This week’s blog is written by portfolio manager Sacha Chorley
We have just passed Trump’s tariff-pause deadline on 9 July, so now is a good time to regroup and review the latest developments in US trade policy.
A flurry of activity
Over the last few days, we have seen a flurry of activity as US trade negotiators faced the inevitable challenge of trying to conduct simultaneous negotiations with a large number of countries in a very short space of time. In order to allow more time for these negotiations, President Trump signed an executive order with new tariff rates for several countries, but delayed their implementation until 1 August. In line with Trump’s unique approach to politics, the countries in scope for these new tariffs were informed by way of a letter from the president on his Truth Social account.
Many countries saw their rates remain the same or decrease compared to the original proposals made in early April, but there have been several that have seen tariff increases with two of these particularly surprising. Firstly, Japan’s tariff rate increased from 24% to 25% despite an initially strong rapport between the negotiating parties. Secondly, Brazil’s rate shot up from 10% to 50%. This was very strange in the context of tariffs supposedly being a defence against trade imbalances as Brazil already imports more from the US than it exports.
Market reaction
Around the same time, President Trump has indicated further sector-specific tariffs on copper and pharmaceuticals of 50% and 200%, respectively. Given the somewhat chaotic nature of the decision-making and announcement process, it was interesting to note that the market reaction seemed to reflect more nuance than the statements might have suggested in isolation. For example, while the US healthcare sector underperformed on the announcement, it rallied back and still managed to outperform the broader stock market on the day. Copper markets were a little more volatile with US-traded copper rallying over 9% while London-traded copper fell by 2% as traders raced to lock in imports ahead of the tariffs.
The discrepancy between such little price reaction in the healthcare space versus a large reaction in the copper market reflects the importance of understanding positioning when contemplating investment decisions. It will be a lot harder (if not impossible) to make money from a particular view if the market is already aligned to that view.
Making sense of it all
Initially, the commonly held opinion on tariffs was that they would be negative for the US stock market and the hectic way they were announced would undermine confidence in the US economy, but have we seen any data to support this? From a technical perspective, yes. A recent report from Societe Generale shows that the flow of assets into European equities over the last three months has been running at approximately twice that of the US. There is also other data that shows a similar picture, such as the decreasing weight of the US in global equity indices, and Q2 2025 market performance, which saw US equities modestly underperform global equities.
However, US economic exceptionalism hasn’t seemed to go away. Real GDP forecasts for the next few years still show economists expecting some of the best growth in the developed world to come from the US economy. Therefore, as we come to the start of the next round of US corporate earnings releases, it will be vitally important to analyse the commentary from companies to understand how they and their customers are faring, and what implications this has for the commonly held view about the US stock market over the short and long-term.
Portfolio manager blog - this week written by
Sacha Chorley
Portfolio ManagerSacha is a portfolio manager of the Quilter Investors Cirilium and Creation Portfolios. Prior to joining Quilter Investors in 2011, Sacha worked at Broadstone with their team of economists before moving into asset allocation and fund manager research.
Sacha is a CFA charterholder and has also completed the Chartered Alternative Investment Analyst qualification. Sacha has a degree in Maths from the University of Bath.
Last week's portfolio manager blog
Following further government climbdowns over planned spending cuts, CJ Cowan looks at what this means for Rachel Reeves’s ‘fiscal rule’, how markets have reacted, and what it could mean for investors going forward in his latest portfolio manager blog.