unanswered," and added, "A comprehensive trade agreement that reduces trade uncertainty will take much longer to finalize, and ongoing investigations and legal matters will also need to be clarified."
By stock, Tesla is down 6.9%. Concerns that CEO Musk’s move to establish a third party, the 'America Party,' announced on July 5 as an alternative to both the Republican and Democratic parties, could negatively impact Tesla’s business are being reflected in the share price. Musk, once a close ally of President Trump, has seen their relationship deteriorate after criticizing the tax cut plan, and with the announcement of a new party, some say the relationship has reached a point of no return. Nvidia is down 0.68%. Apple and Microsoft (MS) are down 0.64% and 0.21%, respectively.
U.S. Treasury yields are rising, especially for longer maturities. The 10-year Treasury yield, the global benchmark for bond rates, is up 6 basis points (1bp=0.01 percentage point) from the previous day at 4.37%. The 2-year Treasury yield, which is sensitive to monetary policy, is hovering around 3.88%, unchanged from the previous day.
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