By Lewis Krauskopf
NEW YORK (Reuters) -Investors awaited tariff news between the U.S. and European Union on Friday that could add a potentially volatile development to the finish of a week in which President Donald Trump reignited his global trade war.
The European Union was bracing for a possible letter from Trump outlining planned duties on the United States’ largest trade and investment partner. The U.S. president this week outlined new tariffs on U.S. imports of goods from a number of countries, including allies Japan and South Korea, along with a 50% tariff on U.S. imports of copper. Trump also announced a hike to 35% on Canadian goods.
The EU initially hoped to reach a comprehensive trade deal, but after months of difficult talks, a person with knowledge of the U.S.-EU talks stated it was hard to predict if the bloc would receive a letter announcing more tariffs or when any agreement might be finalised.
“We receive bad news from the euro zone … and that’s clearly going to be bad news for markets and sentiment,” stated Art Hogan, chief market strategist at B Riley Wealth.
Pharmaceuticals and autos are among the areas in focus between the U.S. and Europe, while “across the board, we do a massive amount of trade,” Hogan stated.
“Right when we believed we had the exit on this trade war highway in sight, it’s receiveting further off in the distance, and it’s not viewing prettier,” Hogan stated, speaking broadly.
Despite some modest rockiness this week, the benchmark S&P 500 finished down just 0.3% on the week and not far from record-high levels. U.S. stocks have rebounded after plunging in April following Trump’s “Liberation Day” announcement of sweeping global tariffs. Trump had paapplyd many of those steep tariffs but issued new levies this week with an August 1 date for them to go into effect.
The CBOE Volatility Index, Wall Street’s “fear gauge,” closed on Thursday at 15.78, its lowest closing level in nearly five months, although it shiftd back above 16 on Friday.
While markets are less sensitive to headlines than a few months ago, “we will required some positive trade developments by the White Hoapply’s August 1 deadline to hold recent equity market gains,” Citi strategist Scott Chronert stated in a note on Friday.
The current weighted average tariff in the U.S. is about 16%, up from 2.5% at the start of the year, UBS economists stated on Friday. The rate would rise to about 18%, including the countest tariffs announced in this week’s letters, UBS stated in a note.
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