Markets Slip as Trump Threatens New Tariffs Ahead of Deadline

U.S. equity futures declined and the dollar weakened after President Trump signaled a potential escalation in trade tensions, saying his administration may begin sending letters to trading partners outlining new unilateral tariffs as early as Friday.

“We’re probably going to start sending some letters out tomorrow—maybe 10 a day—to various countries explaining what they’ll have to pay to do business with the U.S.,” Trump told reporters Thursday, just days ahead of the July 9 deadline for trade negotiations.

Markets had been rallying, with the S&P 500 closing at a record high Thursday after a holiday-shortened session, up 26% from its April low. The rally was partly fueled by optimism that Trump had backed off his aggressive April 2 tariff proposal, which had pushed import duties to levels not seen in over a century.

But Trump’s latest remarks suggest that few, if any, trade deals will be reached before the deadline, renewing fears of heightened protectionism. Deutsche Bank strategist Jim Reid noted Trump floated tariffs between 10% and as high as 60–70%, potentially taking effect on August 1. “That kind of range has major economic implications depending on the country,” Reid said.

Though U.S. equity and bond markets are closed for Independence Day, futures are still trading. The E-mini S&P 500 fell 0.6% early Friday, as investors appeared to shrug off the passage of the GOP’s sweeping tax-cut bill.

The dollar also weakened, down 0.4% against the yen and 0.2% versus the euro.

Globally, markets were under pressure, particularly in economies more vulnerable to U.S. trade penalties. South Korea’s KOSPI dropped 2%, Germany’s DAX slipped 0.8%, and France’s CAC 40 fell 1% by midday in Europe.

“Risk appetite is fading fast,” said Kathleen Brooks, research director at XTB. “Trump appears to have walked away from negotiations, choosing instead to play hardball with trade partners.”

Concerns over slowing global trade hit commodities, with copper futures falling 1.7% and oil down 1.3%.

“Optimism is fading fast as the U.S. tariff deadline approaches,” said Susannah Streeter of Hargreaves Lansdown. “The signs point to steeper and broader tariffs than expected.”

Gold rose 0.2% to around $3,350 an ounce, while bitcoin slipped 0.5% amid the broader risk-off sentiment.