Markets Aren't 'Panicking' Over Trump's Tariffs

US stock indexes held near their records Monday following President Trump's latest updates to his tariffs, as speculation continues that he may ultimately back down on them.

• The S&P 500 rose 8.81 points or 0.1%, to 6,268.56.
• The Dow Jones Industrial Average rose 88.14 points, or 0.2%, to 44,459.65.
• The Nasdaq composite rose 54.80 points, or 0.3%, to 20,640.33, a new all-time high.

Stock indexes fell in Europe but were mixed elsewhere in the first trading after Trump announced 30% tariffs on goods from Mexico and the European Union, the AP reports. They won't take effect until Aug. 1, which leaves time for more negotiations.

The latest postponements for Trump's tariffs allow more time for him to reach trade deals with other countries that could lower the tariff rates and prevent pain for international trade. They also feed into speculation that Trump may ultimately back down on his tariffs if they end up creating too much damage for the economy and for financial markets. If Trump were to enact all his proposed tariffs on Aug. 1, they would raise the risk of a recession. That would not only hurt US voters but also raise the pressure on the US government's debt level relative to the economy's size, particularly after Washington approved big tax cuts that will add to the deficit.

• "We therefore believe that the administration is using this latest round of tariff escalation to maximize its negotiating leverage and that it will ultimately de-escalate, especially if there is a new bout of heightened bond and stock market volatility," according to Ulrike Hoffmann-Burchardi, global head of equities at UBS Global Wealth Management.
• "As usual, there are many conditions and clauses that can get these rates reduced," said Brian Jacobsen, chief economist at Annex Wealth Management. "That's probably why the market might not like the tariff talk, but it's not panicking about it either."

The latest reading on inflation across the United States will arrive on Tuesday. Economists expect it to show inflation accelerated to 2.6% last month from 2.4% in May. Companies are also lining up to report how they performed during the spring. JPMorgan Chase and several other huge banks will report their latest quarterly results on Tuesday, followed by Johnson & Johnson on Wednesday and PepsiCo on Thursday. Fastenal, a distributor of industrial and construction supplies, on Monday reported a stronger profit for the latest quarter than analysts expected. Its stock rose 4.2%, though it also said that market conditions remain sluggish.