This helps to protect the competitive moat of mega-cap tech companies. Secondly, encouraging production operations to move to the US by making import goods more expensive thereby increases the relative attractiveness of domestic manufacturing. Thirdly, reducing or eliminating US trade deficits with various countries aims to increase US independence and boost local industry. Finally, raising tax revenues from tariffs pays for some One Big Beautiful Bill tax cuts and spending changes.
So what developments happened over the month of June? Key changes. The 90-day pause on high reciprocal tariffs for many countries has been extended to August 1, signaling a continued shift in trade policies. President Trump has issued letters to over 20 countries, including major economies like Japan, South Korea, and Brazil, threatening tariffs ranging from 25% to 50%, unless concessions are made. A 50% copper tariff is set to come into effect on August the 1st with expectations of further industry-specific tariffs.
Markets broadly remained little changed from potentially higher tariffs. So what do these mean? A US tariff war will be sustained throughout the current US administration and most likely beyond it. We expect this move to have significant implications for the economy, trade, and business confidence. The changes are anticipated to result in challenges for comprehensive trade deals with countries like China and those in the EU, headwinds to US business confidence, capital expenditure and trade.
And we expect US real GDP growth to slow to around 1% as the cost of importing goods are passed on to consumers. However, the One Big Beautiful Bill, tax cuts, and spending changes, we expect to have a stimulative effect on the US economy in 2026. Finally, we expect US core inflation to rise to around 3% to 3 and 1/2% by the fourth quarter. These impacts could cause further market volatility in the near term, though ongoing negotiations mean risks remain two sided.
We continue to recommend portfolios with diverse exposures to weather changes and uncertainty in impacts. We expect potential further increases in the price of gold as uncertainty increases and central banks and investors diversify their US dollar exposures at the margins. For more information, please see our global markets overview report.
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