"Trump Threatens Tariffs on August 1, But Why is the Market Calm?"

White House: "Taco is Nonsense... Countries and Companies Are Adapting to Absorb the Impact"

Wall Street Consensus: "In the End, He'll Postpone Again"

New York Stock Exchange (New York, Reuters=Yonhap News File Photo) Traders work at the New York Stock Exchange (NYSE) on July 1, 2025. (REUTERS/Jeenah Moon/File Photo) 2025.7.25.

(Seoul=Yonhap News) Reporter Lim Hwa-seop = Despite US President Donald Trump's threat to impose high "reciprocal tariffs" starting August 1 on trade partners who have not reached trade agreements, financial markets remain calm. The White House and Wall Street offer differing analyses on why, reported US CNN on the 24th (local time).

According to CNN, the Trump administration's second term has only reached trade agreements with six countries: the United Kingdom, China, Indonesia, Vietnam, the Philippines, and Japan.

The Trump administration has announced that if agreements are not reached with remaining countries, including South Korea, the European Union (EU), and India, high "reciprocal tariffs" will be imposed starting August 1.

If the Trump administration actually pushes forward with this plan, there are concerns of disruption to global supply chains, retaliatory measures, a stalemate in international trade, rising prices, and widespread shockwaves throughout financial markets.

When President Trump announced the plan to impose high reciprocal tariffs in April, it caused significant turmoil in the US Treasury and stock markets. Feeling the pressure, the Trump administration postponed the implementation a few days later.

Since then, a pattern of alternating announcements of pushing forward with tariffs and postponing them has repeated, leading to the popularization of the term "TACO" on Wall Street.

This stands for "Trump Always Chickens Out."

With the deadline set by the Trump administration for imposing tariffs just over a week away, and US markets thriving with the S&P 500 and Nasdaq indices closing at record highs on the 23rd, there is an analysis that the market anticipates the high tariffs will not actually be imposed.

This view suggests that the Trump administration will either finalize trade agreements with major trading partners like the EU by the August 1 deadline or extend the deadline again to continue negotiations.

However, close associates of President Trump argue that the market's stability is not due to "TACO." They contend that President Trump's tariff policies are proving effective and benefiting the US economy.

A White House official told CNN, "It's absolutely not because of nonsense like TACO," adding, "(Domestic and foreign companies and trade partners) know that the President of the United States is serious about this issue, so they are making adjustments to their business models and supply chains to absorb (the tariff shock)."

Kush Desai, a White House communications staffer, stated in a statement to CNN that the effectiveness of tariffs, as claimed by President Trump, has proven to be correct, and that "pessimistic predictions of recession and inflation" have not materialized.

Sarah Bianchi, a former trade official during the Biden administration who now holds a senior position at the investment bank Evercore ISI, presented a contrasting view.

She said, "They (companies and investors) do not believe he is serious (about imposing tariffs)," and warned that if the Trump administration genuinely attempts to implement the threat of high reciprocal tariffs, the market will suffer a significant blow.

solatido@yna.co.kr

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