On trade, President Donald Trump said he reached a deal with Indonesia that will see goods from the country face a 19% rate, while US exports won’t be taxed. Trump also said he was likely to impose tariffs on pharmaceuticals as soon as the end of the month and that levies on semiconductors could come soon as well, suggesting that those import taxes could hit alongside broad “reciprocal” rates set for implementation on Aug. 1.
The President also predicted that he could strike “two or three” trade deals with countries before implementing his so-called reciprocal tariffs before they are implemented on Aug. 1, saying that an agreement with India was among the most likely.
Meanwhile, the Office of the US Trade Representative on Tuesday opened an investigation into Brazil over its trade practices. Trump had threatened a 50% tariff on the country.
The consumer price index, excluding the often volatile food and energy categories, increased 0.2% from May. While a decline in car prices helped keep a lid on the figure, goods categories exposed to Trump’s levies including toys and appliances rose at the fastest paces in years.
“While any tariff-induced boost to inflation is likely to be short-lived, with higher tariffs being announced, it would be wise for the Fed to remain on the sidelines for a few more months at least,” said Seema Shah at Principal Asset Management.
Meanwhile, Treasury Secretary Scott Bessent suggested that Fed Chair Jerome Powell should step down from the board when his term is up in May 2026. Late Tuesday, Trump said Bessent is “an option” for the Fed Chair post.
Traders this month have whittled the odds of Fed easing. Strong June employment data released July 3 led them to rule out a cut after the next meeting concludes July 30 and to downgrade the chances of a September cut, which was fully priced in as recently as late June.
