US economy appears 'immune' to Trump tariff uncertainty

The US economy, particularly the labour market, continues to appear almost immune to the uncertainty surrounding President Trump’s tariffs.

New claims for unemployment benefits dropped for the fourth straight week in the seven days to 5th July, sinking to a near 2-month low 227k (from 232k).

The minutes of the June FOMC meeting again made mention of the “solid” jobs market, and that “some” participants were in favour of no rate cuts at all in 2025, even if a couple of members are considering voting for a cut as soon as July.

As mentioned earlier in the week, we think that this economic resilience can partly explain the abating in the “sell America” trade, while also allowing the dollar to regain its safe-haven status and allaying bets that the Fed will be forced into cutting rates as early as this month’s FOMC meeting.

It will be interesting to see whether the dollar continues to perform well should Trump throw shade over the likelihood of trade deals before the 1st August deadline. This would be a clear signal that markets are placing greater emphasis on the so far limited economic fallout from the tariffs, rather than the trade measures themselves.