The tariff deadline is approaching, why do investors choose to turn a blind eye?

**Source: Wall Street Journal**

Global investors are greeting Trump’s tariff deadline with numbness and composure, as various moderate scenarios have already been priced in by the market.

According to *Global Times*, U.S. President Trump stated that starting July 4, the U.S. government would notify countries without trade agreements of new tariff rates, ranging from 10% to 70%, with implementation planned for August 1. This upper limit (70%) is significantly higher than the 50% announced in April.

The market has become more composed in its reaction to tariff news. Jeff Blazek, Co-Chief Investment Officer of Multi-Asset at Neuberger Berman in New York, noted that the market perceives the deadline as having enough "flexibility" and believes the worst-case scenario is no longer under consideration.

**Fluctuating Tariff Levels and Timelines**

Tariff levels and effective dates remain uncertain. Trump said last Friday that tariffs as high as 70% could take effect on August 1, far exceeding the previously announced range of 10%-50% in April.

So far, the U.S. government has only reached a limited agreement with the U.K. and a principled deal with Vietnam. Expected agreements with India and Japan have not materialized, and negotiations with the EU have also hit roadblocks.

Per *Xinhua News*, European Commission President Ursula von der Leyen stated that the EU aims to reach an agreement by July 9 and is "ready to strike a principled deal with the U.S." on tariffs. However, if talks fail, the EU will firmly adopt countermeasures to protect its economy.

Meanwhile, *Global Times* reported that Japanese Prime Minister Shigeru Ishiba has declared he will not "easily compromise" in tariff negotiations with the U.S. Japan is prepared for all possible tariff scenarios and will "resolutely" defend its interests while anticipating various outcomes.

Rong Ren Goh, a fixed-income portfolio manager at Eastspring Investments in Singapore, remarked that if April 2 was an earthquake, the tariff letters are merely aftershocks—even if rates exceed the initial 10%, the market impact won’t be the same. He pointed out that excess liquidity in the financial system and the painful experience in April remind investors that panic selling may force them to chase rebounds later.

**Dollar Under Pressure, Rate Expectations Adjust**

Investor attention has also been diverted by weeks of Congressional debate over Trump’s massive tax and spending bill, which was signed into law on Friday.

Stocks celebrated the bill’s passage, which made Trump’s 2017 tax cuts permanent. However, bond investors worry that the measures could add over $3 trillion to the U.S. national debt of $36.2 trillion.

Tariff-related inflation risks are pressuring U.S. Treasuries and the dollar, influencing Fed policy expectations. Rate futures show traders no longer expect a rate cut this month, with only two 25-basis-point cuts priced in by year-end.

The dollar’s safe-haven status has been shaken by tariff policy volatility. The dollar index posted its worst first-half performance since 1973, falling about 11%, with a 6.6% drop since April 2 alone.

John Pantekidis, Chief Investment Officer at TwinFocus in Boston, noted that the market is pricing in expectations of 35%, 40%, or higher tariff levels, alongside a baseline assumption of around 10% across-the-board tariffs. He remains cautiously optimistic about U.S. equities but is closely monitoring interest rate movements.

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