The United States has introduced new tariffs on several countries, starting August 1. The rates are 40% for Myanmar and Laos, 30% for South Africa, and 25% for both Malaysia and Kazakhstan. These rates have only slightly changed since Liberation Day. In 2024, Malaysia, a key trading partner, had exports totaling $43.4 billion, while Japan’s were $145 billion. Following the announcement, the S&P 500 fell by 74 points, a 1.2% drop, reaching its lowest point of the session. This announcement is part of a second round of trade actions, with only 7 countries named out of the expected 12. It’s unclear if investors will hold off on reacting until the full list is released. So far, this is just a piece of the broader trade actions from the U.S., with increased tariffs on specific countries. Malaysia and Kazakhstan face 25% tariffs, while Myanmar and Laos face much higher rates. These tariffs will be effective in just under two months, giving markets a short window to adjust. To provide context, while Malaysia’s export figures are significant, they still lag behind larger partners. A 25% import tax will raise material costs, put pressure on margins, and potentially lower profit forecasts for sectors importing goods, especially in electronics and components. When these tariffs take effect, they will directly impact cost assumptions throughout complex supply chains in the U.S. The market quickly reacted. The S&P 500, a common measure of stock performance across sectors, dropped sharply. A 1.2% decline doesn’t happen without a reason. This downturn was directly linked to the new trade policies, rather than economic data. Notably, this drop occurred right after the release of only part of the list – seven of the twelve affected countries are still unknown. This raises the question: will investors wait for the complete list? Current market movements suggest not. Prices are being adjusted in real time based on partial information, indicating that market makers may not expect the remaining countries to have better news. We also need to consider how pricing could shift in the coming days. Businesses with dollar-linked trades against the Malaysian ringgit or Kazakhstani tenge may need to adjust their short-term strategies. There is good reason to anticipate more price drops or increased volatility as additional trade partners are revealed this week. Exports from countries now facing tariffs may become less appealing purely from a profit margin perspective. This shift will affect pricing downstream. The impact could ripple into consumer sectors that depend on international inputs to stay competitive. Speculators or options traders betting on stability may reconsider their positions. With partial information available, there is still time—though not much—to reassess positions, especially if there’s unequal exposure. Any derivatives related to the S&P may need adjustments if the downward trend continues. Several unnamed countries might be significant players; if they are added to the tariffs, we may see more rebalancing as options expiration dates approach, which is a time of peak activity. While this isn’t a major correction, and the decline was only 1.2%, it’s not something to ignore. This activity is worth monitoring, and we view each new announcement and its timing as an important market trigger.

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