Trump Trade War: BRICS Tariff Threats Weigh on DAX, Euro Stoxx, and S&P 500

The global trade environment is facing renewed pressure as US President Donald Trump intensifies tariff threats ahead of a key deadline. His aggressive stance toward BRICS-aligned nations is expected to send shockwaves through major global indices, including the DAX index, Euro Stoxx 50, and S&P 500. As investors digest the implications of rising protectionism, the markets brace for increased volatility. The latest developments in US trade policy are fueling concerns over global supply chains, equity performance, and investment flows.

Trump’s Tariff Letters Target BRICS-Aligned Nations and Raise Global Trade Tensions

President Trump has reignited tariff tensions by targeting nations that, according to him, align with the “anti-American” policies of the BRICS group. Specifically, in a social post on Sunday, Trump confirmed that the US will impose an additional 10% tariff on any such country. However, while he did not specify which policies he referred to, the scope of the threat is broad. Currently, the BRICS group comprises Brazil, Russia, India, China, and South Africa, along with ten partner countries, including Vietnam and Nigeria.

The timing of the threat adds to market stress. The 90-day pause on tariffs is set to end this Wednesday. Trump confirmed that letters would be sent to dozens of countries starting on Monday, July 7. These letters outline duty rates and trade terms. The message is clear: countries that fail to reach agreements could see tariffs revert to the levels of 2 April. According to Treasury Secretary Scott Bessent, tariffs could range from the current 10% baseline to as high as 70%, though key partners are unlikely to face the maximum rate. The increased tariffs may have a significant impact on global inflation.

The chart below shows that the annual inflation rate in the US rose for the first time in four months, reaching 2.4% in May 2025.

Meanwhile, US producer prices edged up by 0.1% month-over-month in May 2025, following an upwardly revised 0.2% decline in April.

On the other hand, Trump has announced trade deals with only three countries. The UK retained its 10% tariff. China saw a temporary cut in duties from 145% to 30%. Vietnam accepted a minimum tariff of 20%. Meanwhile, around 100 letters will go out to countries with low trade volumes, mostly retaining the 10% rate.

Geopolitical Risks and Tariff Deadlines Fuel Volatility in Global Equity Markets

The recent escalation poses a significant risk to global market stability. During a summit in Brazil, BRICS leaders issued a joint statement. They expressed concern over “unilateral tariff measures.” The group also condemned recent US military actions in Iran. Additionally, they voiced support for increasing the use of local currencies in international trade.

China responded by reaffirming its opposition to tariff wars, emphasizing that coercive trade policies benefit no one. These evolving geopolitical developments, coupled with President Trump’s 1 August deadline for revised tariff rates, present renewed challenges for global equity markets.

DAX Index Presents Bullish Patterns and Rising Volatility

The daily chart for the DAX Index shows that the price is trading within an ascending broadening wedge pattern. Furthermore, the emergence of an inverted head-and-shoulders pattern within this structure indicates bullish price action. In August and September 2024, a breakout from the 18,900 level led to a strong surge. Currently, the index is approaching the resistance of the ascending broadening wedge. Meanwhile, the ongoing trade uncertainty has contributed to heightened volatility in the DAX Index.

Euro Stoxx 50 Eyes Breakout

The daily chart for the Euro Stoxx 50 shows that the index is forming a bullish price action. The inverted head-and-shoulders formation supports this bullish price action. However, the index is consolidating below the neckline, indicating uncertainty. A move above 5,000 would likely initiate a strong surge in the Euro Stoxx 50.

S&P 500 Breaks Record Highs

The weekly chart for the S&P 500 indicates that the index has surpassed its previous record level and, as a result, initiated a strong surge. At the same time, the index is currently moving to the resistance of a broadening wedge pattern. Notably, this pattern had previously formed after an inverted head and shoulders breakout above the key level, further indicating bullish price action.