Tariffs are back, dragging Asia and Europe into the red

New trade developments have pushed major Asian markets into the red for the sixth consecutive session and are poised to do the same to Europe. Faced with his own deadline for a series of"reciprocal" tariffs, Donald Trump has decided to postpone—once again—the effective date, now targeting next week, August 7th. But the decree brings more news: the 15% tariff is presented as the new minimum for countries with which the United States considers itself to have a trade deficit, while countries with which Washington has a trade surplus will face a 10% tariff.

Canada and Taiwan were also in Trump's sights. The US president toughened the narrative surrounding Canada, increasing tariffs from 25% to 35%—claiming that the country had not cooperated in stopping the continued flow of fentanyl and other drugs and had retaliated against the US—while a 20% tariff (albeit temporary) was reserved for the Asian nation.

"This announcement brings clarity on paper, but uncertainty in practice," Charu Chanana, chief investment strategist at Saxo Markets, began by explaining to Bloomberg."Although the markets now know the numbers, the lack of a clear structure behind these tariffs — with seemingly arbitrary rates — only reinforces the sense of political unpredictability. This makes things even more difficult for companies and investors, who lose some room for maneuver," he concluded.

In a more adverse context in terms of tariffs, Asian markets turned red, with South Korea leading the losses. The Kospi plunged 3.5%, its worst session since April, as the country's government prepares to raise corporate taxes and investors seize the opportunity to cash out.

In China, Hong Kong's Hang Seng fell 0.8% and the Shanghai Composite dropped 0.4%. In Japan, the broad-based Topix managed to finish afloat, with gains of 0.25%, but the select Nikkei 225 was dragged into the red and closed down 0.6%. In a particularly difficult week for Asia, the MSCI AC Asia Pacific (an index that aggregates a series of listed companies in the region) posted a negative balance of 2.2% - the worst performance since Trump's tariffs sent shockwaves through the markets in April.