Key takeaways

• Uncertainty surrounding U.S. trade policy continues to build, with the fate of the Trump tariffs imposed under the International Emergency Economic Powers Act (IEEPA) still unresolved.
• Concerns around U.S. deficits and debts have bubbled up again, potentially impacting interest rates and the U.S. dollar.
• The U.S.-Iran conflict appears to be de-escalating, but the true extent of damage to Iran’s nuclear infrastructure and the potential for future escalation remain unclear.
• Equity markets have proven surprisingly resilient, but investors would do well to remain vigilant.
• The next few days will be critical in determining whether the ceasefire holds and whether tensions between the U.S. and Iran continue to de-escalate.

Trade tensions linger: Tariffs in limbo

Uncertainty surrounding U.S. trade policy continues to build, as the fate of the Trump tariffs imposed under the IEEPA remains unclear following a recent court ruling and subsequent stay. The back-and-forth between the administration and the courts has created a sense of policy limbo, leaving investors and businesses alike wondering what’s next.

The Trump Administration’s budget bill, which relies in part on tariff revenue to fund its spending packages, is under increased scrutiny, and concerns about the sustainability of the U.S. deficit and national debt continue to grow. The Congressional Budget Office (CBO) has estimated that the tariffs could reduce U.S. GDP growth by 0.4% in 2025 and 0.3% in 2026, while also increasing the national debt by $1.4 trillion over the next decade.[1]

These factors have combined to reignite long-standing debates over the appropriate levels of U.S. deficits and debt, which have been exacerbated in the post-covid era with deficits above 6%,[2] and forecasted to remain above 6%[3] for the next three years. These are often long-term, slow-moving forces, but they may be beginning to have more of an impact on the trajectory of interest rates and the U.S. Dollar.

For more on recent market performance, please see our latest Market Flash Report.

Iran conflict update: Ceasefire, but no end in sight

The U.S.-Iran conflict appears to be de-escalating, with both sides agreeing to a ceasefire that could bring an end to the conflict. While this development is a welcome respite from recent hostilities, the true extent of damage to Iran’s nuclear infrastructure and the potential for future escalation remain unclear.

Shipping traffic through the Strait of Hormuz has slowed, and oil prices have retreated from recent highs, but the situation remains fluid, and any breakdown in talks could reignite tensions.

For now, markets are taking a wait-and-see approach, but investors would do well to remain vigilant.

For further detail please see our full note titled Iran Conflict Update.

What’s next?

The next few days will be critical in determining whether the ceasefire holds and whether tensions between the U.S. and Iran continue to de-escalate.

Investors will also be keeping a close eye on the G20 summit in Osaka, Japan, where world leaders will gather to discuss a range of issues, including trade and global security.

Closer to home, economic data and corporate earnings will remain in focus given oscillating variables, while markets will be closely watching the Federal Reserve for any indication on the timing of the next interest rate cut.

Conclusion

The past month has seen no respite from global tensions, with ongoing trade policy uncertainty and a brief but intense conflict between the U.S. and Iran keeping markets on edge. While equity markets have proven resilient, the potential for a longer-term impact on the U.S. economy and markets remains unclear.

This is a summary of our report.