• The 90-day pause on tariffs announced on Liberation Day is up next week with limited progress made so far.
• Only the UK and Vietnam have reached a deal so far, but last-minute concessions are expected.
• The US effective tariff rate is expected to settle around 14%, down from 24% despite the absence of deals.

Trump’s 90-day tariff pause is up next week (9th July) and we thought we’d take stock of what has been accomplished over the past 3 months. As a reminder, Liberation Day was Trump’s announcement at the start of April of a range of reciprocal tariffs that were significantly greater than the market anticipated; the effect of which projected the US effective tariff rate to climb to 24%. This projection has fallen back substantially during the pause as the Trump administration seeks to make deals with the rest of the world, and it is now projected that the US tariff rate will settle around 14%. However, whilst negotiations are underway, not much has actually been achieved and as it stands, tariffs will mostly revert to the Liberation Day announcements as below:

US Effective Tariff Rate (%)

Source: Capital Economics

The Eleventh Hour

Trade tensions are rising as the 90-day pause nears its end. Volatility in markets is starting to ramp up again with the Volatility Index (VIX) up 8% this week. Markets have priced in a benign outcome, so the closer we get to deadline day without deals, the more we believe volatility will spike. While it’s expected that the U.S. will grant further last-minute extensions to most countries, a few may still face steep tariffs as punishment for lagging negotiations. The European Union, for instance, is under pressure to strike a deal to avoid a 50% tariff.

So far, progress on trade deals has been limited. The UK and Vietnam are the only ones to have reached a deal – while talks with India are apparently in their final stages. Trump’s administration may be dissatisfied with the lack of deals since April, but the complexity of multilateral negotiations was always a challenge. It’s worth also pointing out that China has its own deadline of 12th August following a deal announced in Geneva in June, but again progress here is fairly limited and the two countries have just been kicking the can down the road.

Bowmore portfolios

Financial markets have reacted with surprising calm. Despite the potential for disruptive tariffs, equity markets have rebounded strongly from the 2nd April shock, with the US hitting all-time highs this week. A repeat of the scale of turmoil we saw in April seems unlikely as the administration won’t want to send markets tumbling a second time. However, Trump has proven himself unpredictable time and time again, and we are cautious of the fact that there is a lot of work to get done and not much time to do it. When you pair these risks with the optimistic valuations, it won’t come as too much surprise that we have recently reduced our US Equity exposure in favour of discounted Emerging Markets, where the best-case scenario is not priced in.

Source: LSEG DataStream, data as at 03/07/2025

The value of your investments can go down as well as up, so you could get back less than you invested. Past performance is not a guide to future performance.