Global Weekly Economic Update: Insights from Deloitte’s Latest Analysis
Week of July 14, 2025
Each week, Deloitte Insights and the Deloitte Global Economics Research Center provide a comprehensive overview of the latest global economic developments. Their research aims to help organizations translate aspirations into impactful strategies, drawing from proprietary data and expert analyses. This week, the focus lies on the surprising resilience of US equity markets amid renewed trade tensions, the implications of sustained tariff policies, and the broader economic outlook shaped by these dynamics.
US Equity Markets Defy Expectations Amid Trade War Uncertainty
Despite ongoing trade tensions and tariff announcements, US equity prices have exhibited a surprising robustness. Typically, trade conflicts and tariff increases can unsettle markets, but the equities have demonstrated resilience that has intrigued economists and investors alike.
Currency Dynamics at Play
One key factor behind this phenomenon is the depreciation of the US dollar. Economic theories generally predict a rise in currency value following tariff hikes; however, the opposite has occurred. Capital flight from the dollar has outweighed tariff effects, leading to currency weakness. This depreciation has boosted US exporters’ competitiveness and enhanced the dollar valuation of foreign earnings for US-based multinational companies, thereby supporting their stock prices.
Comparing Global Equity Performance
While US equities have rebounded sharply since a prior decline, closing the gap with European equities when measured in local currencies, evaluating European shares in US dollars reveals better performance overseas. This suggests that global investors retain a degree of skepticism about US economic prospects relative to Europe, likely fueled by ongoing trade policy uncertainties.
Investor Sentiment and Market Stability
Investor calmness is also reflected in credit markets. The spread between junk bonds and Treasury yields, which spiked in April due to trade worries, has reverted to levels last seen early in the year. This denotes a perception of only moderate risk despite the trade friction. The relative quiet since April has allowed investors to maintain composure, possibly buoyed by optimistic expectations surrounding the “One Big Beautiful Bill” and its potential corporate tax impacts.
The Renewed Trade War and Its Broader Economic Impact
Contrary to some hopes for a rollback, the US appears committed to maintaining elevated tariff rates. Recent trade agreements with countries like the United Kingdom, Vietnam, and China have not reversed the historically high tariffs, hinting at a new paradigm in America’s international trade relations.
Tariff Threats and Market Reactions
Notably, President Trump’s threats to impose a 200% tariff on pharmaceutical imports and a 50% tariff on copper elicited mixed market responses. While the US stock market largely shrugged off these announcements, copper prices surged by approximately 10% within days. Given copper’s critical role across numerous industries, such a substantial tariff could significantly raise production costs if implemented.
Investor Expectations on Tariff Rates
A recent poll of equity traders indicates optimism that post-August 1 average tariff rates will hover below 18%, close to current levels but still extraordinarily high on a historical scale. Fewer than 5% expect the rates to drop below 10%. The ongoing tariff variability—from threats to reversals—injects uncertainty that complicates business planning and investment decisions.
Economic Decision-Making in a Volatile Trade Environment
The unpredictable trademark of tariff announcements has likely led many companies to delay investments pending clearer policy direction. This hesitation could dampen business investment and slow economic momentum, even as financial markets remain relatively stable.
Past experiences highlighted a sharp market reaction when high tariff announcements caused the US equity market to drop sharply in April. That downturn prompted tariff postponements to facilitate further negotiations. With final tariff determinations expected soon, market participants should prepare for a potential change in sentiment.
Outlook: Navigating a Boundaryless, Complex Global Economy
Deloitte’s Chief Global Economist, Dr. Ira Kalish, underscores the complexity of the evolving landscape where economic indicators, trade policies, and investor behavior intermingle in unexpected ways. His insights stress the importance of understanding these multifaceted trends to guide strategic business decisions.
For detailed and personalized economic analyses, business leaders are encouraged to leverage Deloitte Insights, which offers a broad spectrum of research on topics like global trade, fiscal policies, consumer behavior, and industry-specific trends—all aimed at helping organizations navigate the uncertain and rapidly changing global economy.
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About Deloitte Insights
Deloitte Insights is a premier platform disseminating rigorous research and analysis focused on economics, technology, workforce trends, and industry developments, enabling organizations worldwide to make informed, data-driven decisions.
For further information and access to Deloitte’s full weekly economic updates, visit Deloitte Insights online. For direct contact with Dr. Ira Kalish, Chief Global Economist, please email [email protected].