From the Desk

Market insights from our investment teams

Week of  July 7, 2025

Dec Mullarkey

Managing Director, Investment Strategy and Asset Allocation
LinkedIn

This week saw a step up in sectoral and country tariff threats. The White House proposed 50% on copper, 50% on Brazil and 200% on pharmaceuticals. This new phase is in addition to the unresolved reciprocal tariffs that have seen multiple pauses as negotiators toil over details. Given the highly transactional and material swings in tariff proposals so far, it would be easy to assume that markets eventually become more tempered toward new announcements. But the evidence from this week is that markets remain alert and nuanced in their response.

The proposed 50% on copper saw the prices of U.S. copper futures spike. This was moderated somewhat by a U.S. copper inventory build up to a near decade high, as the industry anticipated some of the risk. The adverse price reaction was limited to the U.S. as copper futures on the London and Shanghai metals exchanges were down, suggesting more global supply would avoid the U.S. and flow toward these international markets.

The suggested 50% tariff on Brazil is not related to trade but rather a political difference. Unlike with most countries, the U.S. runs a trade surplus with Brazil. The emerging market sends a lot of commodities to the U.S., with coffee being one of the most prominent. With U.S. coffee inflation already in double digits, this isn’t a great time to pinch the U.S. consumer. For now, the main market reaction has been a rise in coffee futures prices and a weaker Brazilian real.

Finally, the 200% tariff on all pharmaceutical imports was generally shrugged off. The stock prices of some European pharmaceuticals initially dropped but quickly recovered. Key suppliers in India also showed little market reaction. Market analysts determined that relocating overseas capacity would take a long time. And given already high U.S. sensitivity to drug prices, any hike would ignite a major domestic pushback. So, the moral of the story is, markets are still hyper alert to tariff moves and scoring every step.

Sources: Bloomberg, Financial Times, 2025. 

The information may include statements which reflect expectations or forecasts of future events. Such forward-looking statements are speculative in nature and may be subject to risks, uncertainties and assumptions and actual results which could differ significantly from the statements. All opinions and commentary are subject to change without notice. SLC Management is not affiliated with, nor endorsing, any third parties mentioned within this article.

Market insights are based on individual author opinions and market observations. SLC Management investment teams may hold different views and/or make different investment decisions. These are observations only and are not intended to provide specific financial, tax, investment, insurance, legal or accounting advice and should not be relied upon and does not constitute a specific offer to buy and/or sell securities, insurance or investment services. Investors should consult with their professional advisors before acting upon any information posted here. 

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