Deutsche Bank warns of more tariffs and immigration impacts ahead as US summer ends

Deutsche Bank expects further impact from US tariffs and immigration policies as the summer winds down. The US stock market has seen a strong rebound, with the S&P 500 index gaining nearly 9% since spring lows. The recovery was sparked by President Donald Trump's "Liberation Day" reciprocal tariffs, but further trade tensions and immigration policies are likely to affect the market.

As the summer winds down, Deutsche Bank expects further challenges from US tariffs and immigration policies, despite the recent rebound in the US stock market. The S&P 500 index has gained nearly 9% since its spring lows, largely driven by President Donald Trump's "Liberation Day" reciprocal tariffs [2]. However, the market remains volatile and highly sensitive to trade and growth-related news.

The US Department of Homeland Security (DHS) has confirmed that an additional 25% tariff on all Indian-origin goods will take effect from August 27, making India one of the highest-tariffed countries in the world, alongside Brazil [1]. This move is a response to India's purchase of Russian oil, which the US administration views as indirectly aiding Moscow in funding the war in Ukraine. Exporter groups estimate that these tariffs could affect nearly 55% of India's $87 billion in merchandise exports to the US, potentially leading to a 20-30% decrease in exports from September onward [1].

In addition to trade tensions, immigration policies are another concern for the market. The US Administration's stance on immigration has been a source of uncertainty, with potential impacts on labor markets and consumer confidence. Deutsche Bank analysts caution that further policy changes could disrupt supply chains and affect consumer spending, potentially dampening economic growth.

The European bank equity prices fell sharply following the U.S. reciprocal tariff announcement in April, reflecting investor concerns about rising trade tensions and their potential impact on global growth and financial stability [3]. While European bank stocks have since recovered, they remain highly sensitive to trade and growth-related news.

In conclusion, while the US stock market has shown resilience, the ongoing trade tensions and immigration policies pose significant risks. Deutsche Bank's outlook suggests that investors should remain vigilant and prepare for potential market volatility as these policies continue to evolve.