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- US: Trump postpones reciprocal tariffs, effectively extending negotiating window by another three weeks and reinforcing Powell’s “wait and see” stance
- ASEAN and India: Most ASEAN-6 countries received tariff letters except Singapore and India; regional central banks are likely to be cautious in 2H25
- Singapore: MAS is likely to defer its third easing to October after a hold in July; we revised down our average 2025 inflation forecast despite uncertainties
- Malaysia: BNM cut its OPR by 25 bps to 2.75% as expected; we anticipate further easing by end of 2025 to boost economic growth from tariff concerns
Related Insights
US: Trump delays reciprocal tariffs to 1 Aug with tariffs rates largely unchanged. Over the week, Trump sent letters to 21 countries, including Japan and emerging markets, informing them that the US would impose blanket tariffs close to the 2 Apr reciprocal tariffs on their exports to the US, effective 1 Aug. Trump has effectively extended the negotiating window by another three weeks, allowing countries to reach limited trade deals on America’s terms with concessionary tariff rates like those offered to Vietnam. He also threatened 50% tariffs on Brazilian goods and an additional 10% tariff on any country aligning with the “Anti-American” policies of the BRICS.
Compared to the 90-day tariff pause on 9 Apr, this shorter 24-day extension to 1 Aug does not necessarily ease global trade tensions. These written “take it or leave it” letters could be viewed as brinksmanship with compressed timelines, hardened positions, and unclear outcomes that reintroduce uncertainty and volatility. Furthermore, the new deadline remains subject to the legal challenges of the unresolved IEEPA tariffs (with a hearing on 31 Jul).
These letters do not resolve trade uncertainty and are likely to reinforce Fed Chair Jerome Powell’s cautious wait-and-see stance. There were no surprises from the FOMC Minutes for the 17-18 Jun meeting. With many Fed officials expecting tariff-driven inflation in the coming months, markets did not revive bets for a rate cut at the upcoming 30 Jul FOMC meeting. The market consensus expects next week’s CPI inflation to rise to 2.7% y/y (0.3% m/m) in June from 2.4% y/y (0.1% m/m) in May. Core inflation is also expected to increase to 3% y/y (0.3% m/m) from 2.8% y/y (0.1% m/m).
According to the minutes, Fed cuts are possible later in the year if the impact of tariffs on inflation proves temporary, as indicated by the steady readings in the New York Fed’s inflation expectations across the 1Y, 3Y, and 5Y horizons. The future market is keeping the door open for a 25 bps cut in September.
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