Why Trump’s new tariff blitz is different this time round
As the U.S. military conflict with Iran enters its sixth month, President Donald Trump has returned to a more familiar battleground: global trade.
Trump launched a new tariff attack on Friday targeting 60 trading partners, including the European Union, China, Britain and Canada. The latest wave of tariffs ranges from 10% to 12.5%, replacing a temporary 10% tariff that went into effect at 12:01 a.m. ET on Friday and expired July 24.
The market’s initial reaction on Friday was muted as the renewed tariff increase was widely anticipated by investors, given the looming expiration of previous tariffs. This contrasts with the ‘shock and awe’ approach that underpinned the sweeping ‘Liberation Day’ taxes announced in April 2025, causing markets to plummet.
But investors and analysts say the circumstances surrounding the latest tariff hike are markedly different this time, coinciding with a more challenging global economic landscape than last year and backed by a separate regulatory framework, potentially risking putting permanent pressure on markets.
An emboldened White House
“The importance this time is twofold,” said Emma Moriarty, portfolio manager at CG Asset Management.
“This not only demonstrates the Trump administration’s commitment to tariffs, but also demonstrates this commitment in the face of a global energy shock and increasing supply chain bottlenecks. They appear content to continue imposing new tariffs even if they aggravate domestic markets. The consequences for markets should be clear: we must position for an outcome of low growth and high inflation,” Moriarty said.
The measures come as global stock markets continue to grapple with the impact of ongoing hostilities in the Middle East, which has led to a rebound in oil prices. It has been hovering above $100 this week as hopes of negotiating a ceasefire in the war continue to fade.
“While the outcome will not be a complete shock to markets, it is still another source of unwelcome uncertainty as sentiment is shaken by the re-emerging conflict between the US and Iran and concerns about spending levels in the technology sector,” said Russ Mould, investment director at AJ Bell.
The White House administration was expected to seek an alternative path to a new round of tariffs after the Supreme Court ruled in February that the previous tariffs were illegal. The new offensive is being pursued through Section 301 of the 1974 Commercial Code, with officials citing allegations of forced labor as the reason for the new tariffs.
Specifically, countries that adopt or commit to bans will face a 10 percent duty, while those that do not will be subject to a 12.5 percent duty, with the duties affecting 99.4 percent of American imports.
Alan Siow, co-head of emerging corporate debt at Ninety One Asset Management, said the White House appears to be accommodating such regulatory restrictions and may be encouraged by the limited retaliation and lack of a clear inflation increase.
“These latest tariffs appear to be an evolution of the opening tariff salvos,” Siow said, adding that he expected other countries to initially respond in a more measured manner and reserved the increase until the potential impact of the policy became clear.
Is there a permanent drift in the markets?
Looking forward, the reintroduction of tariffs signals the White House’s ambition to maintain import duties as a “permanent feature” of U.S. economic policy, said Martin Jacob, professor of accounting and controls at the IESE Business School in Barcelona.
Jacob said previous temporary measures are approaching their expiration dates, putting pressure on the White House to establish more permanent tariff regimes. “The latest measures therefore represent more than just another short-term negotiating salvo,” he added.
Matthew Ryan, head of market strategy at global financial services firm Ebury, said the persistence of new taxes risked creating a more permanent structural pressure point for markets.
“After a brief hiatus, the dreaded T is back on investors’ lips,” Ryan said. “Moving to Section 301 removes the legal vulnerability that allowed the Supreme Court to strike down the previous round of import tariffs. With this legal escape hatch now closed, markets may need to start pricing tariffs as a structural drag on global growth rather than a temporary risk to be negotiated away.”
Ryan added that attention is now turning to the Federal Open Market Committee’s announcement next week, and the recent rise in oil prices increases the possibility that the Fed may raise interest rates later this year. This marks a departure from previous expectations that the rate would remain steady through the end of the year before a cut in 2027, and Ryan expects policymakers to keep the rate hike option open.
