US stock indices are hovering just below record highs this afternoon, as speculation mounts that President Donald Trump may backtrack on his latest wave of tariff threats.
The S&P 500 is down 0.1%, while the Dow Jones and Nasdaq remain largely flat. Investors appear cautious but not rattled, amid growing belief that the White House may soften its stance to avoid economic disruption.
European markets were more reactive, with most indices slipping after Trump proposed 30% tariffs on goods from Mexico and the European Union over the weekend. However, the FTSE 100 bucked the trend, rising 0.5%.
The proposed EU tariffs won’t take effect until 1 August — the same deadline set last week for updated import tax rates on goods from Japan, South Korea, and several other countries. The delays are seen as giving Trump room to negotiate trade deals that could ease or avert the planned hikes.
Market watchers suggest the threats may be more about leverage than policy. Ulrike Hoffmann-Burchardi of UBS Global Wealth Management said: “We believe the administration is using this latest round of tariff escalation to maximise negotiating leverage, and that it will ultimately de-escalate, especially if market volatility increases.”
Brian Jacobsen, chief economist at Annex Wealth Management, added: “There are many conditions and clauses that could lead to reduced rates. That’s probably why the market isn’t panicking — it doesn’t like the tariff talk, but it’s not reacting with fear either.”
