What Happens After Trump’s 2025 Tariffs Go Live? 

The 1 August deadline has passed, but the real shake-up begins at midnight on 7 August 2025. That’s when President Trump’s sweeping new tariff regime officially kicks in.  

A 10% global baseline now applies to most imports, with elevated rates of up to 50% targeting nations with large trade surpluses against the US ^[1]. The White House frames it as a bold step to fix trade imbalances and revive US manufacturing.  

But global markets are on edge, and key allies, like Canada, are already warning of retaliation. While some–like the EU, Japan, and South Korea–secured partial relief, others weren’t so lucky. 

With tariffs about to reshape trade flows, we break down what’s been implemented, who got a deal, how markets are reacting, and what it all means for investors and the future of global commerce. 

Key Points 

• As of 7 August 2025, President Trump’s global tariff regime is fully in effect—impacting imports from dozens of countries, with rates as high as 50%. 
• Global equities tumbled and bond yields fell as investors priced in slower growth, higher inflation, and a likely Fed rate cut. 
• The tariffs mark a structural shift towards protectionism, with long-term risks including economic fragmentation, supply chain realignment, and rising consumer prices. 

What Tariffs Have Been Implemented? 

President Trump’s aggressive tariff regime began with sweeping changes earlier this year and escalates further on 7 August  2025, when the final phase kicks in.  

Below is a quick snapshot of how it unfolded. 

Date	Event
12-Mar-25	Steel & aluminium tariffs (25%) under Section 232 implemented.
2-Apr-25	Trump proclaims “Liberation Day”; announces 10% baseline tariff.
3-Apr-25	25% auto tariffs imposed (parts exempt if assembled in US).
5-Apr-25	Customs begins collecting 10% tariffs on general imports.
4-Jun-25	Steel/aluminium tariffs double to 50% for most foreign goods.
31-Jul-25	50% tariff on unrefined copper announced; refined copper exempted.
7-Aug-25	Country-specific reciprocal tariffs take effect.

List of countries with the tariff rate imposed 

Country/Region	Tariff Rate	Notes / Exemptions
Canada	35%	Exempts energy, potash; covers ~$9.6B trade.
Brazil	40%	Excludes orange juice, Embraer aircraft.
India	25%	Partly tied to BRICS and Russia trade links.
Switzerland	39%	Affects ~$37B in trade.
Taiwan	20%	Covers ~$35B in goods.
Vietnam	20%	Applied via bilateral trade framework.
Thailand, Malaysia, Indonesia, etc.	19–20%	ASEAN group: tariffs vary by trade flow and bilateral talks.
South Korea	15%	Reduced after auto and parts concessions.
European Union	15%	Reduced for autos, semis, and pharma; metals excluded, still face high tariffs.
China	10%	Base tariff only for now; sector-specific levies under discussion.
All other non-exempt nations	10%	Default “reciprocal tariff” rate applies.

This tariff regime marks one of the broadest trade interventions in modern US history, targeting allies and rivals alike, with some countries negotiating partial reprieves while others absorb the full impact. 

Which Countries Have Received an Extension? 

While most countries face the full weight of President Trump’s new tariff regime, a select few have managed to negotiate limited relief, at least for now.  

The European Union (EU), Japan, and South Korea secured reduced auto and parts tariffs in the 12.5% to 15% range, in exchange for pledges to increase investment and open their markets further to US goods ^[3,4,5]. These deals helped them avoid the harsher 25% rates originally proposed, especially on automotive exports. 

Mexico received a 90-day reprieve from the 7 August implementation, giving both sides time to renegotiate USMCA terms. Tariffs on Mexican goods are now set to begin on November 1, unless a new deal is reached.  

Vietnam and Indonesia also negotiated partial relief, with tariff rates capped between 15% and 20% ^[6]. These were contingent on commitments to improve trade transparency and reduce transshipment risks.  

In contrast, most other countries, including India, China, and Taiwan, remain fully exposed, with no exemptions or extensions granted at this time. 

What’s Next? Tariff Scope May Expand 

While the current focus is on industrial goods, automobiles, and metals, the Trump administration has hinted at expanding the tariff regime further. Ongoing investigations are underway into several critical sectors, including: 

• Semiconductors 
• Pharmaceuticals 
• Critical minerals (such as rare earths and lithium) 
• Timber and lumber 
• Heavy trucks and aircraft engines 

Depending on the findings, these categories could see new tariff rounds before year-end, potentially impacting key trading partners like Germany, Canada, Australia, and Southeast Asian economies with large electronics or pharma export sectors. 

Market Reactions Across Asset Classes 

The global financial markets are already feeling the tremors of President Trump’s tariff regime, even before the 7 August implementation date. 

On 1 August, US stock market suffered their sharpest single-day losses since May, as a weaker-than-expected July jobs report (only 73,000 new jobs added) collided with growing trade tensions ^[7].  

Investor sentiment soured further as concerns grew over higher input costs, global supply chain disruptions, and slower earnings growth, particularly for tech, automotive, and export-heavy sectors.  

Global markets mirrored the pain: the MSCI World Index dropped in tandem, while major European and Asian indices also closed lower, reflecting a synchronised “risk-off” move by institutional investors. 

Here is a look at the overall global stock market performance over the last week (28 July to 1 August).  

Index	Index (1 August 2025)	% Change Weekly
US
Dow Jones Industrial Average	43,588.58	-2.92
NASDAQ 100 Index	22,763.31	-2.19
S&P 500 Index	6,238.01	-2.36
Europe
Euro Stoxx 50	5,165.60	-3.49
DAX	23,425.97	-3.27
FTSE 100	9,068.58	-0.57
CAC 40	7,546.16	-3.68
Asia
Nikkei 225	40,799.60	-1.58
Hang Seng	24,507.81	-3.47
CSI 300	4,054.93	-1.75
India NIFTY 50	24,565.35	-1.09
KOSPI	3,119.41	-2.40
MSCI Singapore	421.05	-2.76
SET	1,218.33	0.10
Jakarta Composite Index	7,537.77	-0.08
FBM KLCI	1,533.35	-0.03
Bloomberg World	2,131.87	-2.51

Meanwhile, there is also an acceleration of flight to safety amid poor employment data and rising trade barriers in the US. The 10-year yield fell to around 4.22% while the 2-year yield saw a decline to around 3.7%.  

Markets are now pricing in a 90% chance of a Fed rate cut in September, as policymakers face renewed downside risks to growth. In line with the risk-off mode, oil markets retreated. This was compounded by an unexpected OPEC+ production hike, which weighed on energy sentiment.  

Safe-haven flows boosted gold prices and the Swiss franc, as investors sought shelter from escalating volatility. Meanwhile, the US dollar weakened further as interest rate expectations shifted towards a dovish tilt.  

Long-Term Implications for Global Trade 

President Trump’s 2025 tariff regime is not just rattling markets. It is setting the stage for a fundamental shift in global commerce. The long-term implications, as economists now warn, go well beyond short-term disruptions.  

According to Bloomberg Economics, the US economy could shrink by up to 1.8% over the next two to three years, while core inflation is expected to rise by 1.1% as companies pass on higher import costs to consumers ^[8]. 

These projections reflect the cumulative impact of both the 10% global baseline tariff and the steeper country-specific levies, some reaching as high as 50%. The average effective tariff rate in the US has surged to 13.3% as of early August 2025, marking the highest level in nearly a century.  

By historical standards, this puts the current trade environment on par with levels last seen during the 1930s Smoot-Hawley era. Other studies reinforce these concerns. A separate analysis by the Yale Budget Lab projects that the 2025 tariffs will lower US GDP by 0.9% in the first year, with a long-run contraction of 0.6% relative to baseline forecasts.  

Consumer prices are estimated to rise by a cumulative 2.3% from the full suite of tariff measures enacted so far ^[9]. 

Global repercussions are already in motion. Countries like India, Brazil, and the EU have signaled that retaliatory tariffs are in the pipeline, further amplifying trade tensions.  

At the institutional level, the World Trade Organisation’s dispute resolution system, already struggling to keep up with cases, faces growing skepticism about its ability to effectively mediate rising conflicts.  

Strategically, economists warn that this could accelerate a shift toward regional trade blocs and economic fragmentation. With traditional supply chains unraveling and new barriers emerging, multinationals may pivot toward “friendshoring” or regional realignment, producing closer to consumer markets or within allied economies. 

What This Means for Traders and Investors 

With President Trump’s 2025 tariff regime now active and the 7 August reciprocal duties poised to hit dozens of trade partners, investors face a very different global landscape.  

Indeed, it’s one where tariffs are no longer short-term political noise but structural features of the market environment. The ripple effects are already visible across asset classes, and Many investors are reassessing their positions in light of the new trade landscape. 

1. Equities: Mind the Earnings Risk 

For equity investors, the clearest short-term risk lies in earnings downgrades across import-intensive sectors. Retailers, automakers, electronics manufacturers, and industrial firms with global supply chains are particularly exposed.  

Companies that source heavily from Asia, especially those now facing 20%+ import duties, could see margins squeezed. Tech, consumer discretionary, and even segments of healthcare reliant on imported pharmaceuticals or components are under pressure.  

Analysts have started revising forward guidance, and volatility around upcoming earnings reports is expected to rise sharply.  

Some analysts note that US-focused manufacturers may be less exposed to foreign input costs and tariffs. Firms tied to domestic infrastructure, local production, and industrial automation may benefit from investment tailwinds and government incentives aimed at rebuilding self-sufficiency. 

2. Fixed Income: Inflation Hedges Back in Focus 

With Bloomberg Economics projecting that tariffs may add up to 1.1% to core inflation, bond markets are already pricing in elevated expectations for Fed easing, but with more uncertainty around timing and magnitude.  

This environment favours inflation-linked bonds (TIPS) and sectoral credit exposure to US-centric plays. Some market participants are watching shorter-duration instruments and high-yield segments more closely in this environment. 

3. Commodities: Volatility Creates Trading Windows 

Copper, aluminum, and agricultural commodities have been hit hard by the new tariff structure—particularly as 50% duties on non-refined copper and expanded metal levies took effect. The volatility has led to significant price movements that traders are closely monitoring.  

Copper, for instance, plunged sharply on the NYMEX after the exemption for refined metal was announced, creating wide spreads and arbitrage potential.  

Hedging strategies and options around agricultural inputs, energy, and industrial metals are becoming essential as supply chains adjust and protectionist policies distort pricing dynamics. 

4. Currencies: Defensive FX Moves Dominate 

The foreign exchange market’s reaction to the tariff rollout has been swift. As US equities slumped and inflation expectations climbed, the dollar weakened, but safe-haven currencies like the Japanese yen (JPY) and Swiss franc (CHF) surged on risk-off sentiment.  

Looking forward, FX traders are watching for capital outflows from emerging markets exposed to higher US tariffs, particularly Southeast Asia and Latin America.  

With the Fed now expected to respond with a more dovish policy heading into the next FOMC gathering in September, tactical positioning in USD-JPY, USD-CHF, and even EUR pairs could offer strong relative returns. 

Sectors to Watch 

Note: Any sectors mentioned are provided strictly for informational purposes. References to these instruments do not represent a recommendation to buy, sell, or trade them through CFDs or any other financial product. They should not be interpreted as investment advice or a personal endorsement of any asset. 

Potential Winners	Potential Losers
US Manufacturing – Reshoring policies may increase demand for local production, automation, and robotics.	Export-Dependent Emerging Markets – Higher tariffs could affect competitiveness for Vietnam, Thailand, India, etc.
Infrastructure & Construction – “Made in America” push and stimulus spending benefit local builders and suppliers.	Global Industrials & Auto – High foreign input content leads to margin pressure in auto, semiconductors, and machinery.
Defense & Aerospace – Rising geopolitical tensions and industrial policy support domestic defense supply chains.	Consumer Goods – Import-heavy companies (e.g. apparel, electronics) face higher costs and squeezed margins.
Supply Chain Software & AI – Tools that optimize logistics and ensure tariff compliance see rising demand.

A Trade Shock or Just the Beginning? 

The tariffs taking effect this August are not a one-off policy move. They mark a structural shift in how global trade is governed, taxed, and politicised.  

With US tariff rates hitting highs not seen since the 1930s, retaliatory threats building, and global supply chains under renewed pressure, we may be witnessing the dawn of a new trade regime, one defined by fragmentation, protectionism, and industrial self-reliance. 

Many investors are calling this the death-knell for globalisation or simply “deglobalisation”. For investors and traders, this is more than noise. It’s a wake-up call. Many market participants are reassessing their exposure and monitoring policy developments closely.  

Whether this turns out to be a temporary jolt or the first chapter of a long-term realignment depends on how markets, policymakers, and businesses respond. 

Reference