The clock is running out on key trade deadlines, but investors have resigned themselves to negotiations that will likely continue over the long haul as equities trade at all-time highs. The 90-day reprieve from President Donald Trump’s “reciprocal” tariffs on most U.S. trading partners ends on Tuesday. The deadline for the U.S. and the European Union to reach a deal to prevent a 50% levy on EU imports is also set to end Wednesday. But most investors are expecting the Trump administration will likely roll forward negotiations. In recent days, the White House called the July trade deadlines “not critical,” adding to confidence the administration isn’t planning on implementing the most draconian tariffs it announced back in April. Investors are awaiting news out of ongoing discussions with the European Union, Japan and India, among others. Meanwhile, the 90-day reprieve for China, a major question for investors, isn’t set to end until August. “I think that that’s probably the most likely course,” said Thomas Browne, portfolio manager at Keeley Teton Advisors. “We may get an announcement here or there, but I think by and large, I would not look for things to be settled completely.” .SPX YTD mountain S & P 500, year to date Stocks ended the shortened trading week Thursday with solid weekly gains that lifted the S & P 500 and Nasdaq Composite to fresh record highs. Both benchmarks advanced more than 1.5%, while the Dow Jones Industrial Average climbed over 2%. Still, the expectation remains that the equity market will get more rocky as the deadlines approach, especially if investors are underestimating Trump’s willingness to put into effect sharper levies. Many are confident the effective tariff rate will wind up somewhere closer to 10%, a historically high level that nevertheless is better than a rate north of 25% that investors fear would result in outright recession. Coming into the year, the effective tariff rate had averaged 2.5%. “The markets are now going to focus on July 9, because that’s where we’re going to get the revelation around the different tariffs,” Rick Rieder, chief investment officer of global fixed income at BlackRock, told attendees at the Morningstar Investment Conference in Chicago on June 25. “People think it’s going to be 10% tariffs, I think, are underestimating. I think it’s going to be 15%.” In particular, the Vietnam agreement this week added to those worries of higher tariffs. The 20% duty the U.S. will apply to Vietnamese imports is below the 46% rate Trump originally proposed in April, but higher than the hoped for 10% baseline. That could be worrisome for future deals with other emerging markets nations. “What we learned from the Vietnam deal is, if anything, the tariffs are going to go up from here , not down,” Sebastian Raedler, head of European equity strategy at Bank of America, told CNBC’s “Europe Early Edition” on Thursday. Meanwhile, other deals that have been struck are hardly frameworks for future agreements. In May, the U.S. reached a deal with the U.K. that will keep a 10% tariff on U.K. imports, a deal one expert called a “small win” given that the U.S. already has a trade surplus with the nation. That will make it hard to replicate with countries where America has a large trade deficit. To date, trade arrangements around the world are at various stages of completion. CNBC reported Wednesday that European officials are now saying their best hope is for striking a “political” deal before the July 9 deadline, which can then be worked out at a later stage. Still, so long as tariffs are not so high they will lead to outright recession, the consensus goes that the equity market can absorb steeper tariffs — even if the broader economy struggles. BlackRock’s Rieder, for example, said a higher tariff rate would further erode the U.S. dollar and add to near-term inflation pressure. Nevertheless, he remains confident the stock market will quickly move past any volatility. Stocks could also get a boost from Trump’s federal spending bill if it passes. The bill, which has returned to the House after passing the Senate Tuesday , is up for a final vote before heading to the president’s desk. Even so, investors are starting to get more worried about the stock market over the near term. Many are pointing out that the S & P 500, which has returned to record highs, is now fairly valued at a time when event-driven risks have yet to abate. The broader index is trading at 23 times forward earnings. Barclays strategist Stefano Pascale this week was one of several warning clients about “froth” in the market. Week ahead calendar All times ET. * July 8-9 Tariff deadlines Monday, July 7 Tuesday, July 8 6 a.m. NFIB Small Business Index (June) 3 p.m. Consumer Credit (May) U.S. Treasury Auction 3-year note Wednesday, July 9 10 a.m. Wholesale Inventories final (May) 2 p.m. FOMC Minutes U.S. Treasury Auction 10-year note Thursday, July 10 8:30 a.m. Continuing Jobless Claims (06/28) 8:30 a.m. Initial Claims (07/05) U.S. Treasury Auction 30-year bond Earnings: Conagra Brands , Delta Air Lines Friday, July 11 2 p.m. Treasury Budget (June) — CNBC’s Sophie Kiderlin contributed to this report.
