According to PANews, Morgan Stanley's Global Head of Fixed Income and Thematic Research, Michael Zezas, has released a report highlighting the significance of the upcoming July 9 tariff suspension deadline. Despite widespread expectations that U.S. tariff policies will not escalate further, Zezas emphasizes the need for investors to prepare for various outcomes.
Morgan Stanley outlines three potential scenarios:
In a delay strategy, the White House might extend the suspension period and announce agreements with some trade partners while retaining the possibility of increasing tariffs on others. The European Union and Japan are expected to maintain the current 10% baseline tariff rate.
In a tactical escalation, if negotiations fail, the U.S. may selectively reimpose tariffs and delay their implementation to allow more time for talks. The European Union and Japan could face a tougher stance.
In a moderate scenario, the U.S. might announce regional or bilateral framework agreements, indicating a tendency to lower tariff levels and reduce uncertainty over recent import costs.
Morgan Stanley stresses that tariff policy remains a crucial market variable, with an aggressive tariff path potentially exacerbating downside risks to the economic outlook and affecting GDP growth expectations for 2025 and 2026. Investors are advised to closely monitor the important date of July 9.