U.S. Sends Tariff Letters to 14 Countries... "25% for South Korea and Japan"
Tariffs to Take Effect August 1... Suspension Deadline Extended by Three Weeks
Trump Hints at Possibility of Further Tariff Suspension Extension
Tesla Rebounds 1% After 6.8% Drop the Previous Day
Apple Falls 0.5% as AI Executive Moves to Meta
On July 8 (local time), the three major indices of the New York Stock Exchange opened the session mixed and largely flat. After President Donald Trump sent tariff letters to 14 countries, including South Korea and Japan, and extended the tariff suspension deadline, which was originally set to expire on July 8, to August 1, the market appeared to shake off some of its anxiety, and the selling pressure seen the previous day has temporarily eased. Investors are adopting a wait-and-see approach as they await news of follow-up trade negotiations.
As of 9:57 a.m. on the same day at the New York Stock Exchange, the blue-chip Dow Jones Industrial Average was down 34.48 points (0.08%) at 44,371.88 compared to the previous trading day. The large-cap S&P 500 index was up 4.75 points (0.08%) at 6,234.73, while the tech-heavy Nasdaq index was trading at 20,442.54, up 30.02 points (0.15%).
President Trump sent tariff letters the previous day to 14 countries, including key Asian allies South Korea and Japan, specifying reciprocal tariff rates of 25% to 40%. South Korea was subject to a 25% tariff, the same as in early April. Japan also received notification of a 25% tariff, which is an increase of 1 percentage point from the previous rate.
However, President Trump left open the possibility of further tariff reductions or additional extensions of the suspension, depending on the progress of future negotiations. In his letter to South Korea, he stated that "tariffs may be adjusted upward or downward" depending on the level of response, such as the removal of trade barriers. When asked by reporters whether the new August 1 deadline for the tariff suspension was firm, he replied, "I wouldn't say it's 100% firm," and added, "If they call and say they want to do something differently, we would be open to that." This indicated that an additional extension of the suspension is possible.
In light of the extension of the tariff suspension, investors have halted stock selling and are closely monitoring the progress of upcoming trade negotiations. The European Union (EU) and India, which did not receive letters from President Trump, are reportedly close to reaching trade agreements with the United States. Previously, U.S. Treasury Secretary Scott Besant also stated that an additional trade agreement could be reached by July 9. In an interview with CNBC the previous day, Secretary Besant said, "Many people have changed their positions regarding the negotiations," and predicted that several trade agreements would be announced within the next 48 hours. He added, "Last night, my inbox was filled with numerous new proposals and offers," and said, "We will be very busy over the next few days."
Brett Kenwell, a U.S. investment and options analyst at eToro, commented, "Although news of the trade war is once again in the spotlight, it does not mean that we will see a repeat of the (sharp market declines) seen at the end of March and the beginning of April." He added, "If there is confidence that negotiations will continue or that the (tariff suspension) deadline will be extended, the market will be able to shrug off these headlines."
U.S. Treasury yields are holding firm. The 10-year U.S. Treasury yield, which serves as a global benchmark for bond rates, is trading at 4.42%, up 2 basis points (1bp=0.01 percentage point) from the previous day. The 2-year U.S. Treasury yield, which is sensitive to monetary policy, remains at 3.9%, the same level as the previous day.
By stock, Nvidia is up 0.54%. The company's market capitalization is approaching $4 trillion. Tesla is up 1.03%. After Tesla CEO Elon Musk announced the launch of a new political party and once again clashed with President Trump, Tesla's share price had plunged 6.79% just the previous day. Apple is down 0.5% on news that a key executive in its artificial intelligence (AI) division has moved to Meta Platforms. This reflects concerns that Apple is falling further behind in the AI competition among big tech companies.
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