Last week, there was mostly positive sentiment around the possibility that the Trump Administration would extend the deadline for imposing large tariff increases on certain countries from 9 July to 1 August. However, this optimism was reversed on Friday when Trump announced that he might proceed with significant tariff increases on several countries if they do not agree to limit their trade surpluses with the United States by that date.

This theme is likely to dominate the coming week, especially following threats over the weekend to impose 30% tariffs on Mexico and the EU and 35% on Canada. The EU has pulled back on retaliating immediately, which might mitigate some of the adverse reaction in the short term. Domestically, the Rand has been driven downwards by the fear of the imposition of these high tariffs, together with internal concerns regarding the country’s crime-fighting institutions.