As the U.S. military conflict with Iran enters its sixth month, President Donald Trump has returned to a more familiar battlefield: global trade.
President Trump on Friday launched a new tariff blitz targeting 60 trading partners, including the European Union, China, the United Kingdom and Canada. The latest tariffs go into effect Friday at 12:01 a.m. ET, replacing the stopgap 10% basic tariff that expired on July 24, and range from 10% to 12.5%.
Market reaction was initially muted on Friday, with investors largely expecting new tariffs to be imposed given the expiration of previous tariffs. This is in contrast to the “shock and awe” approach that underpinned the significant “Liberation Day” levy announced in April 2025, which sent markets plummeting.
But investors and analysts say the circumstances surrounding the latest tariff push are markedly different this time around, landing in tougher global economic conditions than last year and backed by a different legal framework, potentially risking a permanent drag on the market.
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“The importance of this is two-fold,” said Emma Moriarty, portfolio manager at CG Asset Management.
“This not only demonstrates the Trump administration’s commitment to tariffs, but it also shows this commitment against the backdrop of global energy shocks and growing supply chain bottlenecks. It seems content to continue imposing new tariffs even if it worsens the domestic market. For markets, the impact should be clear. We must brace for an outcome of low growth and high inflation,” Moriarty said.
The move comes as global stock markets continue to grapple with the fallout from continuing hostilities in the Middle East, with oil prices rebounding above $100 this week as hopes for a negotiated ceasefire in the war continue to fade.
“While this result is not a complete shock to the market, sentiment is still dampened by renewed tensions between the U.S. and Iran and concerns about tech spending levels, which is another source of unwanted uncertainty,” said Russ Mould, investment director at AJ Bell.
The White House administration was expected to explore alternative routes to imposing new tariffs after the Supreme Court ruled in February that the previous tariffs were illegal. The new onslaught is being pursued under Section 301 of the Trade Act of 1974, with officials citing alleged forced labor practices as the reason for the new tariffs.
Specifically, countries that have implemented or have committed to bans will be subject to a 10% tariff, while those that are not will be subject to a 12.5% surcharge, which would affect 99.4% of U.S. imports.
Alan Siow, co-head of emerging corporate bonds at Ninety One Asset Management, said the White House appears to be adapting to these legal constraints and could be encouraged by limited retaliation and the lack of a clear spike in inflation.
“These latest tariffs appear to be an evolution of the initial tariff imposition,” Siou said, adding that he expects other countries to react more cautiously at first, holding off on escalation until the impact of the policy is clearer.
Will it be a permanent drag on the market?
Looking ahead, Martin Jacob, professor of accounting and management at Barcelona’s IESE Business School, said the reintroduction of tariffs signals the White House’s ambition to keep import tariffs a “permanent feature” of U.S. economic policy.
Jacob explained that as the expiry of previous interim measures approached, pressure mounted on the White House to establish a more permanent tariff regime. “The latest measures are therefore much more than just a short-term negotiation salvo,” he added.
Matthew Ryan, head of market strategy at global financial services firm Ebury, said the persistence of the new levy risked further perpetuating structural pressures for the market.
“After a short hiatus, the dreaded T-word is back on investors’ lips,” Ryan said. “Transitioning to Section 301 removes the legal weakness that allowed the Supreme Court to cancel previous import duties. Now that that legal escape is closed, markets may need to begin to frame tariffs as a structural drag on global growth, rather than a temporary risk to be negotiated out.”
Ryan added that the recent spike in oil prices has increased the likelihood that the Fed will raise interest rates later this year, and attention now turns to next week’s Federal Open Market Committee announcement. This marks a change from previous expectations that rates would remain stable until the end of the year before cutting in 2027, with Ryan expecting policymakers to keep the option of raising rates open.
