Stocks brush off Trump's 30% tariff threat on EU and Mexico

Global stock markets showed resilience on Monday despite US President Donald Trump’s threat to impose 30% tariffs on the European Union and Mexico starting August 1.

While the announcement initially caused a dip in US stocks, markets quickly recovered, with the Nasdaq hitting a new record high. Analysts say investors largely viewed the threat as a negotiating tactic rather than a concrete policy shift.

“The market is betting that by August 1st these tariffs are not going to be implemented at these levels,” said Peter Cardillo of Spartan Capital Securities.

European indices mostly closed lower, though without major losses. London’s FTSE 100 bucked the trend, posting gains. In Asia, most markets closed down—except for Shanghai and Hong Kong, which managed to edge higher.

“Markets see this as typical Trump brinkmanship—loud threats to force concessions,” said Stephen Innes of SPI Asset Management. Kathleen Brooks of XTB echoed the sentiment, adding that financial markets are treating the move as a bluff rather than a concrete plan.

However, some analysts warned of real risks. “There remains the genuine risk that, to save face, he may activate the high tariffs,” said Kim Heuacker of Camarco.

In response, the EU is preparing potential countermeasures targeting $84 billion (€72 billion) worth of US goods if negotiations break down, according to EU Trade Commissioner Maros Sefcovic.

Meanwhile, attention shifted to other developments:

Bitcoin hit a record high above $123,000 amid hopes for favorable US crypto regulations.

Oil prices initially rose on fears of supply disruptions from proposed sanctions on Russia's trade allies but later fell on worries of a wider trade war that could hurt global demand.

Trump also warned of "very severe tariffs" on Russia’s trade partners if Moscow fails to end the war in Ukraine within 50 days.

Investors are also looking ahead to upcoming earnings reports from major US banks like JPMorgan Chase and Bank of America, which will provide insight into consumer strength and business conditions.

Key US economic indicators—including June consumer price and retail sales data—are also on the radar, as markets gauge the timing of potential Federal Reserve interest rate cuts, with futures pointing to a possible move in September.

Market Snapshot (as of 2030 GMT)

Dow Jones: +0.2% at 44,459.65
S&P 500: +0.1% at 6,268.56
Nasdaq Composite: +0.3% at 20,640.33
London FTSE 100: +0.6% at 8,998.06
Paris CAC 40: -0.3% at 7,808.17
Frankfurt DAX: -0.4% at 24,160.64
Tokyo Nikkei 225: -0.3% at 39,459.62
HSI: +0.3% at 24,203.32
Shanghai Composite: +0.3% at 3,519.65
Euro/USD: $1.1670 (down)
Pound/USD: $1.3428 (down)
Dollar/Yen: 147.77 (up)
Brent Crude: $69.21 (down 1.6%)
WTI Crude: $66.98 (down 2.2%)