Risk of more market volatility as Trump's tariff deadline looms

Analysts concerned over deals with consequential trading partners such as EU, Japan

- Ovais Subhani

The three-month race to close trade deals with the US may end for some countries by July 9, but analysts worry that this will still not bring calm to markets, which have been struggling to mitigate the impact of tariffs on trade and economic growth.

US President Donald Trump indicated on July 4 that he had signed letters to 12 countries outlining various tariff levels, with the "take it or leave it" offers to be sent out from July 7.

While more trade deals are likely to be announced before the July 9 deadline when the 90-day pause on Mr Trump's reciprocal tariffs expires for all trade partners, except for China, most countries including Singapore will fall in the 10 per cent baseline tariff category.

However, analysts are concerned about the fate of deals with the more consequential trading partners such as the European Union, Japan, South Korea, Thailand and Malaysia—all key trading partners of Singapore.

The recent deal with Vietnam—the main hub in the region for the so-called China-plus-one investments—shows that even a negotiated settlement may leave countries with higher tariffs than the 10 per cent baseline.

Stocks across Asia were a tad lower at noon on July 7, with Japan's Nikkei 225 index down 0.38 per cent, Hong Kong's Hang Seng 0.45 per cent lower and Bursa Malaysia off by 0.83 per cent.

Singapore's Straits Times Index was up 0.3 per cent, but the Singapore dollar was down 0.2 per cent versus the US dollar. The greenback was also up against the Japanese yen, the euro and the Korean won.

Mr Chetan Seth, Asia equity strategist at Japanese investment bank Nomura, said: "We expect markets to be volatile into the July 9 deadline."

He said the near-term outlook for markets in the region will likely hinge on several key factors, including which trading partners get the letter and which ones make a deal or get more time to negotiate.