Tariffs Return: 90-Day Pause Ends - What Markets Need to Know
Arlan Suderman, Chief Commodities Economist at StoneX, outlines the implications of renewed US tariffs and ongoing trade negotiations.
Key Takeaways
US reinstates tariffs with potential 200% rates on key sectors
Commodity markets remain focused on fundamentals for now
USDA report expected to keep yield forecasts unchanged
New Tariffs Take Shape After Pause Expires
The 90-day pause on reciprocal tariffs ended at midnight on July 8, triggering a new round of trade tensions. Suderman noted that “they're off again”, with new tariffs set to take effect August 1 unless negotiations produce more deals. Secretary Bessent has requested more time to finalize agreements, with the UK and Vietnam already reaching terms. Equity markets continue to hover near record highs despite the announcements.
Global Negotiations Underway
Europe faces steep increases, including 50% tariffs on steel and copper and 25% on cars. The European Commission is pushing to secure a deal, potentially accepting a 10% across-the-board tariff. Canada and Mexico are also in talks, though their deals may be complicated by the future of the USMCA. India remains a focal point, especially following President Trump’s comments on targeting BRICS members with a 10% tariff. “India seems to be walking a fine line” observed Suderman, as it navigates risk management while signaling pro-American alignment.
Commodities Focused on Supply for Now
Despite the trade headlines, commodity markets are prioritizing seasonal and supply-driven fundamentals. “Right now, those commodity markets are trading as if everything's going to get worked out”, said Suderman. If Japan or South Korea were to retaliate with tariffs on energy, meat, or grain imports, export volumes could take a hit. For now, markets are watching crop progress and weather more than policy. Suderman added that China’s absence from US soybean purchases in July remains a concern, especially since the country typically accelerates buying during this period.
USDA Report Could Tighten Balance Sheets
Attention is also turning to Friday’s USDA WASDE report. Despite strong crop ratings, especially for corn, Suderman expects little change in yield forecasts. “USDA has never raised its soybean yield in the July report going all the way back to 1993”, he noted. While corn yields were occasionally raised between 1993 and 2003, that trend hasn’t continued. USDA may adjust acreage numbers, but major supply-side shifts are unlikely. On the demand side, a small increase in old crop corn exports could bring ending stocks near historically tight levels of 1.3 billion bushels.
Looking Ahead
“The Ags look to be facing this weather market going forward, which for the time being in negative”, states Suderman, but tariff outcomes could spark volatility across all commodity classes. He adds that market participants will monitor any late-hour extensions, the status of EU negotiations, and China’s appetite for concessions should trade pressure intensify.
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